LSI Announces Global Transition to Contract Manufacturing

MILPITAS, Calif., July 25, 2007 - LSI Corporation (NYSE: LSI) announced today a strategic initiative to transition the worldwide assembly and testing of its semiconductor and storage systems products to contract manufacturers. The initiative is expected to achieve greater cost efficiencies through the adoption of a variable cost structure and to provide for scalable capacity without additional capital investment. The initiative is part of a previously announced three-phase business acceleration plan adopted by LSI following its merger with Agere Systems on April 2, 2007.

In connection with this initiative, LSI has signed a definitive agreement to sell its semiconductor assembly and test operations in Pathumthani, Thailand to STATS ChipPAC Ltd. for approximately $100 million. The Thailand facility consists of approximately 440,000 square feet of floor space and employs approximately 1100 people.

Under the terms of the agreement, STATS ChipPAC will offer employment to substantially all of the LSI manufacturing employees based at the site, with the remaining non-manufacturing workforce expected to continue their employment with LSI. STATS ChipPAC and LSI will also enter into additional agreements, including a multi-year wafer assembly and test agreement and a transition services agreement.

The transaction is expected to close within 90 days, subject to the satisfaction of customary closing conditions and regulatory approvals.

LSI has also announced that it will transition semiconductor and storage systems assembly and test operations performed at its facilities in Singapore and Wichita, Kansas to current contract manufacturing partners. The transition of these operations is expected to be completed in the first half of 2008.

As part of the above actions, LSI will eliminate approximately 2100 production positions worldwide. The transition is expected to reduce annual capital expenditures by $20 to $25 million beginning in 2008 and to provide a long term positive effect on gross margins.

Abhi Talwalkar, LSI president and CEO, said, "As a result of the steps we are taking today, LSI will be well positioned to leverage the worldwide contract manufacturing ecosystem to further reduce our costs and improve our gross margins over time. Additionally, we anticipate significant benefits from additional sourcing options and worldwide fulfillment capabilities."

LSI is continuing to maintain its interest in Silicon Manufacturing Partners Pte. Ltd., its integrated circuit wafer manufacturing facility in Singapore which is jointly owned with Chartered Semiconductor Manufacturing.

The company will report second quarter results today and has scheduled an analyst meeting for July 31, 2007 in New York City.

Forward Looking Statements: This news release contains forward-looking statements that are based on the current opinions and estimates of management. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that could cause LSI's actual results to differ materially from those set forth in the forward-looking statements include, but are not limited to: the challenges and costs of integrating and restructuring our operations and achieving anticipated synergies following our recent acquisition of Agere Systems; a delay in the closing of the sale of our Consumer business to Magnum Semiconductor; our ability to successfully and timely transition our assembly and test operations to third parties; fluctuations in the timing and volumes of customer demand; our reliance on major customers and suppliers; our ability to compete successfully in competitive markets; our ability to keep up with rapid technological change; the unavailability of appropriate levels of manufacturing capacity; and general industry and market conditions. For additional information, see the documents filed by LSI with the SEC, and specifically the risk factors set forth in the company's most recent reports on Form 10-K and 10-Q. LSI disclaims any intention or obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise.

About LSI

LSI Corporation (NYSE: LSI) is a leading provider of innovative silicon, systems and software technologies that enable products which seamlessly bring people, information and digital content together. The company offers a broad portfolio of capabilities and services including custom and standard product ICs, adapters, systems and software that are trusted by the world's best known brands to power leading solutions in the Storage, Networking and Mobility markets. More information is available at www.lsi.com.

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