Earnings call transcript Q2 2023

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Operator

Good day, and thank you for joining Navitas Semiconductor Second Quarter 2023 Earnings Call. I'd like to turn the call over to Stephen Oliver.

You may begin, sir.

Stephen Oliver

Good afternoon, everyone. I'm Stephen Oliver, Vice President of Corporate Marketing and Investor Relations. Navitas Quarter joining Call. Results for you Semiconductor's XXXX Second Conference Thank

A webcast call. joined our website and Shelton, recorded days and Treasurer. Sheridan, by approximately XX our for approximately webcast of President, and I'm this Gene the Co-Founder; one Chairman, hour today conference on be will available CEO following and CFO will the replay our available this call, following Ron be

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

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

we terms. to that forward-looking can these that expect from statements by words and results risks actual statements caution could expressed in you expectations we materially statements. like to uncertainties cause similar events believe or such subject to wish or You differ or are forward-looking our identify We

XX-K that that XX-Qs. our also from Navitas affect factors including cause and the Risk described business to differ our refer Important results recent actual earnings in to our factors most are can statements Please forward-looking could in release. sections Factors

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

Gene And to now over Sheridan, CEO.

Eugene Sheridan

all to segments. $XX.X and margins, the climbing first we up saw pipeline QX QX, revenue XX.X% in from XXXX, XXX% with growth and of sequentially along progress the XX.X%, million, XX% lot, quarter from up revenues and customer to QX. Steve. second of up in a In quarter Thanks margins increased with gross significant market XXXX from across continued

markets slowdown we pleased the in the broader nice a also more particular, with chargers a interest very this consumer growth models. market, the enabling given in of launch in softness market reach all mobile across delivering some as rise robust that of the solar are and GaN the and cost am global continued mainstream in Despite parity silicon growth I market rates, in chargers, rebound

in we global across growth, With of today, onboard a solid roadside continued of the and announce our excited in we we as fast cumulative America. both silicon shipments In devices. into business, have XXX BMW car million a chargers. years. particularly chargers an shipped up million and devices to plans in business of QX our GaN $XXX momentum QX, electric that million over consortium vehicle to strong additional silicon seeing are XX GM, opportunity and carbide are and translates carbide for North fast few install to XX,XXX chargers Recently, seven announced This next manufacturers, Stellantis including to

AI per latest the in to computing edge GHXXX, watts consuming chips and such meet recently have been NVIDIA's European by X.X developments XX% as inch titanium up cubic industry-leading market, energy in increases required in Union. required efficiency which announced processors, for generative many X.X translates for of this the AI over in When the potential opportunity a data per these silicon-based reminder, a by non-Tesla in density. We dramatic chargers our $XXX already to is in of designs technology the million the may roadside chargers an EV every recent a significant just ICs on GaN Based to doubling over platform, the silicon efficiency has with a power single a power standard plus XXXX. server as roadside kilowatt delivers opportunity power over challenging watts centers thousands months GPU. used power, struggle U.S. meet of As XX% into Overall, considering the and carbide demands utilize supply market efficiency our with year XXX X,XXX as

develop has of customers our with This QX. already power our to a platform center compared NICs doubling and into these rapidly translated customer as supplies pipeline is enabling to data

also air includes high-efficiency factory our refrigerators, carbide conditioners, with which and of In and electrified systems. across includes for utilize Appliance also products. care the robotics dryers, seeing heat washing a Industrial we are home the pumps segment, drive our on growing automation, silicon machines, customer need technology industrial applications dishwashers, which pipeline along projects in appliances, doubling high-efficiency for our based hair motor applications, And HVAC

are such doubled In themselves, softness, into years. inverters attach coming in as increase in solar, over to have silicon backup in storage dramatic rates which XX% attach a solar well rates, GaN battery attach carbide recent energy and the approach market more both years. than in the despite adoption increase solar anticipate as the the we some we experiencing installer rapid a will is and installations, One adding reporting rates, for residential customers, XX% Californian planned panel

each the storage dynamics, has segment. XXX% and potential in increased solar over customer favorable our energy for these revenue Given the project pipeline for

models, charger mobile broader our the translating expanding both despite projects. suppliers, to in mainstream including Samsung particularly performance developments Oppo, significant the the and by customer of experiencing those of and into potential market, growth, global others the number in pipeline revenue are China Korea. number total consumer increase are and projects a In GaN of Major Xiaomi, leading models we adoption softness, significant from a new in smartphone

