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We were also quite active in executing on our recently announced stock repurchase program. Since the announcement over a six-week period through June 1st, 2018, we have returned approximately $1.5 billion to stockholders by repurchasing more than 6.4 million shares and we do intend to continue to be active. Consolidated net revenue for the second quarter was $5.02 billion, just above the midpoint of guidance with strong wired and enterprise storage results offsetting weaker wireless revenue.

As a reminder before I go and give you more color into this quarter, the second quarter of Fiscal 2018 was a 13-week quarter, while the prior quarter, Q1 was a 14-week quarter. Segment revenue comparisons reflect this, as I discuss performance by segment.

Starting with wired, in the second quarter, wired revenue was $2.3 billion, growing 9% year on year, 22% sequentially. The wired segment represented 46% of our total revenue. Second quarter wired results reflected strong sequential increase in demand from cloud data centers and the seasonal recovery in broadband access. Solid year on year growth was driven by robust increase in networking and compute offloading in cloud data centers and strong growth in spending by enterprise IT.

We also benefited from an increase in spending on broadband capacity expansion by service providers. In contrast, however, spending on video access and in the China optical markets remains sluggish. Turning to the third quarter Fiscal 18, we expect growth in wired revenue to continue, notwithstanding the ban on shipments to ZTE. We expect demand to remain healthy from cloud data centers and enterprise IT while broadband access remains robust.

Moving on to wireless -- in the second quarter, wireless revenue was $1.29 billion, growing 13% year on year, but declining 41% sequentially. The wireless segment represented 26% of our total revenue. Second quarter sequential decline in wireless revenue was deeper than usual as shipments to our North American smartphone customers reduced sharply from the atypical exaggerated first quarter. We did partially offset these declines from increasing our product shipments to a large Korean smartphone customer as they supported their new product launch.

Looking ahead to third quarter, we expect to see the beginning of seasonal second half RAM in demand from our large North American smartphone customer as they start to transition to their next generation platform. However, we expect this recovery to be offset by a decline in shipments to our large Korean customer. As a result, we're expecting our overall wireless revenue to be flat, maybe even slightly declined on a sequential basis for the third quarter.

Let me now turn to enterprise storage. Second quarter 2018, enterprise storage revenue was $1.16 billion and represented 23% of our total revenue. This, of course, included a full quality of contributions of over $400 million from the recently acquired Brocade fiber channel switch business. As you may recall, we completed the acquisition of this business early in the first quarter of Fiscal 2018.

And as reported, enterprise storage segment revenue grew 63% year on year and 17% sequentially. But if we exclude Brocade contribution, second quarter enterprise storage revenue would have shown stable year on year performance with strong growth from enterprise server and storage markets, partially offset by softer demand from the hard disk drive market.

For the second quarter, the overall sequential revenue growth was driven by broad strength from the enterprise IT sector. Looking ahead to third quarter Fiscal 2018, we expect continued spend in enterprise IT to drive sequential growth in enterprise storage and growth in cloud storage capacity will lead to recovery in hard disk drive demand.

Finally, our last segment, industrial -- in the second quarter, industrial segment revenue was $263 million, growing 17% year on year, 5% sequentially. The industrial segment represented 5% of our total revenue. Refits continued to remain very strong, with 20% year on year growth and we expect this momentum to continue into the third quarter. Notwithstanding the strength today, we expect annual industrial growth, however, to be in the mid-single-digit range on a long-term basis.

So, in summary, our overall business remains robust and stable. Our third quarter Fiscal 2018 outlook reflects this with a consolidated revenue focus of $5.05 billion at the midpoint as we experience continued strength in wired and enterprise storage benefiting from a very robust cloud data center and enterprise IT spending environment.

Year on year, our revenue growth has remained very sustainable. Even without contributions from Brocade, organic revenue for the second quarter would have been in the high single digits. And for the third quarter, we foresee this year on year organic revenue growth to modulate toward our long-term target of mid-single-digits. We will continue to keep a consistent focus on improving margins and increasing free cashflow from our business.

Our balance sheet continues to be strong with over $1 billion in cash at the end of the second quarter. We also have $10.5 billion remaining on our stock repurchase authorization as of June 1st and reflecting the very strong free cashflow generation we expect during the balance of Fiscal 2018, we plan to aggressively repurchase our shares as long as we believe we can generate superior returns in doing so.

With that, let me turn the call over to Tom for a more detailed review of our second quarter financials and third quarter outlook.

Thomas Krause -- Chief Financial Officer

Thank you, Hock, and good afternoon, everyone. My comments today will focus primarily on our non-GAAP results from continuing operations unless otherwise specifically noted. Reconciliation of our GAAP and non-GAAP is included with the earnings release issued today and is also available on our website at Broadcom.com.

