Anirudh Devgan: Yes. Hi, Charles, thanks for the question. Our demand is broad-based, right, across both our semiconductor customers and our system customers. So as we mentioned before, right now, about 45% of our business is coming from system companies. That includes hyperscaler and other kind of system companies. And I’m very cautiously optimistic that this trend is continued for a long time, okay? Because I think some of these trends are a reversible of system companies doing silicon design. They are already having a lot of success. If you look at whether they are social media companies or phone companies or data center companies or car companies, they have multiple design projects in different stages of development. And overall, we see strong design activity on the systems side and on the semi side.
Now there is always some reports here and there. This is not a straight line, right? Some customers may do more. Some customers may do less. But overall, like there will be more and more designs done by system companies. And as you know, the other part of our interaction with system companies is also expanding our portfolio to include System Design & Analysis products, our SDA segment. So we are working with system companies, not just on the silicon side but on the system side, whether it’s 3D-IC or thermal simulation or CFD. And you can see that part of our business is also growing very strongly. So last year, we reported about 27% growth in the system business, which is beyond our traditional EDA business. So overall, I am pretty pleased.
And I think design activity remains very strong, driven by 3-nanometer and other things and the expansion of our portfolio to System Design & Analysis.
Charles Shi: Thank you, Anirudh. Thank you, John.
Operator: Our next question comes from Jason Celino from KeyBanc Capital Markets. Please go ahead. Your line is open.
Jason Celino: Great, thanks and good quarter. When I look at the guidance, 12% to 14% growth to start the year, best growth guidance I’ve seen and you invest last year’s on a much tougher comp. John, any change to philosophy in terms of how you set guidance?
John Wall: That’s a great question, Jason. No, we’ve approached guidance the same way we normally do. Last year, if you recall, we wanted to wait until we had increased visibility into the hardware pipeline, so we were a bit more conservative about the second half for hardware. We’re approaching this year very similarly, but we had €“ we just finished with really, really strong momentum through the year. And the guide, I mean, there is so much of it coming out of backlog, we feel very confident in the year.
Jason Celino: Okay. And then I think you mentioned on the hardware side, you increased capacity. How hard is it to toggle that up and down? I’m just trying to understand what this means in terms of confidence level and pipeline? Thanks.
John Wall: Yes, Jason, it’s €“ we’ve got access to more production capacity now. We have added additional lines to build the hardware. For the last year, we couldn’t build it fast enough. We did ramp up production capacity, I think, 40% last year, but we sold more than that so we didn’t keep up with demand. So we ramped up production capacity again for 2023, and we feel very confident that we have access to the inventory and the components we need to meet that production demand. But also to the extent that we can produce extra systems, we have a number of underserved or unserved customers that want access to our hardware in the cloud. So any excess capacity we can generate or any excess production we can generate, we can put into the cloud for that offering.
