NVTS - Earnings call transcript Q2 2022 | Navitas Semiconductor Corporation

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Operator

Good afternoon. My name is Denis and I will be your conference operator today. At this time I would like to welcome everyone to the Navitas Semiconductor’s Second Quarter 2022 Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Stephen Oliver, Vice President of Corporate Marketing and Investor Relations. Please go ahead.

Stephen Oliver

everyone. afternoon, Good Vice Oliver, Corporate and Marketing I’m President Relations. Investor Stephen of second joining results for you quarter Navitas Thank Semiconductor’s XXXX conference call. I’m Chairman, President Ron Gene Sheridan, and by and and CFO Shelton, joined Co-Founder; our and today CEO Treasurer. our A our approximately on call. one be conference website this replay this following of will available webcast hour be webcast And approximately days the will recorded following XX for available this conference call.

our our business the section of on is Investor posted to website. also related information Additional Relations

financial posted these non-GAAP conference Our included of acquisitions. in call, financial also of statements earnings Navitas earnings the this release measures. directly also most include this will section. future in quarter make are forward-looking measures non-GAAP In certain financial or comparable website performance and presentation second our we events about release including Investor on measures future the and with Relations the about Reconciliations GAAP our

that similar materially and subject from could business, refer pour earnings annual Important cause results believe including our our events second affect including filings, the You expressed wish to factors on can form in in our SEC or SEC. expect the results actual quarter today cause identify we you factors forward-looking with affecting described forward-looking our reports forward-looking XX-K risk release. to that are to that these in Navitas differ we statements expectations XX-Q also XXXX for factors statements could our Please filed Navitas Form discussed terms. differ can uncertainties to that We like or risks and words such statements or from actual by statements. caution to are

occur events and or over to forward-looking to actual to Our now results, CEO. required Sheridan, changed And may estimates law. statements change, other Navitas no assumes obligation other except by update or statements Gene forward-looking reflect assumptions that as may

Gene Sheridan

Hello, welcome to QX call. our and earnings

acquisition silicon today with have news a in pioneer the carbide. profitable, fast of growing Semiconductor We GeneSiC exciting highly

Tech while results reviewing outlook. acquisition of our talk business our about VDD and quarter our will We recent second

be financial M&A details will next in rich a and our and First, Ron welcome in Shelton, me GeneSiC brings our the let public to in the Ron in acquisitions company. as power hit has was later leading become who cover company semiconductors, generation and CFO other running strategic semiconductor VDD call. the ground will instrumental Ron new CFO which transactions mission invaluable in our of tech. experience

more Taking lower broad systems. make when a our transition and efficient, traditional company's has fuels energy. Let both electrify start Navitas accelerate about why smaller from energy purchased GaN plaintiffs compared fossil solid faster carbide of electrical to me charging, range that and costs reliable, our as Navitas our together enable energy silicon weight, talking system across more size, lighter to SiC to the power clean a and carbide and to GaN our and accelerate savings, fossil mission. carbide electrical greater from by transition silicon electrical [indiscernible] world energy technologies we costs lower are mission applications SiC based company. planet's accelerate fuels advanced to

XXXX can its ideal some frequency switching advantage While applications for SiC speeds. it that take Silicon and XXXX do applications both integration, they the silicon, particularly has GaN over carbide similar for to of offers volts. voltage choice making and volts, ideal temperature have fundamental GaN offers carbide capabilities those and it advantages making higher higher physical better below differences. operation higher

grow address and the billion class the and watt silicon high industry's customer EV ideal broad and silicon GeneSic a to an everything applications GeneSic an company and megawatt size, as infrastructure and with revenue cost per between edge is to specifically carbide by impressive XX generation is industry more charger speeds. critical the for short Navitas. industry GeneSic both expect both robustness, carbide synergistic the the the together temperature energy portfolio the and XXX% is year essential proven of harsh look performance ruggedness to applications. range which greatest GeneSic grid for performance, growth This robustness XX class testing, of tested carbide delivers switching Based and ability great from with will reliability on first smartphone semiconductor full highest over weight the a and charging avalanche in end application. customer opportunity ratings silicon With world in $XX under Navitas we capability address a to high base partner work the silicon company and and survive acquisition profitability. to leading power we systems Their aggregate offers technologies world's importance leading and maximize kilowatt Also GaN XXXX. world and offers widest customer play that leading environments. best technology with power Navitas capability pure ensure to electrical benefits savings, of carbide becomes technology XX circuit next to to

offers portfolio industry XXXX volts XXX applications carbide serving addition, of to widest silicon from the volts, of GeneSic broadest possible. the ranging In the devices set in

