Richard Shannon: Yes, that does. Thanks for that. My follow-on question will be in the display market. I think you talked about service utilization that have increased here sequentially, I think even a nice 20% number if I remember correctly, but still below your year ago levels here. Wonder if you have any visibility into those utilizations continuing to improve and perhaps even get back to year ago levels and then does this imply or just give you better visibility on further CapEx orders within the display unit?
Chuck Mattera: Good morning Richard, thank you very much. Chris Dorman?
Chris Dorman: Yes, in display the utilization of the OLED tools drives the service revenue. And it’s worth remembering that there are two factors in terms of the utilization. It’s the number of phone screens that are produced. But there’s a multiplying factor in terms of the percentage of phones, which are using OLED screens and that is led to an uptick in the service revenue, the utilization of the Excimer lasers and that will continue through the year.
Richard Shannon: Okay, perfect. Thank you.
Operator: One moment for our next question. Our next question comes from Sidney Ho with Deutsche Bank. Your line is open.
Sidney Ho: Great, thank you. Good morning. I want to switch gears over to the industrials market. You seem quite confident that the business will improve in the second-half of fiscal ‘24. Can you talk about which subsegments do you think will lead to recovery between semi-cap display, precision, manufacturing, and aerospace? Particularly interested in your comments in Precision Manufacturing, you’re seeing second conservative order of growth, and some customers are requesting shipments on short notice, but that’s quite different than what we are hearing from other broad-based semiconductor companies?
Chuck Mattera: Okay, Sidney, good morning. This is Chuck. Sidney, we may have two or three people that have an angle on this, but we’ll start with Sanjay.
Sanjai Parthasarathi: Yes, thanks, Chuck. So in terms of our industrial market group is broken up into verticals, so we have our precision manufacturing vertical, our semi-cap vertical, our display vertical, and aerospace and defense. We are really excited about semi-cap. That market for us has been growing very steadily, quarter-over-quarter, year-over-year. So there is — we continue to see a lot of demand both from existing customers and new customers and the envelope of applications seem to continue to improve. On precision manufacturing in particular, that is a market that is a lot more sensitive to macro. However, we do have certain areas of very strong growth, such as electric vehicles, so our stock market’s growing at a 15% CAGR, the medical device market is turning around, that’s growing also fairly well. So we’ve got some really big bright spots within precision manufacturing. And I think Chris covered the display question earlier.
Chuck Mattera: Do you want to add anything to that, Chris?
Chris Dorman: Yes, I would say that semiconductor, capital equipment inspection is also showing growth. It remains strong. Our customers continue to pull on a strong backlog there.
Chuck Mattera: Great. Okay, Sidney.
Sidney Ho: Okay, great. That’s helpful. My follow-up question, though, I just want to follow-up on the silicon carbide. You called the near-term demand for the silicon carbide business remains pretty robust, but recent data points from the industry seems to be more mixed in the past few weeks with demand for EVs maybe slowing down a little bit. Can you give us a sense what you are seeing in terms of demand? Is that you are doing better than others, because you’re gaining share? And also interested to see how the pricing side of things are? Are you seeing more competition in terms of prices? Thank you.
Chuck Mattera: Thank you Sidney. Hi Sohail.
Sohail Khan: Okay. Sidney, that we have to look at the market not by one quarter basis, because this is a market which is on a growth trajectory. And it is going to continue to grow at close to 30% compounded growth rate over next five to 10 years. So one announcement of one vendor pushing in and out does not define the market. Overall market strength is there and the market adoption is there. And yes, when you have the growth and many players are coming in, that there will be price pressure. It is normal, natural in any growth market. But we see a strong growth and a very good traction with very large customers with the long-term agreements in place.
Sidney Ho: Okay, thank you.
Chuck Mattera: Thank you, Sidney.
Operator: One moment for our next question. Our next question comes from Vivek Arya with Bank of America. Your line is open.
Blake Freeman: Hi, this is Blake Freeman on Vivek. Thanks for taking my question. Wanted to go back to your AI opportunity, I know one of your competitors recently made an acquisition to enter the AI data cloud transceiver space. First, was hoping you can provide any clarity on the margin generator from higher speed AI-related transceiver products? And if you think this growing competition also creates any pricing risk in the market?
Chuck Mattera: Thanks for the question. First of all the — clearly this validates the investment thesis we had for the acquisition of Finisar years ago, so we had that vision, which is now you can see was a pretty good one. And then it enforces, right, the — it’s an endorsement, it reinforces the strength of the market that we are witnessing today and the upside potential that we all see. I think the generally speaking, from vertical integration, scale, and technology differentiation, we are still the market leaders and that’s explained why we see the funnel, the pipeline for new engagement around 800G increasing daily in the sense that we believe that we have an opportunity, that maybe we have not considered in the recent past to penetrate hyperscalers where we have been historically not as strong as we would have liked to be.
And so generally speaking, the competitiveness of the landscape is there. I think we welcome competition and I think we are very well positioned with the three attributes, which I mentioned to compete and continue to grow and take advantage of the, again, as I said, of the strategy which we deployed years ago when we identified AI on demand as being a key driver for the growth of our business.
Blake Freeman: Got it, and then just as a follow-up on the silicon carbide side, I know there’s certainly a supply demand imbalance in the market. Just trying to get your thoughts around as there’s more device vendors in the market, who are kind of bringing materials production in-house. How we should think about the growth opportunities for Coherent and I guess, your thoughts on the relative growth in the materials market versus the device market longer term?
Chuck Mattera: Okay, thanks for your question. So, Sohail?
Sohail Khan: Yes. We see a demand on both ends that even you say there are lots of suppliers in the Dubai site, people are still looking for a good MOSFET, a MOSFET which will be rugged, MOSFET which will have high reliability and MOSFET, which can address the future needs, which are getting more and more integration and the amount of current and power you can handle. So we see a very strong demand on the device side from our customer engagements. And then on the material side that we see a very strong demand for 200 millimeter and in 200 millimeter there are very few limited choices and as you know we were the first one to introduce the 200 product to the marketplace. So, we feel pretty good about it. Yes, there is competition, but competition reaffirms that there is a strong demand for it.
Blake Freeman: Great, thank you.
Operator: One moment for our next question. Our next question comes from Christopher Rolland with Susquehanna. Your line is open.
Christopher Rolland: Hey guys, congrats on the results and guidance and thanks for the question. I guess my question is around backlogs. So that’s now increased two quarters in a row. Is this a sign, you guys think of the bottoms, does this mean we can grow revenue each quarter as we move through next year? Or are there some decent timing and fulfillment issues here in this backlog that would disturb that kind of linear pattern?
Chuck Mattera: Okay, thanks a lot Chris. Good morning. Chris, I’m going to ask Magnus just to make a general comment about the overall pulse from the marketplace as he sees it from the point of view of the demand. And we’ll see if there’s a follow-up.
Magnus Bengtsson: Good morning, Chris. Appreciate the question. So let me just talk a little bit about the customer engagement perhaps. I would say that customer engagement is really robust and we see orders continuing to grow across the end market. Customers today, there’s certainly the inventory digestion issues we mentioned with some of our end markets, but customers are really focused on innovation. And so the design wind funnel, the outlook that we have looks very robust across most of our markets. So we would expect that trend to continue.
