Question-and-Answer Session
Operator
(Operator instructions) We will take our first question with Christian Schwab with Craig-Hallum.
Christian Schwab – Craig Hallum
Great. Thank you. Hey, Mike, can you – and your largest customer, Sun Microsystems, I would assume, can you just give us some color and why you think this is specific and temporary around that where we don't think that maybe (inaudible) or the end of life certain programs, it's a pretty large sequential decline.
Mike Salameh
Right. First of all, I can't name the customer because we have confidentiality agreements with our customers, but I will give you little more color on the situation. So the decrease is related to one end customer, we sell to this customer through contract manufacturers around the world and they are used in a variety of end products. We have limited visibility in the flow of product through contract manufacturers and customer channels, but we do know that backlog and forecast show a decrease in third quarter demand. We know that products that use our chips continue in production, and there's new ones ramping, so, the history of the demand has been pretty strong for many quarters. And I would like to point out that's typical to have large quarterly variations in customer demand both from this customer and many others and contributing factor is timing of build schedules and inventories of manufacturing pipeline. And why we expect sales to recover in the fourth quarter? It's the history with the customer, the products, the demand has been strong, the underlying growth rate of the business has also been strong.
Christian Schwab – Craig Hallum
Great. Can you give us any idea of when your concentration – your revenue concentration in PCI Express will kind of spread out to handful to ten customers versus predominantly just a couple?
Mike Salameh
So as we talked about before in various presentations, over half the business is now in servers. And the second largest market is storage. The heavy design activity now is in communications, embedded applications, I mean, that's really ramped up. So as those ramped to production over the next couple of years we expect the business to be more diversified. And it has been diversifying gradually over time since we first started getting into the business.
Christian Schwab – Craig Hallum
Right, that diversification will remain very gradual?
Mike Salameh
Yes.
Christian Schwab – Craig Hallum
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