And we need to and continue to partner with them.
Niels Anderskouv : Yes, maybe I can just comment on the long life cycle. This is an essential part of our strategy from a technology standpoint. Essential CHIP technology is all about supporting long life cycles. And we are seeing continued momentum building across the automotive space. You just heard us talk about 17% of our revenue here in Q1 came from automotive and it continues to be a strong growth for us. So strong fit to the strategy. I also want to mention Tom alluded a little bit to it earlier that our strategy is that we will have — we will qualify all our process nodes for automotive. And when you get back to what Tom just discussed about fab 8, automotive is going to become a very, very integral factory for our automotive strategy, and that’s something that’s been very well perceived by the OEMs as well, having a U.S. supply within that space.
Operator: Our next question comes from the line of Chris Danely of Citi.
Christopher Danely: I guess just a question on CHIPS Act and the money there. So $1.5 billion, that’s great. But that’s — I think that’s over a year’s worth of CapEx. So you’re getting all this money but utilization rates are in the 70s and you have plenty of inventory and we’re sitting here coming out of a downturn. So I guess how do we allocate all of that capacity and not have like some sort of overcapacity or some sort of pricing problem? How is that going to work?
Thomas Caulfield : Yes, Chris, we don’t build capacity ahead of its need. There’s nothing worse than that to overshoot the target. And there’s nothing worse than government programs with the right intention to get diversification and resiliency and supply chain to have companies get ahead of themselves and build empty factories. And so when I think about our global footprint, our investments going forward, we talked about at the end of this year, we’ll have capacity roughly 3 million wafers a year of output. That’s the 300 millimeter equipment. You could do the math on our ASPs. And you can see between wafers and non-wafer revenue that gets us to a company that’s $9 billion to $10 billion in revenue. And you see where we are this year the $6 billion, $8 billion, $7 billion.
So plenty of growth ahead within our current footprint. Now securing your future and the optionality to build capacity is what we’re doing with the CHIPS Act in the European Union, with the CHIPS Act in the U.S. It’s to make sure that we have proper funding so that when we need to invest again, we can and we can do it in the most capital efficient way. And it really comes back to your belief, if you think the industry is done, there’s no growth, then you wouldn’t need any of this. We happen to believe like many others that this industry will double. And it’s a question, if it does it six years, eight years but we need to be ready for that growth. So that we can answer that for our customers. And we need to do it in most economic efficient way and that’s where these government funding partnerships come into play.
And we talk about the CHIPS bill at $1.5 billion. The CHIPS bill will only fund up to roughly 15% of a project. The ITC covers another 25%. So in combination, you’re seeing a high mix of government participation in these investments. Sure, the lion’s share comes to sounds like yes. But I’m not worried about. I’m certainly not worried about GF putting more capacity on than we need to serve our customers. But I’m not worried about the rest of the EU and U.S. manufacturers. Overshooting because they’ll plan their capacity adds with the true demand for our industry.
Christopher Danely : And then my follow-up is on the LTAs and the contracts. Can you let us know what percentage is, say, ’24 and ’25 are covered by LTAs? And in terms of these customer revenue adjustments, is it that they come to you and say, hey, we need to renegotiate and so if you want to renegotiate, you just have to pay us this money and is it all 100% gross margin? Just any insight into the machinations of all those.
John Hollister : Yes, Chris, this is John. We have identified how much LTA total value we have, which is approximately $20 billion. That’s disclosed in our 20-F that we recently filed. The specific time name of that is not called out, that lifetime revenue. You’ve got time product life cycles that vary by the end market. But that gives you a sense of the coverage level, if you will. I mean, look, the economics may flow in with customer volume adjustments, but the fundamental purpose of these LTAs as Neils just spelled out to provide that surety to customers and to give the confidence that they’ll have the supply in a resilient manner when they need it. So that’s really the purpose.
Operator: Our next question comes from the line of Ross Seymore of Deutsche Bank.
Ross Seymore : Couple questions. The first one is on the node transition risk. I know, Tom, you talked about what’s happening in the comm infrastructure and data center segment. But how would you characterize that node transition risk entering this year versus exiting this year? How do we think about that as a headwind over time? And I know you’re diversifying away from it as well.
