James Anderson: Thanks, Melissa. We don’t really provide guidance at that level of granularity, but we did see, but a little bit of additional color that might be helpful. We did see within communications and computing in Q4, although it was sequentially down as I mentioned in the prepared remarks. We did see computing go up sequentially from Q3 to Q4. It was communications that drove that overall segment down sequentially. And yes, one of the benefits that we’ll see in 2024 is that the new generation of servers that’s ramping now that we have a significantly higher level of dollars of content per server on a new generation that we did in the prior generation. That’s about 50% more dollars of content per server. So even if the units remained exactly flat on a year-over-year basis, we would expect to still see growth in the server — data center server segment because of that higher level of content.
So as that new generation of servers becomes a higher percentage of the overall server shipments throughout this year as it ramps, that’s certainly a benefit to us throughout the year.
Melissa Weathers: I guess for my follow-up, I wanted to follow-up on your Developers Conference that you had in December. Can you talk either anecdotally or qualitatively about that event and the kind of customer engagement that it brought on? What was the interest levels? And did it drive enthusiasm towards the line? Just any takeaways from that event that you guys want to share?
James Anderson: Thanks, Melissa. Actually, thanks for asking. We were really excited about the Developers Conference. That was actually Lattice’s first developers conference we had ever done. And I was really pleased with the results. We had over 5,000 registrations. We had 35 different sessions. We had 40 different technology demonstrations. Those were not just Lattice demonstrations, but demonstrations from a lot of our partners. We had great keynotes from our customers and partners like BMW, Meta and NVIDIA as well. Actually, the best part of the conference from my perspective was not just the partner and the customer activity that it generated, but we also launched the two newest device families based on our Avant platform for mid-range FPGAs. So that was Avant-G and the X.
And so we exited last year with three different Avant device families in the hands of customers, the E, the G and the X, and generated initial revenue from Avant before the end of last year as well. And so what’s really exciting about that is that’s the beginning of the Avant revenue ramp. And as you might recall, Avant doubles our addressable market. It creates an entirely new revenue stream for the company. It’s additive to the existing revenue streams. It doesn’t cannibalize the existing small FPGA revenue streams in any way. And so that was one of the best parts of the Developers conference is the launching of G and X versions of Avant, which we believe will start to generate revenue before the end of this year. And there was certainly a lot of customer excitement and activity around that.
But yes, overall, we viewed the event as a tremendous success and we expect to do another Developers Conference later this year.
Operator: Our next question comes from the line of Tristan Gerra with Baird.
Tristan Gerra: Looking at your gross margin guidance, 69% is the first sequential decline since Q4 ’19. Obviously, still a very healthy level. What is driving the decline? Is it more mix related? But it shouldn’t be because communication, as I would recall, tends to be lower margin, and industrial seems to be still fairly resilient. So is there some other component mix that I’m not seeing that is impacting gross margin? And how much of this could be pricing related?
Sherri Luther: Thanks, Tristan, for the question. So from a gross margin perspective, a couple of things, let me say first is that. For 2023, our full year gross margin at 70.4%, another record year for us. So we’re really pleased with those results. In Q4, that sequential decline, we mentioned that, that was a little bit due to mix, the 20 basis point decline. And so then more specifically to your question, the 69% at the midpoint, it’s two things. It’s mix, the majority of it is mix, and then the rest of it is a little bit from lower absorption. So when we talk about mix, industrial and automotive, that’s typically our highest gross margin segment. And so when we see softness there, certainly, we see that impact in gross margin.
And so — but we’re seeing it in terms of the softness industrial and automotive and communications, all of the softness in Q1 that Jim mentioned, being offset a little bit by the compute side of things. So industrial and automotive would have the higher gross margin, and that’s where you’d see the impact in mix coming down sequentially in Q1. The other thing, just to complete that thought on gross margin is that when you look back it’s about like going into our sixth year of our gross margin expansion strategy. So since that time, we’ve increased our gross margin by almost about 1,400 basis points. And so gross margin continues to be an area of focus for us, and we’ll continue to focus on that to our long-term target model that we put out last year at the low 70s.
