Operator: Thank you. Our next question comes from the line of Tore Svanberg of Stifel. Tore Svanberg, your line is open. Please go ahead. Please make sure your line is unmuted and if you in speaker phone lift your handset.
Tore Svanberg: Yes. Can you hear me?
Operator: Yes, sir. Please proceed.
Tore Svanberg: Yes. Sorry about that. Yeah. Bill, my first question was on the [indiscernible] HALO product that you just announced this afternoon. You did say that this is something that should generate revenues longer term, but I think the market is also very, very hungry for lower costs near-term. So what kind of time frame are we looking at here as far as when that product could be in production?
Bill Brennan: So I think that the first message is that we’ve shipped samples that are going to be built into modules. We’ve shipped eval boards that are going to be thoroughly tested by our lead hyperscale customer. And so [indiscernible] is really now. And so the typical development time for an optical module is on the order of — on the order of 12 months to get to production. And that’s really based on building and qualifying the module and then going through qualification with the hyperscale end customer. And so as we look at kind of best-case scenario, we’re talking about something on the order of 12 months from now, so it could impact our fiscal 2025.
Tore Svanberg: That’s very helpful. And as my follow-up, I know the first half of the year, there were still some headwinds, obviously, from your largest customer inventory digestion on the compute side. I’m just wondering is that now — as we look at the January quarter, is that headwind completely behind you or is there still some lingering effects there?
Bill Brennan: Well, I think, as we think about the front-end networks at this lead customer of ours, the application is general compute as well as AI. And so, of course, there is both of these applications are kind of contributing to the digestion of the inventory that was built up as a result of the pivot earlier in the year. And so as we look at fiscal 2024, I think we’ve got good visibility. And exactly when it turns back on, I think we’re still being conservative in a sense that we got to wait for that to really develop in our fiscal 2025.
Tore Svanberg: Great. Thank you very much.
Bill Brennan: Thank you, Tore.
Operator: Thank you. And for our next question it comes from the line of Karl Ackerman of BNP Paribas.
Karl Ackerman: Yeah. Thank you, gentlemen. Two questions, if I may. The first question is a follow-up from the previous one, but you are introduced using AOC solutions today to address both DSP-based and non-DSP-based optical links. How do you see the adoption of non-DSP-based solutions for back-end network connections in calendar 2024? And as you address that question, I guess, why not introduce an AEC solution for back-end networks?
Bill Brennan: So, let me take the first part of that question. Really, the two solutions that we’ve got for optical are what we might call a full DSP, which is kind of the traditional approach, where there’s a DSP on the transmit path as well as the receive path on a given optical link. That activity is going to continue. The product that we really announced today was eliminating the DSP on the receive path and having it on the transmit path only. And so you might say that that would be half of the DSP on a typical optical and so those are really the two solutions that we’re promoting. We believe that completely eliminating the DSP is really not something that’s going to play out in a big way. Analysts have been out front saying that they don’t see it ever being more than 10% of the market if it achieves that level.
So you’d have to have a very tight control over the entire length to be able to be able to manage that. And that’s just not the typical scenario in the market today. Typically people are putting together various solutions and interoperability is really the key as well as troubleshooting and ultimately yielding in production. The second part of your question was regarding AECs, and we are absolutely building AECs for backend networks. And the AECS are really covering in rack, three [indiscernible] or less solutions. There are also rack-to-rack connections, and those are all optical connections, whether they’re AOCs or transceivers. And especially in that situation for rack-to-rack connectivity within a cluster, that’s where we really believe that the LRO DSP is going to be highly applicable and, and really quite valuable to customers.
Karl Ackerman: Thanks for that. For my follow-up, I wanted to pivot to your IP business. This is primarily [indiscernible] data center today, or at least a data center focused application. But over time, the idea is that as PAM3 ramps, it will transition more toward the consumer. How do you expect the end market mix of your IP business transitioning to consumer over the next few quarters? Thank you.
Bill Brennan: So as we look at our IP business primarily today, it’s Ethernet. We’ve talked about one large consumer license that we’ve engaged on for consumer, and that’s moving to 40-gig PAM3 for the CIO 80 or 80 gigabits per second, two lanes of 40-gig for that market. And that market is going to be out sometime in the future, probably on the order of two to three years before that ramps production. I don’t expect it to be a big part of our IP business long-term. I expect that our Ethernet IP business will continue very strongly. And I also believe that from a PCIe perspective, we’ll be able to talk about that as we bring our 64-gig and 128-gig solutions to market.
