That customer needs a second supplier. There’s really only two of us that can drive at the high end of foundry and logic probe cards, especially with the requirements driven by advanced packaging. And so longer than we would have liked we continue to make changes and we’re continuing — we continue to be committed to building a share position at this customer.
Christian Schwab: And then the other second question quick is the high bandwidth memory industry is looking to more than 2x the capacity of high bandwidth memory. Samsung is finally making it. Micron will get their act together probably shortly. So is it safe to assume that that is accurate in industry dialog that your high bandwidth memory business should go — going from $10 million a quarter to easily $20 million plus a quarter at some point next year?
Mike Slessor: I think typically, probe card intensity does scale with wafer starts and output, right? If you look at — over time there’s a pretty good relationship between overall semiconductor revenue and probe card spending, although the intensity has gone up over time. I think the one potential caveat here, not to pour cold water on it, is as any technology matures like the TSV die stacking in HBM will mature yields go up. And so that’s been a bit of a counterbalancing for us. But I think as all three DRAM manufacturers ramp and start to really supply for what the native demand for HBM is in enabling AI, I don’t think that’s an unreasonable expectation to have the business go from, let’s call it, in round numbers, $10 million a quarter to something like $20 million a quarter.
A lot of it will depend on when these other customers ramp, a lot of it will depend on the end pull-through from the AI markets. But if you believe those underlying assumptions, yes, I think it’s reasonable that we’ll be able to come close to doubling our HBM business as we go through some point in 2024.
Operator: And our next question comes from the line of Craig Ellis from B. Riley Securities.
Craig Ellis: Mike, I wanted to start just by following up on some of the conversation around foundry logic. It seemed like a lot of the strength in the quarter was compute related either more on the client side or HPC side and some similar things going on in the outlook, but I didn’t hear too much about mobile and things related to RF and foundry logic. So how do you think that shapes up as we exit your heading into next year and any notable changes on the mobile side in foundry logic as we’re looking at the business?
Mike Slessor: I think our RF business, which we report inside of foundry and logic really is indexed pretty heavily towards mobile handset growth. And I think anybody who follows that industry knows that that’s been a pretty ugly 2023 for handsets and the mobile ecosystem in general. We do see things bottoming in the mobile space. And there were some nice application processor wins and RF wins in the third quarter that did contribute to the results. They just weren’t as major as the compute designs. I still feel like if you look at inventories, whether they be filters or even some of the apps processors across the overall channel, there’s some digestion, some usage for those chips before we really see the new chips that are driving our business to ramp in volume.
But like most of the rest of our businesses, we’ve seen mobile and RF stabilize it, as I said, maybe even get a little bit better. Now one of the things to know about our RF business is some of the shortest lead times we operate in. So where our average lead times are better part of a quarter, RF lead times are actually shorter than that. And so we can see some very significant changes in the demand profile as customers change their wafer start plans. So not a lot of visibility, I guess, is one of the things I’m trying to say.
Craig Ellis: And then the second question earlier in the Q&A, you noted that there have been pluses and minuses vis-a-vis the target model one of the pluses would be AI, one of the minuses would be China. And I was just looking at the China country trends in the supplement that’s released and noticed that China had ticked a few million in lower every quarter over the last four or five quarters. How much of that is cyclical versus anything that might be related to more structural things with shipment restrictions, et cetera? And more importantly, from here, what should we expect going forward in that geography?
Mike Slessor: So it’s a good point, right? Our China business, I think, was again down sequentially, and probably at half the levels it was at the peak back in late ’21 or early ’22. To answer your question directly, it’s almost entirely structural. As a US supplier operating at advanced nodes that are subject of expert controls from the Department of Commerce, we’ve been limited in our ability to supply customers. And I think we’ve been quite clear in our expectations that we expect the domestic China business to continue to increase and at some point here, probably go to zero as they cultivate probably not local China alternatives to us, but with our primary competitor in memory being based out of Japan, our primary foundry and logic competitor being based in the EU, they do have geographic alternatives that aren’t restricted as strongly as we are.
The part holding that business up is still the multinationals that operate in the region. And we’ve seen a recent relaxation of the export controls around them, they were granted extensions to the license and those businesses are holding up fairly well.
Operator: Our next question comes from the line of David Duley from Steelhead Securities.
David Duley: My question has to do with advanced packaging. Clearly, on the conference calls over the last few quarters, we’ve seen a whole bunch more chatter from both the test and assembly guys, Intel and AMD and whatnot. I’m just curious as far as more probe card business goes, what percent would you classify as advanced packaging and what do you think the growth rate of that segment is? And I’m assuming that includes both the tile, the high bandwidth memory stuff?
