Vivek Arya: Yeah. Dave, I actually wanted to stay on the same question because there is a perception that industrial and auto demand is kind of this last shoe to drop in semiconductors. And when I look at what your competitors, right, peers are seeing in analog and microcontroller markets. They are noticing a level of stability and strength. And that’s what I want to confirm with TI that are you seeing the same thing as you go into Q2? Because, yes, consumer is weak, right? Enterprise is weak. That is well known. But specifically auto and industrial. Do you think they are now trending in the right direction in Q2 or do you think that you are in front of some weakness and inventory adjustment in those markets also?
Dave Pahl: Yeah. And again we’re not trying to provide guidance by specific markets. The overall outlook is roughly flat into second quarter. If we had something specific to call out, we would. And I think our approach to building closer relationships with customers, what we’re doing in our channels, our product portfolio continues to strengthen. The capacity that we add are all things that continue to put us in a great position to service customers and service them well over time. But yeah so we’re just not going to go into specifics of each market in the second quarter. So thanks for those questions. And we’ll go on to the next caller, please.
Operator: Our next question comes from the line of Timothy Arcuri with UBS. Please proceed with your question.
Timothy Arcuri: Thanks a lot. Dave, I guess I wanted to ask sort of where you think you are in the cycle because you have less exposure than many of your peers. So in theory, you should be farther along the inventory correction and you’re more connected and real time to demand. So when you sort of look at your customer inventory levels, where do you think we are? Do you think that we’re sort of in the late innings of the correction for you because you are a bit more connected to demand in real time?
Dave Pahl: Yeah, I think, Tim, as you know, this is the first time that our markets, not only for us, but the industry have behaved differently as we’ve gone into this cycle. So if you look at personal electronics, we began seeing weakness in personal electronics back second quarter a year ago, right? So we’re now into our fourth quarter of weaker demand. The other markets with the exception of automotive began weakening the quarter before last. So we’re a couple of quarters in on that. So and of course automotive has remained strong through last quarter. So you put all that together. I think it depends on which market you’re looking at. If you’re in PE, you’re obviously closer to the bottom than you are to the top. So I think our practice, we don’t try to predict where the bottom or the top is, really draws — draw your attention back to slide 13 that we talked about.
That longer term trend is what we’re planning on and what we believe we can look at to inform our decisions. Do you have follow-on?
Timothy Arcuri: I do, Dave, yeah. So I know the SI data can be noisy and you always say to look at things on kind of a TTM basis and if you sort of roll it back, it looks like your share has gone down in analog roughly 200 basis points versus where it peaked in the early parts of COVID. So as you sort of forensically go back and try to figure out what’s happened, do you think that’s entirely based on supply? So in other words, if you didn’t have the shortages that you did, you think that you wouldn’t have lost that share? I’m just kind of wondering, as you look back at the numbers, how you forensically try to explain that share loss relative to the industry data? Thanks.
Dave Pahl: Yeah. And as we’ve talked about that’s something we think you have to look at over time. If you go back to the prior year as with the pandemic started, you remember we made some decisions to continue to run our factories and build long-lived inventory. And those decisions served us very well. So as we went through each quarter, as customers really expedited across the board. We could respond to that and ship them product. And in the short term, that probably helped us with the numbers when you compare it against what the industry was doing. So as we go into the following year, of course, those are our tougher compares. But we have a lot of practices that I think are different than many of our peers. As an example, through that period, we’ve moved to more closer direct relationships with customers.
We believe that’s giving us much better insight. We can see their demand more clearly. We can see what they need both short term and long term much better. Also I’d say that as we were moving through a period where most of our customers are reducing their inventory to align with their needs, we have an employee things like long-term sales agreements or non-cancelable, non-reschedule contracts. So customers aren’t taking product that they don’t need. So that isn’t share gains, it’s just — I think for us, we want to be as easy to do business with as we can. And those — I think all those practices are setting us up well to continue to gain share. So thank you, Tim. We’ll go to the next caller, please.
Operator: Our next question comes from the line of Ambrish Srivastava with BMO Capital Markets. Please proceed with your question.
Ambrish Srivastava: Hi. Thank you very much. Rafael, I just want to make sure I got the depreciation answer right. Obviously, it has implications for gross margin. And the run rate — should we assume the first quarter run rate because that is a very positive implication. And you said it would be lower than the linear, but how much lower, I think we were all modeling $1.5 billion is kind of the number that we had. What’s the right way to think about that, please?
Rafael Lizardi: We’re not breaking down specifics on that. But if you were going to do it linearly, you would get to the $1.4 billion unchanged and then $500 million plus on top of that every year until you get to about $2.5 billion in 2025. So it’s going to run lower than that, yes, this year, and we’ll give you an update the next capital management on subsequent years.
Ambrish Srivastava: Got it. Got it. Just a clarification and not a follow-up. So if you look at gross margin last year versus this year, the three factors at least. I just want to make sure I’m doing it right is the flow-through and the fall-through that you talk about. And then the offsets would be LFAB is now going from restructuring into COGS and then apples-to-apples add a higher depreciation. Is that the right way? Am I thinking about the right three parts?
Rafael Lizardi: Yes. Those are the right three parts. And of course, this is over the long-term. Any one quarter, things — there are many moving pieces, for example, mix always a place a factor, you have more auto and industrial that’s different than personal electronics, right? But at a high level, over a long enough period, yes, those are the trends that the factors you should take into account when modeling this.
Ambrish Srivastava: Got it. Thank you.
Rafael Lizardi: Thank you, Ambrish. We’ll go to the next caller, please.
