So that’s why we believe it will actually go up in second half.
Philip Shen: Great, Yan. That’s very helpful. Thank you. Shifting over to the UFLPA situation in the U.S. Can you talk through if your imports into the U.S. are still being detained, if so, what percentage is it like a very small percentage sub 10% or is it modest and maybe like closer to 10% to 30% of your imports into the U.S. might be detained? And do you have a sense for — if you are detained in that at all, what’s the timeline as to when those tensions might be released? Thanks.
Shawn Qu: Philip, I can only say to you that we get most of our volume released and imported into U.S. Now, I can’t predict, however, I can’t predict how CP — CBP respond or process every lot, which they have questions. So this is not something I can predict, but the historical pattern from other suppliers. So I suggest you go, I mean, maybe you can draw reference from what you see from other importers.
Philip Shen: Okay. Thank you, Shawn. One last one. In terms of storage, can you give a little bit more color on the outlook for growth and margins? Some of our checks suggest you guys may have recently cut your storage pricing meaningfully, maybe 10% to 20% cheaper versus peers. We’re also hearing that you’re telling customers that you may want to own all the data. Can you talk about the rationale for some of these actions? Thanks.
Shawn Qu: I didn’t quite get your question. Who said we are cutting price 10%, 15%?
Philip Shen: 10% to 20%. One of — one of your — well, I can’t share exactly who, but somebody in the storage ecosystem was highlighting that your pricing was reduced in storage meaningfully recently and so you might be 10% to 20% cheaper versus peers. It’s only from one source. I haven’t fully verified everything, but just curious, have you guys recently reduced pricing meaningfully?
Shawn Qu: Well, if we are 10%, 15% below peers, I’m very happy because we are still getting very good margin on the e-STORAGE product that probably shows our very strong cost control and competitiveness. As I said to Colin’s question that when the battery cell price go down and leasing carbonate price go down, we do cost on some of that savings to our customer. So it’s not surprising that if some of the price we offer today is better, is lower than the price we offered a year ago or two years ago, so that won’t surprise me.
Yan Zhuang: So, Philip, once again, we are not selling cheaper than our peers. If we’re selling 10% lower, that’s the market price.
Philip Shen: Great. Really appreciate the color. Thank you, guys. I’ll pass it on.
Operator: Thank you. Our next question comes from the line of Brian Lee with Goldman Sachs. Please proceed with your question.
Brian Lee: Hey, guys. Thanks for taking the questions. I had a couple sort of modeling/housekeeping ones. Huifeng, you mentioned a write-down in the quarter. How much did that impact gross margins for CSI Solar in 4Q and it sounds like, I guess, no residual impact is expected going forward?
Huifeng Chang: About a couple of points, it’s a combination of subtle one trade case and some write-down. And then when we ramp up the TOPCon cell manufacturing, in the process, there is expense in ramp-up the efficiency and getting know how, so that process is also completed. So going forward, we should be okay.
Brian Lee: Okay. So a couple of 100 bps. Understood. And then, for your Q1 margin guidance, had a couple of questions around that. I guess, first off, are you assuming either for Q1 guidance or maybe just give us your thought process around how you’re guiding and embedding it in for the rest of the year? Any impacts from IRA credits?
Huifeng Chang: Yeah. The U.S. module manufacturing started end of last year and now quickly ramping up, so we’ll pick up some manufacturing credits. But more important is that our TOPCon ramp up also completed in China, so that’s very helpful. And then also battery storage will contribute significant profit margin to CSI Solar. So everything working together, I think we have seen the worst have passed.
Brian Lee: Okay. Is there — I mean, I suppose we can kind of back into it, but can you give us a ballpark range of what IRA impact is for Q1 guidance on gross margin and then what that could become over the course of ’24 as you ramp additional volume in the U.S.?
Huifeng Chang: I can’t — we don’t disclose all these details, but I can share with you the framework later on.
Brian Lee: Okay. Fair enough. We’ll take that offline. I guess, on e-STORAGE, if you look at the revenue breakout you guys provide, obviously, it seems like battery storage revenue was pretty significant in Q4, and CSI Solar still only managed to do a 12% gross margin. You’re obviously saying e-STORAGE margins are contributing going forward. So this question would be what is presumably e-STORAGE gross margins are higher than solar module margins embedded in your Q1 guide. Is it fair to assume that for the balance of ’24 e-STORAGE gross margins would remain above your gross margins for solar modules?
Huifeng Chang: I cannot confirm. Quantitatively, I think you are thinking the right direction.
Yan Zhuang: Well, it is, I can confirm.
Brian Lee: Thank you, Yan. Okay. That’s helpful.
Huifeng Chang: Thank you, again.
Brian Lee: Is there any — I mean, directionally, it seems like it’s above. I mean, we’re talking about a meaningful delta between what you’re making on storage versus solar module only?
Yan Zhuang: I can say that for 2024, the gross margin for e-STORAGE is around 20%.
