Tore Svanberg: Yeah. Now that’s really helpful. And as my follow-up and Emeka, on gross margin, I think the mix and sort of the fixed cost absorption makes sense, but at what level would the semiconductor gross margin start to improve a little bit more materially because you talked about some fixed cost absorption that at current levels you’re not really able to overcome. So what does the semiconductor business have to be in order to see, more step function improvements in gross margin, because obviously the mix is — mix overall is moving in the right direction, right. But I’m just trying to understand that the fixed cost absorption, part of it.
Emeka Chukwu: So, first of all, thank you for your kind words. I really enjoyed working with both you and all the sell-side analysts, all over through the years, and hopefully, our paths are going to cross somewhere else in the future.With regards to your question, I think we would expect that to see the gross margin for the semiconductor business as we see maybe a change in some of the mix an increase in the 10 gig PON which is pretty high gross margins for us, seeing some recoveries in the LoRa business from the current levels. The LoRa business is suffering a little bit from high levels of inventory in the channel at this point. So we continue to see a mix of the ITA industrial and automotive revenues for our advanced protection system.
So is a combination of the mix of revenues in addition to higher levels of revenues for the semiconductor business, but I think like Paul said, we have seen definitely very good signs that a semiconductor business looks like. It is poised to start going back up. So I would expect that as we go forward to start seeing some higher levels of gross margin as well.
Tore Svanberg: Got it. So it sounds like for at least the October quarter, this will be a higher sort of revenue mix in consumer, especially with some of your smartphone design wins and things like that, but then beyond that given, you could start to see PON and LoRa and other contributions.
Emeka Chukwu: Yes, exactly. I think you got that right. And then just with overall higher levels of revenues, I actually driving the need for more inventory deals and stuff now was that drive absorptions higher so and consequently as a result, the gross margins will start to tick up again.
Tore Svanberg: That’s very helpful. Thank you, again.
Operator: Thank you. Our next question comes from the line of Scott Searle with Roth MKM. Please proceed with your question.
Scott Searle: Hey, good afternoon. Thanks for taking my questions. Paul, congrats on your first quarter and nice job on the cost front. And Emeka I want to wish you all the best in your future endeavors. It’s always been a pleasure working with you.
Emeka Chukwu: Thank you.
Scott Searle: Maybe to just dive in on the compliance front quickly Paul and Emeka. You’ve done a lot on the cost side of the equation. We are taking a step down on the topline. Can you get back into compliance without a major recovery on the topline? Are there some other — it sounds like there some other additional OpEx levers to pull and/or an ability to get some flexibility on the debt covenants? So I kind of like to understand the thought process and the strategy beyond the initial quarter as we get into fiscal ’25?
Paul Pickle: So I think the answer to that Scott is yes for the next 12 to 18 months. And obviously, as that leverage ratio cap continues to step down we’ll need some recovery in the business beyond a year and a half or so into FY26, but the way I kind of look at it as we took immediate actions for compliance for the covenants buying ourselves some buffer in that regard and then we need to continue to optimize cash generation in order to service the debt and then it becomes about principal paydown. So this is really kind of a two-year haul, but in the short-term, I don’t see an issue with covenant compliance. I think we’ve got enough tools in the tool bag to make sure that continues to happen. We do need some recovery if we are going to hold on to this debt over the long-term and continue to service it and pay it down in principle through its term.
But I think longer out with the market recovery we’ve got a little bit more options under our belt in terms of divestiture and the like perhaps refinancing as well. It’s going to be — this is going to be a bit more of a longer story, but in the short-term, I think we have secured ourselves 12 months to 18 months.
Scott Searle: Perfect. Very helpful. And if I could, I guess, kind of a multipart question following up on some earlier questions. From a revenue standpoint, a couple of the product lines that are seeing some headwinds routers were down in the current quarter, modules are looking to take that step down and normalize from an inventory standpoint. I’m wondering on both fronts there when do you see router starting to recover? Are you seeing that supply-demand balance come back in? And then with modules, it sounds like you’ve got some other potential upside opportunities with Chinese OEMs not being welcoming the US, and starting to see that in your order book now. So I’m kind of wondering what you’re factoring in on that front. And lastly, I think LoRa took a big step down in the quarter.
I’m wondering, how long do you see it at these levels before starting to recover? And then kind of putting them all together, what is the normalized level of sales that we should be thinking about 12 months from now? The combined companies who go back 12 months ago was around $400 million obviously below that, obviously not a normalized environment, but what’s kind of the number that we should be thinking about as the world starts to recover. Thanks.
Paul Pickle: So Scott, I just have to ask a clarification question. So were you saying routers modules and LoRa together, those revenue levels or you are talking about the whole?
Scott Searle: The whole. The whole.
Paul Pickle: Okay, all right. So I guess I don’t have an answer for you on the whole quite yet, but I would say if I looked at demand and try to anticipate a moderate recovery, let’s say, back to normal levels. I can kind of — it’s pretty easy to go look at over the COVID cycle, see the rush of demand, and then try to draw a line through that. I think we’ve got some businesses that have historically grown at specific CAGRs over the last decade. So it’s pretty easy to draw a line through those and say, this is what it should be independent of cycles, but I’d say, we are still probably north of $1 billion. I’m attempting to put a number on it, but I’m going to admit that I haven’t exhaustively looked at every single product line.