customer to all million pipeline in and pipeline. increase capitalize ensure important growth manufacturing Putting revenue it markets. $XXX also together, growth in in happy of pleased our potential our across on for gallium we're all projects QX total expanding to billion fully a very and fast to both target with announce QX in over I'm customer our with progress $X this of carbide nitride we customer can capacity both silicon from

we ramping all ship carbide silicon the of our and this midst the carbide continue capacity in next to throughout Xx silicon can are we produce. devices announced, previously by As we as year

we're with reactor our the next start for epi, investment track epi which installed announced with of will addition, In in $XX year. QX first silicon on in-house million carbide

aggregate, reduction epi provide the over capacity support investment per margin in it million will and cost year is appreciable this of $XXX years, three expected expansion. next and In revenue, to

Last X have year, in our working X in objectives closely to with our increase support a GaN TSMC, of fab benefiting partner, from we are headroom next growth that the to years. Xx ensures we capacity plenty

growth million benefits capital-efficient a May, support highly in to continue With a additional strategic manner. the of very that enable rates higher have can investments a offering we follow-on sheet to strong manufacturing balance in $XX even

world agenda also are the Investor announce global exciting be XX. include a to the at to Navitas to first are California and pleased analysts new future headquarters Center held Torrance, the we in November Electrify vision Experience the participate electrified comprehensive Investors invited that Today, in power in and on Day new our an the applications. for that will will detail present of past, our

will announcement carbide or of of believe agenda include technology many target GaN new platforms, four the silicon major our This markets. also we will which transform

a surprise pipeline, review of on provide guest XXXX will outlook. view and showcased exciting some customer high-level detailed a also speakers our provide our We

us, our pipeline, our and technology with excited significant pleased are market accelerating the expansion. We're development capacity results, front which manufacturing progress adoption, very reflected opportunities about I'm summary, in across pure-play vision with of our In financial believe, one only continue customer power Navitas is our to industry. world, and capability fastest-growing and to of next-generation will companies in electrify the semiconductor be the the our results. we company in semiconductor

Shelton, to CFO, me Ron turn our as over well as results update to it let guidance. Now financial those on our

Ronald Shelton

today, I'll we're comments then seeing. for market second quarter take Gene. quarter Thank you first through some third of and our our outlook my dynamics you, I'll results, walk In and the you through the

a quarter first exited the mobile of on guidance, our strong somewhat more slower tempered a quarter. record strong of to compared the we that attributable with the factors. increase was continue business. and so of XXXX above had driven in million. QX That's to market by XX% momentum beat to across high-end record top in and experienced year-over-year the to primarily quarter bookings Revenue we second in growth $XX.X than the the in backlog, we levels increasing Nevertheless, the during XX% by quarter consumer see XXX% The macroeconomic growing market, XX% growth well sequentially was by

in of Before I'd XX.X% to expenses, our in adjusting press consumed release of non-GAAP second $XX.X XXXX, to XXXX for the reconciliations in the of today. gross GAAP XX.X% and quarter operating from fewer of our second the to the development. of increased earlier XX.X% XXXX. quarter were my first million guidance And compared at to the second is as like for and the lower Non-GAAP rest quarter guidance. non-GAAP non-GAAP Non-GAAP in to second we below the and margin refer be margins lower the quarter our fees you to slightly referring audit-related and research the in the were experienced quarter first expenses measures. Total I'll than gross commentary, which materials higher end quarter

As invest quarter. we business we've mentioned the you in in the a manner disciplined second our in to which results past, the seen continue have in of

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

was Our weighted for the average second million basic shares. XXX.X share count quarter

balance levels were very to strong end continued and debt. working the to improvements no and liquidity Cash million sheet, and remains it of at Turning we capital. high continue equivalents quarter cash carry $XXX.X with in

second costs, we pipeline. of first of XX.X margins in to for capacity strategic needs the $XX.X the control series and growing net Leveraging issued meet the shares our reduce expand million. and public of those enhance a of manufacturing successful our investments proceeds part increase to our proceeds, over we supply offering chain, As our in backlog million announced quarter,