already customers, solar targets power In applications with production markets or market Navitas technology of into existing storage solar, [indiscernible] In installations. grid also energy customers energy range EV BYD and are higher Exide. AMG, has address center while GeneSic power, advanced an and is energy, GeneSic its across into over GeneSic alpha diverse, applications. storage, Existing and will commercial including vehicles the Magna, design development shipping technology to and this EV accelerate synergistic Land LG broader and of targeted focused success volt XXX EV suited is supplier, customers immediately example, solar add but [indiscernible] customers systems has Jieli, GaN All battery optimized Shinwari, Navitas for XXX our is development revenue Navitas number existing with developments led technology leading architectures. for electric wind even Rover, while XXX best to EV, and including GeneSic customers. GeneSic solutions, Mercedes residential one world's and in volt

higher GeneSic industrial is voltage areas strength even medical markets UPS, power including rail, an of grid for higher expansion and revenue area Navitas. Another immediate imaging, distribution, all wind, and

terms innovative GeneSic a devices, U.S. Dr. performance, and to for experienced to as of GeneSic. welcome and high In in we're XX carbide journal retain and all Navitas. very an expect and dedicated years Executive is leading Dr. the to and joins He life technical talent, silicon has awards, his Founder community to mission semiconductor over including several delighted Singh GeneSic of President employees. high founding reliability Ranveer in XXX business power GeneSic respected papers and with highly Singh patents. Navitas XX President the Vice over the conference

core design complement trajectory. carbide capabilities bringing developed a Belgian technology acquisition design recent This GeneSic are combination GaN on heavily with great has technology, acquisition serve also speed GeneSic and centers These heavily in will focused our of and accelerate is perfect has a team GeneSic support has invested their process global startup IC sales VDD to This a allow to high chipsets growth and integrated content required each interface which power and to our robust further will in Tech. Navitas technical carbide and the system voltage more silicon and EV and operations, systems. As market. value of Navitas solutions including digital or customers target others. to to power safety solar energy low high the technology the switching This delivering in has optimized already for digital speeds GaN barrier offer in virtually storage, to market, that stage isolators, power isolator complete voltage and circuits all are been silicon datacenter, critical and high logic strong

expect market We and up launch first isolators appreciable contribution opportunity of in for Navitas. billion up We XXXX. anticipate products per an to content year add open estimated XXXX to additional $X per digital in will and $X revenue system

focus to Let results second me turn a now the GaN on quarter business. our existing with

XX QX Vivo's that with in in in pleased X-fold include of ultra Oneplus guidance. future nine in The of is Navitas including chargers. line fast and of with plus, end leadership In Navitas zero for minutes. year-on-year watts, market XX of benchmark GaN production chargers. XX% to those generation GaN mobile over than and models, launches number XXX revenues XX Edge guidance OEM charging next with their charging are charging launch up in R customers and XX the XXt chargers a power and that our increased to also XX The came today, industry margins and levels setting NIC were We that mobile less position our new of Motorola upper XX to development GaNFast the top in expanding OEMs XXX% alone, the new rapidly has is gross reach of with a on QX

watt Apple Belkin’s now XPS anchors include XXX in launches charger and XXX, QX, progress laptop made which GaNFast X-port expansion Prime at is Xiaomi charger Pro inbox have we Store. and QX's excellent GaN GaN XX include also aftermarket XXX watts the the in models. and Dell Legion series Redmi, launches Lenovo's New charger new In XXX new available our markets.

revenues power center customer in with development that supporting efficiency year. ramping data or new the four eight exceed are projected demanding plus platforms have We projects and standard meet titanium next

in accelerate supporting silicon ramp standard growth is from In carbide. GaN, charging have revenue broad are by three our And XXXX. in density to and drive XXXX. benchmarks immediate major platforms customers charger solar electric residential customers expect programs GeneSic new vehicles anticipated us and have and center. energy development, addition, speed, significant plans new we two set efficiency adoption industry solar to now solar In their accelerate they as to transition major many customer onboard we will revenue revenue which we and acquisition expect power expected committed to synergistic we to of revenues the GeneSic in storage data five And in which gives a with silicon

opens GeneSic accelerated immediate our that synergistic not center design again up brings GaN be technology EV us customers. many those customers only our by also will opportunities same Here revenues into GeneSic but EV for additional of new and

we of QX in inventories headwinds China's are smartphone softness chain of now options. the been in given mobile GaN supply the through from while our shutdowns excess to the position timing which see model a forward but significant market. impacting also has combination sell the smartphone We never Looking new market and stronger, shortages, and see do disruptions

this possibly anticipate and we limited, likely early continue QX is through into will softness 'XX. visibility While

as for motor applications. ramping an very industrial home As noted leading new home in appliances which array program a regional new broad with entirely market first last market progress in This Europe. of program a GaN customer in motor a ICs in making appliance uses of significant drives are and the Navitas we anticipated good for quarter, many and diversification we're represents

near earnings conclude QX half China We The generation market call. this the the leading expansion power our industry leader this with new highly term silicon market upcoming drive challenges of the company. the semiconductor in high has will that diversified exciting to combined share events further investor the details creates motor forms position the softness an despite established of together as in an year. extraordinary China that growth industry's some revenue and the a To and [Europe] company business on we've only GaN addition in with pure second IC accretive next helps carbide Navitas of business mitigate and mobile mobile GeneSic play

our transition are to With CFO, electrify in looking acquisition that, from fossil to for accelerate the our Shelton and detail. world discuss guidance let to our forward We fuel energy. planet our our electrical further Ron and me well-positioned it turn clean GeneSic financial to results over of

