Francois Bouvignies: I have 2 quick ones. The first one is on maybe microcontroller has been a big driver in 2022 and seems to be still in Q1. Can you give some color around the dynamic in microcontroller, specifically that has been constrained for the last few quarters? I mean it looks like inventories are going up significantly. So what do you see in terms of supply demand and pricing dynamic inventories for microcontrollers specifically? Even though you assume pricing to be flat on average, but it would be very interesting to have your macro controller view specifically. And the second question I had is on silicon carbide. Actually, to confirm the 40%, 4-0, subset in-house for, I think it was 2024, Jean-Marc, I was not understood your answer. I mean do you still to have 40% next year? Or it’s maybe more like a 3, 5 years aspiration? And I just wanted to clarify that point.
Jean-Marc Chery: By 2024, it means, okay, by Q4 2024, we would like to have 40% internal production.
Francois Bouvignies: Okay. And is 200-millimeter, that…
Jean-Marc Chery: It will be 150 at the early stage, and step after step, we’ll move to 200.
Francois Bouvignies: Good clarification.
Jean-Marc Chery: On MCU, the market remain strong overall. We have spoken about STM32, I guess, general purpose. So remain — the market remains very strong. But overall, I have spoken then — okay, I will give maybe some specific color. Yes, the demand, the capacity and the inventories have started to be more balanced, clearly. And the lead time are starting to reduce step-for-step in certain product family and the pricing is stable. But where we are still, let’s say, capacity constraint, It’s on some ultra-performing, okay, microcontroller for industrial applications, for B2B application, because of as this ultra-performing microcontroller sometimes including let’s say, connectivity, security and AI are in competition with microcontroller for automotive.
And basically, they are sharing the same 14-nanometer technology capacity. And here, clearly, we are still on the, let’s say, important capacity saturation. Lead time, which are, let’s say, quite above a normal situation. And in a certain extent, it is some allocation. For the mainstream microcontroller STM32, for the ultra-low power microcontroller STM32, we are moving step by step to a more normal situation. But I repeat, okay, with still a strong demand and in the pricing environment, which is stable. Whatever is, let’s say, go-to-market channel we use.
Celine Berthier: Next question, please. I think we have time for 1 or 2 questions depending on the length of the question and answer. So next question and then we will adjourn.
Operator: The next question is from Sandeep Deshpande from JPMorgan.
Sandeep Deshpande: Two or 3 questions, if I may, quickly. Jean-Marc, you’ve had a great guidance for the full year. And you are highlighting that in the second half that there is some mix shift with your main consumer electronics customer. So essentially, it looks like all your growth for the year is coming from the automotive industrial space. Is that correct? And I would like to understand what is exactly happening in terms — because you mentioned in an earlier question that there is some shift happening in terms of the consumer electronics customer, in terms of the part, I’d like to understand that. And I have 1 quick follow-up.
Jean-Marc Chery: Yes, okay. What I would like to confirm, okay, that in 2023, completing, okay, the plan we disclosed to you at the midpoint. Our company will have about 70% of our revenue generated by automotive and industrial markets, and about slightly above 30% from personal electronics and communication equipment and computer peripheral. But it is perfectly aligned with in ambition that we share with you at the Capital Market Day. This is exactly what we want to do. So this, yes, I confirm, okay, in 2023, we will finish the year in the mix in terms of vertical exposure, which is a strategic target we set up, okay, at the management team during the Capital Market Day. Now the year, okay, let okay, on the personal electronics overall, moving forward along the year, we have a mix change, okay, in the important engaged customer program.
Again, this mix change will translate in less revenue year-over-year, but better gross margin generation. This is what I can confirm to you, and this will happen, okay, smoothly moving forward across the year.
Sandeep Deshpande: Understood. And just a quick follow-up on manufacturing. I have — I mean, how much of your production in ’22 was 300 millimeters? And going forward, with your ramping up of Agrate, how should we look at that 300-millimeter as a percentage of your production in ’23 and ’24?
Jean-Marc Chery: It was, let’s say, slightly above 25%.
Lorenzo Grandi: Internal. We’re talking about internal only.
Sandeep Deshpande: And Jean-Marc, is it — because there was some conversation earlier on the margin mix because of the ramp-up of the Agrate fab that there will be some negative impact on gross margin in the second half of this year, but will it be accretive in ’24?
Lorenzo Grandi: Yes. Yes, definitely. Of course, in the course of this year in 2023, we will not be in scale for our 300-millimeter in Agrate, such as that it will be accretive at the level of our gross margin. Because at the end, as we said that we will end the year with the 1,000 wafer per week. Still it’s too low, and you know that our priority is to grow as fast as we can in this. In 2024, our expectation is that we will start to start to be neutral to our gross margin, and then in the second part of next year to be accretive as we target to increase this capacity along the 2024. This year, no, it will not be, let’s say, accretive to our gross margin. This is one of the reasons that you see that, in respect to the starting point of our gross margin in the first quarter, we have no opportunity to improve over the year. And we — and our average for the full 2023 will be close to 47%, similar to the one that we had in 2022.
Celine Berthier: Thank you very much, Sandeep. And we have time for our last question.
Operator: This last question is from Andrew Gardiner from Citi.
Andrew Gardiner: Lorenzo, perhaps one for you. You normally give us an update in terms of your operating expense outlook, if you could help both in terms of first quarter as well as how you see things trending through the year. And then a quick follow-up after that, if you don’t mind.
