Greetings. Welcome to Advanced Energy’s Second Quarter 2024 Earnings Call. At this time, all participants will be in listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded. I’ll now turn the conference over to Edwin Mok, Vice President of Strategic Marketing and Investor Relations. Mr. Mok, you may now begin.

Thank you, operator. Good afternoon, everyone. Welcome to Advanced Energy’s second quarter 2024 earnings conference call. With me today are Steve Kelley, our President and CEO; and Paul Oldham, our Executive Vice President and CFO. You can find our earnings press release and presentation on our website at ir.advancedenergy.com. Let me remind you that today’s call contains forward-looking statements. They are subjects to risks and uncertainties that could cause actual results to differ materially and are not guarantees of future performance. Information concerning these risks can be found in our SEC filings. All forward-looking statements are based on management’s estimates as of today, July 30, 2024, and the company assumed no obligation to update them. Any targets beyond the current quarter presented today should not be interpreted as guidance. On today’s call, our financial results are presented on a non-GAAP financial basis unless otherwise specified. Excluded from our non-GAAP results are stock compensation, amortization, acquisition-related costs, facility expansion and related costs, restructuring and asset impairment charges, and unrealized foreign exchange gains or losses. A detailed reconciliation between GAAP and non-GAAP measures can be found in today’s press release. With that, let me pass the call to our President and CEO, Steve Kelley.

Thanks, Edwin. Good afternoon, everyone, and thanks for joining the call. Second quarter revenue and earnings per share exceeded our guidance. Strong demand in the data center market, as well as a pull-in of demand in the semiconductor market, drove sequential revenue growth of 11%. Data center revenue grew 74% sequentially, as we benefited from strong investments in AI. Our high-efficiency, high-power density products are well-suited for AI servers, which require significantly more power than conventional servers. In industrial/medical, revenue was down slightly as customers continued to work through pockets of inventory. However, distribution sell-through of our industrial/medical products increased in the second quarter. Since roughly half of our I&M business goes through the channel, this is an encouraging data point and could indicate that we are close to reaching a bottom in the I&M market. Design activity is extremely robust across our product portfolio. We are working intensively with a wide variety of customers to integrate our precision power products into their leading edge systems. Our healthy design win pipeline is expected to drive profitable revenue growth and share gain as markets recover. To accelerate innovation across multiple markets, we acquired Airity Technologies. Airity is an innovator at high-voltage power with a focus on efficient, high-density gallium nitride-based solutions. Prior to the acquisition, we worked closely with Airity on several joint development projects and feel very good about the technology and talent that Airity brings to Advanced Energy. In operations, we are taking advantage of reduced factory loading to accelerate our consolidation efforts. At the macro level, we are reducing our factory footprint in China, the U.S., and Europe, while upgrading our factories in Malaysia, the Philippines, and Mexico. Overall, we believe our factory actions will enhance operational productivity, lower fixed costs, and improve product quality. The consolidation effort…

Thank you, Steve, and good afternoon, everyone. Second quarter revenue increased 11% sequentially to $365 million, ahead of our guidance of $350 million driven by strengthening demand in the data center computing market and pull forward of demand in semiconductor. Gross margin was up slightly quarter-over-quarter and operating margins improved 270 basis points as we continued to manage our cost structure closely. As a result, we delivered earnings of $0.85 per share above our guidance of $0.73. Overall, 2024 is playing out as we anticipated with full year revenues and earnings expected to be in line with or better than what we communicated last quarter. As Steve mentioned we are leveraging the current environment to accelerate our plans to consolidate our manufacturing sites. We now plan to fully close our last production site in China with final production completing in the first half of 2025. Although this action will result in higher transition costs in 2024, it will enable us to further lower our fixed cost structure and increases our confidence to achieve and sustain gross margins of over 40%. Now, let’s review our financial results in more detail. Total revenue was $365 million, up 11% sequentially, but down 12% year-over-year. Revenue in the semiconductor market was $188 million, up 5% sequentially and 9% over last year. Solid execution to meet customer needs enabled us to deliver results above our guidance. Service revenue was roughly flat from last quarter. Industrial and medical revenue of $79 million, decreased 5% sequentially and 38% from last year’s record levels due to continued inventory destocking at both OEMs and distributors. Data center computing revenue was $73 million, up 74% quarter-over-quarter, and 24% year-over-year, well ahead of our guidance. The upside was mainly driven by a strong demand for AI server power solutions from both…

Thank you. We’ll now be conducting a question-and-answer session. [Operator Instructions] Thank you. And our first question is from the line of Joe Quatrochi with Wells Fargo. Please proceed with your questions.

