As everybody knows, we just launched to production our 0.14 or 140 nanometer process. OMMIC is working on 100 nanometer and 60 nanometer and even 40 nanometers. So that’s €“ they are further along in developing and producing those products, which would take MACOM years to do. So tremendous amount of time spent or saved by bringing OMMIC into the MACOM portfolio. Second, they have a tremendous barriers of entry. They have an incredible epitaxial growth capability which is quite unique. They have developed some very interesting metal contact technology to improve high frequency performance which will very much complement the work that we’re doing. This business is also not a commodity business. These products will have high margins, high ASPs, and will be targeting medium to €“ small to medium niches.
And when we look at the market opportunity, we size that to be about a $100 million SAM. So our goal is to take this business today that arguably is hovering just below breakeven, and we want to drive it to be a growing profitable part of our business. That will take time, but we think when we’re successful, we will be in a leadership position at the millimeter wave frequencies. And we look forward to that position.
Operator: Thank you. One moment please for our next question. Our next question coming from the line of Tom O’Malley with Barclays. Your line is open.
Tom O’Malley: Hey guys. Thanks for taking my question. So, when I look out into the year, you’re talking about relative strength in the Industrial and Defense business. I would expect you’ve heard some others of your peers talk about some weakening on the Industrial side. Could you just talk about if you’re seeing any changes in ordering patterns there? And then secondly, as you look into the out quarter, clear, there’s a big reduction in OpEx to kind of get to the midpoint of your guide. Could you talk about where that’s coming from? It’s pretty substantial. You guys have been good at that in the past, but just want to understand how it’s declining so quickly? Thank you very much.
Steve Daly: Thank you, Tom. So I’ll take the first part of that question, then Jack can handle the second piece. As you know, last year for MACOM, Industrial and Defense was a record year. And I believe Q4 may have even been Q4 FY 2022 was a record quarter, and we’re seeing continued opportunities to grow. Most of this is coming from gaining market share not only in Defense, but also Industrial. And we’ve talked over the last year or two that we believed over the long term, I&D would continue to be a strong end market for us. So we think we’re doing a lot of good things in this market. We actually are projecting that market will grow low single digits for the full year. In terms of the industrial ordering pattern, I think there are pockets of weakness for sure.
But generally speaking, what we see is the larger companies are burning down their inventories, while the medium and smaller companies are continuing to order on a regular sort of more normal basis. And then before I turn it over to Jack about the OpEx, I’ll just highlight that. As we mentioned in the script, we focus very much on short-term financial performance as well as long-term financial performance. And the team here at MACOM has done a super jaw dealing with that day when Huawei went on the entity list, when we had to deal with COVID shutdowns. And then while we had to deal with now the macro global issues and the softness in the industry. So we have a very talented team that is ready to address issues as they come and try to get in front of them.
And that’s a little bit of what you’re seeing as we think about Q2 and throttling back some of our spending. So we were ready for this. We were not surprised by sort of the current environment and we’re taking actions to address those and Jack can add some detail to that.
