Navitas Semiconductor Q4 2023 Earnings Call Transcript

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Provided by Quartr
February 29, 2024

There are 13 speakers on the call.

Operator

Good afternoon. Thank you for standing by, and welcome to Navitas Semiconductor 4th Quarter and 2023 Financial Results Conference Call. Please be advised, today's conference is being recorded and a replay will be available on Evita's Investor Relations website. I would now like to hand the conference over to Stephen Oliver, Vice President of Corporate Marketing and Investor Relations. Stephen, over to you.

Speaker 1

Good afternoon, everyone. I'm Stephen Oliver, Vice President of Corporate Marketing and Investor Relations. Thank you for joining Navitas Semiconductor's 4th quarter and full year 2023 results conference call. I'm joined today by Gene Cherinen, our Chairman, President, CEO and Co Founder and Ron Shelton, our CFO and Treasurer. Also present is Janet Cho, who will take over as EVP, CFO and Treasurer following this earnings report as announced earlier.

Speaker 1

A replay of this webcast will be available on our website approximately 1 hour following this conference call and the recorded webcast will be available for approximately 30 days following the call. Additional information related to our business is also posted on the Investor Relations section of our website. Our earnings release includes non GAAP financial measures. Reconciliations of these non GAAP financial measures with the most directly comparable GAAP measures are included in our Q4 earnings release and also posted on our website in the Investor Relations section. In this conference call, we will make forward looking statements about future events or about the future financial performance of Navitas, including acquisitions.

Speaker 1

You can identify these statements by words like we expect or we believe or similar terms. We wish to caution you that such forward looking statements are subject to risks and uncertainties that could cause actual events or results to differ materially from expectations expressed in our forward looking statements. Important factors that can affect Navitas Business, including factors that could cause actual results to differ from our forward looking statements, are described in our earnings release. Please also refer to the Risk Factors section in our most recent 10 ks and 10 Qs. Our estimates or other forward looking statements may change and Navitas assumes no obligation to update forward looking statements to reflect actual results, changed assumptions or other events that may occur, except as required by law.

Speaker 1

And now over to Gene Sheridan, CEO.

Speaker 2

Thank you, Steve, and thanks to everyone for joining the call today. As we celebrate our 10 year anniversary, I'm very excited to announce a number of major milestones for the company, which include cumulative shipments of over 150,000,000 devices, savings of over 200,000 tons of CO2, a customer pipeline as announced in December of over $1,250,000,000 and our highest quarterly revenue ever with over $26,000,000 in Q4. This quarterly result exceeds our guidance and reflects an increase of 111% from Q4 of the prior year. In total, 2023 annual revenue comes in at $79,500,000 which reflects growth of approximately 109% over 2022 in a year when overall semiconductors are generally down around 8%. Let me now turn to some of the market specific developments and highlights.

Speaker 2

While the mobile market in general is experiencing limited growth in the near term, we continue to see solid revenue increases as major mobile players transition from silicon to GaN based chargers. Our high speed generation 4 GaN SIM Pepperidge platform is a key component in fast and ultrafast mobile charging. All 10 of the top 10 mobile OEMs are now in production with Navitas and GaN is climbing the adoption curve rapidly. In 2024, we expect customers like Oppo and Xiaomi to ship over 30% of all their chargers with GaN technology. Navitas now powers 5 different Opel models and we're excited to announce 8 newly released Xiaomi phone models with GaN chargers ranging from 67 watts to 100 and 20 watts.

Speaker 2

In Korea, success with Samsung continues. We were already powering the S23 charger and now we've been selected to power the new Galaxy S24. Dan has moved from beachhead to mainstream and is the technology of choice for new mobile designs across phones, tablet, laptops and aftermarket chargers. We have also developed a new M Series version of our generation 4 half bridge IC, which are optimized for motor drives and a major driver in our home appliance pipeline. As noted in December, our appliance and industrial pipeline totaled over 200 projects and approximately $360,000,000 in potential business.

