Meta Marshall: Yes. So last quarter, you would have implied kind of about 100 basis point, 150 basis point increase between fiscal Q3 and fiscal Q4 and that seemingly kind of come down to about 80 basis points. And kind of understand the overhang to fiscal Q3, but what is the difference in kind of a smaller jump up between fiscal Q3 and implied fiscal Q4 gross margins?
Chuck Mattera: I think, Rich just give a big picture, if you would, please.
Richard Martucci: Yes. So the margin resolution in Q3, as we mentioned, are pretty much done. We’re still in the middle of ramping, as Lee mentioned, our 800G product and our yield plans that we have going forward. So the other piece of this is the majority of the increase quarter-over-quarter is coming from 800G as well as Sohail managing silicon carbide. And in the past, we did mention that the silicon – the 800G product is at our gross margin average. So it’s really part of a mix issue as well quarter-over-quarter.
Chuck Mattera: Yes. Let me add Meta to be clear. While the problems have been resolved for resolving, there’s a tail in terms of a ramp back up to where we need to be. It’s just not a flash cut. So we’re confident about the corrective the corrective actions and the like, but we still need to establish that target yields and they’ll come on different product lines will come within this quarter. So there’s a little bit of a tailwind to the quarter. Is that clear?
Meta Marshall: Yes. No, that’s perfectly clear. And then just any commentary on sub-800 gig demand?
Chuck Mattera: That’s a great topic. Let’s go to market first if we can.
Sanjai Parthasarathi: Okay. Thanks, Meta. This is Sanjai. So over the five years, the sub 800G is essentially flat. That’s our latest projection. The 800G and above, as I said earlier, is growing at a slated to grow at a 60% CAGR. So the sub 800 is – I mean that’s our view of the market. And…
Meta Marshall: Yes, great. Thank you.
Chuck Mattera: Just one second. I think we can clarify one-step further with Lee, please do, because it is a very important topic.
Lee Xu: Sure. From our own kind of internal forecast point of view, we see indeed, just as Sanjai was saying, the sub 800G is roughly flat for the next few quarters, but we do see some pickup three quarters from now. And so that’s – I think the overall is healthy.
Chuck Mattera: We’ll be opportunistic. We’ll be opportunistic about it. We’re definitely trying to expand the share of wallet with the largest players. We’ve told the story about 400G in the past. And when it comes, if we can turn our capacity into it and make a real good business out of it, we’ll be there.
Meta Marshall: Perfect. Thank you.
Chuck Mattera: Thank you.
Operator: Thank you. One moment for our next question. Next question comes from the line of Karl Ackerman from BNP Paribas. Your line is open.
Karl Ackerman: Yes, thank you. I wanted to focus on the telecom portion of your business for a moment. Clearly, you and peers in the ecosystem have pushed out the recovery in telecom from what was roughly June of this year to the end of this year and perhaps even the beginning of 2025. But within that, there seems to be some pockets of growth as well as softness. For example, last week, one of your peers had spoken about a recovery in metro long-haul, while cable was a bit soft. I’m curious if you have seen similar commentaries within the telecom. So if you could just double-click on the opportunities you see within telecom, what’s working, what’s not working as you progress toward that recovery in that market? That would be very helpful.
Chuck Mattera: Okay, Karl. Good morning. Thanks. Beck, please.
Beck Mason: Sure. Thank you for the question. So we do see a sort of a mixed areas of strength and weakness in the telecom market. One area of strength we have seen is in the China market. And there we see build-outs by most of the major carriers going on with new C+L networks. And we have some differentiated products in our pump laser and our WSS that they give us strength in that market. We expect that to continue through the year. I think the other thing for us where we see a growth opportunity coming in FY ’25 is really on the digital Coherent optical pluggable market space. And that’s where we have a number of really differentiated products coming to market, including our 100 gig QSFP28 ZR that has tremendous demand from our customer base.
And we think that will help us sort of lift up to our FY ’25. So our view of what’s going to happen in the market and with our growth may be a little bit decoupled from what some of our competitors are seeing. Did that help you with your question?
Karl Ackerman: Yes it did. I’ll see you in the floor. Thank you.
Chuck Mattera: Thank you, Karl. Thank you, Beck.
Operator: One moment for next question. Our next question comes from the line of Jed Dorsheimer from William Blair. Your line is open.
Jed Dorsheimer: Hi, thanks for taking my question. So one and a follow-up. I guess, first, just on the silicon carbide, maybe as an additional clarity, I know you had that the power outage, but wondering if you could give an update on progress on your 200-millimeter development activities and any metrics that you can provide? And then I have a follow-up.
Chuck Mattera: Okay. Thank you, Jed. Sohail, please.
Sohail Khan: Hi, thanks for the question. 200 millimeters is going quite well. We are supplying pre-production quantities to multiple customers. And the feedback from the customers is very good, both from quality as well as their ability to bring their lines up. As you know, the ramp is going to be dependent on when their fabs are up. So from our standpoint, we are ready and we are adding capacity more to ramp and we will see a much more contribution coming in next fiscal year.
Jed Dorsheimer: That’s great. Thanks. And then as a follow-up, you know, clearly there’s a lot of demand in the Datacom side of the business, and it’s fantastic that you guys are playing well into that. As we think out a little bit, I’m just curious, something that’s a bit out of your control, how you’re thinking about the power challenges and specifically lead times around things like transformers seem to be limiting data center growth. And I’m curious you know how a company that’s selling components into that market is thinking about some of those structural challenges in developing with respect to AI? Thanks.
Chuck Mattera: Hi. Thank you, Jed. Giovanni, would you like to take that?
