Welcome, everyone, to the MPS Fourth Quarter 2022 Earnings Webinar. My name is Genevieve Cunningham, and I will be the moderator for this webinar. Joining me today are Michael Hsing, CEO and Founder of MPS; and Bernie Blegen, VP and CFO.

In the course of today’s conference call, we will make forward-looking statements and projections that involve risk and uncertainty, which could cause results to differ materially from management’s current views and expectations. Please refer to the Safe Harbor statement contained in the earnings release published today.

Risks, uncertainties and other factors that could cause actual results to differ are identified in the Safe Harbor statements contained in the Q4 2022 earnings release and in our latest 10-K and 10-Q filings that can be found on our website. MPS assumes no obligation to update the information provided on today’s call.

We will be discussing gross margin, operating expense, R&D and SG&A expense, operating income, other income, income before income taxes net income and earnings on both a GAAP and a non-GAAP basis.

These non-GAAP financial measures are not prepared in accordance with GAAP and should not be considered as a substitute for or superior to measures of financial performance prepared in accordance with GAAP.

A table that outlines the reconciliation between the non-GAAP financial measures to GAAP financial measures is included in our Q4 and full year 2022 earnings release, which we have filed with the SEC and is currently available on our website.

I’d also like to remind you that today’s conference call is being webcast live over the Internet and will be available for replay on our website for one year, along with the earnings release filed with the SEC earlier today. Now I’d like to turn the call over to Bernie Blegen..

GAAP gross margin in the range of 57.4% to 58.0%. Non-GAAP gross margin in the range of 57.7% to 58.3%. Total stock-based compensation expense of $40.2 million to $42.2 million, including approximately $1.2 million that would be charged cost of goods sold.

GAAP R&D and SG&A expenses including litigation expenses between $135.1 million and million $139.1 million. Non-GAAP R&D and SG&A expense to be in the range of $96.1 to $98.1 million. This estimate excludes stock compensation expense, but includes litigation expense.

Beginning with the Q1 2023 outlook, MPS will no longer separately forecast litigation expenses. Interest income is expected to be in the range from $1.8 million to $2.2 million before foreign exchange gains or losses and charitable contributions. The non-GAAP tax rate for Q1 2023 will be 12.5%.

The non-GAAP tax rate remains unchanged from 2022 as there have not been any material changes in tax regulations. Fully diluted shares to be in the range of 48.2 to 49.2 million shares. Finally, I’m pleased to announce a 33% increase in our quarterly dividend to $1 per share from $0.75 per share for stockholders of a record as of March 31, 2023.

In conclusion, while we remain cautious about near-term business conditions, we believe MPS can swiftly adapt to market changes and take advantage of the current environment to focus on business development and investing in infrastructure necessary to support long-term growth. I’ll now open the webinar up for questions..

Thank you, Bernie. Analysts, I would now like to begin our Q&A session. [Operator Instructions] Our first question is from Quinn Bolton of Needham. Quinn, your line is now open..

Hey, guys. Congratulations on the strong results and the nice outlook in this environment. I guess I wanted to start Bernie and Michael, the computing storage business was much stronger than at least I expected in the fourth quarter.

You grew revenue quarter-on-quarter when the rest of the PC [ph] market is clearly experiencing softness and inventory correction. So I guess, can you give us sort of your outlook? How do you see that business trending over the next couple of quarters? And then I’ve got a follow up. Thank you..

Sure. I think that there’s been a lot of press recently around weakness in notebooks as far as unit sales. And in addition, we’ve started to see some word [ph] here about declines also in the memory market. Interestingly, memory continued to be very strong for us offsetting a decline in notebooks.

And as we look ahead here, we actually see notebooks beginning to improve in the early part of 2023. And probably those gains will offset a decline in memory. So we’re basically looking at this category at least for the first half of the year to be flattish..

Okay..

The one component the AI portions still remain to be very strong in the near futures. And then we see a very high growth..

