Jean-Marc Chery: Clearly, the signal now we see after having seen in 2023 in the first half, as I mentioned, the acknowledgment of customers that the lead time of semiconductor, okay, reducing clearly, and in October, okay, we share with you that when we have seen September bookings, not at the expected level. We discuss with our customers and all of them, okay, say, “well, we are visiting our sales and operating plan because okay, our own end demand is weakening, except power energy for infrastructure. But what was related construction, residential, okay, including factory automation, robotics and of course, okay, what is consumer, all the customer and distributor were really assessing their end demand that was weakening and their inventory level.
Well, clearly, okay, the signal of Q4 booking show that we are in the inventory correction mode. By the experience, inventory correction, okay, last four to five quarters, we can say that it has started in Q3, end of Q3, that’s the reason why, okay, we expect that this inventory correction will end of Q2. Could be slightly extending Q3, let’s monitor it, okay. It’s possible. But we are convinced discussing with our customers that this inventory correction will end, end of Q2 so that’s the reason why, okay, we have built a plan that is backloaded for Industrial, H2 versus H1. And that’s the reason why also today, our backlog visibility on Industrial is pretty low. And that’s the reason why, okay, we have given a range of $1 billion between $15.9 million to $16.9 million.
But at the end, the feedback we are receiving that we are facing an inventory correction that should end in Q2 and expecting a rebound H2
Q – Joshua Buchalter: Thank you. for all that color. And I guess as we go through this period of digestion, any way to quantify where the channel is at and where it needs to be? And any changes in the pricing environment with your customers as you go through the digestion? Thank you.
Jean-Marc Chery: No, pricing is going back to what we classify normal is low single digit, okay? We don’t see, okay, price pressure special. Going back to normal. Now it’s an inventory correction. I think, okay, we can classify that many customers in the field of Industrial market have overestimated in a certain extent, their in demand dynamic in 2023 and restart in 2024, they continue to order, okay, at the level of the backlog we received end of 2022 and first half for 2023. And now they acknowledge that they have to adjust because the end demand is not at the expected level or this kind of adjustment again last three, four quarters, started in Q3 should end in Q2.
Joshua Buchalter : Thank you.
Celine Berthier: Thank you very much Josh.
Operator: The next question is from Lee Simpson from Morgan Stanley. Please go ahead.
Lee Simpson: Great. Thanks. Good morning. Thanks for fitting me in. I just want to carry on from the last question. When we look at the inventory correcting for Industrial, a lot of this — I mean, correct me if I’m wrong, a lot of this looks as to its general purpose microcontrollers. And a lot of this looks as though it’s going through a distribution channel. So in many ways, I take the comment that it’s a normal inventory correction. But would you say there may be scope for this to pull nearer the end of Q1 rather than the end of Q2 and that we might see scope for modest improvements for that business into Q2. And I guess I just wanted to clarity on the early over market. I think you said that there was a high single-digit improvement for Industrial in the second half. Is that half-on-half because that doesn’t look like it could be year-on-year?
Jean-Marc Chery : First of all, the over inventory is, let’s say, of course, impacting the general purpose microcontroller, because this is the key semiconductor device in any Industrial system, but as well sensors, MEMS as well general purpose analog and some power switch or power driver, so discrete. So this is okay, a bit more than that. Why maybe it is a little bit, let’s say, more visible on the microcontroller, because do not forget that Industrial customer in 2022 has been heavily hit by the Automotive, okay, many semiconductor companies has been forced to allocate more to Automotive because of fantastic growth of Automotive at the detriment of Industrial. So it is clear that Industrial market in 2023, they maybe cover them a little bit more than usual.
And that’s the reason why, okay, the inventory correction of MCU now in an economy, which is impacting the Industrial market is a little bit amplified versus the other semiconductor, let’s say, device. To your question, about inventory correction lasting in Q1 or in Q2. But very honestly, now the key parameter we have to monitor is the order booking. Yes, if we see a strong acceleration during the course of Q1, we should expect at early Q2, the market will rebound but if we see, let’s say, a softer restart in Q1 then accelerating in Q2, we will be the scenario that I described a few minutes ago.
Lee Simpson: Great. That’s very clear. And maybe just — if I just could add on — can you hear me?
Celine Berthier: Yes, yes, we can hear you.
