Texas Devices Included (NASDAQ:TXN) Morgan Stanley Know-how, Media & Telecom Convention March 7, 2023 12:50 PM ET
Firm Contributors
Joe Moore – Semiconductor Business Analyst
Convention Name Contributors
Dave Pahl – VP, IR
Rafael Lizardi – CFO
Joe Moore
Nice. Welcome again. I am Joe Moore. I am very completely happy to have with us right here at the moment the administration staff of Texas Devices. Rafael Lizardi, CFO; and Dave Pahl who runs Investor Relations.
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So with that out of the way in which, thanks a lot.
Query-and-Reply Session
Q – Joe Moore
I’m wondering if we may spend the primary a part of this speaking in regards to the insights from the Capital Markets Day. Perhaps begin with you are type of growing the long-term development to 10%, what provides you the boldness about that long-term development charge?
Rafael Lizardi
Certain. So on the capital administration name a couple of month in the past, we talked a couple of plan that might allow development of about 10% for the foreseeable future for the following a number of years. And we’re putting in a CapEx plan, now we have put in place a CapEx plan that can help that. What was — provides us the boldness on that’s the growing content material in semiconductor content material analog and embedded particularly, I feel auto and industrial.
That is primary. Quantity two is our place in these markets that now the corporate is more and more extra an auto trade, however roughly two thirds of our income is in auto and industrial. After which the third one is the enter from our clients on the geopolitically reliable capability that now we have put in place, and we proceed to place in place each on the fabs in addition to on the meeting check operations.
Joe Moore
And I assume — I imply one of many issues I respect about TI is, I really feel like that is not a 3-year CAGR from right here. That is extra of a long-term over time. I imply you are not attempting to make a cyclical prediction inside.
Rafael Lizardi
Completely. We do not, proper. The cycles come and go. Actually, we had a really fascinating chart on our capital administration name. I encourage you to go obtain that which exhibits the ups and downs of the cycle, however what’s fairly constant is the long-term development, and we imagine that is going to proceed.
Joe Moore
Nice. After which to help that larger development, you are speaking about capital spending that strikes larger from the prior 12 months’s name, $3.5 billion to $5 billion a 12 months now. I do not see there’s advantages from that you simply talked to, however possibly you may type of stroll us by way of a few of these advantages after which speak about what drives you to try this at this level?
Rafael Lizardi
Sure, certain. So our plan places our CapEx at about $5 billion per 12 months for the following 4 years, and that’s up from roughly $3.5 billion final 12 months. However now the distinction is we, luckily, Congress handed the chipset, which we do applaud as a great step to place the USA on a fair taking part in area as a result of a lot of these sort of incentive or provide in lots of nations all over the world.
So roughly talking, we anticipate about $1 billion offset per 12 months. In order that $5 billion, we basically will get about — that $5 billion will probably be decreased to a internet $Four billion.
However that is — there is a time offset to that, proper? The money truly is available in about one 12 months, one and half years later. And the end in depreciation it is about the identical then as what we informed you final 12 months regardless of the upper CapEx. However after all, you get that with now a lot larger income enablement.
Joe Moore
Sure. I would love to come back again to the chip’s [indiscernible] of this. However I feel guess what informs the technique? I imply, you come out of a two-year interval the place the shortages have been fairly important, not simply TI, however all people within the trade. And now you can exit with a message of provide chain certainty. How a lot does this issue into this? And it looks as if that is a message that is going to resonate with clients.
Rafael Lizardi
Just a few angles on that. And Dave, if you wish to touch upon that, however we put collectively this CapEx plan with the long-term development in thoughts. Clearly, the pandemic and the tightness considered some issues that we’re attempting to implement so far as our order success technique and our stock technique, which we talked about on the capital administration, and we will take stock larger.
And that is as a result of our enterprise mannequin permits us to given the character of our elements, catalog in nature, off the shelf, so to talk, lengthy lasting numerous place. So it is fairly low danger. In order that mixed with our expectations from development and it permits us to place this plan in place to help that development over time.
Dave Pahl
Sure. And I’d add, as we went by way of the pandemic and had these shortages. There’s a variety of Boards asking their CEOs to have a look at the resiliency of their provide chain. So actually, for the primary time at very excessive ranges at our clients, they’re wanting the place merchandise — who they’re shopping for merchandise from, what their wants will probably be in 5 years, 10 years, 20 years, after which even into the place these merchandise are sourced.