Accounts improved enables compared $XX to first in quarter, investment the million quarter that This month were receivable a the sales epi towards $XX.X the over last prior of support at while $X.X The during capacity quarter. margins. million facility enables headquarters. higher to was Torrance million $XXX silicon in facility epi revenue, the meaningful making can reflecting million gross carbide our contribution weighted annual the

as believe for to levels of we at inventory better our days flat the inventory Over will time, to closely long-term million, and nicely improves than levels target times. was more trend Inventory continue forward. turns business inventory towards going align inventory drive our with $XX.X we X

on guidance. to Moving

over of For recorded and the the in second we million, end XXX% the or increase this currently X%. At over XXXX of of expect XXXX. represents million third growth the of of substantial plus third we expected midpoint, quarter approximately $XX year-over-year revenues $XX.X quarter, minus XX% the an sequential quarter

Our carbide guidance expected increasing products an and the recovery silicon of on mobile the continued market. is supply based in

Throughout we've revenue the double indicated this that was year, goal our year. to

adds our guidance. in upside moderation to the to performance business, that recent remain in be margins comfortable with expansion expected margin into a given the second for confidence, quarter and we also in quarter are short Our will gross the the to the flat compared translate mobile which third relatively our Gross term.

in and operating third In excludes amortization million to be $XX.X compensation this of expenses stock-based are the assets. total, intangible to expected $XX.X approximately million. our And quarter non-GAAP

expenses investing of percentage to as We scale. generally will a revenue but growth, as continue will continue we in decline

shares. share expect million third the approximately of quarter basic be weighted our average XXXX, count For XXX we to

grown the million extremely unprecedented are backlog, record quarter market, nearly and level, the we're for of our pleased mobile the the the results ended GaN quarter cash we outlook. closing, quarter with supplier long-term where strength to ICs. leading no customer ended with our We In in and and saw the has $XXX an We debt. we and pipeline of near-term with

the Operator, session. let's begin Q&A

Operator

Instructions]. [Operator

& of The Needham Quinn Company. comes line the first question from from Bolton

Nathaniel Bolton

between some mid-XX end the into minute give bit you hate do carbide 'XX? focus kind to just mostly I previously. look about negative, margin of a of gross of data consumer second was a year to think to you half? margins the as than mobile, Can your but in on be mix, get able perhaps target when how center sort think into just you by spend mix you I -- might a higher-margin which the but you of coming range, and markets due see talking lower sounds prior little silicon thought Ron, the you

Ronald Shelton

question. the Yes. for Quinn, thanks

revenue we strong. So fundamentally, be have pipeline the it's news a right billion It And now. the we markets grow. to business backlog of about up it to recovering, is seems more very in terms I end in backlog And $X and pipeline, over is, than and mobile strong was markets great and the continue talked think other XX%. good position

in So of a little not But based just our seem what to be, a in see -- are drive moderation we the growth be indicated all bit we've areas on is in comments mix, to we seem margins. to of we gross margins. executing

So about margins, talked about that's when year what talked we this now. to transition X, We happening markets. end right diversifying would talked earlier drive Gen about

you pipeline, our not happening. growing, have looked it's at only that's those but margins. generally If higher And

then putting costs, in manufacturing we're driving strategic costs. And talked we're about place. We that

epi facility. The first step is the

in I pause. it's a not even think bit just executing those of areas, we're a So all a --

couple I and and a but there's we shift moderation of be of of margins, of it's here quarter back think we'll I terms in on at in just a look the no I rate look would terms in fundamental margins maybe of quickly growth margin it, grow, track. would our profile. slowdown terms think at and how

Nathaniel Bolton

just Ron, recovery the mobile a in by Is the on than expected call. Or business? or which stronger carbide of market, delay maybe is on the coming slowdown really guess that's that consumer I side Or really a in mobile year than business charger the margin pause -- mix? Or stronger pause? not question. gross kind expected think thought markets and just charger behind have is stronger for in growth the sort of accounting the referenced GaN you the just really margin margin a perhaps the of affect in sort of margin slowdown your market, and any of what's maybe the quarter? lower driven silicon pause follow-up flattening sort is perhaps back I of gross I earlier mobile I guess is the in are that third seeing know or than you the but is you appliance the mix the the part the which a charger the that shift higher-end

Ronald Shelton

right? think kind now. is is we the supply-challenged carbide. ship silicon strength of that, can -- is nothing than we're issue. the more Again, says really a It little we in make it's nothing So supply still right business up, It's catching product -- having everything and silicon Yes. this carbide mix a but about we're I bit where

I margins. suppose a we drive of And an like gross issue. the we're a and I margin nothing So doing just from forward. to I it's it as expansion I mix I a it's slowdown standpoint our a I going bit of mean And be wouldn't it's think think margins rate characterize said, again, doing think should -- quarters pause. a of I in of in and doing growth there's But we're everything execution slowdown the expansion couple moderation.

