Operator: Thank you. One moment for our next question. Our next question comes from Krish Sankar from TD Cowen. Please go ahead.
Krish Sankar: Hi. Thank you for taking my question. I have a few of them. John I’m just rig to reconcile your statement that second half should be slightly better than first half in terms of revenues. That would imply that calendar 2024 revenues for you could be down on a year-over-year basis or slightly down. Just kind of curious is that true? If so do you expect both semi and electronic packaging to be down or one down more than the other?
John Lee: Well, yes, I think there’s a lot of still uncertainty with respect to revenue, but we do expect to be slightly better in the second half versus the first half. And it depends on what your assumptions are for Q3 and Q4 obviously whether the whole year is up or down. But as was pointed out earlier these things — they can change quickly. We’re planning on a slight uptick in second half, but we’re also planning on being ready in case it accelerates. So I would say that’s still TBD in terms of year-over-year comparison for the full year.
Krish Sankar: Got it. Got it. And then can you just give an estimate of what you think our advanced packaging learnings would be this year and what it was last year?
John Lee: Yes. I think it’s — we’ve talked about advanced packaging being one-third of our business. And when servers and PCs and phones were kind of more normalized. This year is probably more in that 25% — 25% sorry. But that can vary. And of course that’s you can read about the public companies who are our customers in advanced packaging. And you can see that obviously the revenues are down significantly. So that’s consistent with that.
Krish Sankar: Got it. Got it. If I could just squeeze one more John. Just curious how do you think about Atotech benefiting or the impact of Atotech when some of your customers start moving to glass panels or advanced packaging down the road?
John Lee: Yes. No glass is certainly something that the industry has talked about for a long time obviously and more people are talking about it now. I would just say this Atotech is an industry leader in packaging, advanced packaging and the next generation. I would characterize it as we’re certainly always in those discussions, always certainly looking at what our customers’ needs are and developing the necessary processes to enable what they need and glass is one of the things that we are working on along with the rest of the industry.
Krish Sankar: Thanks, John.
John Lee: By the way, Krish I wanted to just clarify my statement about 25% advanced package that’s 25% of electronics and packaging not 25% of MKS. Sorry.
Krish Sankar: Got it. Thank you.
John Lee: Thanks, Krish.
Operator: Thank you. One moment for our next question. Our next question comes from Joe Quatrochi from Wells Fargo. Please go ahead.
Joe Quatrochi: Yes. Thanks for taking my question. I wanted to — on the NAND side as you think about just the recovery in the memory industry and you think about just what’s going to be driving demand on the NAND side? It sounds like the recovery in spending is going to be more related to system upgrades or node transitions. So curious of how do you think about the revenue opportunity for MKS when maybe it sounds like the WAP is going to be a little bit more tied to migration versus net new greenfield ad?
John Lee: Yeah. Thanks, Joe. The — when the customers are upgrading the chambers for the next node, certain critical subsystems on there have to be upgraded otherwise, you can’t do the next node. And 1 of those is the RF power decks. So as you may or may not know, there’s three power decks on every chamber for VNAND etcher. And all 3 have to get upgraded if you’re moving from one node to the other. And that is obviously the biggest part of our spend. So, we don’t really notice the difference when they’re doing chamber upgrade versus the entire tool, obviously, we’re doing the entire tools, we may see other parts of MKS products go in there. But the chamber upgrade really benefits us equally, I guess, from the RF power standpoint.
Now, having said that, we did talk about inventory burn down and there’s still a little bit left in the NAND market. So — but this is a good sign when some of the customers are talking about note upgrades because that will start burning off that inventory and then at some point, they’ll need the new stuff from us as well.
Joe Quatrochi: That’s helpful. And as a follow-up to that, do you expect that as we kind of look into the second half of this year that NAND inventory burn down is still to play out to some extent? Or is it just, I guess, maybe starting to play out more this quarter?
John Lee: Yes. I think it depends, right? It depends on how many people are changing nodes, upgrading the nodes. But I think our view now is that it’s still slowly unfolding. So that’s why we’re saying that, slowly unfolding. So I think there’s still more to go. And so I think in the second half, there’s still some of that NAND inventory burn down that has to happen only for us. But as we talked about earlier, it can change fast, right? And that could accelerate, but — and we’re ready for that, whether that happens or not.
Joe Quatrochi: Got it. And just as a follow-up question. On the services gross margin strength that you had in the quarter, was that where the onetime item was? Or just can you help us understand what drove that?