Speaker 2

I'm pleased to announce another major appliance design win with a Tier 1 player, which leverages this latest M Series package, which we believe enables the highest frequency, highest efficiency and highest power density motor drive for appliance and is expected to add over $10,000,000 per year in new revenue starting late this year. In total, Navitas is in development with 7 of the world's top 10 home appliance OEMs, which we expect will drive further revenue starting later this year and accelerate throughout 20252026. In appliance and industrial segments, major OEMs are moving to GaN or silicon carbide to meet regulatory requirements for energy efficiency and consumer demands for higher power density, along with transitions from gas powered heating and cooling systems to fast adoption of heat pump technology. We now have customer designs underway at 2 of the top 3 global leaders in industrial pumps and 1 of the top 3 global leaders in heat pumps. The combination of which is anticipated to drive tens of 1,000,000 in new revenue starting late next year or 2026.

Speaker 2

We are also excited to share that Navitas GAN ICs have been designed into the ground based terminal for a major Internet satellite rollout that is expected to drive over $5,000,000 annually with shipments beginning late this year and continuing for the next 5 to 10 years. In September last year, we launched GaN Safe technology, a new industry benchmark as the world's most protected, most reliable and highest performance GaN power semiconductor technology. Just this week at the prestigious APEC conference in Long Beach, we expanded that technology family to include a top side cooled packaging option. With a 20 year warranty, GaN Safe breaks the glass ceiling that has prevented GaN from entering high power, high reliability markets for decades. As power hungry AI processors increased power demand by 2x to 3x, now increasing to 1000 to 2000 amps per processor and up to 100 kilowatts per rack, new GaN safe and generation 3 fast silicon carbide technologies are enabling drivers to deliver the needed power, densities and efficiencies required by these next generation AI processors.

Speaker 2

Navitas dedicated data center design center is now achieving unprecedented 4.5 kilowatts in the industry standard CRPS-one hundred and eighty five form factor, more than double the power density of legacy silicon solutions with lower temperatures, higher reliability and at a lower cost per watt. Over 20 designs are expected to ramp into initial mass production in 2024 at the top data center players, which we expect to contribute $3,000,000 to $5,000,000 in new revenue in the second half of this year. In electric vehicles, we observed the same slower growth rates as observed by our peers, which is creating some short term revenue headwinds. But we're also benefiting from the introduction of our new GaN Safe technology, plus our new Generation 3 FAST Silicon Carbide MOSFETs, which are significant drivers in our revenue pipeline for onboard and roadside EV chargers for both 400 volt and 800 volt battery systems. Silicon carbide based onboard chargers are in or moving to production this year with customers including top EV brands such as Zeekr, Volvo and Smart.

Speaker 2

We also have multiple design engagements underway in U. S, Europe, Korea, China and Japan. These selling carbide chargers are expected to ramp later this year and into 2025. GaNIC ED adoption is also on track for mass production ramps in 2025. Navitas is pioneering leading edge onboard bidirectional charging at 6.6 kilowatts and 11 kilowatts with our dedicated EV design center.

Speaker 2

Last year, we announced a joint design center with Geely, a top 10 EV player, and now we're excited to announce another joint design center with Shinri, one of the top EV onboard charger suppliers for Hyundai, BYD, Honda, Sealy and others. The first Shinri development projects are already underway and are expected to contribute appreciable revenues in early 2025. In EV roadside chargers, in addition to our ongoing silicon carbide production with SK Signet, which is a major supplier to Electrify America and EVgo, we are adding multiple Tier 1 developments in U. S, Europe and Asia with mass production starting in the second half of this year, which are expected to contribute over $5,000,000 in 2025. In the solar space, while we are observing a continued general market slowdown given high interest rates that limit our growth in the first half of twenty twenty four, we are seeing accelerating displacement of silicon with GaN safe and generation 3 fast silicon carbide technologies in our solar and energy storage customer pipeline.

Speaker 2

We now have significant developments with 3 of the top 5 U. S. Solar OEMs and the majority of the world's top 10 solar players. While we are already shipping silicon carbide in the market today, GaN adoption in solar is on track to start ramping late this year and together these new GaN and sulfur carbonate customer designs are expected to add tens of 1,000,000 of revenue in 2025. Overall, while we're not immune to the near term market headwinds, which are translating to more muted revenues in the first half of twenty twenty four, the significant new wins that I've highlighted in my remarks in combination with an anticipated market recovery starting in the second half of the year are expected to translate into full year 2024 revenue growth of 40% to 50% over 2023.

