Ross Seymore: Thank you.
Genevieve Cunningham: Our next question is from Rick Schafer of Oppenheimer. Rick, your line is now open.
Rick Schafer: Hey, guys. Let me add my congratulations. If I could follow up, just one more question on enterprise data. You mentioned your greenfield product lineup for next year, I think, a couple of times on call. And one of those really stands out is the silicon carbide power isolation module you guys are working on. And I know that’s for a couple of different end markets. I was hoping you could give some color around the sort of engagements you’re seeing right now with the CSPs, so in data center, maybe a sense of timing of when those initial revenues would start showing up in the model. And my bigger question is really, do you view sort of power isolation module as a TAM expander for your existing enterprise data franchise? Thanks.
Michael Hsing: Let me answer your first for silicon cover. Thanks for reminding me this. I almost forgot. Yes, we released the product. And first revenue, we’ll see sometime in the next years, would be in the solar inverters. And the green energies had a lot of demand, we have got products we designed for those — that market segment and will start to ramp and also in automotive. And these are not specifically for tracking inverter for these drivers. We do power management. And we will see those products designed and ramping up much later. I mean these are clearly in the dip — there’s a void in the market. No other company produces that kind of a product, and it became very unique. And so I have a very good confidence in the second half of next year, the year after. We will see a lot of new revenue coming from that segment. And what’s the second questions, second part of the —
Rick Schafer: Yes. Within CSP, the full rack power that I know you guys have discussed. Is there any color you could give around how you view that? Is that sort of a TAM expander for your enterprise data segment? I’m sorry, the hyperscalers?
Michael Hsing: Oh, the hyperscaler. Hyperscaler is now — you guys know better than we do. We just only provide the power. So I can mean that, for the CPU side, GPU side, as we said earlier, VR14, we expect to have bigger shares. And if you refer to silicon carbide in that we will develop those products. Those are power supplies. And again, these are plug-and-play power supply, and these are large modules. And that will ramp up — I don’t have a time frame. Probably is towards the very end of the next year, the 2025.
Rick Schafer: Okay. Thanks a lot for that color, Michael. And I guess, maybe if I could try one more slide that Ross question on gross margin. I don’t know, Bernie, if you could give us any kind of rule of thumb. And I understand it’s a mix issue and I hear everything you’re saying about the current pricing environment. But as we look the thing sort of normalizing, say, in the second half next year, say you get back to your $2 billion or better kind of run rate, I mean, should we be thinking gross margin at that level should be back sort of tilting toward the high 50s again at that sort of a run rate?
Bernie Blegen: Yes. I would not be too quick to jump to the high 50s in the near term here. I think that what we’ve said previously is that we expect for the next few quarters to stay within our model, targeting about 56% plus or minus 50 basis points. And then, as we look at the second half of next year, as things stabilize and we get a better mix that we should see return to have an incremental improvement.
Michael Hsing: Yes. I still see some and I didn’t look at the number in details. We expand a lot of capacities. And these are strategically not mistake. And we do see a lot of growth in the next couple of years. And so I believe this capacity, the utilization had taken into effect on the gross margins. I don’t know how many — what’s the percentage? I don’t know. Maybe Bernie can answer you later.
Bernie Blegen: Yes. On the capacity, and I’ll take this topic on because it’s an important one as we look ahead, is we talked about a year ago as far as developing new relationships with fab partners, particularly in Taiwan and Singapore as we not only expand capacity in advance of a future upswing in demand but also to diversify by geography. And so those investments are adding to our overall cost profile more in the R&D side than in gross margin specifically today, but that capacity will become available here just as we see the second half of next year starting to —
Michael Hsing: Well, these are for future. China is on —
Bernie Blegen: Yes.
Michael Hsing: But the capacity that we expanded from a year ago and it’s not utilized, yes?
Bernie Blegen: Yes, not yet.
Michael Hsing: Okay. Or the test equipment.
Rick Schafer: Thanks for all the color guys.
Genevieve Cunningham: Our next question comes from William Stein of Truist. William, your line is now open.
William Stein: Great. Thanks for taking my question. I’m hoping Michael, you talked about traction in design wins that will turn into revenue over the next several quarters and years. It sounds like you’ve been very busy with these, as you always are. And often, that means you can see sort of what’s coming a little earlier in terms of where the revenue might shift in terms of the end markets and products and that sort of thing. So when you think about the bigger design wins, either the bigger volume runners or the bigger ASP drivers, is there a shift either in end markets or in mix, let’s say, for modules or motion control or things like that? Any other shifts in the revenue mix that we should expect because of these design wins that have yet to ramp?