Yeah, thanks for taking the question, guys. Maybe one on the industrial side or industrial/medical. Can you just talk about your forward visibility and just the visibility and the channel inventory? Based on your guide, it seems like maybe revenue is going to stabilize kind of in this current level, and how do we think about the trajectory beyond that and looking into 2025?

Yeah, Joe, this is Steve. I’d be happy to answer that question. Maybe just go back to Q4 of 2023 that’s when we started to see the correction in industrial/medical. So we’re about 10 months into the correction, and so what we do is we track the inventory and distribution very closely. We track the sell in the distribution. We track the sell through, and then we track inventory. So the good news is inventory is steadily declining in the distributor channel. Resells were up in Q2 after a sharp decline in Q1. And as we look at the trend lines in these metrics, we think that we reach supply/demand balance somewhere in the Q4 2024 or Q1 2025 timeframe. So we’re getting close, and I think it’s a good indicator for us, because roughly half of our I&M business goes through distribution. So that’s what I think. I think 2025 is going to be a decent year based on the fact that we have a very strong design win pipeline in both industrial and medical. And so, I think a lot of those designs are going to ramp into production next year.

Got it. That’s helpful. And as a follow-up, as we’re thinking about the recovery in gross margin as we exit this year, I think in the past you guys talked about kind of a revenue target of $400 million exiting or in 4Q of trying to get back to, I think, 37.5% to 38% gross margin. When we think about the mix of that revenue and the strength, maybe in AI relative to maybe a little bit weaker outlook in an I&M, how do we balance that from a gross margin perspective? Is that revenue level to reach that kind of range of gross margin still the right way to think about it?

Yeah, we commented on this last time, and I think generally that’s right around $400 million were going to be in that range we discussed last time. I think there’s a few variables. Obviously, mix can affect it a little bit. Higher data center or our high volume product revenue would be a little bit negative. Mix for that, we saw that a little bit both this quarter and the reverse of that in Q1. But in general, the gross margin on those products has come up over time, as we’ve implemented our strategy and focused more on the differentiated part of this market. So the impact of mix on our products might be in the 50 to 75 basis point, if you saw something that was heavily balanced one way or the other. So there could be a little headwind from mix around that level. But, I think, we’ll show good progress. The other thing is that we announced, of course, that we’re going to fully close our remaining production site in China, which will be a good thing. It actually allows us to get more fixed costs out of the equation, and it gives us better leverage as markets recover because of that. It will cause a little bit of headwinds, those aren’t significant. But it will cause a little bit of headwinds, because we’ll carry a little extra cost as we ramp up basically other sites to carry that last bit of production that will be coming out of China. So on balance, we expect margins to improve through Q3 and Q4. I think, in general, the model that we gave last time is in the right neighborhood, and there could be some benefits. If semi is a little stronger, we may have a little bit of headwinds. And then depending on where revenue ultimately comes in Q4, I think that could help us or it could be a little lower. In general, we’re on track, we believe, to get to our over 40% gross margins roughly by middle of next year, assuming markets recover as we’ve discussed. All of our sort of factory actions should largely be completed by that time. I think we’ll have a cleaner fixed cost structure, which will give us, again, more leverage as revenues grow from that point and we feel good about the progress that we’re making.

Helpful. Thank you.

Yeah.

Our next question is from the line of Jim Ricchiuti with Needham & Company. Please proceed with your questions.

Hi, thanks. Good afternoon. Question on the data center business. In terms of visibility, how far does it extend? Does it extend beyond Q4? You gave some directional guidance on that.

Yeah, Jim, this is Steve. Yeah, the hyperscale business, it’s interesting, it’s a cyclical business, so we’ve gone through a few of these cycles. And what we’ve seen every time is after a period of inventory digestion, the market is strong for typically 4 to 5 quarters. So, right now, we believe that the momentum in hyperscale will take us through at least Q1, if not Q2, of next year. At the same time, we’re gaining market share in some of these AI applications. So we think hyperscale is going to stay strong, perhaps for most of 2025.

Okay. Thanks, Steve. That win that you highlighted, does that hyperscale customer for that AI design, does that contribute in any place in Q4 or is that more initial revenues and then it scales in early 2025?