Let me quickly summarize our results for the second quarter of Fiscal 2018. Second quarter net revenue was $5.02 billion in line with guidance. Our second quarter gross margin from continuing operations was 66.6%, 60 basis points above the midpoint of guidance. We did benefit from a more favorable product mix in the quarter driven by higher than expected revenue from our wired segment and lower than expected revenue from our wireless segment.

Operating income from continuing operations for the quarter was $2.46 billion and represented 48.9% of revenue. Adjusted EBITDA for the quarter was $2.63 billion and represented 52.3% of revenue. Our days sales outstanding were 50 days, a 5-day increase in the prior quarter as we saw a reduction in linearity of revenue across the quarter. Our inventory at the end of the second quarter was $1.26 billion, a decrease of $56 million from the prior quarter, days on hand remain flat from the prior quarter at 67 days. We generated $2.31 billion in operational cashflow, which reflected the impact of $117 million of cash expended on acquisition and restricting related activities, including Qualcomm and Brocade.

Please also note that we did not make any interest payments in the second quarter as these are made on a biannual basis in the first and third quarters of our fiscal year. Capital expenditure in the second quarter was $189 million or 3.8% of net revenue. As a housekeeping matter, I would also note that CapEx was $61 million higher than depreciation. Free cashflow, which we define was operating cashflow less CapEx in the second quarter was $2.12 billion or 42.3% of net revenue and reflects the impact of acquisition and restructuring expenses.

On the buyback, just to give you some more clarity, in the second quarter, we spent $347 million on repurchasing 1.5 million shares. These repurchases took place over the last two weeks of the quarter. Over the first four weeks of the third quarter, we have spent an addition $1.16 billion repurchasing $4.9 million shares. In addition, we returned $766 million in the form of dividends and distribution in the second quarter.

Turning to our balance sheet, we increased our cash balance by $1.1 billion through the second quarter and ended the period with $8.2 billion in cash and $17.6 billion in total debt.

Now, let me turn to our non-GAAP guidance for the third quarter of Fiscal Year 2018. This guidance reflects our current assessment of business conditions and we do not intend to update this guidance. This guidance is for results of continuing operations only.

Net revenue is expected to be $5.05 billion plus or minus $75 million. Gross margin is expected to be 66.5% plus or minus one percentage point. Operating expenses are estimated to be $882 million. The tax provision is forecast to be approximately 7%. Net interest expense and other is expected to be approximately $115 million. The diluted share count forecast is for 457 million shares and it does not include the impact from any share repurchases done after June 1st, 2018. Stock-based compensation expense will be approximately $320 million. CapEx will be approximately $125 million.

As you may recall in connection with redomiciling the United States and as a result of the effects of US corporate tax reform, we had initially expected our effective cash tax rate on a steady state basis to be in the range of 9% to 11% per year. Following redomiciliation, we currently expect our cash tax rate for the balance for Fiscal Year 18 to be approximately 7% and our long-term cash tax rate to remain in the 9% to 11% range.

That concludes my prepared remarks. Operator, please open up the call for questions.

Questions and Answers:

Operator

Ladies and gentlemen, if you have a question at this time, please press * then the number 1 key on your telephone. If your question has been answered or you wish to remove yourself from the queue, please press the # key. Again, that's * then 1 to ask a question. To prevent any background noise, we ask that you place your line on mute once your question has been stated. And in the interest of time, we ask you to please limit yourselves to one question and one follow-up.

Our first question comes from Ross Seymore with Deutsche Bank. Your line is now open.

Ross Seymore -- Deutsche Bank -- Analyst

Hi, guys. Thanks for letting me ask a question. I wanted to start off on the wired side. Last year, there was a debate about why the year over year slowed so much and you guys were confident sequential growth, which you just delivered. Talk a little bit about the visibility going forward. What's driving the slight growth that you're guiding to in the fiscal third quarter and can you still hit the mid-single-digit growth for the fiscal year in that wired segment?

Hock Tan -- President and Chief Executive Officer

The wired segment for us, especially the networking part of it, we have very good visibility right now and it's largely driven, as I indicated in my prepared remarks, from the cloud data center guys, the big cloud data center guys. What we also see and that's probably less visible is probably very strong spending patterns at enterprise. I call that enterprise IT environment the more traditional enterprise. Those guys have also been spending.

