Michael Hsing: Yes. Okay. I think in the next couple of years, and you will see some significant growth from a different area, from a single processing and for data converters and for — of course, we talk about today and the audio process, and which we’re already designing and some consumer — high-volume consumer market segment. And later, we’re going to get into automotive and automotive business. And other ones, we have a lot of small things. A lot of other things like silicon carbides and for silicon carbide projects for green energies for solar — and for solar inverters. And — well, these are still kind of power management, but a lot of them, we are other power, and these are for communications. And for communications in between — in the solar side, okay, so from the inverter side.
And even the automotive side back to automotive side, and there’s a lot of other communication in the — within the car, and we’ll develop those type of products. And you see MPS in the next few years will migrate out to dose a second to those segments.
Tore Svanberg: Excellent. Thank you and congrats again.
Michael Hsing: Thank you.
Genevieve Cunningham: Our next question is from William Stein of Truist. William, your line is now open.
William Stein: Hey, thanks. I’ll add my congrats to the remarkably stable outlook. And along those lines, the company has had a longer-term revenue growth and margin model that you have talked about in the past. I think the way you say it is either plus growth or around 20 top line and then 10 to 20 bps per quarter on gross margin. We’ve been sort of really outside of that model as things have been really volatile since — really since COVID started, I guess, but I wonder if we’re potentially honing back into that model? Or should we sort of throw that away and not think about that anymore? How would you encourage us to think about revenue growth and margins longer term?
Michael Hsing: Yes, those kind of models is models and models. And — but I think the given time and we will be back in a model is the model can be. It’s like a weather forecasting, right? we build models and we didn’t predict this thunderstorms. And for like the last couple of years, our model is not correct. And either we have too much we too little. So given those kind of economic, whether it’s the environment and that model is not quite right. But they end up — and also, our model is not very scientific either okay, is based on our empirical historical reasons, okay? And — but we should not deviate from what we see now again.
Bernie Blegen: And just to give people a refresh of what the model is that Will is referring to is, generally speaking, we outperformed the market by 10 to 15 percentage points and in the stable market conditions where it’s growing between about 5% and 8%, it’s easy to assume that would be between 15% and 20% growth. On the gross margin or range that we targeted about on a non-GAAP basis, is between 55% and 60%. And then when the environment is more predictable, we look to be able to grow gross margin 10 to 15 percentage points — or basis points on quarterly successive quarters.
Michael Hsing: Yes. I might as well added, okay. We emphasize the product development and also the customers design win. And I do see a lot of wins and many different segments I said earlier and probably I forgot even half of it, okay, in my mind. And there are so many things going on. And — so going in the future and when a normalize — as Bernie said, is a more normalized economic conditions. And there’s no reason we will not grow — we grow 1.5%, okay? That’s at least say it that way, okay.
Bernie Blegen: But the market contracted 10%.
Michael Hsing: Yes, yes. Okay. Yes.
William Stein: We certainly are outgrowing long-term, no doubt. The other thing I’d like to ask about is inventories. I think on your own balance sheet, you’re running below your long-term target now, maybe the maybe my view of the targeted sale. I’m not sure, maybe you can just update us on inventory relative to your target and also in the channel, what you think is going on there, please? Thanks so much.
Bernie Blegen: Sure. I can take that one. So as a reminder, the model is days on our balance sheet between 180 to 200 days. We came in at about the low 170s this quarter, which was really a reflection of how we have been managing our inventory in this uncertain environment. Having said that, we’ve started a lot of wafer starts ahead of what we believe will be a potential upside certainly in the next few quarters. As far as the channel, that’s been a difficult aspect of this market for everybody. And we’ve had our share of putting inventory in the channel, but I’m very happy to report that over the last three quarters, it’s been coming down appreciably. And we’re right now just a little bit above our model.
Michael Hsing: We will start to build inventory.
Bernie Blegen: Yes.
William Stein: Great. Thanks so much guys.
Genevieve Cunningham: Our next question is from Travis Polan of Wells Fargo. Travis, your line is now open.
Travis Polan: Hi, guys. This is Travis on for Gary. Congratulations on the results. I was wondering if you could provide color on how your customer base has evolved through 2023. Historically, MPS has been diverse from this perspective. But did any customer approach 10%? And along those lines, how do you expect this mix to evolve as we move into 2024?
