Craig Ellis: That’s real helpful, thank you. And then I’ll follow up with Emeka on a couple of clarifications. So Emeka, can you just help us understand how we compare the prior $50 million Sierra-related synergies target with $100 million in expense reduction that Paul just mentioned? And then with respect to the gross margin color, what are the biggest changes that have occurred from where we were expecting 100 basis points to 150 basis points of expansion through the year or two flattish from here? Thank you.
Emeka Chukwu: Hi, Craig. I think so with regards to the synergies I think the last time I gave a number for the synergies, I said it was about $50 million that we were expecting. I think we are doing a little bit better than that now. I don’t have an exact number, but we are doing a little bit better than that. And then in addition to some of the other actions that Paul has already taken when the company that is how we are getting to a $100 million reduction from a pro forma number. With regards to gross margin, is actually very simple. We are seeing the benefit of the mix of a higher mix of the IC component revenues that is good for gross margin. However, when the guidance was initially discussed, Craig the expectations was that the revenue levels will be much higher and we will be able to improve the utilization of our manufacturing business and stuff like that.
So right now we have a lot of fixed manufacturing overhead, that we are not able to absorb and that is the primary reason for coming off of the previously expectation that was set for about 100 basis points and 150 basis points in gross margin improvement.
Craig Ellis: That’s helpful. If I could just sneak one more in for Paul. Paul, you commented in your prepared remarks about the strength in signal integrity and it looked like it was within data center. Can you just talk about the visibility you have to that strengthened? And what some of the specific program drivers are for that? Thanks, guys.
Paul Pickle: So, we’ve got quite a bit of visibility there. It’s — I will say though it’s a bit more difficult to plan for those particular customers because when they are ready to go, they turn on a dime and it’s also the kind of thing that we don’t have a ton of channel inventory that’s out there waiting to be consumed either. So it’s we are cognizant of it. It’s very much a hands-on process where we are running proof-of-concepts, understanding that the programs are coming and staging them, getting ready for when the orders dropped down in terms of planning that in a particular quarter, it’s a bit more difficult. So I think we have a good sense that it’s going to be coming a bit more of a relevant figure for us over the next several quarters but exactly which quarter it’s a little bit more difficult for me to determine.
Craig Ellis: Thanks, guys.
Operator: Thank you. Our next question comes from Anthony Stoss with Craig-Hallum. Please proceed with your question.
Anthony Stoss: Thanks. Hey, Paul. Just to put a finer point on what Quinn was asking on OpEx. So if there was some, I guess one-time things that elevated the OpEx. Should we think about OpEx coming down to couple million dollars each quarter sequentially? And at what point do you think your goal of getting to $100 million cost taken on in total will be done, in which quarter? And I have a couple of follow-ups.
Paul Pickle: So I don’t think I said a couple of $100 million dollars, but I think on a run rate basis, we are a $100 million off. I think we can improve that. I won’t put a number on it at this juncture. In terms of the rate of fall-off, I think, don’t expect it to be significant windfall chunks that happened, but we’ll be looking to execute as quickly as possible. And I’ll say through Q1 is the current plan to have most of those operational efficiencies in place, after that it would be continual improvement, that we would look to enact. So try to give you a little bit of a timeline avoid putting an exact number on it until I have a good feel for what that budgeting exercise is.
Anthony Stoss: Got it. And then, at what point, are you going to reach a determination of what assets you may want to keep either from Sierra or Semtech? Are you getting closer to that?
Paul Pickle: I think if I look at, first of all, right now, every asset that’s a positive contribution is an asset to keep at this juncture unless I can hit certain clearance ratios associated with those assets, and that really kind of comes down to the short-term exercise. If you ask me long-term do I need certain assets. I’ve already made a determination what is strategic in my mind and critical for our future. Other than that, we don’t need certain assets in order to get that job done for the long-term vision of where we’d like to go. I’d like to spend a little bit more time on that plan. But I have a good sense of which assets I can divest and it just comes down to whether or not I can reach those clearance ratios. Having said that, I really don’t think this is a conducive environment to doing a deal or running a process.
So my goal and my determination at this point is to be — is to get the company to a point where we are not forced to do a divestiture, but we can do that if it strategically makes sense. I think of it more as a long-term principal paydown.
Anthony Stoss: Got it. And last question, just your comments related to the FCC coming out last week, highlighting the Chinese module makers and you said your pipeline is increasing. This has been discussed from the Commerce Department and other agencies for almost three years. What’s giving you confidence now that they actually might do something?
Paul Pickle: Yeah. We saw a significant boost in the pipeline and I think it’s, to the point where I’ll quote one customer, they don’t believe that it’s necessarily an issue or risk, but they just don’t feel like they can fight the politics anymore. So if we kind of look at it from that standpoint, I think we — if I can offer better quality, better security maybe a slight premium to the costs that they’re currently paying for a low cost APAC counterpart, I don’t know why somebody wouldn’t come my way, because we are certainly going to solve that problem. We also have the ability to put in place TIA-compliant modules, if that becomes a requirement as well. So it really kind of comes down to, from an infrastructure or critical industrial applications, we will be the guy to beat and we are going to make sure that we are the guys to be.
Anthony Stoss: All right. Thanks, Paul.
Operator: Thank you. Our next question comes from Harsh Kumar with Piper Sandler. Please proceed with your question.
Harsh Kumar: Hi. Thank you. Paul, congratulations on your first earnings here at Semtech.
Paul Pickle: Thank you, Harsh.
Harsh Kumar: For what you’ve got here is, you’ve got two companies, couple of different product lines. And as an analyst, I am trying to understand what is Semtech? What is Sierra Wireless? And I was wondering if, just from sake of simplicity if you would be willing to give us how much is core Semtech revenues? And how much is core Sierra Wireless revenues? And within Sierra Wireless, if you don’t mind breaking our routers versus modules, because you called out, I think you said the routers were off slightly and modules were down quite a bit. So, I was wondering if you could help us level set some parts and pieces, so we can be better at modeling.
