Gary Mobley: Vineet, I want to ask more of a longer-term focused question. China is a very important market in the overall automotive market for sure. And so my question to you is, what sort of investments are you making there in terms of forging relationships with localized foundry partners, back-end partners and whatnot? How are you showing China domestic customers that you’re willing to invest in the market in an effort to win their trust to maintain their business?
Vineet Nargolwala: Gary, thanks for the question. And you’re right, China is incredibly important to us. And actually, in the most recent quarter, we saw some really nice growth in China despite all sort of the macro noise that you hear, which just reinforces the belief we have to be in China to win with the Chinese customers, and we’re really pleased with the progress we’re making. To the question you asked, we are investing in localizing a part of our supply chain in China. We have inked an agreement with local OSAT, and we expect in the next 12 to 18 months, we’ll start shipping from our China partners locally. And we are also working with a foundry partner in China which will take a little bit longer to qualify wafers, but it’s part of the plan.
And so it’s important for us to demonstrate to our Chinese partners and customers that we are indeed investing in the region. Not just for supply chain resilience from their perspective, also to take advantage of economies of scale locally. And so we’re really excited about the progress we’re making, and we’ll continue to update everybody as we make progress.
Operator: Next question comes from Quinn Bolton with Needham & Company.
Nick Doyle: This is Nick Doyle on for Quinn. So sentiment around EV as low, at least in the U.S., I think the China data points continue to be strong. And I understand Allegro is a bit agnostic to EV versus ICE but wanted to get your sense on customer sentiment. What are you seeing from U.S. EV customers? Is there better design activity than the recent data point suggests from guys like Tesla and GM?
Vineet Nargolwala: Yes, Nick, thanks for the question. And so let’s take a step back. I think as you look at emissions and fuel economy regulations globally, the end outcome is pretty clear that all OEMs will have to move towards a pretty high mix of battery electric vehicles or some sort of emissions-free vehicle in order to comply with those regulations. The path there is going to be different for each OEM. Some OEMs are investing completely and totally in battery electric vehicles. Others are taking more of a mixed approach with plug-in hybrids and equal part of their focus and strategy. And as you point out, the positive for Allegro is that we are really agnostic to whether the platform is plug-in hybrid or it’s full battery electric.
Our content is very similar. And it’s about 1.5 to 1.7x that of a pure ICE vehicle. So we’re really pleased regardless of the direction any OEM takes, and we’re ready to support the OEMs and the tiers with a really broad portfolio of magnetic sensing and very targeted power applications. From a design activity standpoint, I would tell you that every OEM is investing significant amounts of capital in R&D into electrifying their fleet. And it’s various degrees of electrification, as I’ve just pointed out. I can’t comment on any specific OEM. But suffice to say that every OEM is working on a bunch of new models, which will hit the market over the next 2 to 3 years. And so I think from a consumer standpoint, it’s going to be a really exciting time because there will be a ton of choice when it comes to battery electric vehicles or plug-in hybrid vehicles at all price points and from every brand.
Nick Doyle: Great. And maybe you could talk about the design win activity in data center, specifically the AI liquid cooling. I think your exposure there was something new. We kind of heard at the start of the year. What is it about your power solutions that enable you to win these AI liquid cooling sockets?
Vineet Nargolwala: Yes. Nick, thanks for the question. So this has been a pivot from our partners that we work with that serve the data center infrastructure market as AI data centers or AI chips are proliferating through data centers. The cooling approach or the cooling solution is much different than a traditional data center. AI chips are larger and they run hotter. And so the power consumption and the heat dissipation is orders of magnitude higher than a regular data center chip. And so just air cooling is not enough. And that’s why a lot of our partners are innovating and coming up with really clever liquid cooling solutions. And so when we look at the data center market, our design win activity through this inventory digestion period, has actually stayed pretty strong.
And now we’re starting to see the first design wins on liquid cooling solutions where essentially our motor drivers are used not just now for fans but also for the pumps that are used to pump the liquid and to make sure that the level and the pressure of the liquid is staying consistent. So really excited about what the potential is here. And I think we’re just getting started.
Operator: Our next question comes from Vijay Rakesh with Mizuho.
Vijay Rakesh: Just Vineet and Derek. Just a quick question here. If you look at your outlook, I think it looks like the key is the inventory destocking, especially on the margin line. As you look at June quarter, do you think [Indiscernible] and OEM inventories get back to normal in that 4- to 6-week range that you talked about?