So, when we combine the two together, that portion of our wide infrastructure business as it relates to networking broadly, as we describe it, is very strong. And of course, a separate segment we call enterprise storage benefits get drafted along with that. So, that's why we see very strong business in what storage, what I call near line or what I call data center storage business -- very, very strong, both of them. That's very visible in many of these situations because the cloud data center guys tend to spend in a fairly lumpy manner. And so, you get the visibility as opposed to more secular or trended manner as the IT guys are doing.

So, to answer your question, bottom line, that will drive our wide business to get to our goals of mid-single-digit year on year growth for this year.

Ross Seymore -- Deutsche Bank -- Analyst

Perfect. I guess as my follow up, switching gears to the wireless side of things, it's good to see that your big North American business is starting to turn up and that the business as a whole has stabilized. Can you just talk about whether via content or the unit side how you think about seasonality in the back-half of the year given that there's so many different moving parts as content per SKU and what different customers are doing?

Hock Tan -- President and Chief Executive Officer

There are a lot of moving parts. It's easier to look at it on the total basis. Also, that's unusual factors which we all thought would happen in that as we move from iPhone 8 to iPhone 9 generation coming up, there is some caution in the level of build. And we believe there is. But having said that, we also think orders coming in what I call in a normal seasonal pattern of strength. We do see that very clearly now and we do see bookings that extend all the way to close to the end of this calendar year from these North American customers. So, what you see exactly, trying to be normal patterns. The difference is what's the mix of the new generation phones versus legacy phones. And that's what might lead to some uncertainty of how much content changes or increases there might. And quite frankly, visibility is not that clear because it's hard to predict what level or what will the mix of new generation phones versus legacy generation phones would be.

Ross Seymore -- Deutsche Bank -- Analyst

Thanks, Hock.

Operator

Thank you. And our next question comes from Craig Hettenbach with Morgan Stanley. Your line is now open.

Craig Hettenbach -- Morgan Stanley -- Executive Director

Hock, this is more of a strategic question of how you view the business. So, some of the pushback on the companies that you've been so equipped to feeling that there's a need to do more M&A. Just two things on that -- number one, with the current makeup of the business, can you talk about the long-term growth profile as you see it? And then the second part would be now that you're buying back stock, your view of the opportunities to do M&A versus return cash through buybacks.

Hock Tan -- President and Chief Executive Officer

Well, very interesting question on it. In terms of long-term growth of this company and the various franchise businesses that comprise our entire business and company, we've always said there is no reason to say that at all, to say that we will achieve on a long-term basis if you look over an extended period of time an average compounded growth rate of mid-single-digits. No reason for us to change. The business model continues to demonstrate that and we do not see anything that makes us think otherwise.

Year to year, as we have seen, you may see variations from that mid-single-digits. We saw that in 2017 as it compares to 2016. We saw it strongly. Organic growth, stripping out your acquisitions, the contribution from acquisitions, we saw close to mid-double digit mid-teens year on year growth in '17. We are in '18 and I don't expect that mid-teen rate of growth to continue. As I say, it's one year, but it is still above in '18 mid-single-digits, definitely. We're expected to moderate down to perhaps high single-digits conservatively.

We expect that, but that's to be expected. You can not expect the kind of breadth of our business in connectivity solutions largely and our major market position within connectivity solutions, especially in those markets there where franchise products prevail to keep growing higher than the rate of growth of the entire semiconductor industry, not counting memories. It has to modulate down, as I said before, to a level which is closer to the growth of the entire industry. We have to follow that.

The only variation to that whole thing as we think through this is that my old technology business, every new generation, every time a new generation pops up and it varies in product lifecycle from headsets, which is 18 months, to storage, which may be five, six years, to industrial, which may be even longer -- that each new generation brings an increased content.

So, we have a picture above GDP growth. Hence, we end up with mid-single-digits worldwide on a global basis. We will see that long-term. Even as in the short-term, we see variations and see saw that in '17. We're seeing it in the '18. But it will inevitably be mentioned over a longer period get down to that mid-single-digits.

Craig Hettenbach -- Morgan Stanley -- Executive Director

Got it. Just the second part of that question around how you're evaluating M&A opportunities versus the aggressive steps you're taking on the buyback.

Hock Tan -- President and Chief Executive Officer

Oh, we keep doing both. Basically, based on return on investment as we generate cash, our cashflow generation, as Tom indicated in his remarks and especially last quarter and last quarter is not an unusual quarter as we focus going forward is our cash flow generation is very, very strong. Our free cash flow was north of $2 billion last quarter.

