Christopher Danely : Last quarter, you gave us an update on the shortage situation and lead times. I think you talked about lead times being 45 weeks, where they’re normally 15. How have the shortage situation and lead times changed over the last three months?
Thad Trent : Yes. So the lead times are relatively bottom and think they are down a couple of weeks on average. But when you’re out at 45 weeks, that really isn’t material. So I would say things have been very consistent throughout the quarter in terms of the lead times as well as just the shortages and the number of escalations that we’ve seen.
Christopher Danely : Sure. And then any comment on the Q2 outlook? It’s been sort of flat, slightly up, slightly down over the last several years. How’s Q2 looking? Can we expect this to spread into Q2?
Thad Trent : So Chris, we’ll talk about Q2 in 90 days. It’s too early to make that call.
Operator: Our next question comes from Toshiya Hari from Goldman Sachs.
Toshiya Hari : Hassane, I was hoping you could talk a little bit about your philosophy around LTSAs with the macro softening. I guess one of the common questions we get from investors is how does the company? How do you guys manage any requests around pushouts and things of that sort? I think in the past, you’ve talked about not being flexible on the pricing side because that’s a committed contract, if you will. But how are you managing the volume side of things as it relates to LTSAs?
Hassane El-Khoury : Yes. Look, obviously, our philosophy has not changed. The pricing is firm. The backdrop is the LTSAs are legally binding. We will engage with customers for the right reasons. Obviously, it’s not in anybody’s benefit to have inventory on their shelf or even inventory in the channel. So we’ve been managing the inventory in the channel. You’ve seen that consistently in our performance. So that philosophy is holding, and we will maintain that. Engagement with customers, it’s not about price, but we will have a win-win situation with the customer, and that remains our philosophy.
Toshiya Hari : Got it. And then as a quick follow-up for Thad. I guess what kind of utilization rates are you assuming for the current quarter? That’s a quick clarification. Then my question is in terms of long-term gross margins, at the ’21 Analyst Day, I think you gave a range of 48% to 50%. It sounds like your strategy — the execution to your strategy has been really good in terms of your portfolio, your manufacturing footprint, et cetera. Is 48% to 50% still the right range? Or do you feel like there could be upside given the $160 million benefit you spoke to in your prepared remarks?
Thad Trent : Yes. So on the utilization rates, we expect that we’ll be kind of in this range, maybe it’s flat to down slightly in Q1. I think just given kind of the macro softness we’re seeing here in the first half of the year, it’s probably going to be — remain in that range. And we’ll see how the second half shapes up later. And what’s the second part of the question? What was it? Can you repeat the second part?
Toshiya Hari : Yes, long-term gross margins, you gave a 48% to 50% range. I don’t expect you to give us a preview on the May Analyst Day, but how are you thinking about the puts and takes? And I think you gave a number in terms of the benefit from transitioning manufacturing from your divested fabs. Any potential upside to that 48% to 50% long term?
Thad Trent : Yes. Look, we remain confident in that 48% to 50%. I said that in my prepared remarks. We’ve also said that target is a milestone, not a destination, right? We’re confident in our business. We have a lot of tailwinds after we get through ’23. So stay tuned on that, but we remain committed to the 48% to 50%. And believe that is a milestone.
