I think that’s the way I view it, what the microLED is going to be. But as I said, I think the timeframe of when will they be commercially ramping up in volume production, I think it’s probably late 2024 to 2025.
Charles Shi: Got it. It sounds like you may lead your customers’ revenue ramp up by a little bit, or that kind of makes sense, right, because wafer — first, you ship the wafer, you recognize revenue, they process the wafer, they recognize their revenue. But thank you very much, Morris and Gary. I hope to catch up more with you soon. Thank you.
Gary Fischer: Thanks, Charles.
Operator: Our next question comes from Matt Bryson with Wedbush.
Matt Bryson: Hey, thanks for taking my questions. First one is, when you look at the three factors you mentioned that’s impacting gross margins, Gary, can you provide some weight as to — or some idea of the weight of each of those factors on the quarter?
Gary Fischer: Well, I would say, the lower revenue is the key part of the story and the product mix wasn’t as good as we expected. So, those are probably the two main things. A little bit of below expectation from the raw material companies, but it’s really more around the substrate business.
Morris Young: But on the other hand, the guidance for Q1 then the major impact of the gross margin coming down, I will probably think is shifting more towards the product mix, because we expect indium phosphide to take a major hit on the inventory correction. So, that will drop significantly. That will impact our gross margin overall.
Gary Fischer: That’s correct.
Matt Bryson: Understood. But then — so when we’re thinking about normal gross margins, if you’re able to return revenues to the level that they had been up, then you’re still looking at the gross margins you were enjoying a quarter or two ago. Is that fair?
Morris Young: Oh, absolutely. I think we — although there are price pressure from customers when business is not looking good, but there’s not a significant — I mean, it’s not a drop of overall margin. Our business is fairly stable and we also increasing our efficiency. We have new joint ventures taking care of the raw material supply. So, we’re confident. And as business return, I think we should be looking forward to mid-30%s and even — yes, high 30%s.
Matt Bryson: No. Understood. I just wanted to make sure it wasn’t more of a — the pricing wasn’t more of a factor, right, because that’d be…
Gary Fischer: No, pricing is not really a — the key factor. Yes, there’s price pressure from time to time, but really the big reason is what I just said. So — and we’re confident that when things rebound, all the stuff that we’ve done for the last two years to improve gross margin, it’s going to blossom again. It’s just taking a pause because of the disruption in the marketplace right now.
Matt Bryson: Understood. And then, I guess, my one other question is, you talked there’s some programs being potentially put on hold at your customers given the more difficult environment, which makes sense. But on the silicon photonics front, are you still seeing progress there? Or anything you can talk about as to how you see that market developing for AXT?