A big part of it relates to the fact that it's CapEx, which has been a big consumption of our cash flow over the last two years, at least, between building up capacity and building up campuses in a couple of locations, which involves a bigger amount of money for operating cost reduction purposes, but nonetheless suck up all our CapEx, has dramatically dropped as we finish those programs. And as Tom said, we are looking toward a CapEx level much lower than we've seen in prior years, in prior quarters.

So, that's enabling our cash generation to be fairly substantial, on a quarterly basis, probably north of $2 billion free cash flow. So, that's allowing us a lot more flexibility, which allows us to still look at M&A, which we do, and still be able to invest that very strong stream of cash generation in a very good asset return generating asset, our chips. Think about it -- why are shares producing or generating over $8 billion?

In the company, our market cap, they're talking over 8% cash on cash return, some bet in its own chips. So, of course we will keep doing that, especially with the flexibility of generating a lot of cash. But that doesn't mean we stop doing M&A. We are continuing to look and we go by the criteria we have on cash on cash return. As we see opportunities, as we still do, we will act on those M&A opportunities.

Craig Hettenbach -- Morgan Stanley -- Executive Director

Got it. Thank you.

Operator

Thank you. And our next question comes from Ambrish Srivastava from BMO Capital Markets. Your line is now open.

Gabriel Ho -- BMO Capital Markets -- Analyst

Hi, this is Gabriel Ho calling in for Ambrish. I just wanted to take care of my question. I think this is a question to Hock. Under wireless, the guidance seems to be implying flattish on a year over year basis in terms of growth for the fiscal third quarter. So, my understanding is last year the phone bill at your large smartphone OEM customer was later than normal. Why is your wireless not growing? Is it due to the content or more of the unit?

Hock Tan -- President and Chief Executive Officer

You know what? It's hard to measure quarter on quarter for various reasons. In my remarks, I was very clear at this time last year third quarter, we had both the North American smartphone maker and the Korean high-end phone maker going in the same direction. While we are still very positive on the North American phone maker, we are not seeing strength in the Korean phone maker. As I said in my prepared remarks, that's reason we are seeing that difference, the major reason we're seeing that difference.

Gabriel Ho -- BMO Capital Markets -- Analyst

Thanks. I suppose on the revenue side, you talk about operating leverage, talk about revenue growth moderating toward the mid-single-digits. How should we think about your OpEx front as well as your gross margin longer term?

Thomas Krause -- Chief Financial Officer

So, if I understood your question correctly, you're talking about the operating leverage in the model going forward. If you look at the operating expenses, they've effectively flattened out here at these levels. We might see them come down a bit, especially as we come into '19. It's a fair level.

We don't see expenses increasing from here much. And we obviously think we still have a lot of leverage from a gross margin standpoint and continue to see gross margin expand. That's a trend you've seen over the last several years. We don't see that stopping anytime soon. So, when we put that together, we believe that we've got a lot of capacity to continue to improve our operating margins.

As Hock talked about, CapEx is coming down. This is largely a fadless company, a CapEx-light company when you look at the fundamentals. So, we're driving CapEx down to more like $100 million a quarter, which suggests you're going to be running closer to 2% as a percentage of revenue. So, free cash flow margins, if we have a target of 40%, we think that can continue to improve and likely will improve obviously more than 40% if you do that now.

Gabriel Ho -- BMO Capital Markets -- Analyst

Thanks.

Operator

Thank you. And our next question comes from Blayne Curtis with Barclays. Your line is now open.

Blayne Curtis -- Barclays -- Analyst

Thanks for taking my question. I just wanted to ask on the guidance, I wanted to make sure -- it sounded like all the segments of wireless would be up, but then you said not to mention ZTE. I'm just curious how much of an impact that would be. Secondly, on just wireless, it's obviously harder to triangulate average content. Legacy is one portion, but there's also the shared portion. I'm just wondering if you can comment on your visibility of your share as that customer, North American customer. Thanks.

Hock Tan -- President and Chief Executive Officer

We don't really like to talk about share of that. In the overall scheme of things, Blayne, it makes not difference to us. It might make a difference to somebody else, which I won't mention, but in the overall scheme of things, we look at things as 20 product divisions, 4 different segments. Some segments are up, some segments are down from quarter to quarter, but overall, very, very stable and sustainable. So, I really don't have that much to comment on in terms of share. We really don't like to comment on share.

But in regard to your first part about ZTE, again, we're trying to be looking at it form a very high level. And until we have the ability to ship our, clearly ship out to ZTE, we really prefer that, again, as you said, not to comment on it. The way we say it now is products are not shipping. That's our position at this point.

Blayne Curtis -- Barclays -- Analyst

Okay. Thanks.

Operator

Thank you. Our next question comes from Amit Daryanani with RBC Capital Markets.