Absolutely. In the enterprise data we’ve really got good traction with the GPUs for artificial intelligence and so that should really be one of our growth drivers in the first half of 2023..

That was going to be my next question, enterprise data was down slightly in the fourth quarter. But it sounds like you see the ramp or just strong results in the first half driven by.

It sounds like specifically GPUs, is that right?.

Yes, that’s related to artificial intelligence..

Yes. When we look at CPUs in the enterprise data, there’s still initial softness as we’re waiting for the platform launches for both the Sapphire Rapids and Genoa to take off..

Do you expect that in the second half than the CPU to on a take [ph] in more second half of the year?.

Yes..

Perfect. Thank you..

Our next question is from Tore Svanberg of Stifel. Tore, your line is now open..

Yes. Thank you. And congratulations on another record year. Michael, I was hoping you could talk a little bit more about the power isolation module business, they expect to ramp in 2024.

Is this still based on the company’s BCD technology or are you now starting to venture into some newer technologists? I’m just curious, because you haven’t talked a whole lot about potentially getting into silicon carbide or GaN or anything like that?.

Yes, so we do have programs that are going to a wide bandgap materials, okay? And in the past, I think we talk about it in, we have a program to make to investigating and develop those devices since 2017. And now we see the first result and we do have some samples ready, but not in the production yet.

My prediction is that are somewhere in the middle of the years, okay, or second half of the years. And related to the – your questions about the isolated modules, when any higher powers is pressuring inverters, solar and solar inverters and data centers also chargers, onboard chargers and all these in the wind turbines.

All of these have one basic component in all these very high power applications, which is all the power devices driven by using the isolated modules.

And MPS is using, again, using our own BCD process and as well as our bandgap materials and we combine togethers and making a very simple [indiscernible] and a very ease of use power modules for those type of applications. Some of these products already in production in the EVs currently.

And things that we expected higher growth in the next couple years..

That’s very helpful. And as my follow-up, could you just give us an update on the manufacturing footprint both from a capacity perspective, but more importantly about diversification.

You talked about, looking at all sorts of regions to partner with some new manufacturing partners, so yes, both capacity, but then also from a geographic – geographical perspective perhaps an update that? Thank you..

Yes. We see as everybody else see in the geopolitical tensions and as you know MPS in the past, we always want to be a local company in every political regions. And we did that successfully in R&D site. And because for one thing is close to customers, other ones and – other ones we isolated from these tensions from between the countries.

And for the manufacturing side, currently, we can fulfill all our customer demand to – demand for wherever they want to manufacture it. And we want to – by end of the year or by the next – by end of the year or next years, we will have fully rent and for the new capacities just in case the [indiscernible] really separated..

Great. Thank you so much, and congrats again..

Thanks, Tore..

Our next question is from Alex Vecchi of William Blair. Alex, your line is now open. Our next question is from Matt Ramsay of Cowen. Matt, your line is now open..

Thank you very much. Good afternoon, guys.

Can you hear me, okay?.

Yes..

Hey, Michael. Hey, Bernie.

The – one question that I wanted to ask you that we’ve heard, I mean, you guys – I guess, addressed in your prepared script how you are working to move sort of the operations at manufacturing footprint and other pieces outside of China to in the long term, more sort of align with your TAM and revenue mix for the really, really long term in the company.

And you’ve been very clear about those plans. But there’s been some more, I guess, acute reports of maybe some customers that want to very quickly use product sources outside of China. And you’ll probably know some of those reports that I’m talking about.

I guess, have those impacted your revenues at all? Are you seeing any strange behaviors from customers that maybe you want to move and source product outside of China more quickly than you’re able to? Or are you already sourcing outside of China to support many of your global customers? Thanks..

Yes, it’s a misconception for MPS is that we are – lot of manufacturers that’s in China. That’s true. But it’s a misconception. So, okay, we do in a prior COVID – we do – most of, we do at least half of it manufacturer and at least we have capacities is outside the countries or outside of China.