I think the best way to view that that win is probably as a replacement for the older technologies that are phasing out. So this is a pretty fast lifecycle market. Typically, these technologies ramp and then decline within the space of a couple of years. But this is an important one, because it’s associated with artificial intelligence. So, typically, we have roughly 50% to 60% more-dollar content in those racks than we do with conventional server racks. So as we move forward, we’re going to see more and more of these AI-type applications in hyperscale. And it’s important for us, because many of our differentiators really come into play as the power levels go up. And the AI servers consume a lot of power. Typically, it’s 3 to 5 times the power consumption of conventional server racks. So our efficiency becomes very important to customers. Our power density, the ability to put a lot more power to roughly the same size box, become extremely important to our customers.

Jim, just quickly, typically, as I said before, as we’re winning these applications, typically better margin than our historical margins in this market. So, I think, it contributes positively.

I appreciate that color both beyond that. Just the final question for me is just on the pull-ins that you alluded to. I don’t know if you can quantify that or, say, whether that which area did that come from memory or any color on some of those pull-ins?

I think we commented that I think there’s kind of a pull across the board from an AI perspective. So I think it’s for some of the applications that would support that. It’s hard for us to assess exactly, the timing of these things, Jim, but we definitely saw some customers accelerate activity into the second quarter. We’ll see the carry through on that. Obviously, we still feel that our semi, by product selling into semi. Overall, we’ll be up in the second half still, despite that pull-in and flattish for the full year. So, we’ll see how that carries through, but definitely we saw some acceleration from a couple of customers.

Okay. Thanks a lot.

Our next question is from the line of Krish Sankar with TD Cowen. Please proceed with your questions.

Yeah. Thanks for taking my question. I had to two quick questions. The first one was for you, Paul. In case you cover the $400 million run rate, I’m kind of curious, so are you willing to underwrite the $400 million run rate in the 4Q and the 37.5% to 38% gross margin you said before. The reason I’m asking is because it seems like a huge step up from the midpoint of September quarter guidance, and it’s so hard to think about the run rate and how it’s far made into calendar 2025 for revenue and gross margin, and then I had two other questions. Thank you.

Yeah, it’s a good question. Last quarter we talked about some estimates for the fourth quarter, largely trying to get to an annual number. We also said at the time it’s hard to handicap each of the quarters other than that we expected each quarter to grow from the previous quarter. So at this point, one, we don’t typically guide more than a quarter out. Secondly, we still feel good about the full year to be the same or better, and we expect Q4 to be higher. How exactly that will play out between Q3 and Q4, I think is a little bit yet to be seen, you know, particularly given the dynamics that Steve discussed in industrial and medical. So I think, again, we feel good about kind of the implications of being around $400 million from a margin perspective. I think the structural elements are there, things that could affect that a little bit plus or minus are going to be mixed, a little bit of headwinds related to higher transition costs related to closing our Shenzhen plant, but that will be a net positive in the long run.

Got it. Thanks for that, Paul. And then, Steve, I’m kind of curious on kind of like the cycle, how do you see the shape of the recovery? Clearly it’s not a D-shaped recovery, yet there’s a lot of optimism on the next year. I’m kind of curious, what do you think of the drivers? And also, is that a way to figure out at what quarter would that infection happen to see the cyclical recovery, or is that really tough to prognosticate?

Yeah, Krish, let me just ask a clarifying question, because you’re kind of coming in and out. Were you talking about AE as a whole, or semiconductor only?

Oh, the semiconductor side of thing.

Okay. Yeah, semiconductor. Okay, so what we’re seeing is a gradual recovery in 2025. I think we’ve been dealing with two issues in semiconductor over the past year-and-a-half. The first is obviously a demand inflection, but the other issue has been inventory. So, I think, the good news is we think we’ve just about worked through the inventory issues downstream, and we think we’ll be completely out of the inventory issues by the end of this year. So 2025 will be fully connected with end customer demand without any inventory influences. What we see in 2025 is an acceleration in the second half in particular, because we believe a lot of these units, these eVoS and eVerest units, we’re shipping into our customer development labs and ultimately into wafer fabs this year. We’re going to see a ramp on those products as early as the second half of next year. And so basically two things together. The first is the market gradually recovering, but we see an acceleration based on our market share gains in plasma power.

