10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended July 3, 2011

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to                     

Commission File Number: 1-10317

LSI CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	94-2712976
(State of Incorporation)	(I.R.S. Employer Identification Number)

1621 Barber Lane

Milpitas, California 95035
(Address of principal executive offices)
(Zip code)

(408) 433-8000
(Registrant’s telephone number, including area code)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company.)

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

     As of August 5, 2011, there were 572,877,263 shares of the registrant’s Common Stock, $.01 par value, outstanding.

LSI CORPORATION
FORM 10-Q
For the Quarter Ended July 3, 2011
INDEX

	Page
	No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)		3
Condensed Consolidated Balance Sheets as of July 3, 2011 and December 31, 2010		3
Condensed Consolidated Statements of Operations for the three and six months ended July 3, 2011 and July 4, 2010		4
Condensed Consolidated Statements of Cash Flows for the six months ended July 3, 2011 and July 4, 2010		5
Notes to Condensed Consolidated Financial Statements		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		19
Item 3. Quantitative and Qualitative Disclosures about Market Risk		28
Item 4. Controls and Procedures		28
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		28
Item 1A. Risk Factors		28
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		30
Item 6. Exhibits		30
Signatures		31
Exhibit Index		32
EX-10.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

FORWARD-LOOKING STATEMENTS

     This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words “estimate,” “plan,” “intend,” “expect,” “anticipate,” “believe” and similar words are intended to identify forward-looking statements. Although we believe our expectations are based on reasonable assumptions, our actual results could differ materially from those projected in the forward-looking statements. We have described in Part II, “Item 1A. Risk Factors” a number of factors that could cause our actual results to differ from our projections or estimates. Except where otherwise indicated, the statements made in this report are made as of the date we filed this report with the Securities and Exchange Commission and should not be relied upon as of any subsequent date. We expressly disclaim any obligation to update the information in this report, except as may otherwise be required by law.

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

LSI CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)
(Unaudited)

	July 3,			December 31,
	2011			2010
ASSETS
Cash and cash equivalents	$	755,442		$	521,786
Short-term investments		151,068			154,880
Accounts receivable, less allowances of $11,875 and $9,701, respectively		234,127			326,604
Inventories		193,802			186,772
Prepaid expenses and other current assets		73,805			73,314
Assets held for sale		18,558			464
Total current assets		1,426,802			1,263,820
Property and equipment, net		178,517			223,181
Identified intangible assets, net		490,989			561,137
Goodwill		72,377			188,698
Other assets		147,213			188,076
Total assets	$	2,315,898		$	2,424,912
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	$	185,458		$	173,919
Accrued salaries, wages and benefits		87,728			126,307
Other accrued liabilities		174,535			184,402
Total current liabilities		447,721			484,628
Pension and post-retirement benefit obligations		443,392			463,119
Income taxes payable — non-current		85,087			85,717
Other non-current liabilities		38,974			73,946
Total liabilities		1,015,174			1,107,410
Commitments and contingencies (Note 14)
Stockholders’ equity:
Preferred stock, $.01 par value: 2,000 shares authorized; none outstanding		—			—
Common stock, $.01 par value: 1,300,000 shares authorized; 571,228 and 615,191 shares outstanding, respectively		5,712			6,152
Additional paid-in capital		5,672,751			5,998,137
Accumulated deficit		(4,064,584	)		(4,368,522	)
Accumulated other comprehensive loss		(313,155	)		(318,265	)
Total stockholders’ equity		1,300,724			1,317,502
Total liabilities and stockholders’ equity	$	2,315,898		$	2,424,912

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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LSI CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)
(Unaudited)

	Three Months Ended						Six Months Ended
	July 3, 2011			July 4, 2010			July 3, 2011			July 4, 2010
Revenues	$	500,644		$	473,447		$	973,908		$	946,119
Cost of revenues		263,024			248,679			512,114			506,557
Gross profit		237,620			224,768			461,794			439,562
Research and development		145,873			142,871			288,220			281,733
Selling, general and administrative		71,793			70,150			140,660			140,515
Restructuring of operations and other items, net		(10,904	)		5,086			(8,098	)		6,706
Income from operations		30,858			6,661			41,012			10,608
Interest expense		—			(1,707	)		—			(5,601	)
Interest income and other, net		6,450			4,639			10,738			(4,168	)
Income from continuing operations before income taxes		37,308			9,593			51,750			839
Provision for/(benefit from) income taxes		8,900			6,911			4,796			(16,191	)
Income from continuing operations		28,408			2,682			46,954			17,030
Income from discontinued operations (including a gain on disposal of $260,066 for the three and six months ended July 3, 2011), net of taxes		265,376			4,750			256,984			12,922
Net income	$	293,784		$	7,432		$	303,938		$	29,952
Basic income per share:
Income from continuing operations	$	0.05		$	0.00		$	0.08		$	0.03
Income from discontinued operations	$	0.44		$	0.01		$	0.42		$	0.02
Net income	$	0.49		$	0.01		$	0.50		$	0.05
Diluted income per share:
Income from continuing operations	$	0.05		$	0.00		$	0.08		$	0.03
Income from discontinued operations	$	0.43		$	0.01		$	0.41		$	0.02
Net income	$	0.48		$	0.01		$	0.49		$	0.05
Shares used in computing per share amounts:
Basic		594,957			651,778			605,315			654,192
Diluted		611,093			661,540			621,248			663,857

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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LSI CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)
(Unaudited)

	Six Months Ended
	July 3, 2011			July 4, 2010
Operating activities:
Net income	$	303,938		$	29,952
Adjustments:
Depreciation and amortization		102,310			133,268
Stock-based compensation expense		27,112			34,926
Non-cash restructuring of operations and other items, net		20,964			(41	)
Write-down of investments		—			11,600
Gain on sale of business		(260,066	)		—
(Gain)/loss on sale of property and equipment		(508	)		268
Unrealized foreign exchange loss		2,581			990
Deferred taxes		(19,766	)		183
Changes in assets and liabilities:
Accounts receivable, net		92,477			31,887
Inventories		(43,140	)		(22,247	)
Prepaid expenses, assets held for sale and other assets		(10,991	)		6,343
Accounts payable		9,290			(14,410	)
Accrued and other liabilities		(77,878	)		(39,324	)
Net cash provided by operating activities		146,323			173,395
Investing activities:
Purchases of debt securities available-for-sale		(24,131	)		(1,189	)
Proceeds from maturities and sales of debt securities available-for-sale		23,445			21,525
Purchases of other investments		(4,000	)		(316	)
Purchases of property and equipment		(37,198	)		(48,373	)
Proceeds from sale of property and equipment		896			199
Proceeds from sale of business, net of transaction costs		475,150			—
Net cash provided by/(used in) investing activities		434,162			(28,154	)
Financing activities:
Redemption of convertible subordinated notes		—			(349,999	)
Issuances of common stock		50,931			21,588
Purchase of common stock under repurchase programs		(396,792	)		(80,732	)
Net cash used in financing activities		(345,861	)		(409,143	)
Effect of exchange rate changes on cash and cash equivalents		(968	)		(3,012	)
Net change in cash and cash equivalents		233,656			(266,914	)
Cash and cash equivalents at beginning of period		521,786			778,291
Cash and cash equivalents at end of period	$	755,442		$	511,377

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

5

LSI CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — Basis of Presentation

     For financial reporting purposes, LSI Corporation (“LSI” or the “Company”) reports on a 13- or 14-week quarter with the year ending December 31. The second quarter of 2011 and 2010 consisted of 13 weeks each and ended on July 3, 2011 and on July 4, 2010, respectively. The first six months of 2011 and 2010 consisted of approximately 26 weeks each. The results of operations for the three and six months ended July 3, 2011 are not necessarily indicative of the results to be expected for the full year.

     On May 6, 2011, the Company completed the sale of its external storage systems business to NetApp, Inc. (“NetApp”). The results of the external storage systems business are presented as discontinued operations in the Company’s statements of operations and, as such, have been excluded from all line items other than “income from discontinued operations” for all periods presented. Since the first quarter of 2011, the Company operates in one reportable segment. Before it was sold, the external storage systems business was part of the Storage Systems segment. The results of the redundant array of independent disks (“RAID”) adapter business, which were formerly included in the Storage Systems segment, are now included in the Company’s remaining reportable segment.

     The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ significantly from these estimates.

     In management’s opinion, the accompanying unaudited condensed consolidated financial statements contain all normal recurring adjustments necessary for a fair statement of the Company’s financial position, results of operations, and cash flows for the interim periods presented. While the Company believes that the disclosures are adequate to make the information not misleading, these financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

Recent Accounting Pronouncements

     Pronouncements not yet effective:

     In May 2011, the Financial Accounting Standards Board (“FASB”) issued additional guidance on fair value measurements and related disclosures. The new guidance clarifies the application of existing guidance on fair value measurement for non-financial assets and requires the disclosure of quantitative information about the unobservable inputs used in a fair value measurement. This guidance is effective on a prospective basis for interim and annual periods beginning after December 15, 2011. The adoption of this guidance will not have any impact on the Company’s results of operations or financial position.

     In June 2011, the FASB issued amended guidance regarding the presentation of comprehensive income. The amended guidance gives an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The amended guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. The amended guidance also requires presentation of adjustments for items that are reclassified from other comprehensive income to net income in the statement where the components of net income and the components of other comprehensive income are presented. This guidance is effective on a retrospective basis for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011. The Company is currently evaluating the disclosure impact of the adoption of this guidance on its results of operations and financial position.

     Pronouncements adopted during the six months ended July 3, 2011:

     In October 2009, the FASB amended revenue recognition guidance on multiple-deliverable arrangements to address how to separate deliverables and how to measure and allocate arrangement consideration. The new guidance requires the use of management’s best estimate of selling price for the deliverables in an arrangement when a vendor does not have specific objective evidence of selling price or third party evidence of selling price. In addition, excluding specific software revenue guidance, the residual method of allocating arrangement consideration is no longer permitted, and an entity is required to allocate arrangement consideration using the relative selling price method. This guidance also expands the disclosure requirements to include both quantitative and qualitative information. The Company adopted this guidance in the first quarter of 2011. The adoption did not impact the Company’s results of operations or financial position.

6

     In October 2009, the FASB issued guidance to clarify that tangible products containing software components and non-software components that function together to deliver a product’s essential functionality will be considered non-software deliverables and will be scoped out of the software revenue recognition guidance. The Company adopted this guidance in the first quarter of 2011. The adoption did not impact the Company’s results of operations or financial position.

     In December 2010, the FASB issued guidance to clarify that, when presenting comparative financial statements for business combinations that occurred during the current year, a public entity should disclose revenue and earnings of the combined entity as though the business combinations had occurred as of the beginning of the comparable prior annual reporting period. The update also expands the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The Company adopted this guidance in the first quarter of 2011. The adoption did not impact the Company’s results of operations or financial position.

Note 2 — Stock-Based Compensation

Stock-Based Compensation Expense

     The following table summarizes stock-based compensation expense, net of estimated forfeitures, included within the continuing operations related to the Company’s stock options, Employee Stock Purchase Plan (“ESPP”) and restricted stock unit awards.

	Three Months Ended				Six Months Ended
Stock-Based Compensation Expense Included In:	July 3, 2011		July 4, 2010		July 3, 2011		July 4, 2010
			(In thousands)
Cost of revenues	$	2,051	$	1,985	$	3,864	$	3,401
Research and development		6,653		6,750		12,876		12,770
Selling, general and administrative		4,948		6,439		10,579		12,126
Total stock-based compensation expense	$	13,652	$	15,174	$	27,319	$	28,297

     Stock Options:

     The fair value of each option grant is estimated as of the date of grant using a reduced-form calibrated binomial lattice model (the “lattice model”). The following table summarizes the weighted-average assumptions that the Company applied in the lattice model:

	Three Months Ended						Six Months Ended
	July 3, 2011			July 4, 2010			July 3, 2011			July 4, 2010
Estimated grant date fair value per share	$	2.65		$	2.05		$	2.14		$	1.97
Expected life (years)		5.01			4.35			4.51			4.28
Risk-free interest rate		2	%		2	%		2	%		2	%
Volatility		47	%		54	%		47	%		51	%

     The following table summarizes changes in stock options outstanding:

				Weighted-Average
	Number of			Exercise
	Shares			Price Per Share
	(In thousands)
Options outstanding at December 31, 2010		71,607		$	6.97
Options granted		8,869			6.35
Options exercised		(5,327	)		5.03
Options canceled		(5,098	)		15.99
Options outstanding at July 3, 2011		70,051		$	6.38
Options exercisable at July 3, 2011		44,473		$	7.10

     For options outstanding and options exercisable as of July 3, 2011, the weighted-average remaining contractual term was 3.64 years and 2.61 years, respectively, and the aggregate intrinsic value was $106.8 million and $52.5 million, respectively.

     Employee Stock Purchase Plan:

     Compensation expense for the Company’s ESPP is calculated using the fair value of the employees’ purchase rights under the Black-Scholes model. Under the ESPP, rights to purchase shares are granted during the second and fourth quarters of each year. A total of 2.9 million shares and 3.3 million shares were issued under the ESPP during the three months ended July 3, 2011 and July 4,

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2010, respectively. The following table summarizes the weighted-average assumptions that went into the calculation of the fair value for the May 2011 and May 2010 grants:

	Three Months Ended
	July 3, 2011			July 4, 2010
Estimated grant date fair value per share	$	2.10		$	1.74
Expected life (years)		0.8			0.8
Risk-free interest rate		0.02	%		0.3	%
Volatility		37	%		48	%

     Restricted Stock Awards:

     The cost of service-based and performance-based restricted stock unit awards is determined using the fair value of the Company’s common stock on the date of grant. For performance-based restricted stock unit awards, the Company also considers the probability that those restricted stock units will vest.

     Service-based:

     The vesting requirements for service-based restricted stock units are determined at the time of grant and require that the employee remain employed by the Company for a specified period of time. As of July 3, 2011, the total unrecognized compensation expense related to these restricted stock units, net of estimated forfeitures, was $57.9 million and is expected to be recognized over the next 3.3 years on a weighted-average basis. The fair value of the shares that were issued upon the vesting of service-based restricted stock units during the three and six months ended July 3, 2011 was $0.7 million and $11.0 million, respectively.

     The following table summarizes changes in service-based restricted stock units outstanding:

	Number of Units
	(In thousands)
Unvested service-based restricted stock units at December 31, 2010		7,106
Granted		6,914
Vested		(1,745	)
Forfeited		(433	)
Unvested service-based restricted stock units at July 3, 2011		11,842

     Performance-based:

     The vesting of performance-based restricted stock units is contingent upon the Company meeting specified performance criteria and requires that the employee remain employed by the Company for a specified period of time. As of July 3, 2011, the total unrecognized compensation expense related to performance-based restricted stock units was $17.0 million and, if the contingencies are fully met, is expected to be recognized over the next 1 to 3 years.

     The following table summarizes changes in performance-based restricted stock units outstanding:

	Number of Units
	(In thousands)
Unvested performance-based restricted stock units at December 31, 2010		2,338
Granted		3,540
Vested		(827	)
Forfeited		(164	)
Unvested performance-based restricted stock units at July 3, 2011		4,887

Note 3 — Common Stock Repurchases

     On March 9, 2011, the Company’s Board of Directors authorized a new stock repurchase program of up to $750.0 million of its common stock. The repurchases under this program are funded from the proceeds of the sale of the external storage systems business, available cash and short-term investments. Under this program, the Company repurchased 41.6 million shares for $300.0 million during the three months ended July 3, 2011 and 56.3 million shares for $396.8 million during the six months ended July 3, 2011. The repurchased shares were retired immediately after the repurchases were completed. Retirement of the repurchased shares is recorded

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as a reduction of common stock and additional paid-in capital. As of July 3, 2011, $353.2 million remained available under this stock repurchase program.

Note 4 — Restructuring, Asset Impairment Charges and Other Items

     The following table summarizes items included in restructuring of operations and other items, net from continuing operations:

	Three Months Ended					Six Months Ended
	July 3, 2011			July 4, 2010		July 3, 2011			July 4, 2010
				(In thousands)
Lease and contract terminations	$	1,865	(a)	$	125	$	3,553	(a)	$	971
Employee severance and benefits		289	(b)		4,779		1,932	(b)		5,304
Total restructuring expenses		2,154			4,904		5,485			6,275
Other items		(13,058	)(c)		182		(13,583	)(c)		431
Total restructuring of operations and other items, net	$	(10,904	)	$	5,086	$	(8,098	)	$	6,706

(a)	Primarily relates to changes in estimates and changes in time value of accruals for previously accrued facility lease exit costs.
(b)	Primarily relates to restructuring actions taken during the first half of 2011 as the Company continues to streamline operations.
(c)	Primarily relates to the reversal of a $14.5 million sales and use tax related liability as a result of concluding various audits, partially offset by $1.3 million of costs associated with the transition service agreements entered into with NetApp in connection with the sale of the external storage systems business.

     In connection with the sale of the external storage systems business, the Company initiated certain restructuring actions. The results of those actions are included in discontinued operations and are summarized below:

	Three Months Ended						Six Months Ended
	July 3, 2011			July 4, 2010			July 3, 2011			July 4, 2010
				(In thousands)
Lease and contract terminations	$	868		$	(19	)	$	2,579		$	(19	)
Employee severance and benefits		3,153	(a)		—			14,173	(a)		—
Asset impairment and other exit charges		10,058	(b)		—			21,138	(b)		—
Total	$	14,079		$	(19	)	$	37,890		$	(19	)

(a)	Primarily represents severance accruals for the restructuring actions taken in connection with the sale of the external storage systems business.
(b)	Includes $9.5 million and $20.4 million for the write-down of certain assets related to discontinued operations during the three and six months ended July 3, 2011, respectively.

     The following table summarizes the significant activity within, and components of, the Company’s restructuring obligations from continuing operations and discontinued operations:

							Employee
	Asset Write-downs			Lease and Contract			Severance
	and Other Exit Costs			Terminations			and Benefits			Total
				(In thousands)
Beginning balance at December 31, 2010	$	—		$	20,905		$	4,951		$	25,856
Expense		21,138			6,132			16,105			43,375
Utilized		(21,138	)		(8,747	) (a)		(13,750	) (a)		(43,635	)
Ending balance at July 3, 2011	$	—		$	18,290	(b)	$	7,306	(b)	$	25,596

(a)	The amounts utilized represent cash payments.
(b)	The balance remaining for lease and contract terminations is expected to be paid during the remaining terms of the leases, which extend through 2015. The majority of the balance remaining for severance is expected to be paid by the end of 2011.

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Note 5 — Benefit Obligations

     The Company has pension plans covering substantially all former Agere Systems Inc. (“Agere”) U.S. employees, excluding management employees hired after June 30, 2003. Retirement benefits are offered under defined benefit pension plans, which include a management plan and a represented plan. The payments under the management plan are based on an adjusted career-average-pay formula or a cash-balance program. The cash-balance program provides for annual company contributions based on a participant’s age, compensation and interest on existing balances. It covers employees of certain companies acquired by Agere since 1996 and management employees hired after January 1, 1999 and before July 1, 2003. The payments under the represented plan are based on a dollar-per-month formula. Since February 2009, there have been no active participants under the represented plan. The Company also has a non-qualified supplemental pension plan in the U.S. that principally provides benefits based on compensation in excess of amounts that can be considered under a tax qualified plan. The Company also provides post-retirement life insurance coverage under a group life insurance plan for former Agere employees excluding participants in the cash-balance program and management employees hired after June 30, 2003. The Company also has pension plans covering certain international employees.

     Effective April 6, 2009, the Company froze the U.S. management defined benefit pension plan. Participants in the adjusted career-average-pay program will not earn any future service accruals after that date. Participants in the cash-balance program will not earn any future service accruals, but will continue to earn 4% interest per year on their cash-balance accounts.

     The following table summarizes the components of the net periodic benefit cost/(credit):

	Three Months Ended
	July 3, 2011						July 4, 2010
	Pension			Post-retirement			Pension			Post-retirement
	Benefits			Benefits			Benefits			Benefits
				(In thousands)
Service cost	$	141		$	21		$	112		$	21
Interest cost		16,929			621			17,553			612
Expected return on plan assets		(17,000	)		(1,033	)		(17,909	)		(1,150	)
Amortization of transition asset		(5	)		—			—			—
Amortization of prior service cost		10			—			10			—
Amortization of net actuarial loss		1,694			85			527			—
Total benefit cost/(credit)	$	1,769		$	(306	)	$	293		$	(517	)

	Six Months Ended
	July 3, 2011						July 4, 2010
	Pension			Post-retirement			Pension			Post-retirement
	Benefits			Benefits			Benefits			Benefits
				(In thousands)
Service cost	$	275		$	38		$	230		$	41
Interest cost		33,779			1,246			35,170			1,220
Expected return on plan assets		(33,998	)		(2,065	)		(35,732	)		(2,298	)
Amortization of transition asset		(10	)		—			—			—
Amortization of prior service cost		20			—			20			—
Amortization of net actuarial loss		3,375			177			1,074			—
Total benefit cost/(credit)	$	3,441		$	(604	)	$	762		$	(1,037	)

     During the six months ended July 3, 2011, the Company contributed $20.7 million to its pension plans. The Company expects to contribute an additional $44.6 million to its pension plans for the remainder of 2011. The Company does not expect to contribute to its post-retirement benefit plan in 2011.

Note 6 — Balance Sheet Details

     Inventories were comprised of the following:

	July 3,		December 31,
	2011		2010
	(In thousands)
Raw materials	$	1,760	$	30,691
Work-in-process		73,242		33,513
Finished goods		118,800		122,568
Total inventories	$	193,802	$	186,772

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     During the three months ended July 3, 2011, the Company reclassified $16.2 million of land in Gresham, Oregon from held and used to held for sale.

Note 7 — Cash Equivalents and Investments

     The following tables summarize the Company’s cash equivalents and investments measured at fair value:

	Fair Value Measurements as of July 3, 2011
	Level 1			Level 2			Level 3		Total
				(In thousands)
Cash equivalents:
Money-market funds	$	606,045	(a)	$	—		$	—	$	606,045
Commercial paper		—			625	(b)		—		625
Total cash equivalents	$	606,045		$	625		$	—	$	606,670
Available-for-sale debt securities:
Asset-backed and mortgage-backed securities	$	—		$	109,783	(b)	$	—	$	109,783
U.S. government and agency securities		4,496	(a)		22,924	(b)		—		27,420
Corporate debt securities		—			13,865	(b)		—		13,865
Total short-term investments	$	4,496		$	146,572		$	—	$	151,068
Long-term investments in equity securities:
Marketable available-for-sale equity securities	$	1,907	(c)	$	—		$	—	$	1,907

	Fair Value Measurements as of December 31, 2010
	Level 1			Level 2			Level 3		Total
				(In thousands)
Cash equivalents:
Money-market funds	$	378,382	(a)	$	—		$	—	$	378,382
U.S. government and agency securities		2,000	(a)		—			—		2,000
Total cash equivalents	$	380,382		$	—		$	—	$	380,382
Available-for-sale debt securities:
Asset-backed and mortgage-backed securities	$	—		$	116,552	(b)	$	—	$	116,552
U.S. government and agency securities		1,496	(a)		24,502	(b)		—		25,998
Corporate debt securities		—			12,330	(b)		—		12,330
Total short-term investments	$	1,496		$	153,384		$	—	$	154,880
Long-term investments in equity securities:
Marketable available-for-sale equity securities	$	1,681	(c)	$	—		$	—	$	1,681

(a)	The fair value of money-market funds is determined using unadjusted prices in active markets. The fair value of these U.S. government and agency securities is determined using quoted prices in active markets.
(b)	These investments are traded less frequently than Level 1 securities and are valued using inputs that include quoted prices for similar assets in active markets and inputs other than quoted prices that are observable for the asset, such as interest rates, yield curves, prepayment speeds, collateral performance, broker/dealer quotes and indices that are observable at commonly quoted intervals.
(c)	The fair value of marketable equity securities is determined using quoted market prices in active markets. These amounts are included within other assets in the condensed consolidated balance sheets.

