Tore Svanberg: That’s fair. And then moving on to the operating margin and not to sort of like focus on the math here but when you position as a trailing 12 month, I mean 1 quarter could be as low as 25%, right? So I’m just trying to understand just conceptually with your OpEx, how much variability do you have if we continue to see sequential declines in revenues?
Eric Bjornholt: So we have more flexibility in our OpEx compared to what we’ve guided the current quarter for. We are not ready to size that for the Street at this point in time. But as I said before, you guys have seen us work through cycles before. And if the cycle gives us something that’s extreme to work with, we will take more measures in our business. That is not what we’re hoping that we need to do but we do have levers that we can pull that we’ve pulled historically that if we’re faced with a more difficult environment than we anticipate, OpEx can come down from what you’re seeing here in our guidance for the current quarter.
Operator: Our next question comes from the line of Joshua Buchalter with TD Cowen.
Joshua Buchalter: I wanted to follow up on the utilization comments. So you mentioned matching utilizations to the business environment. But clearly, you’re seeing weakness at your end customers. I guess what are the signals that would drive you to lower utilization? Like what are the — what would you need to see? And then can you maybe expand a little bit more on the rationale behind keeping utilization high as you’re trying to work through inventory, both on books and in the channel?
Eric Bjornholt: I’ll start and Ganesh and/or Steve can add to this. But again, our products have very, very long life cycles. If we were to cut utilization in the factories significantly, there is a large portion of the cost that you can’t take out because of the very heavy fixed cost environment. And so the balance does it make sense to build the inventory, have that higher inventory, have it available to support your customers when the business environment turns positive which it will. And that’s kind of how we’re managing it right now. Now, you can obviously get to a point where that inventory is too high and it doesn’t make sense and we don’t think that we’re in that position today but we have let fab utilization fall from where it was and we’ll continue to monitor it on a really a weekly, monthly basis and make decisions as we go.
Ganesh Moorthy: What I would add to it is ramping a fab after you take it down drastically, it takes time to get people hired, train, get the equipment and the remaining process work to be done takes time. So as we saw in 2021 and 2022, we put the foot on the accelerator but it took time to get the ramps going. So I think you want to be careful as you make some of those changes. And we are making small changes to get them to where we want to be. But because we have the good fortune of products with extremely long life cycles and all of the inventory is in good shape. And in fact, all that inventory allows us to do 2 great things. One, respond quickly when the business changes. And we know when it changes, it will change faster than we expect on the upside.
And second, push the capital that is required to be deployed in order to generate those products further out in time. So I think it is a good asset utilization in terms of being able to be careful with how we take capacity down.
Joshua Buchalter: I appreciate all the color there. And for my follow-up, I wanted to ask about pricing. I guess it’s encouraging to hear pricing still hanging in but there’s a big investor concern that it will roll over. Can you, I guess, provide some anecdotes or what do you think is allowing firmer pricing in past cycles, because that’s what’s allowing margins to hang in, I think, better than far given the top line but also a major concern for investors.
Ganesh Moorthy: The pricing on our product line which are long design cycles, very sticky product lines. In past cycles, there’s never been something that rolled over, nor are we thrown to trying to use price as a way to leverage any short-term demand change because it doesn’t help in where we’re going. So our cycles of experience with how we have handled other cycles for pricing, plus where we are and how we’re navigating this cycle. We don’t feel price is a place where change is expected to happen.
Operator: Our next question comes from the line of William Stein with Truist Securities.
William Stein: Great. Guys, I know you’re only guiding a quarter but you made this comment on March, I think about a sequential decline. By my math, I think typical seasonality is down at least a couple of percentage points. And just to help us sensitize our models, would you anticipate another, as you called it last time, I think, amplified or magnified seasonality in Q1? Or do you think it’s possible that we’re more like a normal seasonal result?
Ganesh Moorthy: Well, there’s so little visibility that we can apply to any kind of intelligent answer at this point in time. We need to get further down the time to see how next quarter takes shape. And we’re guiding to just one quarter — the December quarter at this point in time. We’ve given you some directionally where our sense is for the March quarter but in terms of the magnitude, there’s nothing that we can provide at this point that would be helpful.
William Stein: Understood. I have a follow-up, if I can. I’m hoping you can size for us the amount of sales in the December quarter that you anticipate will be filled as part of the PSP program. And similarly, how much PSP backlog you have after December still on the books? It just seems to me with lead times at 13 weeks going to — I think you said 8. It’s hard to imagine customers are lining up for that still.
Ganesh Moorthy: So you’re right. PSP had a time when it was far more important for customers to be enrolled and to be taking advantage of that priority. As cycle times come down, there are fewer PSP orders that are needed for any customers. It’s not that it’s gone away. It’s still there in a reasonable amount but it’s typically the customers who are very long cycle in their design and very high value in their end products. Because quite honestly, there are many parts of the market that are concerned about what happens on the flip side of the cycle, whatever that is in the second half of ’24, etcetera. So it’s a customer choice. No customer has to use PSP unless they believe it provides them a tool. And we made adjustments to the program to give them more flexibility, have shorter amount of window of time, etcetera. And we’ll continue to evolve the program. And if there’s use for it, customers will take advantage of it. And if they want, if there isn’t, then they won’t.
