These are tough questions for our customers right now. It comes down to their prioritization of their spend. But all indications are in the latest numbers. And if I think about these latest numbers that the cloud service providers are announcing versus where they were six months to nine months ago, there’s a very positive trend. And I think to the questions about GenAI and other feature sets, we’re not at peak cloud yet. So I do think it’ll come back fairly strongly from a unit’s perspective when it does.
Operator: The next question comes from Tristan Gerra with Baird. Please go ahead.
Tristan Gerra: Hi, good afternoon. A couple of questions. The first one is about the production cost curve, and if you could talk about the percentage decline per year that we should expect in a medium term on a per bit basis? And then second question about is the percentage of production that’s coming from China and also the true demand that you see from China as a percentage of your revenue? Thank you.
Dave Mosley: I think, the relative – I can answer to China question first and then Gianluca can take the cost discussion. China is down quite a bit, but relatively as part of our portfolio, it’s about the same relative numbers that it was – even when it was the peak of the – of our portfolio. So, I wouldn’t overly analyze China versus CSPs versus consumer spending and all these other things that have affected our revenue downturn. I think it’s a fairly consistent number across the entire portfolio. And we’re looking for demand upswings in every one of those sections as well as we go forward. But we’re also managing the business really carefully because we don’t think it’s going to come back in the next six months like we said in our prepared remarks.
Gianluca Romano: The cost per terabyte of course we don’t guide the full year. What I would say is in a down cycle it depends a lot from the level of utilization that you have in your factories, so can vary a lot from one quarter to another quarter. In general, no we are continuing to do our product road map. And as Dave said, we have a new PMR product coming out soon, higher capacity, that means lower cost per terabyte. And then we will have HAMR in just a couple of quarters, so all those new products will help us in reducing the cost per terabyte.
Dave Mosley: Right. I like our chances in the cost per terabyte arena going forward. And I think as we continue to work yields and scrap on these new products and so on, have the highest capacity points out there, have the ability to take that aerial density to lower capacity points as well, it helps our cost per terabyte immensely.
Tristan Gerra: Great. Thank you very much.
Operator: The next question comes from Mehdi Hosseini with Susquehanna. Please go ahead.
Mehdi Hosseini: Yes. Thanks for taking my question. A couple of follow-ups. Given your lower OpEx missed around to 160, how should I think about scaling, especially on the revenue side before you would need to increase OpEx materially?
Dave Mosley: Yes. Mehdi, I think we can hold the line on where we are right now and get a lot of scale. I mean we’ve been through the product transition far enough on the PMR product and HAMR product that we can – we’re pretty much done with the development phases, all the experimentation and so on and so forth. So I don’t think we need to grow OpEx until we build back quite a bit of revenue and so we’ll get very efficient scale there. I appreciate the question.
Mehdi Hosseini: Sure. And then for Gianluca, should I assume that free cash flow would be down in September and then up in December?
Gianluca Romano: Well, in general, no, we have generated good free cash flow through all our quarters. I said in the prepared remarks, September would be a little bit lower because we have to pay for the restructuring charges that we executed in end of June and during July.
