Question-and-Answer Session
Operator
Thank you. (Operator Instructions) Well take our first question from Glen Yeung with Citigroup.
Analyst for Glen Yeung – Citigroup
Hi. This is Analyst for Glen Yeung. I wanted to ask about I guess start with China, so that was the source of weakness this quarter. Can you talk about how you see that potentially if it does come back in 2Q and if not in 2Q like how you see that potentially coming back for your handset business?
Bertrand F. Cambou
Yeah, we think Q2 is looking like well recovering. The issue of China was essentially due to a poor customer consumer spending during the Chinese New Year. That has been the subsequent of a normal ice storm in the southern China, and then the lower than expected revenues has been creating a soft March. But definitely the economy in China is strong; the consumer spending is strong. We see the Q2 becoming back to normal here, which means that as we far as we can see it, this (inaudible) of China was well understood and Flash inventory appears to be very low.
Analyst for Glen Yeung – Citigroup
All right, so as China comes back, help me then think about as I see pricing was up 7% blended quarter-on-quarter. I’m guessing some of that was due to (inaudible) in China not being there. Should I be thinking that pricing could be down a bit more than usual in second quarter as China comes back?
Bertrand F. Cambou
It is a fact that we launched it in Q1 of very high density. We have a 2-gigabyte ORNAND, a 65-nanometer out of SP1 in volume productions producing high-end MCPs or 19-nanometer and so on and so forth and we have a stronger mix that has been driven that. In Q2, we expect in those type of products to increase as well, which mean that the Chinese business is going to re-bounce somewhat, but we are still looking at the top OEM being very strong as well in the quarter, which we don’t see as a trajectory here some difference than what we are in Q1.
Dario Sacomani
Yeah, I was just going to add to what Bertrand said. I mean in the first quarter, the price degradation per bit was down 3% and so we continue to expect normal pricing degradation of 6% to 7% going into Q2, so we continue to anticipate normal.
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