Stefan Murry: I mean the opportunity there is several times larger, many times larger. It remains to be seen how much of that market we can get. I don’t want to, create too much, irrational exuberance at this point. But the market size, the market opportunity there is huge and it’s being driven by AI. I mean there’s nothing that should be mysterious about the demand profile, right? I mean we heard Nvidia [ph] talking today, on their, or yesterday on their earnings call about the amount of computing infrastructure that’s being built. All of that needs to be interconnected and a lot of it is being interconnected at 800G and frankly will be probably moving to 1.6 terabits in some applications early next year. So the opportunity is huge.
I think we’re well positioned for that. Like I mentioned earlier, we’ve seen a lot of new customer inbound interest just recently and there’s a lot of work to be done and I’m not predicting we’re going to get, what percentage of that market we’ll ultimately be able to get. It’s a little early to say, but the market opportunity there is huge.
Timothy Savageaux: Okay, thanks very much.
Operator: [Operator Instructions] Our next question comes from Dave Kang with B. Riley Securities. Please go ahead.
Dave Kang: Thank you. Good afternoon. My first question is regarding your first quarter outlook. Can you just provide more color in terms of each product segment? How they’re going to decline sequentially?
Stefan Murry: Well, we don’t really give guidance by product segment, but, clearly the cable TV business, no matter what happens there, it’s not big enough. It’s not going to collapse to zero, so whatever happens there is not likely to account for the majority of the decline. So that’s going to come primarily from the data center business. We noted in our prepared remarks earlier that, it’s a combination of factors there that the Lunar New Year, a lot of these products are made in our China facility and so the mix of those products shifted a little bit unexpectedly on us towards the end of last year, which resulted in having to make new products essentially that we hadn’t necessarily planned for in advance and that’s why the Lunar New Year caught us a little bit unprepared this year.
In addition to that, we did have some pricing reductions and, again, most of that you can assume is in the data center side. It kicked in towards the end of last year and both of those two factors account for the bulk of the decline.
Dave Kang: So on that, the second part about pricing reductions, was it mainly 100 gig also or involved 400 gig as well?
Stefan Murry: No, it was mainly 100 gig. I don’t believe we had any price reductions on 400 gig.
Dave Kang: Got it. And then when you talked about when you talk about a second quarter snapback, are you just talked about 400 gig or will 100 gig recover as well?
Stefan Murry: We expect it’ll be mostly 400 gig. There may be some recovery in 100 gig, it’s a little bit unclear, but that technology is clearly, in the waning phase of its life cycle. 400 gig is clearly going to be, picking up more in the near future and, again, as we talked about earlier, later in the year, 800 gig is expected to contribute as well.
Dave Kang: Right. And then on the Microsoft, do you have any kind of like backlog to speak of that gives us confidence that, you’ll, that they’ll ramp throughout this year or is it still based on their forecast?
Stefan Murry: I mean, we have a small backlog like they always do, but it’s consistent with what we’ve seen over the years. It’s nothing, it’s nothing that would guarantee a ramp throughout the year.
Dave Kang: Got it. And my last question is, you talked about, Microsoft to add another supplier, what’s the latest on that?
Stefan Murry: I’m sorry, I didn’t quite understand your question. You said Microsoft adding another supplier for the 400 gig specifically or did you say…
Dave Kang: Yes AOC possibly adding another supplier in addition to you — any latest update on that?
Stefan Murry: All right. I mean, yes, I get your question now. So, I mean, I’m not aware that there’s any other supplier that’s shipping at this point. But I really wouldn’t really be able to share that information even if I were. But as a matter of fact, at this point, I’m not aware of it, so.
Dave Kang: Got it. All right, thank you.
Stefan Murry: You’re welcome.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Thompson Lin for any closing remarks.
Thompson Lin: Okay, thank you for joining our call today. As always, we want to extend a thank you to our investors, customers, and employees for your continued support. We look forward to seeing many of you at AAOI and to updating you on our next earning call.
Operator: The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.