Amit Daryanani -- RBC Capital Markets -- Analyst

Thanks for taking my questions. I just have two as well. Just on capital allocations, now that buybacks are part of your broader capital allocation, does the bar for M&A for deals essentially become higher because plan B would be assuming you buy something at an 8% cash yield with no integration issues. So, I'm curious, does the bar for deals become higher or how do you look at the cash on cash targets today now that you have the option to do buybacks?

Thomas Krause -- Chief Financial Officer

Look, I think Hock said it well. I'll just reiterate it with a little more color. Basically, it's a return-driven phenomenon. You can see our views on the returns on our own stuff based on our execution of buyback over the last month-plus. I think that's self-evident. Going forward, as Hock said, we always look to drive double-digit returns from an M&A standpoint.

Obviously, we think we know how to do integration. So, we'll take a risk-adjusted view of it. As long as we think we can find opportunities that are well in excess we can provide our stock at, we'll obviously take a very close look at that, but without that in mind, obviously, the stock over the last month-plus has looked attractive to us based on the stock that we brought back and continue to do so, given the returns.

Amit Daryanani -- RBC Capital Markets -- Analyst

Got it. If I can just follow-up on the wireless segment, I understand some of the newer discussions you've been having on this, but as you think about the next several quarters in Fiscal 19 on a broader level, do you think you're positioned to grow your wireless revenues in aggregate in Fiscal 19 at this point or are the compares going to be such that it's going to be hard to show growth next year in that business if units remain flat with your two largest customers there?

Hock Tan -- President and Chief Executive Officer

You know, we don't give outlook even beyond one quarter, much less a year. Frankly, we're not about to really change that practice or policy because then we'd be doing nothing but a lot of this in every earnings call. We'll give you our strategic view of the whole thing and that hasn't changed. Again, we've got great franchises in every segment we're in, including especially wireless. To ask me what one year looks like, we don't comment on that.

Amit Daryanani -- RBC Capital Markets -- Analyst

Fair enough. Thank you.

Ashish Saran -- Director of Investor Relations

Next question, please.

Operator

Your next question is John Pitzer with Credit Suisse. Your line is now open.

John Pitzer -- Credit Suisse -- Managing Director

Yeah. Good afternoon, guys. Tom, congratulations on the strong quarter. Thanks for letting me ask a question. Hock, maybe I'll ask the wireless question a little bit different. I understand the impact that mix might have as far as your revenue growth in the back half of the year, but as you think sort of flagship to flagship as your North American customer, how should we think about content growth this time around? Perhaps differentiate between RF and other applications. I guess on the RF stack, we'll start to see some initial 5G modems coming out at the end of this year. I'm just wondering what kind of visibility you have for continued growth of FBAR as the world transitions from 4G to 5G.

Hock Tan -- President and Chief Executive Officer

Strategically, as you go to 5G and you go deeper and deeper into 5G, which runs the ultra-high-band frequency -- maybe it's not so ultra-high, but nonetheless, when you talk about anything 3-gigahertz and beyond, you tend to push toward more and more FBAR content. That's given. That's very well proven. That's very well known. Now, when will 5G really come in and what fashion will it come in? The initial phones will likely claim to be 5G but not truly 5G, so the specifications don't have to be as rigorous for performance.

Phone makers may use, especially on the lower end, not higher end, use softer alternatives and get away with it because performance doesn't matter, just the socket. But when you really get deeper and deeper into 5G, you need FBAR filters to make it work. So, think of it long-term -- content will step up, no question, not only more frequencies but frequencies that demand the need for FBAR. Beyond that, who knows? Go ahead.

John Pitzer -- Credit Suisse -- Managing Director

And then specifically as we think flagship to flagship this year for your North America customer, how do we think of your RF content growth and/or potential growth elsewhere with things like connectivity or touch?

Hock Tan -- President and Chief Executive Officer

Well, things are, as you say, moving along. We all like to think about how soon will normalcy in flagship phones recover, come back to what you call normalcy? We don't know. And how do you know what is content versus unit volume, especially when normalcy is not there? I'm not trying to dodge your question. I'm saying you can't tell. I'm saying right now, shipments are not really normal, even as we see bookings coming in strongly and hopefully we like to see normal, but then we don't see the North Korean customers being as strong as it should be.

John Pitzer -- Credit Suisse -- Managing Director

That's helpful.

Operator

Thank you. And our next question comes from Stacy Rasgon with Bernstein Research. Your line is now open.