And to answer your question, whether zero impact in the – for whoever customers request to manufacture in the outside of China in the past and the futures..

All right. Thank you for that, Michael. That’s really clear. Just a question we get a lot. I wanted to talk a little bit about the consumer business, which is kind of the – maybe the least important strategic segment, but also the most volatile. If you look at where, I guess the numbers came in the fourth quarter.

And I guess what I’m wanting to understand a little bit is the philosophy that you guys might have if and when some of those consumer markets and the China market in general recover.

Are you excited to keep that segment down around 10% of revenue and will continue to prioritize everything else? Or is that a business that you want to serve Michael as it potentially rebounds? Thank you..

Yes, and again, I would say that I mean, in the past, last year capacity issues like a constrain the consumer growth. And we do have a lot of opportunity. We just didn’t pick it up because of the capacity issues.

And in the downturns in the past, as you know, that again and will be a lot more aggressive for in these consumer market segment because when you react to a price and you react to the opportunity how fast you react to the opportunity. And within the six months, you’ll see the – you’ll see the bigger number change in a consumer segment.

And that’s what we would do..

And Matt keep in mind, the resilience of our business model has to do with the diversity of the end markets, the customers, the geographies that we serve. So consumer, well, it has dropped to around 10% of the quarter remains a very important part of that strategy and will continue to invest in it..

Thank you very much, guys. Appreciate it..

Our next question is from Alex Vecchi of William Blair. Alex, your line is now open..

Hello?.

Our next question is from Gary Mobley of Wells Fargo. Gary, your line is now open..

Hey, Michael. Hey, Bernie. [Indiscernible] And thanks for taking my question for the first time as a covering analyst. And related to that, I apologize in advance if I ask an uninformed question here. But the inventory for you guys, that 212 days, that’s internal inventory.

I believe, however, your sales, 83% of your sales roughly go through distribution.

So maybe you can give us a view in terms of distribution inventory and did it increase and if so, to what extent did it favor revenue?.

Gary, opening up, welcome to the party. This is Gary’s first call with us..

And welcome to the inventory question..

Inventory question. I thought we finished this question..

For Gary’s, okay..

Okay. Gary, it’s okay. So when I look at the channel inventories from Q4 to Q1, or I’m sorry, from Q3 to Q4, they basically stabilized. So we didn’t see a significant increase either in terms of dollars or days in the quarter. Likewise when we talk about inventory on our balance sheet, and I’ll address that out as well.

There’s about a six month lead time from when we can slow down wafer starts when you see it on the balance sheet. So likewise, as we’re looking now to head to Q1, we see both inventory in terms of dollars on our balance sheet as well as in the channel, stabilizing sell-through in the channel remains very good.

And then it should normalize in the second half of the year..

I apologize if I step into….

It’s fair to say like I mean, in 2019, we deliberate build 200 days plus inventory because we did see all these opportunity. And then now the inventory goes this highs because go over 200 days again. And that is because the customers demand start to pushing out and this is on the high side and we will cautiously and reduce it.

And it’s not – this is not the same as it was done in 2019..

Got it. Thank you for that. And I wanted to ask about contributors to the revenue growth for the fiscal year, for the quarter, 48.5% is quite commendable.

I was hoping maybe you can deconstruct that between ASP increases and unit increases and how you see that playing out for fiscal year 2023 as well?.

It’s very diverse to growth in – with a little more aggressive activities in the consumer segment. And this is different from 2020 to 2021. And everything is the same because we are not – we don’t – it’s not a one trick ponies, and like not a two trick pony either. So I mean we have a multiple product.

We have a product like 5,000, 6,000 different products. We have a few thousands of customers, large customers, let’s say, biggest customer is less than 4% in a different industry. And with our – that’s the same way as we do in the last 10 full years. And we’re still continue to pass..

