And then when you think about guidance for fourth quarter, it does incorporate that range, incorporates the expectation that we will have some more additional underutilization resolution. So you put all of that together and I think the big picture takeaway is just really when you have five points of utilization, drives two points of gross margin either down or up based on where your utilization is we’ve done a very nice job offsetting the utilization headwinds. And to the extent that utilization can come back in the opposite direction and start to improve then I think we have some opportunity to the upside.
Ross Seymore: Thank you.
Operator: Thank you. One moment for our next question. Our next question comes from Chris Caso from Wolfe Research. Please go ahead.
Chris Caso: Yes, thank you. Good morning. The first question is on the pricing environment. And I recognize that most of what you ship to customers now is based on agreements that was signed previously but perhaps you could talk to the pricing environment for new business. Is your expectation that new business that you signed on some of the new LTAs remain flat going forward?
Thomas Caulfield: Yes. I’ll start. Look, we speak about this all the time and Niels touched on it about our design win pipeline. Our goal is to make sure all new business is accretive to our long-term model. 90% of the design wins that we booked this quarter were on our single-source business where we have differentiation that provides value to our customers and allows us to capture that value for ourselves. So pricing for us on all future business is always based about how the solutions we bring to the marketplace and we’re bringing differentiation and we’re happy to report that our design wins in aggregate are accretive to our long-term model. And that hasn’t changed from Q1 to Q2 and how we did in Q3.
David Reeder: Maybe I could reiterate a few points as well. We still believe as we’ve commented for a long time that pricing for the year year-over-year 2023 versus 2022 will be flat to slightly up for the year. We’ve mentioned that on any given quarter you’re going to have some mix impact with respect to ASPs. But we do think that the pricing environment is still quite constructive particularly on the 300-millimeter side. You do see a little bit of pricing action taking place on spot deals and 200-millimeter. But for 300-millimeter I’d say the pricing environment is quite constructive. Did you have a follow-up?
Chris Caso: I do. Thank you. And perhaps you could talk about your expectations by market segment into the fourth quarter kind of what’s up what’s down recognizing that this demand change has been pretty asymmetric. If you could also speak to while you say that about what’s the — what’s the market segment where you’re seeing some of these payments for LTA true-ups? Which segment is that — or is it concentrated in a particular segment?
David Reeder: Maybe I’ll start on this one and Niels,Tom if you all have anything to add feel free to chime in. Look I think when you think about fourth quarter the sequential performance of the individual end markets I think you’re going to see a little bit of more of the same of what you’ve seen throughout the course of this year. Automotive has been strong for us this year. Our expectation is you’re going to continue to see that on a sequential basis. Within the home and industrial IoT business there’s kind of a tale of two stories there. You’ve got industrial as well as aerospace and defense remaining quite stable. And then you’ve got by and large everything consumer being a little bit more challenged. And so I think what you’ve seen out of home and industrial IoT is a business some puts some takes, but largely kind of performing pretty consistently quarter-to-quarter to quarter throughout this year.
Smart mobile devices, I would characterize as kind of bumping along the bottom. There’s still some inventory that needs to be depleted out of that channel. And so on any given quarter you could have a little bit of movement there but I would say by and large kind of bumping along the bottom. And then you’ve got comms infrastructure and data center and I would characterize that kind of on a sequential basis as being relatively stable third quarter to fourth quarter. Niels or Tom anything you guys would add to that?
Niels Anderskouv: Maybe only on smart mobile devices we did see Qualcomm and Cerus and Calum [ph] reporting their results and sign — to see a little bit of signs that the inventory has bottomed up, right? Next question.
Operator: Thank you. One moment for our next question. Our next question comes from Vivek Arya from Bank of America Securities. Please go ahead.
Unidentified Analyst: Hi. Thank you for taking the questions. This is Dak Sanjang [ph] on behalf of Vivek. I just want to go back to the end market question. In autos, obviously, you’re seeing great strength. You said likely a quarter-over-quarter strength into next quarter. How sustainable do you think this is just given some of your customers have portrayed some weaknesses and obviously you’ve had a strong year this year but it’s likely going to be a tougher compare next year. So any color here would be helpful.
Tom Caulfield: Yeah. I think you have to foreshadow to that. Remember 2020, we were under $100 million of revenue. We grew to $375 million last year $1 billion. Clearly a small numbers looks like high growth rates when you start from a small base. Now, you’re at $1 billion to continue those kind of growth rates just not in the cards, because the unit growth of automobiles. I think the one thing that plays to our advantage is everybody thinks about the transformation or transition in the industry of auto being just the electrification. But there’s a whole bit about the autonomous nature and the connected part of that trend that transcends the electrification piece. So whether it’s an internal combustion car or electrified vehicle they’re going to need all these other semiconductor devices for navigation for managing all the signals in the car for radar devices and things of that nature.
So I think maybe because we play in a little bit broader base we can capture new models because a lot of this business that we’re building to today for sockets we’ve won three to five years ago. Now, if the industry if the automotive industry takes a pause and units coming down no one is immune from that. But so far as we can see in Q4 we’re solid about what our shipments will be then. And as we get closer to next year, we’ll take a look at the auto industry and decide what it has for GFS. But it will be for us a big part of our revenue as we go forward as a company, because of the alignment of the needs — the semiconductor needs and requirements for automotive and our capability to deliver to that. Niels would you add anything?
Niels Anderskouv: The only thing is just reemphasizing the point that whether it’s internal combustion engine or whether it’s electrical vehicles we are well positioned and well balanced across both of those areas and the growth we’ve had this year goes across both and we expect that to be the same going forward.
David Reeder: Yeah, Vivek, I think what you’re hearing is a little bit of a bifurcation. Long term we feel like the secular trends with the products that we provide in the market will be a tailwind for us. I think short term look like many in the industry we’re looking at what’s happening with interest rates. We’re looking at what potentially that could create from a drag perspective on total units sold just car units into the market. So obviously that’s something that we’re watching. But long term we’re still quite bullish on the sector longer term. Did you have a follow-up, Vivek?
Unidentified Analyst: Yeah. So going back to smart mobile devices I know you said we’re approaching the bottom probably the next quarter or two, we’re going to see an inflection. I know you guys don’t guide 2024 now, but any color qualitatively for your assumptions next year would be great as well. Thank you.
