Founded around five years ago, Sierra Logic is fab-less designer of chips that are used by high-end storage makers to allow them to fit low cost SATA disk drives to disk arrays that were originally designed to accept FC disk drives. In June this year, Sierra Logic boasted that the silicon it designed was powering two million ports inside disk arrays, up from one million ports only ten months earlier.

The majority of Emulex’ revenue still comes from the sale of Fibre Channel HBAs, but the company is expanding into new markets. In April it announced the purchase of silicon and software developer start-up Aarohi Communications Inc, for around $39m cash, which is involved in port-level processing in smart SAN switches, and in silicon for 10Gbit Ethernet. This followed Emulex’ purchase in 2003 of embedded FC switch maker Vixel Corp for around $310m. Embedded FC switches are used inside disk arrays.

Although Emulex’ share of the HBA market has shrunk slightly over the last three years, the company is far from running from a sinking core business. Emulex accounted for 40% of total worldwide FC HBA factory revenue in the second quarter of this year, according to researcher the Dell’Oro Group. Dell’Oro also forecasts that the HBA market will grow by 19% to reach $1.6bn total revenue this year.

Emulex is simply looking ahead, said Dell’Oro founder Tam Dell’Oro.

One threat to Emulex’ prospects of making a return on Sierra Logic is the existence of FATA disk drives, which combine low-cost ATA mechanicals with FC electronic interfaces. EMC, IBM, HP and 3PAR have all adopted FATA. If other disk array makers follow suit, the market may no longer need Sierra’s FC-to-SATA conversion silicon.

Emulex responded that nine top tier storage OEMs are already using Sierra’s silicon. It could also have pointed out that of the two disk drive makers that dominate the market for enterprise drives – Hitachi GST and Seagate – so far only Seagate is shipping FATA drives.

When the acquisition is complete, Emulex will appoint Sierra Logic’s current CEO Bob Whitson to run Emulex’ embedded products division which will include the former Vixel products, and IO controller silicon that also ships on Emulex HBAs.