Clearly, as you look at a business driver in 2022 and as we look ahead, you can also see the impact of selling higher value technologies and higher ASPs that go along with it.

So while many companies use this supply-demand imbalance as an opportunity to raise prices to their customers, we only had one single-digit price increase back in February and all of the other is representative of higher ASPs and volume gains..

Helpful. Thank you, guys..

Our next question is from Ross Seymore of Deutsche Bank. Ross, your line is now open..

Hi guys, can you hear me?.

Yes. Its fine..

Perfect. Well, first, I also want to welcome Gary to the call and thank him so much for being the one asking the inventory question….

You still remember..

I knew you would. So I had just one question, one follow-up. The question on the near-term first was, you talked a little bit about stabilization in your orders, but said they’re still below normal.

So any color on that? And then folding another near-term follow-on is the first quarter, you said it sounded like Storage and Computing would be flat and Enterprise Data would be up a bit. If you’re flat overall, what’s going down sequentially in the first quarter to get you to that? So that’s kind of an aggregate first question..

So when we look at Q1, and obviously, we’ve guided down about 2%, which is sort of consistent with seasonal trends. And it’s – the industrial is likely to come down. And I may have left you with an incorrect impression because Enterprise Data is likely to go down even though GPU, AI will improve.

And then on the plus side, the momentum in automotive continues to be very strong..

In the stabilization color geographically by end market, the order stuff you said?.

Yes. We’re seeing better activity. I think that we commented both in Q3 and repeated it here, that customers have gotten a lot more near-term focused and you can point to consumer, you can point China as being areas that was very observable.

And right now, we’re seeing a lot better activity but it hasn’t necessarily translated into what I call a normalized ordering cover..

Got it. Thanks for that. And I guess as my longer-term follow-up, a question I get a lot from investors is the really impressive growth you guys did in 2022, up about 50% round numbers. That’s about 30% faster than the SIA defined analog category. And that delta is kind of 2x what you guys historically have done.

And some people are concerned that that’s just because of insufficient supply and competition and assume fungibility that you guys are just growing because other people can’t, or some of your competitors had some product issues that they’ll soon rectify. And so those tailwinds could turn into headwinds this year.

I know you’re not going to guide for the full year.

But are you at all concerned about those two dynamics having kind of overinflated 2022 and turning into headwinds this year?.

Okay, tell those customer – tell those not customers, okay?.

Investors..

Our investors, our customers choose to buy our stocks. And hey, we don’t do it in the pay to pay, the me-too products. Everything is pretty much single source product. And our products a lot more programmable, a lot more versatile and gave me and our customer can configure those products. And of course, we’ll take advantage of it, okay, in a shortage.

Our customers can use our product in a multiple way, I mean, lot of them are software based. And announced and as you know, in the software side and I mean is a lot more stickier. And we will continue to use our technical strengths and to gain the market share and I mean headwinds, okay, for those people they don’t believe that, okay.

We have a hearing I mean that’s fair, but our numbers delivered like our past number to show that..

Thanks, guys..

Our next question is from Rick Schafer of Oppenheimer. Rick, your line is now open..

Thanks and I’ll add my congratulations, guys. If I could ask my first question, it’s kind of a broad question on your module, just your overall module strategy. I mean, say, it doubles this year to sort of 10% or so of revenues. Bernie, I’m sure you’ll correct me if that’s all base there.

But sort of what’s the right contribution long-term? I mean, Michael, I mean, eventually, do you want sort of everything to move in that direction toward module, or is it weighted more to specific end markets, maybe a couple of them already. And I’m curious if you can comment on the margin implications as module becomes a bigger contributor.

I think in the past you said this a 5x type ASP multiplier. But again, please correct me..

So I’ll give you the numbers correction and Michael will give you this strategic answer. Modules currently are about 5% of our business..

Yes, and it has doubled..

Yes..

In a double the year, year-over-year for the last two years.

Three years or two years?.