Speaker 2

For all of our target markets, the system benefits derived from gallium nitrate and sodium carbide are amplified by long term secular tailwinds. These include energy source conversion from fossil fuels to renewables, gas powered vehicles, transitioning to all forms of electric transportation and the intense and rapidly accelerating power demand of AI and edge computing. Our leading edge GaN ICs and GenesTech technologies are both displacement technologies traditional markets and accelerating and enabling technologies in new energy markets. As we've stated before, these drivers combined with our unique position as the industry's only pure play power GaN and silicon carbide player position Navitas to grow at a rate that is 6 to 10 times faster than the overall power semiconductor market for years to come. And now over to Ron to review the financials.

Speaker 3

Thank you, Gene, and good afternoon, everyone. In my comments today, I will first take you through our 4th quarter and annual 2023 financial results and then I'll walk you through our outlook for the Q1 along with some of the market dynamics we are currently seeing. Revenue in the Q4 of 2023 was again above our guidance, growing 111% year over year and 19 percent sequentially to approximately $26,100,000 For the full year of 2023, we grew revenue to $79,500,000 representing year over year growth of 109%. Before adjusting expenses, I'd like to refer you to the GAAP to non GAAP reconciliations in our press release earlier today. In the rest of my commentary, I will refer to non GAAP expense measures.

Speaker 3

Non GAAP gross margin in the 4th quarter increased to 42.2% from 42.1% in the Q3 of 2023 and 40.6% in the Q4 of 2022. Gross margins in the quarter were at the low end of our guidance, primarily due to increased mobile market product mix as we continue to see strength in that part of our business. For fiscal year 2023, non GAAP gross margin was 41.8% compared to 40.8% in the prior year. 4th quarter total operating expenses were $20,700,000 comprising SG and A expense of $9,300,000 and R and D of $11,400,000 This is a bit higher than our guidance due primarily to slightly higher spending on materials related to certain research and development activities. For fiscal year 2023, non GAAP operating expenses were $73,500,000 compared to $56,700,000 in the prior year.

Speaker 3

This increase reflects continued significant investments in new products, technologies and markets. All of these investments are laying the stage for significant growth in the future. Putting all of this together, the loss from operations for the Q4 of 2023 was $9,700,000 compared to a loss from operations of $12,400,000 in the Q4 of 2022 and a loss of $40,300,000 for the full year compared to a loss of $41,200,000 for 2022. Our weighted average share count for the Q4 was 179,000,000 shares. Turning to the balance sheet, it remains very strong with high levels of liquidity.

Speaker 3

Cash and cash equivalents at quarter end were $152,800,000 and we continue to carry no debt. Accounts receivable were $25,900,000 compared to $17,600,000 in the prior quarter, reflecting a product shipment pattern that was less linear than prior quarters. This wasn't a surprise as we had significant demand in December from our mobile customers. Inventory increased to 23 point $2,000,000 compared to $15,900,000 in the prior quarter. Similar to accounts receivable, we were not surprised by the near term increase in inventory levels, which grew in anticipation of January shipments to the mobile market.

Speaker 3

Also, we procured additional silicon carbide substrates and epi wafers to support expected significant growth in the second half of the year in the EV, Industrial and Solar markets. Moving on to guidance for the Q1. We currently expect revenues of $23,000,000 plus or minus $500,000 At the midpoint, this represents substantial year over year growth of more than 70% over the $13,400,000 we recorded in the Q1 of 2023 and is slightly down off of the Q4 of 2023, largely due to expected seasonality in our mobile business and some softness in the other markets as we already discussed. Gross margins for the Q1 are expected to be approximately 41%, plus or minus 50 basis points as our mix continues to lean more towards the mobile market in the near term. As we move through the year, we expect improving margins aligned with an expected recovery in higher margin markets including EV and Industrial in the second half of 2024.

