Here’s what we know: LSI is agnostic. Has long made HDD controllers. Now, owns the most recognized SSS controller, SandForce. They have both dogs in the fight.
The problem? We’ve got a bunch of 20th word processor guys applying the SSS like a HDD. Only is a slim form factor. What’s the repeating the same behavior and expecting different results thing? Either an 86 PC guy or two are going to get Ultras right or Apple and/or an ARM groupie will.
While end-demand environments remain challenging, we expect to benefit from a number of new product cycles that will be ramping into production in the coming months. In addition to our ramps of our SandForce FSPs, Q3 will be the first quarter of initial production ramps for our Nytro PCIe flash adapter products and Axxia multi-core standard products, and we remain on track to be in production with all HDD customers by the end of this year.
Now I'd like to review additional business highlights for Q2. I will begin with our server and storage business, which includes flash-related businesses, SAS, ServeRAID adapter and software, SAN and HDD.
In flash, we are unique in offering 3 product families: Standard product flash storage processors or FSPs, custom FSPs and PCIe flash adapters, strongly positioning LSI to benefit from a multiyear growth cycle in flash-based storage adoption. We had previously indicated that our flash businesses would grow 100% to 150% in 2012 from a rough base of $70 million in 2011. Based upon strong customer momentum and new design wins, we are seeing in SandForce, FSPs and Nytro PCIe solutions, we now believe that our revenues will exceed 200% growth year-over-year in 2012.
In Q2, our standard product SandForce FSP revenues were above $45 million, representing 42% sequential growth and continued market share gains. Growth is being driven by increased penetration into the notebook market segment, with key wins at Toshiba, Intel, Hynix, Asus and others. According to IDC, flash-enabled notebooks are expected to be the fastest-growing segment of the PC market for years to come in contrast to the overall HDD-enabled notebooks space. LSI has focused on developing FSPs that hit this inflection point, as ultrabooks and other flash-enabled notebooks take a growing foothold in the marketplace.