“We have more work to do at the foundry level to drive gross margins to where we want to be—that is going to be multiple quarters before we get those to be foundry-average gross margins—but it is tracking better than we expected, which is good.”

In context

“o your gross margin. Can you give us some context as to how much better they are? And as we go through the year, when do you expect that headwind to gross margin to become at least neutral? David Zinsner: 18A yields are a closely guarded proprietary piece of information for us, so we do not typically disclose specifics. I would just say Lip Bu had a target as we came into the year for the end of this year, and we are probably going to hit that around the middle of this year. He has done a very good job working the team to drive a better response there, and of course that carries on to next year’s expectations around yields. As we get towards the end of the year, on a combined product-plus-foundry basis, we will be in a relatively decent place in terms of the gross margins at Panther Lake. We have more work to do at the foundry level to drive gross margins to where we want to be—that is going to be multiple quarters before we get those to be foundry-average gross margins—but it is tracking better than we expected, which is good. We have focused a lot on yields. Lip Bu has brought in a lot of talent into that space, and we have brought in external partners that are particularly good at metrology, which has helped us execute better. We are starting to see the benefits this quarter. John Pitzer: Do you have a follow-up question? Suneet Pajjuri: Yes, thank you. On the ASIC business, Dave, I think you said it doubled year-on-year. Could you help us with what is included in that? I believe it is IPUs? I just want to get a better sense of how big it is, and as we look out to the next few years, what is the strategy for that business to grow? Are you going after the classic ASICs in terms of XPUs, or is this more adjacencies? Lip Bu Tan: Thank you. It is a good question. This ASIC business is sometimes purpose-built sili”