Speaker 3

In total, operating expenses in the Q1, excluding stock based comp and amortization of intangibles, are expected to be approximately $21,500,000 We continue to invest in growth oriented initiatives for our end markets. As we have indicated before, we expect increases in our spending will be substantially less and growth in our revenues as we continue to see leverage in our business model. To put that in perspective, compared to the Q1 of 2023, at the midpoint of our guidance, we expect revenues in the Q1 of 2024 to grow more than 70%, yet operating expenses based on our guidance are expected to grow only 20% over the same period. For the Q1 of 2024, we expect our weighted average share count to be approximately 180,000,000 shares, stock based compensation to be approximately $13,000,000 and amortization of intangible assets to be approximately $5,000,000 In closing, we're extremely pleased with the results for the quarter and for all of fiscal 2023. Our results continue to demonstrate that we can and expect to grow expect to grow significantly faster than the overall market.

Speaker 3

While we are not immune to some of the same macro trends seen by others leading to more muted outlook for the first half of the year, we expect the strength of our pipeline and some market recovery in the second half of the year will support annual revenue growth of 40 percent in 2024 relative to 2023. Operator, let's begin the Q and A session.

Operator

Your first question comes from the line of Quinn Bolton from Needham. Please go ahead.

Speaker 4

Hey guys, congratulations on the strong finish to 2023. Most metrics look pretty good in certainly the top line into next year, but the gross margin coming in a little light. You talked about the mix shift to mobile driving some of that lower margin in the near term. But Ron or Jean, could you give us a sense, how do you see margin recovering through 2024? Can you give us sort of any thoughts on where margin might exit 2024?

Speaker 2

And then I've got a follow-up question. Yes, sure. Thanks Quinn. This is Gene. Yes, as you commented and we explained the margins are a little bit more muted in the first half of the year just purely due to market mix and the strength of the mobile market.

Speaker 2

Most other markets are a little softer in the first half of the year as we anticipate automotive and industrial strengthening in the back half of the year, but also the 4 major growth drivers that I highlighted, AI data centers ramping in the later part of the year, the Tier project ramping later in the year, GaN starting in solar later in the year, even the Internet satellite project. All of these are expected to be above that average. So all of these will contribute to a modest margin improvement throughout the year. We expect to end the year still below mid-40s, but we'll see incremental improvement in Q3 and Q4.

Speaker 4

Thank you, Gene. My

Speaker 2

next question and

Speaker 4

I may have asked you this in the past, but just kind of walking the show floor here at APAC, you see GaN all over the place. I know you guys are targeting a lot of the higher power GaN to 6 50 volts and above. But it seems like there's increase in opportunity in kind of lower power, mid power GaN as well. And just wondering as you guys continue to grow, do you have any revised thoughts on potentially expanding the product portfolio to below a 6 50 volt GaN technology? Because again, it seems like there are some pretty good opportunities in that lower mid tower market as well.

Speaker 4

Thank

Speaker 2

you. Yes, fully agree Quinn and that is definitely of interest. It's an area that we're working on actively. We don't have a specific launch schedule development schedule to share. We certainly got our hands full with all the opportunities at 6 50 volts, but I agree with you.

Speaker 2

I think there's great opportunity for lower voltage GaN and it's something we plan to pursue over time.

Speaker 4

Perfect. We'll stay tuned. I'll go back in queue. Thank you.

Speaker 2

Thanks Quinn.

Operator

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

Speaker 5

Hi, guys. Thanks for asking a question. And Ron and Janet, congrats to both your transitions. I guess my question for this year is being second half weighted is no different than a lot of the peers, but just how second half weighted do you expect it to be? Do you expect to grow sequentially in the Q2?

Speaker 5

Or is it going to be much more of a stair step up as inventories normalize and a lot of these new design wins come in the second half?

Speaker 2

Yes, sure. Thanks, Ross. Yes, not too dissimilar than prior years. It's probably in the range of 40%, 60%. That's similar to what we saw last year.

Speaker 2

So I don't think there's much surprise there.

