Thad Trent: Yes. So the utilization dropped in the quarter from about 74% to 71%. We expect, kind of, what we’re seeing right now is utilization to stay in that range plus or minus for the remainder of the year. Obviously, if there’s a second-half recovery, we can ramp up quickly. You nailed it on the rest of it silicon carbide performed better-than-expected, EFK cost as I said is coming in significantly higher than we expected. You can think about these as being, kind of, orders of magnitude more dilutive than what we expected. The good news is we are absorbing that. As I said, we’re finding additional opportunities to improve gross margin across the company and we’re able to absorb that. We believe by the time we get into 2024, we’ve got the cost structure of EFK back in line to where we would expect it to be.
So we’re really confident in the margin outlook for this year, I don’t think anything changes. I think if we look at Street consensus for gross margin for 2023, even with these headwinds, we think we can execute to that — those expectations.
Ross Seymore: Thank you.
Operator: Our next question comes from Vivek Arya with Bank of America Securities. Your line is open.
Vivek Arya: Thanks for taking my question. Hassane, I wanted to ask about your plans for in-sourcing the material side for silicon carbide. Can you give us a progress on how that’s going? I believe you said during the prepared remarks that you are targeting to be majority in-source? Is that a full-year comment? Is that an exiting Q4 comment? So just give us an update on where you are from an in-sourcing perspective? And let’s say if you are majority in-sourced exiting the year, how does that help you on the gross margin side?
Hassane El-Khoury: Yes, look, my comment is exiting the year. It’s basically reiterating our plan that I’ve stated throughout the year — last year of establishing the supply, establishing the growth in our Hudson facility in order to set ourselves up exiting the year majority. So that holds even more now given the progress that we’ve had in Hudson just in the last quarter, which drove a lot of our favorability in our results and the gross margin as Thad talked about. So I remain very, very happy with where we are from the progress and the confidence that we have in reiterating our plans. As far as the gross margin obviously in-sourced is always better, because you can see the merchant, there’s always margin stacking that happens.
So our ability to be able to mix and have a majority exiting, of course, helps the margin as we move through the year. But the biggest portion of the margin expansion for silicon carbide is really going to come from the utilization of that fixed cost that we’ve implemented. And that remains on track for us to get that business to at or above the corporate margin. So we remain very focused on that and really satisfied with where we’ve done so far.
Vivek Arya: Got it. And for my follow-up, Hassane, I think you mentioned that, so specific to autos, that you took the opportunities in Q1 to drain some of the inventory. How are you seeing the overall pricing environment as you look Q2 through Q4 versus what you thought earlier, are there any changes? There’s a lot of macro across currents, but how is that impacting your automotive outlook, Q2 through Q4, especially on the pricing side? Are there any changes one way or another?
