Matt Murphy : Yes. First, I think you’re in the ballpark on storage. And just for a little context, the magnitude of that decline, we can’t find a data point that shows it declining that quickly. Even when we look back to the reset in 2019, this is down a lot more than that in the same time frame. So you’re right, a lot has come out, and so that needs to normalize. I think you’ve probably got the math about right if you think about sort of where is the base business at. But just to be clear, we’re still in a little bit of a dynamic environment figuring out where this is going to bottom out. But if you look at how fast it’s coming down, and that’s kind of what we’re doing, by the way, we’re effectively working with our customers to make sure we deal with this quickly and efficiently and minimize any risk of building excess inventory.
And that’s the path we’re on. So sometime in the Q4, Q1 timeframe, we think that works itself through, and then you start to kind of grow from there. But that’s probably reasonable. Probably is an annualized type of run rate, maybe a little bit lower in the first half and certainly higher in the second half as the new designs really ramp up.
Timothy Arcuri : Yes, got it. I guess just maybe trying to — I was just trying to get — to hold people’s hands a little bit on the non-storage stuff because people will say, well, the issue is not just storage. The issue is the other stuff, too, but it sounds like it’s not.
Matt Murphy : It’s — there is some. I mean, just to be very, very clear, right? The major reason code for the sequential decline from Q3 to Q4 in the data center line is storage, but there is inventory adjustment going on in digestion given that slope of the CapEx curve has just come down. There is some realignment. But that is not as pronounced, and it’s very manageable. But I just — I want to be very clear, it’s not 100% storage issue. There’s just a broader digestion.
Operator: Our next question comes from Toshiya Hari with Goldman Sachs.
Toshiya Hari : Matt, if we take your guidance for the carrier infrastructure business in Q4, I think you’ll be doing about $1.1 billion in revenue in the full year, maybe a little bit below that. To level set us, how much of that is wireless? How much of that is wired? And as you look forward into fiscal year ’24, how are you thinking about the 5G business? I think the market, overall, you’re seeing some spots of softness potentially, but obviously, you’ve got idiosyncratic design wins. So how are you thinking about your business there? And then on the wired side, just given the cyclical dynamics, what sort of decline should we be expecting into fiscal ’24?
Jean Hu : Toshiya, this is Jean. I’ll start to answer this question, and then Matt can add. So first, on the carrier infrastructure, wireless is already more than half. We talk about the wireless revenues already running, had more than $600 million annualized run rate. So wireless is definitely small than half. Going into next year, as Matt mentioned earlier, we continue to see strong 5G adoption and our customers continue to do very well in the marketplace. So we do expect the wireless part of the business will continue to have a very strong growth into next year. Of course, the wireline side is what Matt discussed. We are going to see some headwinds on wireline side. But overall, we do expect the carrier infrastructure to continue to grow. Matt, anything you want to add?
Matt Murphy : No, I think that was perfect. I mean I just put a pin on it that the wireless opportunity continues to be very exciting, and I think it’s going to be a very good year for wireless next year.
Operator: Our next question comes from Karl Ackerman with BNP Paribas.
Karl Ackerman : Two questions, if I may. Matt or Jean, I wanted to first discuss enterprise networking. You spoke about how China impacts that a little bit. But ex-China, are you still seeing growth? And I know some of your networking OEMs have spoken about some moderating orders. But I think last quarter, you said that this segment was an area that was most constrained. And so I want to get — clarify if that’s still true. And if you could kind of tie in the amount of inventory that some of those customers have to get a better sense of the demand dynamic of enterprise networking going into fiscal ’24?
Matt Murphy : Sure. I’ll make a few comments. And then, Jean, why don’t you add as well. Yes, a couple of things are going on. One is the supply environment has definitely improved. Now some of that is because of the weakness in the China market that’s opened up supply, we can give to other customers. Because generally, outside of a few select cases, our enterprise business is mostly merchant products. These would be Ethernet switches, gigabit, multi-gigabit PHYs, embedded processors, Karl, things like that. So when you would have a demand softness in 1 region, that helps thing. So the supply situation has improved, which is a good thing. We do have some of our own growth drivers as well. We’ve highlighted this over the last few quarters.
We have some new custom silicon wins that are ramping up. That’s offsetting some of that weakness as well. But in general, the non-China piece has done okay. It probably — we’re being cautious about how we think about it for next year. So I think the run rate that we’ve guided to in Q4 is probably a safe run rate to think about for next year. Even if there’s a little bit of weakness or there is some inventory digestion that goes on. We do have content gains still rolling through. And so those are some of the moving pieces. You basically have China going down, U.S. customers where we’ve got either new design wins or share gain or content gain. And so it sort of all aligns to the numbers where we’ve guided for Q4. Jean, anything you want to add?
Jean Hu : No.
Karl Ackerman : Got it. No, that’s helpful, Matt. Maybe just as a quick follow-up. I was wondering as you think about some of the inventory digestion that needs to occur across some end markets, as you contemplate that and plan with your foundry suppliers for next year, is there — could you just maybe just talk about some of the discussions you’re having in terms of the ability to perhaps limit some of the cost inflation from the foundry side and whether that — if they can share that cost with you going forward such that perhaps less of an onerous task for you to pass it along to your end customers.
Matt Murphy : Yes. I would say if you — without getting into the specifics of each of the input costs that we deal with, I would say that in general, with supply loosening up, that’s going to be a positive. I’d say that being said, we have — there are areas that are still constrained. There’s still inflationary aspects inside our supply chain that sort of are coming towards us. We’re doing what we can to mitigate those. And to the extent we can’t mitigate those. We’re going to continue to do what we’ve been doing for the last few years, which is basically pass it on in a generally margin-neutral type of manner. And we found a way to do that, and we’ll continue to do that. But certainly, the Marvell team and the operations team has worked aggressively over the last few years, particularly on the packaging back end, et cetera, to enable more sources to set up more strategic agreements.
And so we’re kind of working on both sides. One is to just do our job as a good supplier and manage the cost base. But to the extent we can’t, there will be probably a little bit of inflation still in the system. That’s sort of how we’re looking at it. We formed really strategic partnerships with these companies. We have a very transparent communication with them on the demand environment. And I’d say that we’re counting on them to work with us as partners as we manage through what looks like an overall semiconductor down cycle.