Thomas Caulfield : Yes, I think, as I said before, how we serve that market. We’re pretty much at the low end of that revenue. And the real question is how we build this back to the business we want it to be through our technology platforms for power delivery and solving the bandwidth challenges. And so that’s the growth opportunity for us back into this end market. While we can hold the line of where we are today at that love revenue that we focus on.
Ross Seymore : I guess as a quick follow-up, is there something beyond that? Do you have a similar problem in smart mobile devices, not just limiting the original questions to the comm infrastructure side of things?
Thomas Caulfield : I think there’s a fundamental element to which single-digit nanometer does and what it doesn’t do. If you’re able to have an application where it doesn’t make a difference that the cost per transistor goes higher but the power used for transition transistor is a premium, then those applications will pay that for that transistor. And so that creates a real moat around not wanting to go to single-digit nanometer the application actually requires that. And so you’re seeing it in data center you’re seeing it in power is the key metric, minimizing power use. So we think the moat is if this was the old days of Moore’s Law, where you’ve got a lower cost per transistor, right, we’d all have to move. Now we sit in an area where customers are working with us with the expressed intent save us from having to go to single-digit nanometer and pay more per transistor.
And that’s what the vary and that’s why we need to continue to innovate and drive features on our platforms to prevent our customers need and have to pay more for the products to service the markets day.
Niels Anderskouv : If I may add to that, we actually — we’re seeing it today on 22 FDX. We’re seeing several of our customers asking for us to continue to innovate on the process nodes they can stay longer. And we’ve seen the early same trend happening on 12-nanometer. In our road maps, we have new versions of 12-nanometer that gives you a much better performance ratio in time. So if you think about the essential chip technology strategy put in place across the four product lines, it really is about extending the life cycle of these process nodes and continue to make sure that they stay competitive, so we continue to win new businesses. And I think the example of smart mobile devices being the biggest end market in 12-nanometer today, exactly just illustrates that. It’s a great fit to that segment, and we’ll continue to optimize ROI and make it even better.
Operator: Our next question comes from the line of CJ Muse of Cantor Fitzgerald.
CJ Muse : I guess first question on auto, down 16% sequentially. I think it came in a little bit worse than what we were thinking when you initially guided. Curious maybe what changed in the quarter in terms of product or subsegment? And then, I guess, as you think about the recovery into June and beyond, what are the key drivers that we should be focused on there?
Thomas Caulfield : I think this quarterly seasonality those things, we don’t pay a lot of attention to in this segment given the fact that it’s a very long duration. What we’re highly confident is that this is a business that will continue to grow not only in the out years, but this year and meaningful growth in the mid- to high single-digits for us in 2024. So we see the order book, and we see it in our business plans. So I wouldn’t read too much into a quarter and quarter down in automotive, especially given last year was a year of over $1 billion growing from $375 million the year before.
John Hollister : Do you have a follow-up, CJ?
CJ Muse : Yes. I guess maybe a question on smart mobile. Maybe kind of similar type of question. You talked about mix shift to premium phones, which benefit you. I think you talked about RF front end and display drivers as incremental drivers for you in ’24. So is that a business that you think can grow in all of calendar ’24? Or is there sufficient inventory challenge that might be difficult.
Thomas Caulfield : Now we believe that’s an area that we will grow this year with content growth, with handset growth means we can have growth — we’re coming off of a Q1 that was already challenged with inventories in the channel. So as inventories bleed out, handset growth happens, we see growth in smart mobile devices for GF this year.
Niels Anderskouv : Yes, I think that’s a good growth story we have there. Handsets growing, us growing us having a larger share in premium handsets that we believe that to grow faster. And then on all of that, you’re starting to see inventory dollar-wise training in the space. So yes, we do believe that’s going to be a growth market for us this year.
Sam Franklin: Julia, we’ll take one last question.
Operator: Our final question comes from Mehdi Hosseini of Susquehanna International Group.
Mehdi Hosseini : Yes. A couple of follow-ups. Tom, just double-clicking on communication. I believe that your comments suggest that the revenues there are expected to grow flattish throughout the year, especially with the migration to nanometer. What I want to better understand is, when do you expect new opportunities like silicon photonics that have been talked about in the downstream are going to be material to you? And then, one follow-up question for John. How should we think about D&A and OpEx in ‘24 versus ’23?