Yes, three..

Three years..

Yes..

Yes. And so it’s a significant business now. I mean and eventually, yes, that’s what all I want to see.

And MPS all going to move into a new type of modules I mean in modules, power module has a bad connotation, I know that I mean lot of companies in a power module business and those are 30% gross margins and I don’t know what’s the right word to use it, it is a power modules and like in place okay with, but that’s not your old grandpa’s, again, power modules.

And again, this is very different. Our margin is above core average. And some of the solutions much, much higher.

But – and we sell it was all well over $100 stuff, and that’s kind of I see as a part of its hardware plus service and customers, the users, they don’t need to know like how does – how to use the product or how to – you have to have a very deep knowledge how to design a power supply, okay.

And they should use very simple solutions like what we provide. They don’t need the headaches to design a power supply, I think that we’re going to end up with MPS or without MPS will be that, okay, but MPS want to be a leader in that..

And I’d like to go back to Rick’s earlier question, I would say that back in the day, the single biggest ingredient as far as making a decision for design win had to do with the lowest cost.

And I think that what our customers are seeing, particularly in the last three years is there are other value drivers consider as far as time to market how much design resource they want to be saved from having to do a total cost of ownership.

And those are areas that we’re able to meet our customers’ demand as well, if not better than any other analog or power provider….

Yes, as well to give you examples and okay, we build our own test equipment, semi equipment test equipment and all based on the MPS power modules. And if you buy those kind of power modules, they can selling well over $50. And so that in semi equipment market segments that’s a perfect thought for that.

And these are very high ASP and very much, much compact than on the current market..

Okay. Thanks for that color. And it actually leads you to my next question. I appreciate all the color that and you guys have certainly discussed with the power isolation module. But just specific to the silicon carbide update, just it does – it sounds like you’ll be sampling this year.

Do we – should we expect any material contribution from silicon carbide this year? Or are we kind of looking at 2024? And Michael, I mean, we’ve heard different numbers, but what is the addition of silicon carbide modules for traction inverter, et cetera? What does that do to your potential content per vehicle?.

Our trashing inverters and using silicon carbide, okay, it’s not this year and maybe even if we will see it next year. Our silicon carbide devices, okay, we design our own – we develop our own, okay. And we want – we picked up some market segment that proves our products are reliable in the first. And that’s the first step.

To answer your questions, and this year, okay, and there’s no large number of building in our revenue stream, yes, okay, and so we don’t expect that, but that’s just approved the technologies now..

Thanks, Michael. Thanks, Bernie..

Our next question is from William Stein of Truist. William, your line is now open..

Great. Thanks for taking my question. Someone beat me to the module question this time. So I’ll focus in a little bit different direction in the past.

I know a few quarters ago, you talked about a team that you hired to work in the converter area, which is something you’re not really that known for, but I think this is also another being ASP and a big growth opportunity for Monolithic.

Can you talk about your traction in converters so far and what you expect to come in the coming quarters?.

Yes. We can – are glad to ask the questions, okay, a couple of days ago, I saw an image and we received from our customers, and we use our customers, use our imaging for the X-ray machines and much better than their prior versions.

And so when is – we sample other biotech companies and they are – our product is designed in and we will see the revenues probably a small revenue this year in the next years. This is a slow ramping products that get very high barriers.

And the bottom line is we have the technologies, and we have the know-how to design a very high performance data converted. These are – is comparable if it’s not better. And we will broaden the product portfolios and as we expand our teams and these take lot of efforts and a lot of investment. And so far, we built up a pretty good sizable teams.

And now you will have – see more general product coming up in the next couple of quarters..

Thank you, Michael, appreciate that. Maybe one other, if I can. Something we haven’t heard the company speak a whole lot about lately, and that’s the e-commerce effort.

Any update on how your traction is progressing there?.