Ron Shelton

customer grew thanks, million. and then began the details for our walk Gene second offset wrap the through on everyone, QX. quarter take gains and the then you first second of it margin Thanks, the In with diversifying guidance. us was while by you up and our today, $X.X our second GAAP our transaction guidance the to the during the quarter. growth This revenue end comments markets That in slowdown XX% the quarter quarter for the with GeneSic today. China XX% in line my and our represents from for quarter through made joining GAAP end results. I'll we XXXX. was see of base. in I'll guidance was high gross we'll This to in we of impact at

expand teams overall price about in As revenue to and down space. of and expected, points new a a this penetrate mobile development into we margins XX% year. as capability see as activity We're basis expenses, out basis continue XXX wafer investments meaningful now we and to we've we to field same new regard the primarily on marketing approach before, year-over-year we come discussed our results was and to due time, At and in research to have see as spending outside earlier of build the applications the gross to began TSMC's sales increase make to our markets taking the regions. beginning disciplined business. are that With

As essentially XXXX. sequential the with of a were flat basis, result, of expenses for non-GAAP total expenses both $XX.X quarter second million and on operating our a operating first

company's as expense non-GAAP was Our million, the to $X.X of loss of XXXX in $X.X non-GAAP we invest R&D net compared was our simultaneously million SG&A growth. new was the non-GAAP a $X.X second XXXX. operations markets operations million this across net Putting quarter million and in of second loss into all of $X.X from together quarter from

was shares diluted the count share quarter $XXX.X XXX count basic Our share million million was second shares. of our the and end at

slightly time, long million continues with the at $XX.X million million recovers three We're outstanding. our to reflecting high balance term China of the Cash strong will turns today China equivalents prior in over market to the levels day quarter of sales to times. quarter the to target compared that rose inventory in four quarter the the $X.X prior given to inventory earlier our mobile Inventory receivable trend confident compared in $XX.X mobile very for liquidity. towards Turning announced remain to we million as Accounts sheet. softness market. cash were end the prior and acquisition to was $XXX.X $X.X levels million. and improved It

Turning to GeneSic acquisition. the

million and our we to in noted, growth in expect to realize high all of margins business As million we business is a highly profitable benefits is highly respects greater we with achieving subject XXXX. $XX.X accretive it debt. XX% an approximately over have Total balance $XXX it those consideration After and Navitas $XX cash, to million sheet than immediately. cash amount exceptionally consisted shares strong $XXX million up quarters no and stock continue virtually GeneSic to substantial the and four of in revenues the cash acquisition, XX, September ending approximately with to EBITDA of

will profitability earlier, we which GeneSic cash high profit major is margins, a benefit accelerate this its overall path positive acquisition As flow. indicated and our of to

to So we see of and business fund in to the to capitalized grow sufficient continue the combined be to summarize, and capitalize we are and have front well us. available on opportunities capital us in

on Now to guidance. moving

million revenues For the XXXX. expected are and of GAAP the third of and $X third that's be quarter million to million between XXXX $XX in compared to quarter $X.X

the to for for impacted to for space. growth of margin includes by quarter minus X%. guidance we Our see the adversely a business market, the partial quarter in to we outside or expect plus of beginning mobile approximately continue mobile are XX% be is Gross to GeneSic operations revenues do the China the third quarter expected softness while and be

we new markets from invest initially our mobile as have impact lower expect in We expanding away in which continued the the of margins. mix gross from shift products into

believe last gross this quarter, temporary. we impact is on we margins As noted

We assets. that mobile the improve to the will expenses in to QX over quarters margins based compensation or operating our which market In total amortization as GeneSic to X%, products our transition improve. approximately of partial of excludes intangible expect include generation a expenses are we few gross non-GAAP and begins and for China quarter plus be which $XX minus stock for million expected next

mobile XX% is for outlook fourth the softness revenue plus market the range of power the In accelerates of gross to $XX in how of Navitas and the ranges leader. that session. us outlook combination summary, $XX our the preliminary million for in and million. Q&A of reflects we're And begin let's Our margins growth quarter opportunities from vision generation minus XXXX in continued our about next the in GeneSic becoming the industry's and or front excited X%. Operator, semiconductor China