Stacy Rasgon -- Bernstein Research -- Managing Director

Hi, guys. Thanks for taking my questions. Let me ask that question a different way. I know last year around this time, you gave us a number for content. You said that your North American customer was up 40%. Obviously, that may have changed a bit given the mix and it sounds like you're suggesting mix going forward of new phones versus legacy is an unknown. But if the mix in 2019 is the same as what we saw this year, what do you think your content of your North American customer would be. That should be a math problem you ought to be able to do.

Hock Tan -- President and Chief Executive Officer

Yeah. But even if I tell you, how are you going to check it against revenue, which is what it comes down as most important?

Stacy Rasgon -- Bernstein Research -- Managing Director

Well, we'll see.

Hock Tan -- President and Chief Executive Officer

Because a legacy phone will vary. If the mix of legacy phones start increasing dramatically, you will reflect on a different set of content. What you're asking is not really what's the content. What's the revenue over the next few quarters? What's it going to look like? You're trying to do simple math on content.

I think you have an unknown equation, which says the legacy phones may increase in percentage, which then dilutes any increase in content and then the revenue won't reflect what you're looking for. I'm basically trying to answer your questions for you by saying if you're looking on a simple correlation between content increase and revenue change, I'm saying there are other factors that are coming in that might dilute that whole equation. So, answering that question that you asked, doesn't answer the underlying interest that you have.

I would say in broad scope, content, direction, and trend hasn't changed at all. But the mix of legacy, the mix of phone SKUs, and in some situations, if you look beyond a North American OEM and look at other high-end smartphone makers which we sell to and their varying performance will skew your numbers.

Stacy Rasgon -- Bernstein Research -- Managing Director

Okay. Let me ask a question --

Hock Tan -- President and Chief Executive Officer

You know what I mean? Your math request is easy. Let me tell you the math request is the trend in content increase has not changed. It doesn't tell you anything.

Stacy Rasgon -- Bernstein Research -- Managing Director

But your old long-term kind of normalized outlook was kind of for end market units to be relatively flat, call it premium phones aren't growing very much, but they have mid-double-digit kind of over the long-term mid-double-digit content. You're not changing that long-term point of view. By the way, that had nothing to do with mix. That was a portfolio point of view, as I understand it. Are you still holding to that long-term portfolio view for content increase?

Hock Tan -- President and Chief Executive Officer

Oh, yeah. There will be long-term content increase still and there will still be long-term content increase. I would still be interested to know that there's a mix change and there's a unit change now that we have all seen.

Stacy Rasgon -- Bernstein Research -- Managing Director

Okay.

Hock Tan -- President and Chief Executive Officer

Do you have a follow-up question?

Stacy Rasgon -- Bernstein Research -- Managing Director

I do. Let me ask about storage really quickly. Obviously, that's growing well right now, I think, in conjunction with the networking portion of enterprise, they have similar drivers. I say storage historically has tended to be quite a bit more lumpy than the wired business and it just rose 17% sequentially, it looks like, on a mostly organic kind of quarter.

I guess how should we think about the drivers of that and the lumpiness that may continue with that going forward? I think historically, you've given, again, a longer-term kind of view of that business overall as rough flattish. How should we be thinking about the near-term drivers of that and how that will play out over the rest of the year.

Hock Tan -- President and Chief Executive Officer

Let me correct some misperceptions if I'm not articulating it clearly enough. If you strip out Brocade, I was trying to say -- if you do a year on year comparison, you have to strip off Brocade from current year Fiscal 18 results -- our revenue in enterprise storage year on year is single-digit growth, as you expect enterprise storage to typically happen.

And it's a very stable kind of business. It doesn't do cartwheels and funny stuff like that, but it's very stable and extremely sticky and profitable. That's storage. It will be. Even in Fiscal 18, we think super-strength, especially with near line data, cloud data center, buying more high-capacity hard drives, we'll still grow maybe closer to high-single-digits year on year, which is unusual for enterprise storage.

What, perhaps, confused the mix is we now have year on year comparison Brocade and that leads to that 17%. Otherwise, year on year, please don't expect double-digit growth on storage. At best, flattish to single digits.

Stacy Rasgon -- Bernstein Research -- Managing Director

Wasn't the 17% a sequential number or am I remembering that wrong?

Hock Tan -- President and Chief Executive Officer

Oh, yeah. It's probably some level of sequential. Now, you're right. I'm trying to discourage from looking at it sequential. Look at it year on year, sorry.

Stacy Rasgon -- Bernstein Research -- Managing Director

Okay. So, you think roughly flattish year over year excluding Brocade. Okay. Thank you.

Hock Tan -- President and Chief Executive Officer

Yeah, flattish year on year excluding Brocade.

