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Microsemi Corporation (MSCC - Analyst Report), an original equipment manufacturer (OEM) of a broad range of high-reliability and analog/mixed signal integrated circuits, announced its collaboration with LSI Corporation .

The two companies have decided to pool in their expertise (Microsemi’s precision time protocol technology and LSI’s Axxia communication processors). The resultant solution is expected to improve the flexibility, efficiency and operability of backhaul networks at lower costs. The significance of the deal stems from its ability to address growing data needs of mobile networks.

According to research conducted by Cisco Systems, Inc. (CSCO - Analyst Report), global mobile data traffic may grow 18 times over the 5-year period from 2011 to 2016. The steep rise in mobile traffic is due to the unprecedented increase in mobile Internet usage through smartphones, tablets and laptops. It is also expected that the world population will cross the 7.3 billion mark by 2016, which obviously bolsters the usage of these devices.

In addition, a study by IDC suggests that smartphone shipments will reach 659.8 million units in 2012 growing at a compounded annual growth rate (CAGR) of 18.6% to 2016.

The immense popularity of smartphones and tablets has led to accelerated growth in mobile Internet usage. The reports suggest that current growth rates will be more or less sustained. Hence, mobile Internet demand will trend higher.

Microsemi has been investing heavily in R&D. Management is focusing on security and increasing the electronic content per device and per customer, which will eventually grow its market share. Further, Microsemi’s strength is in its vast product range and offerings for next generation 4G LTE networks. This can help Microsemi outperform its competitors and increase its market share in the long run.

Microsemi’s revenue in the third quarter of fiscal 2012 was $259.2 million, up 4.0% sequentially and 19.6% year over year. The communications market was the largest contributor, making up 31.0% of sales. The defense & security market generated 28.0% of sales and aerospace generated 21.0%. The defense, aerospace and medical markets largely use Microsemi’s high-reliability chips, while the other markets use its analog/mixed signal products.

Currently, Microsemi Corporation has a Zacks #3 Rank, implying a short-term ‘Hold’ rating

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