Question-and-Answer Session
Operator
Thank you, Mr. Cook. (operator instructions) We’ll go first this afternoon to Rich Kugele with Needham & Company.
Rich Kugele - Needham & Company
When it comes to the agreement that you recently signed with one of your OEMs, is there any inventory impacts we should be expecting?
Manouch Moshayedi
As you saw, our inventory was pretty low again in Q2. I think inventory will be built to this quarter. At the end of the day, I think we’ll be comfortable with about $45 to $50 million dollars of inventory.
Rich Kugele - Needham & Company
Okay, and it will all be basically tied to the agreements anyway, right?
Manouch Moshayedi
Right.
Rich Kugele - Needham & Company
When it comes to the gross margin, which obviously was much better than anybody was looking for, can you talk about the sustainability of that margin profile?
Manouch Moshayedi
We think on a go-forward basis on margins for ZeusIOPS will remain in the 50 to 60% area. As you know, we have no competition at this stage. In addition to that, we can hard drive manufactures in the enterprise area. We’re still making upwards of 40% margin in that business. Going forward, if we have competition in the area of enterprise, moving to Malaysia, also the capacity to be built in Malaysia and streamline all of the buildings. I think we will be able to maintain about the 50% margin for ZeusIOPS.
Rich Kugele - Needham & Company
Can you give us a sense on how the revenue may have broken down between MOCH8 and DRAM.
Manouch Moshayedi
MOCH8 was about $6.5 to $7 million. DRAM was about $9.5 maybe and flash was about $9.5 and we still had some legacy business of about $3 million.
Operator
Next now to Gary Hsueh with Oppenheimer & Co..
Gary Hsueh - Oppenheimer Co.
How much exactly the second half of the ply contract for $120 was factored into guidance for $95 to $97 million in Q3?
Manouch Moshayedi
All of it, basically. Not all of it. I would say $5 million out of the $120 was built into the Q3 numbers.
Gary Hsueh - Oppenheimer Co.
Just along those lines, if you look at your biggest customer, 39% in the 10Q filing for Q2 and that’s coming from 20% Q1, if you assume this biggest customer is driving basically all the ZeusIOPS, in terms of ZeusIOPS revenue, that would be roughly 49% of ZeusIOPS revenue in Q1 and 58% in Q2. What happens to this percentage in terms of ZeusIOPS as you go into the second half? I got to assume with more customers and newer customers that you gain in the first half starting to hit volume production in the second half that really this percentage for this biggest customer as a percentage of the total of ZeusIOPS business has to start coming back down a little bit? Would that be right?
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