Operator

Thank you. And our next question comes from Vivek Arya, Bank of America Merrill Lynch. Your line is now open.

Vivek Arya -- Bank of America Merrill Lynch -- Analyst

Thanks for taking my question. I also had two. I understand we don't want to talk about specific content. There does appear to be some more competition in high mid-band bands. Do you think that is just the desire for large customers to just have supplier diversity or do you think competition is catching up in technology? And if it's the latter, what are you doing to make sure that you're sort of maintaining your competitive edge in these technologies?

Hock Tan -- President and Chief Executive Officer

Okay. Good question. In every franchise we have -- and we have 20 of them -- we are in the lead. That's the definition of why we call it franchise. That's our business model, that we are the lead, whether we grow it organically ourselves or acquire and strengthen and sustain those, we're the number one in each of the segments, no different in wireless. In wireless, we sell notably RF front end, in other words, built into it, or Wi-Fi/Bluetooth combo chip, as we call it, wireless connectivity. Very much, we're the number one and in the lead.

And we always, having said that, have competition. The world is such you always have competitors, but we are always in the lead and we always, as a key business model, continue to invest as we need to to continue, if not expand our lead. And to answer your question, in RF front end, which I assume is what you're addressing, rather than wireless connectivity or Wi-Fi/Bluetooth, where nobody is even in range in RF front end, we are very much in the lead.

We've had that lead now for many years and we continue to invest to keep that lead. And it has not changed. Believe me, it has not changed. The lead that we have been able to design those RF front end components, which includes, a lot of FBAR filters, a key element of strength, and power amplifiers less so, and the normal switches and little components that add up to an RF front end.

But especially where it relates to FBAR, we're in the lead in architectural. We're the best at creating those RF front end that enable high-end phones to deliver the kind of performance and bandwidth that you see around you. We continue to make sure we are very much in the lead. So, as far as we're concerned, that hasn't changed.

The franchise, to answer your question directly, is not at all in jeopardy. This is not trying to be cavalier or complacent. We are far from complacent in any of our franchise businesses. We continue to remain in the lead and ensure we'll continue to be in the lead as we look forward one generation, two generations. That hasn't changed. The franchise is not in jeopardy.

Vivek Arya -- Bank of America Merrill Lynch -- Analyst

And as my follow-up, very strong performance on the gross margin side. I think, Tom, you were mentioning you expect more upside. What's driving this upside? Is it just mix? Is it something else? Is there a way to quantify what the longer-term opportunity is to take gross margins to? Thank you.

Thomas Krause -- Chief Financial Officer

Good question. Obviously, it is mix as well. If you look at the growth Hock's been articulating around cloud and enterprise IT, we've added Brocade, these are all very margin accretive activities. As revenue grows as well, we're seeing our businesses that were lower performing, carried with it lower gross margins that we acquired from Broadcom in particular continue to improve. As you know, it takes several years to go from actually designing in the product to shipping new products in volume, some of the products we've known for less than a couple of years.

So, all those things as well as the day to day normal operating improvement is driving gross margins up. Clearly, we're focusing on value accretive R&D. So, we're spending nearly $3 billion in R&D. All of that is focused on delivering greater and greater value to the customer. That's also very gross margin accretive. That gives us confidence that we can continue to improve within these levels.

Hock Tan -- President and Chief Executive Officer

Let me expand a bit on what Tom is saying. Here's the thing if you look at the strategy of this company and the market characteristics and how we address the market -- we pick those franchise products. Those products are strategic components, typically, of the customers in each of the segments, in each of the end markets we address.

And as I say, one of the things that's great about the technology business is it constantly evolves. I'm not using the word disrupt. I'm using the word evolution. It evolves. It goes out, switches, increases in bandwidth. The top of the rack switch we're launching now is 12.8-terabyte, features, a lot, but let's use capacity. The routers we have, same situation -- the 30s we have out there to support our building block products and a bunch of other products reach a level 102 gigabyte per second.

As we go up higher and higher, the bar in challenging our products goes up correspondingly. I almost want to use the word in many cases exponentially. You have to spend the money to deliver those kind of very high technology products. It gest harder and harder as generation progresses in every one of our products. Even a simple thing as PCI Express generation three, going to generation four, it's a huge challenge for most silicon guys out there. We can do it, going from 25-gigabyte to 56-gigabyate to 112-gigabyte, as I said earlier. We are finding less and less people out there able to come even close to what we do.

And because of that, we're delivering high content. With increased bandwidth, which is a big part of what we do, higher bandwidth allows more data transfers, allows us to get better value for these products. That's what drives the gross margin. All this is spending mostly in R&D. The spending is not in making the product more -- it's not in the course of manufacturing going up. It's more in the R&D spending to design and enable the product to come out.

