Five years ago, Intel Corp. general manager Randy Smerik thought he had developed a chip design idea far enough ahead of its time to warrant the formation of a new company. He and a small group of Intel engineers had come up with a novel way to enable network equipment to analyze high-speed data, a critical feature for network security. His work resulted in Tarari Inc., which was spun out of Intel in 2002, received funding from Crosspoint Venture Partners, XMLFund and Enterprise Partners Venture Capital, among others, and has become a leader in so-called content inspection accelerators.

Now Tarari is returning to the fold of a large chipmaker, this time LSI Corp., which agreed to acquire the 45-person startup for $85 million in cash. The deal should make a worthy addition to the networking security and storage offerings of LSI, which has been shedding non-core assets and training its focus on these areas since it acquired Agere Systems Inc. in December. Besides big-ticket deals like the Agere acquisition, LSI has been providing solid exits for VCs by acquiring startups to supplement its storage offerings. In February, for example, it agreed to pay $55 million to acquire storage networking technology startup SiliconStor Inc., which was backed by VSP Capital and APV Technology Partners.

LSI did not say what would become of Smerik, currently Tarari's CEO. —Olaf de Senerpont Domis

See Aug. 2002 story from TheDeal.com
See Jan. 2006 story from TheDeal.com
See Aug. 22 story from TheDeal.com
See Dec. 2006 story from TheDeal.com
See August 2002 story from TheDeal.com

Tags: semiconductors, vc, venture+capital