Investments in Non-Marketable Securities

     The Company does not estimate the fair value of non-marketable securities unless there are identified events or changes in circumstances that may have a significant adverse effect on the investment. There were no non-marketable securities fair-valued during the three and six months ended July 3, 2011. The following table summarizes certain non-marketable securities measured and recorded at fair value on a non-recurring basis during the six months ended July 4, 2010:

	Carrying Value		Fair Value Measurements						Losses for the		Losses for the
	as of		During the Six Months Ended July 4, 2010						Three Months Ended		Six Months Ended
	July 4, 2010		Level 1		Level 2		Level 3		July 4, 2010		July 4, 2010
	(In thousands)
Non-marketable securities	$	1,900	$	—	$	—	$	1,900	$	—	$	11,600

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     As of July 3, 2011 and December 31, 2010, the aggregate carrying value of the Company’s non-marketable securities was $46.0 million and $39.9 million, respectively. There were no sales of non-marketable securities for the three and six months ended July 3, 2011 and July 4, 2010.

Investments in Available-for-Sale Securities

     The following tables summarize the Company’s available-for-sale securities:

	July 3, 2011
	Amortized		Gross Unrealized		Gross Unrealized
	Cost		Gain		Loss*			Fair Value
			(In thousands)
Short-term debt securities:
Asset-backed and mortgage-backed securities	$	101,714	$	8,294	$	(225	)	$	109,783
U.S. government and agency securities		26,801		634		(15	)		27,420
Corporate debt securities		13,677		203		(15	)		13,865
Total short-term debt securities	$	142,192	$	9,131	$	(255	)	$	151,068
Long-term marketable equity securities	$	852	$	1,097	$	(42	)	$	1,907

* As of July 3, 2011, there were 48 investments in an unrealized loss position.

	December 31, 2010
	Amortized		Gross Unrealized		Gross Unrealized
	Cost		Gain		Loss			Fair Value
			(In thousands)
Short-term debt securities:
Asset-backed and mortgage-backed securities	$	107,891	$	9,012	$	(351	)	$	116,552
U.S. government and agency securities		25,313		812		(127	)		25,998
Corporate debt securities		12,226		176		(72	)		12,330
Total short-term debt securities	$	145,430	$	10,000	$	(550	)	$	154,880
Long-term marketable equity securities	$	852	$	868	$	(39	)	$	1,681

     The following tables summarize the gross unrealized losses and fair values of the Company’s short-term investments that have been in a continuous unrealized loss position for less than and greater than 12 months, aggregated by investment category:

	July 3, 2011
	Less than 12 Months					Greater than 12 Months
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
			(In thousands)
Asset-backed and mortgage-backed securities	$	8,436	$	(133	)	$	868	$	(92	)
U.S. government and agency securities		6,403		(15	)		—		—
Corporate debt securities		3,513		(15	)		—		—
Total	$	18,352	$	(163	)	$	868	$	(92	)

	December 31, 2010
	Less than 12 Months					Greater than 12 Months
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
			(In thousands)
Asset-backed and mortgage-backed securities	$	11,807	$	(179	)	$	2,469	$	(172	)
U.S. government and agency securities		13,969		(127	)		—		—
Corporate debt securities		6,527		(72	)		—		—
Total	$	32,303	$	(378	)	$	2,469	$	(172	)

     There were no impairment charges for available-for-sale debt or equity securities for the three or six months ended July 3, 2011 and July 4, 2010. There were no material other than temporary impairment losses recorded in other comprehensive income for the three or six months ended July 3, 2011 and July 4, 2010. Net realized gain or loss on sales of available-for-sale debt and equity securities for the three and six months ended July 3, 2011 and July 4, 2010 was not significant.

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     Contractual maturities of available-for-sale debt securities as of July 3, 2011 were as follows:

	Amount
	(In thousands)
Due within one year	$	7,871
Due in 1-5 years		39,181
Due in 5-10 years		10,113
Due after 10 years		93,903
Total	$	151,068

     The maturities of asset-backed and mortgage-backed securities were allocated based on contractual principal maturities assuming no prepayments.

Note 8 — Derivative Instruments

     The Company has foreign subsidiaries that operate and sell the Company’s products in various markets around the world. As a result, the Company is exposed to changes in foreign-currency exchange rates. The Company utilizes forward contracts to manage its exposure associated with net asset and liability positions denominated in non-functional currencies and to reduce the volatility of earnings and cash flows related to forecasted foreign-currency transactions. The Company does not hold derivative financial instruments for speculative or trading purposes.

Cash-Flow Hedges

     The Company enters into forward contracts that are designated as foreign-currency cash-flow hedges of selected forecasted payments denominated in currencies other than U.S. dollars. These forward contracts generally mature within twelve months. The Company evaluates and calculates the effectiveness of each hedge at least quarterly. Changes in fair value attributable to changes in time value are excluded from the assessment of effectiveness and are recognized in interest income and other, net. The effective portion of the forward contracts’ gain or loss is recorded in other comprehensive income and is subsequently reclassified into earnings when the hedged expense is recognized within the same line item in the statements of operations as the impact of the hedged transaction. The ineffective portion of the gain or loss is reported in earnings immediately. As of July 3, 2011 and December 31, 2010, the total notional value of the Company’s outstanding forward contracts, designated as foreign-currency cash-flow hedges, was $41.3 million and $41.7 million, respectively. For the three and six months ended July 3, 2011 and July 4, 2010, the after-tax effect of foreign-exchange forward contract derivatives on other comprehensive income was not material.

Other Foreign-Currency Hedges

     The Company enters into foreign-exchange forward contracts that are used to hedge certain foreign-currency-denominated assets or liabilities that do not qualify for hedge accounting. These forward contracts generally mature within three months. Changes in the fair value of these forward contracts are recorded immediately in earnings to offset the changes in fair value of the assets or liabilities being hedged. As of July 3, 2011 and December 31, 2010, the total notional value of the Company’s outstanding forward contracts, not designated as hedges under hedge accounting, was $42.1 million and $112.3 million, respectively. For the three and six months ended July 3, 2011, gains of $0.3 million and $2.1 million, respectively, on other foreign-currency hedges were recognized in interest income and other, net. For the three and six months ended July 4, 2010, a gain of $2.2 million and a loss of $3.6 million, respectively, on other foreign-currency hedges were recognized in interest income and other, net. These gains and losses were substantially offset by the loss and gain on the underlying foreign-currency-denominated assets or liabilities.

Fair Value of Derivative Instruments

     As of July 3, 2011 and December 31, 2010, the fair value of derivative instruments included in the condensed consolidated balance sheets was not material.

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Note 9 — Reconciliation of Basic and Diluted Shares

     The following table provides a reconciliation of basic and diluted shares:

	Three Months Ended				Six Months Ended
	July 3, 2011		July 4, 2010		July 3, 2011		July 4, 2010
			(In thousands)
Basic shares		594,957		651,778		605,315		654,192
Dilutive effect of stock options, employee stock purchase rights and restricted stock unit awards		16,136		9,762		15,933		9,665
Diluted shares		611,093		661,540		621,248		663,857

     The following table provides information about the weighted-average common share equivalents that were excluded from the computation of diluted shares because their inclusion would have an anti-dilutive effect on net income per share:

	Three Months Ended				Six Months Ended
	July 3, 2011		July 4, 2010		July 3, 2011		July 4, 2010
			(In thousands)
Anti-dilutive securities:
Stock options		38,338		71,868		44,130		70,505
Restricted stock unit awards		1,445		306		93		401
Convertible notes		—		12,324		—		19,314

Note 10 — Segment and Geographic Information

     Historically, the Company operated in two reportable segments — the Semiconductor segment and the Storage Systems segment. The Semiconductor segment designs, develops and markets highly complex integrated circuits for storage and networking applications. These solutions include both custom solutions and standard products. The Storage Systems segment offered external storage systems and RAID adapters for computer servers and associated software for attaching storage devices to computer servers. On March 9, 2011, the Company entered into a definitive agreement to sell its external storage systems business to NetApp and started to operate its RAID adapter business as part of its semiconductor business. Accordingly, the Company now has one reportable segment. The change has been reflected in the Company’s segment reporting for all periods presented.

Information about Geographic Areas

     The following table summarizes the Company’s revenues by geography based on the ordering location of the customer. Because the Company sells its products primarily to other sellers of technology products and not to end-users, the information in the table below may not accurately reflect geographic end-demand for its products.

	Three Months Ended				Six Months Ended
	July 3, 2011		July 4, 2010		July 3, 2011		July 4, 2010
			(In thousands)
North America*	$	122,881	$	110,379	$	243,799	$	200,145
Asia:
China		120,318		79,433		215,298		166,149
Singapore		61,632		75,569		118,800		152,401
Taiwan		68,988		73,552		151,299		155,983
Other		79,405		79,149		147,604		165,908
Total Asia		330,343		307,703		633,001		640,441
Europe and the Middle East		47,420		55,365		97,108		105,533
Total	$	500,644	$	473,447	$	973,908	$	946,119

* Primarily the United States.

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Note 11 — Comprehensive Income

     Comprehensive income or loss is defined as a change in equity of a company during a period from transactions and other events and circumstances, excluding transactions resulting from investments by owners and distributions to owners. The following table summarizes the changes in the total comprehensive income, net of taxes:

	Three Months Ended						Six Months Ended
	July 3, 2011			July 4, 2010			July 3, 2011			July 4, 2010
				(In thousands)
Net income	$	293,784		$	7,432		$	303,938		$	29,952
Net unrealized (loss)/gain on investments		(418	)		778			(92	)		1,308
Net unrealized (loss)/gain on derivatives		(360	)		(393	)		49			(1,252	)
Foreign currency translation adjustments		190			1,886			1,591			(2,120	)
Amortization of transition asset, prior-service cost and net actuarial loss		1,784			537			3,562			1,094
Total comprehensive income	$	294,980		$	10,240		$	309,048		$	28,982

Note 12 — Income Taxes

     The Company recorded income tax provisions from continuing operations of $8.9 million and $4.8 million for the three and six months ended July 3, 2011, respectively, and an income tax provision from continuing operations of $6.9 million and an income tax benefit from continuing operations of $16.2 million for the three and six months ended July 4, 2010, respectively.

     The income tax provision from continuing operations for the six months ended July 3, 2011 includes a reversal of $8.2 million in liabilities for uncertain tax positions, which included previously unrecognized tax benefits of $4.8 million and interest and penalties of $3.4 million, as a result of the expiration of statutes of limitations in multiple jurisdictions.

     The income tax benefit from continuing operations for the six months ended July 4, 2010 included a reversal of $27.9 million in liabilities for uncertain tax positions, which included previously unrecognized tax benefits of $12.2 million and interest and penalties of $15.7 million, as a result of the expiration of statutes of limitations in multiple jurisdictions.

     The Company computes its tax provision using an estimated annual tax rate. The Company excludes certain loss jurisdictions from the computation of the estimated annual rate when no benefit can be realized on those losses. With the exception of certain foreign jurisdictions, the Company believes it is not more likely than not that the future benefit of the deferred tax assets will be realized.

     As of July 3, 2011, the Company had $138.6 million of unrecognized tax benefits, for which the Company is unable to make a reasonably reliable estimate as to when cash settlement with a taxing authority may occur. It is reasonably possible that the total amount of unrecognized tax benefits will increase or decrease in the next 12 months. Such changes could occur based on the normal expiration of statutes of limitations or the possible conclusion of ongoing tax audits in various jurisdictions around the world. If those events occur within the next 12 months, the Company estimates that the unrecognized tax benefits, plus accrued interest and penalties, could decrease by up to $18.5 million.

Note 13 — Related Party Transactions

     A member of the Company’s board of directors is also a member of the board of directors of Seagate Technology (“Seagate”). The Company sells semiconductors used in storage product applications to Seagate for prices comparable to those charged to an unrelated third party. Revenues from sales by the Company to Seagate were $118.9 million and $217.5 million for the three and six months ended July 3, 2011, respectively. Revenues from sales by the Company to Seagate were $88.8 million and $184.9 million for the three and six months ended July 4, 2010, respectively. The Company had accounts receivable from Seagate of $71.7 million and $55.0 million as of July 3, 2011 and December 31, 2010, respectively.

     The Company has an equity interest in a joint venture, Silicon Manufacturing Partners Pte Ltd. (“SMP”), with GLOBALFOUNDRIES, a manufacturing foundry for integrated circuits. SMP operates an integrated circuit manufacturing facility in Singapore. The Company owns a 51% equity interest in this joint venture and accounts for its ownership position under the equity method of accounting. The Company is effectively precluded from unilaterally taking any significant action in the management of SMP due to GLOBALFOUNDRIES’ significant participatory rights under the joint venture agreement. Because of GLOBALFOUNDRIES’ approval rights, the Company cannot make any significant decisions regarding SMP without GLOBALFOUNDRIES’ approval, despite the 51% equity interest. In addition, the General Manager, who is responsible for the day-to-day management of SMP, is appointed by GLOBALFOUNDRIES, and GLOBALFOUNDRIES provides day-to-day operational support to SMP.

     The Company purchased $14.8 million and $25.6 million of inventory from SMP for the three and six months ended July 3, 2011, respectively. The Company purchased $12.0 million and $24.0 million of inventory from SMP for the three and six months ended July 4, 2010, respectively. As of July 3, 2011 and December 31, 2010, the amounts payable to SMP were $6.9 million and $1.2 million, respectively.

Note 14 — Commitments, Contingencies and Legal Matters

Purchase Commitments

     The Company maintains purchase commitments with certain suppliers, primarily for raw materials and manufacturing services and for some non-production items. Purchase commitments for inventory materials are generally restricted to a forecasted time horizon as mutually agreed upon between the parties. This forecasted time horizon can vary for different suppliers. As of July 3, 2011, the

15

Company had purchase commitments of $396.6 million, which are due through 2014.

     The Company has a take-or-pay agreement with SMP under which it has agreed to purchase 51% of the managed wafer capacity from SMP’s integrated circuit manufacturing facility, and GLOBALFOUNDRIES has agreed to purchase the remaining managed wafer capacity. SMP determines its managed wafer capacity each year based on forecasts provided by the Company and GLOBALFOUNDRIES. If the Company fails to purchase its required commitments, it will be required to pay SMP for the fixed costs associated with the unpurchased wafers. GLOBALFOUNDRIES is similarly obligated with respect to the wafers allotted to it. The agreement may be terminated by either party upon two years written notice. The agreement may also be terminated for material breach, bankruptcy or insolvency.

Guarantees

     Product Warranties:

     The Company warrants finished goods against defects in material and workmanship under normal use and service for periods of generally one to three years. A liability for estimated future costs under product warranties is recorded when products are shipped.

     The following table sets forth a summary of changes in product warranties:

	Accrued Warranties
	(In thousands)
Balance as of December 31, 2010	$	17,617
Accruals for warranties issued during the period		3,663
Accruals related to pre-existing warranties (including changes in estimates)		521
Settlements made during the period (in cash or in kind)		(4,440	)
Balance as of July 3, 2011	$	17,361

     Standby Letters of Credit:

     As of July 3, 2011 and December 31, 2010, the Company had outstanding obligations relating to standby letters of credit of $3.5 million and $3.9 million, respectively. Standby letters of credit are financial guarantees provided by third parties for leases, customs and certain self-insured risks. If the guarantees are called, the Company must reimburse the provider of the guarantee. The fair value of the letters of credit approximates the contract amounts. The standby letters of credit generally renew annually.

Indemnifications

     The Company is a party to a variety of agreements pursuant to which it may be obligated to indemnify the other party. Typically, these obligations arise primarily in connection with sales contracts and license agreements or the sale of assets, under which the Company customarily agrees to hold the other party harmless against losses arising from a breach of warranties, representations and covenants related to such matters as title to assets sold, validity of certain intellectual property rights, non-infringement of third-party rights, and certain income tax-related matters. In each of these circumstances, payment by the Company is typically subject to the other party making a claim to and cooperating with the Company pursuant to the procedures specified in the particular contract. This usually allows the Company to challenge the other party’s claims or, in case of breach of intellectual property representations or covenants, to control the defense or settlement of any third-party claims brought against the other party. Further, the Company’s obligations under these agreements may be limited in terms of activity (typically to replace or correct the products or terminate the agreement with a refund to the other party), duration and/or amounts. In some instances, the Company may have recourse against third parties covering certain payments made by the Company.

Legal Matters

     On December 6, 2006, Sony Ericsson Mobile Communications USA Inc. (“Sony Ericsson”) filed a lawsuit against Agere in Wake County Superior Court in North Carolina, alleging unfair and deceptive trade practices, fraud and negligent misrepresentation in connection with Agere’s engagement with Sony Ericsson to develop a wireless data card for personal computers. The complaint claimed an unspecified amount of damages and sought compensatory damages, treble damages and attorneys’ fees. In August, 2007, the case was dismissed for improper venue. On October 22, 2007, Sony Ericsson filed a lawsuit in the Supreme Court of the State of New York, New York County against LSI, raising substantially the same allegations and seeking substantially the same relief as the North Carolina proceeding. In January 2010, Sony Ericsson amended its complaint by adding claims for fraudulent concealment and gross negligence. On September 10, 2010, LSI filed a motion for summary judgment. In January 2011, LSI and Sony Ericsson held an unsuccessful mediation in this matter. On August 4, 2011, the court granted LSI’s motion and ordered the dismissal of all of Sony

16

Ericsson’s claims.

     On March 23, 2007, CIF Licensing, LLC, d/b/a GE Licensing (“GE”) filed a lawsuit against Agere in the United States District Court for the District of Delaware, asserting that Agere products infringe patents in a portfolio of patents GE acquired from Motorola. GE has asserted that four of the patents cover inventions relating to modems. GE is seeking monetary damages. Agere believes it has a number of defenses to the infringement claims in this action, including laches, exhaustion and its belief that it has a license to the patents. The court postponed hearing motions based on these defenses until after the trial, and did not allow Agere to present evidence on these defenses at trial. On February 17, 2009, the jury in this case returned a verdict finding that three of the four patents were invalid and that Agere products infringed the one patent found to be valid and awarding GE $7.6 million for infringement of that patent. The jury also found Agere’s infringement was willful, which means that the judge could increase the amount of damages up to three times its original amount. The court has not scheduled hearings on Agere’s post-trial motions related to its defenses. One of these motions seeks to have a mis-trial declared based on Agere’s belief that GE withheld evidence in discovery, which affected Agere’s ability to present evidence at trial. On October 6, 2010, a special master appointed by the court determined that GE’s actions were not wrongful and that the evidence withheld by GE was not material to the jury’s findings. Agere is challenging this determination. If the jury’s verdict is entered by the court, Agere would also expect to be required to pay interest from the date of infringing sales. If the verdict is entered, Agere intends to appeal the matter. On February 17, 2010, the court issued an order granting GE’s summary judgment motions seeking to bar Agere’s defenses of laches, exhaustion, and license and denying Agere’s summary judgment motions concerning the same defenses. On July 30, 2010, the court held that one of the patents found invalid by the jury was valid. The court also held that the February 17, 2010 order was not inconsistent with its previous ruling that Agere would be permitted to renew its laches, licensing, and exhaustion defenses, and that Agere has not been precluded from asserting them post-trial. The Company is unable to estimate the possible loss or range of loss, if any, that may be incurred with respect to this matter.

     On December 1, 2010, Rambus Inc. (“Rambus”) filed a lawsuit against LSI in the United States District Court for the Northern District of California alleging that LSI products infringe one or more of nineteen Rambus patents. These products contain either DDR-type memory controllers or certain high-speed SerDes peripheral interfaces, such as PCI Express interfaces and certain SATA and SAS interfaces. Rambus is seeking unspecified monetary damages, treble damages and costs, expenses and attorneys’ fees due to alleged willfulness, interest, and permanent injunctive relief in this action. In addition, on December 1, 2010, Rambus filed an action with the International Trade Commission (“ITC”) against LSI and five of its customers alleging that LSI products infringe six of the nineteen patents in the California case. Rambus also named five other companies and a number of their customers in the ITC action. Rambus is seeking an exclusionary order against LSI and its customers in the ITC action, which, if granted, would preclude LSI and its customers from selling these products in the U.S. The ITC instituted its investigation on December 29, 2010. LSI has filed an answer in the ITC proceedings and has requested a stay in the California case. The Company is unable to estimate the possible loss or range of loss, if any, that may be incurred with respect to this matter.

     In addition to the foregoing, the Company and its subsidiaries are parties to other litigation matters and claims in the normal course of business. The Company does not believe, based on currently available facts and circumstances, that the final outcome of these other matters, taken individually or as a whole, will have a material adverse effect on the Company’s consolidated results of operations or financial position. However, the pending unsettled lawsuits may involve complex questions of fact and law and may require the expenditure of significant funds and the diversion of other resources to defend. From time to time, the Company may enter into confidential discussions regarding the potential settlement of such lawsuits. However, there can be no assurance that any such discussions will occur or will result in a settlement. Moreover, the settlement of any pending litigation could require the Company to incur substantial costs and, in the case of the settlement of any intellectual property proceeding against the Company, may require the Company to obtain a license to a third-party’s intellectual property that could require royalty payments in the future and the Company to grant a license to certain of its intellectual property to a third party under a cross-license agreement. The results of litigation are inherently uncertain, and material adverse outcomes are possible.

     The Company has not provided accruals for any legal matters in its financial statements as potential losses for such matters are not considered probable and reasonably estimable. However, because such matters are subject to many uncertainties, the ultimate outcomes are not predictable, and there can be no assurances that the actual amounts required to satisfy alleged liabilities from the matters described above will not have a material adverse effect on its consolidated results of operations, financial position or cash flows.

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Note 15 — Discontinued Operations

     On May 6, 2011, the Company completed the sale of its external storage systems business to NetApp pursuant to the terms of the asset purchase agreement and received cash consideration of $480.0 million. The strategic decision to divest the external storage systems business was based on the Company’s expectation that long-term shareholder value can be maximized by becoming a pure-play semiconductor company. Under the terms of the agreement, NetApp purchased substantially all the assets of the Company’s external storage systems business, which developed and delivered external storage systems products and technology to a wide range of partners that provide storage solutions to end customers. As part of the asset purchase agreement, certain transitional services will be provided to NetApp for a period of up to eighteen months. The purpose of these services is to provide short-term assistance to the buyer in assuming the operations of the external storage systems business.

     Following is selected financial information included in income from discontinued operations:

	Three Months Ended					Six Months Ended
	July 3, 2011			July 4, 2010		July 3, 2011			July 4, 2010
				(In thousands)
Revenues	$	51,675		$	165,958	$	207,365		$	330,468
(Loss)/income before income taxes	$	(14,590	)	$	6,939	$	(22,500	)	$	19,413
Gain on sale of external storage systems business		260,066			—		260,066			—
(Benefit from)/provision for income taxes		(19,900	)		2,189		(19,418	)		6,491
Income from discontinued operations	$	265,376		$	4,750	$	256,984		$	12,922

     During the three and six months ended July 3, 2011, the Company recorded write-downs of $9.5 million and $20.4 million, respectively, related to assets associated with discontinued operations. Further, the Company released $19.7 million of deferred tax liabilities related to tax deductible goodwill in connection with the sale of the external storage systems business during the three months ended July 3, 2011.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     This management’s discussion and analysis should be read in conjunction with the other sections of this Form 10-Q, including Part 1, “Item 1. Financial Statements.”

     Where more than one significant factor contributed to changes in results from year to year, we have quantified these factors throughout Management’s Discussion and Analysis of Financial Condition and Results of Operations where practicable and material to understanding the discussion.

