And finally, pricing continues to play a role. I think I talked about the pricing specifics for last year in my prepared remarks. Now when you think about this year, input cost continues to go up, especially in those areas which continue to be tight from a supply perspective. So there is also, specifically in Automotive, continued pricing tailwind to be expected.
Operator: Our next question comes from Vivek Arya with Bank of America. Your line is open.
Vivek Arya: Thanks for taking my question. Kurt, when I look at the two areas facing the most headwind, Consumer IoT and Mobile, and I think they could be below 20% of sales as you get into Q1. Should we assume that is sort of the cycle look when I look at Mobile, I think it’s back to like Q1 ’19 level? So do you think Q1 kind of marks the cycle low for these two most problematic areas? Or do you see them slipping further in Q2?
Kurt Sievers: Honestly, Vivek, we don’t know. I would go over my skis to make a firm statement here. But indeed, Mobile, of course, has a couple of specifics which are driving it really low. There is a seasonal element to this, obviously. Secondly, we do have in Mobile executed our NCNR orders last year, which gives us a headwind from an inventory perspective, if you will. We firmly executed these NCNR orders because these are custom-specific products where we have no chance otherwise to move them around and give them to other customers. And then finally, there is the well-known and documented Android weakness, which continues to be. I’d say the following, as you see, we are very disciplined with customer inventory and mind you that our Mobile business, to the largest extent, is going through the channel.
So if and when end demand picks up, rebounds, which I think it will, at some point, we should indeed very quickly see it. Is that exactly for the second quarter? I don’t know, but we are very close to the post given the way how we treat this. I mean I’m glad you are asking, Vivek, because this whole thing around our almost brutal discipline on the 1.6 channel inventory moves us very close to as soon as there is pickup in end demand, we will also see it in our numbers.
Vivek Arya: Got it. And then on gross margin, I think, Bill, you mentioned something about mix that is helping you keep gross margins at the high end of your target range of 58%. So conceptually, let’s say, if your Q1 is the bottom-in sales and sales are flat to up from here. Then do you think gross margins can stay at 58%? Or do you think there is something in mix or utilization in the following quarters that can change gross margins below this level? Or it’s 58% kind of now the new baseline of gross margins for NXP?
Bill Betz: Vivek, thank you for your question. Let me talk about Q4 and the Q1 guide and also looking ahead. First, as you know, we did slightly better than our guidance and I mentioned it was improved by product mix for Q4. Again, as we look into Q1, despite those lower revenues, we see this positive product mix offsetting lower fall-through on the revenue. Also, we have lowered our internal front-end utilization rates. In Q3, we were running in the high 90s. In Q4, we’re about 90%. And again, remember, this is all linked to that non-auto industrial type of products because of market softness we’re seeing. For Q1, we do expect to lower our front-end utilization again to about 85%, which is where we still remain constrained in our internal auto IP processing technologies and so forth.