Operator

Okay. I guess as my

Speaker 5

follow-up, you talked about a ton of design wins, ramping at various times and some really meaningful dollar amounts. How do you think the mix of the company changes by end markets? You guys had talked a little bit about how the split was between mobile and appliance, etcetera. How is that in 2023? And how do you expect that to transition into 2020?

Speaker 2

Yes, definitely. 23 saw a really nice surge in mobile that's continuing as we explained in early this year that surge took mobile over 40%. The other markets were in the 10% to 20% range. I think we'll see that shift back throughout the year, given the anticipated recovery, in industrial and EV, but also the ramps we've talked about. AI data center is brand new for us.

Speaker 2

That's really coming off of a 0 base appliance strengthening with that strong pipeline and that major new Tier 1 project that ramps. GaN and SiC both ramping into solar in the second half of the year. So I think we'll see it balance out pretty nicely where the mobile goes below 40% and the other markets creep up from their 10% to 20%.

Speaker 5

Thank you.

Speaker 6

You bet.

Operator

Your next question comes from the line of Kevin Cassidy from Rosendaz Securities. Please go ahead.

Speaker 7

Yes. Thanks for taking my question and congratulations on the good results. And Ram, happy trails. And Janet, look forward to working with you. On the mobile market, you mentioned that GaN has about 30% market share.

Speaker 7

Do you see that market share growing in the mobile chargers? Or is this going to be steady state? Maybe what do you see as the growth rate in the mobile market for GaN?

Speaker 2

Yes. Thanks, Kevin. Good question. And that 30% was specific to Xiaomi and OPPO kind of leading the charge, so to speak. But I think most GaN mobile is probably still single digit adoption rates.

Speaker 2

So we don't believe there's any limit to switching. I think ultimately all of the silicon chargers will move to GaN over time. Part of that dynamic is not just driven by our technology or by the customer choice, but also the power levels moving up. So as the whole world goes from slow chargers, which are 5, 10, 15, 20 watts, where GaN doesn't bring much value to fast chargers in the 30, 40, 50 watts and then ultimately the ultrafast chargers where we're really, really strong at 100 watts or higher. There's no limit to switching everything over from silicon again.

Speaker 2

So it's just a question of time. I think the growth rates between now and then will continue pretty strongly.

Speaker 7

And maybe if we look at the other markets that you're penetrating now, 20 design wins in data center and the home appliances. I mean, can you draw a parallel to the mobile market for where those markets will be going?

Speaker 2

Yes. I think it's almost identical. I think you see these first few leader high performance examples setting the example for the whole industry. Once you get your first beachhead customers, beachhead applications within the market tends to be on the high end, sets an example for others proves that the value is there, that the quality, the reliability, everything is there. And then we see a pretty effective domino occurrence over the subsequent years where one project leads to 2 leads to 4 leads to 16 and things start to grow exponentially.

Speaker 2

So I think you can look back at what's happened and what we've learned in mobile charters just in the last 3 years. We anticipate the same sort of domino effect, the same sort of accelerating adoption to occur in each of these new markets with their own sort of S curve adoptions.

Speaker 7

Okay, great. Thank you.

Speaker 2

Thanks, Kevin.

Operator

Your next question comes from the line of Tristan Gerra from Baird. Please go ahead.

Speaker 8

Hi, this is Tyler on for Tristan. Thanks for taking the questions. Noticed that Anchor is advertising GaN Prime on their website as a for a home backup solution. They're advertising their products with your technology as a core competency. Could you please remind us how GaN Prime represents a step up in performance, the potential size and growth of the home backup market and your content in these boxes?

Speaker 2

Yes, great, great. I'm glad you caught that. And we love the fact that we've got now major players featuring GAM right in the line. In fact, the Anker, I think, positions themselves as the largest GaN charger lineup in the world. And while we're not the exclusive supplier, we're a major supplier to Anker.

Speaker 2

And this whole positioning obviously benefits the whole industry. It certainly benefits Navitas. So the GaN Prime products in particular can be up to 50% size reduction, up to 30% energy efficiency improvement. And we're now actually at system cost parity. So they're not demanding a price premium in that solution.