And as they do this, they discover out that in some instances, it is likely to be 50%. In some instances, it might be 70% of their product is sourced both in Taiwan or China. And when that will get reported to the Board with the geopolitical tensions we have had, they’ve mentioned, okay, what’s our plan long term to cut back that dependency.
So after they have a look at our footprint and see the place our factories are at the moment after which they have a look at the place the additions are going, they actually like that. They wish to align their highway maps and their groups to what we’re doing. So if we have had hundred of these, we have had a whole bunch of these kinds of discussions with clients.
Joe Moore
Sure, we have seen that consciousness as nicely, however the greatest OEMs are far more conscious of the place these items are being constructed than we have ever seen earlier than. I am sorry about that.
Rafael Lizardi
Properly, I simply wish to make clear one thing again on the chips Act. The numbers I gave you had been for the ITC, the Funding Tax Credit score. And that is the half that’s basically nondiscretionary so long as, clearly, you observe what’s within the regulation. And it qualifies that we’re not accounting or — for something for the grant facet of that.
And the grant is what you hear about within the information, particularly within the final couple of weeks. We’ll aggressively apply for a lot of tasks on that entrance, however we’re not relying on that but. We’ll see what we get after which no matter we get then we’ll implement it’ll embody it.
Joe Moore
Perhaps following up on that time. So — as a result of I’ve gotten some pushback on our modeling of this. So the $500 million of incremental depreciation totally comprehends the tax credit score advantage of the CapEx, however nothing from the grant facet, proper?
So something grant-wise could be incremental to that. After which are you able to — how does that grant course of work that is going to be on a project-by-project foundation? And what’s the timeframe of creating a willpower round that?
Rafael Lizardi
Sure. So the rules simply got here out final week, extra particular tips on that. If I recall accurately for our mature — so excessive degree is about $40 billion that the Division of Commerce could be allocating. Roughly $10 billion of that’s anticipated to go to mature know-how. So the place we play basically. The 45 to — I feel they outline it 28 nanometers and above.
However we’re largely within the 45 to 130 nanometers. They’ve a protracted record of standards that — a few of it’s type of necessary. In case you do not do that, you do not — you are not eligible. Many is extra preferential relying on what you decide to do you then’ll have a desire to get a few of the cash or not.
Every challenge can rise up to $Three billion project-by-project foundation. And sure, we’ll be [indiscernible] applied sciences, I imagine the window opens in Might the purposes the pre-application due within the subsequent few weeks. After which someday in Might, we’ll get to submit the complete utility, after which we’ll hear someday after that.
Joe Moore
Okay. And it looks as if a variety of the media focus has been round 2-nanometer superior know-how and issues like that. However a variety of the client focus is admittedly on the nodes that you simply serve. I imply the purchasers who’re most going by way of the method that you simply articulated, Dave, that they are going by way of and their whole provide chain and ensuring that it is derived from the best location, that appears to be extra of an automotive industrial phenomenon than different markets.
Rafael Lizardi
That is right. And naturally, the low nanometer know-how that is essential, and so they energy very superior chips, however you can not use these chips with out the whole lot that goes round these, which is a variety of what we offer with analog and embedded and significantly in automotive and industrial. There are a lot of capabilities and gadgets that do not use the extra superior know-how in any respect and depend on the type of embedded and analog applied sciences to operate.
Joe Moore
Okay. Nice. How does the cycle play into this, if in any respect? I imply, do you have a look at that $5 billion as that is the quantity for the following few years? Is there the potential to make a cyclical adjustment? How do you concentrate on that?
Rafael Lizardi
That is the quantity for the following few years.
Joe Moore
Okay.
Dave Pahl
And I’d add, Rafael pointed to it, however in our capital administration slide deck, we confirmed semiconductor unit shipments over the past 30, I feel it was. And you may see cycles, and we mark type of the height of every of these cycles. And we record what number of months in between these peaks on the slide.
After which we simply took the mathematical common. And the mathematical common is 40 months. So should you name that roughly round 4 years and the variability, as you already know, we have been following it so long as now we have is kind of extensive. But when you decided at the moment to construct a fab the time for the primary wafers to come back out is that lengthy or maybe longer, relying on how fast of a head begin you could have on it. So the funding cycle is longer than what the standard or common cycle you’d see in semiconductor.