OVERVIEW

     We design, develop and market complex, high-performance storage and networking semiconductors. We provide silicon-to-system solutions that are used at the core of products that create, store, consume and transport digital information. We offer a broad portfolio of capabilities, including custom and standard product integrated circuits used in hard disk drives, solid state drives, high-speed communications systems, computer servers, storage systems and personal computers. We also offer redundant array of independent disks, or RAID, adapters for computer servers and RAID software applications.

     We sell our integrated circuits for server and storage applications principally to makers of hard disk drives, solid state drives and computer servers. We sell our integrated circuits for networking applications principally to makers of devices used in computer and telecommunications networks and, to a lesser extent, to makers of personal computers. We also generate revenue by licensing other entities to use our intellectual property.

     We derive the majority of our revenue from sales of products for the hard disk drive, server, and networking equipment end markets. We believe that these markets offer us attractive opportunities because of the growing demand to create, store, manage and move digital content. We believe that this growth is occurring as a result of a number of trends, including:

• The increasing popularity of mobile devices such as smart phones and media tablets, and the increasing use of the internet for streaming media, such as videos and music, which are driving the need for more network capacity;

• Consumer and business demand for hard disks to store increasing amounts of digital data, including music, video, pictures, and medical and other business records; and

• Enterprises refreshing their data centers to provide higher levels of business support and analytics, which drives demand for new servers and storage systems and associated equipment.

     Our revenues depend on market demand for these types of products and our ability to compete in highly competitive markets. We face competition not only from makers of products similar to ours, but also from competing technologies. For example, we see the development of solid state drives based on flash memory rather than the spinning platters used in hard disk drives as a long-term potential competitor to certain types of hard disk drives, and we are focusing development efforts in that area.

     On May 6, 2011, we completed the sale of our external storage systems business to NetApp for $480.0 million in cash. That business sold external storage systems, primarily to original equipment manufacturers, or OEMs, who resold these products to end customers under their own brand name. We have reflected the external storage systems business as discontinued operations in our statements of operations and, as such, the results of that business have been excluded from all line items other than “income from discontinued operations” for all periods presented. We believe that as a result of this sale, we are seeing increasing interest in our products from other external storage systems OEMs who previously were reluctant to buy our products because they viewed us as a competitor.

     During the second quarter of 2011, we reported revenue of $500.6 million, compared to $473.4 million for the second quarter of 2010. For the six months ended July 3, 2011, we reported revenue of $973.9 million, compared to $946.1 million for the six months ended July 4, 2010. We reported net income of $293.8 million, or $0.48 per diluted share for the second quarter of 2011, compared to $7.4 million, or $0.01 per diluted share, for the second quarter of 2010. Net income for the second quarter of 2011 included a $260.1 million gain on the sale of our external storage systems business. For the six months ended July 3, 2011, we reported net income of $303.9 million, or $0.49 per diluted share, compared to $30.0 million, or $0.05 per diluted share, for the six months ended July 4, 2010.

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     On March 9, 2011, our Board of Directors authorized a stock repurchase program of up to $750.0 million of our common stock. Through July 3, 2011, we had repurchased 56.3 million shares for $396.8 million under this program. We anticipate continuing to repurchase stock under current market conditions.

     We ended the second quarter of 2011 with cash and cash equivalents, together with short-term investments, of $906.5 million, an improvement of $229.8 million from the end of 2010, primarily attributable to the cash we received from the sale of our external storage systems business.

     The price of commodities used in the production of semiconductors has been increasing this year and has had an adverse impact on our gross margins. For example, we use gold in the production of semiconductors and the market price of gold has increased significantly during 2011. We do not currently enter into hedging transactions to reduce income statement volatility due to changes in the prices of gold or other commodities, although we may choose to do so in the future. Further increases in commodity costs may also have an adverse impact on our gross margins.

     In the second quarter of 2011, our largest customer, Seagate, accounted for approximately 24% of our total revenues. We anticipate that Seagate will account for an increasing percentage of our revenues in the near term as we gain share and ramp new products at Seagate. We believe that in the longer term, we will ramp new products at other customers for our semiconductor products, which will reduce our dependence on Seagate from these increased levels.

     As we look forward into the second half of 2011, we are focused on a number of key objectives, including:

• Successfully delivering products to customers to support share gains and new product ramps we anticipate;

• Improving our gross margins and controlling operating expenses to drive improved financial performance;

• Meeting or exceeding our development, product quality and delivery commitments to our customers;

• Identifying attractive opportunities for future products, particularly in areas that are adjacent to technologies where we have strong capabilities;

• Developing leading-edge new technologies; and

• Developing the skills of our workforce.

RESULTS OF OPERATIONS

Revenues

     Three months ended July 3, 2011 compared to the three months ended July 4, 2010:

	Three Months Ended
	July 3, 2011		July 4, 2010		$ Change		% Change
	(Dollars in millions)
Revenues	$	500.6	$	473.4	$	27.2		5.7	%

     The increase in revenues was primarily attributable to increases in market share at, and increased demand from, existing customers for semiconductors used in storage product applications and increased demand for our server RAID adapters. These increases were offset in part by a decrease in unit sales from semiconductors used in networking product applications, primarily products used in wireless networking applications.

     Six months ended July 3, 2011 compared to the six months ended July 4, 2010:

	Six Months Ended
	July 3, 2011		July 4, 2010		$ Change		% Change
	(Dollars in millions)
Revenues	$	973.9	$	946.1	$	27.8		2.9	%

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     The increase in revenues was primarily attributable to increases in market share at, and increased demand from, existing customers for semiconductors used in storage product applications, increased demand for our server RAID adapters and higher revenues from the licensing of our intellectual property. These increases were offset in part by a decrease in unit sales from semiconductors used in networking product applications, primarily products used in wireless networking applications.

     Significant Customers:

     The following table provides information about our one customer that accounted for 10% or more of consolidated revenues:

	Three Months Ended						Six Months Ended
	July 3, 2011			July 4, 2010			July 3, 2011			July 4, 2010
Revenues		24	%		19	%		22	%		20	%

Revenues by Geography

     The following table summarizes our revenues by geography based on the ordering location of the customer. Because we sell our products primarily to other sellers of technology products and not to end-users, the information in the table below may not accurately reflect geographic end-demand for our products.

     Three months ended July 3, 2011 compared to the three months ended July 4, 2010:

	Three Months Ended
	July 3, 2011		July 4, 2010		$ Change			% Change
	(Dollars in millions)
North America*	$	122.9	$	110.3	$	12.6			11.4	%
Asia:
China		120.3		79.4		40.9			51.5	%
Singapore		61.6		75.6		(14.0	)		(18.5	)%
Taiwan		69.0		73.6		(4.6	)		(6.3	)%
Other		79.4		79.1		0.3			0.4	%
Total Asia		330.3		307.7		22.6			7.3	%
Europe and the Middle East		47.4		55.4		(8.0	)		(14.4	)%
Total	$	500.6	$	473.4	$	27.2			5.7	%

* Primarily the United States.

     The increase in revenues in North America was primarily attributable to increased unit sales of server RAID adapters. The increase in revenues in Asia was primarily attributable to increased unit sales of semiconductors used in storage product applications. The decrease in revenues in Europe and the Middle East was primarily attributable to decreased unit sales of semiconductors used in storage product applications, offset in part by increased unit sales of server RAID adapters.

     Six months ended July 3, 2011 compared to the six months ended July 4, 2010:

	Six Months Ended
	July 3, 2011		July 4, 2010		$ Change			% Change
	(Dollars in millions)
North America*	$	243.8	$	200.2	$	43.6			21.8	%
Asia:
China		215.3		166.1		49.2			29.6	%
Singapore		118.8		152.4		(33.6	)		(22.0	)%
Taiwan		151.3		156.0		(4.7	)		(3.0	)%
Other		147.6		165.9		(18.3	)		(11.0	)%
Total Asia		633.0		640.4		(7.4	)		(1.2	)%
Europe and the Middle East		97.1		105.5		(8.4	)		(8.0	)%
Total	$	973.9	$	946.1	$	27.8			2.9	%

* Primarily the United States.

     The increase in revenues in North America was primarily attributable to increased unit sales of server RAID adapters and higher revenues from the licensing of our intellectual property. The decrease in revenues in Asia was primarily attributable to a decrease in unit sales from semiconductors used in networking product applications,

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primarily products used in wireless networking applications, partially offset by increased demand for semiconductors used in storage product applications. The decrease in revenues in Europe and the Middle East was primarily attributable to decreased unit sales of semiconductors used in storage product applications, offset in part by increased unit sales of server RAID adapters.

Gross Profit Margin

     Three months ended July 3, 2011 compared to the three months ended July 4, 2010:

	Three Months Ended
	July 3, 2011			July 4, 2010			$ Change		% Change
	(Dollars in millions)
Gross profit	$	237.6		$	224.8		$	12.8		5.7	%
% of revenues		47.5	%		47.5	%

     Gross margins as a percentage of revenues remained flat as a result of lower amortization of identified intangible assets offset by higher costs for commodities used in the manufacture of our products and less favorable product mix in the second quarter of 2011 as compared to the second quarter of 2010.

Six months ended July 3, 2011 compared to the six months ended July 4, 2010:

	Six Months Ended
	July 3, 2011			July 4, 2010			$ Change		% Change
	(Dollars in millions)
Gross profit	$	461.8		$	439.6		$	22.2		5.1	%
% of revenues		47.4	%		46.5	%

     Gross margins as a percentage of revenues increased primarily as a result of lower amortization of identified intangible assets and higher revenues from the licensing of our intellectual property, which generally have higher gross margins than revenues from the rest of our business, offset in part by higher costs for commodities used in the manufacture of our products and less favorable product mix during the first half of 2011 as compared to the first half of 2010.

Research and Development

     Three months ended July 3, 2011 compared to the three months ended July 4, 2010:

	Three Months Ended
	July 3, 2011			July 4, 2010			$ Change		% Change
	(Dollars in millions)
Research and development	$	145.9		$	142.9		$	3.0		2.1	%
% of revenues		29.1	%		30.2	%

     R&D expenses increased primarily due to higher compensation-related expenses and facility costs as a result of headcount additions to support development efforts, offset in part by lower costs for shared development engineering projects due to higher contributions from certain customers and lower spending on materials associated with existing R&D projects.

Six months ended July 3, 2011 compared to the six months ended July 4, 2010:

	Six Months Ended
	July 3, 2011			July 4, 2010			$ Change		% Change
	(Dollars in millions)
Research and development	$	288.2		$	281.7		$	6.5		2.3	%
% of revenues		29.6	%		29.8	%

     R&D expenses increased primarily due to higher compensation-related expenses and facility costs as a result of headcount additions, offset in part by lower R&D costs for shared development engineering projects due to higher contributions from certain customers and lower spending on materials associated with existing R&D projects.

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Selling, General and Administrative

     Three months ended July 3, 2011 compared to the three months ended July 4, 2010:

	Three Months Ended
	July 3, 2011			July 4, 2010			$ Change		% Change
	(Dollars in millions)
Selling, general and administrative	$	71.8		$	70.2		$	1.6		2.3	%
% of revenues		14.3	%		14.8	%

     SG&A expenses increased primarily due to an increase in litigation costs, offset in part by decreases in general and administrative expenses as a result of our continuing focus on control of expenses.

     Six months ended July 3, 2011 compared to the six months ended July 4, 2010:

	Six Months Ended
	July 3, 2011			July 4, 2010			$ Change		% Change
	(Dollars in millions)
Selling, general and administrative	$	140.7		$	140.5		$	0.2		0.1	%
% of revenues		14.4	%		14.9	%

     SG&A expenses increased primarily due to an increase in litigation costs, offset in part by decreases in general and administrative expenses as a result of our continuing focus on control of expenses.

Restructuring of Operations and Other Items, net

     The following table summarizes items included in restructuring of operations and other items, net from continuing operations:

	Three Months Ended					Six Months Ended
	July 3, 2011			July 4, 2010		July 3, 2011			July 4, 2010
	(In millions)
Lease and contract terminations	$	1.9	(a)	$	0.1	$	3.6	(a)	$	1.0
Employee severance and benefits		0.3	(b)		4.8		1.9	(b)		5.3
Total restructuring expenses		2.2			4.9		5.5			6.3
Other items		(13.1	)(c)		0.2		(13.6	)(c)		0.4
Total restructuring of operations and other items, net	$	(10.9	)	$	5.1	$	(8.1	)	$	6.7

(a)	Primarily relates to changes in estimates and changes in time value of accruals for previously accrued facility lease exit costs.
(b)	Primarily relates to restructuring actions taken during the first half of 2011 as we continue to streamline our operations.
(c)	Primarily relates to the reversal of a $14.5 million sales and use tax related liability as a result of concluding various audits, partially offset by $1.3 million of costs associated with the transition service agreements entered into with NetApp in connection with the sale of the external storage systems business.

Interest Expense, Interest Income and Other, net

     The following table summarizes interest expense and components of interest income and other, net:

	Three Months Ended					Six Months Ended
	July 3, 2011		July 4, 2010			July 3, 2011		July 4, 2010
	(In millions)
Interest expense	$	—	$	(1.7	)	$	—	$	(5.6	)
Interest income		3.3		3.6			6.7		7.2
Other income/(expense), net		3.2		1.0			4.0		(11.4	)
Total	$	6.5	$	2.9		$	10.7	$	(9.8	)

     Interest expense decreased by $1.7 million and $5.6 million for the three and six months ended July 3, 2011, respectively, as compared to the three and six months ended July 4, 2010, as a result of the repayment of our 4% Convertible Subordinated Notes in May 2010.

     Interest income decreased by $0.3 million for the three months ended July 3, 2011 as compared to the three months ended July 4, 2010, primarily as a result of lower interest rates, offset in part by higher cash balances in 2011. Interest income decreased by $0.5 million for the six months ended July 3, 2011 as compared to the six months ended July 4, 2010, primarily as a result of lower interest rates in 2011.

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     Other income, net, for the three and six months ended July 3, 2011, primarily included $3.0 million of income for services provided under the transition service agreements entered into with NetApp in connection with the sale of the external storage systems business. Other expense, net, for the six months ended July 4, 2010, primarily included $11.6 million of other than temporary impairment charges incurred during the first quarter of 2010 for certain non-marketable equity securities.

Provision for/Benefit from Income Taxes

     We recorded income tax provisions from continuing operations of $8.9 million and $4.8 million for the three and six months ended July 3, 2011, respectively, and an income tax provision from continuing operations of $6.9 million and an income tax benefit from continuing operations of $16.2 million for the three and six months ended July 4, 2010, respectively.

     The income tax provision from continuing operations for the six months ended July 3, 2011 is presented net of a reversal of $8.2 million in liabilities for uncertain tax positions, which included previously unrecognized tax benefits of $4.8 million and interest and penalties of $3.4 million, as a result of the expiration of statutes of limitations in multiple jurisdictions.

     The income tax benefit from continuing operations for the six months ended July 4, 2010 included a reversal of $27.9 million in liabilities for uncertain tax positions, which included previously unrecognized tax benefits of $12.2 million and interest and penalties of $15.7 million, as a result of the expiration of statutes of limitations in multiple jurisdictions.

     We compute our tax provision using an estimated annual tax rate. We exclude certain loss jurisdictions from the computation of the estimated annual rate when no benefit can be realized on those losses. With the exception of certain foreign jurisdictions, we believe it is not more likely than not that the future benefit of the deferred tax assets will be realized.

Discontinued Operations

     Following is selected financial information included in income from discontinued operations:

	Three Months Ended					Six Months Ended
	July 3, 2011			July 4, 2010		July 3, 2011			July 4, 2010
	(In millions)
Revenues	$	51.7		$	166.0	$	207.4		$	330.5
(Loss)/income before income taxes	$	(14.6	)	$	6.9	$	(22.5	)	$	19.4
Gain on sale of external storage systems business		260.1			—		260.1			—
(Benefit from)/provision for income taxes		(19.9	)		2.1		(19.4	)		6.5
Income from discontinued operations	$	265.4		$	4.8	$	257.0		$	12.9

     During the three and six months ended July 3, 2011, we recorded write-downs of $9.5 million and $20.4 million, respectively, related to assets associated with discontinued operations. Further, we released $19.7 million of deferred tax liabilities related to tax deductible goodwill in connection with the sale of the external storage systems business during the three months ended July 3, 2011.

FINANCIAL CONDITION, CAPITAL RESOURCES AND LIQUIDITY

     Cash, cash equivalents and short-term investments increased to $906.5 million as of July 3, 2011 from $676.7 million as of December 31, 2010. The increase was mainly due to proceeds from the sale of our external storage systems business and cash inflows generated from operating activities, offset in part by cash outflows for financing and other investing activities, as described below.

Working Capital

     Working capital increased by $199.9 million to $979.1 million as of July 3, 2011 from $779.2 million as of December 31, 2010. The increase was primarily attributable to the following:

• Cash, cash equivalents and short-term investments increased by $229.8 million primarily due to the proceeds from the sale of our external storage systems business on May 6, 2011;

• Accrued salaries, wages and benefits decreased by $38.6 million primarily as a result of timing differences in the payment of salaries, benefits and performance-based compensation, and the payout of accrued compensation-related costs to employees transferred to NetApp as part of the sale of the external storage systems business;

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• Assets held for sale increased by $18.1 million primarily as a result of the reclassification of $16.2 million of land in Gresham, Oregon from held and used to held for sale because the held for sale criteria were met during the quarter ended July 3, 2011;

• Other accrued liabilities decreased by $9.9 million due to a reduction in accruals as a result of the sale of the external storage systems business; and

• Inventories increased by $7.0 million primarily due to increased inventory purchases during the second quarter of 2011 in anticipation of expected increases in product demand in the second half of 2011, offset in part by inventory sold to NetApp as part of the sale of the external storage systems business.

     These increases in working capital were offset in part by the following:

• Accounts receivable decreased by $92.5 million primarily as a result of lower revenues from discontinued operations due to the sale of the external storage systems business; and

• Accounts payable increased by $11.5 million primarily due to increased inventory purchases, as inventory purchased to support continuing operations exceeded the reduction in inventory purchases resulting from the sale of the external storage systems business.

     Working capital increased by $58.3 million to $789.4 million as of July 4, 2010 from $731.1 million as of December 31, 2009. The increase was primarily attributable to the following:

• Current portion of long-term debt decreased by $350.0 million as a result of the repayment of our 4% Convertible Subordinated Notes upon their maturity in May 2010;

• Inventories increased by $22.2 million as a result of a slowdown in customer purchases in the last month of the second quarter of 2010;

• Accounts payable decreased by $18.9 million primarily due to the normal timing of invoice receipts and payments; and

• Other accrued liabilities decreased by $17.9 million as a result of the utilization of restructuring reserves, payments of taxes and decreases in other accruals related to our operations.

     These increases in working capital were offset in part by the following:

• Cash, cash equivalents and short-term investments decreased by $292.2 million;

• Accounts receivable decreased by $31.9 million primarily as a result of an improvement in collections; and

• Accrued salaries, wages and benefits increased by $22.0 million primarily as a result of timing differences in the payment of salaries and benefits and the addition of performance-based compensation accruals, which we reduced in 2009 in response to the global economic downturn.

Cash Provided by Operating Activities

     During the six months ended July 3, 2011, we generated $146.3 million of cash from operating activities as a result of the following:

• Net income adjusted for non-cash items, including depreciation and amortization of $102.3 million and stock-based compensation expense of $27.1 million. The non-cash items and other non-operating adjustments are quantified in our condensed consolidated statements of cash flows included in Item 1;

• Offset in part by a net decrease of $30.2 million in assets and liabilities, including changes in working capital components, from December 31, 2010 to July 3, 2011, as discussed above.

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     During the six months ended July 4, 2010, we generated $173.4 million of cash from operating activities as a result of the following:

• Net income adjusted for non-cash items, including depreciation and amortization of $133.3 million and stock-based compensation expense of $34.9 million. The non-cash items and other non-operating adjustments are quantified in our condensed consolidated statements of cash flows included in Item 1;

• Offset in part by a net decrease of $37.8 million in assets and liabilities, including changes in working capital components, from December 31, 2009 to July 4, 2010, as discussed above.

Cash Provided by/Used in Investing Activities

     Cash provided by investing activities for the six months ended July 3, 2011 was $434.2 million. The investing activities for the six months ended July 3, 2011 were the following:

• Proceeds from the sale of our external storage systems business, net of transaction fees, of $475.2 million;

• Purchases of property, equipment and software, net of proceeds from sales, totaling $36.3 million; and

• Purchases of available-for-sale debt securities and other investments, net of proceeds from maturities and sales, of $4.7 million.

     Cash used in investing activities for the six months ended July 4, 2010 was $28.2 million. The investing activities for the six months ended July 4, 2010 were the following:

• Purchases of property, equipment and software, net of proceeds from sales, totaling $48.2 million; and

• Proceeds from maturities and sales of available-for-sale debt and other investments, net of purchases, of $20.0 million.

     We expect capital expenditures to be approximately $55 million in 2011. In recent years, we have reduced our level of capital expenditures as a result of our focus on establishing strategic supplier alliances with foundry semiconductor manufacturers and with third-party assembly and test operations, which enables us to have access to advanced manufacturing capacity while reducing our capital spending requirements.

Cash Used in Financing Activities

     Cash used in financing activities for the six months ended July 3, 2011 was $345.9 million, as compared to $409.1 million for the six months ended July 4, 2010. The primary financing activities during the six months ended July 3, 2011 were the use of $396.8 million to repurchase our common stock, offset in part by proceeds of $50.9 million from issuances of common stock under our employee stock plans. On March 9, 2011, our Board of Directors authorized a new stock repurchase program of up to $750.0 million of our common stock. As of July 3, 2011, $353.2 million remained available under this stock repurchase program.

     The primary financing activities during the six months ended July 4, 2010 were the use of $350 million to repay all of our outstanding 4% Convertible Subordinated Notes upon their maturity on May 15, 2010 and the use of $80.7 million to repurchase our common stock, which were offset in part by the proceeds of $21.6 million from issuances of common stock under our employee stock plans.

     We do not currently pay, and do not anticipate paying in the foreseeable future, any cash dividends to our stockholders.

     Cash, cash equivalents and short-term investments are our primary source of liquidity. We believe that our existing liquid resources and cash generated from operations will be adequate to meet our operating and capital requirements and other obligations for more than the next 12 months. We may, however, find it desirable to obtain additional debt or equity financing. Such financing may not be available to us at all or on acceptable terms if we determine that it would be desirable to obtain additional financing.

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CONTRACTUAL OBLIGATIONS

     The following table summarizes our contractual obligations as of July 3, 2011:

	Payments Due by Period
	Less Than 1 Year		1-3 Years		4-5 Years		After 5 Years		Other			Total
	(In millions)
Operating lease obligations	$	44.3	$	44.5	$	11.5	$	2.9	$	—		$	103.2
Purchase commitments		386.4		10.2		—		—		—			396.6
Unrecognized tax positions plus interest and penalties		—		—		—		—		85.1	**		85.1
Pension contributions		44.6		*		*		*		*			44.6
Total	$	475.3	$	54.7	$	11.5	$	2.9	$	85.1		$	629.5

*

We have pension plans covering substantially all former Agere U.S. employees, excluding management employees hired after June 30, 2003. We also have pension plans covering certain international employees. Although additional future contributions will be required, the amount and timing of these contributions will be affected by actuarial assumptions, the actual rate of return on plan assets, the level of market interest rates, and the amount of voluntary contributions to the plans. The amount shown in the table represents our planned contributions to our pension plans for the remainder of 2011. Because any contributions for 2012 and later will depend on the value of the plan assets in the future and thus are uncertain, we have not included any amounts for 2012 and beyond in the above table.

**

This amount represents the non-current tax payable obligation. We are unable to make a reasonably reliable estimate as to when cash settlement with a taxing authority may occur.

Operating Lease Obligations

     We lease real estate and certain non-manufacturing equipment under non-cancellable operating leases. We also include non-cancellable obligations under certain software licensing arrangements in this category.