Speaker 5

So

Speaker 2

all of those same benefits that we've seen at Oppo, Xiaomi and so many other Samsung S24 apply to the GaN Prime family. Operator, back to you for any follow-up questions.

Operator

Next question comes from the line of Jon Tanwanteng from CJS Securities. Please go ahead.

Speaker 6

Hi, thanks for taking my questions. Gene, I was wondering, you had expected 50% or more growth when you had your Investor event in December. What are the biggest changes from there? Is it mostly automotive and inventory issues and then maybe some solar in there? Is it more broad based than that?

Speaker 6

Help me understand what's changed in the pipeline for you?

Speaker 2

Yes. John, that's exactly right. Last two months, two and a half months, we've seen the slowdown as many have commented about. Really, it's not a decline. It's just slower growth in EV and slower growth in industrial.

Speaker 2

Anytime you get an adjustment in growth rates, you get pockets of inventory that build up, forecasts come down temporarily to kind of swallow that change in growth rate, deal with that pocket of inventory. We see that a bit in the channel. And so by all of our indications, we think that's a couple of quarters and that's added to our more muted expectations for the first half of the year.

Speaker 6

Got it. Thank you. And then is there any update on just how operating expenses are expected to step up this year especially with the lower growth expectations?

Speaker 2

Yes, sure. Maybe this is a good chance for Janet to jump in and share her thoughts.

Speaker 9

Hi. We have a very way to manage our OpEx. We see a lot of operating leverage as we scale up revenue. Right now, as you can see from our guidance, we guided Q1 to grow revenue at 70% versus OpEx growth of 20%. We will continue to monitor our headcount plan to make the necessary investment to drive profitable growth.

Speaker 9

And we laid out our long term target model in our Investor Day. We still remain committed to that. For the longer term, we're working towards to achieve OpEx level at 20% to 30%.

Speaker 6

Okay, great. Thank you for that. And then just any update on the timeline to either EPS breakeven or cash flow breakeven or profitability?

Speaker 2

Yes. We're not giving any specific updates on long term model, although committed to it over the next few years. I think profitability is still targeted for $50,000,000 a quarter. Where we hit that, I think, depends on market dynamics and, of course, overall growth rate.

Speaker 6

Okay, great. Thank you.

Speaker 2

Thanks, John.

Operator

Your next question comes from the line of Chuck Egan from Charter Equity Research. Please go ahead.

Speaker 10

Hey guys, thanks for taking the questions. I had a couple on some of your end markets and how GaN and SiC, the interplay between those. So, of course, there's a lots of buzz around AI, particularly with the big infrastructure build outs going on. And so I was just curious about your approach to that market since both SiC and GaN can be used in data centers. So, will those kind of be fighting for the same slots?

Speaker 10

Or can they coexist in those applications at different power levels or performance measures? Just anything there will be helpful.

Speaker 2

Yes. It's a great topic, a really interesting one for us. We've got this data center design center that designs the entire power supply to a really deep system expertise. And now we've got leading edge GaN, leading edge sewing carbide. So we're in a unique position to figure the right answers to exactly that question.

Speaker 2

It's actually not very it's not very intuitive. It's not very easy even for our customers to figure out. But we're doing some really exciting work on exactly that a combination of solid carbon and GaN. Is actually 2 stages in the power converter. The first stage is called power factor correction.

Speaker 2

We're using silicon carbide often in that stage followed by the DC to DC converter stage with gallium nitride. That kind of takes advantage of the strengths of each of the technologies, silicon carbide being more mature and very proven on its robustness facing grid, gallium nitride achieving very high frequency and high efficiency in that DC to DC converter. So there's a lot more to that story that I'm touching here, but you brought up a really important point. You're going to see a lot of interesting, we call them kind of hybrid designs where we leverage both GaN and silicon carbide, not only for this data center space, but others in that 1 to 20 kilowatt area like onboard chargers. So you'll see a lot more developments in that area.

Speaker 10

Great. Okay. That's helpful. And then similarly on the automotive side. So you're expecting GaN to ramp for that later this year.

