LSI Logic Corporation (NYSE: LSI) said Friday that it will acquire privately held storage chip firm SiliconStor Inc. for $55 million in cash.

The two companies entered into a definitive agreement on Friday, where LSI will obtain the firm's nearly 30 employees. LSI hopes to use the enterprise network solutions developer as a component in its strategy to provide products for all nodes in the storage-systems architecture.

The SiliconStor acquisition, said Bill Wuertz, senior vice president at LSI, will enable LSI to offer a complete portfolio of interoperable SAS, SATA, and software building blocks.

Last December, LSI acquired another chip firm, Agere Systems Inc., in a $4 billion all-stock transaction.

The current deal is subject to the satisfaction of customary closing conditions and is expected to occur in the first quarter of 2007.

Shares of LSI rose 1.29 percent, or $0.12 to $9.41 in afternoon trading on the New York Stock Exchange.