Operator: Our next question comes from Tore Svanberg with Stifel. Please proceed with your question.
Tore Svanberg: Yes. Thank you, Dave. Thank you, Rafael. So you talked about operating in a weak environment. Could you also give us some color on bookings trends, maybe even the current run rate versus where you think consumption is? Just trying to understand, and this goes back to Ambrish’s question about four consecutive quarters of double-digit declines. So yes, any color on bookings trends would be really helpful.
Dave Pahl: Yes. So as I mentioned, I think as part of another question on revenue order linearity, there was nothing unusual inside of that. Secondly, we obviously, we’re describing the environment as being weak. And we don’t have a system that tells us, are we shipping above or below demand. The strongest signal that we get is orders from customers. Now as we talked about earlier comms, or a market like Personal Electronics was the first market to go into the downturn. We’ve had a couple of quarters of growth inside of that market. Now it’s up off of a very weak base. But we are seeing that as a trend. If you compare that to the industrial market, we had seen that, let’s say, let’s call it, about half of the sectors begin to weaken a couple of quarters ago, it was really this quarter that we saw that, that weakness is broadening.
So customers, we believe, inside of markets like that inside of markets like Comms equipment that we said they’re adjusting their inventories as such. So again, that provides us the opportunity both strategically with building the capacity and more tactically, building, putting in place the inventory to be able to support the next upturn because it will certainly come. Do you have a follow-on?
Tore Svanberg: Yes. Thank you, Dave. Very helpful. Follow-on for Rafael. Rafael, thank you for the depreciation numbers for the next few years. Do you also have an update us on the timing of the offsets to the depreciation, especially in relation to ITC and the CHIPS Act and anything new there?
Rafael Lizardi: So nothing new, frankly. The ITC is the expectation is similar, which is about a 20% to 25% credit on everything that is spent on CapEx in the U.S. for fabs. So what we said back in February is that that’s going to be roughly $4 billion of the $20 billion or so that for CapEx, the $5 billion more. So roughly about $4 billion of that we’re going to get back on ITC about one year offset. Of that, we have already accrued $1.2 billion on the balance sheet. So you’ll see that on our balance sheet on the long-term assets. A portion of that, we will get some time next year, probably by fourth quarter next year is when we expect to get that cash, so that’s when the cash will start flowing in. As I mentioned in an earlier call, on an earlier question, we are actively applying for the grant.
So that’s going to be in addition to the ITC. We’re not counting on that. We don’t have any numbers on that because you have to apply, you have to wait until the Department of Commerce makes that decision. But we are — we’re planning on receiving the funding from the CHIPS Act grant was comprehended in our decision, and we firmly believe we are very well positioned to receive those funds, and we’re a great candidate for that, and we believe there will be meaningful to manufacturing operations in Texas and Utah to support semiconductor growth and the objectives of the CHIPS program office.
Dave Pahl: Great. Thank you, Tore. Let’s go to the next caller, please.
Operator: Our next question comes from the line of Harlan Sur with JPMorgan.
Harlan Sur: Thank you. Good afternoon. China headquartered shipments or about 20% of to the first half of this year. Does this geography has experienced the most significant decline. I think it was down like 33%, 35% year-over-year in the first half of this year. Much of your China business is focused on industrial. Is this geography continuing to contribute to the weakness here in Q4? And what other geographies are you seeing that is contributing to this broadening out of sort of the weak industrial trends?
Dave Pahl: Yes. So let me — I’ll speak to what we saw in the third quarter. And just in general, including industrial in China continue to remain weak. So, I think if we’re having this call a year ago or so, as China came out of COVID, I think most of us would have expected there to be a more significant rebound, which just hasn’t materialized. So yes, I think when you look at on a regional basis compared with the year ago, the only region that was up was Japan. So the other regions were down. And so, again, just described that weakness as being very broad in nature. Do you have a follow-on, Harlan?
Harlan Sur: Yes. Thank you. So your embedded business continues to hold up relatively well, right? Trailing 12 months, it’s up 8% year-over-year. You’ve talked about the positive strategy changes in embedded. Last quarter, you also cited some constraints. I assume that those constraints have fully normalized. So do you anticipate embedded continuing to hold up? Or do you anticipate this segment starting to weaken from here with some of the capacity constraints potentially easing?
Dave Pahl: Yes. As we talked about before, we had focused on changing the product strategy that we had inside of embedded. I’d say we’re very pleased with the results that we have so far. Our first objective was to stabilize that business. And we continue to invest in it because we believe it has long-term growth potential and contribution to free cash flow. So we’re very pleased with where we’re going. I think more tactically, as we talked about last quarter, we saw that business does rely more heavily on foundry suppliers. We began to see those — that capacity begin to free up for us. And I think that it was different because we had capacity in place to service analog, our own capacity there overall. So, yes. So again, we think that business long term is going to be a great driver for us in the future. So thank you. And I think we’ve got time for one more caller.
Operator: Our next question comes from the line of William Stein with Truist Securities. Please proceed with your question.
William Stein: Great. Thanks for squeezing me in. Dave, can you remind us what’s in the other segment besides calculators and perhaps why that end market was down so much more than the others? I know it’s very seasonal from calculators, but there was a big drop year-over-year.
Dave Pahl: Yes. So besides calculators, we have our DLP or Digital Processor Products that are in there. So those products are continuing to make their way through inventory correction overall. And calculators had a weaker back-to-school this season. Do you have a follow-on?
William Stein: Yes, perhaps something that hasn’t come up in a while, but lead times. We were dealing with this golden screw issue for a while where there were quite a number of parts or quite a big part of the, let’s say, all the available SKUs that had very extended lead times with revenue down as much as it is. I’m guessing that, that’s mostly resolved and lead times are like sort of stock to four weeks for most things at this point. But if you could level set me on that, the degree to which there are still extended lead times, that would be really helpful. Thank you.