Operator

ahead. Securities. your with [Operator Instructions] Please Rosenblatt And go from Cassidy Kevin of is the first question line

Kevin Cassidy

acquiring? taking on many acquisition. for Thanks about Maybe what you Yes. be us the tell little the are revenues more how GeneSic details you a might could question. employees if or my Congratulations

Gene Sheridan

your million. to people it's And on it's pronunciation well. and thanks XX that year's Sure. at this about call. Yes for But we're GeneSic about $XX as estimating Kevin, revenue help

Kevin Cassidy

Okay, press in at is I XX%? and think the growing release

Gene Sheridan

growth That's demonstrated right. Annualized rate.

Kevin Cassidy

for that to And on third going it great. is for Or Okay, be now? your ramping is shipping generation in the revenue just quarter?

Gene Sheridan

Yes, in will impact we're QX. more next in releasing QX the and year. appreciable first customers It's material in biggest our not QX. It's be

Kevin Cassidy

Okay, great.

queue. the get back I'll in Okay,

Gene Sheridan

Thanks, Kevin.

Operator

Your a ahead. next from Tristan Baird. Please is line Gerra of question with go

Tristan Gerra

equipment How silicon incur you for build potentially would you follow-up capacity? would you be Hi, Good chips you your questions purchases from capacity as some if and flow that you of or impact cash a much manufacturing recipient expand just carbide? Also, the if company build on GeneSic. you And think guys. afternoon. act,

Gene Sheridan

but case aggressively In may as a with just Navitas expanding their in of the I'll has on comment, model nitride Navitas Taiwan. of working facility, fabulous on of gallium takes rapidly investments. carbide CapEx care fabulous their TSMC Texas GeneSic like who Ron bulk been in the with theirs the expanding TSMC, is while the just for they're who works [Xpat] it is GaN explain capacity silicon model us just

done substrate the with and combination suppliers multiple silicon it job and dimension substrates In a qualifying, that and approving great critical has added in of epi carbide, team and addition, in of [Xpat]. and epi-layers using has GeneSic

in supply doesn't the chain, CapEx but So term. a require short also it's and very flexible significant robust

Tristan Gerra

that we looking they scale? GeneSic to a world gross any want at would is levels? Okay, the be changes similar expect quick this follow-up as year? and as XX continues margin to going million then, current it to should how Is at then, there be Or

Ron Shelton

is this Ron. Hey Yes.

again, single the about comments, my $XX margins forward, as million in as $X was going about we is to to around billion, plus X%. you little a guiding million. minus number or and that, And of that single company were to QX guiding the So that up we we're way right a now it bit margins $XX billion think then $XX saw

in the kind that's at And way. we time trend margins. march I it over So mean, they'll of look that again, lockstep, in

the a at comments in this power we're a business single So will basis. I and looking as point we report we're We're this to semiconductor and put and that out going just company. on very is a consolidated releases profitable. company, the

refer plus immediately. EBITDA a being to XX% margins. as accretive It's we accretive, it got it's So

we're about excited very cash. it'll think So it. We generate

when we up, net-net-net, all transaction So, financial and add that you business transaction. good it's think really a

Tristan Gerra

Great. Thank you very much.

Ron Shelton

Yes.

Operator

Your next ahead. go question from with is of Blake Friedman Bank Please line the America. of

Blake Friedman

Hi, I in players of few go been the are acquisition. there landscape. my for just years, know I GeneSic thanks several the who to kind to the have carbide beginning further taking question. wanted into past silicon enter

the on was to holds I you the So elaborate vendors could industry. if advantages GeneSic in competitive curious relative further existing

Gene Sheridan

But applications, prepared are devices. high is high some as switching these particularly temperature, presentation in how which we about of there, for Blake. we're Yes. use Yes, some We've And remarks, share the that's really a diligence, extraordinary fact, Definitely of Thanks lot going investor online. intensive an done, their question. to in to due frequency others. testing performance, findings be of some of want to compared technology the super course, really we of the you findings, it. in posted highlighted excited in those

carbide. Of GaN the technologies benefit or silicon course, that's began of wide

they the we've avalanche combination short And class. performance, best a of are but step a his his that and robustness company and like Dr. really really years reliability, credit if and to performance, over career. circuit circuit world and impressive develop of further, some circuit, seen. went Singh his and real XX in and Parameters GeneSic in robustness excellent last to the also work whole So ever switching that the achieve, that's Ranveer and team hard

why industry the though it's growing and it So And to even position. the entrant faster very to than they're share gaining it puts market, I market strong, a and in the him in a speaks leading explains later performance market. think

Blake Friedman

weakness I kind of I smartphone to know that. quantify know. China then QX if of the up you out for peers. quickly, and to maybe in Good on QX. kind wondering And called softness in that just following legacy just both similar market Thanks you business, can

Ron Shelton

Yes, this is Ron.

think pointed to soft. way the is about little Gene out, business as a is the So this

we what half. relative off companies. first of down think the it, right to seen And slightly visibility to so the other you've flat And to in first it's second half half about limited is for year, now, the again, this the similar

of be where kind quarter to at say, going bit just really and limited. a thing it little two it's it's we're So a to three looking

China rest the revenues So right now of expect muted year. are be out to through of and this certainly

Blake Friedman

thank you. Great,

Ron Shelton

Yes.

