Michael Plisinski: Yeah, I think it’s certainly the more common DRAM that’s driving the drops we’re seeing. HBM is great and it’s great for our packaging business, and it’s picking up some DDR 5, 4, but it’s not enough to make up for PCs and smartphones that are down. So, DRAM overall is impacting us because of the vast rest of the market outside of high performance compute.
Operator: We’ll take our next question from Craig Ellis with B. Riley Securities.
Craig Ellis: I just wanted to see if I could start with you, Mike, and look beyond the calendar third quarter because it seems like with the panel litho shipment timing issue that we will have these three and maybe more tools. So I was hoping you could clarify how many tools we’ll rev rec in the third quarter there? And then from there, can you just talk about the gives and takes for fourth quarter revenue, not looking for specific guidance, but just want to understand how the gives and takes play out as we exit the year?
Michael Plisinski: It’s actually a continuation of what we’re guiding in the third quarter. So we see power semiconductors for the fourth quarter remaining fairly strong, demand there is strong, we’re going to introduce the new tools. That will help a little bit, but that is more a driver for 2024 in the power semiconductor space. And then heterogeneous packaging, our support specifically for AI devices, i.e. Nvidia and some of the 00:20:08 and HBM that were mentioned, that we can see continuing to strengthen straight through the year. So those are the positives. Obviously, the litho will remain sort of stable and continue once we catch up with the with the shift here with the three tools. And then the advanced nodes, that’s the tailwind.
So as I look at Q4, it’s a lot of the same stores, real strong in heterogeneous packaging, real strong in power, advanced node is a bit of a tailwind. Overall, we expect to be similar levels of guidance for the fourth quarter. We’d expect it to be around the same.
Craig Ellis: Mark, I’ll follow up with you. So, the company had a program for optimization, and I think, just more careful expense management. And that was about $27.5 million. At the Analyst Day, there was a $25 million program that was announced. Can you just help us understand to what extent are benefits from those programs factored into the third quarter’s guide? What does it mean for the exit level of gross margin this calendar year? So, where can gross margin be in the fourth quarter? And then how much of the benefit of those two programs do we see hit in gross margin and OpEx next year?
Mark Slicer: Let me start with the – coming off the analyst day and the comments around the $25 million of optimization in 2024 and 2025, that activity, we’re executing now. Obviously, we haven’t seen – the bulk of those savings are expected to be in 2024 and 2025. We are, as I commented in my prepared remarks, seeing some of that now and some slight shifts of suppliers and things like that. So we’re still focused on that. I think for Q3 and Q4, we still have a lot more work to do. Certainly, we have seen some savings and operating expenses, as it relates to taking costs out and offsetting the kind of annualization year-over-year. Certainly, in the back half, we’re focused on that, those continued reduction plans. The Q3, we do have, certainly, some of that continue to be baked and where we are from a gross margin and OpEx standpoint.
I think as we look at the decline in advanced nodes, fortunately, we have programs in place right now. We’re looking and executing even further reductions in Q3 and Q4 as we look towards that decline, and making sure that we can continue to drive gross margin accretion back up above the 53% to 54%. Our goal from a full year perspective is still to target that 53% to 54% and align to the long term operating model of getting back to 55% plus longer term. So, that’s our target.