Nathaniel Bolton

slip Got it. just could business. in maybe center one, just one data the I on if And quick

business the starting to center in production of half here revenues 'XX? year? power starting data this Is the second market announced Are supply data see to now that You new you from platform. to X.X-kilowatt center the ramp

Eugene Sheridan

year. that is next Yes. in data revenue the releasing to targeted customer We and high-power the just centers actually QX. -- of We're start production GaN starting ramp revenue later Most then quarter ICs this quarter. the for next

Operator

comes question from next from the Seymore Deutsche Ross Bank. line of Your

Melissa Weathers

term? inventory of penetration you situation see Could and in appliances on give you are share gains your the Weathers do summary industrial impacting of end believe markets by us Melissa on new for maybe Ross. the how is levels end high-level where market and medium that you And particularly This pace inventory market market? industry guys and in a today

Eugene Sheridan

industry in pretty Yes, expect year. our Melissa. much buildup from a line mobile what are don't levels the in see with view, we channel. We Thanks, in did space consumer last but and would inventory, the report the we channel certainly Sure. specific

of which builds. As a and reflected unexpected from upside new we're reported from actually apart deliver, inventory those brand in being we QX, shipping levels apart in saw depleted inventory and couldn't lot mobile, we now an

channel I'd highlighted, at inventory nice Navitas nice balanced so in as reasonable. things I market So a the channel. we've think both Ron anything, see build, broader particular and from markets, where we silicon can everything carbide, we're and pretty demand. in just pickup have that reduction we shipping inventory, we in the a pretty seen highlight But If limited

Melissa Weathers

Okay. Great. you're other end what you talk And of then guided mobile recovery quarter for sequential growth. your how end much revenue by to expecting guide, kind there by And market? kind that, be of building of mid-teens versus Can your off driven that the September refill should about markets? or of you

Eugene Sheridan

broad-based, actually. center into The center exception a those continues even we growth QX. strongly quarter. in markets. shipping strong growth That's as other pretty it's next stability and we're yet. the data see being but in certainly, QX year. good into grow we not where and Yes, that mobile the one data pretty see -- QX shipments But really throughout Mobile then commented start seasonally We earlier,

Operator

Your next from Cassidy question of comes from Rosenblatt. Kevin the line

Kevin Cassidy

I details the are just an industrial a the idea us areas, around wonder what that's ramping even the little content appliance starting ramp give right they give in average you what more of could goods. and can dollar us If you if if geographies to and have? you'd market,

Eugene Sheridan

particularly energy for more are Thanks pretty applications the fossil gallium appliances, that. home excited fundamentally conditioners, based. carbide. or nitrate fuel from about moving which I listed air the Kevin. and dryers, silicon clean refrigerators, a We're to like washers, questions, electrified electricity great semiconductors Yes, from pumps, of It's broad number HVAC. fuels

automation, HVAC about technology. As using you to look that at tends segment, silicon the more be carbide Industrial

is opportunities across There's more U.S., us. ramping, ramping a 'XX. And even that highlighted Asia we've in regions, more customer for picking big some of revenue and the than the segments, in doubled and starting and both those now lots number many of across we about point we're Europe applications. just that and quarter. at carbide into are nitride fact different strength are up in So across a silicon focus Most in customer it 'XX, talked a projects more big across before. projects very the has ramping really gallium but Europe seeing these broad-based of

over nitride certainly to it's years. brings great stability conversion and from So silicon or the carbide not segment, of gallium growth next lot fastest-growing in couple but a silicon of the

Kevin Cassidy

can expected? And gallium is adopt And markets end will you as which Gen you that the faster? on nitride tracking it say X, do think

