Derek D’Antilio: Yes, Blayne, this is Derek. The cost structure we have, I would say market-based competitive pricing with Polar right now. It’s probably in between the pricing of our other partners. And that’s part of the reason why we’re excited about this. I think the investment will allow them actually over time to reduce the cost with scale with that fab. We have not been paying transfer pricing. The larger owner pays transfer pricing for Polar. And in fact, as a result of this transaction, we’ll go from owning about 30% of Polar right now to around 14%, so it will be some slight benefits in accounting. And there won’t be any transfer pricing. It’s largely market-based pricing with a long-term wafer agreement that’s market-based
Blayne Curtis: Thanks.
Operator: One moment. Our next question comes from Quinn Bolton from Needham & Company. Your line is open.
Quinn Bolton: Hey guys, congratulations on the 30% op margin. Just one quick follow up on the Polar investment as, as a minority shareholder are you guys required to contribute any CapEx to this expansion or is that all handled separately by, by Polar?
Derek D’Antilio: Quinn, this is Derek. No, we’re not required to contribute any CapEx. We’ll own about 14% of Polar. We’ve owned 30% right now and have not been required to contribute any CapEx. And that’s really one of the wonderful things about this is the Polar Fab will get the investment they need to improve their technology from both One Equity Partners coupled with some proposed CHIPS Act funding.
Quinn Bolton: Got it. My question is with your lead time starting to compress as you build die-bank and you said in the near-term it sounds like you’re going to be rebuilding some channel inventories. Can you just, I know you’re not giving guidance beyond the March quarter, but how are you thinking about the next several quarters? Do you €“ as you see lead times compress, do you expect a period of, sort of a pause in sales? Or do you think you can continue to grow through this period of compression in lead times and the backlog normalizing over the next several quarters?
Vineet Nargolwala: Yes. Quinn, that’s a really great question. I would say what we are trying to do with building wafer and die-bank is really about improving lead times for our customers. It’s a customer service issue for us; having said that we would expect no real pause in our sales growth. As Derek pointed out, we have over year’s worth of backlog. Our mission right now is to continue to improve lead times for our customers, keep reducing the past due and make sure that we are servicing customers the way we want to service them, and so that’s really what the wafer and the die-bank is about.
Quinn Bolton: Understood. Thank you.
Operator: One moment. And our next question will come from Vijay Rakesh and Mizuho Group. Your line is open. And Vijay, your line is open.
Vijay Rakesh: Yes. Hi. Good quarter and guide here. Just a question on the EV side. I think you guys mentioned EV growing 30% in fiscal 2024, is that right? I’m just wondering if that’s conservative, if you start to see the EV side start to expand faster given all the price cuts in the channel?
Vineet Nargolwala: Yes, Vijay, that’s a great question. We’re just using third-party data at this point. So I think it remains to be seen if the price cuts actually accelerate the EV penetration. We think there’s potential elasticity there. So at this point we’re just relying on the third-party data here with the 30%.
Vijay Rakesh: Got it. And in terms of applications, and I think you had talked about how your content is much higher on the EV side with the sensors. You talked about $90 per unit on the EV side. Do you see broadly that driving your market share higher as you go into calendar 2023 fiscal 2024? I guess the question is; do you see that application space expanding in EVs?
Vineet Nargolwala: Yes. Vijay, just to be clear, so the $90 is our content opportunity, and that includes our newest acquisition, Heyday, which brings to us isolated high-voltage gate drivers. I would say that broadly and directionally, our content opportunity on EVs is 1.6 to twice that of what we have in our standard ICE vehicle. And certainly, as you look at the application set, we believe that we have leadership in the applications that are specific to an EV, around current sensing, around motor drivers and then isolated gate drivers. And so we would expect to see share expansion as we €“ as EVs take off. The Heyday revenue is probably two to three years out at this point. So that’s just the nuance there.
Vijay Rakesh: Got it. And just a quick last question; I think in the past you’ve mentioned your foundry capacity has been one of the gating factors on your €“ in your top line. Are you seeing better capacity allocation now from your foundries?
Vineet Nargolwala: Yes. So it is incrementally getting better, Vijay, and I would say the long term looks really good. We have to work through the near term here as the increased allocation starts to make its way through our back end but that’s the dynamic we are dealing with.
Vijay Rakesh: Got it. Great. Thanks a lot.
Vineet Nargolwala: Thank you.
Operator: One moment. And our next question will come from Alessandra Vecchi of William Blair. Your line is open.