Purchase Commitments

     We maintain purchase commitments with certain suppliers, primarily for raw materials and manufacturing services and for some non-production items. Purchase commitments for inventory materials are generally restricted to a forecasted time horizon as mutually agreed upon between the parties. This forecasted time horizon can vary for different suppliers.

Uncertain Tax Positions

     As of July 3, 2011, we had $138.6 million of unrecognized tax benefits, for which we are unable to make a reasonably reliable estimate as to when cash settlement with a taxing authority may occur. It is reasonably possible that the total amount of unrecognized tax benefits will increase or decrease in the next 12 months. Such changes could occur based on the normal expiration of statutes of limitations or the possible conclusion of ongoing tax audits in various jurisdictions around the world. If those events occur within the next 12 months, we estimate that the unrecognized tax benefits, plus accrued interest and penalties, could decrease by up to $18.5 million.

Standby Letters of Credit

     As of July 3, 2011 and December 31, 2010, we had outstanding obligations relating to standby letters of credit of $3.5 million and $3.9 million, respectively. Standby letters of credit are financial guarantees provided by third parties for leases, customs and certain self-insured risks. If the guarantees are called, we must reimburse the provider of the guarantee. The fair value of the letters of credit approximates the contract amount. The standby letters of credit generally renew annually.

CRITICAL ACCOUNTING POLICIES

     There have been no significant changes in our critical accounting estimates or significant accounting policies during the six months ended July 3, 2011 as compared to the discussion in Part II, Item 7 and in Note 1 to our financial statements in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2010.

27

RECENT ACCOUNTING PRONOUNCEMENTS

     The information contained in Note 1 to our financial statements in Item 1 under the heading “Recent Accounting Pronouncements” is incorporated by reference into this Item 2.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

     There have been no significant changes in the market risk disclosures during the six months ended July 3, 2011 as compared to the discussion in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2010.

Item 4. Controls and Procedures

     Evaluation of Disclosure Controls and Procedures: The Securities and Exchange Commission defines the term “disclosure controls and procedures” to mean a company’s controls and other procedures that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act is accumulated and communicated to management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required or necessary disclosures. Our chief executive officer and chief financial officer have concluded, based on the evaluation of the effectiveness of the disclosure controls and procedures by our management with the participation of our chief executive officer and chief financial officer, as of the end of the period covered by this report, that our disclosure controls and procedures were effective for this purpose.

     Changes in Internal Control: During the second quarter of 2011, we did not make any change in our internal control over financial reporting that materially affected or is reasonably likely to materially affect our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

     This information is included under the caption “Legal Matters” in Note 14 to our financial statements in Item 1 of Part I.

Item 1A. Risk Factors

     Set forth below are risks and uncertainties, many of which are discussed in greater detail in our Annual Report on Form 10-K for the year ended December 31, 2010, that, if they were to occur, could materially adversely affect our business or could cause our actual results to differ materially from the results contemplated by the forward-looking statements in this report and other public statements we make:

• As a result of the earthquake and tsunami that affected Japan in early March 2011, and the events at the Fukushima Dai-ichi nuclear plant, it is possible that demand from our customers will be affected, which could have an adverse impact on our business.

     On March 11, 2011, Japan experienced a 9.0 magnitude earthquake, which triggered a tsunami that led to widespread damage and business interruption. Following the earthquake, the cooling system at the Fukushima Daiichi nuclear generating plant failed and the plant experienced significant emissions of radiation. As a result of the earthquake, a number of factories in Japan were forced to shut down and the country experienced rolling blackouts, further affecting industrial production.

     We do not maintain significant operations in Japan and do not use semiconductor foundries in Japan. We believe that we have addressed supplier issues related to the events in Japan and that our principal risk with respect to the events in Japan is that our customers will require less of our products. We have been working closely with our customers to understand their needs. We have some customers with significant operations in Japan and demand from these customers may be reduced if the customers’ operations are curtailed. Our revenues may also be adversely affected if any of our customers are unable to obtain sufficient parts from other suppliers or if they experience reduced demand from their customers.

• We depend on a small number of customers. The loss of, or a significant reduction in revenue from, any of these customers would harm our results of operations.

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• If we fail to keep pace with technological advances, or if we pursue technologies that do not become commercially accepted, customers may not buy our products and our results of operations may be harmed.

• We operate in intensely competitive markets, and our failure to compete effectively would harm our results of operations.

• Customer orders and ordering patterns can change quickly, making it difficult for us to predict our revenues and making it possible that our actual revenues may vary materially from our expectations, which could harm our results of operations and stock price.

• We depend on outside suppliers to manufacture, assemble, package and test our products; accordingly, any failure to secure and maintain sufficient manufacturing capacity at attractive prices or to maintain the quality of our products could harm our business and results of operations.

• Failure to qualify our products or our suppliers’ manufacturing lines with key customers could harm our business and results of operations.

• Any defects in our products could harm our reputation, customer relationships and results of operations.

• Our pension plans are underfunded, and may require significant future contributions, which could have an adverse impact on our business.

• We may be subject to intellectual property infringement claims and litigation, which could cause us to incur significant expenses or prevent us from selling our products.

• If we are unable to protect or assert our intellectual property rights, our business and results of operations may be harmed.

• If we are unable to reduce costs associated with the external storage systems business that we sold to NetApp, our results of operations may be adversely affected.

     Following the sale of our external storage systems business, we are providing services and office space to NetApp on a temporary basis and are compensated for doing so by NetApp. Once we stop providing those services and office space to NetApp, we may have systems and office space that we must pay for but do not need for our business. If we are not able to eliminate these costs promptly, our results of operations may be adversely affected.

• We are exposed to legal, business, political and economic risks associated with our international operations.

• We use indirect channels of product distribution over which we have limited control.

• We may engage in acquisitions and strategic alliances, which may not be successful and could harm our business and operating results.

• The semiconductor industry is highly cyclical, which may cause our operating results to fluctuate.

• Our failure to attract, retain and motivate key employees could harm our business.

• Our operations and our suppliers’ operations are subject to natural disasters and other events outside of our control that may disrupt our business and harm our operating results.

• We are subject to various environmental laws and regulations that could impose substantial costs on us and may harm our business.

• Our blank check preferred stock and Delaware law contain provisions that may inhibit potential acquisition bids, which may harm our stock price, discourage merger offers or prevent changes in our management.

• Class action litigation due to stock price volatility or other factors could cause us to incur substantial costs and divert our management’s attention and resources.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

     The following table contains information about the repurchases of our common stock during the quarter ended July 3, 2011.

Issuer Purchases of Equity Securities

					Total Number of
					Shares Purchased		Dollar Value of Shares
					as Part of		that May Yet Be
	Total Number of Shares		Average Price		Publicly Announced		Purchased Under
Period	Purchased		Paid per Share		Plans or Programs		the Programs
April 4 — May 3, 2011		459,396	$	6.99		459,396	$	650,000,167
May 4 — June 3, 2011		21,404,174		7.43		21,404,174		491,003,374
June 4 — July 3, 2011		19,768,016		6.97		19,768,016		353,208,822
Total		41,631,586	$	7.21		41,631,586	$	353,208,822

     On March 9, 2011, our Board of Directors authorized the repurchase of up to $750 million of our common stock. The repurchases reported in the table above were made pursuant to this authorization.

Item 6. Exhibits

     See the Exhibit Index, which follows the signature page to this report.

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		LSI CORPORATION (Registrant)
Date: August 12, 2011	By	/s/ Bryon Look
		Bryon Look
		Executive Vice President, Chief Financial Officer and Chief Administrative Officer

31

EXHIBIT INDEX

10.1	Separation Agreement with Phillip Bullinger
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350
101.INS	XBRL instance document
101.SCH	XBRL taxonomy extension schema document
101.CAL	XBRL taxonomy extension calculation linkbase document
101.LAB	XBRL taxonomy extension label linkbase document
101.PRE	XBRL taxonomy extension presentation linkbase document
101.DEF	XBRL taxonomy extension definition linkbase document

32

EX-10.1

Exhibit 10.1

LSI Corporation	1 800 372 2447
1621 Barber Lane	lsi.com
Milpitas, CA 95035

[Execution Copy]

April 15, 2011

Phil Bullinger
LSI Corporation
4165 Shackleford Road
Norcross, GA 30093

Re:  Performance Bonus and Benefits Summary Pursuant to
the LSI Corporation Severance Policy for Executive Officers

Dear Phil,

The purpose of this letter is to detail the terms of (1) a special performance and retention bonus (the “Performance Bonus”) developed for you in order to provide you with a financial incentive to remain an active employee in good standing with LSI and to achieve the performance goals set forth in this letter and (2) your separation under the LSI Corporation Severance Policy for Executive Officers.

I.
Performance Bonus

As you know, LSI recently entered into an agreement to sell its External Storage Systems Business (Engenio). As the leader of the Engenio business your contributions to the successful implementation and execution of the proposed sale and your continued focus on meeting the business objectives pending the completion of the sale are of critical importance to LSI, to the value of the Engenio business and for our customers, employees and shareholders. Therefore, it is important to stay focused on delivering on our commitments to our customers and to each other. Because your continued performance and contributions are critical, we are pleased to provide you with an opportunity to receive a Performance Bonus as set forth below.

Performance Bonus Amount. You will be eligible to receive a Performance Bonus equal to $212,500 if (a) you remain in your current position as an employee in good standing with LSI through May 13, 2011 (the “Retention Date”), and (b) you achieve the performance goals set forth on Annex A (the “Performance Goals”).

Payment Date and Other Terms and Conditions. The Performance Bonus, if earned, will be paid in a single lump sum payment within thirty (30) days following the Retention Date. If you do not achieve the Performance Goals or if at any time prior to Retention Date, (1) you voluntarily terminate your employment with LSI, or (2) your employment with LSI is terminated for cause, then your right to receive the Performance Bonus payment shall lapse. If LSI terminates your employment without cause prior to the Retention Date (whether or not the Performance Goals are achieved), then the Performance Bonus shall be deemed to be earned, and will be paid to you in a single lump sum within thirty (30) days of any such termination.

Mr. Phil Bullinger
April 15, 2011 Page -2-

For the purpose of any benefit calculations (i.e., 401(k), ESPP, etc.), the Performance Bonus payment will not be included in any benefit calculations, and the payment shall be subject to all applicable taxes, which shall be deducted from any payment that is made to you.

Employment at Will. Please be aware that this letter is not an employment contract and should not be construed or interpreted as creating an implied or expressed guarantee of continued employment. The employment relationship is by mutual consent. This means that you have the right to terminate your employment at any time and for any reason. Likewise, LSI reserves the right to terminate your employment on the same basis.

Compensation Committee Approval. This terms and conditions set forth in this letter relating to your Performance Bonus are contingent upon the approval of the Compensation Committee of our Board of Directors.

II.
Separation under the LSI Corporation Severance Policy

Following, and contingent upon, the sale of the Engenio business, which is expected to occur on or about May, 2011, your employment with LSI will terminate. For the avoidance of doubt, it is understood and agreed that the separation benefits contained in this letter are specifically contingent upon the completion of the sale of the Engenio Business and the termination of your employment following such sale.

Upon termination, you will be eligible for benefits pursuant to the LSI Corporation Severance Policy for Executive Officers provided that you execute and not revoke the General Waiver and Release Agreement attached hereto as Annex B. This letter contains the entire agreement between LSI and you regarding the termination of your employment and fully supersedes and replaces in its entirety the provisions of any other agreement relating to your employment and termination. All such other agreements, written or oral, are hereby terminated and replaced with this letter.

Termination Date. You acknowledge and agree that, effective as of the later of (a) May 13, 2011, and (b) the closing of the sale of the Engenio business to NetApp, Inc. (the “Termination Date”), you hereby resign all of your positions with LSI, including, without limitation, your position as Executive Vice President and General Manager, Engenio Storage Group, and any other positions (including directorships) with other entities that are affiliated with LSI. You agree to execute any documents that may be necessary or appropriate to effect or to memorialize any resignations from LSI or its affiliates contemplated by this letter.

Severance Payment. Following the Termination Date, LSI shall make a lump-sum payment to you equal to $425,000.

Benefits. You and your eligible dependents shall continue to be covered by LSI’s group benefit plans (e.g., medical, dental, prescription, vision care, and life insurance), at LSI’s expense, except for the employee-paid portion of such premiums, until the last day of the month in which the Termination Date falls, to the same extent that you and your dependents were covered by said plans as of the date of this Agreement.

Mr. Phil Bullinger
April 15, 2011 Page -3-

If you desire to continue coverage, pursuant to COBRA for medical, dental, prescription and vision care, after the Termination Date, you may do so at your own expense; provided, however, that LSI will pay for COBRA coverage at the same level of coverage that was in effect for the you and you eligible dependents immediately prior to the Termination Date (such payments shall not include COBRA coverage with respect to the company’s health care spending account) for twelve (12) months, at no charge to you for so long as you are not employed by another company during such time. Thereafter, you (and, if applicable, your eligible dependents) may continue COBRA coverage at your own expense in accordance with COBRA. You understand and agree that you must complete a COBRA application in order to receive the extension of health benefits beyond the Termination Date.

Your group basic life insurance and accidental death and dismemberment coverage will continue to the same extent the you and the your dependents were covered by said plans as of the date of this Agreement at LSI’s expense for a two (2) month period following the end of the month in which the Termination Date falls. You will have the option to convert the basic life insurance policy to an individual policy at your own expense at the rates supplied by the underwriting company within 31 days following the paid-up benefits extension period by submitting the conversion application provided by the insurance carrier. Your accidental death and dismemberment coverage is not available for conversion to an individual policy.

Stock Rights. You will not be eligible to receive any further stock option or restricted stock unit grants after the Termination Date. However, existing stock option and restricted stock unit grants will continue to vest, until the Termination Date. All of your rights under existing stock options and restricted stock units will be governed pursuant the agreements and plans under which they were granted.

Expense Reimbursement. You will submit your final reasonable and customary travel and other expenses reports to LSI on or prior to the Termination Date.

* * *

The above reflects the terms of the agreement between you and LSI regarding (1) the Performance Bonus, and (2) the termination of your employment. There will be no other payments or benefits other than those specified above.

Phil, please sign below to indicate your concurrence with the terms and conditions set forth in this letter.

	LSI CORPORATION
/s/ Phil Bullinger	By: /s/ Abhi Talwalkar
Phil Bullinger	Name: Abhi Talwalkar
	Title: President and Chief Executive Officer
Date: April 15, 2011	Date: April 15, 2011

Annex A

PERFORMANCE GOALS

1. Sale of the Engenio Business

The closing of the sale of the Engenio business occurs on or before May 6, 2011, or such later date as is agreed between LSI and the buyer.

2. Engenio Business Performance

Up to and including the closing date, the Engenio business under your direction must continue to meet the performance goals metrics and business objectives established by LSI’s President and Chief Executive Officer in his sole discretion and absolute discretion.

* * *

In order to receive the Performance Bonus both of the Performance Goals (1 and 2) above must be met. Notwithstanding anything to the contrary contained in the letter, the Performance Bonus payment shall not be required to be made if either of the Performance Goals is not met for any reason. Determination of whether a Performance Goal has been achieved shall be made by LSI’s President and Chief Executive Officer in his sole and absolute discretion.

Page 1 of 1

Annex B

GENERAL WAIVER AND RELEASE AGREEMENT

     1. I understand and agree that (a) my employment with LSI Corporation (together with its predecessors and its successors and assigns, “LSI”) will end on May 13, 2011; (b) I will be paid severance and other benefits as set forth in the attached letter dated April 4, 2011 setting forth the Benefits Summary Pursuant to the LSI Corporation Severance Policy for Executive Officers effective as of June 1, 2008 (“Summary”) only if I sign and do not revoke this General Waiver and Release Agreement (“Agreement”); and (c) the terms of the Summary are incorporated by reference in this Agreement and are intended to supersede and extinguish any other obligation LSI may have to pay me severance or other payments or benefits upon termination, including but not limited to any agreements or understandings, whether oral or written, made at any time prior to the date of this Agreement.

     2. In consideration of the payments and benefits set forth in the Summary, I, on behalf of myself and my heirs, executors, administrators, successors and assigns, knowingly and voluntarily waive, release and forever discharge LSI, each of its subsidiaries or affiliated companies, their respective current and former officers, employees, agents and directors, and any predecessor, successor or assign of any of the foregoing, from any claim, charge, action or cause of action that I or any of them may have against any such released person, whether known or unknown, from the beginning of time through the date of this Agreement based upon any matter, cause or thing whatsoever related to or arising out of my employment with LSI or my termination other than claims arising out of a breach of this Agreement or any claim that cannot be waived by law. All such claims are forever barred by this Agreement.

     This release and waiver includes, but is not limited to, any rights or claims under United States federal, state or local law, for wrongful or abusive discharge, for breach of any contract, or for discrimination based upon race, color, ethnicity, sex, age, national origin, religion, disability, sexual orientation, or any unlawful criterion or circumstance, including, but not limited to, rights or claims under the Family and Medical Leave Act, claims of discrimination under the Employee Retirement Income Security Act, the Equal Pay Act, the Occupational Safety and Health Act, the Workforce Adjustment Retraining Notification Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, Section 1981 through 1988 of the Civil Rights Act of 1866, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act, the Rehabilitation Act of 1973, Executive Order 11246 and any other executive order, the Fair Labor Standards Act and its state and local counterparts, the Uniform Services Employment and Reemployment Rights Act, and the Immigration Reform Control Act, all as amended. I confirm that I have no claim or basis for a claim whatsoever against LSI with respect to any such matters related to or arising out of my employment by LSI or my termination.

     3. I affirm that I have been given at least 21 days within which to consider this release and its consequences, that I have seven days following my signing of this Agreement to revoke and cancel the terms and conditions contained herein and the terms and conditions of this Agreement shall not become effective or enforceable until the seven-day revocation and cancellation period has expired, and that, prior to the execution of this Agreement, I have been advised by LSI to consult with an attorney of my choice concerning the terms and conditions set forth herein. Any revocation or cancellation of this Agreement by me pursuant to this paragraph shall be in writing delivered to LSI.

Page 1 of 4

     4. (a) Until May 13, 2012, I shall not, without the prior written consent of LSI Corporation’s Chief Executive Officer, (i) directly or indirectly solicit (or encourage any company or business organization in which I am an officer, employee, partner, director, consultant or member of a technical advisory board to solicit or employ) or (ii) refer to any employee search firms, any person who was employed by LSI as of the date hereof and who was not involuntarily terminated without cause by LSI on or before the date of any such solicitation.

          (b) Until May 13, 2012, I shall not, without the prior written consent of LSI Corporation’s Chief Executive Officer, at any time or for any reason, anywhere in the world, directly or indirectly (i) engage in any business or activity, whether as an employee, consultant, partner, principal, agent, representative, stockholder (except as a holder of less than 5% of the combined voting power of the outstanding stock of a publicly held company) or in any other individual, corporate or representative capacity, or render any services or provide any advice to any business, activity, person or entity, if I know or reasonably should know that such business, activity, service, person or entity, directly or indirectly, competes in any material manner with LSI’s business as constituted on the date hereof, or (ii) meaningfully assist, help or otherwise support any person, business, corporation, partnership or other entity or activity, whether as an employee, consultant, partner, principal, agent, representative, stockholder (other than in the capacity as a stockholder of less than 5% of the combined voting power of the outstanding shares of stock of a publicly held company) or in any other individual, corporate or representative capacity, to create, commence or otherwise initiate, or to develop, enhance or otherwise further, any business or activity if I know or reasonably should know that such business, activity, service, person or entity, directly or indirectly, competes in any material manner with LSI’s business as constituted on the date hereof. For the purposes of this Agreement, LSI’s competitors shall be those companies listed in the “Competition” section of LSI’s Form 10-K for the fiscal year ended December 31, 2010.

          (c) If at any time I violate the provisions of Sections 4(a) or 4(b) above, any amounts remaining unpaid as set forth in the Summary as well as any benefits provided for in the Summary (other than those from qualified retirement or welfare plans and my expatriate and relocation benefits) and any continuing vesting of stock options or restricted stock units, if any, shall immediately be forfeited and terminated, and any amounts already paid to me in accordance with the Summary, except for the sum of One Thousand Dollars ($1,000) shall, at LSI’s sole discretion, be required to be repaid by me to LSI within ten (10) business days of LSI’s request in writing therefore. This provision shall not affect LSI’s right to otherwise specifically enforce any provision relating to non-solicitation or non-competition that is in this Agreement or in any other agreement, document or plan applicable to me.

          (d) I hereby agree that, from time to time upon LSI’s reasonable request, I shall assist LSI in connection with any pending or future dispute, litigation, arbitration or similar proceeding or investigation or any regulatory requests or filings involving LSI, any of its employees or directors or the employees and directors of any subsidiary.

          (e) I agree to not (i) testify or otherwise provide testimony in any form at or for any legal or administrative proceeding, including testimony related to any matter involving LSI, unless legally compelled to do so or (ii) make statements to third parties, the public, the press or the media or any administrative agency, in either case that would portray LSI in an adverse light or disparage LSI, or cause injury to LSI with respect to events occurring prior to or after the date hereof.

Page 2 of 4

     5. I agree to return to LSI any and all LSI property of any kind or description whatsoever, including, but not limited to, any Confidential Information (as defined below), which has been furnished to me or is held by me, at my residence or elsewhere, and shall not retain any copies, duplicates, reproductions or excerpts thereof. I also agree and covenant, that I shall not divulge to any other person or entity any proprietary or confidential information, whether written or oral, received or gained by me in the course of my employment by LSI or of my duties with LSI (“Confidential Information”), nor shall I make use of any such Confidential Information on my own behalf or on behalf of any other person or entity, for so long as such Confidential Information is not known to the general public.

     In addition, I agree to abide by the terms of any confidentiality and/or proprietary information agreement that I have entered into with LSI, the terms of which shall continue in full force and effect.

     6. If I am a California resident, I expressly waive Section 1542 of the California Civil Code, which provides:

“A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release which if known by him must have materially affected his settlement with the debtor.”

If I am a resident of another state, I agree to waive the benefits of any statute similar in terms and effect to this provision.

     7. This Agreement contains the entire agreement concerning the subject matter hereof and supersedes all prior agreements, understandings, discussions, negotiations, and undertakings, whether written or oral, with respect thereto, except for the confidentiality and/or proprietary information agreements referred to above. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions or portions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law.

     8. This Agreement may not be modified or amended except by a writing signed by me and LSI’s Executive Vice President, General Counsel and Secretary.

     9. I understand that any taxes (other than the employer-mandated portion of FICA and FUTA) which may become due as a result of any payment or transaction contemplated by this Agreement including the attached Summary are my sole responsibility, and I further agree to hold LSI harmless on account thereof.

     10. This Agreement shall be interpreted in accordance with the plain meaning of its terms and not strictly for or against any person or entity. To the extent that federal law controls the interpretation or enforceability of any provision of this Agreement, this Agreement shall be construed and enforced in accordance with federal law. Otherwise, this Agreement shall be governed by and construed and interpreted in accordance with the laws of the Commonwealth of Pennsylvania without reference to the principles of conflicts of law.

Page 3 of 4

     BY SIGNING AND DELIVERING THIS AGREEMENT, I STATE THAT: I HAVE READ IT AND UNDERSTAND IT; I AGREE WITH IT AND AM AWARE THAT I AM GIVING UP IMPORTANT RIGHTS, INCLUDING RIGHTS PROVIDED BY THE OLDER WORKERS BENEFIT PROTECTION ACT, FOR CONSIDERATION TO WHICH I WAS NOT ALREADY OTHERWISE ENTITLED; I WAS ADVISED TO, AND AM AWARE OF MY RIGHT TO CONSULT WITH AN ATTORNEY BEFORE SIGNING IT; AND I HAVE SIGNED IT KNOWINGLY AND VOLUNTARILY.