Eugene Sheridan

great happening. It's to Gen margin customers Gen Yes. We our from No, are be major nitride last from production switching late launched year. a is for adopted performance big over Generation expected is what's of platform. X next and X, question. Generation gallium transition all by X X getting cost being to Gen in actually reductions our exactly X advantages, markets, to that's This and it us. enhancement even year

high-power of also EV other mentioned All the and center, we're I launching are into GaN markets launching solar, into X. Gen that chips directly that data

our So of will we by X transitioned the QX latest. the at all Gen to shipments year expect the have virtually actually or of end

Operator

line Bank next the from of America. of from comes Your question Friedman Blake

Blake Friedman

the wanted to focus market. I just mobile on

you comment I with on was and OEMs be developments strong in helpful. highlighted American You've China. would with OEMs traction North can hoping or relationships just Korea anything

Eugene Sheridan

is many of high-end we're the it's the fact models years, for markets, power this year highlighted charger or system pretty a We're cost That's In what the the we that from mobile true is for big mainstream gallium and last adoption. many performance-based this predicted of flagship to particular, models. a to couple more systems. and with of seeing seeing the We year, of Thanks, you Yes silicon-based Blake. true bet. others. charger transition nitride this broad-based parity, achieve for

them. Xiaomi, America In seeing Samsung and not talk particular, to to but like away sensitive can are and aren't names, we we from these Korea world, China few That's we to similar and some in those cases, we more around shy so Oppo the that about. successes highlighted public North are in because transitions companies disclosing customers with and say some tend a publicly

is the the announced customer on late spoke described, lot for and the more profile, a based our specific it the at broader products I So and about major and than in also details Investor product we for reasons launches November. Day we're looking

So more coming. details will be

Blake Friedman

quick [indiscernible] the follow-up, following that Great. And the then just occurred raise in capital as quarter. a

on your position... about curious Just thoughts cash

Eugene Sheridan

you You repeat broke last up a Could part? raise... the bit. Capital

Blake Friedman

capital the raise I was your in about raising cash and just the Yes. thoughts about thoughts on curious position future. capital following

Ronald Shelton

the we and Yes a Ron. nutshell, about Blake, it's feel cash our good sheet balance position. In really

raise, indicated, we've whereas equity the as manufacturing strategic for think one. targeted I being reasons,

would what I about for extent capital think think going needs right be we now say forward, going to is, would strategic capital our when planning, I and forward, and you us the reasons. raised it

business in We've But past additional operations, we and been it manufacturing, more capital. terms need active strategic to in be ongoing a raise would but in M&A strategic accretive. and the now the see or right of don't

Operator

comes from from Jack next Equity line Your Charter question the of Egan Research.

Jack Egan

few a on silicon carbide. had I

a bit wafers and been the talk about carbide suppliers So falling for entering more market. just prices silicon recently, there's of

So or seeing curious, broader landscape you in right wafer supply just the pricing are was now? what of I terms guys

Eugene Sheridan

Jack. Thanks,

and of in can a build. as with I capacity we're materials. still the midst tight we that carbide We with includes chains in shipping increase highlighted think X-FAB. in everything a silicon We're are X-FAB supply XXX% significant ramp-up we general, reasonably mentioned signed pretty

be wafers, own our wafers, bare to you to adding or wafers we're epi substrates the the So and next alluded in Ron year, epi going described call. as as in-house as as well

said, think that it's improving. I do of all With

think I of seeing material pockets availability. we're improved

come MOSFETs, to the use I coming quality but with higher-performance that's on at as very or bare to the new dramatic ability be call there for And call are substrates said. down. And think we point. this as it seeing them, prices has wafers think those true you evaluated. I yield, we're board, wouldn't all I start to suppliers

or demand next more over terms and the time, industry of take think trends but are things a these favorable two. supply balanced year think the I getting in I So for the

Jack Egan

Sure.

can higher device helpful. And of now. be some devices so on the right above your device then side, at what margin, which is are bit That's gross than manufacturers XX% a Okay. the large

And or so other versus Navitas product due that and fixed fabless having of mix? how factors much end like lower being cost a base is just to market

Eugene Sheridan

of to other Many cost and break business, structure. hard benefit silicon we of Obviously, structures the suppliers. knowing their don't let It's say. margins out don't cost gross have detailed carbide alone

