And as I have noted, this figure doesn’t reflect any of the benefit from either the U.S. or European Chips Act. From a capacity viewpoint, what does that mean, that basically means that we will be able to still double our internal capacity footprint by 2025. Originally, we were thinking that was going to take place more in the 2024 time period. But given the macro and the demand outlook, we are comfortable with that. So, we don’t need basically all of that capacity in the short-term. From a customer viewpoint, from a swing capacity viewpoint, our goal is to be able to basically swing 70% of our product portfolio from internal to external fabs. That’s good for our customers because it gives our customers the ability to dual source, and that really creates a rich and resilient supply chain with multiple options for our customers.
And from a gross margin viewpoint, internally, that allows us to moderate the factories a bit with this additional swing coming in-house as well. So, we are comfortable with that strategy. I don’t know if Vince has…?
Vincent Roche: Yes. So, let me – good morning, Tore, let me add a couple of piece of color to what Jim has just said. So, most of ADI’s revenue today is built on process technologies that are 180 nanometers [ph] and above. Now in digital technology terms, that’s a very, very old process technology. That’s more than 25-years-old in terms of its currency. But in the analog space, that is still a very contemporary process node, so more than 70 – a little more than 70% of our revenue today is produced on process technologies at 180 nanometers and above. And as Jim said, we have gone through a major internal expansion to give us more flexibility and agility in terms of where and how we manufacture those process technologies.
And we are making all these investments that we have made on the internal fabs of 200-millimeter wafers. So, the tool chains are less expensive, and we are able to get tremendous return on investment over many, many decades on the investments that we are making. So – and I think below that, for the, let’s say, at the final line geometry nodes, we have very, very good alternatives with our external partners who are in a very, very really important piece of how we make the hybrid manufacturing model work. So, anything that is kind of 90 nanometers and below, it’s 300-millimeter wafers, and we secure that production with multiple sources across the globe.
Tore Svanberg: Very helpful. Thank you.
Michael Lucarelli: Thanks so much Tore. And we will go to our last question, please.
Operator: [Operator Instructions] Our last question comes from Timothy Arcuri with UBS. Your line is open.
Timothy Arcuri: Thanks a lot. I had a question on inventory. It sounds like you are planning to bring it down quite a bit from here. And you mentioned that the target is 120 days, but of course, it depends on what the base of revenue is. So, can you quantify how much more you plan to take out of your inventory? It seems like it could come down maybe a couple of hundred million dollars more from here? And then also maybe if you can also quantify – and this is kind of a hard question to answer, but how much is selling below sell-through? I know you get some metrics, particularly inside of distribution? Thanks.
Jim Mollica: Hey Timothy, let me take that. Just to be clear, let me kind of we step that back what I have said. So basically, inventory in fourth quarter was down $70 million, and that was on a quarter-on-quarter compare. That was almost all at the finished goods level. In 1Q, we plan to take inventory down by a similar amount. And then we will do that again in 2Q. That’s on a dollar basis, not on a days basis, just to be clear there. So, over the course of three quarters, fourth quarter and the first half of ‘24, we expect inventory to be down in the $200 million plus range for that. In terms of the channel, as I mentioned, we are – our sell-in to the channel is lower than our sell-through. And in the fourth quarter, that was – it was in the $50 million range. And I would probably expect probably a similar number there in first quarter, yes. And with that…
Vincent Roche: Tim and your question on the days of inventory, I would say our pre-COVID target was 120, we are close to 190 today. I think both of them are going to be wrong when all the dust settles, but we will re-up you on kind of the long-term inventory days model at a future call. And with that…
Timothy Arcuri: Okay. Thanks.
Vincent Roche: Good Tim. Thanks everyone for joining us this morning. A copy of the transcript will be available on our website. Thanks for joining the call. I appreciate your interest in ADI and have a great Thanksgiving.
Operator: This concludes today’s Analog Devices conference call. You may now disconnect.