Phil Bullinger 

Date: May __, 2011 

Page 4 of 4

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
AS ADOPTED PURSUANT TO
SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002

I, Abhijit Y. Talwalkar, certify that:

1. I have reviewed this quarterly report on Form 10-Q of LSI Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 12, 2011

By:	/s/ Abhijit Y. Talwalkar Name: Abhijit Y. Talwalkar
	Title: President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER
AS ADOPTED PURSUANT TO
SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002

I, Bryon Look, certify that:

1. I have reviewed this quarterly report on Form 10-Q of LSI Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 12, 2011

By:	/s/ Bryon Look Name: Bryon Look
	Title:   Executive Vice President, Chief Financial Officer
	and Chief Administrative Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Abhijit Y. Talwalkar, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of LSI Corporation on Form 10-Q for the quarterly period ended July 3, 2011 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of LSI Corporation.

By:	/s/ Abhijit Y. Talwalkar
	Name:	Abhijit Y. Talwalkar
	Title:	President and Chief Executive Officer
	Date:    August 12, 2011

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Bryon Look, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of LSI Corporation on Form 10-Q for the quarterly period ended July 3, 2011 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of LSI Corporation.

By:	/s/ Bryon Look
	Name:	Bryon Look
	Title:	Executive Vice President, Chief Financial Officer and Chief Administrative Officer
	Date:	August 12, 2011

XML



Reconciliation of Basic and Diluted Shares (Details 1) In Thousands	3 Months Ended		6 Months Ended
	Jul. 03, 2011	Jul. 04, 2010	Jul. 03, 2011	Jul. 04, 2010
Stock options [Member]
Earnings Per Share, Diluted, Other Disclosures [Abstract]
Anti-dilutive securities	38,338	71,868	44,130	70,505
Restricted stock unit awards [Member]
Earnings Per Share, Diluted, Other Disclosures [Abstract]
Anti-dilutive securities	1,445	306	93	401
Convertible notes [Member]
Earnings Per Share, Diluted, Other Disclosures [Abstract]
Anti-dilutive securities		12,324		19,314

XML



Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) In Thousands, except Per Share data	Jul. 03, 2011	Dec. 31, 2010
ASSETS
Allowances for accounts receivable	$ 11,875	$ 9,701
Stockholders' equity:
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	2,000	2,000
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	1,300,000	1,300,000
Common stock, shares outstanding	571,228	615,191

XML



Condensed Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Per Share data	3 Months Ended		6 Months Ended
	Jul. 03, 2011	Jul. 04, 2010	Jul. 03, 2011	Jul. 04, 2010
Condensed Consolidated Statements of Operations [Abstract]
Revenues	$ 500,644	$ 473,447	$ 973,908	$ 946,119
Cost of revenues	263,024	248,679	512,114	506,557
Gross profit	237,620	224,768	461,794	439,562
Research and development	145,873	142,871	288,220	281,733
Selling, general and administrative	71,793	70,150	140,660	140,515
Restructuring of operations and other items, net	(10,904)	5,086	(8,098)	6,706
Income from operations	30,858	6,661	41,012	10,608
Interest expense		(1,707)		(5,601)
Interest income and other, net	6,450	4,639	10,738	(4,168)
Income from continuing operations before income taxes	37,308	9,593	51,750	839
Provision for / (benefit from) income taxes	8,900	6,911	4,796	(16,191)
Income from continuing operations	28,408	2,682	46,954	17,030
Income from discontinued operations,(including a gain on disposal of $260,066 for the three and six months ended July 3, 2011), net of taxes	265,376	4,750	256,984	12,922
Net income	$ 293,784	$ 7,432	$ 303,938	$ 29,952
Basic income per share:
Income from continuing operations	$ 0.05	$ 0.00	$ 0.08	$ 0.03
Income from discontinued operations	$ 0.44	$ 0.01	$ 0.42	$ 0.02
Net income	$ 0.49	$ 0.01	$ 0.50	$ 0.05
Diluted income per share:
Income from continuing operations	$ 0.05	$ 0.00	$ 0.08	$ 0.03
Income from discontinued operations	$ 0.43	$ 0.01	$ 0.41	$ 0.02
Net income	$ 0.48	$ 0.01	$ 0.49	$ 0.05
Shares used in computing per share amounts:
Basic	594,957	651,778	605,315	654,192
Diluted	611,093	661,540	621,248	663,857

XML



Income Taxes (Details) (USD $)	3 Months Ended		6 Months Ended
	Jul. 03, 2011	Jul. 04, 2010	Jul. 03, 2011	Jul. 04, 2010
Income Taxes (Textuals) [Abstract]
Provision for / (benefit from) income taxes	$ 8,900,000	$ 6,911,000	$ 4,796,000	$ (16,191,000)
Reversal in liabilities for uncertain tax positions			8,200,000	27,900,000
Unrecognized tax benefits related to uncertain tax positions			4,800,000	12,200,000
Interest and penalties related to uncertain tax positions			3,400,000	15,700,000
Unrecognized tax benefits	138,600,000		138,600,000
Estimated decrease in unrecognized tax benefits, plus accrued interest and penalties			$ 18,500,000

XML



Stock Based Compensation (Tables)

6 Months Ended

Jul. 03, 2011

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Stock-based compensation expense

	Three Months Ended				Six Months Ended
Stock-Based Compensation Expense Included In:	July 3, 2011		July 4, 2010		July 3, 2011		July 4, 2010
			(In thousands)
Cost of revenues	$	2,051	$	1,985	$	3,864	$	3,401
Research and development		6,653		6,750		12,876		12,770
Selling, general and administrative		4,948		6,439		10,579		12,126
Total stock-based compensation expense	$	13,652	$	15,174	$	27,319	$	28,297

Changes in stock options outstanding

				Weighted-Average
	Number of			Exercise
	Shares			Price Per Share
	(In thousands)
Options outstanding at December 31, 2010		71,607		$	6.97
Options granted		8,869			6.35
Options exercised		(5,327	)		5.03
Options canceled		(5,098	)		15.99
Options outstanding at July 3, 2011		70,051		$	6.38
Options exercisable at July 3, 2011		44,473		$	7.10

Unvested service-based restricted stock

	Number of Units
	(In thousands)
Unvested service-based restricted stock units at December 31, 2010		7,106
Granted		6,914
Vested		(1,745	)
Forfeited		(433	)
Unvested service-based restricted stock units at July 3, 2011		11,842

Unvested performance-based restricted stock

	Number of Units
	(In thousands)
Unvested performance-based restricted stock units at December 31, 2010		2,338
Granted		3,540
Vested		(827	)
Forfeited		(164	)
Unvested performance-based restricted stock units at July 3, 2011		4,887

Employee Stock Option [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Weighted average assumptions in fair value of option grant

	Three Months Ended						Six Months Ended
	July 3, 2011			July 4, 2010			July 3, 2011			July 4, 2010
Estimated grant date fair value per share	$	2.65		$	2.05		$	2.14		$	1.97
Expected life (years)		5.01			4.35			4.51			4.28
Risk-free interest rate		2	%		2	%		2	%		2	%
Volatility		47	%		54	%		47	%		51	%

Employee Stock Purchase Plan [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Weighted average assumptions in fair value of option grant

	Three Months Ended
	July 3, 2011			July 4, 2010
Estimated grant date fair value per share	$	2.10		$	1.74
Expected life (years)		0.8			0.8
Risk-free interest rate		0.02	%		0.3	%
Volatility		37	%		48	%

XML



Document and Entity Information (USD $) In Billions, except Share data	6 Months Ended
	Jul. 03, 2011	Aug. 05, 2011	Jul. 04, 2010
Document and Entity Information [Abstract]
Entity Registrant Name	LSI CORP
Entity Central Index Key	0000703360
Document Type	10-Q
Document Period End Date	Jul. 03, 2011
Amendment Flag	false
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 2.9
Entity Common Stock, Shares Outstanding		572,877,263

XML



Derivative Instruments (Details) (USD $) In Millions	3 Months Ended		6 Months Ended
	Jul. 03, 2011	Jul. 04, 2010	Jul. 03, 2011	Jul. 04, 2010	Dec. 31, 2010
Derivative Instruments (Textuals) [Abstract]
Total notional value of outstanding forward contracts, not designated as hedges under hedge accounting	$ 42.1		$ 42.1		$ 112.3
Gain (loss) related to other foreign currency hedges recognized net of interest income and other	0.3	2.2	2.1	(3.6)
Total notional value of the Company's outstanding forward contracts, designated as foreign-currency cash-flow hedges	$ 41.3		$ 41.3		$ 41.7
Cash Flow Hedging [Member]
Derivative Instruments (Textuals) [Abstract]
Maturity period of forward contract			within 12 months
Other Foreign Currency Hedges [Member]
Derivative Instruments (Textuals) [Abstract]
Maturity period of forward contract			within 3 months

XML



Balance Sheet Details (Tables)

6 Months Ended

Jul. 03, 2011

Balance Sheet Details [Abstract]

Inventories

	July 3,		December 31,
	2011		2010
	(In thousands)
Raw materials	$	1,760	$	30,691
Work-in-process		73,242		33,513
Finished goods		118,800		122,568
Total inventories	$	193,802	$	186,772

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Cash Equivalents and Investments (Details Textuals) (USD $) In Millions, unless otherwise specified	Jul. 03, 2011	Dec. 31, 2010
Cash Equivalents and Investments (Textuals) [Abstract]
Carrying value of company's non-marketable equity securities	$ 46.0	$ 39.9
Number of investments in an unrealized loss position	48

XML



Balance Sheet Details

6 Months Ended

Jul. 03, 2011

Balance Sheet Details [Abstract]

Balance Sheet Details

Note 6 — Balance Sheet Details

     Inventories were comprised of the following:

	July 3,		December 31,
	2011		2010
	(In thousands)
Raw materials	$	1,760	$	30,691
Work-in-process		73,242		33,513
Finished goods		118,800		122,568
Total inventories	$	193,802	$	186,772

     During the three months ended July 3, 2011, the Company reclassified $16.2 million of land in Gresham, Oregon from held and used to held for sale.

XML



Cash Equivalents and Investments (Tables)

6 Months Ended

Jul. 03, 2011

Cash Equivalents and Investments [Abstract]

Company's cash equivalents and investments measured at fair value

	Fair Value Measurements as of July 3, 2011
	Level 1			Level 2			Level 3		Total
				(In thousands)
Cash equivalents:
Money-market funds	$	606,045	(a)	$	—		$	—	$	606,045
Commercial paper		—			625	(b)		—		625
Total cash equivalents	$	606,045		$	625		$	—	$	606,670
Available-for-sale debt securities:
Asset-backed and mortgage-backed securities	$	—		$	109,783	(b)	$	—	$	109,783
U.S. government and agency securities		4,496	(a)		22,924	(b)		—		27,420
Corporate debt securities		—			13,865	(b)		—		13,865
Total short-term investments	$	4,496		$	146,572		$	—	$	151,068
Long-term investments in equity securities:
Marketable available-for-sale equity securities	$	1,907	(c)	$	—		$	—	$	1,907

	Fair Value Measurements as of December 31, 2010
	Level 1			Level 2			Level 3		Total
				(In thousands)
Cash equivalents:
Money-market funds	$	378,382	(a)	$	—		$	—	$	378,382
U.S. government and agency securities		2,000	(a)		—			—		2,000
Total cash equivalents	$	380,382		$	—		$	—	$	380,382
Available-for-sale debt securities:
Asset-backed and mortgage-backed securities	$	—		$	116,552	(b)	$	—	$	116,552
U.S. government and agency securities		1,496	(a)		24,502	(b)		—		25,998
Corporate debt securities		—			12,330	(b)		—		12,330
Total short-term investments	$	1,496		$	153,384		$	—	$	154,880
Long-term investments in equity securities:
Marketable available-for-sale equity securities	$	1,681	(c)	$	—		$	—	$	1,681

(a)	The fair value of money-market funds is determined using unadjusted prices in active markets. The fair value of these U.S. government and agency securities is determined using quoted prices in active markets.
(b)	These investments are traded less frequently than Level 1 securities and are valued using inputs that include quoted prices for similar assets in active markets and inputs other than quoted prices that are observable for the asset, such as interest rates, yield curves, prepayment speeds, collateral performance, broker/dealer quotes and indices that are observable at commonly quoted intervals.
(c)	The fair value of marketable equity securities is determined using quoted market prices in active markets. These amounts are included within other assets in the condensed consolidated balance sheets.

Non-marketable equity securities measured and recorded at fair value on a non-recurring basis

	Carrying Value		Fair Value Measurements						Losses for the		Losses for the
	as of		During the Six Months Ended July 4, 2010						Three Months Ended		Six Months Ended
	July 4, 2010		Level 1		Level 2		Level 3		July 4, 2010		July 4, 2010
	(In thousands)
Non-marketable securities	$	1,900	$	—	$	—	$	1,900	$	—	$	11,600

Company's available-for-sale securities

	July 3, 2011
	Amortized		Gross Unrealized		Gross Unrealized
	Cost		Gain		Loss*			Fair Value
			(In thousands)
Short-term debt securities:
Asset-backed and mortgage-backed securities	$	101,714	$	8,294	$	(225	)	$	109,783
U.S. government and agency securities		26,801		634		(15	)		27,420
Corporate debt securities		13,677		203		(15	)		13,865
Total short-term debt securities	$	142,192	$	9,131	$	(255	)	$	151,068
Long-term marketable equity securities	$	852	$	1,097	$	(42	)	$	1,907

* As of July 3, 2011, there were 48 investments in an unrealized loss position.

	December 31, 2010
	Amortized		Gross Unrealized		Gross Unrealized
	Cost		Gain		Loss			Fair Value
			(In thousands)
Short-term debt securities:
Asset-backed and mortgage-backed securities	$	107,891	$	9,012	$	(351	)	$	116,552
U.S. government and agency securities		25,313		812		(127	)		25,998
Corporate debt securities		12,226		176		(72	)		12,330
Total short-term debt securities	$	145,430	$	10,000	$	(550	)	$	154,880
Long-term marketable equity securities	$	852	$	868	$	(39	)	$	1,681

Gross unrealized losses and fair values of the Company's short-term investments

	July 3, 2011
	Less than 12 Months					Greater than 12 Months
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
			(In thousands)
Asset-backed and mortgage-backed securities	$	8,436	$	(133	)	$	868	$	(92	)
U.S. government and agency securities		6,403		(15	)		—		—
Corporate debt securities		3,513		(15	)		—		—
Total	$	18,352	$	(163	)	$	868	$	(92	)

	December 31, 2010
	Less than 12 Months					Greater than 12 Months
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
			(In thousands)
Asset-backed and mortgage-backed securities	$	11,807	$	(179	)	$	2,469	$	(172	)
U.S. government and agency securities		13,969		(127	)		—		—
Corporate debt securities		6,527		(72	)		—		—
Total	$	32,303	$	(378	)	$	2,469	$	(172	)

Contractual maturities of available-for-sale debt securities

	Amount
	(In thousands)
Due within one year	$	7,871
Due in 1-5 years		39,181
Due in 5-10 years		10,113
Due after 10 years		93,903
Total	$	151,068

XML



Cash Equivalents and Investments (Details 1) (Fair Value, Measurements, Nonrecurring [Member], USD $) In Thousands	6 Months Ended
	Jul. 04, 2010
Non-marketable equity securities measured and recorded at fair value on a non-recurring basis
Non marketable equity securities fair value disclosure	$ 1,900
Losses in non-marketable equity securities	11,600
Fair Value Measurements Level 1 [Member]
Non-marketable equity securities measured and recorded at fair value on a non-recurring basis
Non marketable equity securities fair value disclosure	0
Fair Value Measurements Level 2 [Member]
Non-marketable equity securities measured and recorded at fair value on a non-recurring basis
Non marketable equity securities fair value disclosure	0
Fair Value Measurements Level 3 [Member]
Non-marketable equity securities measured and recorded at fair value on a non-recurring basis
Non marketable equity securities fair value disclosure	$ 1,900

XML



Restructuring, Asset Impairment Charges and Other Items (Details 1) (USD $) In Thousands	3 Months Ended		6 Months Ended
	Jul. 03, 2011	Jul. 04, 2010	Jul. 03, 2011	Jul. 04, 2010
Restructuring of operations and other items net from discontinued operations
Total restructuring of operations and other items, net	$ (10,904)	$ 5,086	$ (8,098)	$ 6,706
Segment, Discontinued Operations [Member]
Restructuring of operations and other items net from discontinued operations
Total restructuring of operations and other items, net	14,079	(19)	37,890	(19)
Segment, Discontinued Operations [Member] | Lease and contract terminations [Member]
Restructuring of operations and other items net from discontinued operations
Total restructuring expenses	868	(19)	2,579	(19)
Segment, Discontinued Operations [Member] | Employee severance and benefits [Member]
Restructuring of operations and other items net from discontinued operations
Total restructuring expenses	3,153		14,173
Segment, Discontinued Operations [Member] | Assets impairment and other exit charges [Member]
Restructuring of operations and other items net from discontinued operations
Total restructuring expenses	$ 10,058		$ 21,138

XML



Benefit Obligations (Tables)

6 Months Ended

Jul. 03, 2011

Benefit Obligations [Abstract]

Components of net periodic benefit cost/(credit)

	Three Months Ended
	July 3, 2011						July 4, 2010
	Pension			Post-retirement			Pension			Post-retirement
	Benefits			Benefits			Benefits			Benefits
				(In thousands)
Service cost	$	141		$	21		$	112		$	21
Interest cost		16,929			621			17,553			612
Expected return on plan assets		(17,000	)		(1,033	)		(17,909	)		(1,150	)
Amortization of transition asset		(5	)		—			—			—
Amortization of prior service cost		10			—			10			—
Amortization of net actuarial loss		1,694			85			527			—
Total benefit cost/(credit)	$	1,769		$	(306	)	$	293		$	(517	)

	Six Months Ended
	July 3, 2011						July 4, 2010
	Pension			Post-retirement			Pension			Post-retirement
	Benefits			Benefits			Benefits			Benefits
				(In thousands)
Service cost	$	275		$	38		$	230		$	41
Interest cost		33,779			1,246			35,170			1,220
Expected return on plan assets		(33,998	)		(2,065	)		(35,732	)		(2,298	)
Amortization of transition asset		(10	)		—			—			—
Amortization of prior service cost		20			—			20			—
Amortization of net actuarial loss		3,375			177			1,074			—
Total benefit cost/(credit)	$	3,441		$	(604	)	$	762		$	(1,037	)

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Comprehensive Income

6 Months Ended

Jul. 03, 2011

Common Stock Repurchases/Comprehensive Income [Abstract]

Comprehensive Income

Note 11 — Comprehensive Income

     Comprehensive income or loss is defined as a change in equity of a company during a period from transactions and other events and circumstances, excluding transactions resulting from investments by owners and distributions to owners. The following table summarizes the changes in the total comprehensive income, net of taxes:

	Three Months Ended						Six Months Ended
	July 3, 2011			July 4, 2010			July 3, 2011			July 4, 2010
				(In thousands)
Net income	$	293,784		$	7,432		$	303,938		$	29,952
Net unrealized (loss)/gain on investments		(418	)		778			(92	)		1,308
Net unrealized (loss)/gain on derivatives		(360	)		(393	)		49			(1,252	)
Foreign currency translation adjustments		190			1,886			1,591			(2,120	)
Amortization of transition asset, prior-service cost and net actuarial loss		1,784			537			3,562			1,094
Total comprehensive income	$	294,980		$	10,240		$	309,048		$	28,982

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Stock Based Compensation

6 Months Ended

Jul. 03, 2011

Stock-Based Compensation[Abstract]

Stock-Based Compensation

Note 2 — Stock-Based Compensation

Stock-Based Compensation Expense

     The following table summarizes stock-based compensation expense, net of estimated forfeitures, included within the continuing operations related to the Company’s stock options, Employee Stock Purchase Plan (“ESPP”) and restricted stock unit awards.

	Three Months Ended				Six Months Ended
Stock-Based Compensation Expense Included In:	July 3, 2011		July 4, 2010		July 3, 2011		July 4, 2010
			(In thousands)
Cost of revenues	$	2,051	$	1,985	$	3,864	$	3,401
Research and development		6,653		6,750		12,876		12,770
Selling, general and administrative		4,948		6,439		10,579		12,126
Total stock-based compensation expense	$	13,652	$	15,174	$	27,319	$	28,297

     Stock Options:

     The fair value of each option grant is estimated as of the date of grant using a reduced-form calibrated binomial lattice model (the “lattice model”). The following table summarizes the weighted-average assumptions that the Company applied in the lattice model:

	Three Months Ended						Six Months Ended
	July 3, 2011			July 4, 2010			July 3, 2011			July 4, 2010
Estimated grant date fair value per share	$	2.65		$	2.05		$	2.14		$	1.97
Expected life (years)		5.01			4.35			4.51			4.28
Risk-free interest rate		2	%		2	%		2	%		2	%
Volatility		47	%		54	%		47	%		51	%

     The following table summarizes changes in stock options outstanding:

				Weighted-Average
	Number of			Exercise
	Shares			Price Per Share
	(In thousands)
Options outstanding at December 31, 2010		71,607		$	6.97
Options granted		8,869			6.35
Options exercised		(5,327	)		5.03
Options canceled		(5,098	)		15.99
Options outstanding at July 3, 2011		70,051		$	6.38
Options exercisable at July 3, 2011		44,473		$	7.10

     For options outstanding and options exercisable as of July 3, 2011, the weighted-average remaining contractual term was 3.64 years and 2.61 years, respectively, and the aggregate intrinsic value was $106.8 million and $52.5 million, respectively.

     Employee Stock Purchase Plan:

     Compensation expense for the Company’s ESPP is calculated using the fair value of the employees’ purchase rights under the Black-Scholes model. Under the ESPP, rights to purchase shares are granted during the second and fourth quarters of each year. A total of 2.9 million shares and 3.3 million shares were issued under the ESPP during the three months ended July 3, 2011 and July 4, 2010, respectively. The following table summarizes the weighted-average assumptions that went into the calculation of the fair value for the May 2011 and May 2010 grants:

	Three Months Ended
	July 3, 2011			July 4, 2010
Estimated grant date fair value per share	$	2.10		$	1.74
Expected life (years)		0.8			0.8
Risk-free interest rate		0.02	%		0.3	%
Volatility		37	%		48	%

     Restricted Stock Awards:

     The cost of service-based and performance-based restricted stock unit awards is determined using the fair value of the Company’s common stock on the date of grant. For performance-based restricted stock unit awards, the Company also considers the probability that those restricted stock units will vest.

     Service-based:

     The vesting requirements for service-based restricted stock units are determined at the time of grant and require that the employee remain employed by the Company for a specified period of time. As of July 3, 2011, the total unrecognized compensation expense related to these restricted stock units, net of estimated forfeitures, was $57.9 million and is expected to be recognized over the next 3.3 years on a weighted-average basis. The fair value of the shares that were issued upon the vesting of service-based restricted stock units during the three and six months ended July 3, 2011 was $0.7 million and $11.0 million, respectively.

     The following table summarizes changes in service-based restricted stock units outstanding:

	Number of Units
	(In thousands)
Unvested service-based restricted stock units at December 31, 2010		7,106
Granted		6,914
Vested		(1,745	)
Forfeited		(433	)
Unvested service-based restricted stock units at July 3, 2011		11,842

     Performance-based:

     The vesting of performance-based restricted stock units is contingent upon the Company meeting specified performance criteria and requires that the employee remain employed by the Company for a specified period of time. As of July 3, 2011, the total unrecognized compensation expense related to performance-based restricted stock units was $17.0 million and, if the contingencies are fully met, is expected to be recognized over the next 1 to 3 years.

