Hassane El-Khoury: Yes. My comment was more, I don’t see a recovery, a market recovery. So it was more of a macro commentary.
Quinn Bolton : Got it. And then on the silicon carbide business, you talked about overall utilization rates being managed down to 68% for the next few quarters to manage inventory. I assume, given the outlook for EVs still growing in the fourth quarter into next year, that the silicon carbide is probably immune from some of those lower utilization rates, but wanted to clarify that? And if utilization remains high in silicon carbide, could you actually see a scenario where silicon carbide moves above corporate average in 2024?
Thad Trent: Yes, that’s a good question. So the utilization for silicon carbide in Q3 was up, where silicon was down, and that pulled the total up. As we look forward, we don’t see the silicon carbide utilization decreasing. We will be bringing on additional capacity next year to support ’25 and beyond. But I don’t expect that utilization to decline. I think it’s the silicon that will actually decline, that gets us down into that 65% to — mid-60% to high-60% range.
Operator: [Operator Instructions] Our next question comes from Vijay Rakesh with Mizuho.
Vijay Rakesh : Just a quick question on your commentary on softer demand with higher inventory, I guess. Is that more — is that pretty — what are you seeing across the board in both combustion engine and EV? Or can you characterize that a little better?
Hassane El-Khoury: Well, it’s hard to — for a lot of the general content in automotive, it’s hard to figure out if it’s EV or not. But I can tell you, it’s not silicon carbide. It’s not IGBT. It’s not the EV-specific constraint. It’s more of a general — I would call it, general purpose automotive demand that can go in either car. But given the volume for EV, it’s more driven by the internal combustion demand because that’s where the volume is skewed to.
Vijay Rakesh : Got it. And then as you look at your silicon carbide road map, you talked about 2024 might be a transition to 200-millimeter. Is that still something that you see? And what’s your expectation on what mix would be on 200 millimeter, let’s say, exiting ’24?
Hassane El-Khoury: So what we’ve — so we’re on track to what we’ve always said. We’re finished qualifying and the conversion started. I talked about in my prepared remarks. For 200-millimeter, we feel very comfortable and actually more confident today than we were even 90 days ago on the 200-millimeter, given the performance that we’ve had in the silicon carbide business, ramping all the way from substrates, all the way through devices. The fabs are ready, Epi is ready, and furnaces started conversion. So our plan has always been qualify ’24 and ramp revenue in ’25. So you’re not going to really see a mix shift in ’24, that would be more of a ’25, ’24 is when we transition manufacturing to the 200-millimeter.
Vijay Rakesh : Got it. And last question, when you look at silicon carbide, when do you start to see it getting accretive to the corporate margins, I guess?
Thad Trent : Well, so we’re going to hit the corporate average in Q4, as I said. As you go into next year, I think it’s going to be at or above, depending on kind of what the market does. And that’s going to be dependent on overall utilization. But we’ll definitely be at parity and potentially higher in 2024.
Operator: [Operator Instructions] Our next question comes from Timothy Arcuri with UBS.
Timothy Arcuri : I just wanted to ask a question also on the 2023 silicon carbide cut from $1 billion down to $800 million. You guys have always talked about the LTSAs being legally binding, and it didn’t seem like they would be subject to any changes in EV ramps. It sounded like a little bit of a higher bar than what we hear from others. So can you talk about that? Was that some structural change in a program from one of your customers where something is just permanently pushed out? Or should we still expect that — you’re not getting this year, does that push into next year?
Hassane El-Khoury: So obviously, I’m not going to comment on specific customer details, specifically on programs. But I will comment on the LTSAs. So the LTSAs are legally binding. Therefore, for us to agree or even acknowledge that push out or even the demand in general outside of silicon carbide in Q4, there has to have been, which there is, a win-win for us and the customer. We’ve always said, if anything, the LTSAs get us a phone call. We get the phone call way ahead of time in certain areas when the customer knows that it’s coming. And we’re able to manage with the customer for a win-win, whether that win-win is a quarter later or a year later or a longer term that depends on case by case. So we manage it with the customer because what we don’t want is, of course, enforce the LTSA at the expense of just shipping inventory if demand is lower.
So we take it very cautiously. We have — it has to be a win for us, but also a win for the customer, and that’s what keeps the strategic customers engaging.
Timothy Arcuri : Got it. Got it. Sure. So given that, is the commitment still to $4.5 billion between ’23 and ’25, so that we still have $3.7 million left between ’24 and ’25?
Hassane El-Khoury: We’re not commenting on that. What I have commented is, obviously, if you take the growth rate that I described in 2024, and you can compare it to where we were before. So no change in our outlook.
Operator: [Operator Instructions] Our next question comes from Tristan Gerra with Baird.
Tristan Gerra : I just wanted to expand a little bit on the coverage for next year for LTSA. Obviously, I’m guessing that you don’t have full year coverage like you did entering this year, but could you talk about maybe percentage-wise? Or when is the average LTA expiring next year? Just wanted to kind of look at the transition for LTSA into notably the second half of next year.
Thad Trent : Yes. So what you’ll see in our filing is that we’ve got $5.7 billion of LTSA commitment over the next 12 months. So hopefully, that gets you in the ballpark there.
