LSI Logic Reports Q2 2004 Financial Results; Provides Q3 Business Outlook

Second Quarter News Release Summary

• Revenues of $448 million, 10 percent increase over Q2 2003.
• GAAP* net income of 2 cents per diluted share, consistent with previous guidance.
• Net income, excluding special items**, of 7 cents per diluted share, consistent with previous guidance.
• Gross margin improvement to 46.6 percent.

Third Quarter Business Outlook
(Excludes effect of potential storage systems IPO)

• Projected revenue range of $435 million to $465 million.
• GAAP* range of breakeven to a net loss of 3 cents per diluted share.
• Net income, excluding special items**, in the range of 3-6 cents per diluted share.

* Generally Accepted Accounting Principles
** Acquisition-related amortization, restructuring and other special items.

LSI Logic Q2 Revenues Grow 10 Percent Year-Over-Year
Gross Margin Expands To 46.6 Percent

Milpitas, Calif., July 27, 2004 - LSI Logic Corporation (NYSE: LSI) today reported 2004 second quarter revenues of $448 million, an increase of 10 percent compared to the $407 million reported in the second quarter of 2003 and a 1 percent sequential decrease compared to the $452 million reported in the first quarter of 2004.

Cash and short-term investments totaled $847 million at the end of the second quarter of 2004. The company generated positive operating cash flow for the ninth consecutive quarter.

Second quarter 2004 GAAP* net income was $7 million or 2 cents per diluted share compared to a GAAP net loss of $162 million or 43 cents per diluted share in the 2003 second quarter. First quarter 2004 GAAP net income was $9 million or 2 cents per diluted share.

Second quarter 2004 net income, excluding special items**, was $28 million or 7 cents per diluted share compared to a net loss, excluding special items, of $6 million or 2 cents per diluted share in the second quarter of 2003. Excluding special items, first quarter 2004 net income was $25 million or 6 cents per diluted share.

"Late in the second quarter, we saw some slowing of the overall business that is carrying over into the third quarter," said Wilfred Corrigan, LSI Logic chairman and chief executive officer. "However we expect the second half of the year as a whole to be stronger than the first half of the year, driven by continued growth in consumer electronics and an improvement in IT orders from our customer base later in the year."

"LSI Logic began production shipments of RapidChip Platform ASICs in the second quarter, and we expect a steady growth ramp in the second half of this year leading to volume production in 2005," said Joe Zelayeta, LSI Logic executive vice president of ASIC Technology and Methodology. "We are generating repeat orders from existing and new customers based upon the high-performance, low-design cost and quick time-to-revenue advantages of LSI Logics Platform ASICs."

"LSI Logics year-over-year improvements in revenues, gross margin and profitability continued in the second quarter," said Bryon Look, LSI Logic chief financial officer. "During the past 12 months, we have generated $124 million in positive operating cash flow, eliminated all short-term debt and strengthened our balance sheet."

LSI Logic Third Quarter Business Outlook
(Excludes effect of potential storage systems IPO)

	GAAP*	Special Items**	Excluding Special Items
Revenue	$435 million to $465 million		$435 million to $465 million
Gross Margin	44-46 percent		44-46 percent
Operating Expenses	$198 to $202 million	Approximately $25 million	$173 to $177 million
Net Other Income (Exp.)	$(2) to $(3) million		$(2) to $(3) million
Tax Provision	$6 million		$6 million
Earnings/Loss Per Share	($0.03) to $0.00	Approximately $0.06	$0.03 to $0.06
Diluted Share Count	393 million		393 million

Capital spending is projected to be around $25 million in the third quarter, and approximately $100 million in 2004.

Third quarter depreciation and software amortization is expected to be approximately $25 million.

* Generally Accepted Accounting Principles

** Acquisition-related amortization, restructuring and other special items.

NOTE: The companys financial guidance will be limited to the comments made on todays public conference call and contained in the Third Quarter Business Outlook section of this news release.

Financial Statements

• Q2 2004 Financial Statements

About LSI Logic

LSI Logic Corporation (NYSE: LSI) is a leading designer and manufacturer of communications, consumer and storage semiconductorsfor 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. http://www.lsilogic.com

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Safe Harbor for Forward Looking Statements

This news release contains forward-looking statements, which include the following: projected revenues of $435 million to $465 million in the third quarter of 2004; projected GAAP range of break-even to a net loss of 3 cents per diluted share in the third quarter of 2004; projected net income, excluding special items, in the range of 3-6 cents per diluted share in the third quarter of 2004; the companys expectation that the second half of the year will be stronger than the first, driven by continued growth in consumer electronics and an improvement in IT spending by the companys customer base later in the year; the companys expectation of a steady growth ramp for RapidChip Platform ASICs in the second half of 2004, leading to volume production in 2005; projected capital spending of approximately $25 million in the third quarter of 2004 and approximately $100 million in 2004; and expected third quarter depreciation and software amortization of approximately $25 million. These forward-looking statements are based on the opinions and estimates of management at the time the statements are made and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that could cause LSI Logics actual results to differ materially from those set forth in the forward-looking statements include, but are not limited to: fluctuations in the timing and volumes of customer demand; the rate of depletion of customer inventory buildup and the companys achievement of revenue objectives; ability to meet financial targets; the companys ability to develop new products; the timing and the success of new product introductions; and the continued availability of appropriate levels of manufacturing capacity. For additional information, readers are referred to the documents filed by LSI Logic with the SEC, and specifically the risk factors set forth in the companys most recent reports on Form 10-K, 10-Q and 8-K.