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LSI LOGIC'S STORAGE SYSTEMS TO BECOME SEPARATE COMPANY

LSI Logic Corp announced its intention to separate its storage systems operations from its mainstream semiconductor business and create an independent storage systems company. The independent company will be based upon LSI Logic's wholly owned subsidiary, LSI Logic Storage Systems Inc, which is currently reported as a separate segment in LSI Logic's financial statements.

"Our plan is to create an independent storage systems company that unlocks the value and potential of our storage systems business," said Wilfred Corrigan, LSI Logic chairman and chief executive officer. "We anticipate that a separation will intensify the market focus and strategic direction of the two companies, benefiting customers, investors and employees. The net result will be two companies, one focused on semiconductors and the other on storage systems. Both companies will be financially sound, independently managed and targeted on the growth of their respective markets. Each company will be well positioned to build value for shareholders, customers and employees."

As reported in LSI Logic's Form 10-Q for the third quarter of 2003, LSI Logic Storage Systems Inc's revenues were $104 million, or 23 percent of the $450 million reported by LSI Logic. This result represented the sixth consecutive quarter of year-over-year revenue growth for LSI Logic Storage Systems Inc.

"LSI Logic Storage Systems Inc has generated revenue growth and delivered profitability to LSI Logic based on its strong customer engagements, strategic partnerships, market presence, advanced technologies and broad product portfolio," said Bryon Look, LSI Logic chief financial officer. "The revenues of our Storage Systems subsidiary have returned to their peak levels, achieved in 2000."

LSI Logic Storage Systems Inc designs and manufactures high performance modular enterprise storage platforms and storage management software that are delivered to end users through strategic partners. IBM, StorageTek, the Teradata Division of NCR and SGI are among the partners who provide total solutions with unique combinations of hardware, software and services for applications including transaction processing, e-mail, data warehousing and scientific research.

The LSI Logic Board of Directors has authorized management to proceed with the separation. Depending on market conditions, LSI Logic is considering an initial public offering (IPO) for the storage systems company in the first half of 2004. At a later date following the IPO, LSI Logic may distribute to its stockholders the remaining shares of the storage systems business in a tax-free transaction or sell or hold any portion of the shares.

The Storage Systems Company

Tom Georgens will be the chief executive officer of the storage systems company. Georgens has served as the president of LSI Logic's Storage Systems subsidiary for the past five years.

"We have expanded and strengthened our customer relations and strategic partnerships," said Georgens. "Based on the global trend toward modular, scalable storage systems and LSI Logic Storage Systems' proven partnership model, we can provide best-in-class solutions to end-market customers."

Corrigan noted that the current executive team that made the subsidiary a success will remain in place. LSI Logic also plans to identify independent directors to serve on the board of the storage systems company.

About LSI Logic Storage Systems Inc

LSI Logic Storage Systems Inc, a subsidiary of LSI Logic Corp, designs and manufactures high performance modular enterprise storage platforms and storage management software that is delivered to end users through strategic partners. IBM, SGI, StorageTek and Teradata are among the partners who provide total solutions with unique combinations of hardware, software and services for applications including transaction processing, e-mail, data warehousing and scientific research.

About LSI Logic

LSI Logic Corp is a leading designer and manufacturer of communications, consumer and storage semiconductors for applications that access, interconnect and store data, voice and video. In addition, the company supplies storage network solutions for the enterprise. LSI Logic is headquartered at 1621 Barber Lane, Milpitas, CA 95035 and is online at www.lsilogic.com/.