Hassane El-Khoury: Absolutely no changes, it’s actually very predictable and that’s really the benefit that we’ve been talking about with the LTSAs that have us really with our customers align on pricing and volume through the duration of the LTSAs. So no conversations about pricing. The focus has always remained on supply and that’s holding up not just through the year, but through the extent of the LTSAs we have with the customers. So very, very stable and no pressure on that. And by the way, it’s not just an automotive. The pricing is holding up across all markets where we have LTSAs and we — because we — as you know, we’ve been focusing on products that provide value. It’s not a pricing conversation, it’s about what the products bring to the customer.
The things that would have pricing pressures, in Thad, talked about how we have been focusing on exiting that business, to the point where it’s above the business we exited had a four handle on the gross margin and we still are steadfast on exiting, because that is where the margin pressure will come in and the pricing pressure and we’re not going to play in these markets and we’re getting ahead of it and exiting those businesses.
Vivek Arya: Excellent. Thank you, Hassane.
Operator: Our next question comes from Chris Danely with Citi. Your line is open.
Chris Danely: Thanks, guys. I didn’t know I went from a Jewish to Italian overnight. Anyway, can you just give us a little update and some color on the shortages and the lead time situation? I guess for Hassane, our shortage is pretty much exclusively in the automotive business or are they elsewhere? And then there any point in time this year where you think the shortages will go away?
Hassane El-Khoury: Yes, look, so the — for me, I always refer to shortages as technologies, because they’re across all markets where we provide them. High voltage silicon is of course constrained technology for us. We ramped capacity, yet the demand is much higher than even our increased capacity. And for that business, for example, it goes into automotive and it goes into industrial specifically in our alternative energy. And as Thad said, that’s ramping very nicely this year after a very stellar ‘22 ramp that we talked about last year. So that is technology that is constrained. We have some intelligent power technologies that are constrained. Think about it as mixed signal analog where demand in automotive and demand in industrial both have been increasing ahead of the capacity we’ve added.
So those are technologies agnostic of markets. We remain constrained, not because of just capacity, but demand keeps accelerating, because of the markets we are participating in. As far as the second-half of the year, that really depends on what your view is for the second-half of the year. Based on our outlook, that technology will still remain constrained there, while in other areas, not in these specific technologies, we’re seeing some flattening in our lead times and therefore we can see some of that easing. But the second-half is really going to depend on what the demand does. And based on our outlook, we’re going to remain constrained.
Thad Trent: Yes. And on the lead time. Lead times are relatively stable running, kind of, in that 41 to 43 week timeframe. Quarter-on-quarter, I think down a week to two weeks, but I would call it pretty much across the board lead times are stable.
Chris Danely: Okay. Great. And then for my follow-up, just I guess one for Thad. So as the CapEx is ramping Thad, can you just talk about maybe over the next three to five years, how that’s going to impact depreciation and gross margin and can this all be offset by the efficiencies or what will be the, I guess, the gross margin headwind from all those CapEx a little farther down the road?
