Sunny Lin: Got it. Well, so I have a quick follow-up on 3-nanometer profitability. And so Wendell has provided a pretty good insight about the dilution for 2024. But historically, a new node would take about 7 to 8 quarters to get to corporate average after mass production. I understand now corporate average gross margin is also higher. But any expectations that N3 will become in line with corporate average gross margin?
Jeff Su: Yes. So Sunny’s question is looking at the 3-nanometer. Her question is really that with 3-nanometer and process complexities. Sunny, you’re asking really kind of reach the corporate average over time?
Sunny Lin: Or is there a time line that you are expecting?
Jeff Su: Or and time line to reach.
Wendell Huang: Yes. Sunny, as I just mentioned, it’s becoming more challenging for the leading nodes because of the process complexity increases a lot. It applies to N3. So it will be challenging for N3. And we actually mentioned that at the beginning of last year already, it will be challenging that for N3 to reach the corporate leverage in the – in 7 to 8 quarters time frame like before. Yes. But however, part of it is really because of the higher corporate margin that we currently have.
Sunny Lin: Got it. Thank you. My second question is on 2-nanometer. And so if we look at your target for 2-nanometers improvement over 3-nanometer in terms of speed and power, the upgrade seems to be actually less than 3-nanometer over 5-nanometer. So I wonder what’s actually the implication of GA [ph] transition to cost versus performance. Is the target somewhat conservative? Or there is other technological challenges that we need to consider?
Jeff Su: Okay. Sunny, second was – it’s really a third, but the question is on N2. She notes that the performance and the improvement seems to be less than 3-nanometer versus 5-nanometer. So could we talk more about that?
C. C. Wei: Yes, let me answer the question. Sunny you have a very good observation. Yes, you are right. As I compare node to node from 5 to 3, the improvement, it becomes less from 3 to 2. But let me point it out, usually, we are talking about the performance, the speed and also the density so that the geometry shrinkage. Now we focus on the power consumption reduction, which is still a poor node as a performance because as time goes by more and more customer, really, they are increasing towards greater power efficiency. This is very important for the data center very important for the server. And that’s what we are working on. So did I answer your questions, Sunny?
Sunny Lin: Got it. Thank you for the color. And good to know that you are on track to deliver a second generation of 2-nanometer in 2026. Thank you.
Jeff Su: Thank you, Sunny. Operator, let’s move on to the next participant, please.
Operator: Next one to ask questions, Brett Simpson from Arete.
Brett Simpson: Yes. Thanks very much. And the first question is for C.C. I was interested in getting a read on the customer reception you’re getting for the new variants for N3, I think you talked about N3P and 3x. Are customers still as focused on N3E or are you seeing a preference for them to migrate to the new variants such as N3P, N3X rather than the N3E. And this as a follow-on for AI, when do we actually start to see N3 adoption for N3? Thank you.
Jeff Su: Okay. So Brett’s first question is looking at our 3-nanometer families and the continuous enhancements that we always have. He is asking what is the customer reception of N3P and N3X? How does this compare or cannibalize N3? And when do we expect AI related to adopt 3-nanometer family solutions?