E-commerce. Well, maybe it’s not as fast as I want to be. And I said my expectation too high and I think it’s better here is that we launched MPS now I mean, actually, I’ll take back. I think it’s not as – it’s true, not I expect more, okay, but there’s a lot of resistance. I mean – but our modules lot of module ramp-up. It’s from e-commerce.

And we – after last year, yes, after maybe 13 or 14 or 15 months ago, we launched MPS in a remote technical support. And that helped a lot. And especially our module side, again, help our customers can schedule a meeting online. And we can solve their – when they’re logging we solve their technical issues. That helped a lot.

And I think the most part of the ramp-up is from the MPS now from a website. But overall, all things and it will take time, okay? And you are talking about engineer change their behaviors, okay, how do you design the product and how you’re purchasing the product.

And I think as next 10, 12 years, even now in the next five to 10 years for the millenniums and to design a power supply and they want to do Google search rather than do the fundamental design like in the past 20 years ago, like the last 20 years.

And so these are the products designed for that, okay, for easy plugging play use and easy to use and can buy from the Internet..

Okay, thank you..

Our next question is from Chris Caso of Credit Suisse. Chris, your line is now open..

Yes, thank you. Good afternoon, everyone. The question is about where lead times are right now and the degree of product shortages.

With your inventory up now, has that helped to bring down lead times and alleviate some of the shortages? And if so, has that taken away perhaps some of the incentive for customers to place orders for a product they didn’t – they don’t need.

What – it’s obviously one of the things we worry about as we go through the cycle, interested in your view on that..

I’d agree that lead times have been coming down. They were up as long combined as much as 26 weeks or six months. And they’re coming down more slowly than you think. So I don’t know. Obviously, our customers have changed their ordering behavior.

And if that could be attributed to the change in lead times or the fact that they have adequate inventory or that they’re uncertain about with the next six months, I can’t really say which is a driver in their decision..

Got it. Okay. As a follow-up, Michael, you mentioned in some earlier remarks, plans to be a little more aggressive on consumer business as you go through the year.

So wondering if you could expand on those comments? Is that something just opportunistic this year, something that you see in the market is that just a function of the diversity of your business model where some other business is slow. So you can go find business elsewhere, if you could give us some more color on that, please..

I think you made a very good comment. It is opportunistic, okay? Remember, we – how many years ago, we – years ago, let say and we have more than 50% of our MPS revenues is all from consumer. And these are five fast design cycles in fast revenues and cycles product and on opportunities.

And we have the right product, right support and right price and you can move the needle quickly.

And obviously, in contrary to the other industrial automotive cloud computing and these are much longer design cycles and they’re kind of slowing down one segment to the other or relative in – it’s not as – clearly, it’s not as in the last couple of years.

And the consumer is our opportunity again, and we know how to do it, okay? And we have the product and we have the price structures and not as high as all the other segments, and we will do that..

If I could just follow on that, does that imply when business improves elsewhere, we’ve got a better macro and such some of the product cycles elsewhere with maybe higher margin opportunities develop that you sort of back away from some of that and come back to some of the other segments that have driven growth more recently..

No, it’s not. Okay, consumers is a – diversity is always our strategies. And last couple of years, we didn’t grow because of capacity constraints, okay? And we sacrifice on the consumer side..

Got it. Thank you..

Thanks, Chris..

Our next question is from Tore Svanberg of Stifel. Tore, your line is now open..

Yes, thank you. I just wanted to come back to the data converter business. So you’re obviously getting into the kitchen of 400-pound gorillas here and I think historically, it’s been very difficult to crack into this market. You talked about the high barriers to entry.

And other than the product being higher precision, I get that, but is there anything else about your business model that will allow MPS to be successful in this market?.

I think it’s – we don’t know what is the business model. I think it’s – I know this size takes time. And the market is large, a few competitors. All these, you said these are 800 pounds of gorilla, okay. We are well little highs going around – and we had to run fast.

