I think that’s going to be a long-term advantage for us and it’s going to continue to be a competitive moat. As it relates to putting together a 400 gig kind of standard AEC or an 800 gig standard AEC, I think that’s where we’re going to start seeing competition make progress, but again, I think that’s a smaller volume part of the market.
Karl Ackerman: Yes. No, I appreciate that, Bill. For my follow-up, it seems the opportunity in front of you for your discrete optical DSPs is broadening and can address optical – active optical cable solutions, but I’m just curious, what are the margin implications as your discrete 400 gig DSP business ramps over the next couple of quarters? Thank you.
Dan O’Neil: Yes, we haven’t – what the guidance we’ve given with regard to how our products kind of lay across the gross margin spectrum, we expect optical in the near and long term to be at the higher end of our product portfolio. Not too dissimilar from standalone optical companies that you’ve seen in the past and tracked in the past. Our Line Card PHY business, it’s kind of right in the sweet spot as some of these other emerging product groups like chiplets and our AEC as a category is generally speaking below that target margin. And just for level setting, there has been no change to our long-term target model. Our long-term gross margin of 63% to 65% is our expectation, as these product lines mature and as we execute to our plans, and that’s with IP contributing 10% to 15% of the overall product mix.
Karl Ackerman: Thank you.
Operator: And thank you. One moment for our next question. And our next question comes from Suji Desilva from ROTH MKM. Your line is now open.
Suji Desilva: Hi, Bill. Hi, Dan. I wanted to clarify some comments you had in the prepared remarks around, I think you said Tier 2 customers, you’re making progress. I just want to understand are you referring to customers beyond your first two hyperscale customers, three, four, five, and six or referring to a second-tier of cloud customers? And if it is the latter, is it traditional or newer AI – gen-AI type applications?
Dan O’Neil: So we’ve mentioned before that, we’ve engaged with multiple customers that are using our AECs and these are not hyperscalers these would be considered Tier 2 and also we’ve had success with service providers as well. And so we mentioned that because the product category is I think really becoming quite solidified. When a new customer comes in and is looking at our solutions, it becomes almost like an automatic effective decision just based on the fact that you can’t really manage signal integrity or just basic physical size with passive copper, and optical is just a different equation on power double the power double the price, and so it becomes very easy decision. One of the announcements that we made in the last month or so was the work that we’ve done with Intel on their Habana Gaudi2 cluster that they’ve developed and that’s a great example of a customer that kind of quickly made the decision to make these intra-rack and rack to rack connections, the three-meter type connections with AECs. And there is a video that they did with us and it’s on our website for you to look at.
That’s one example of this type of customer. We’ve talked in the past about Comcast and within their infrastructure, they’ve got the need for switch racks and if you look at the big routers that are part of their infrastructure became a very easy decision for them to implement with Credo AECs. These are the types of examples, but we continue to work with what you would consider the hyperscalers and we continue to make progress. So we’re at different stages of evaluation development, different stages of engagement, but not at the point where I can report, adding that third large customer.