I trench So benefit we match very structure. our our assisted technology a technology feel robust substrates, think about good as silicon We carbide being vendors. planar cost with epi and from different that different can mix

down, in-house think more I us our about own gives come that we epi. Epi flexibility, the on especially and So maybe prices and as on using as talked substrates the

us So of be might think of margins that we But on technology. think actually, the performance of structure. doing cost pretty the the others than better gives main I all I because a is good reason

GeneSiC. have We we bought benchmark the heavy results testing ago of best year test before a We did high-performance in-circuit anybody.

technically industry. we avalanche robust that very also chips to us in customers use the XXX% their margins. gross offer there's making stacked cost place giving most few chips, in volts fewer voltage range, of In effective from the also And rated range voltage but and upper multiple allows voltage We lower competitors the to XXX that higher volts. systems more X,XXX that high-voltage avalanche to the our can do have also tested values highest very, widest

average industry. margins performance the the translating that's capability the about of above and in think maybe technology it's I gross more into So

Operator

of the from question Winkler Jefferies. comes Your Natalia line from next

Natalia Winkler

please view the horizon be a project be to Gene, guys capabilities forward? you that a extent about in-house to we more a that improvement think I you going about cost time wanted them? you to Is to are ask that have speak and about Could investing should in. epi going how you bit going

Eugene Sheridan

definitely. Thanks, Yes, Natalia.

over $XX So X-year it's million a period. a investment

I It's half to year, next fully of middle first and expect it by reactor. first the first late we revenue contributing that order be year. to of is received and next year, early operational year. The phase be this on to said epi next

more It margin into that's it give that capacity cost cost even will but can earlier, will still Ron to incremental the reduction, important also gross both give incremental next line, market be very as price of more drive on but alluded us and year, to us which which put tight is reduction also allow us some throughout enhanced aggressive top

years years, to I orders the so additional demand and it be years expect as fit that once online, continue kind we placing a use profile. the even outsourced demand involved X epi X in-sourced of profile of cost and and did say those maximize will blend to we X, in we'll reactors as as capacity and to well be epi see to time it's

Natalia Winkler

Understood. first helpful. That's applications and think had just second the markets. mentioned we we to the believe explain historically, please question It GaN kind could And those Gene, on about But should I the was into then be you you always as center. well. carbide how very the data being silicon designed like, think GaN of silicon about I sounds center? carbide thought in I data

the you So different market? have could you type please speak about -- in that end of those program

Eugene Sheridan

very one the question. that processors power the with changing dynamic used Yes, a demand. be the profile, very, it's efficiency will fundamentally generative in AI it's great future, a Obviously, the

So to it's because them, pretty of out it's shipping newest design the already But centers center we're exciting, one it bringing also the or our actually in highlighted, GaN That combination R&D combination compared the inside, carbide ICs silicon particular do GaN with looking one to uses advanced system data but work, kilowatt X.X we at as we not announced. GaN. continue into just of do system-level is yet. all

but guy. the next-gen power benefits play of something, Navitas one don't that's semiconductor to of only want is So pure I preannounce the

carbide We cost, can delivery, a best have density, evaluate priorities we the to depending a for in et efficiency, reliability, way, around cetera. world's customer what's leading very GaN, power system, world-leading going silicon upon be objective

that potential is we with more that carbide starting revenue we market, for think we you'll being a in ramp GaN center combination products silicon a IC I to expect used there be announce and So but and GaN, quarter. heavily see see as next data definitely

Operator

[Operator Instructions].

Jon comes Your next from Securities. CJS of from question line the Tanwanteng

Jonathan Tanwanteng

just addition margins. exiting back My Epi with mixed is think 'XX exiting adoption going to we target should wondering, next-gen Ron, the all? look the equipment that changing the have you when was there? you versus when we products guess, how or of the on year and at first that margin to further And just to incremental margins if of the forecast gross equipment, next QX based should be margin I one, your the expect out didn't of and I of

Ronald Shelton

Jon. Thanks, question. Good Yes.

to indicated the near the margins. growth in in we about as the term, a of getting comments, So moderation back we short-term talked

you I some was So expect previous gives the that that we rate off indication mid-XXs. our just which to guidance, QX, not grow at of them think

over on to couple quarter time, out from we it push of looks a had effectively again, previously what margin think indicated us like I growth.