Operator

Seymore Your next line the go with Please Ross from of question Bank. is Deutsche ahead.

Ross Seymore

letting Navitas. Ron, to me thanks to Hi, ask question. welcome

go just growth revenue to assume incredibly kind of wanted XX% applies GeneSic it that's Just as I forward I'm about should think know rate things. has are of as of if is proven as far you rate at talked forward I number revenues side growth going backwards. sure of that into What much the sort the as looking. impressive, demonstrated, looking not looking we that but backwards

Gene Sheridan

Yes, Good question. thanks, Ross.

think the and China still plan should I our judge in or next time November. any with And right. poor rate integration we'll November. tell demonstrated annual more in as ballpark just that as the smartphone in same You're quarterly us And business, the this more rate better visibility yet, giving bullish financial But forward. we some that in do XX% we're more. with GeneSic some for planning point, deeper announcement at do growth well to that'll official guidance We're that going to not team. of you It's be 'XX the give growth

Ross Seymore

guys Ron, but there to I of color XX as gaining customers your broader is, what guess Obviously, eight in was the are problem the over top then side of Was nine know and markets half question. offsetting a significantly that like see gave half at to all Navitas? was core to you you've Is inventory? share the Gene the excess and/or do it the core that inventory doesn't prior market. are things, of weakness the specific you to I'm really It the helpful share, seem of weak, gains from And generally, what that's here? we Ron the vendors. excess gone on anything it. getting you Got six business, components top But it

So the I of to bit just two want those kind little color more get interaction between on a dynamics.

Gene Sheridan

has I our in brand XX a could single amazing add Yes. been in China and design. position market never design globally benchmark, charger lost brands, fast better. we've the new not launches some really experiences, charging

So continuing We're game other there's market no against share. share loss even in just to and GaN. silicon discrete against

those premium some those limited sell XX complete The They back up. production to news those and all of an of the the China, years, they're I or because new through launches, all smartphones in They're done. the dynamic inventory the are feels impact position existing queued them there. models. new good when the up is a stages, strong that we that on built happens, models, until models on real new wins new the the the you're on see through very while in print ones to them launched they hitting model And volume want existing existing they in they when brakes the have are holding launch either models. some early don't of of launch that so sell players push lot So think is themselves. major are a the on the though And them the models,

very been So to in think position, see before. that significant revenue strong I but it. we're gains we've go stronger market And with ever than a recovers, as we'll

Ross Seymore

Perfect, thank you.

Gene Sheridan

Thanks Ross.

Operator

Hallum. line the Please with from is of question ahead. Sam Craig next Your go Peterman

Sam Peterman

my for I three programs I on electric kind just to customers. onboard Thanks the vehicle five to But charger wanted clarify, ask two guys. question. taking a those on question. of part Hi, first,

potentially want again all against in Navitas. where, silicon not I'm clarify, Just from seem place carbide. like a like charger from onboard And those win the to are curious of kind to and industry GeneSic just

as to kind solution.? So products both market an with about think where slide of could curious GaN of go EV kind you how in now your you

Gene Sheridan

we've EV dozens five few XXXX. actually probably and customers Yes. little the tracking are GeneSic the those clarify, to major really But start said significant of to development on really ahead those out the bit many Thank GaN side. contributing But the in We you BYD, well, immediately us. supporting as acquisition, of of probably programs three EV a Sam Mercedes, are And the schedule remarks, for platforms customers. shipping in in a others. would revenue them AMG, past, we're named those in prepared just

just two three additive. all really like target are those EV, participation energy of our And solar, plans. prior So our and some we've to years markets effectively, by like accelerated power in our high compared storage to

So those all rolled together.