So you actually must be planning for that grey line that we present on that chart, the development line over time as a result of should you attempt to time that, you will be both too early or late should you’re attempting to queue it on — attempting to select the following peak.
Joe Moore
After which I feel — that is useful. After which as you concentrate on your price construction popping out of those amenities, sponsored CapEx is sweet, larger 300-millimeter combine is sweet. However you are additionally — should you’re competing with firms which can be fabless, there could possibly be all types of foundry wafer pricing dynamics which can be transferring round over time. It seems like your view is that, that can kind itself out over time. And the most effective factor you are able to do is management your personal price construction. Is that proper?
Rafael Lizardi
Sure. So a few issues on that. And we may argue at infinitum on this one and what mannequin makes extra sense. However we just like the management of our personal future and our clients like that. B, we like that to be in a geopolitically reliable location the place we reduce or remove any potential disruptions from any points that will have on the geopolitical degree.
And the final one is the foundry mannequin depends on basically one participant, possibly two or three gamers which can be — have a lot of the market share on that, and that’s simply not a great place to be should you’re the client of these firms.
Joe Moore
Okay. Nice. After which final query on this, the numerous deal with home capability. What about European markets? Is not that an space the place they could have the identical preferential remedy for fabs in Europe? And the way do you concentrate on these sorts of dynamics?
Rafael Lizardi
Proper now, now we have only a nice heart of excellence in the USA, in Texas, specifically, but in addition now in Utah, the place we purchased a manufacturing facility about 1.5 years in the past. That may be a barely completely different know-how, the 45-, 65-nanometer. And there, we introduced a second manufacturing facility in Utah. So we purchased one, and we simply introduced. And it is embedded within the plan that we talked about on the CapEx entrance.
However a second manufacturing facility there, each of these 300-nanometer. And in Dallas — within the Dallas space in North Texas, now we have our Fab1 and Fab2 along with the older factories. And now we’re constructing in Sherman, the place we will have factories there. We’re constructing the primary concurrently, and we’ll equip the primary one.
In order that’s only a excellent place to have factories. The city, the cities which have been very embracing, have been very supportive. We’re getting the incentives. And by the way in which, Texas can be an excellent place for electrical energy and the labor provide and the technology-focused people who now we have there may be additionally improbable.
Joe Moore
After which I imply the softball query, you’d respect these in 5 years, what is the helpful life of those amenities?
Rafael Lizardi
For much longer than 5. Sure, and it varies relying on the kind of software, however we — on the fab degree, which, after all, they do not — a fab would not maintain the identical instruments all through its life, however now we have fabs which can be 50 years outdated and plenty of of these instruments are — have been there for some time.
Joe Moore
Sure. Okay. Nice. Perhaps we may shift to speak a bit of bit in regards to the near-term atmosphere. Are you able to simply give us an replace? You have seen your lead occasions come down a bit of bit. You have seen income weak spot. Perhaps a bit of bit extra at TI than different locations. Are you able to simply discuss typically to that?
Dave Pahl
Sure. And so have not up to date from our final earnings launch, and we’ll end the quarter up and report that out. However I feel extra broadly, we noticed all our markets start to weaken apart from auto that was our expectation for this quarter. I would say typically, while you have a look at our merchandise, and now we have 80,000 plus merchandise. In case you depend in SKUs, it is likely to be 4, 5x that quantity.
However typically, the lead occasions have remained secure, 12 weeks or much less. We’ve many friends which can be at 52 weeks or longer, and a few of them are making progress on it. As well as, now we have ti.com, the place we have tens of 1000’s of merchandise which can be obtainable for quick cargo. And we are able to ship in most locations the following day, all over the world. And in some locations.
Joe Moore
24-hour lead occasions.
Dave Pahl
Sure. Sure. Sure. That is proper. And in some locations, we ship 3 times a day. So order it within the morning and get it within the afternoon. So we’re transferring to a replenishment mannequin the place we’ll have stock of product, the perfect state of affairs that we wish to transfer to is we have all product that is instantly obtainable by way of ti.com. Clients can place orders on a backlog at lead time or give us visibility by way of consignment applications.
However that is the mannequin that we’re working to and clients actually respect that mannequin. And it will likely be fascinating, however that channel of ti.com, I feel, will probably be growing significance sooner or later.
