Emily Yang: Yes, Gary. So let me answer the first portion of the question and then I’ll let Brett or Gary answer the manufacturing service agreement, right. So definitely Q1 with our guidance, our revenue decreased about 5.5%, matching pretty much our seasonality, right. The market is still extremely dynamic and definitely we are not ready to guide the second quarter. But based on the usual seasonality, usually second quarter will be a growth quarter and then the third quarter because lack of, I would say overall visibility, what we truly believe the second half is definitely going to be stronger than the first half, right. I think we just need to continue to monitor the overall market as we grow from the revenue point of view.
As we also have time to really qualify importing additional products into our internal fab, the utilization would continue to improve, right. So it’s difficult for us to forecast the whole year. That’s also not something we usually provided. But I think with the expectation of the second half will be stronger than the first half. With the product mix initiative we continue to drive with a total solution sales approach that we’re confident that our gross margin will improve over time.
Gary Mobley: Got it, got it. Appreciate that, Emily. Before I ask my follow up, I did want to congratulate Gary on his new role. I forgot to mention that.
Gary Yu: Well, thank you, Gary. It’s my honor.
Emily Yang: Brett, you want to talk a little bit about the manufacturing?
Brett Whitmire: Yes, I would just. Gary, I would just add to what Emily said regarding what we’d expect transitionally on margin connected to the revenue expectation that we’re not guiding. But from a seasonal perspective that’s what we would expect. And then from a wafer service agreement, we believe we’ve absorbed that transitionally and going forward, hopefully what we would see is that would kind of be a neutral to tailwind for us as we continue to work on technology qualification and the ability to port our product into these locations, as well as ability to ramp revenue and that capacity being available to us.
Gary Mobley: Got it. Thank you for that. It looks like you’re bringing down your non-GAAP operating expenses by about 12%, 13% from where they were a year ago. How much of that is variable versus structural? And the reason I’m asking the question is to try to get a sense of by how much operating expenses improve when revenue improves?
Brett Whitmire: Yes. So basically what you see in that is a combination of things. So we have taken – we continue to take action connected to variable things, as you mentioned. But we’re also doing actions that provide restructuring inside the company to drive efficiency. We’ve also impacted with the performance we’ve had that’s been an impact on variable pay and we continue to look at where our investments are. I think what you’ll see is our continued focus on R&D and that investment being kind of flat or tied with revenue growth. And from an SG&A perspective, continuing to look for opportunities to bring that down to drive structural efficiency and then not bring it up any more than some portion of what the revenue growth would be.
Gary Mobley: Thanks, Brett.
Operator: And our next question today comes from David Williams with Benchmark. Please go ahead.
David Williams: Hey, good afternoon and let me add my congratulations to Gary.
Gary Yu: Thanks, David.
David Williams: Absolutely. So a lot of my questions were around the gross margin, but maybe just on the order velocity, if you can provide any color there, it sounds like it’s still a mixed bag, but inventories are clearing in a few places. So just as you think about your order velocity through the quarter and maybe how those have trended so far into this first quarter here?
Emily Yang: Yes. So I think we definitely seen improvement from the book-to-bill ratio point of view. And so I think there’s a lot of positive signals on the inventory side. I talk about within the three Cs, it’s getting cleaner than ever before. So I think this is all positive. I think the unknowns really the actual demand, especially after the Chinese New Year, right. I think the China recovery is still extremely slow than anybody’s expectation. So I think overall, unfortunately still weaker from the visibility point of view. We just need to continue to monitor it very closely. But definitely, there’s some good positive signs as well.
David Williams: Okay. Great.
Gary Yu: And David, and this is Gary, I will put some comment on that too. So I know we are going to put a lot of effort to the key account focus, that’s being said, we’re going to put a lot of sales effort to work with key account to create a demand. At the same time when you see the short lead time appeal continue to increase during this kind of period, and we kind of work with the distributor to put the right inventory in their warehouse to make sure they can handle this kind of short lead time appeal in timely basis.
David Williams: Okay, great. And I guess, do you get a sense that your customers, that they are being fairly rational with their inventories and taking them to normal levels, or do you get a sense that maybe those are being brought down too low and you might get a bit of a snap back because of replenishment there?
