So, but the pricing pressure, I am not — I don’t think that that’s such a big problem. The fact of having a sole supplier relationship is really where we try to work with all of our customers and that’s off of having a partnership and trust.
Mehdi Hosseini: And in that context, combined with Silicon Photonics, Germanium, and combined with certain RF SOIs, are these going to be margin accretive or margin neutral? Hopefully it’s not margin to do this.
Russell Ellwanger: The Silicon Photonics is definitely margin accretive and Silicon Germanium has always been at the upper end of our margin spectrum in general.
Mehdi Hosseini: And RF SOI?
Russell Ellwanger: RF SOI itself is very, very good margin. What dilutes RF SOI margin to some extent is that the SOI substrate itself is very expensive. So RF SOI has a very good revenue contribution, but the margin that you get on the RF SOI is really off of the silicon that you’re processing. You’re not doing a big uplift on the substrate and the substrate’s expensive. So if you look at the total margin of an RF SOI wafer, it’s not going to be a very good margin. It’s not the highest margin that we sell. If you look at the margin per layer of silicon manufacturing, it’s very, very good.
Mehdi Hosseini: Okay. And then lastly, OpEx sold $33.5 million for Q1.
Russell Ellwanger: I couldn’t hear the beginning of the question. If you could repeat it.
Mehdi Hosseini: I’m shifting to OpEx. You did $33.5 million for Q1. How should we model this for the rest of the year?
Oren Shirazi: Our OpEx are pretty much flat. I mean, despite the revenue increase that Russell is talking about, we do not expect to increase those OpEx because they are fixed cost. So I think current level is the level that we’ll take.
Mehdi Hosseini: So just the model’s kind of sluggish going forward.
Oren Shirazi: Yeah. Yeah.
Mehdi Hosseini: Okay. Got it. Thank you for that.
Russell Ellwanger: Thank you for the questions. Appreciate your coverage as well.
Operator: The next question is from Lisa Thompson of Zacks Investment Research. Please go ahead.
Russell Ellwanger: Hey, Lisa.
Lisa Thompson: Hi, there. I do have a couple of questions for you. I was wondering, could you talk a little bit about the electronic market of how your products go into that and what you’re seeing as to what’s going on there?
Russell Ellwanger: I’m sorry. I really couldn’t make out the question. Could you answer it again or question it again, please?
Lisa Thompson: Sure. Could you talk a little bit about the electronic vehicle market and what you’re seeing for your products there?
Russell Ellwanger: Oh! Sure. Thank you. So the biggest market that we serve and have served within the EV is the battery management, which was right now is not as strong as it had been as the overall automotive is not. But that is an area that we serve. We have a new platform, which is a research platform that is gaining a lot of traction for designs for battery management. I think the first protos on that will be happening in the fourth quarter and first quarter, fourth quarter of this year and first quarter of 2025, according to recent customer interactions that I had asked. So the biggest area on the EV that we have is within battery management. Within automotive in general, we have a variety of other activities that we do.
We have another that had been press released over the years. We do radar, Silicon Germanium based radar that was with Denso, Toyota. We have a variety of activities with automatic door openings, spinning mirrors, certain amount of activities with cameras and right now, a lot of activities, be it with electric vehicle or not, dealing with LiDAR. I think I mentioned that in the script. With dealing with Silicon Photonics for FMCW based LiDAR, which has not gone into mass manufacturing yet, but promises to really be that which will take over on autonomous driving for the LiDAR market. So those are the major activities that we have with automotive and specific with electric vehicles. Now, there’s many other products that we serve within automotive as well that comes from having purchased the Maxim facility where the bulk of the long-term contract we have is serving automotive.
That’s very captive within Maxim and the specific applications that are served within there, I really shouldn’t get into because that’s Maxim’s business and not mine. But we serve Maxim on a contract, well, ADI at this point, and that’s predominantly automotive.
Lisa Thompson: So are you seeing demand up, down or sideways?
Russell Ellwanger: I said initially that the automotive demand is weak right now and I reiterated that for battery management, that it’s also down right now.
Lisa Thompson: Okay. And then a question for Oren, could you explain what happened with the taxes this quarter and whether we should still expect it to be about 14% for the full year?
Oren Shirazi: Yeah. The model should be that you should expect, I mean, all in effective rate, whatever you want. The Israeli operations create 7.5%, our taxable at 7.5%, the U.S. at 20%, the Japan at 30%, so you can assume 14% or whatever. For this, from Q2 and beyond, for this quarter, as you see, there was a one-time benefit, which is the base for your question, instead of having an expensive, we had a benefit from some historical accrual reduction. But of course, this cannot be the baseline assumption for the future that we’ll have tax benefits when we have pre-tax income, like in this quarter. So for the future, the assumption should remain the same.
Lisa Thompson: And then just to ask you about the interest and other, at $4 million, that was significantly lower than I was guesstimating just based on interest income. So what do we think about that going forward?
Oren Shirazi: So usually it’s between $4 million per quarter to $7 million per quarter. Last quarter, we had a one-time benefit there in that line from — usually in this line, it’s not only interest, it’s also gains from some sale of machinery or other specific transactions in that line and gains from exchange rate. So this line is not something that is like the OpEx, which I could answer before so that it’s a fixed amount. Usually it’s between $4 million to $7 million. Obviously Q4 of 2023 last quarter, I mean, previous quarter was exceptionally good, but you see that it’s coming back to this level of $4 million to million $7.
Lisa Thompson: Okay. I think, did you have — you had kind of a big exchange rate hit there, didn’t you, this quarter, according to the cash flow?
Oren Shirazi: No. Not exchange rate hit, no.
Lisa Thompson: No. That wasn’t it. Okay. All right.
Oren Shirazi: Actually cash flow it is — we have a cylinder hedging transaction that hedge against any material change in the exchange rate, and actually the exchange rate this quarter, the Israeli exchange rate and the Japanese exchange rate didn’t make any impact, if at all it was a little bit positive. So there was no significance of any material or anything.
Lisa Thompson: Okay. Great. Thank you. That’s all my questions.