Joe Moore
Nice. And I feel while you — one of many issues we’re studying about this atmosphere is how completely different firms react to those circumstances. It looks as if I’d summarize TI as being pretty proactive about ensuring that your inventories are lean, ensuring that you simply’re not holding anybody to backlog that they do not — product that they do not need issues like that. Are you able to simply discuss to that philosophy a bit of bit?
Rafael Lizardi
Sure. So it begins with our enterprise mannequin as a result of our elements are — we name them catalog, however consider off the shelf, proper? So anyone can simply design them of their product. They don’t seem to be constructed particularly for any buyer and even an utility. And so they final for a very long time, each in stock, on the shelf because it’s ready to ship but in addition the product life cycle.
So a buyer could design it in and personal a thermostat and that very same thermostat will promote for a few years and even the [indiscernible] of the thermostat will use the identical — a few of the similar half. So then — and when you could have 5, 10, 20 clients shopping for these elements, even when a few of these clients cease utilizing them, you will nonetheless have many shoppers, places ready the place we are able to construct stock forward of time, have it on the cabinets that permits higher buyer satisfaction and shorter lead occasions.
Joe Moore
Nice. And I feel a variety of us that reside our lives tactically from quarter-to-quarter, ask a variety of questions on deviations and development. I really feel like over a few years, it evens out and also you had a really robust relative 12 months in 2021. while you add stock and different individuals did not. Do you suppose that is the — I imply, do you care about what the rationale is? Or are you centered extra simply on your small business? And simply how do you guys take into consideration market share over the longer haul?
Dave Pahl
Sure. I feel as you described within the quick interval, even a few years, there’s a variety of issues that can put noise into the system, particularly as we have gone by way of the final two years with the pandemic and as demand has shifted round. However should you do have a look at share beneficial properties over an extended time period, and we have been gaining most likely 30 or 40 foundation factors while you have a look at a 3 or 5, 10 or 15 12 months.
And our confidence in our skill to proceed to achieve shares most likely by no means been larger. And our aggressive benefits that we have been speaking about now for fairly a while as we have invested and strengthened them. They had been essential earlier than, however I feel that they are actually delivering tangible outcomes.
So that does not imply, I feel, due to the standard of the markets, that is not going to be an enormous inflection in market share beneficial properties, and we’re not relying on that. We would prefer it to develop quicker. However I feel simply the standard of the markets, the share simply would not transfer in a short time within the close to time period.
Joe Moore
Okay. Nice. After which when it comes to the demand by finish market, you have type of seen probably the most weak spot possibly within the Private Electronics market. You have talked about probably the most power most likely in automotive, however you have you appear extra cautious on automotive than a few of your friends in [indiscernible] we will undergo the identical correction there. Are you able to discuss to that view? And is it potential that automotive simply stays robust by way of the cycle as a result of there’s that a lot content material development for all the explanations that you have articulated, that is a goal market?
Dave Pahl
Certain. Sure, I am going to remark. Rafael, do you wish to add something? I’d simply say that is still robust out of the realm of prospects, it may simply from our expertise and having accomplished this for a number of a long time that when you could have shortages, clients construct stock to guard themselves, if they simply cease constructing stock, that is going to decrease demand, proper? So we noticed that occur in first in private Electronics that has now moved into different markets.
And our expectation could be, sooner or later, I do not know if it is in 1 / 4 two or three or 4 quarters of weak spot in automotive, however the longer-term development in automotive stays extraordinarily strong. And our confidence in additional content material per automobile growing within the subsequent decade, the speed of EV adoption, we imagine will probably be quicker than the earlier decade. So what occurs within the quick time period, we can’t have direct management over, however we are able to deal with that longer-term development line, and we all know it should be actually stable.
Joe Moore
The client mindset in the direction of stock in these markets principally due to the character of those companies, long-life merchandise, Zero obsolescence danger, not a lot worth danger over time. Why should not clients make that very same resolution? Having wrestled with shortages for 2 years, it looks as if an inexpensive factor for them to be constructing a variety of security stock to verify this does not occur once more.
And a few of them have articulated that they’re — like how do you guys take care of that? Do you lean into that? Do you presumably in the event that they wish to construct it, you allow them to, however how do you keep on prime of the traits when that is occurring?
Rafael Lizardi
Sure. Appropriate. I imply, bear in mind, now we have 100,000 completely different clients. And for a few of these, we do have info of what they maintain in — on a consignment foundation due to our ebook. However for many of them, we do not. And so they no matter and in the event that they wish to maintain stock, we’re not going to cease them. However we — it’s extra environment friendly as an ecosystem for us to have it. However no matter they wish to do, they’re going to do it. And we’ll even have our stock for the explanations I talked.
