Paul Oldham: Yes. So that’s right. We would be exiting the year based on what we said in our prepared comments, somewhere between 37.5% and 38% gross margins. As we get then into 2025 or are the other things, there are still more activities on the factory consolidation front. I think that the full benefit of that certainly bleeds into the first half of 2025 as we execute our plans over the course of full course of 2024. I think that’s another 100 basis points that could come through for sure. I think the second thing is we start to see more benefit from our shift in mix as we have more sole-source products. That could add another 50 or more basis points. Over time, over a couple of years, we think that could be as much as another 150 or 200 basis points in total.
But certainly, I think in the in the early 2025 range. I think there’s easily 50 basis points in better mix and sole-source products there. And the last thing is we — while this year has got a bit of a front-end air pocket, as Steve said, I think it exits back on a rate that’s increasing. And I think generally, the market views 25 as a pretty strong year, which we’ll benefit from irregardless of our new products, the channel investments and everything else. Those will be accelerators. And so that’s why we look into 2025, we think that will be a strong year. And as we said, if we can get back to $450 million, roughly mid-$400 million range, that’s going to yield just with the volume impact margins in the — around 40%. So we feel pretty good about that when you look out in time because of the work we’re doing now, the setup of things we can control in terms of managing our cost structure, getting that where we’d like it, getting the foundation for gross margin in place, the investments in new products and opportunity to gain share of the investments in channel.
We think all of that positions us well to see really nice earnings growth as we go into 2025. And look, that mid-$400 million, as I said earlier, is an even peak revenue for us from the last up cycle. So if you ran that out to a peak revenue level, I think we’d be well in excess of 40% gross margins.
Duksang Jang: Thank you.
Operator: Thank you. Our final question today is from the line of Mark Miller with Benchmark. Please proceed with your question.
Mark Miller: I’m just wondering if you’re seeing any impact of the slowing in EV sales, especially at second-tier foundries.
Steve Kelley: Your question, Mark, was whether we’re seeing any impact in the slowing of EV sales. We really have very little direct exposure to that market. There’s some indirect exposure through our work with IC makers who are building silicon carbide chips and power MOSFETs and so forth. But at this point, we haven’t seen any meaningful impact.
Mark Miller: And what about the funding by the U.S., Europe and Japan for internal chip production. Is that going to become a driver in 2025?
Steve Kelley: I think it will, Mark. Obviously, that benefits our customers or the equipment customers. And anything that benefits them ultimately benefits us. So we think building these geographical ecosystems is a good thing for the industry, and it will be a good thing for us.
Mark Miller: Thank you.
Operator: Thank you. Ladies and gentlemen, this concludes our question-and-answer session and will also conclude today’s conference. You may now disconnect your lines at this time, and we thank you for your participation. Have a wonderful day.
