James Anderson: Tristan, I think you also asked about pricing at the end of your question. Maybe I’ll take that piece of your question. I would describe our pricing as quite durable. As Sherri mentioned, we’ve had a gross margin improvement strategy in place since 2019. Part of that has been pricing optimization. And over those last five years of pricing optimization, through multiple different types of market conditions, our pricing has remained quite durable. And in fact, our ASPs have continue to go up each year. As we’ve introduced a wider range of products and especially products with more capability, more capacity, more software content. And as more of our product mix goes towards those higher capacity, high capability devices, that has naturally pulled up our ASPs over time.
And we expect that trend to continue, especially when you think about now we’re at the beginning of the Avant revenue ramp and with Avant ASPs being 10x to 20x higher than the Nexus and pre-Nexus ASPs as Avant mixes into the revenue base, we would expect ASPs to continue to grow over the coming years.
Tristan Gerra: And then for my follow-up, I wanted to go back to the revenue breakdown. I would have expected industrial revenue to roll over. It did a little bit, but still at a run rate that’s well higher than a year ago and its communication that came down a lot. So the question is, is industrial the last leg to come down, and we haven’t really seen that yet? And if you could remind us the percentage of communication as a percent of industry of communication and computing? And then also in computing, you’ve showed some seasonality in Q1 of last year sequentially. So how much of computing is actually driven by data center densification where more GPUs equate more wood of trust security chips versus the weakness in server units which also will have an impact.
So if you could help us put all of this together, but also what should we expect with industrial? I know you gave us a hand for Q2 and the second half of this year, but wanted to understand better the moving pieces within the top line.
James Anderson: Thanks, Tristan. I think that was at least three different questions. So I’m going to do my best to answer those. So on the first one on industrial and auto. Yes, we did see some sequential decline from Q3 to Q4. I think it was about 9% sequential decline in industrial auto. We expect to see a deeper decline than that from Q4 to Q1. And so yes, and that has been later — that decline has been later than what we originally saw in the communications and computing space. We started to see that decline really in the first half of last year. In industrial and automotive, we started to see those markets impacted really towards the end of Q3 of last year into Q4, and we expect industrial and automotive to be down from Q4 to Q1.
And so that’s also part of why — earlier why Sherri said that’s part of the mix changes of industrial and automotive, our highest margin segment declines more than kind of the rest of the segments. It’s a negative impact on our gross margins. Now on the second part of your question on comms and compute. I think you’re asking what portion is communications versus compute? We don’t break those out separately, but just qualitatively, compute is the bigger component of that segment. Compute has grown significantly over the past years and is the bigger component. And then in terms of — I think the third part was just a little bit — of your question was just a little bit more about computing, what we’re seeing there. And what I would say is, if you put units aside on an apples-to-apples basis on the new generation of servers, we have higher content.
So we would expect to see growth based on the higher levels of content that we have on that new generation as that new generation becomes a greater percentage of the server shipments. But certainly, any changes in the end market overall server unit shipments, those would affect us as well, but we would benefit at the same time from that higher dollars of content per server. I hope that answered the third part of your question as well.
Operator: Our next question comes from the line of Christopher Rolland with SIG.
Christopher Rolland: I’m a bit surprised actually that you guys didn’t mention your win in a high-profile VR/AR headset. And I’d love to know, if possible, what the OEM might be using that for, they appear to be using an iCE40 versus Nexus. Was this purely a price decision? Or was there anything else that went into that? And then is this a beachhead for headway into more of their products or even outside of that OEM? Do you guys get more excited about consumer again after this win?
James Anderson: Thanks, Chris. That particular customer is a very long and very good customer of Lattice’s, but that customer is also very sensitive about us discussing anything related to them. So I won’t discuss that particular topic.
Christopher Rolland: Just how about consumer in general? Does this get you more excited about consumer?
James Anderson: Yes. There’s certainly — in consumer, there are many different places where Lattice devices can be used, gosh in all sorts of AI-enabled consumer devices and all sorts of sensor-enabled devices, right? In the consumer segment, you’re seeing more and more computer vision, sensory technology added to consumer devices and obviously, more AI-related processing. And in all those types of applications, in all those applications, Lattice has a really great ability to play in those types of applications for a couple of reasons. First of all, our devices are incredibly power efficient, right? And in almost all those devices, power efficiency is really important. Whether they’re battery powered or whether they’re connected to power, power efficiency is important.
