Tom Diffely: Okay. And maybe just quickly on that wearables market, is that going to be new business for you or is that just the evolution from the prior generation to the new generation that you’ve done?
Giel Rutten: That specific product we’re talking about is new, it’s a new generation and it’s also a new business for us. Business that we didn’t have in 2023 and that we will have in 2024.
Tom Diffely: Great, And then, sorry to take too much of your time, but the capacity expansion in 2.5D, it sounds like that business is currently under a pretty heavy ramp, but it’s not till the second quarter of 2024, where it gets to kind of 3 times of last year’s level.
Giel Rutten: Yes. I mean, that’s a continuous ramp in that line. Of course, we have existing capacity there Tom and by debottlenecking that capacity and optimization of the utilization of the line we are able to double capacity and outputs by the end of this year already, and then by further investments of incremental equipment, we share further plan to in total triple our capacity towards the second quarter of 2024.
Tom Diffely: Okay. And then when you look at the CapEx for the year, it sounds like you’re maintaining the $750 million, but did the location of that spent change? Are you spending more on computing and less on other markets?
Giel Rutten: Not really, Tom. You have to keep in mind that in that CapEx for this year, a significant part of that CapEx was allocated for our Vietnam facility. On the CapEx allocated for equipment and equipment expansion, I think that we already allocated and that is as planned.
Tom Diffely: Great. Well, I appreciate your time today. Thank you for the questions.
Giel Rutten: Thank you.
Operator: Thank you. [Operator Instructions] Our next question comes from Randy Abrams with UBS. Please state your question.
Randy Abrams: Yes, thank you. The first question actually is following up on Tom’s questions on the applications. I may have missed it, but could you discuss for auto, industrial, and mainstream just the outlook for those applications to continue the correction or start to show signs of life on more of the mainstream and mature auto and industrial products?
Giel Rutten: Yes, good question, Randy. Now let me try to give some color and then Megan later on give a little bit more detail here. In the automotive, we’re clearly monitoring our position in advanced products in automotive because the emerging applications like ADAS, infotainment, in-car networking are all supported by advanced silicon in combination with advanced packaging. So there we see continued growth, I mean year-to-date growth in automotive advanced packaging was around 15% year-on-year. So that’s a good signal that will continue to grow. On the more mature part of the automotive market, we clearly see that customers are very prudent on keeping inventory or maintaining inventory at an elevated level, certainly going into the end part of this year and we saw some corrections in specific areas.
In our view it’s not that the inventory is extremely elevated, but it was more a prudent correction towards the end of the year. And we believe that going into next year, I think the overall supply chain for automotive is pretty much in balance.
Randy Abrams: Good. On the margins, I’m curious on the incremental fourth quarter, actually the sales are pulling back. It looks like the margin is holding up a bit again. Is there a mixed change just relative to other part of business or I think some of the efficiency measures on the non-material costs that held in third quarter, just if anything, relatively supporting the margin to hold up in fourth quarter.
Giel Rutten: Okay. Thanks, Randy. Megan can take that.
Megan Faust: Yes. Hi, Randy. Yes, so Q4, despite some decline, the margin is holding up nicely within our — I would say our financial model even a bit better than that. There is some product mix in there, but I wouldn’t say that that’s dramatic. There’s also a bit of currency benefit in there, but overall there’s really good, I would say, cost management where we’re holding manufacturing costs down as that revenue declines.