Sam Peterman

you. Got

color describe of a earlier for silicon opportunity? the to that a year an in helpful. VDD. on that carbide you and of can then would Thanks you technology more Any kind Okay. what little you is little Navitas elaborate and across clarifying I across acquisition your bit thing additional said be the the and Is a bit quarter X market of second, that. And Can that on then on markets? billion kind want brings and all to that GaN ask

Gene Sheridan

And Yes, we've semiconductor. talked IPO definitely, Sam. it mission our about generation power since to next in the become

chips While that. complementary are silicon digital out like silicone legacy Tech by power exactly important that most of controller, isolators, the devices, VDD or silicon get there silicon are carbide, developed we're and GaN not very investing are in to

high needed little X needed. XX, almost in isolators systems, these are these isolators XX all even of sometimes fact, In are power digital these little

Tech technology and also gives details, digital the in investor for but high more capability isolators GeneSic that company some GeneSic, of GaN. because an only Here on speed, frequency those presentation or which acquisition, carbide on again, not already optimized We presentation, we're high they've one. releasing love silicon the particular, the VDD

be to We billion XX So as device it's the or after to as us. products be shortly you that system, estimate $X that. GaN COVID dollar of every be said fit separate up is to launch year up that mentioned, that and isolators to and these a to it phone incremental we'll content. And And I commercializing market in we'll and additional a potential for tamps perfect of described. integrating up could we've could did and then that opportunities ramping. that be really next technology market with

Operator

is go question of the next with line Please Jon Tanwanteng from CJS. Your ahead.

Jon Tanwanteng

Thanks get up of just that outside by Gene, everything's actually wanted how on how you've you a doing wins geography? give you more to my China? some outside? taking I Can detail some congrats picked ask regions the question. going Did for quarter And the us color acquisition. you, little are last

Gene Sheridan

definitely, particular is percentage for appliance of that's now we've in we the That's put by and We time of China. been GaN our highlighted this certainly and first more see accelerated in overall other Europe that applications. really motor adopting we've stability Europe a regions in in all one company premium for been home total major growth and revenues. drive as the diversifying last given regions particular, quarter very is major ICs in And the program highlight. Yes, of that color, But a good is the obviously significant that's Europe softness but almost into successful regions. to the all

China, across building So generally Europe now then it's business. are Asia, U.S. customers view balanced the a Asia, pretty broader the and who in

Jon Tanwanteng

you going growth any could wondering climate markets, going how a units but needle market, the to of in you was actually it. bill how charger much to in of forward light power of would the passing, little work move a model for you bit you not types that's these And applications? done about move then Have Got these lot guys? EV, solar, as they that's the how if talk of second, high just I

Sam Peterman

question. world and great businesses a in that's our semiconductor in we customers, really Yes, And Act, companies that power from as still GaN $XXX pure this Energy the the But as passed for energy do. manufacturing, become And this benefit markets, our clean unfolding and plus that what and to only that now encourage obviously, next play is going generation to the Chips especially Clean larger our is billion Sic those climate dramatically I'm Act perfect gets company U.S. we both semiconductor investments. and implemented. between act sure

years, focused applications but we the home, fact, what In efficient appliances move two electrifying commonly also, down and to not based which pumps, home alley, broadly. like course, heat electric very in driving already but bills, know heating, is if and accelerate those continuing they're like and obviously things key the up break gas areas immediately benefit the working all we're to business now energy in of of already based, you carbide vehicle incentivize to electric next e-mobility Those going right just silicon shipping with more our and GaN, we're our few to those on in markets. not are into

how into the very to excited we're on And quantifying learning an more So government initiatives. of and that looking forward exactly our business. we're translates acceleration

Jon Tanwanteng

yourselves? you if Is Great. One market what more, that you GeneSic GaN requires go neither way some helps or the there that or can could or by I one can after go another? you with do with both into could, of Sic platform after get any application you combination the

Gene Sheridan

interesting synergies. a choices there's nature, older with think leading might carbide, a there's most have technology, both that we conversely, silicon to but up made synergistic show done GaN edge conversely really with delivers find and the be. up technology, but also synergies or whatever legacy help markets, carbide, customers the carbide, good to lot not but devices, I the customer. right And probably of opening the leading suppliers of there's think these technology. there. customer the and about the Novitas because edge to GaN to or up show for lot for overlap either a great and And side, not overlap excited GaN. same Navitas might the by applications the who silicon one is to that silicon an going carbide push GaN be and only trying GaN be I'm the silicon I it's That's opportunity maybe and all because GeneSic on Yes silicon diversity wouldn't have new overlap best

in lot I solar an XXX a and storage. think overlap electric volt there's energy and is a a lot on battery, There whether volt of battery. opportunity of XXX overlap or vehicle, it's

no guide course there customer is in the think, combination I the right, going what unique of be of markets, to any is this having And is sort of optimized to going winner to dividends lot matter pay So of a to solution. generation these the overlap benefit. next Navitas to

Jon Tanwanteng

Great. Thanks.

Operator

[Operator Instructions] Jefferies. from next question is Your go Please the Mark line of with Lipacis ahead.

