Mitch Hourtienne: Yes. The performance is already proven, all the commercials are proven so that the value is obviously recognized by the three different states. But it’s really a state by state decision. The end customer, the Department of Transportation within each state. And as you know, some states are more aggressive adopting new tech, some lag. Some have expedited processes, some have slower processes. So, the main gating item is just additional states adopting the technology and the process of sourcing this.
Jun Pei: Yes, I think that final piece is probably the capital and that’s available to these operators. And, as the infrastructure bill, funding gets rolled out, that’ll probably help a bit as well.
Operator: The next question is a follow-up from Richard Shannon with Craig Hallum.
Richard Shannon: Maybe one or two questions here. Hull, I think you mentioned as your guidance for gross margin is something to be positive here. What do you think help us kind of think through this as we go throughout the year? Obviously, we know there’s a mix of auto and infrastructure and some product and some NRE type of stuff here. But as we gain some volumes here, how do we think about kind of the exit rate of your product gross margins? I don’t know if you want to quantify or qualify in some way, but I’d love to get a sense of kind of that exit velocity on that number?
Hull Xu: Yes. Thanks, Richard. Good question. Tough one to answer. As you mentioned, there is a mix of product revenue versus development revenue. So, development revenue, typically, right now, it’s running at around 50% or more, and in the future also depends on, is it more software development or something else. Product revenue, it really depends on the cost, BOM cost and also the ASP. ASP for automotive, we are launching in below 1,000. As it scales, we are targeting ASP to be somewhere near 500 or below. But that will take a couple of years before we reach that volume. And then, smart infrastructure ASP is quite a bit higher than automotive. For example, last year, our smart infrastructure ASP somewhere around 4,000 or 4,500.
And we do expect that to come down a little bit, but gradually, very gradually. We do expect smart infrastructure ASP this year to be still quite a bit higher than that of automotive. So, all of these play into the gross margin picture. And I think, what we guided to is, what we can — where we feel confidence in right now.
Richard Shannon: Okay. I think that would be my only question. Thank you much.
Hull Xu: Okay. Thanks.
Operator: The next question is from Gus Richard with Northland. Please go ahead.
Gus Richard: Yes. Thanks for taking my question. And just to follow on Richard’s question. Can you give us a rough idea of what the mix is going to be this year between NRE, auto and infrastructure?
Hull Xu: Yes. So, in our guidance, there’s not a lot of NRE, right now. So additional NRE will be upside. So, essentially, the majority of the guide is product revenue. And then, in terms of auto versus smart infra, I’d say, it’s maybe 3:1 kind of relationship, 3 for auto 1 for smart infra in terms of revenue.
Gus Richard: Got it. And then your OpEx expected to be flat and sort of I am assuming R&D will be flat, and I’m just wondering is that, because you had a tape-out last year, and you don’t have a major tape-out this year — or how do you kind of hold the R&D flat?