Got it. Very helpful, Steve. And then if I just squeeze one last, in the past you’ve spoken about like from a technology standpoint, the opportunity for Advanced Energy in gate all around for conductive edge. Is there a way to sites of opportunity? For example, like your customers have spoken about how much dollar it is for 100,000 data starts a month. Is there a way to kind of figure out what Advanced Energy opportunity is with this gate all around conductive edge for every 100,000 data starts or what other metric you want to use? Thank you.

I wish there was, but right now we don’t have that formula. So what we’re doing is put in full speed ahead of both conductor edge and dielectric edge, because we think our technology now is a good fit for both applications. So we think in the current course and speed that we can increase our share in conductor edge where we’re already the leader. And we also break into dielectric edge in a big way. So that goes from almost nothing to a significant percentage over the next few years.

Thanks, Steve.

Our next question is from the line of Steve Barger with KeyBanc Capital Markets. Please proceed with your question.

Thanks. For the semi equipment guidance, you said flat sequentially in 3Q and a flat year versus 2023. I think that implies 4Q could be down a bit on a year-over-year basis and can you just square that up with the accelerated delivery request in 2Q and the idea that inventory is pretty much out of the channel by year-end?

Yeah, I think, our math shows flattish in Q3 would be an up quarter in Q4 if you just went to a completely flat year. Obviously, we said flattish. With the dynamics in the market, there’s pluses and minuses. If we have a slow recovery, that could be a little bit better. If things push out, we’d still feel good about kind of seeing some growth in the second half of this year. So I think, Steve, just checking that, we feel like it is up half in the second half and Q4 would be higher than Q3 as we see it today, assuming Q3 is flattish with Q2, and another Q2 was higher. So all of that commentary is on a higher base, right?

It’s on a higher base, but it kind of – even if you’re up a little bit in 4Q, it’s kind of a flattish trend in the last 3 quarters of the year, right? So I’m just trying to – but you expect a more linear acceleration in 2025 if I’m hearing you right?

Yeah, I think that’s right. That’s based on a gradual market recovery as different parts of the market recover better in the second half as Steve described, because of kind of the ramp of some of these new technologies. The only thing I’d say, Steve is, look, the one thing we know about this market is that we don’t know. And historically, when the semi market recovers, it recovers quickly and it’s hard to predict the timing of that. So at this point, we’re trying to plan prudently. At the same time, make sure that we have the inventory and people available to respond quickly to customer needs. Frankly, we were able to do that this quarter, because we were prepared and were able to accelerate some shipments in from a couple of customers. So we’ll continue to be prepared and then monitor how the market goes.

Got it. And my follow-up is also for the semiconductor business, but related to industrial. It seems like the message from a lot of the auto and industrial semiconductor companies is that the trough is here in 2Q. Do you think the industrial chip cycle is a good leading or concurrent indicator for the industrial equipment cycle that you’re diversifying into? Or are those two things not really related?

I wouldn’t call it a tight relationship. As I view the market, I think, it’s important to figure out when you went into the supply chain crisis and when you came out of it, right? And then that kind of determines when you reach equilibrium again. And so for us in I&M, industrial/medical, we came out of that supply chain crisis in Q4 last year. So we’re 10 months into it. That’s why I think we’re going to be out of it in Q4 of this year, Q1 of next year. It seems like a reasonable amount of time, and the trends support that thesis. I think in semiconductor, it’s been a year-and-a-half now, right? I think the industry went negative in Q1 of 2023, and so I think we’re seeing a point here towards the end of this year where things will probably turn around again. So I think, like Paul said, it’s a best guess. But it’s based on historical data, it’s based on trends that we’re seeing. And, we’re not that great at forecasting downturns or upturns, but they do tend to be a little sharper both ways than we first estimated.

Understood. Thanks. Our next question is from the line of Mehdi Hosseini with SIG. Please proceed with your question.

Yeah, thanks for taking my question. This is for the team. Trying to understand your readiness and to what extent can you support customers before building backlog again? So if I were to take your guide for semi, which is about $190 million-ish, would you be able to get it back to the prior peak of $270 million without having to accrue backlog? In other words, your ability to maintain a term business for the semi business unit? And I have a follow-up.

