FN
#Thank you, <UNK>.
I think, <UNK>, your date of December is really in line with what we plan and what we anticipate.
Yes, so we don't break out that but in the past we've said most of the startup cost is in operating expense.
So in the past quarter of Q3, we still look at about $2 million to $2.5 million baked into the operating expense.
Now, bear in mind that $2.5 million has about $0.5 million sales and marketing, which rightfully belongs below the line.
So I am hopeful that when you get to the breakeven level that $2 million will be fully absorbed into the cost of goods sold.
This is <UNK>.
As we look at it, we don't see any one-off.
Most ---+ every one of our Japanese customers today, which we are certainly proud of, is a continued customer with the Company.
I think ---+ that's absolutely correct.
We are experiencing increased experience in the Japanese outsourcing.
Our sales efforts and engineering effort in Japan are quite successful.
<UNK>, this is <UNK>.
I think during the timeframe of OFC we had this scare of ZTE.
I believe it's completely behind us right now.
Most everybody is resuming shipping to ZTE.
So far from our vantage point, I don't see any impact after the big scare.
But in terms of Verizon strike, so far again we have not seen any impact.
In the future, I don't know.
If there's an impact, I don't think it's going to slow down the metro upgrade, maybe it's just a message of delay a little bit in terms of timing.
But so far, Fabrinet has not seen any impact on that.
Thank you, <UNK>.
For this quarter, there is really very little, in fact, almost none.
There is a mark-to-market gain ---+ we excluded it from the non-GAAP reporting.
There's something about interest expense, how we offset interest income expense.
We have a flood income.
We, again, excluded this from the non-GAAP.
So from a non-GAAP standpoint, other income expense, I would say, is insignificant.
A little bit, not a lot.
Again, we will continue to see that ---+ I won't call it SG&A, I said operating expense, will be continuing to decline.
A lot depends on how fast Fabrinet West performs.
But if that gets to breakeven then, yes, that $10 million will be significantly lower.
On the 10% customer, no, we haven't said anything yet because we normally report once a year.
So next quarter, I will have a report who will be the new 10% customer for this year.
We are ramping a few customers.
Honestly, until the last finishing line, I really cannot tell who will be the winner.
We always had the end of September, as the opening of that facility.
That in fact is going to happen.
As <UNK> said, we fully expect that we will be shipping product out of there in the third quarter.
Thank you.
<UNK>, this is <UNK>.
Typically, new business as we've discussed before, will come in a little bit higher than gross margin because we have room to improve the yield and so on and with the improvement we share with the customer.
So I think for competitors, like existing product, existing customers, new business generates a little bit higher than the gross margin.
Contract you mean.
A little bit of background on that.
Our customer base is not based on a contract, it's based on a volume supply agreement.
A volume supply agreement really is what the customer and ourselves agree on is how we're going to run the business between the two of us.
It's really not project ---+ in fact it is not project defined, it includes a relationship.
Beyond that, it's all a relationship.
Yes.
So in terms of volume ---+ as you know, the gross margin pretty much depends on the volume .
it's volume driven.
The higher the volume, obviously we get better absorption.
Again, in terms of volume, we only have 13-week visibility.
So beyond 13-weeks, it's pretty cloudy.
Until I know the volume, I really cannot project gross margin.
But we do know that we have pressures on labor costs, obviously you understand that.
We continue to find offsets and the offsets to ---+ productivity and to material pricing and so on.
Cost reduction is an ongoing thing in a factory.
So I feel the 12% to 12.5% we guided to all along is achievable.
We're comfortable with that level.
Beyond that, it all depends on the volume.
Thank you, <UNK>.
Thanks, <UNK>.
I don't know that they enjoy it, but we are ramping QSFP28 also as I mentioned in the prepared remarks.
So 100-gig is the main driver, obviously silicon photonics is also ramping nicely, all the advanced components to support 100-gig.
So those are the products we see as pretty strong.
A lot of these are in the telecom in the past quarter or so.
We see strong demand there.
Again, for the specifics probably if you ask our customer, you might get better insight.
But yes, you are right, we see pretty strong demand there.
No.
I don't know, <UNK>, did you see any impact there.
No.
We can really tell you that we have seen absolutely no effect with that strike.
No, I think across the board, I think we were able to rise to the occasion and ship as requested throughout the whole quarter.
<UNK>, we don't go into that much detail.
The only thing I can tell you is that in silicon photonics today, I think I have mentioned this before, it's increasing as a percent of revenue.
Today it's already surpassed 15%.
That's all I can tell you.
Okay.
You are going to see tomorrow when we file the Q, essentially, we shipped more to North America in the past quarter than any other region.
So that's in the Q.
Thank you, <UNK>.
Okay.
All right.
Let me try my best to answer that.
I think if you look at both segments, telecom and datacom, both are growing ---+ continuing to grow.
Obviously, telecom is accelerating, the growth is accelerating like we expected.
So again, in the case of telecom ---+ a lot of that comes from existing customer, the legacy product, because they support the telecom growth.
So some of what you mentioned, the ROADM, amplifiers and so on.
Those are supporting, the TC ---+ telecom upgrade and you can see it, we're in the cycle right now.
We are in the upgrade cycle right now.
Now, we see pretty good momentum too, even though datacom has been growing tremendously in the last couple of quarters, we see the momentum continuing.
So, like I said, telecom comes to the party and continues to accelerate.
That's all I can tell you.
And the new business, some of which are supporting both segments, too.
So we achieved multiple growth from all segments.
Is that helpful.
Okay.
So for the ops com versus non-ops com, I would expect that the ratio will probably continue.
We saw a nice growth 77% this past quarter on optical communications, and non-optical at 33%.
I believe the same pattern will probably be maintained in the next quarter.
All right.
Within ops com, I would expect telecom will inch up a little bit compared to datacom.
So next quarter, I believe that telecom ---+ I would expect telecom to be a little bit higher than, in terms of percentage, higher than the past quarter.
Thank you, <UNK>.
<UNK>, the one thing that we've never experienced in the industry is the price movement because of a shortage of capacity.
But in this case, pricing has never been a factor.
What we are experiencing is the capacity constraints that exist are primarily capacity constraints on equipment that's furnished or owned by the customer.
So their capital layout only carries to a certain capacity.
The capacity constraints are not the constraints of the facilities, bricks and mortar, or headcount or those types of issues.
Considering, as you well know, we believe we're in the early part of this ramping cycle.
A ramping cycle does have capacity constraints as it moves forward.
Well, we have the floor space of about 500,000 square feet.
We certainly have made some commitments to that square footage, but I really can't go through and define ---+ divulge who it has been made to.
Back to your other question on ---+ I think the industry, as we go through this ramping period, which obviously is very good for everybody, is arising to the occasion to meet the demand.
There are isolated cases of capacity problems, which obviously are resolved in a short period of time.
What our experience is, and we have experienced it over about the last 15, 16 years, is that it takes us for a new facility ---+ and that's the largest facility we put in ---+ the balance of the others were about 300,000 square feet ---+ it takes us about three years to complete the assignment of all the space.
And obviously about halfway through that, we start another building.
But it is certainly, we certainly have a lot of space to be allocated in the 500,000 square feet.
Yes.
We want to say thanks for joining the call.
Have a good evening.
