Operator: Our next question comes from Gary Mobley with Wells Fargo.
Gary Mobley : I had a question that kind of picks up on the last topic, and that is your purchase obligations. I know you haven’t filed your 10-Q yet, but as I looked at the last your purchase obligations are expected to be about 25% of your cost of goods sold next year. And so given the current market softness, do you anticipate being able to utilize all that? Do you anticipate the possibility of any sort of inventory write-down?
Jean Hu : Gary, this is Jean. Thank you for the question. So yes, the purchasing obligation we have this quarter will not change much from the last 10-Q we filed. It’s about $3.2 billion. But just remember, those purchase agreement, it’s really for long term. On average, it’s between four to 10 years. And also, our products are very complex and a lot of them have a very long manufacturing cycle. So we actually need a dedicated capacity for those complex products to support our customers, single cells, the customer, large volume, last long time. Regardless of the economic environment, we need those dedicated capacity. And frankly, our team has been very thoughtful. We only secure the capacity largely in back end and the substrate for portion of what we need. So we feel quite comfortable. We don’t have the issues on the purchase agreement obligations or have to write off any capacity. That’s not something we anticipate at all.
Matt Murphy : Yes. Gary, I would just add, I’d say that if you look at the bundle of the different obligations we have, some of them are in the shorter term, which are in the form of things like prepays and others where as we take the capacity, we actually get it back. The LTA, take-or-pay portion is actually not very large relative to the total. And as Jean said, the most strategic aspect of this is really in the most advanced technologies, especially in complex substrates and high-end packaging, which we absolutely need to secure because of the volume that we’re going to be ramping in the next few years. I mean just take the — as one example, the $800 million of incremental cloud-optimized silicon wins. That all is 5-nanometer technology using advanced ABS substrates, very customized packaging.
Those agreements to get that capacity from really the best vendors, you need to put that in place literally years in advance. And so we’ve done those types of things, and we feel good about that because they’re tied directly to committed programs. So as Jean said, overall, while we have obligations, we think they’re actually a benefit to us, and it certainly helps us underwrite our future success. And we’re able to send a strong message to our customers about how we’re able to provide the necessary capacity and supply chain for them — for their future.
Operator: Our next question comes from Ross Seymore with Deutsche Bank.
Ross Seymore : I guess kind of a two-parter going back to the data center side, Matt. Could you just level set us, what percentage of the third quarter data center business was storage? And then looking forward on the more kind of constructive side of things, what’s your confidence level on that $400 million in incremental cloud optimized revenue growth next year? Given the fact that you talked about a deceleration in what’s happening at the cloud customers themselves, are you at all worried about that $400 million being something less than that or being pushed out? Is that at all a level of conservatism that we should consider?