     The following table summarizes changes in performance-based restricted stock units outstanding:

	Number of Units
	(In thousands)
Unvested performance-based restricted stock units at December 31, 2010		2,338
Granted		3,540
Vested		(827	)
Forfeited		(164	)
Unvested performance-based restricted stock units at July 3, 2011		4,887

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Stock Based Compensation (Details 2) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jul. 03, 2011	Jul. 04, 2010	Jul. 03, 2011	Jul. 04, 2010
Stock-Based Compensation and Common Stock (Textuals) [Abstract]
Options outstanding at July 3, 2011, Weighted-Average Remaining Contractual Term	3.64		3.64
Options outstanding at July 3, 2011, Aggregate Intrinsic Value	$ 106.8		$ 106.8
Options exercisable at July 3, 2011, Weighted-Average Remaining Contractual Term			2.61
Options exercisable at July 3, 2011, Aggregate Intrinsic Value	52.5		52.5
Shares issued under ESPP	2,900,000	3,300,000
Employee Stock Option [Member]
Weighted average assumptions in fair value of option grant
Estimated grant date fair value per share	$ 2.65	$ 2.05	$ 2.14	$ 1.97
Expected life (years)	5.01	4.35	4.51	4.28
Risk-free interest rate	2.00%	2.00%	2.00%	2.00%
Volatility	47.00%	54.00%	47.00%	51.00%
Employee Stock Purchase Plan [Member]
Weighted average assumptions in fair value of option grant
Estimated grant date fair value per share	$ 2.10	$ 1.74
Expected life (years)	0.8	0.8
Risk-free interest rate	0.02%	0.30%
Volatility	37.00%	48.00%
Service based restricted stock [Member]
Restricted stock awards
Unvested service-based restricted stock units, Beginning Balance			7,106,000
Granted			6,914,000
Vested			(1,745,000)
Forfeited			(433,000)
Unvested service-based restricted stock units, Ending Balance	11,842,000		11,842,000
Stock-Based Compensation and Common Stock (Textuals) [Abstract]
Total unrecognized compensation expense related to restricted stock units awards	57.9		57.9
Period to recognize total unrecognized compensation expense			3.3
Fair value of the shares issued upon the vesting of restricted stock units	0.7		11.0
Performance based restricted stock [Member]
Restricted stock awards
Unvested service-based restricted stock units, Beginning Balance			2,338,000
Granted			3,540,000
Vested			(827,000)
Forfeited			(164,000)
Unvested service-based restricted stock units, Ending Balance	4,887,000		4,887,000
Stock-Based Compensation and Common Stock (Textuals) [Abstract]
Total unrecognized compensation expense related to restricted stock units awards	$ 17.0		$ 17.0
Period to recognize total unrecognized compensation expense related to performance-based restricted stock units			1 to 3 years

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Derivative Instruments

6 Months Ended

Jul. 03, 2011

Derivative Instruments [Abstract]

Derivative Instruments

Note 8 — Derivative Instruments

     The Company has foreign subsidiaries that operate and sell the Company’s products in various markets around the world. As a result, the Company is exposed to changes in foreign-currency exchange rates. The Company utilizes forward contracts to manage its exposure associated with net asset and liability positions denominated in non-functional currencies and to reduce the volatility of earnings and cash flows related to forecasted foreign-currency transactions. The Company does not hold derivative financial instruments for speculative or trading purposes.

Cash-Flow Hedges

     The Company enters into forward contracts that are designated as foreign-currency cash-flow hedges of selected forecasted payments denominated in currencies other than U.S. dollars. These forward contracts generally mature within twelve months. The Company evaluates and calculates the effectiveness of each hedge at least quarterly. Changes in fair value attributable to changes in time value are excluded from the assessment of effectiveness and are recognized in interest income and other, net. The effective portion of the forward contracts’ gain or loss is recorded in other comprehensive income and is subsequently reclassified into earnings when the hedged expense is recognized within the same line item in the statements of operations as the impact of the hedged transaction. The ineffective portion of the gain or loss is reported in earnings immediately. As of July 3, 2011 and December 31, 2010, the total notional value of the Company’s outstanding forward contracts, designated as foreign-currency cash-flow hedges, was $41.3 million and $41.7 million, respectively. For the three and six months ended July 3, 2011 and July 4, 2010, the after-tax effect of foreign-exchange forward contract derivatives on other comprehensive income was not material.

Other Foreign-Currency Hedges

     The Company enters into foreign-exchange forward contracts that are used to hedge certain foreign-currency-denominated assets or liabilities that do not qualify for hedge accounting. These forward contracts generally mature within three months. Changes in the fair value of these forward contracts are recorded immediately in earnings to offset the changes in fair value of the assets or liabilities being hedged. As of July 3, 2011 and December 31, 2010, the total notional value of the Company’s outstanding forward contracts, not designated as hedges under hedge accounting, was $42.1 million and $112.3 million, respectively. For the three and six months ended July 3, 2011, gains of $0.3 million and $2.1 million, respectively, on other foreign-currency hedges were recognized in interest income and other, net. For the three and six months ended July 4, 2010, a gain of $2.2 million and a loss of $3.6 million, respectively, on other foreign-currency hedges were recognized in interest income and other, net. These gains and losses were substantially offset by the loss and gain on the underlying foreign-currency-denominated assets or liabilities.

Fair Value of Derivative Instruments

     As of July 3, 2011 and December 31, 2010, the fair value of derivative instruments included in the condensed consolidated balance sheets was not material.

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Related Party Transactions

6 Months Ended

Jul. 03, 2011

Related Party Transactions [Abstract]

Related Party Transactions

Note 13 — Related Party Transactions

     A member of the Company’s board of directors is also a member of the board of directors of Seagate Technology (“Seagate”). The Company sells semiconductors used in storage product applications to Seagate for prices comparable to those charged to an unrelated third party. Revenues from sales by the Company to Seagate were $118.9 million and $217.5 million for the three and six months ended July 3, 2011, respectively. Revenues from sales by the Company to Seagate were $88.8 million and $184.9 million for the three and six months ended July 4, 2010, respectively. The Company had accounts receivable from Seagate of $71.7 million and $55.0 million as of July 3, 2011 and December 31, 2010, respectively.

     The Company has an equity interest in a joint venture, Silicon Manufacturing Partners Pte Ltd. (“SMP”), with GLOBALFOUNDRIES, a manufacturing foundry for integrated circuits. SMP operates an integrated circuit manufacturing facility in Singapore. The Company owns a 51% equity interest in this joint venture and accounts for its ownership position under the equity method of accounting. The Company is effectively precluded from unilaterally taking any significant action in the management of SMP due to GLOBALFOUNDRIES’ significant participatory rights under the joint venture agreement. Because of GLOBALFOUNDRIES’ approval rights, the Company cannot make any significant decisions regarding SMP without GLOBALFOUNDRIES’ approval, despite the 51% equity interest. In addition, the General Manager, who is responsible for the day-to-day management of SMP, is appointed by GLOBALFOUNDRIES, and GLOBALFOUNDRIES provides day-to-day operational support to SMP.

     The Company purchased $14.8 million and $25.6 million of inventory from SMP for the three and six months ended July 3, 2011, respectively. The Company purchased $12.0 million and $24.0 million of inventory from SMP for the three and six months ended July 4, 2010, respectively. As of July 3, 2011 and December 31, 2010, the amounts payable to SMP were $6.9 million and $1.2 million, respectively.

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Reconciliation of Basic and Diluted Shares

6 Months Ended

Jul. 03, 2011

Reconciliation of Basic and Diluted [Abstract]

Reconciliation of Basic and Diluted

Note 9 — Reconciliation of Basic and Diluted Shares

     The following table provides a reconciliation of basic and diluted shares:

	Three Months Ended				Six Months Ended
	July 3, 2011		July 4, 2010		July 3, 2011		July 4, 2010
			(In thousands)
Basic shares		594,957		651,778		605,315		654,192
Dilutive effect of stock options, employee stock purchase rights and restricted stock unit awards		16,136		9,762		15,933		9,665
Diluted shares		611,093		661,540		621,248		663,857

     The following table provides information about the weighted-average common share equivalents that were excluded from the computation of diluted shares because their inclusion would have an anti-dilutive effect on net income per share:

	Three Months Ended				Six Months Ended
	July 3, 2011		July 4, 2010		July 3, 2011		July 4, 2010
			(In thousands)
Anti-dilutive securities:
Stock options		38,338		71,868		44,130		70,505
Restricted stock unit awards		1,445		306		93		401
Convertible notes		—		12,324		—		19,314

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Discontinued Operations (Tables)

6 Months Ended

Jul. 03, 2011

Discontinued Operations [Abstract]

Income/(loss) from discontinued operations for the external storage systems business

	Three Months Ended					Six Months Ended
	July 3, 2011			July 4, 2010		July 3, 2011			July 4, 2010
				(In thousands)
Revenues	$	51,675		$	165,958	$	207,365		$	330,468
(Loss)/income before income taxes	$	(14,590	)	$	6,939	$	(22,500	)	$	19,413
Gain on sale of external storage systems business		260,066			—		260,066			—
(Benefit from)/provision for income taxes		(19,900	)		2,189		(19,418	)		6,491
Income from discontinued operations	$	265,376		$	4,750	$	256,984		$	12,922

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Cash Equivalents and Investments

6 Months Ended

Jul. 03, 2011

Cash Equivalents and Investments [Abstract]

Cash Equivalents and Investments

Note 7 — Cash Equivalents and Investments

     The following tables summarize the Company’s cash equivalents and investments measured at fair value:

	Fair Value Measurements as of July 3, 2011
	Level 1			Level 2			Level 3		Total
				(In thousands)
Cash equivalents:
Money-market funds	$	606,045	(a)	$	—		$	—	$	606,045
Commercial paper		—			625	(b)		—		625
Total cash equivalents	$	606,045		$	625		$	—	$	606,670
Available-for-sale debt securities:
Asset-backed and mortgage-backed securities	$	—		$	109,783	(b)	$	—	$	109,783
U.S. government and agency securities		4,496	(a)		22,924	(b)		—		27,420
Corporate debt securities		—			13,865	(b)		—		13,865
Total short-term investments	$	4,496		$	146,572		$	—	$	151,068
Long-term investments in equity securities:
Marketable available-for-sale equity securities	$	1,907	(c)	$	—		$	—	$	1,907

	Fair Value Measurements as of December 31, 2010
	Level 1			Level 2			Level 3		Total
				(In thousands)
Cash equivalents:
Money-market funds	$	378,382	(a)	$	—		$	—	$	378,382
U.S. government and agency securities		2,000	(a)		—			—		2,000
Total cash equivalents	$	380,382		$	—		$	—	$	380,382
Available-for-sale debt securities:
Asset-backed and mortgage-backed securities	$	—		$	116,552	(b)	$	—	$	116,552
U.S. government and agency securities		1,496	(a)		24,502	(b)		—		25,998
Corporate debt securities		—			12,330	(b)		—		12,330
Total short-term investments	$	1,496		$	153,384		$	—	$	154,880
Long-term investments in equity securities:
Marketable available-for-sale equity securities	$	1,681	(c)	$	—		$	—	$	1,681

(a)	The fair value of money-market funds is determined using unadjusted prices in active markets. The fair value of these U.S. government and agency securities is determined using quoted prices in active markets.
(b)	These investments are traded less frequently than Level 1 securities and are valued using inputs that include quoted prices for similar assets in active markets and inputs other than quoted prices that are observable for the asset, such as interest rates, yield curves, prepayment speeds, collateral performance, broker/dealer quotes and indices that are observable at commonly quoted intervals.
(c)	The fair value of marketable equity securities is determined using quoted market prices in active markets. These amounts are included within other assets in the condensed consolidated balance sheets.

Investments in Non-Marketable Securities

     The Company does not estimate the fair value of non-marketable securities unless there are identified events or changes in circumstances that may have a significant adverse effect on the investment. There were no non-marketable securities fair-valued during the three and six months ended July 3, 2011. The following table summarizes certain non-marketable securities measured and recorded at fair value on a non-recurring basis during the six months ended July 4, 2010:

	Carrying Value		Fair Value Measurements						Losses for the		Losses for the
	as of		During the Six Months Ended July 4, 2010						Three Months Ended		Six Months Ended
	July 4, 2010		Level 1		Level 2		Level 3		July 4, 2010		July 4, 2010
	(In thousands)
Non-marketable securities	$	1,900	$	—	$	—	$	1,900	$	—	$	11,600

     As of July 3, 2011 and December 31, 2010, the aggregate carrying value of the Company’s non-marketable securities was $46.0 million and $39.9 million, respectively. There were no sales of non-marketable securities for the three and six months ended July 3, 2011 and July 4, 2010.

Investments in Available-for-Sale Securities

     The following tables summarize the Company’s available-for-sale securities:

	July 3, 2011
	Amortized		Gross Unrealized		Gross Unrealized
	Cost		Gain		Loss*			Fair Value
			(In thousands)
Short-term debt securities:
Asset-backed and mortgage-backed securities	$	101,714	$	8,294	$	(225	)	$	109,783
U.S. government and agency securities		26,801		634		(15	)		27,420
Corporate debt securities		13,677		203		(15	)		13,865
Total short-term debt securities	$	142,192	$	9,131	$	(255	)	$	151,068
Long-term marketable equity securities	$	852	$	1,097	$	(42	)	$	1,907

* As of July 3, 2011, there were 48 investments in an unrealized loss position.

	December 31, 2010
	Amortized		Gross Unrealized		Gross Unrealized
	Cost		Gain		Loss			Fair Value
			(In thousands)
Short-term debt securities:
Asset-backed and mortgage-backed securities	$	107,891	$	9,012	$	(351	)	$	116,552
U.S. government and agency securities		25,313		812		(127	)		25,998
Corporate debt securities		12,226		176		(72	)		12,330
Total short-term debt securities	$	145,430	$	10,000	$	(550	)	$	154,880
Long-term marketable equity securities	$	852	$	868	$	(39	)	$	1,681

     The following tables summarize the gross unrealized losses and fair values of the Company’s short-term investments that have been in a continuous unrealized loss position for less than and greater than 12 months, aggregated by investment category:

	July 3, 2011
	Less than 12 Months					Greater than 12 Months
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
			(In thousands)
Asset-backed and mortgage-backed securities	$	8,436	$	(133	)	$	868	$	(92	)
U.S. government and agency securities		6,403		(15	)		—		—
Corporate debt securities		3,513		(15	)		—		—
Total	$	18,352	$	(163	)	$	868	$	(92	)

	December 31, 2010
	Less than 12 Months					Greater than 12 Months
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
			(In thousands)
Asset-backed and mortgage-backed securities	$	11,807	$	(179	)	$	2,469	$	(172	)
U.S. government and agency securities		13,969		(127	)		—		—
Corporate debt securities		6,527		(72	)		—		—
Total	$	32,303	$	(378	)	$	2,469	$	(172	)

     There were no impairment charges for available-for-sale debt or equity securities for the three or six months ended July 3, 2011 and July 4, 2010. There were no material other than temporary impairment losses recorded in other comprehensive income for the three or six months ended July 3, 2011 and July 4, 2010. Net realized gain or loss on sales of available-for-sale debt and equity securities for the three and six months ended July 3, 2011 and July 4, 2010 was not significant.

     Contractual maturities of available-for-sale debt securities as of July 3, 2011 were as follows:

	Amount
	(In thousands)
Due within one year	$	7,871
Due in 1-5 years		39,181
Due in 5-10 years		10,113
Due after 10 years		93,903
Total	$	151,068

     The maturities of asset-backed and mortgage-backed securities were allocated based on contractual principal maturities assuming no prepayments.

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Comprehensive Income (Details) (USD $) In Thousands	3 Months Ended		6 Months Ended
	Jul. 03, 2011	Jul. 04, 2010	Jul. 03, 2011	Jul. 04, 2010
Changes in the total comprehensive income or loss, net of taxes
Net income	$ 293,784	$ 7,432	$ 303,938	$ 29,952
Net unrealized (loss)/gain on investments	(418)	778	(92)	1,308
Net unrealized (loss)/gain on derivatives	(360)	(393)	49	(1,252)
Foreign currency translation adjustments	190	1,886	1,591	(2,120)
Amortization of transition asset, prior-service cost and net actuarial loss	1,784	537	3,562	1,094
Total comprehensive income	$ 294,980	$ 10,240	$ 309,048	$ 28,982

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands	6 Months Ended
	Jul. 03, 2011	Jul. 04, 2010
Operating activities:
Net income	$ 303,938	$ 29,952
Adjustments:
Depreciation and amortization	102,310	133,268
Stock-based compensation expense	27,112	34,926
Non-cash restructuring of operations and other items, net	20,964	(41)
Write-down of investments		11,600
Gain on sale of business	(260,066)
(Gain)/loss on sale of property and equipment	(508)	268
Unrealized foreign exchange loss	2,581	990
Deferred taxes	(19,766)	183
Changes in assets and liabilities:
Accounts receivable, net	92,477	31,887
Inventories	(43,140)	(22,247)
Prepaid expenses, assets held for sale and other assets	(10,991)	6,343
Accounts payable	9,290	(14,410)
Accrued and other liabilities	(77,878)	(39,324)
Net cash provided by operating activities	146,323	173,395
Investing activities:
Purchases of debt securities available-for-sale	(24,131)	(1,189)
Proceeds from maturities and sales of debt securities available-for-sale	23,445	21,525
Purchases of other investments	(4,000)	(316)
Purchases of property and equipment	(37,198)	(48,373)
Proceeds from sale of property and equipment	896	199
Proceeds from sale of business, net of transaction costs	475,150
Net cash provided by/(used in) investing activities	434,162	(28,154)
Financing activities:
Redemption of convertible subordinated notes		(349,999)
Issuances of common stock	50,931	21,588
Purchase of common stock under repurchase programs	(396,792)	(80,732)
Net cash used in financing activities	(345,861)	(409,143)
Effect of exchange rate changes on cash and cash equivalents	(968)	(3,012)
Net change in cash and cash equivalents	233,656	(266,914)
Cash and cash equivalents at beginning of period	521,786	778,291
Cash and cash equivalents at end of period	$ 755,442	$ 511,377

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Common Stock Repurchases

6 Months Ended

Jul. 03, 2011

Common Stock Repurchases/Comprehensive Income [Abstract]

Common Stock Repurchases

Note 3 — Common Stock Repurchases

     On March 9, 2011, the Company’s Board of Directors authorized a new stock repurchase program of up to $750.0 million of its common stock. The repurchases under this program are funded from the proceeds of the sale of the external storage systems business, available cash and short-term investments. Under this program, the Company repurchased 41.6 million shares for $300.0 million during the three months ended July 3, 2011 and 56.3 million shares for $396.8 million during the six months ended July 3, 2011. The repurchased shares were retired immediately after the repurchases were completed. Retirement of the repurchased shares is recorded as a reduction of common stock and additional paid-in capital. As of July 3, 2011, $353.2 million remained available under this stock repurchase program.

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Benefit Obligations (Details) (USD $)	6 Months Ended		3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended
	Jul. 03, 2011	Apr. 06, 2009	Jul. 03, 2011 Pension Benefits [Member]	Jul. 04, 2010 Pension Benefits [Member]	Jul. 03, 2011 Pension Benefits [Member]	Jul. 04, 2010 Pension Benefits [Member]	Jul. 03, 2011 Post-retirement Benefits [Member]	Jul. 04, 2010 Post-retirement Benefits [Member]	Jul. 03, 2011 Post-retirement Benefits [Member]	Jul. 04, 2010 Post-retirement Benefits [Member]
Components of the net periodic benefit cost/(credit)
Service cost			$ 141,000	$ 112,000	$ 275,000	$ 230,000	$ 21,000	$ 21,000	$ 38,000	$ 41,000
Interest cost			16,929,000	17,553,000	33,779,000	35,170,000	621,000	612,000	1,246,000	1,220,000
Expected return on plan assets			(17,000,000)	(17,909,000)	(33,998,000)	(35,732,000)	(1,033,000)	(1,150,000)	(2,065,000)	(2,298,000)
Amortization of transition assets			(5,000)		(10,000)
Amortization of prior-service cost			10,000	10,000	20,000	20,000
Amortization of net actuarial loss			1,694,000	527,000	3,375,000	1,074,000	85,000		177,000
Total benefit cost/(credit)			1,769,000	293,000	3,441,000	762,000	(306,000)	(517,000)	(604,000)	(1,037,000)
Benefit Obligations (Textuals) [Abstract]
Interest on cash-balance accounts for participants in the cash-balance program		4.00%
Company's contribution to pension plans	20,700,000
Expected pension plan contributions for remainder of 2011	$ 44,600,000

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Commitments, Contingencies and Legal Matters (Tables)

6 Months Ended

Jul. 03, 2011

Commitments, Contingencies and Legal Matters [Abstract]

Summary of changes in product warranties

	Accrued Warranties
	(In thousands)
Balance as of December 31, 2010	$	17,617
Accruals for warranties issued during the period		3,663
Accruals related to pre-existing warranties (including changes in estimates)		521
Settlements made during the period (in cash or in kind)		(4,440	)
Balance as of July 3, 2011	$	17,361

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Segment and Geographic Information (Details) (USD $) In Thousands	3 Months Ended		6 Months Ended
	Jul. 03, 2011	Jul. 04, 2010	Jul. 03, 2011	Jul. 04, 2010
Company's revenues by geography based on the ordering location of the customer
Revenues	$ 500,644	$ 473,447	$ 973,908	$ 946,119
North America [Member]
Company's revenues by geography based on the ordering location of the customer
Revenues	122,881	110,379	243,799	200,145
China [Member]
Company's revenues by geography based on the ordering location of the customer
Revenues	120,318	79,433	215,298	166,149
Singapore [Member]
Company's revenues by geography based on the ordering location of the customer
Revenues	61,632	75,569	118,800	152,401
Taiwan [Member]
Company's revenues by geography based on the ordering location of the customer
Revenues	68,988	73,552	151,299	155,983
Other [Member]
Company's revenues by geography based on the ordering location of the customer
Revenues	79,405	79,149	147,604	165,908
Asia [Member]
Company's revenues by geography based on the ordering location of the customer
Revenues	330,343	307,703	633,001	640,441
Europe and the Middle East [Member]
Company's revenues by geography based on the ordering location of the customer
Revenues	$ 47,420	$ 55,365	$ 97,108	$ 105,533

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Restructuring, Asset Impairment Charges and Other Items

6 Months Ended

Jul. 03, 2011

Restructuring, Asset Impairment Charges and Other Items [Abstract]

Restructuring, Asset Impairment Charges and Other Items

Note 4 — Restructuring, Asset Impairment Charges and Other Items

     The following table summarizes items included in restructuring of operations and other items, net from continuing operations:

	Three Months Ended					Six Months Ended
	July 3, 2011			July 4, 2010		July 3, 2011			July 4, 2010
				(In thousands)
Lease and contract terminations	$	1,865	(a)	$	125	$	3,553	(a)	$	971
Employee severance and benefits		289	(b)		4,779		1,932	(b)		5,304
Total restructuring expenses		2,154			4,904		5,485			6,275
Other items		(13,058	)(c)		182		(13,583	)(c)		431
Total restructuring of operations and other items, net	$	(10,904	)	$	5,086	$	(8,098	)	$	6,706

(a)	Primarily relates to changes in estimates and changes in time value of accruals for previously accrued facility lease exit costs.
(b)	Primarily relates to restructuring actions taken during the first half of 2011 as the Company continues to streamline operations.
(c)	Primarily relates to the reversal of a $14.5 million sales and use tax related liability as a result of concluding various audits, partially offset by $1.3 million of costs associated with the transition service agreements entered into with NetApp in connection with the sale of the external storage systems business.

     In connection with the sale of the external storage systems business, the Company initiated certain restructuring actions. The results of those actions are included in discontinued operations and are summarized below:

	Three Months Ended						Six Months Ended
	July 3, 2011			July 4, 2010			July 3, 2011			July 4, 2010
				(In thousands)
Lease and contract terminations	$	868		$	(19	)	$	2,579		$	(19	)
Employee severance and benefits		3,153	(a)		—			14,173	(a)		—
Asset impairment and other exit charges		10,058	(b)		—			21,138	(b)		—
Total	$	14,079		$	(19	)	$	37,890		$	(19	)

(a)	Primarily represents severance accruals for the restructuring actions taken in connection with the sale of the external storage systems business.
(b)	Includes $9.5 million and $20.4 million for the write-down of certain assets related to discontinued operations during the three and six months ended July 3, 2011, respectively.