And it’s just to take opportunities and okay, what presents the product and our customers. And they do have an eye on the different suppliers especially come from the last couple of years. And it’s – we have a good hope, but we know it take a while..

That’s fair.

And just lastly, could you give us an update on the time line for the $3 billion and the $4 billion capacity that you’re working on?.

Yes. As we said in next couple of years – next two years, and we’re still on it. And we work with our suppliers and the gaming I just mentioned the consumer business, okay? And one of the reason is we do have obligations and to fill up these facts. And we’ll be aggressive and getting all these – getting these orders, fill the capacities.

And that’s our gaming in the past. We repeatedly and do this – have done these kind of things in several cycles already. And this cycle, I don’t see a difference from the last downturns. And – but – so for the capacity expansion, we’re still intact in the game.

We’re not – we may slow down a little, so I mean, but we really have obligations with our fabs, okay?.

Great. Thank you, again..

Our next question is from Quinn Bolton of Needham. Quinn, your line is now open..

Great. Thanks for letting me take a quick or ask a quick follow up. Bernie, I just wanted to ask your sort of thoughts on gross margin. You guided to 58% at the mid-point. It looks like the Street consensus was probably 50 to 100 basis points higher than that through the year.

So as you look at 2023, do you think March is sort of the bottom and margins can trend higher into the second half of the year? Or is this push in the ability to be opportunistic in the consumer segment likely to keep margins flattish in this 58% level through 2023..

Yes, I’d probably look at it as being flattish for the remainder of 2023. And when you look at what’s taken the margin down and while you’re right, we’re down 50 basis points. It’s not a significant deflation from the rate that we’ve been at trending at over the last two years.

And it’s really because we have the additional manufacturing capacity, lower revenue. And as we look at the next two quarters at least, the sales mix is not as desirable. .

Understood. Thank you..

Our next question is from Ross Seymore of Deutsche Bank. Ross, your line is now open..

Okay, just a quick follow-up on my side on the margin side as well. And this time on the OpEx side, you guys did a good job on the OpEx. I know you’re putting litigation expense up into regular OpEx, which thank you for doing that.

But just the trend in OpEx throughout the year last year grew maybe half the rate of what revenues did? How do we think about this year?.

I think as Michael is expressed here between diversifying our supply chain and continuing to invest in R&D capabilities that we have some very real opportunities for additional investment that would show up in growing our operating expenses.

Having said that, though, there is a fair amount of uncertainty as far as what the revenue outlook is, and we want to be good financial managers as we go through these market conditions. So I would expect that it’s likely that operating expenses won’t grow much more than 50%, 60% of revenue growth in the current year..

Having said that, in the past, in the past two years, now we reached $2 billion companies and they all one point okay, whatever….

1.8..

Yes, 1.8, okay. I mean, our infrastructure hasn’t really grown that much. In the last couple of years, and it’s difficult to hire people and now we have a lot more breathing room, okay, this is the time to build up a company..

Great. And I guess for a quick follow-up, I just wanted to revisit one of the questions that was asked, I think it was the very first question or close to the beginning on the storage and computing strength.

I know you said notebook was better than you thought and the memory/storage was weaker, and those two kind of go the opposite direction in the first quarter then. But those markets in aggregate have been weak across the board for quite some time. So I’m still a little surprised at the strength in the fourth quarter and the stability in the first.

What would you attribute that to? Obviously, you’re getting the orders, but are you guys taking share? Is it the Tier 1 penetration? Is it content? Just any more color on that because it’s such a disconnect to the end market in general?.

I think I believe we gained some shares..

Absolutely..

Yes. We gained some market shares..

Great. Thank you..

Yes, we’re a little bit aggressive on in summer low end market..

Yes..

Thank you..

[Operator Instructions] As there are no further questions, I would now like to turn the webinar back over to Bernie..

Great. Thank you very much and for joining us for this conference call, and we’ll be talking again here for the first quarter update, which will likely be in the late April. So thank you very much..