John Lee: Yes. I think it’s still muted, Jim. I think you can see the utilization rates of many of our customers. And as you know, that’s driven a lot by smartphones, PCs and servers. And so some of our substrate customers publicly — public companies have been down 30% year-over-year. So when those utilization rates pick up, then as my answer to Krish’s question, we’ll see that chemistry go up. And then as that continues, we’ll see that CapEx investment happening. But right now, HDI CapEx seems still a little muted.
Jim Ricchiuti : Got it. Just a follow-up question. On the Photonics Solutions division, the PSD, we saw some a little bit more of a sequential decline in Q4. I’m trying to understand that a little better. Is that the semi portion of that business may be catching up with some of the weakness you’ve seen in other areas in semi business? Or is it just possibly a case of weakness in some of the other markets that’s overall impacted the Photonics PSD revenue?
John Lee: Yes, that’s a good question. The PSD division, the semi part of PSD, that has continued to be strong as we — as we mentioned in the prepared remarks. And that’s, as you said, is going to be one of the bigger long-term drivers of our outgrowth in market share in WFE because of the exposure to lithography, metrology and inspection. And so the slight downtick in PSD was really some muted demand in research and defense relative to what our expectations were.
Jim Ricchiuti : But that’s not suggestive of any, maybe change in the market in that non-semi evolution of the business? Or do you think it’s — is it more of a timing issue, Joe? Have you seen any change in dynamics in the market?
John Lee: No. In fact, — we — the specialty industrials is made up of many markets, and some can be a little lumpy up and down. But in general, it’s been a pretty steady business. And some of the industrials, for instance, like automotive, have actually been very, very steady. So this particular quarter, we’re just calling out a little bit of research and defense. That was a little lower than our expectations. But the rest of the specialty industrial markets were very steady, actually.
Jim Ricchiuti : Yes. And I just actually segue to the last question about automotive. Are you seeing any impact from all of the headlines we’re seeing in automotive as it relates to the Atotech business?
John Lee: Yes, we see the same things you see a lot of the chip companies, right? That is playing automotive guiding down. But we really haven’t seen that, Jim. It’s been a very steady, steady business throughout the year. And kind of our expectation, at least in Q1 as well.
Operator: And our next question comes from Steve Barger with KeyBanc Capital Markets.
Steve Barger : My first question is related to the cycle. In the past, you’ve talked about how semi and E&P are likely to recover in a similar time frame, but at different magnitudes. Do you still expect a more or less simultaneous recovery? Or is there any scenario where one segment or the other would lag or not participate as the market recovers?
John Lee: Yes. Thanks, Steve. It’s a good question. I think in general, they are correlated. Because if you’re making more chips, you’re going to have to package them. I think — so our view is that they are continuing — going to continue to be correlated. The difference for MKS is that our exposure to semi is really about CapEx and our exposure, most of our exposure to E&P is consumables. So as we talked about earlier in the earlier question, we’ll see that sooner E&P just because of the consumable nature of the business. And then CapEx there would follow as well.
Steve Barger : Right. Got it. And free cash flow has been in the $140 million range in the last couple of quarters. Do you feel like that’s stabilizing to the point where it could be more predictable around these levels as you go through the year and think about working cap and inventory?
Seth Bagshaw: Yes, Steve, this is Seth. I’ll take that question, obviously. So I think the – it’s hard to get cash flow in any one quarter. But the inventory levels, as we talked before, has been really sticky because of the supply chain constraints. So we started to see image level sort of peak in the last quarter, that will be helpful going forward as well. But fundamentally, as you brought – outlined here, at certain revenue levels, which we’re hitting right now, the cash flow becomes quite robust. Q1 is a little more working capital requirements because of variable compensation payments. But Q4, we’re very pleased with cash flow, very strong execution on margins and on OpEx. That continued through 2024 as well. So it’s hard to be exactly cash flow each quarter. But I would expect cash flow to be more robust going forward as the revenues pick up.
Operator: Thank you. I’m showing no further questions at this time. I would now like to turn it back to David Ryzhik for closing remarks.
David Ryzhik : Yes. I’d like to thank everyone for joining the call. And operator, you can close the call.
Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.