     The following table summarizes the significant activity within, and components of, the Company’s restructuring obligations from continuing operations and discontinued operations:

							Employee
	Asset Write-downs			Lease and Contract			Severance
	and Other Exit Costs			Terminations			and Benefits			Total
				(In thousands)
Beginning balance at December 31, 2010	$	—		$	20,905		$	4,951		$	25,856
Expense		21,138			6,132			16,105			43,375
Utilized		(21,138	)		(8,747	) (a)		(13,750	) (a)		(43,635	)
Ending balance at July 3, 2011	$	—		$	18,290	(b)	$	7,306	(b)	$	25,596

(a)	The amounts utilized represent cash payments.
(b)	The balance remaining for lease and contract terminations is expected to be paid during the remaining terms of the leases, which extend through 2015. The majority of the balance remaining for severance is expected to be paid by the end of 2011.

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Cash Equivalents and Investments (Details) (Fair Value, Measurements, Recurring [Member], USD $) In Thousands	Jul. 03, 2011	Dec. 31, 2010
Company's cash equivalents and investments measured at fair value
Cash equivalents measured at fair value	$ 606,670	$ 380,382
Investments measured at fair value	151,068	154,880
Fair Value Measurements Level 1 [Member] | Money Market Funds [Member]
Company's cash equivalents and investments measured at fair value
Cash equivalents measured at fair value	606,045	378,382
Fair Value Measurements Level 1 [Member] | Commercial Paper [Member]
Company's cash equivalents and investments measured at fair value
Cash equivalents measured at fair value	0
Fair Value Measurements Level 1 [Member] | Asset-backed and mortgage-backed securities [Member]
Company's cash equivalents and investments measured at fair value
Investments measured at fair value	0	0
Fair Value Measurements Level 1 [Member] | U.S. government and agency securities [Member]
Company's cash equivalents and investments measured at fair value
Cash equivalents measured at fair value		2,000
Investments measured at fair value	4,496	1,496
Fair Value Measurements Level 1 [Member] | Corporate debt securities [Member]
Company's cash equivalents and investments measured at fair value
Investments measured at fair value	0	0
Fair Value Measurements Level 1 [Member] | Long-term marketable equity securities [Member]
Company's cash equivalents and investments measured at fair value
Investments measured at fair value	1,907	1,681
Fair Value Measurements Level 1 [Member]
Company's cash equivalents and investments measured at fair value
Cash equivalents measured at fair value	606,045	380,382
Investments measured at fair value	4,496	1,496
Fair Value Measurements Level 2 | Money Market Funds [Member]
Company's cash equivalents and investments measured at fair value
Cash equivalents measured at fair value	0	0
Fair Value Measurements Level 2 | Commercial Paper [Member]
Company's cash equivalents and investments measured at fair value
Cash equivalents measured at fair value	625
Fair Value Measurements Level 2 | Asset-backed and mortgage-backed securities [Member]
Company's cash equivalents and investments measured at fair value
Investments measured at fair value	109,783	116,552
Fair Value Measurements Level 2 | U.S. government and agency securities [Member]
Company's cash equivalents and investments measured at fair value
Cash equivalents measured at fair value		0
Investments measured at fair value	22,924	24,502
Fair Value Measurements Level 2 | Corporate debt securities [Member]
Company's cash equivalents and investments measured at fair value
Investments measured at fair value	13,865	12,330
Fair Value Measurements Level 2 | Long-term marketable equity securities [Member]
Company's cash equivalents and investments measured at fair value
Investments measured at fair value	0	0
Fair Value Measurements Level 2
Company's cash equivalents and investments measured at fair value
Cash equivalents measured at fair value	625	0
Investments measured at fair value	146,572	153,384
Fair Value Measurements Level 3 | Money Market Funds [Member]
Company's cash equivalents and investments measured at fair value
Cash equivalents measured at fair value	0	0
Fair Value Measurements Level 3 | Commercial Paper [Member]
Company's cash equivalents and investments measured at fair value
Cash equivalents measured at fair value	0
Fair Value Measurements Level 3 | Asset-backed and mortgage-backed securities [Member]
Company's cash equivalents and investments measured at fair value
Investments measured at fair value	0	0
Fair Value Measurements Level 3 | U.S. government and agency securities [Member]
Company's cash equivalents and investments measured at fair value
Cash equivalents measured at fair value		0
Investments measured at fair value	0	0
Fair Value Measurements Level 3 | Corporate debt securities [Member]
Company's cash equivalents and investments measured at fair value
Investments measured at fair value	0	0
Fair Value Measurements Level 3 | Long-term marketable equity securities [Member]
Company's cash equivalents and investments measured at fair value
Investments measured at fair value	0	0
Fair Value Measurements Level 3
Company's cash equivalents and investments measured at fair value
Cash equivalents measured at fair value	0	0
Investments measured at fair value	0	0
Money Market Funds [Member]
Company's cash equivalents and investments measured at fair value
Cash equivalents measured at fair value	606,045	378,382
Commercial Paper [Member]
Company's cash equivalents and investments measured at fair value
Cash equivalents measured at fair value	625
Asset-backed and mortgage-backed securities [Member]
Company's cash equivalents and investments measured at fair value
Investments measured at fair value	109,783	116,552
U.S. government and agency securities [Member]
Company's cash equivalents and investments measured at fair value
Cash equivalents measured at fair value		2,000
Investments measured at fair value	27,420	25,998
Corporate debt securities [Member]
Company's cash equivalents and investments measured at fair value
Investments measured at fair value	13,865	12,330
Long-term marketable equity securities [Member]
Company's cash equivalents and investments measured at fair value
Investments measured at fair value	$ 1,907	$ 1,681

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Reconciliation of Basic and Diluted Shares (Tables)

6 Months Ended

Jul. 03, 2011

Reconciliation of Basic and Diluted [Abstract]

Reconciliation of the numerators and denominators used in the computation of basic and diluted per share amounts

	Three Months Ended				Six Months Ended
	July 3, 2011		July 4, 2010		July 3, 2011		July 4, 2010
			(In thousands)
Basic shares		594,957		651,778		605,315		654,192
Dilutive effect of stock options, employee stock purchase rights and restricted stock unit awards		16,136		9,762		15,933		9,665
Diluted shares		611,093		661,540		621,248		663,857

Weighted-average common share equivalents excluded from computation of diluted shares

	Three Months Ended				Six Months Ended
	July 3, 2011		July 4, 2010		July 3, 2011		July 4, 2010
			(In thousands)
Anti-dilutive securities:
Stock options		38,338		71,868		44,130		70,505
Restricted stock unit awards		1,445		306		93		401
Convertible notes		—		12,324		—		19,314

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Stock Based Compensation (Details) (USD $) In Thousands	3 Months Ended		6 Months Ended
	Jul. 03, 2011	Jul. 04, 2010	Jul. 03, 2011	Jul. 04, 2010
Stock-based compensation expense
Total stock-based compensation expense	$ 13,652	$ 15,174	$ 27,319	$ 28,297
Cost of revenues [Member]
Stock-based compensation expense
Total stock-based compensation expense	2,051	1,985	3,864	3,401
Research and development [Member]
Stock-based compensation expense
Total stock-based compensation expense	6,653	6,750	12,876	12,770
Selling, general and administrative [Member]
Stock-based compensation expense
Total stock-based compensation expense	$ 4,948	$ 6,439	$ 10,579	$ 12,126

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Balance Sheet Details (Details) (USD $)	3 Months Ended
	Jul. 03, 2011	Dec. 31, 2010
Inventories
Raw materials	$ 1,760,000	$ 30,691,000
Work-in-process	73,242,000	33,513,000
Finished goods	118,800,000	122,568,000
Total inventories	193,802,000	186,772,000
Balance Sheet Details (Textuals) [Abstract]
Inventory reclassified to held for sale	$ 16,200,000

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Comprehensive Income (Tables)

6 Months Ended

Jul. 03, 2011

Common Stock Repurchases/Comprehensive Income [Abstract]

Changes in the total comprehensive income or loss, net of taxes

	Three Months Ended						Six Months Ended
	July 3, 2011			July 4, 2010			July 3, 2011			July 4, 2010
				(In thousands)
Net income	$	293,784		$	7,432		$	303,938		$	29,952
Net unrealized (loss)/gain on investments		(418	)		778			(92	)		1,308
Net unrealized (loss)/gain on derivatives		(360	)		(393	)		49			(1,252	)
Foreign currency translation adjustments		190			1,886			1,591			(2,120	)
Amortization of transition asset, prior-service cost and net actuarial loss		1,784			537			3,562			1,094
Total comprehensive income	$	294,980		$	10,240		$	309,048		$	28,982

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Income Taxes

6 Months Ended

Jul. 03, 2011

Income Taxes [Abstract]

Income Taxes

Note 12 — Income Taxes

     The Company recorded income tax provisions from continuing operations of $8.9 million and $4.8 million for the three and six months ended July 3, 2011, respectively, and an income tax provision from continuing operations of $6.9 million and an income tax benefit from continuing operations of $16.2 million for the three and six months ended July 4, 2010, respectively.

     The income tax provision from continuing operations for the six months ended July 3, 2011 includes a reversal of $8.2 million in liabilities for uncertain tax positions, which included previously unrecognized tax benefits of $4.8 million and interest and penalties of $3.4 million, as a result of the expiration of statutes of limitations in multiple jurisdictions.

     The income tax benefit from continuing operations for the six months ended July 4, 2010 included a reversal of $27.9 million in liabilities for uncertain tax positions, which included previously unrecognized tax benefits of $12.2 million and interest and penalties of $15.7 million, as a result of the expiration of statutes of limitations in multiple jurisdictions.

     The Company computes its tax provision using an estimated annual tax rate. The Company excludes certain loss jurisdictions from the computation of the estimated annual rate when no benefit can be realized on those losses. With the exception of certain foreign jurisdictions, the Company believes it is not more likely than not that the future benefit of the deferred tax assets will be realized.

     As of July 3, 2011, the Company had $138.6 million of unrecognized tax benefits, for which the Company is unable to make a reasonably reliable estimate as to when cash settlement with a taxing authority may occur. It is reasonably possible that the total amount of unrecognized tax benefits will increase or decrease in the next 12 months. Such changes could occur based on the normal expiration of statutes of limitations or the possible conclusion of ongoing tax audits in various jurisdictions around the world. If those events occur within the next 12 months, the Company estimates that the unrecognized tax benefits, plus accrued interest and penalties, could decrease by up to $18.5 million.

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Discontinued Operations (Details) (USD $)	3 Months Ended		6 Months Ended
	Jul. 03, 2011	Jul. 04, 2010	Jul. 03, 2011	Jul. 04, 2010	May 06, 2011
(Loss)/income from discontinued operations for the external storage systems business
Revenues	$ 51,675,000	$ 165,958,000	$ 207,365,000	$ 330,468,000
(Loss)/income before income taxes	(14,590,000)	6,939,000	(22,500,000)	19,413,000
Gain on sale of external storage systems business	260,066,000		260,066,000
(Benefit from)/provision for income taxes	(19,900,000)	2,189,000	(19,418,000)	6,491,000
Income from discontinued operations	265,376,000	4,750,000	256,984,000	12,922,000
Discontinued Operations (Textuals) [Abstract]
Transitional services as part of asset purchase agreement			up to eighteen months
Agreed sale price for external storage system					480,000,000
Write down of assets	9,500,000		20,400,000
Released deferred tax liabilities related to sale of external storage systems business	$ 19,700,000		$ 19,700,000

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Benefit Obligations

6 Months Ended

Jul. 03, 2011

Benefit Obligations [Abstract]

Benefit Obligations

Note 5 — Benefit Obligations

     The Company has pension plans covering substantially all former Agere Systems Inc. (“Agere”) U.S. employees, excluding management employees hired after June 30, 2003. Retirement benefits are offered under defined benefit pension plans, which include a management plan and a represented plan. The payments under the management plan are based on an adjusted career-average-pay formula or a cash-balance program. The cash-balance program provides for annual company contributions based on a participant’s age, compensation and interest on existing balances. It covers employees of certain companies acquired by Agere since 1996 and management employees hired after January 1, 1999 and before July 1, 2003. The payments under the represented plan are based on a dollar-per-month formula. Since February 2009, there have been no active participants under the represented plan. The Company also has a non-qualified supplemental pension plan in the U.S. that principally provides benefits based on compensation in excess of amounts that can be considered under a tax qualified plan. The Company also provides post-retirement life insurance coverage under a group life insurance plan for former Agere employees excluding participants in the cash-balance program and management employees hired after June 30, 2003. The Company also has pension plans covering certain international employees.

     Effective April 6, 2009, the Company froze the U.S. management defined benefit pension plan. Participants in the adjusted career-average-pay program will not earn any future service accruals after that date. Participants in the cash-balance program will not earn any future service accruals, but will continue to earn 4% interest per year on their cash-balance accounts.

     The following table summarizes the components of the net periodic benefit cost/(credit):

	Three Months Ended
	July 3, 2011						July 4, 2010
	Pension			Post-retirement			Pension			Post-retirement
	Benefits			Benefits			Benefits			Benefits
				(In thousands)
Service cost	$	141		$	21		$	112		$	21
Interest cost		16,929			621			17,553			612
Expected return on plan assets		(17,000	)		(1,033	)		(17,909	)		(1,150	)
Amortization of transition asset		(5	)		—			—			—
Amortization of prior service cost		10			—			10			—
Amortization of net actuarial loss		1,694			85			527			—
Total benefit cost/(credit)	$	1,769		$	(306	)	$	293		$	(517	)

	Six Months Ended
	July 3, 2011						July 4, 2010
	Pension			Post-retirement			Pension			Post-retirement
	Benefits			Benefits			Benefits			Benefits
				(In thousands)
Service cost	$	275		$	38		$	230		$	41
Interest cost		33,779			1,246			35,170			1,220
Expected return on plan assets		(33,998	)		(2,065	)		(35,732	)		(2,298	)
Amortization of transition asset		(10	)		—			—			—
Amortization of prior service cost		20			—			20			—
Amortization of net actuarial loss		3,375			177			1,074			—
Total benefit cost/(credit)	$	3,441		$	(604	)	$	762		$	(1,037	)

     During the six months ended July 3, 2011, the Company contributed $20.7 million to its pension plans. The Company expects to contribute an additional $44.6 million to its pension plans for the remainder of 2011. The Company does not expect to contribute to its post-retirement benefit plan in 2011.

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Discontinued Operations

6 Months Ended

Jul. 03, 2011

Discontinued Operations [Abstract]

Discontinued Operations

Note 15 — Discontinued Operations

     On May 6, 2011, the Company completed the sale of its external storage systems business to NetApp pursuant to the terms of the asset purchase agreement and received cash consideration of $480.0 million. The strategic decision to divest the external storage systems business was based on the Company’s expectation that long-term shareholder value can be maximized by becoming a pure-play semiconductor company. Under the terms of the agreement, NetApp purchased substantially all the assets of the Company’s external storage systems business, which developed and delivered external storage systems products and technology to a wide range of partners that provide storage solutions to end customers. As part of the asset purchase agreement, certain transitional services will be provided to NetApp for a period of up to eighteen months. The purpose of these services is to provide short-term assistance to the buyer in assuming the operations of the external storage systems business.

     Following is selected financial information included in income from discontinued operations:

	Three Months Ended					Six Months Ended
	July 3, 2011			July 4, 2010		July 3, 2011			July 4, 2010
				(In thousands)
Revenues	$	51,675		$	165,958	$	207,365		$	330,468
(Loss)/income before income taxes	$	(14,590	)	$	6,939	$	(22,500	)	$	19,413
Gain on sale of external storage systems business		260,066			—		260,066			—
(Benefit from)/provision for income taxes		(19,900	)		2,189		(19,418	)		6,491
Income from discontinued operations	$	265,376		$	4,750	$	256,984		$	12,922

     During the three and six months ended July 3, 2011, the Company recorded write-downs of $9.5 million and $20.4 million, respectively, related to assets associated with discontinued operations. Further, the Company released $19.7 million of deferred tax liabilities related to tax deductible goodwill in connection with the sale of the external storage systems business during the three months ended July 3, 2011.

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Restructuring, Asset Impairment Charges and Other Items (Details 2) (USD $)	3 Months Ended	6 Months Ended
	Jul. 03, 2011	Jul. 03, 2011
Activities affecting the restructuring obligations
Beginning balance at December 31, 2010		$ 25,856,000
Expense		43,375,000
Utilized		(43,635,000)
Ending balance at July 3, 2011	25,596,000	25,596,000
Restructuring Asset Impairment Charges and Other Items (Textuals) [Abstract]
Write-downs included in Asset impairment and other exit charges	9,500,000	20,400,000
Sales and use tax liability		14,500,000
Cost associated with transition service agreements		1,300,000
Assets impairment and other exit charges [Member]
Activities affecting the restructuring obligations
Beginning balance at December 31, 2010		0
Expense		21,138,000
Utilized		(21,138,000)
Ending balance at July 3, 2011	0	0
Lease and contract terminations [Member]
Activities affecting the restructuring obligations
Beginning balance at December 31, 2010		20,905,000
Expense		6,132,000
Utilized		(8,747,000)
Ending balance at July 3, 2011	18,290,000	18,290,000
Employee severance and benefits [Member]
Activities affecting the restructuring obligations
Beginning balance at December 31, 2010		4,951,000
Expense		16,105,000
Utilized		(13,750,000)
Ending balance at July 3, 2011	$ 7,306,000	$ 7,306,000

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Segment and Geographic Information (Tables)

6 Months Ended

Jul. 03, 2011

Segment and Geographic Information [Abstract]

Company's revenues by geography based on the ordering location of the customer

	Three Months Ended				Six Months Ended
	July 3, 2011		July 4, 2010		July 3, 2011		July 4, 2010
			(In thousands)
North America*	$	122,881	$	110,379	$	243,799	$	200,145
Asia:
China		120,318		79,433		215,298		166,149
Singapore		61,632		75,569		118,800		152,401
Taiwan		68,988		73,552		151,299		155,983
Other		79,405		79,149		147,604		165,908
Total Asia		330,343		307,703		633,001		640,441
Europe and the Middle East		47,420		55,365		97,108		105,533
Total	$	500,644	$	473,447	$	973,908	$	946,119

* Primarily the United States.

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Condensed Consolidated Statements of Operations (Unaudited) (Parenthetical) (USD $) In Thousands	3 Months Ended	6 Months Ended
	Jul. 03, 2011	Jul. 03, 2011
Condensed Consolidated Statements of Operations [Abstract]
Gain on sale of business	$ 260,066	$ 260,066

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Basis of Presentation (Policies)

6 Months Ended

Jul. 03, 2011

Basis of Presentation [Abstract]

Recent Accounting Pronouncements

     Pronouncements not yet effective:

     In May 2011, the Financial Accounting Standards Board (“FASB”) issued additional guidance on fair value measurements and related disclosures. The new guidance clarifies the application of existing guidance on fair value measurement for non-financial assets and requires the disclosure of quantitative information about the unobservable inputs used in a fair value measurement. This guidance is effective on a prospective basis for interim and annual periods beginning after December 15, 2011. The adoption of this guidance will not have any impact on the Company’s results of operations or financial position.

     In June 2011, the FASB issued amended guidance regarding the presentation of comprehensive income. The amended guidance gives an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The amended guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. The amended guidance also requires presentation of adjustments for items that are reclassified from other comprehensive income to net income in the statement where the components of net income and the components of other comprehensive income are presented. This guidance is effective on a retrospective basis for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011. The Company is currently evaluating the disclosure impact of the adoption of this guidance on its results of operations and financial position.

     Pronouncements adopted during the six months ended July 3, 2011:

     In October 2009, the FASB amended revenue recognition guidance on multiple-deliverable arrangements to address how to separate deliverables and how to measure and allocate arrangement consideration. The new guidance requires the use of management’s best estimate of selling price for the deliverables in an arrangement when a vendor does not have specific objective evidence of selling price or third party evidence of selling price. In addition, excluding specific software revenue guidance, the residual method of allocating arrangement consideration is no longer permitted, and an entity is required to allocate arrangement consideration using the relative selling price method. This guidance also expands the disclosure requirements to include both quantitative and qualitative information. The Company adopted this guidance in the first quarter of 2011. The adoption did not impact the Company’s results of operations or financial position.

     In October 2009, the FASB issued guidance to clarify that tangible products containing software components and non-software components that function together to deliver a product’s essential functionality will be considered non-software deliverables and will be scoped out of the software revenue recognition guidance. The Company adopted this guidance in the first quarter of 2011. The adoption did not impact the Company’s results of operations or financial position.

     In December 2010, the FASB issued guidance to clarify that, when presenting comparative financial statements for business combinations that occurred during the current year, a public entity should disclose revenue and earnings of the combined entity as though the business combinations had occurred as of the beginning of the comparable prior annual reporting period. The update also expands the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The Company adopted this guidance in the first quarter of 2011. The adoption did not impact the Company’s results of operations or financial position.

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Cash Equivalents and Investments (Details 2) (USD $) In Thousands	Jul. 03, 2011	Dec. 31, 2010
Short-term Debt [Member]
Company's available-for-sale securities
Available-for-sale Securities, Amortized Cost	$ 142,192	$ 145,430
Available-for-sale Securities, Gross Unrealized Gains	9,131	10,000
Available-for-sale Securities, Gross Unrealized Losses	(255)	(550)
Available-for-sale Equity Securities Fair Value	151,068	154,880
Asset-backed and mortgage-backed securities [Member]
Company's available-for-sale securities
Available-for-sale Securities, Amortized Cost	101,714	107,891
Available-for-sale Securities, Gross Unrealized Gains	8,294	9,012
Available-for-sale Securities, Gross Unrealized Losses	(225)	(351)
Available-for-sale Equity Securities Fair Value	109,783	116,552
U.S. government and agency securities [Member]
Company's available-for-sale securities
Available-for-sale Securities, Amortized Cost	26,801	25,313
Available-for-sale Securities, Gross Unrealized Gains	634	812
Available-for-sale Securities, Gross Unrealized Losses	(15)	(127)
Available-for-sale Equity Securities Fair Value	27,420	25,998
Corporate debt securities [Member]
Company's available-for-sale securities
Available-for-sale Securities, Amortized Cost	13,677	12,226
Available-for-sale Securities, Gross Unrealized Gains	203	176
Available-for-sale Securities, Gross Unrealized Losses	(15)	(72)
Available-for-sale Equity Securities Fair Value	13,865	12,330
Long-term marketable equity securities [Member]
Company's available-for-sale securities
Available-for-sale Equity Securities, Amortized Cost	852	852
Available-for-sale Securities, Gross Unrealized Gains	1,097	868
Available-for-sale Securities, Gross Unrealized Losses	(42)	(39)
Available-for-sale Equity Securities Fair Value	$ 1,907	$ 1,681

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Restructuring, Asset Impairment Charges and Other Items (Tables)

6 Months Ended

Jul. 03, 2011

Restructuring, Asset Impairment Charges and Other Items [Abstract]

Restructuring of operations and other items net from continued operations

	Three Months Ended					Six Months Ended
	July 3, 2011			July 4, 2010		July 3, 2011			July 4, 2010
				(In thousands)
Lease and contract terminations	$	1,865	(a)	$	125	$	3,553	(a)	$	971
Employee severance and benefits		289	(b)		4,779		1,932	(b)		5,304
Total restructuring expenses		2,154			4,904		5,485			6,275
Other items		(13,058	)(c)		182		(13,583	)(c)		431
Total restructuring of operations and other items, net	$	(10,904	)	$	5,086	$	(8,098	)	$	6,706

(a)	Primarily relates to changes in estimates and changes in time value of accruals for previously accrued facility lease exit costs.
(b)	Primarily relates to restructuring actions taken during the first half of 2011 as the Company continues to streamline operations.
(c)	Primarily relates to the reversal of a $14.5 million sales and use tax related liability as a result of concluding various audits, partially offset by $1.3 million of costs associated with the transition service agreements entered into with NetApp in connection with the sale of the external storage systems business.

