Operator: Our next question will be coming from Blayne Curtis of Barclays. Your line is open.
Blayne Curtis : Hi, good morning, thanks. I have two questions. Just kind of curious for the December quarter, $85 million between the two segments, I’m just having a hard time the order of magnitude so large of the correction. I mean you actually saw a little growth in consumer. So, I think the view was going into this that maybe you’re kind of getting through things and then you’re seeing a decline. So, I guess curious what you think the trigger was. I mean, was it lead times coming in? Or just the customers just turned off? And what was the trigger for that? And then just of that $85 million, can you help us between those two segments a little bit more? It sounds like industrial is worse, but just any kind of like broad strokes would be helpful between those two segments.
Matt Johnson: Yes. I mean, a quick answer is Industrial is definitely the bigger challenge because we’re seeing that hit harder right now. Consumer has been hit all along. But you’re absolutely right that we’ve seen a little bit of, let’s call it, stability in Q3 on Consumer and that’s going down again, Q3 to Q4. The team believes that seasonally, Consumer is stronger in Q3 in anticipation of holiday builds in that cycle, and we saw some benefit from that, but those levels obviously aren’t stable and holding going Q3 into Q4. So that could be impacting the consumer side of it, but we’re not sure we need a few more clicks before we can say for certain.
Blayne Curtis : Got you. And then I want to ask on gross margin. I mean I’m assuming there’s some fixed cost absorption that’s not happening here. Just wondering if there’s any written off inventory. And then if you can help us on the recovery of gross margin next year?
John Hollister : Yes, Blayne. It’s really two effects in the fourth quarter. There’s not an unusual amount of obsolescence or write-offs that are contemplated. But we are seeing both with the sharp reduction in revenue in Q4, an oversized concentration effect of customer and product mix on the downside. That’s one leg of it. But the thing I mentioned and what you mentioned is also a big piece of it that we just have fixed that is being absorbed over a smaller revenue base. We do anticipate with recovery in the market that gross margins would revert back to what we experienced in the third quarter and as we move into first quarter and second half of 2024. We think this is anomalous, what we’re seeing in the fourth quarter 2024.
Blayne Curtis : Thanks.
Operator: Our next question will be coming from Joe Moore of Morgan Stanley. Your line is open.
Joseph Moore : Hi, thank you. I wonder if you guys could address like-for-like pricing. You saw the prices go up the last couple of years when foundry costs went up. Are you seeing any change there? And if you’re not, I guess, to the extent that you’re thinking about next-generation design wins, you’re building your pipeline, do you see more price competition for those new sockets?
Matt Johnson: Yes. A couple of comments, Joe. This is Matt. Yes, what we’ve seen is the market kind of return to pricing behavior that is typical for this type of market and really, I’m going to call it typical of pre-pandemic and now kind of post-pandemic. So, an easy way to think about it is the price pressure is really on design wins, more than anything, as you pointed out, not on our existing business. That existing business tends to cross thousands of designs and customers tends to run as it does. And where we see kind of the leading edge of price pressure is on those design wins, which, as I said, are at record levels last few years, including this year, including Q3. And what we’re seeing there is price pressure that is typical, not anomalous and we are still winning at an accelerated pace.
Joseph Moore : That’s helpful. Thank you.
Operator: And we have a follow-up question coming from Tore Svanberg of Stifel. Your line is open.
Tore Svanberg: I just had two quick follow-ups. First of all, I’m back to the run rate. So, if we go back to Q1 of ’21 before you had obviously very strong growth through the pandemic years, the revenue run rate was around $158 million, if I’m not mistaken. I understand sell-through is deteriorating. I understand there’s cyclicality about inventory and so on and so forth. But it would just seem that a number around that level is probably where the consumption is of your business. Just wondering if you have any comment if you think that, that is completely off? Or could that potentially be in the ballpark?
Matt Johnson: The only thing I understand, Tore, this is Matt, the logic, and the approach. The only thing I’d add or say and is the Think of the design win momentum and share gains over that time frame. So even if you consider the entire pandemic as a build of inventory, which we don’t believe that, that’s all it was. Even if you did, there’s gains and stronger business underpinning that exiting than entering. So that’s an important component to add to your question.
Tore Svanberg: That’s great perspective. And the second question is, and maybe moving away from some of the near-term challenges here. In the past, you talked about some new product cycles. Obviously, you mentioned Series 3, but there’s also smart retail. There’s your Wi-Fi business. You did talk a little bit about the India smart meter business. But could you give us an update on any — some of these newer businesses that are supposed to start ramping?
Matt Johnson: Yes, sure. Yes, Wi-Fi — so let me step back. Big picture, we talked about an increased focus in Bluetooth. No change there. We’re incredibly happy and excited with the progress we’re making there. We are gaining share in Bluetooth and that continues. Wi-Fi earlier on in that investment and that initiative. But one of our fastest-growing areas this year and moving forward. So that’s exciting progress as well. When you look at it by segments, we talked about digital retail, shelf labels, continues to see good progress there. We just, in our prepared remarks, mentioned the metering space, which we’ve always had an incredibly strong position, and that’s gotten stronger. And there’s a lot of rollouts and tenders there that are going to give us some lift not just starting next year, but also for quite a few years.
