SUCCEEDING A COMPANY'S FOUNDER IS NEVER easy. That’s what Abhi Talwalkar did when he joined LSI Corp. as president, CEO and director in May 2005. Milpitas, California–­based electronics pioneer LSI had fallen on hard times, and long-standing investors were clamoring for a fix.

Wilfred Corrigan, the British-born engineer who had run Fair­child Camera and Instrument Corp. — considered the birthplace of Silicon Valley — launched the business as LSI Logic in 1981 with $6 million in venture capital. At the time, major U.S. and Japanese corporations ruled the electronics industry. LSI Logic focused on customized silicon chips, a niche market; by the late 1980s it dominated the business. Early in the next decade, it began offering systems and design tools too. Between 1998 and 2003, LSI acquired a dozen companies and broadened its product lines as the semiconductor business contracted. When revenue plunged in 2003, the company cut costs and jobs.

To put LSI back on its feet, the board replaced Corrigan with Talwalkar, then co–general manager of Intel Corp.’s digital enterprise group, which included the semiconductor giant’s corporate client, server, storage and communications businesses.

Talwalkar inherited a company that had expanded into everything from networking to consumer goods, including video-processing chips that went into DVD players and the Sony PlayStation video game console. With so many products, it was no longer on the leading edge of anything. But Talwalkar foresaw that people would increasingly use smartphones and other mobile devices to do things like post to Facebook and watch movies. So he decided to reinvent LSI as a specialist in semiconductors and software that would help meet the surging demand for data storage and networking. Rather than spend billions on fabrication plants, the company would streamline the design of its chips and outsource manufacturing.

Talwalkar has been busy: Between May 2006 and this January, he sold, acquired or merged 14 businesses. One of the biggest sales took place in late 2007, when LSI unloaded its mobility products group to Germany’s Infineon Technologies for $450 million. Last year LSI, which now has 4,700 employees, began to turn around. Revenue grew 9.3 percent, to $2.04 billion, while the semiconductor industry was flat overall. When Talwalkar took over, LSI stock stood at $6.13; late last month it traded at $8.66, a 41 percent increase.

The 48-year-old Talwalkar’s family moved to the U.S. from Pune, India, when he was five. He spent his early years in Boston and Portland, Oregon. The Oregon State University electrical engineering graduate worked at a slew of start-ups, including Bipolar Integrated Technology, Lattice Semiconductor and Sequent Computer Systems, now part of IBM Corp.

Talwalkar joined Intel as a contractor in 1993 and rose to oversee one of the Santa Clara, California–based company’s main business lines. A skilled and fiercely competitive Ping-Pong player, he installed tables at all of LSI’s campuses and started a tournament that now includes 1,000 participants. Senior Writer Julie Segal spoke to the CEO in New York last month about his turnaround of LSI.