Navitas Semiconductor (NVTS) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics - Q3 2024 revenue was $21.7 million, flat YoY but a 6$21.4 million, with SG&A at 9.9 million and R&D at 11.6 million [32] - Q3 2024 operating loss was $12.7 million [32] - Cash and cash equivalents at quarter-end were$99 million with no debt [33] - Q4 2024 revenue guidance is $18-20 million, with gross margin expected to be around 40$1 billion market opportunity [12] - Strategic partnership with Infineon to create common GaN specifications, providing dual sourcing options for customers [13] - Focus on AI data centers, mobile, and EV markets, with technologies developed for these markets expected to cross-sell into industrial, appliance, and solar markets [25][26] - Streamlining operations with a 14% headcount reduction and $2 million quarterly OpEx savings, aiming for profitability [24][36] Management Commentary on Operating Environment and Future Outlook - Management noted softness in some end markets and customer project delays, leading to a muted outlook for the next few quarters [26] - Despite near-term challenges, the company expects solid growth to resume later in 2025, driven by a$1.6 billion customer pipeline and design win momentum [27] - New low-voltage GaN technology, Infineon partnership, and organizational efficiency improvements are expected to drive growth and profitability [27] Other Important Information - Company has over 300 patents granted or pending, strengthening its competitive advantage [15] - New low-voltage GaN technology will start sampling this quarter, with first customer designs expected to ramp in H2 2025 [19] - Company is focusing on working capital improvements, with inventory reduced to $21 million from$25 million in the prior quarter [33][34] Q&A Session Summary Question: Dual sourcing agreement with Infineon and IP licensing - The agreement includes a broad-based cross-license, allowing both companies to collaborate without patent conflicts [39] - Dual sourcing is driven by customer demand for supply chain risk reduction and faster adoption of GaN technology [39][40] Question: Gross margin guidance and market mix - Flat gross margin guidance for Q4 is due to strong mobile market performance offsetting muted growth in higher power markets [44] Question: Automotive market trends - EV market is showing signs of recovery, with increased design wins in onboard and roadside chargers [45][46] Question: Silicon carbide market and channel inventory - Channel inventory for silicon carbide is decreasing, with growth expected to resume in 2025 [48] - High-voltage GaN could eventually displace silicon carbide, but cost-effectiveness and reliability remain key factors [49] Question: Restructuring and market focus - Restructuring includes a 14% headcount reduction and $2 million quarterly savings, with a focus on AI data centers, mobile, and EV markets [51] - Technologies developed for these markets will also benefit adjacent markets like industrial, solar, and energy storage [51] Question: Pricing and competition - Market softness has led to more aggressive pricing, but the company has improved cost structures to maintain competitiveness [52] Question: Low-voltage GaN in data centers - GaN is making inroads in 48V data center applications, with potential to push efficiency and frequency beyond traditional silicon levels [54] Question: Liquid cooling in data centers - Liquid cooling is seen as necessary to support higher power levels in AI processors, driving demand for efficient power semiconductors [56] Question: Infineon partnership and revenue expectations - The partnership focuses on low-voltage GaN for AI data centers, with sampling starting this quarter and production ramps expected in late 2025 [70] Question: Solar market focus - While solar remains a niche market, the company sees opportunities in solar microinverters with bidirectional GaN technology [67][68] Question: Smartphone market trends - The company is seeing growth in entry-level smartphones with higher charging power, particularly in emerging markets [64]