Mehdi Hosseini: Okay. And my follow-up has to do with your color on Q1, and I appreciate going out of your way to help us with the modeling. The midpoint implies 8% sequential decline. And SOCs has historically been the weakest in Q1. So should we assume that semi test SOC will be down by more than 8% and everything else would be down less than 8%?
Sanjay Mehta: Hi, Mehdi, it’s Sanjay. Yeah. So the seasonality decline is really coming through, I would say, in robotics. Obviously, seasonality comes down. And then we’re ramping UR20 Q3 and really Q4 that goes down to run rate. The other component of the decline in Q — or the forecasted decline in Q1 is tied to storage, really the mobility of the end market and SLT. And from an SOC perspective, we’re seeing that as roughly flattish at this point, Q4 to Q1. So those are really the drivers of what we see now. And as I said in my prepared remarks, I’ll just remind you that we’re seeing, as lead times come down, a lot more kind of book-ship and customers coming to us with incremental orders within lead time. So we’re expecting to see kind of more bookings kind of at the tail end of Q4 for Q1 shipments. So there’s a little bit more volatility there.
Mehdi Hosseini: Thank you. Very helpful.
Operator: Our next question comes from the line of Samik Chatterjee with JPMorgan. Please proceed with your questions.
Samik Chatterjee: Hi, thanks for taking my questions. I guess if I can follow up on the last question, maybe an — actually, your response that you’re getting the 50% of wins in the accelerated compute or sort of custom ASICs that you are targeting, can you share a bit more in terms of then when we start to think about that translating — the win translating into revenue, when does that start to happen? And particularly, like, when you look at a pipeline building here, how does that revenue progression look like? And I have a follow-up.
Greg Smith: Yeah. So right now, the noted characteristic of it is volatility year-on-year. Our model of it, though, is by the time you get out to sort of the 2026, 2027 timeframe, we expect that these vertically integrated producers are going to represent about $400 million to $500 million of the compute test TAM. And for reference, that’s probably going to be on the order of 1/4 to 1/3 of the total compute TAM out in that timeframe.
Samik Chatterjee: Got it. And then for my follow-up, I know you’re talking about 2024 being a year of incremental growth, and there are lots of puts and takes here, but you’re starting 1Q in line with 1Q ’23 and when I look at consensus, it has you growing 20% for the year. So obviously, as a magnitude sort of overall difference in sort of where you’re starting 1Q versus what consensus is expecting, any sort of thoughts around whether that’s a realistic assumption? Or if that 20% growth were to be realized, what do you need to see in terms of sort of uplift, which quarter that needs to come through for you to be able to realize that kind of sort of strong growth through the year?
Sanjay Mehta: Yeah. I think that — it’s Sanjay. I think that Greg really outlined kind of the potential headwinds and tailwinds in 2024. So right now, the first half and given the limited visibility, especially in mobility, it still continues to look a little dampened or weaker. But from a model perspective, where we see ’24 tailwinds are in compute, mobility and Robotics for 2024. And so that’s where we do see the tailwinds. The question is, to what degree. And we’ve provided some transparency of what we know about in Q1. And we think that, that is the low point. We think we’ll grow from there. It’s tough to call right now how it appears to be for the rest of the year. And we’ll provide an update in January with what we know.
Samik Chatterjee: Thank you. Thanks for taking my questions.
Operator: Our next question comes from the line of Vivek Arya with Bank of America. Please proceed with your questions.
Vivek Arya: Thanks for taking my question. First one on gross margins. Sanjay, could you remind us what drove second half gross margins lower than the first half? And what will drive overall ’24 gross margins higher than ’23?
Sanjay Mehta: Yeah. Good question. So it’s a similar story to what I noted in July, Vivek. Fundamentally, it’s product mix in the second half, and we deferred resiliency spending in operations really from first half to second half. And in the first half, we were focused on chasing and meeting customer demand. So some of our projects were deferred into the second half. So it’s mainly mix as well as deferred resiliency spending from kind of first half to second half.
Greg Smith: And at ’24, why it would be better?
Sanjay Mehta: Sorry. Thank you. In 2024, really, I think if — as we’ve noted in our prepared remarks, incremental volume. Incremental volume, product mix — is a main driver of product mix. And then there’s a bunch of other puts and takes. And as I’ve noted in my prepared remarks, we expect to see much of the operational resiliency costs behind us in ’24.
Vivek Arya: Got it. And for my follow-up, Greg, I was hoping you could help us kind of square some of the more muted commentary from customers such as the Texas Instruments about industrial demand, not as much automotive but a lot more industrial demand. I think they said the industrial weakness is broadening. How correlated is that demand to what you see and what your UR business sees? Because you’re noticing strength in UR, but when we look at folks such as TI or Analog Devices, they were talking about weakness on the industrial side. So how correlated have these two trends been historically? And what is the kind of the right read across?
Greg Smith: So I think the answer to your question is not very. The business that we’re in with UR and MiR tends to be — it’s a short lead time business. We tend to run with about four weeks of lead time and customers will use our stuff for smaller projects. Much of the rest of the industrial segment that TI and Infineon and ST are serving is towards much longer lead time projects. Some of our industrial robot competitors are working off of year-long backlogs and for process control equipment, it can be even longer than that. So what we tend to see is that the cycles of investment for advanced automation lag we do are actually a little bit out of phase with the cycles of investment for, say, factory building. And right now, we’re seeing that there is significant weakness in orders for our peers in industrial automation compared to where they were a year ago.
And we’re actually stabilizing relative to them. And that kind of makes sense. They will build a factory, they’ll start running in the factory, and then they will look at different tasks in the factory that could be automated using AMRs and cobots and then they’ll make a subsequent investment to do that. So I think the answer to your question is that you can’t really infer what’s going to happen with our Robotics business based on the industrial semi trends.
Vivek Arya: Thank you.
Operator: Our next question comes from the line of Toshiya Hari with Goldman Sachs. Please proceed with your question.
Toshiya Hari: Good morning. Thank you. My first question, I have two. But my first question on semi test lead times. Greg, where are they today? How much have they come in over the past couple of quarters? And over the next couple of quarters, where do you see them going? And when you talk about Q1 of ’24 revenue being flat, year-over-year, I guess that’s for the overall company. But within your SOC test business or semi test business, what percentage of Q1 revenue do you think will be turns business?
