Operator: Thank you. The next question is a follow-up from Samik Chatterjee with JPMorgan. You may proceed.
Samik Chatterjee: Hey, guys. Thanks for taking the follow-up. I guess my follow-up was more on the industrial weakness that you’re seeing and just trying to think about how to sort of extrapolate back to thinking about the June quarter as well. You are indicating you take a step down on power devices revenue related to that industrial weakness that you’re seeing. But how are you thinking about how long that continues in terms of the weakness? Is there an incremental step down in relation to that weakness you’re seeing based on your current visibility? Just trying to get a sense of, as Mohawk ramps, how do we think about sort of the offsets to that? Thank you.
Gregg Lowe: So, first off, industrial is definitely weak, as we had mentioned last quarter as well. And it is mainly driven by Asia and China, but it’s weak across Europe and US as well. And it’s hard to tell when things are going to get better. But from a planning perspective, we’re not anticipating it getting better this year, this calendar year. So we’re just assuming it’s going to be where it’s at. Now the industrial business is a really good business for us, and it will come back. And what we’re doing in the meantime is we’re ramping Mohawk Valley, which is almost 100% targeted right now at automotive customers. So we will be ramping Mohawk Valley and driving that up. We’re converting as much as practical out of Durham to supply for the automotive customers as well, but we are limited on the Durham footprint from that perspective.
But the good news is eventually, and we’ve all seen the movie, the industrial business will pick back up. And when it does pick back up, we will largely be an automotive outfit out of Mohawk Valley and giving us room then in the Durham facility to continue ramping when the industrial business picks back up. And again, we’ve gotten a lot of design-ins and a lot of design-wins there. It will come back up. That’s a great business for us. We love the customers in that space. And we’ll have ability out of the Durham facilities to handle that.
Neill Reynolds: And Samik, let me just try and help out here from a modeling perspective a little bit. If you go look at just the 2Q revenue, we saw about a 30% increase in the EV-related device kind of revenue. We’ll see that again in 3Q, but that will be offset by weaker industrial energy revenue. You can think about 15% decline 2Q going into 3Q, kind of at the midpoint. So from a modeling perspective, when we think about the Durham revenue, which is primarily industrial and energy revenue, the capacity we’ve talked about is about $90 million to $100 million a quarter. Now that’s going to be lower than that kind of moving forward. You can think about $80 million to $85 million of Durham-based power device revenue coming out over the next several quarters.
So if you put all of those pieces together, we talked about for modeling purposes, materials being in that kind of $90 million to $95 million range per quarter. The Durham Fab, as I just said, in that kind of $80 million to $85 million range as long as the industrial and energy revenue continues to remain down at those levels. Again, as Gregg said, it could come back at some point, likely will. But all of the growth essentially in the immediate term is really going to be from Mohawk Valley. So what you can think of as kind of flattish on materials, flattish on the Durham, output from a device perspective and growth from the $25 million or so midpoint we just saw — in the guidance we gave for 3Q growing above that point as you move out into the future and towards $100 million in the December quarter.
So that’s kind of the way to think about it over the next few quarters.
Operator: Thank you. The next question is from the line of Harsh Kumar with Piper Sandler. You may proceed.
Harsh Kumar: Yeah. Hey, guys. Thanks for letting me ask the question. I actually had two, one for Neill and one for Gregg. Gregg, the first one for you. We get this from a lot of customers where people say, okay, Mohawk is just getting going and it’s going to be really good. But then you are also sort of tied to a German fab, and that would be another project that you would take on. So I wanted to understand your level of commitment to getting into the German facility while you’re still ramping Mohawk. And then, Neill, I’ll just go ahead and ask you my question as well. I wanted to understand the difference in cost, the underutilization cost from Mohawk Valley relative to the JP Siler City costs for start-up. And so is it not fair for me to think that the — you would come out a little bit ahead as you get closer to the September, December time frame because the underutilization costs are significantly more than perhaps the start-up costs at Siler City JP?
Gregg Lowe: Yes, Harsh, thanks for the question. We have received initial notification of funding for the IPCEI process in Europe for the fab in Germany. There’s still a considerable amount of work to be done before we begin construction, and that includes our European Chips Act application approval. There’s regulatory filings around the world, permitting a whole bunch of different things that need to happen. So I wouldn’t anticipate that we would begin construction of that fab until calendar 2025. So in between now and then, our full focus is on Mohawk Valley, ramping that fab. I was up at the fab several times last quarter. I’ll be up there again next week. And we’ve got — we certainly have my full attention, but the whole organization’s attention on doing everything we can to ensure we have a great ramp of that fab.