So, it's normal that the gross margin goes up. It's also normal that the cost of doing R&D is stepping up too. That's something we're very disciplined on how we make sure we get a good return. But really, the cost of manufacturing more and more sophisticated higher performance products doesn't change and doesn't increase as fast as the value we add to our customers.

And that's why you translate it to higher and higher gross margins. The same applies to wireless to RF front end. I like to say that. It's harder and harder. The value goes up. But the cost of manufacturing goes up less. It affects the explanation for why our gross margin has been trending or creeping up generation after generation year after year.

Vivek Arya -- Bank of America Merrill Lynch -- Analyst

Thank you.

Operator

Thank you. And our next question comes from Harlan Sur, J.P. Morgan. Your line is now open.

Harlan Sur -- J.P. Morgan -- Executive Director

Good afternoon, guys. Great job on the quarterly execution. Your data center pipeline is very strong and I assume contributing to the strong year over year growth in wired. Our sense is the pipeline is getting stronger and more diversified in terms of customers and product types, switching, routing, AI, deep learning, so on. It does seem like more and more of the cloud titans are trying to do their own silicon. So, do you guys think this is just a transitory phase and merchant silicon will fill this void or do you get a sense that better silicon optimization via ASICs will be a sustainable trend. I think this question also applies to your analog ASIC business as well.

Hock Tan -- President and Chief Executive Officer

Very interesting question. Do you know the answer? I'll be direct with you -- I don't know the final outcome answer either. We see strength today and looking forward to the next generation in both merchant silicon and ASIC implementations of the kind of products we do. In many situations on large cloud guys who have the scale to ask for unique ASICs, some of those unique ASICs get their platform from our merchant silicon.

So, it becomes, in many cases, another thing where it's almost an equal system play. It's a whole fabric on network play. It's not one component by itself. We think that. Both merchant silicon is moving along very slowly as is ASIC or semi-ASIC, semi-custom development. This is, when you say that the cloud guys want to do our own silicon, our phrase is to say they can only do so much of the silicon.

As you know, there's a whole spectrum when you do silicon from right at the front-end definition, architecture definition, all the way to the back end. No cloud giant can cut across the entire spectrum. You'll do only parts of it. There's always room for a silicon supplier like us who are able to do across the entire spectrum with $20 billion of revenues, our scale enables us to not only do things better than most other suppliers out there in silicon, but also gets us to the scale of cost, that is hard to match.

In other words, our cost of developing 7 nanometers spread across such a wide spectrum of products is very cost effective, as the IP, intellectual property, we develop to support many of our unique products. You see that in the kind of financial performance Tom articulated.

Harlan Sur -- J.P. Morgan -- Executive Director

Thanks for the insights there, Hock. Then question for Tom -- you guys have a full quarter of Brocade under your wing. You were targeting $900 million in annualized EBITDA post synergies or 60% EBITDA margin. Just given the company's total margin profile that you're driving right now, it seems like you guys are already there but we wanted to get your view -- can you just help us level set where you are relative to your targets and how much more you think you can drive versus higher expectations?

Thomas Krause -- Chief Financial Officer

Great question. I think at this point, we feel real good about Brocade. Obviously, revenues are -- it's a public company and everyone knows we're the top line on saying what, so revenues are strong and a lot of that is reflected in the storage business and results there. In terms of margins, obviously this is a margin accretive deal. A lot of the costs on the OpEx side have come down. There's a little bit left to go, but it's largely done. If you do that math, obviously, this is a business that's meeting, if not exceeding, our expectations, but I don't want to get any more detailed than that.

Harlan Sur -- J.P. Morgan -- Executive Director

Great. Thank you.

Operator

Thank you. That concludes Broadcom's conference call for today. You may now disconnect.

Duration: 59 minutes

Call participants:

Ashish Saran -- Director of Investor Relations

Hock Tan -- President and Chief Executive Officer

Thomas Krause -- Chief Financial Officer

Ross Seymore -- Deutsche Bank -- Analyst

Craig Hettenbach -- Morgan Stanley -- Executive Director

Gabriel Ho -- BMO Capital Markets -- Analyst

Blayne Curtis -- Barclays -- Analyst

Amit Daryanani -- RBC Capital Markets -- Analyst

John Pitzer -- Credit Suisse -- Managing Director

Stacy Rasgon -- Bernstein Research -- Managing Director

Vivek Arya -- Bank of America Merrill Lynch -- Analyst

Harlan Sur -- J.P. Morgan -- Executive Director

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