Joe Moore
I imply, finally, in the event that they really feel snug that they will get it and so they do not want maintain.
Rafael Lizardi
We predict over time, they really feel snug, proper? It could be higher for everyone if we maintain it, however…
Joe Moore
Sure. And possibly…
Dave Pahl
And Joe, I’d simply add that as clients look to enhance the resiliency of their provide chain. One possibility is to hold extra stock, however that is fairly tactical in close to time period. As we talked about earlier, the CEOs of the businesses are wanting on the provide chain. And should you consider it in actual buyer or an automotive buyer, an OEM, they don’t seem to be most — they don’t seem to be making the choices on our merchandise.
It is the Tier 1, the Tier 2, the Tier 3s the frontline engineers are making these selections. And for probably the most half, they have not been concerned while you’re the OEM. And so they examine that offer chain, and now we have, in most automobiles, 300 completely different or 400 completely different SKUs. And we have EVs that we have over 1,000 completely different SKUs that we’ll promote into. And so they’re shocked.
They did not know that we had that many elements of their cars. So after they have a look at that resiliency, it is extra than simply stock. It is the place is it going to be sourced? The place are the applied sciences that they’ll want for the following 5 and 10 years and be sure that they have some affect in who’s selecting these elements and what resolution matrix they’re utilizing to make them. And that is completely different at the moment than it was 5 years in the past.
Rafael Lizardi
And that is a improbable level as a result of a buyer could resolve, okay, I am going to maintain a 12 months’s value of stock, which might be fairly onerous to start with, they do this throughout their provide base. However on the finish of the day, there is a important disruption, a 12 months will not be sufficient, proper? If they do not have it — their suppliers do not have a great enterprise continuity plan. They do not have good alternate sources. They don’t seem to be in geopolitically reliable location. So that’s the place our broader technique is available in apart from you extra stock charge.
Joe Moore
Properly, we noticed that to some extent along with your technique within the sense of I believed constructing that stock would imply that you’d have sufficient for any atmosphere. After which all of a sudden we’re in an atmosphere the place you continue to do not have sufficient. And the CapEx most likely results in extra conviction that you simply will not run into that state of affairs.
Rafael Lizardi
Appropriate. Identical factor, proper, holding extra stock solely will get you up to now proper? And the CapEx having capability forward of demand takes you the remainder of the way in which.
Joe Moore
Nice. So I am going to ask yet another query after which we’ll open it as much as the viewers in case there’s some. Are you able to speak about your strategy to distribution. Dave, you talked about ti.com, however you guys have type of alongside the same vein of rethinking your small business mannequin, are we excited about let’s optimize issues. You guys have type of moved in some instances, away from distribution extra in the direction of a direct relationship with all sizes of shoppers. Are you able to speak about that thought course of and the way that is going?
Dave Pahl
Sure, I am going to begin off. We put collectively a staff in 2019, and you already know that we have been investing in ti.com for nicely over a decade now in demand creation. However in 2019, we put a staff in place to have a look at bringing extra clients direct. I feel in 2020, we had — 2019, if return to that, we had three of our income going by way of distribution, one third of it direct as we executed that program to convey extra clients straight.
Final 12 months, we now had 70% of our revenues direct. And our Head of Gross sales has described a lot of clients that wish to go direct as down the road and across the nook lined up. And it is actually simply our IT’s staff skill to convey these clients in so we are able to do alternate of invoicing and orders and people kinds of issues direct. So we will put some methods in place that makes that course of simpler, that will probably be extra self-served by clients and their skill to come back direct.
And operations groups that our clients have numerous considerations, however the quantity — prime few considerations is what’s pricing and what’s availability. And we have already talked about a bit of little bit of we have lengthy believed that proudly owning and controlling our stock within the channel and at clients is a strategic worth.
So we have the most effective availability, and we simply have structurally the bottom price. And so these two issues, I feel, are — particularly as we have gone by way of shortages, having that directation and visibility of the place product is and the shortages are the place we have to focus to shut these. They’re simply going to get higher info in the event that they’re dealing straight with us.
In order that’s proper the place we’re. And simply strategically being engaged with clients, this offers us higher perception, higher information of the applications which can be working, and we do not have a 3rd occasion between us and people clients. We simply suppose long run, that is going to result in share beneficial properties.