Hey, Mehdi, I’ll start, and I think, Paul will finish this one. But in semi, a significant part of our business goes through inventory hubs or just-in-time operations. So we don’t really have much of a backlog, but what we do is we track the size of the bins that our customers specify. And obviously, as their business picks up, they want more from us, they pull more from those inventory hubs. I think in the I&M business, the industrial/medical side, which is not your question, but I’ll make a comment anyway. I think the backlog is more significant. But again, it’s different in the past few years, because the lead times are much shorter today. They’re typically anywhere between 8 to 12 weeks. And in past years, they’ve been up to a year, right. And so, our visibility is pretty short-term in industrial/medical today. So that forces us to make some bets and put some inventory in place so we can react quickly.

Yeah, I think maybe to expand on that, Mehdi, I think the question is how fast is the recovery? If it’s a sharp recovery, then it’s more challenging. Having said that, we’ve invested in strategic inventory, particularly on some of the challenging or long lead parts so that you can respond quickly. And we’ve made sure we’ve kept adequate workforce to respond quickly. So it’ll depend on the pace. Certainly, we have the capacity to be at the prior peak or higher, no question about that. And we’re trying to – the goal is to manage our material strategies so that we can be pretty responsive to changes in demand.

Sure. Thank you. And as you can imagine, we can never predict the shape of the recovery or downturn it was only 2 years ago that your OEM customers couldn’t get enough and then after 2 quarters they couldn’t cut back fast enough and I’m just trying to better understand how you and your OEM partners have been able to capitalize on their learning over the past couple of years to be able to adjust and given the fact that back in SEMICON everybody is positive about the prospect of growth in 2025, but nobody is planning for it and I’m just was trying to determine your readiness. I wonder if you have any follow-up before I move on to my second question.

Yeah, I would say it’s a pretty important topic for us and our customers, right, and we all acknowledge that these upturns are fast and furious essentially. And so what we’ve done is put in place some strategic inventory of piece parts in particular. One thing we do know based on the past few years is which of the piece parts are most problematic, right. The ones we haven’t replaced with alternatives, we’ve taken some insurance in the form of strategic inventory, so we can respond to a quick upside. The second aspect is staffing, so we could have certainly cut back more in our factories given the current loading but we chose not to, because what we see is quite a bit of demand comes in late in the quarter and so we have to flex up typically in the last month-and-a-half of the quarter.

Got it. Thank you for trying. And then, Paul, you talked about some increase in OpEx with 2 to 4 quarter of increase per quarter especially looking to 2025 be reasonable. And then, as a second follow-up to that given this increase in your CapEx this year, I think your CapEx is on target to increase by a couple of million. Should we assume that you’re done with investment, especially the resizing, and next year, your CapEx would actually be down on a year-over-year basis?

Yeah, so on OpEx, I think we said last time we expected OpEx to be up $1 million to $2 million each quarter sequentially through the end of this year. I think it’s consistent with the guide we gave again this quarter. Next year, certainly, we have normal merit in inflation cycles. But in general, our base operating cost structure should stay pretty level. So we’ll have variable costs that go with that, very selective hiring is all, and normal inflation. So that’s a little bit how you should think of it. In general, we expect to grow revenue at half the rate – grow expenses at half the rate of sales growth. Now, if sales grow quite quickly, again, we don’t need to scale up. We can get a lot of leverage out of our expense structure. From a capital perspective, we are running ahead because we’re doing these factory transitions. We’re investing in NPI tools and capability with our new products coming. And we have some infrastructure investments we’re making in systems and tools, as we’ve talked about. So, I think these largely conclude sort of the middle-ish to late next year. So, certainly as you go out in time 12 to 18 months, we’d expect to see our CapEx revert back towards kind of a 2% to 3% rather than a 4% of revenue.

Thank you, guys.

Thank you. [Operator Instructions] Our next question is from the line of Scott Graham with Seaport Research. Please proceed with your question.

Yes. Hey, good afternoon. Thanks for taking the question. Well done quarter. I have several questions and I hope they’re easy and quick, so I can get to all three or four of them. The T&N business, the telecom business, we all know telecom is a weak market, but is that a business where we’re at a level of revenue now where maybe we’re thinking more strategically, it doesn’t make sense? Or are we thinking that there’s going to be a big pop in this thing at some point and we’re going to kind of get back? I mean, the sales of the businesses are more than 40% down. And I’m just kind of wondering what your longer-term thinking on this thing is. Can this pop back up?