Mark Lipacis

Thanks I had my questions. for two. great. taking Hi,

very sure I which I So think that Gene just was comment, understood wanted I last clarifying. make to

is So synergy R&D necessarily in this refocusing. And opportunity. cost then reduction not

chargers, it. you we on You applications a have understanding? roadmap, onboard you voltage you're then that completely products. picked portfolio for portfolio that forward that kind before pushing of was be silicon higher of on expects have had product, Is GeneSic that a you of and with had GaN sitting carbide And right a to roadmap would and your up like top solar the the extend you

Gene Sheridan

that's think way to think definitely I the right about Yes, Mark. it

the same a right revenue, very sure the quickly and customers, going generation capability. technology tool only is relationships best to we deliver got years, it GaN make solar the take cycles. GeneSic energy immediately we've leading whatever with with next system get in with them was not edge We're schedule doing track optimizing of to a bit regard. on customers, are us that lot said, very and significant But of to up and higher us edge to this long are GaN with little our leading great power. going in in these that customers, but you three those carbide, production As for storage ahead two even We're puts toolbox the show silicon power development to EV

in changer our accelerating to go, game a accelerant for a real where and but So real intending business line diversifying it's to it's we're completely that plan.

Mark Lipacis

Got you.

this way? of then of risk And in And trying of wait think on to until you, do the tap What that's down helpful. that, to able this. going for on don't and Thank with to the do in? down there market any you in Okay, to manage believe the to this? produced the line notes and know, Is I about a it's kind the capital strategy to on to a you of the just then wafers follow-up was inventory kind Ron is inventories I continue build And try I inventories there then market because a take is write question enough. you your comes China started be don't talk on or back? expect own fast And you. that the you working so that therefore carrying? slowdown you're getting

Ron Shelton

question. sure. Yes, Good

that And times business. with and So want we'll is state what will the we're target one about I by time align forward, go over times respect inventory, think the we now. inventory I year. of a to mean three our half a And turns right inventory go as to with four

we'll just with outlook I keep on it's hand mean. So align our time. inventories any point at in that

we to put way keep market the intent just with going So go another outlooks is forward. to not build as align the it and it we're building inventory to inventory, our

And write think your of about there's for downs now. no right us to The second downs. question part about reason write

the of the a outlook things the are lot based on state And kinds those we look at every of in think I it's market. of quarter.

quarter. we last do that this we didn't and every have any So quarter

Mark Lipacis

Got you. you. Thank

Ron Shelton

Yes.

Operator

question line Company. Please ahead. Needham with Your Bolton next is and go from of Quinn the

Quinn Bolton

Yes.

to follow Mark's chargers current the question inventory designs, sort up current up. of inventory there guess Just and about wanted writedowns. it I

behind there chargers? stuff older a of generation just might those fourth possibly for the products. this on gen-X given some see a write be slew of based have risk them got to wouldn't your You've demand a designs that new Why sitting overall generation lower down

Gene Sheridan

Yes.

if per existing there again, we think -- as it’s I think currently lower not have inventory. demand may think bad for the se, be I But it's it. I product is

period We said, and can so any not look to at off. and tell it you like at QX, in have of time. point, certainly what outlooks I look at write And in is quarter, we ideas at again, it forecasts When on this look we and anything we'll QX, on. we'll based offs, it again every again it in wasn't will there write QX and at looked and I at that outlooks it's

Ron Shelton

add can too. I color a Then little

dozen where of our part are, numbers. terms In it's really volumes over real maybe spread a

generation-X looking a pin in and delay be different high So we're particular, to we but high really China real is particular, consumption market in the looking Generation-X shrink mix not mix. pin at in situation, each at in generation call a replacement. not in what clearly a die particular, a we're can a

whether Ge-X if to customers to them we're So even want other. the generation-X designed good there they've to thing Gen-X they're if do one we have required in it, in shipping flexibility the move is or versus

to And helps about no the we're our risk. fact related reduce over that generationally reduce mix. to a So inventory volumes risk spread to dozen to are partner more than that results help

Quinn Bolton

GeneSic just wondering, Got it. I apologize missed if close and what I up. say date then the you And follow Maybe acquisition? you Did did.

Gene Sheridan

Today.

Ron Shelton

Today.

Quinn Bolton

right. All okay. Today,

quarter then roughly third about GeneSic you've speaking. quarter So a your guidance, of in got half

Ron Shelton

Right.