Restructuring of operations and other items net from discontinued operations

	Three Months Ended						Six Months Ended
	July 3, 2011			July 4, 2010			July 3, 2011			July 4, 2010
				(In thousands)
Lease and contract terminations	$	868		$	(19	)	$	2,579		$	(19	)
Employee severance and benefits		3,153	(a)		—			14,173	(a)		—
Asset impairment and other exit charges		10,058	(b)		—			21,138	(b)		—
Total	$	14,079		$	(19	)	$	37,890		$	(19	)

(a)	Primarily represents severance accruals for the restructuring actions taken in connection with the sale of the external storage systems business.
(b)	Includes $9.5 million and $20.4 million for the write-down of certain assets related to discontinued operations during the three and six months ended July 3, 2011, respectively.

Activities affecting the restructuring obligations

							Employee
	Asset Write-downs			Lease and Contract			Severance
	and Other Exit Costs			Terminations			and Benefits			Total
				(In thousands)
Beginning balance at December 31, 2010	$	—		$	20,905		$	4,951		$	25,856
Expense		21,138			6,132			16,105			43,375
Utilized		(21,138	)		(8,747	) (a)		(13,750	) (a)		(43,635	)
Ending balance at July 3, 2011	$	—		$	18,290	(b)	$	7,306	(b)	$	25,596

(a)	The amounts utilized represent cash payments.
(b)	The balance remaining for lease and contract terminations is expected to be paid during the remaining terms of the leases, which extend through 2015. The majority of the balance remaining for severance is expected to be paid by the end of 2011.

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Basis of Presentation

6 Months Ended

Jul. 03, 2011

Basis of Presentation [Abstract]

Basis of Presentation

Note 1 — Basis of Presentation

     For financial reporting purposes, LSI Corporation (“LSI” or the “Company”) reports on a 13- or 14-week quarter with the year ending December 31. The second quarter of 2011 and 2010 consisted of 13 weeks each and ended on July 3, 2011 and on July 4, 2010, respectively. The first six months of 2011 and 2010 consisted of approximately 26 weeks each. The results of operations for the three and six months ended July 3, 2011 are not necessarily indicative of the results to be expected for the full year.

     On May 6, 2011, the Company completed the sale of its external storage systems business to NetApp, Inc. (“NetApp”). The results of the external storage systems business are presented as discontinued operations in the Company’s statements of operations and, as such, have been excluded from all line items other than “income from discontinued operations” for all periods presented. Since the first quarter of 2011, the Company operates in one reportable segment. Before it was sold, the external storage systems business was part of the Storage Systems segment. The results of the redundant array of independent disks (“RAID”) adapter business, which were formerly included in the Storage Systems segment, are now included in the Company’s remaining reportable segment.

     The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ significantly from these estimates.

     In management’s opinion, the accompanying unaudited condensed consolidated financial statements contain all normal recurring adjustments necessary for a fair statement of the Company’s financial position, results of operations, and cash flows for the interim periods presented. While the Company believes that the disclosures are adequate to make the information not misleading, these financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

Recent Accounting Pronouncements

     Pronouncements not yet effective:

     In May 2011, the Financial Accounting Standards Board (“FASB”) issued additional guidance on fair value measurements and related disclosures. The new guidance clarifies the application of existing guidance on fair value measurement for non-financial assets and requires the disclosure of quantitative information about the unobservable inputs used in a fair value measurement. This guidance is effective on a prospective basis for interim and annual periods beginning after December 15, 2011. The adoption of this guidance will not have any impact on the Company’s results of operations or financial position.

     In June 2011, the FASB issued amended guidance regarding the presentation of comprehensive income. The amended guidance gives an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The amended guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. The amended guidance also requires presentation of adjustments for items that are reclassified from other comprehensive income to net income in the statement where the components of net income and the components of other comprehensive income are presented. This guidance is effective on a retrospective basis for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011. The Company is currently evaluating the disclosure impact of the adoption of this guidance on its results of operations and financial position.

     Pronouncements adopted during the six months ended July 3, 2011:

     In October 2009, the FASB amended revenue recognition guidance on multiple-deliverable arrangements to address how to separate deliverables and how to measure and allocate arrangement consideration. The new guidance requires the use of management’s best estimate of selling price for the deliverables in an arrangement when a vendor does not have specific objective evidence of selling price or third party evidence of selling price. In addition, excluding specific software revenue guidance, the residual method of allocating arrangement consideration is no longer permitted, and an entity is required to allocate arrangement consideration using the relative selling price method. This guidance also expands the disclosure requirements to include both quantitative and qualitative information. The Company adopted this guidance in the first quarter of 2011. The adoption did not impact the Company’s results of operations or financial position.

     In October 2009, the FASB issued guidance to clarify that tangible products containing software components and non-software components that function together to deliver a product’s essential functionality will be considered non-software deliverables and will be scoped out of the software revenue recognition guidance. The Company adopted this guidance in the first quarter of 2011. The adoption did not impact the Company’s results of operations or financial position.

     In December 2010, the FASB issued guidance to clarify that, when presenting comparative financial statements for business combinations that occurred during the current year, a public entity should disclose revenue and earnings of the combined entity as though the business combinations had occurred as of the beginning of the comparable prior annual reporting period. The update also expands the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The Company adopted this guidance in the first quarter of 2011. The adoption did not impact the Company’s results of operations or financial position.

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Segment and Geographic Information

6 Months Ended

Jul. 03, 2011

Segment and Geographic Information [Abstract]

Segment and Geographic Information

Note 10 — Segment and Geographic Information

     Historically, the Company operated in two reportable segments — the Semiconductor segment and the Storage Systems segment. The Semiconductor segment designs, develops and markets highly complex integrated circuits for storage and networking applications. These solutions include both custom solutions and standard products. The Storage Systems segment offered external storage systems and RAID adapters for computer servers and associated software for attaching storage devices to computer servers. On March 9, 2011, the Company entered into a definitive agreement to sell its external storage systems business to NetApp and started to operate its RAID adapter business as part of its semiconductor business. Accordingly, the Company now has one reportable segment. The change has been reflected in the Company’s segment reporting for all periods presented.

Information about Geographic Areas

     The following table summarizes the Company’s revenues by geography based on the ordering location of the customer. Because the Company sells its products primarily to other sellers of technology products and not to end-users, the information in the table below may not accurately reflect geographic end-demand for its products.

	Three Months Ended				Six Months Ended
	July 3, 2011		July 4, 2010		July 3, 2011		July 4, 2010
			(In thousands)
North America*	$	122,881	$	110,379	$	243,799	$	200,145
Asia:
China		120,318		79,433		215,298		166,149
Singapore		61,632		75,569		118,800		152,401
Taiwan		68,988		73,552		151,299		155,983
Other		79,405		79,149		147,604		165,908
Total Asia		330,343		307,703		633,001		640,441
Europe and the Middle East		47,420		55,365		97,108		105,533
Total	$	500,644	$	473,447	$	973,908	$	946,119

* Primarily the United States.

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Commitments, Contingencies and Legal Matters (Details) (USD $)	1 Months Ended	6 Months Ended
	Feb. 28, 2009	Jul. 03, 2011	Dec. 31, 2010
Summary of changes in product warranties
Balance as of December 31, 2010		$ 17,617,000
Accruals for warranties issued during the period		3,663,000
Accruals related to pre-existing warranties (including changes in estimates)		521,000
Settlements made during the period (in cash or in kind)		(4,440,000)
Balance as of July 3, 2011		17,361,000
Commitments, Contingencies and Legal Matters (Textuals) [Abstract]
Total purchase commitments due through 2014		396,600,000
Company's percentage of take-or-pay agreement with SMP		51.00%
Terms in which take-or-pay agreement may be terminated by either party		Upon two years written notice
Warranty period for finished goods against defects in material and workmanship under normal use and service		one to three years
Jury award to GE for patent infringement	7,600,000
Outstanding obligation related to standby letters of credit		$ 3,500,000	$ 3,900,000

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Stock Based Compensation (Details 1) (USD $) In Thousands, except Per Share data	6 Months Ended
	Jul. 03, 2011
Changes in stock options outstanding
Options outstanding at December 31, 2010, Number of Shares	71,607
Options outstanding at December 31, 2010, Weighted-Average Exercise Price Per Share	$ 6.97
Options granted, number of shares	8,869
Options granted, Weighted-Average Exercise Price Per Share	$ 6.35
Options exercised, Number of Shares	(5,327)
Options exercised, Weighted-Average Exercise Price Per Share	$ 5.03
Options canceled number of Shares	(5,098)
Options canceled, Weighted-Average Exercise Price Per Share	$ 15.99
Options outstanding at July 3, 2011, Number of Shares	70,051
Options outstanding at July 3, 2011, Weighted-Average Exercise Price Per Share	$ 6.38
Options exercisable at July 3, 2011, Number of Shares	44,473
Options exercisable at July 3, 2011, Weighted-Average Exercise Price Per Share	$ 7.10

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Commitments, Contingencies and Legal Matters

6 Months Ended

Jul. 03, 2011

Commitments, Contingencies and Legal Matters [Abstract]

Commitments, Contingencies and Legal Matters

Note 14 — Commitments, Contingencies and Legal Matters

Purchase Commitments

     The Company maintains purchase commitments with certain suppliers, primarily for raw materials and manufacturing services and for some non-production items. Purchase commitments for inventory materials are generally restricted to a forecasted time horizon as mutually agreed upon between the parties. This forecasted time horizon can vary for different suppliers. As of July 3, 2011, the Company had purchase commitments of $396.6 million, which are due through 2014.

     The Company has a take-or-pay agreement with SMP under which it has agreed to purchase 51% of the managed wafer capacity from SMP’s integrated circuit manufacturing facility, and GLOBALFOUNDRIES has agreed to purchase the remaining managed wafer capacity. SMP determines its managed wafer capacity each year based on forecasts provided by the Company and GLOBALFOUNDRIES. If the Company fails to purchase its required commitments, it will be required to pay SMP for the fixed costs associated with the unpurchased wafers. GLOBALFOUNDRIES is similarly obligated with respect to the wafers allotted to it. The agreement may be terminated by either party upon two years written notice. The agreement may also be terminated for material breach, bankruptcy or insolvency.

Guarantees

     Product Warranties:

     The Company warrants finished goods against defects in material and workmanship under normal use and service for periods of generally one to three years. A liability for estimated future costs under product warranties is recorded when products are shipped.

     The following table sets forth a summary of changes in product warranties:

	Accrued Warranties
	(In thousands)
Balance as of December 31, 2010	$	17,617
Accruals for warranties issued during the period		3,663
Accruals related to pre-existing warranties (including changes in estimates)		521
Settlements made during the period (in cash or in kind)		(4,440	)
Balance as of July 3, 2011	$	17,361

     Standby Letters of Credit:

     As of July 3, 2011 and December 31, 2010, the Company had outstanding obligations relating to standby letters of credit of $3.5 million and $3.9 million, respectively. Standby letters of credit are financial guarantees provided by third parties for leases, customs and certain self-insured risks. If the guarantees are called, the Company must reimburse the provider of the guarantee. The fair value of the letters of credit approximates the contract amounts. The standby letters of credit generally renew annually.

Indemnifications

     The Company is a party to a variety of agreements pursuant to which it may be obligated to indemnify the other party. Typically, these obligations arise primarily in connection with sales contracts and license agreements or the sale of assets, under which the Company customarily agrees to hold the other party harmless against losses arising from a breach of warranties, representations and covenants related to such matters as title to assets sold, validity of certain intellectual property rights, non-infringement of third-party rights, and certain income tax-related matters. In each of these circumstances, payment by the Company is typically subject to the other party making a claim to and cooperating with the Company pursuant to the procedures specified in the particular contract. This usually allows the Company to challenge the other party’s claims or, in case of breach of intellectual property representations or covenants, to control the defense or settlement of any third-party claims brought against the other party. Further, the Company’s obligations under these agreements may be limited in terms of activity (typically to replace or correct the products or terminate the agreement with a refund to the other party), duration and/or amounts. In some instances, the Company may have recourse against third parties covering certain payments made by the Company.

Legal Matters

     On December 6, 2006, Sony Ericsson Mobile Communications USA Inc. (“Sony Ericsson”) filed a lawsuit against Agere in Wake County Superior Court in North Carolina, alleging unfair and deceptive trade practices, fraud and negligent misrepresentation in connection with Agere’s engagement with Sony Ericsson to develop a wireless data card for personal computers. The complaint claimed an unspecified amount of damages and sought compensatory damages, treble damages and attorneys’ fees. In August, 2007, the case was dismissed for improper venue. On October 22, 2007, Sony Ericsson filed a lawsuit in the Supreme Court of the State of New York, New York County against LSI, raising substantially the same allegations and seeking substantially the same relief as the North Carolina proceeding. In January 2010, Sony Ericsson amended its complaint by adding claims for fraudulent concealment and gross negligence. On September 10, 2010, LSI filed a motion for summary judgment. In January 2011, LSI and Sony Ericsson held an unsuccessful mediation in this matter. On August 4, 2011, the court granted LSI’s motion and ordered the dismissal of all of Sony Ericsson’s claims.

     On March 23, 2007, CIF Licensing, LLC, d/b/a GE Licensing (“GE”) filed a lawsuit against Agere in the United States District Court for the District of Delaware, asserting that Agere products infringe patents in a portfolio of patents GE acquired from Motorola. GE has asserted that four of the patents cover inventions relating to modems. GE is seeking monetary damages. Agere believes it has a number of defenses to the infringement claims in this action, including laches, exhaustion and its belief that it has a license to the patents. The court postponed hearing motions based on these defenses until after the trial, and did not allow Agere to present evidence on these defenses at trial. On February 17, 2009, the jury in this case returned a verdict finding that three of the four patents were invalid and that Agere products infringed the one patent found to be valid and awarding GE $7.6 million for infringement of that patent. The jury also found Agere’s infringement was willful, which means that the judge could increase the amount of damages up to three times its original amount. The court has not scheduled hearings on Agere’s post-trial motions related to its defenses. One of these motions seeks to have a mis-trial declared based on Agere’s belief that GE withheld evidence in discovery, which affected Agere’s ability to present evidence at trial. On October 6, 2010, a special master appointed by the court determined that GE’s actions were not wrongful and that the evidence withheld by GE was not material to the jury’s findings. Agere is challenging this determination. If the jury’s verdict is entered by the court, Agere would also expect to be required to pay interest from the date of infringing sales. If the verdict is entered, Agere intends to appeal the matter. On February 17, 2010, the court issued an order granting GE’s summary judgment motions seeking to bar Agere’s defenses of laches, exhaustion, and license and denying Agere’s summary judgment motions concerning the same defenses. On July 30, 2010, the court held that one of the patents found invalid by the jury was valid. The court also held that the February 17, 2010 order was not inconsistent with its previous ruling that Agere would be permitted to renew its laches, licensing, and exhaustion defenses, and that Agere has not been precluded from asserting them post-trial. The Company is unable to estimate the possible loss or range of loss, if any, that may be incurred with respect to this matter.

     On December 1, 2010, Rambus Inc. (“Rambus”) filed a lawsuit against LSI in the United States District Court for the Northern District of California alleging that LSI products infringe one or more of nineteen Rambus patents. These products contain either DDR-type memory controllers or certain high-speed SerDes peripheral interfaces, such as PCI Express interfaces and certain SATA and SAS interfaces. Rambus is seeking unspecified monetary damages, treble damages and costs, expenses and attorneys’ fees due to alleged willfulness, interest, and permanent injunctive relief in this action. In addition, on December 1, 2010, Rambus filed an action with the International Trade Commission (“ITC”) against LSI and five of its customers alleging that LSI products infringe six of the nineteen patents in the California case. Rambus also named five other companies and a number of their customers in the ITC action. Rambus is seeking an exclusionary order against LSI and its customers in the ITC action, which, if granted, would preclude LSI and its customers from selling these products in the U.S. The ITC instituted its investigation on December 29, 2010. LSI has filed an answer in the ITC proceedings and has requested a stay in the California case. The Company is unable to estimate the possible loss or range of loss, if any, that may be incurred with respect to this matter.

     In addition to the foregoing, the Company and its subsidiaries are parties to other litigation matters and claims in the normal course of business. The Company does not believe, based on currently available facts and circumstances, that the final outcome of these other matters, taken individually or as a whole, will have a material adverse effect on the Company’s consolidated results of operations or financial position. However, the pending unsettled lawsuits may involve complex questions of fact and law and may require the expenditure of significant funds and the diversion of other resources to defend. From time to time, the Company may enter into confidential discussions regarding the potential settlement of such lawsuits. However, there can be no assurance that any such discussions will occur or will result in a settlement. Moreover, the settlement of any pending litigation could require the Company to incur substantial costs and, in the case of the settlement of any intellectual property proceeding against the Company, may require the Company to obtain a license to a third-party’s intellectual property that could require royalty payments in the future and the Company to grant a license to certain of its intellectual property to a third party under a cross-license agreement. The results of litigation are inherently uncertain, and material adverse outcomes are possible.

     The Company has not provided accruals for any legal matters in its financial statements as potential losses for such matters are not considered probable and reasonably estimable. However, because such matters are subject to many uncertainties, the ultimate outcomes are not predictable, and there can be no assurances that the actual amounts required to satisfy alleged liabilities from the matters described above will not have a material adverse effect on its consolidated results of operations, financial position or cash flows.

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Condensed Consolidated Balance Sheets (Unaudited) (USD $) In Thousands	Jul. 03, 2011	Dec. 31, 2010
ASSETS
Cash and cash equivalents	$ 755,442	$ 521,786
Short-term investments	151,068	154,880
Accounts receivable, less allowances of $11,875 and $9,701, respectively	234,127	326,604
Inventories	193,802	186,772
Prepaid expenses and other current assets	73,805	73,314
Assets held for sale	18,558	464
Total current assets	1,426,802	1,263,820
Property and equipment, net	178,517	223,181
Identified intangible assets, net	490,989	561,137
Goodwill	72,377	188,698
Other assets	147,213	188,076
Total assets	2,315,898	2,424,912
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	185,458	173,919
Accrued salaries, wages and benefits	87,728	126,307
Other accrued liabilities	174,535	184,402
Total current liabilities	447,721	484,628
Pension and post-retirement benefit obligations	443,392	463,119
Income taxes payable - non-current	85,087	85,717
Other non-current liabilities	38,974	73,946
Total liabilities	1,015,174	1,107,410
Commitments and contingencies (Note 14)
Stockholders' equity:
Preferred stock, $.01 par value: 2000 shares authorized; none outstanding	0	0
Common stock, $.01 par value: 1,300,000 shares authorized; 571,228 and 615,191 shares outstanding, respectively	5,712	6,152
Additional paid-in capital	5,672,751	5,998,137
Accumulated deficit	(4,064,584)	(4,368,522)
Accumulated other comprehensive loss	(313,155)	(318,265)
Total stockholders' equity	1,300,724	1,317,502
Total liabilities and stockholders' equity	$ 2,315,898	$ 2,424,912

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Common Stock Repurchases (Details) (USD $) In Millions	3 Months Ended	6 Months Ended
	Jul. 03, 2011	Jul. 03, 2011	Mar. 09, 2011
Common Stock Repurchases (Textuals) [Abstract]
Maximum amount authorized under stock repurchase program			$ 750.0
Value of shares remaining under stock repurchase program	353.2
Repurchase of shares, shares	41.6	56.3
Repurchase of shares, value	$ 300.0	$ 396.8

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Reconciliation of Basic and Diluted Shares (Details) In Thousands	3 Months Ended		6 Months Ended
	Jul. 03, 2011	Jul. 04, 2010	Jul. 03, 2011	Jul. 04, 2010
Reconciliation of basic and diluted shares
Basic Shares	594,957	651,778	605,315	654,192
Dilutive effect of stock options, employee stock purchase rights and restricted stock unit awards	16,136	9,762	15,933	9,665
Diluted Shares	611,093	661,540	621,248	663,857

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Cash Equivalents and Investments (Details 3) (USD $) In Thousands	Jul. 03, 2011	Dec. 31, 2010
Gross unrealized losses and fair values of the Company's short-term investments
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Fair Value	$ 18,352	$ 32,303
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses	(163)	(378)
Available-for-sale Securities, Continuous Unrealized Loss Position, Greater than 12 Months, Fair Value	868	2,469
Available-for-sale Securities, Continuous Unrealized Loss Position, Greater than 12 Months, Unrealized Losses	(92)	(172)
Asset-backed and mortgage-backed securities [Member]
Gross unrealized losses and fair values of the Company's short-term investments
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Fair Value	8,436	11,807
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses	(133)	(179)
Available-for-sale Securities, Continuous Unrealized Loss Position, Greater than 12 Months, Fair Value	868	2,469
Available-for-sale Securities, Continuous Unrealized Loss Position, Greater than 12 Months, Unrealized Losses	(92)	(172)
U.S. government and agency securities [Member]
Gross unrealized losses and fair values of the Company's short-term investments
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Fair Value	6,403	13,969
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses	(15)	(127)
Available-for-sale Securities, Continuous Unrealized Loss Position, Greater than 12 Months, Fair Value	0	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Greater than 12 Months, Unrealized Losses	0	0
Corporate debt securities [Member]
Gross unrealized losses and fair values of the Company's short-term investments
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Fair Value	3,513	6,527
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses	(15)	(72)
Available-for-sale Securities, Continuous Unrealized Loss Position, Greater than 12 Months, Fair Value	0	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Greater than 12 Months, Unrealized Losses	$ 0	$ 0

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Cash Equivalents and Investments (Details 4) (USD $) In Thousands	Jul. 03, 2011
Contractual maturities of available-for-sale debt securities
Due within one year	$ 7,871
Due in 1-5 years	39,181
Due in 5-10 years	10,113
Due after 10 years	93,903
Total	$ 151,068

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Related Party Transactions (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jul. 03, 2011	Jul. 04, 2010	Jul. 03, 2011	Jul. 04, 2010	Dec. 31, 2010
Silicon Manufacturing Partners Pte Ltd. [Member]
Related Party Transactions (Textuals) [Abstract]
Company's equity interest in SMP joint venture	51.00%		51.00%
Purchase of inventory from SMP	$ 14.8	$ 12.0	$ 25.6	$ 24.0
Amounts payable to SMP	6.9		6.9		1.2
Seagate Technology [Member]
Related Party Transactions (Textuals) [Abstract]
Revenues from sales to Seagate	118.9	88.8	217.5	184.9
Accounts receivable from Seagate	$ 71.7		$ 71.7		$ 55.0

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Restructuring, Asset Impairment Charges and Other Items (Details) (USD $) In Thousands	3 Months Ended		6 Months Ended
	Jul. 03, 2011	Jul. 04, 2010	Jul. 03, 2011	Jul. 04, 2010
Restructuring of operations and other items net from continued operations
Total restructuring of operations and other items, net	$ (10,904)	$ 5,086	$ (8,098)	$ 6,706
Segment, Continuing Operations [Member]
Restructuring of operations and other items net from continued operations
Total restructuring expenses	2,154	4,904	5,485	6,275
Other items	(13,058)	182	(13,583)	431
Total restructuring of operations and other items, net	(10,904)	5,086	(8,098)	6,706
Segment, Continuing Operations [Member] | Lease and contract terminations [Member]
Restructuring of operations and other items net from continued operations
Total restructuring expenses	1,865	125	3,553	971
Segment, Continuing Operations [Member] | Employee severance and benefits [Member]
Restructuring of operations and other items net from continued operations
Total restructuring expenses	$ 289	$ 4,779	$ 1,932	$ 5,304