Ganesh Moorthy: Okay. So on your second question, as I said, if you look at it over a year’s period of time, you’re going to find that the fiscal 2024 at the midpoint of our guidance is about 9.5% down from fiscal 2023. I don’t think that’s outside of where the normal is at. Within a two-quarter period of time, absolutely, we are correcting and correcting at a faster rate than where we were at. But I think we have to look at area under the curve for revenue rather than just peak to trough alone in terms of what you’re going to look at. In terms of end markets, we – sorry, was there a question?
Chris Danely: No, I said thanks.
Ganesh Moorthy: Okay. In terms of end markets, as I mentioned, it’s weak across the board. We don’t track at a quarterly level kind of how they’re all moving. But we have enough anecdotal data. I think we were among the earliest people as early as two or three quarters ago saying automotive is starting to weaken and roll over and industrial did and data center had been. So we have seen this for some time. And at this point in time, I would say that they’re all week. There might be individual customers who are stronger or weaker than what – on average that we see but nothing to write home about, other than the two exceptions I spoke about, which is aerospace and defense is still holding up. And our portion of the AI servers that we provide solutions to.
Chris Danely: Thanks Ganesh. And then just a quick clarification on the utilization rates. Do you guys anticipate utilization rates declining again in the June quarter from March? Or will they stay flattish from March to June?
Eric Bjornholt: We don’t know yet. We will have to see how kind of the business evolves over the coming months.
Chris Danely: Okay. Thanks Eric.
Operator: Thank you. Our next question comes from the line of Vijay Rakesh with Mizuho. Please proceed with your question.
Vijay Rakesh: Yes, hi. I had a quick question. And I was wondering between the CapEx and the funding that Microchip was getting how much capacity you would be adding on the front end of the back end as you look at calendar 2024, I guess?
Eric Bjornholt: So, our capital expenditures for fiscal 2024 we laid out for you, and that’s $300 million to $310 million. We have not given a number for next fiscal year. I expect it to be lower than that. We’ve actually taken in quite a bit of equipment this year that we have not essentially released and placed in service for production purposes. So, we’ve got capital that’s paid for and at our facilities that we can deploy as the market returns to a more normalized level, and we need that capacity, but I expect CapEx to be quite low in our fiscal year 2025.
Ganesh Moorthy: Vijay, here’s how I would think about it from a – how are we positioned for growth from our capacity. Our initial response as this thing changes is going to be utilizing the inventory that we have built and being able to ship using the inventory we have. Our next response will be around getting our factories to more full utilization. We are underutilizing them at this point in time. Our third response would be taking equipment that we have already ordered and received which we will begin to place into production. And then finally, into adding more equipment or bottleneck equipment as the case might be. So, we believe we have plenty of firepower for being able to respond to an up cycle through a combination of those four things.
Vijay Rakesh: Got it. And if you were to combine all of that, you mentioned your channel disti inventory was at 37 days versus an optimal high 20s, I guess that you mentioned before. And your in-house inventory I probably goes up a little bit as you go to March. Any thoughts on when you actually see that starting to realign or start to stabilize or start to come down? Is that more of a second half? When do you actually see that happening, I guess?
Ganesh Moorthy: If I had a better picture on the demand environment, I could give you a better answer. So, what we’re doing is we’re taking action on the things we can control, which is our internal capacity, and those are the shutdown days, the lowering of the utilization factors and all that other stuff that we’re doing. And that is all in anticipation that at some point, the market will return, and it will reverse cycle at that point in time, first, by us producing less, which we’re taking steps for; and second, by the market consuming more, which is what is unknown.
Vijay Rakesh: Got it. And last question on the margin trajectory for March quarter. Did you say that all of it was because of utilization? And should we expect that underutilization to continue into June? Or how do you see that? Or do you expect utilization to pick back up again?
Eric Bjornholt: So, we didn’t say it was all of it. There’s a large portion of the change that is utilization driven. There’s always product mix and inventory reserves and other things that impact that. I think it will be probably difficult for capacity utilization to increase in the June quarter just because we are running on an attrition basis, and that is continuing each week as some people leave, and then it just takes a while to ramp that back up even if the market dynamics are better. And so that’s something that we’ll watch very closely and make sure that we’re making the appropriate investments in people, but it tends to be like moving a battleship on the ocean, it turns relatively slow.
Vijay Rakesh: Got it. Thank you very much.
Operator: Thank you. Our next question comes from the line of Joe Moore with Morgan Stanley. Please proceed with your question.