Yeah, I think you’ve captured the dynamics pretty well. And for a while, we’ve said that this market isn’t one that has a lot of growth, it’s kind of a sustained business. We did see a pretty big ramp in the last couple of years, big coming out of the supply chain crisis. So it’s down a lot, but it was up a lot. Both of those, I think, were kind of unusual. So it is getting back towards maybe a bottom now and a steady state might be a little higher than this. But look in this market like others, we have some marquee customers, we have some places where we can focus, where we think we make reasonable returns. And all of these markets, they have a lot in common. We share common architecture, common products, common manufacturing. So it’s not something that’s easy to sort of carve out rather we’re able to capitalize on kind of the whole to have a reasonable business. It’s not one we want to grow a lot or think we can because of the market. And, again, focusing on what we think the returns are reasonable. I wouldn’t say we strategically would expect to divest of this product.

Thank you for answering that so succinctly. The data center’s business, Steve, you indicated that it should be up strongly the next couple of quarters. I guess I’m just wondering why not longer, maybe not at the pace of this past quarter, but is it your customer saying something that is giving you a little bit of a tendency do not grow beyond the next couple of quarters? I’m just wondering, because I believe that [every side is staying] [ph] that this market is going to be growing fairly strongly for the next several years, as in 3 to 5 type things. So I’m just wondering why you limited your time to the next couple of quarters.

Yeah, let me just clarify. We think data center is going to be strong into 2025, and I think you’re right, long-term trends are very positive, I mean, more and more data generation, storage, transmission, so it’s nowhere to go but up for time. But this is a cyclical market, and so typically after a digestion period, we should just have exited Q1 of this year. We’re going to have at least 4 to 5 quarters of really strong revenue, and so that’s about as much as we’re willing to forecast right now. But, I think, given the trends towards AI and some of our market share gains in specialty areas within hyperscale, there’s a chance we could sustain this type of revenue level through 2025, but I’m not going to venture right now and, say, that we will for certain.

Okay. Thank you. That was great. I just maybe want to go back and revisit the answer to a previous question, when I think Jim was trying to unbundle the growth in the semiconductor market or somebody else. I’m just curious as to aside from sort of the pull forward that you’re talking about logic versus memory. I mean, any more color you can give in your business, maybe, again, away from that pull forward, why it feels like you’re a little bit more optimistic there?

Yeah, I think it’s difficult for me to add too much to the market commentary that’s already out there. There’s a lot of prognosticators who forecast what’s happening in NAND and DRAM and logic and so forth. But what I can say is that with our new technologies, eVoS and eVerest, and now NavX, which was just introduced earlier this month at SEMICON West. We are working very closely with our customers to secure a tool of record status on the leading edge memory and leading edge logic processes. So this is very, very important. And we mentioned it during the scripted part of the call, but let me just repeat. Today, we have orders for over 200 of these eVoS and eVerest products this year, right? And so, we’re hustling to deliver these products to our customers. And in turn, they’re working with their customers to get these technologies qualified in wafer fabs and in production as soon as the second half of next year. So we see some trends that are very favorable for Advanced Energy. Some of those are connected to market growth next year, but some are independent because it enables us to gain share, particularly in leading edge.

That’s great. Thanks, Steve.

Thank you. Our next question is from the line of Mark Miller with Benchmark. Please proceed with your question.

Just wondering if you can quantify the effect of lower factory loading on your margins.

I think you said lower factory loading. Is that right, Mark?

That’s correct.

Okay. Yeah. What we’ve said, maybe the reverse of that, is that we think that there’s roughly 50 basis points of margin improvement – 100 basis points of margin improvement for roughly every $50 million of incremental revenue. So you could certainly anticipate that on the downside as well. That’s been the biggest contributor. Recently, why we haven’t seen a pickup in margins as material costs got better is because revenues have been lower. So I think that’s the way to think about it, Mark.

And the impression I’ve gotten from the call and the questions is that in terms of semiconductor bookings and backlog, it’s kind of flattish, or is it better than that?

Again, there’s not really a backlog concept in semi, because so many of our customers pull from jet bins, but generally we think that the inventory rationalization, we’re largely through that, and that we’re generally shipping kind of at the demand levels, particularly as we go through the balance of the year. And that this market will bounce around here and should trend up over time. It’s hard to call that in the very near-term, but we feel really good about all these markets have been in a downturn for a while, and we have a great set of new products coming that should accelerate growth as things recover.

Thank you.

Yeah.

Thank you. This will conclude our question-and-answer session. This will also conclude today’s conference. Thank you for your participation. You may disconnect your lines and have a wonderful day.