Joe Moore
And your opponents are doing what I’d do of their state of affairs, which is saying the distribution will now be serving to us. How do you be sure that — I really feel like a variety of the preliminary demand creation occurs two or three years earlier than any enterprise individuals truly become involved in a lot of these elements. How do you just be sure you’re nonetheless getting your elements in entrance of the designers on the time that they should do their designs?
Dave Pahl
Sure, it is actually investments we have made over time in ti.com, and we get near 100 million classes with our clients close to a 12 months. These classes vary in three to 4 minutes in time. So that is engineers coming after they’re doing designs, going by way of the method of selecting elements. And we are able to use that info to make that engineer’s time productive in order that we all know inside a click on or two what system they’re growing.
Our portfolio goes from tens of 1000’s of merchandise all the way down to a few dozen. We all know that engineers are going to be interested by. And the aim is to make their time as productive as potential, but in addition to get as many elements in entrance of them and the best reference designs and knowledge. So we have been doing that for a nicely over a decade now. We have got a variety of expertise doing it. And that is how we be sure that we had been in entrance of these clients.
Joe Moore
Let’s examine if there is a query from the viewers. Over right here.
UnidentifiedAnalyst
You guys already know this market at the moment with two bond offers in 12 months in 30 years. I used to be questioning if there’s been any modifications in your excited about capital construction or leverage targets, given the excessive charge atmosphere we’re in proper now?
Rafael Lizardi
Sure. No. In relation to debt, we — our aims haven’t modified, and that’s — that could be a useful gizmo to enrich our working money and the economics make sense. And there is two angles to the 2 sides of the financial. Clearly, the fee is one and rates of interest have clearly gone up. Nevertheless it’s nonetheless — within the large scheme of issues, it is nonetheless a comparatively whole lot.
And the opposite facet of that’s what we will use that money circulate, proper? And now we have ample money on the steadiness sheet. We completed final quarter at $9 point-some billion, $9.7 billion, I imagine $1 billion, which is the ample money for our enterprise, however we wish to maintain that manner. And that’s as a result of within the subsequent three or 4 years, now we have CapEx coming as we talked about. And we’re additionally going by way of a cycle and doubtlessly a recession.
So a part of controlling our personal future is to have ample money in order that we are able to proceed to guard it. And that begins with our working money which could be very robust. Then the money on our steadiness sheet, which, once more, very robust. However then we complement that additionally with that as that is smart.
UnidentifiedAnalyst
I’ve two fast questions. The primary one is, most of your Asian opponents would inform us that thank goodness TI cares about margins, in any other case, they would not survive. In order you guys fill out extra capability, what do you concentrate on utilizing pricing extra strategically maybe to curb the competitors from Asia?
Rafael Lizardi
Sure. I am going to offer you my take, and Dave, you wish to chime in, however a few angles to that. One, the kind of elements that we run, despite the fact that they’re off the shelf, as I mentioned earlier, in catalog and so they have potential replacements, however for probably the most half, they don’t seem to be dropping replacements, proper? You want one thing else to alter on the board, stored — barely completely different capability or resistor, barely completely different board.
In case you push it, you may make the change, but it surely’s from a buyer standpoint, it is funding in R&D, it takes time, you bought to respin the board, you bought to qualify. So it isn’t — it is easy, I drop costs and a sudden going to get all this demand as a result of clients — and bear in mind, our common promoting worth is within the — it is lower than $1 — $0.50, lower than that.
So clients should not going to alter a bunch of stuff simply so that you simply transfer — in order that they will save a couple of pennies. That is one angle to the query. However the different angle although, is there are some areas of the market, Private Electronics, for instance, the place pricing makes a distinction within the preliminary means of designing the half.
So should you’re promoting a thermostat or a cellphone — nicely, let me stick to Private Electronics, a low-end cellphone, a couple of pennies right here and there, a couple of pennies there make a distinction. So our price place is nice for that as a result of now we have a 300 millimeter, now we have on the ATE entrance, we’re very environment friendly. So we are able to design elements which can be naked bones, let’s name it, only for these kinds of finish markets, so we are able to compete on that. We do compete on that. So we’ll be sure that we possibly give them a bit of extra for his or her cash on that entrance.
Joe Moore
Nice. Properly, Dave and Refael sadly, we’re out of time. Thanks a lot.
Dave Pahl
Okay. Thanks.