So We growth. margin very in the we good the short margin profile. the margin about moderation we in growth. feel It's this our feel very positive good very here, that just about term had

that With don't lower granular. Gene comments, the benefit echo -- again, of But cost. just to want I is we're I'll get said, Gene's respect Epi, of as to we part the Epi think

we'll in profile our the and moderation And a right think changed way But I'm nothing's at and a little give to margin on margin in now, little expect it. of of we thesis. should indications bit of November, I look go Investor touch growth. our point, and we'll of pause where to a that our bit longer-term is at a the again, sure at model term. Day margins longer see you longer-term have the an And end

Jonathan Tanwanteng

are to us to wondering customer it's Okay. being that pipeline the you that areas quickest by type. conversion pipeline on whether little from you're Great. And just just in where Could more color orders see Gene, then, deliver, developing? where market able end on strength seeing most to by the the pipeline, the that a you're give immediate you

Eugene Sheridan

look mean are market. I at cycles, development by those pretty predictable the Yes. if you

to XX-month revenue. opportunity could from shipping trending three down course, months the an Of be cycles is Data about second XX consumer from a that to tends and quickest converts center to less. mobile and opportunity three. to be creation four years fast the or back development common is are Renewables ramp EV revenue

years, of sort in to renewables. that I in you're two should say, range So three

said, $X early stage. terms are stage. development billion at not in They're in along our of that many all pipeline With the of opportunities the well obviously

this see programs So some throughout growth. of programs kicking or solar. development those in them year, EV, late-stage short-term year, even -- next to thing with we'll Same contributing

characterize So time you so and flavor of customers. little so when that's many and got $X opportunity you've actual markets the to pipeline from of gives rough little expanding so many different But a lines revenue to across it's hard about pipeline shipping converting quickly different that a early bit billion ramping.

Jonathan Tanwanteng

Great.

sizable. Just did another The new that existing there? or changing applications? in QX maybe if I applications could from one. pipeline a you of Or from to mostly QX add forecast and pretty opportunity Was new some adding was lot in the increase their customers actually customers

Eugene Sheridan

Yes. the added solar in We actually space.

customer more we that doubled of than Data that me specifically pipeline. the more within pipeline. doubled industrial projects projects Let within highlight centers, appliance customer the than number

Solar revenue actually project, an doubling per a dynamic. saw nearly which of interesting is

looking sort we to more or carbide. While people go from it or as down double diversify of as bigger convert to silicon silicon didn't GaN see they either fast,

those dynamic. give by projects and certainly a market, varies but customer of terms you a to to little it revenue quite grew, in a while dramatically of bit over sense of figures billion. of overall of from the XX% $X number So couple pipeline course, It's facts are the broadening

Operator

Craig-Hallum Mitwalli of Shadi last [Operator line Instructions]. The the question from comes from

Eugene Sheridan

Craig-Hallum? Any from question there

Shadi Mitwalli

you me? hear Can

Eugene Sheridan

Yes we can. Thank you.

Shadi Mitwalli

margins? just visibility returning into how question any cost declines? near a far And from are I gross either you or have those levels, on them through do mix GaN highs, got prior

Eugene Sheridan

technology cost X% it's further reduction revenue over that out say we to in some this the to first and by fair margins year, a took X.X margins spoke and continue But granularity. years gross we break don't at ago, price or Yes, system of we choice the and X.X growth. increases gross with to drive was the years, almost XX% about start that one last our hit towards made another year, TSMC strategic

said, increases. price With don't further anticipate we that

to We completing went the carbide but cost a silicon also a of epi our them we're in-house side, ultimately have that number on incremental of corporate coming. a major transition through, X to to which from and pipeline Ron lot the to reductions highlighted business, We including in driving gross model. important it X very the much driving Gen towards closer long-term average that is Gen margins our bringing

business margin some gross So incremental gross improvements on that forward. of attractive I think impact see certainly behind margin path us, the pretty adjustment or going is negative GaN and a of we

Operator

from XXXX Second there Navitas and the for you Seeing Semiconductor no Thank are This today's questions joining queue. Call. conference, Earnings more you. thank concludes Quarter that

disconnect. may You now

Navitas Semiconductor (NVTS) 14 Aug 232023 Q2 Earnings call transcript