Operator: Thank you. One moment for our next question. And our next question comes from the line of Ross Seymore from Deutsche Bank. Your question, please.
Ross Seymore: Hi, guys, Thanks for taking the question. I want to ask a near-term question and then I’ll have a follow-up. On the near-term side, I guess there’s kind of two parts, so forgive me for that, but for the guide for the third quarter, Fermi or Brian, you mentioned that I think you said the majority of the weakness should be in the IoT side not auto, I just wanted to get some color on that. And then the second part of the first question here is going to be the fiscal year basis, I think Joe kind of asked it earlier, but it looks to me like your non-CV revenues are going to be down about 50% year-over-year, how much of that, if you can guess, do you think is share that’s just gone and it’s the low-end stuff you mentioned, first is, just a cyclical dynamic of inventory burn and some of that will snap back.
Fermi Wang: Right. So, first of all, I think that for the short-term side, we definitely believe that, it’s — I think the question is related to…
Brian White: I think the first part of your question, Ross, was confirmation that the weakness that we see in revenue for fiscal Q3 is driven by the IoT side of the equation and that is correct. We’re seeing obviously some significant rebalancing of inventory and orders across our businesses. But in terms of what’s driving this leg down in revenue between Q2 and Q3, it appears to essentially be all IoT at this point.
Fermi Wang: Right. On the second part is really whether that video processor side, I think that the video processor side is definitely part of the weakness we talk about in the consumer IP cam side, and so that really depends on the inventory situation, whether they, well — how fast they can rebound to it, but I don’t think we can snap back to the original level. We believe that some of our video processor business will be replaced by our low-end CV chip too. So I think that we talk about next year, our video processor business will continue to go down, but not in the same scale that we sold this year.
Ross Seymore: And then I guess my follow-up, and forgive me, I guess it’s kind of three here kind. If we look at the growth for fiscal year ’25, you said the video processors will still go down. What do you think are the key growth drivers in your CV business that we should look forward to either when design wins kick in, and inventories burn, so cyclically or secularly just roughly speaking, what do you see as the biggest tailwind to offset that video processor headwind.
Fermi Wang: So for the for CV side, I definitely believe that both when the inventory burns through as well as our new projects like CV5 and CV72 production will help us to get tailwinds to boost our IoT business. But even on auto side, we believe that new design wins can help us to get more revenue growth for next year. So I think that professional — from the professional IP Cam side, it’s become very clear that we think that our market is still — we hold our market share very well and as soon as we get the inventory cleaned, we should be able to see a rebound on the current design wins and plus with the CV5 and CV72 design when we talk about that should help.
Ross Seymore: Thank you.
Operator: Thank you. One moment for our next question. And our next question comes from the line of Tristan Gerra from Baird. Your question, please.
Unidentified Participant: Hi. This is Thera (ph) for Tristan Thanks for taking the questions. Just, you touched on the IoT side of the business, but maybe on the auto side, have you seen any step downs in order patterns from automotive OEMs as they take inventory control measures in the past few months, and do you expect any further order reductions before year-end in auto?
Fermi Wang: Right. So we did some small customer that trying to — that reducing their inventory, but it’s not as bad as IoT side. I think most of the time, I think our automotive customers continue to take the parts of the plant. Although we see some weakness but it’s not like I said, IoT is really the main problem we’re dealing with right now.
Unidentified Participant: Okay. Great. And then for my follow-up, how different are the potential engagements for CV3 given the long-term nature and software platform cost of developing ADAS solutions versus the traditional segments that you play, including delivery orders?
Fermi Wang: Right. So obviously, the CV3 design win take much longer than our recorder in the past. Recall that in the past, it was like 18 months, even in auto, 18 months design cycles. Here in the outside channel, we’re talking about four years. That’s the reason we decided to really focus on our CV72 and CV3 opportunity in China first and so that we can address the revenue time to market — time to revenue was the issue. So for that, we talk about CV72, most likely will have a revenue second half 2025 calendar year. And I even think the CV3, we have a design win with a Tier 1 that we might generate revenue in fiscal — sorry, calendar year 2026 and that is definitely shorter than any other areas that we’re seeing.
Unidentified Participant: Okay. Great. Thanks for the questions.
Operator: Thank you. One moment for our next question. And our next question comes from the line of Tore Svanberg from Stifel. Your question, please.
Tore Svanberg: Yes. Thank you. Fermi just back to sort of the resources and the opportunities and specifically thinking about the CV3, the leverage of the software because, we’re talking about auto, right, which is an edge device, but we’re also talking about AI accelerators at the core, so just trying to understand how much portability you have with your current investments so that you don’t have to go through a completely new investment cycle if you will?
Fermi Wang: Right. So, we don’t plan to have a brand new investment cycle. With our current resources, we already build up our software stack in a way, we are ready to demo a brand new software stack that’s 100% AI-based very soon. That’s what we talk about in the past, right? We talk about that we are working with Conti software stack, but in parallel, we’re doing our own software development. With our current resource, with the two acquisitions, both Oculii as well as Parma VisLab. We are at a stage ready to demo our next generation of software stack. So from the development point of view, software side, I think we definitely not only prove that we have enough resources but we finished the work to some extent. So now the issue is with LLM, also we funded our phase — first phase of LLM investment based on our current resource, and leveraging a lot of investment we’re putting into CV3 software already.
But for the second phase, we are waiting to see the result of first phase of our engagement with customers, even that ramping up is not going to be a lot more than what we have today. We definitely will be ready to talk to investors when we are talking about ramping up. From that point of view, you can think that even for the silicon side for LLM, like I said, this is going to be our next phase of CV3 roadmap. So we have to build a next-generation roadmap for the silicon side, and this will leverage 100% existing VLSI team (ph). So any new development or new investment cycle for LLM is a software team to support customer. I hope that for clarifies the question.