Quinn Bolton

it. Got

rate run that increase GaN driver or of Is sequentially. imply to So which basis question XXX sort the $XX million of margin if for markets us some related And margin? does your you in revenue They about million a you QX in $X.X just million margins more Is would non-mobile really by reflection to to revenue give quick being or a of GeneSic probably sort improvement I in math, $X increases just QX? seeing as do GeneSic. that probably are getting opportunity? this of of European quarter the motor the an points GaN well full driven

Ron Shelton

Ron. is this Yes,

Let me start.

few So there's in questions yes, a there.

high let level. a at So start me

about million So say year. GeneSic a we did $XX

half. first being the to GaN to flat the sequentially, half down from about second business the kind talked of also We

both going we're forward Gen-four, a Gen-four, when GeneSic. part look it's up customer the think of starting of end side, And introducing they full margins market and in I QX to mix and GaN move and really also the it then you at on quarter is base

But leading I again, a the of like into in few know this, to improvement That's things that. does -- don't QX. It's at are it's half. a down level there margin again, I second said, flat it's fine. high Gene So

Gene Sheridan

improvement margin that some next incremental main are think in and continue that I the are we QX year. drivers right. to into will that's leading No, expect Those

Quinn Bolton

of the Great. And one given then know Gene, update, for you've I timing last with me, Gen-X. sort us

to Gen-X of previously, price expected to be silicone introduced think sort parity end by ship you calendar brings you'd the of which with I or to 'XX.

wondering, Just brings Gen-X still parity late introduction 'XX to silicone? to guys that tracking price you are with you that to of sort

Gene Sheridan

good that's notes no, Quinn that good to memory guidance. and Yes, no and change

Quinn Bolton

Great. much. Thank you very

Gene Sheridan

Quinn. Thanks

Operator

Tristan [Operator is next with question go a Instructions] ahead. Please up Gerra of from line the Your Baird. follow

Tristan Gerra

Hi, the again for guys, opportunity. thanks

million synergistic. is business the should to your whatever carbide, So I How companies targeting look very and diversify you but silicon let's in are your three content if billion in you years. I fairly carbide, by EVs, low unit of obviously accelerates carbide at in that silicon divide analog they're kind I some we number. ramping do GeneSic $XX positioning if plus average say understand next at get year, silicon And it I this the what a look

you volume higher be differentiated guide those volume in how So relative going lower Or applications targeting are be those you're within silicon to to to carbide? going markets?

Gene Sheridan

growth is Tech whole and not aggressively performance think than adoption the of to we technologies little isolators, the carbide and designed differentiation market about that is all not including bring a gains. before marketed. of team it's thanks, other significant Tristan. capability. by is With I We're innovation, And acquisition. said, going said, innovation, innovation, been device well that we're all the lot like into Yes VDD digital starting Ranveer circuit combine block market But to been kind that. Navitas think new share silicon driving I of Dr. impressive that change very faster reflection to of with innovations, with a going robustness that has that's technology the GeneSic already on and Yes, fast, the bit a that's from known, already more to and together, a stated that the capabilities, the color, kid as give further system package are GeneSic Singh.

So variables. have of we lot a

GeneSic of demonstrating Navitas GaN and with same been the We we're that of lot do other to already value, very And have layers technology. integrating technology. anxious has a the

[indiscernible]. the the differentiation, those silicon over time, of have all to I So with think technology are for to in layer point strong GeneSic, starting we adding carbide going

Tristan Gerra

pricing Great. year, wafer in going think And your TSMC. product was nitride talked Gen-X about the then to this be for how gallium higher offset to earlier you an I

the you extent over as migration So gross at several to reduce I the the in as that gets to the a delayed continue bit Gen-X next your margin inventories Gen-X. potentially look little should result? How a quarters

Tristan Gerra

Yes.

before and it first I and improvement ramp on seeing margin cost then mentioned QX in with margin the track reduction started customers our of we all, Gen-X. we're releasing think quite that reduction, sampling QX. and some to QX We've in material we're first to in contribution

talked wait in outlook as that we've been we see it. make sure our about, we want we better conservative the As and can that recovery pretty talked while to in China market, we judge about,

the customer guidance all are plans, good into of I plans of baked or ahead our our a rollout hitting well running here we're adoption. in those pretty shape shared terms things pretty on today. So in And we've of little even bit think and again, Gen-X

Tristan Gerra

Great. Thanks again.

Gene Sheridan

Thanks, Tristan.

Operator

remarks. any and question closing I'll for the over concludes call. call today's portion the to Sheridan Gene This turn answer of

Gene Sheridan

GaN company to IPO next operator. generation of year the power that our that completed to this in acquisitions but after alluded a leader. It's semiconductor who our call. really joined just since all Thank you thanks of And very much, to history being have of strategy leader, just company's a in one not being you time we extraordinary our some

plan GeneSic silicon and carbide chips our generation the silicon really us positions power well follow the now to semiconductor with only isolators, company company. adding us as an play the positions capability, pure adding Now next extraordinary and strategic with very digital VDD

happy of you us and you today. So join we're very very position very happy about our all Thank could much.

Operator

Thank you call. all This concludes today's conference participation. your for

may disconnect. You now

Navitas Semiconductor (NVTS) 16 Aug 222022 Q2 Earnings call transcript