Speaker 10

And we're seeing more OEMs move to or at least announce 800 volt systems. And so I'm curious how that changes the opportunity or I guess the mix of silicon carbide in GaN and some of those automotive applications just because silicon carbide sometimes can be higher better at higher voltages, but you still have the benefits of that high frequency for GaN where it can function. So with more 800 volt systems, would it change your outlook at all? Or is it really kind of a wash for you since you do both silicon carbide and GaN?

Speaker 2

Well, certainly that's the beauty of it, whatever way the market goes. And I think 400 volt and 800 are going to coexist for a long, long time at a high level just like you described the 800 volt is a better fit for the 1200 volt silicon carbide. The 400 volt could be either frankly, but we see a lot of that moving to GaN or a combination again of GaN and silicon carbide. I would point out though even for an 800 volt battery when you plug it into a single phase AC input which runs 110 220 you could actually use gallium nitrate on that first phase followed by the silicon carbide which then sees the 800 volt battery to charge that battery. So here again, I think the combination of having both technologies puts us in a really unique position to figure out the right approach and whichever approach is going to win, whether it's 400 volts or 800 volts, we're going to benefit from it.

Speaker 10

Great. Thanks, Gene. Thank you, Jack.

Operator

Your next question comes from the line of Richard Shannon from Craig Hallum. Please go ahead.

Speaker 11

Great. Thanks guys for taking my question. I think I'm going to follow-up from a prior question here. Really thinking about your yearly revenue growth by end market. I'm wondering if you answered the last question about talking about mobile being about 40% and going below as the other ones ramp up here.

Speaker 1

Maybe ask you in

Speaker 11

a different way here, any way that you could you rank order kind of the dollar contributors to growth here by end market? I would assume mobile will probably be the biggest given that starting at 40 percent, but maybe get a sense of how much dollar growth we're adding and some other ones that might be not obvious from how you described the

Speaker 2

opportunities you're seeing here, Gene? Yes. Thanks, Richard. It's a tough one to call. I gave a bunch of numbers.

Speaker 2

Data centers is coming off a base of 0. So I $3,000,000 to $5,000,000 in the second half of the year. So that's still going to be on the smaller side compared to everything else. Appliance has been a great strength area for us, especially when mobile was a bit down and that's going to pick up strongly in the second half of the year. I think the other markets depend a little bit on how the market recovers too.

Speaker 2

We've got our product launches, which are going to give us some certainty of that growth that we outlined, GaN going into solar, a bunch of additional silicon carbide going into solar, a bunch of OBCs we talked about in silicon carbide that are ramping throughout the year. So it's pretty hard to predict it. It feels pretty balanced honestly to me as you look at what's going to add $20,000,000 or $30,000,000 to the back half of the year. It's going to be pretty broad based across each of those areas I just mentioned.

Speaker 11

Okay. Thanks for that clarification, Gene. Maybe following up here, thinking about your new products that are ramping in here and you discussed some of them at your analyst event a couple of months ago. And I think you even less I think even on the last conference call, you talked about the new half bridge offering here, maybe doing a $10,000,000 run rate exiting this year. Wondering if that's still kind of in the range of what you're thinking.

Speaker 11

And then as you think about your other products like the bidirectional one, the GaN control and the GaN safe, To what degree are those going to be contributing to your revenues by the end of the year?

Speaker 2

Yes. Great questions, Richard. And thanks for noting all of those exciting new product announcements. On the Gansens half bridge, we're especially excited about the motor versions we've created, which are then tuned orally for appliance, motor in general, but appliance in particular. And that major Tier 1 that's driving $10,000,000 a year starting late this year is actually adopting that motor version of our GaN SENSE half bridge.

Speaker 2

And not only that, they're pushing it to a frequency efficiency and density that nobody's ever seen before. So we're super excited. Once these products come out, they tend to set an example for the whole industry. There's a lot of reverse engineering that we expect will happen. And it will likely lead to a nice domino effect of even more.

Speaker 2

We've already got a pretty strong appliance pipeline going. GaN safe, I mentioned sort of throughout because GaN safe is really our high power. As you get above 1,000 watts, GaN safe is our answer, the most protected, most reliable, most safe, even a 20 year warranty to back it up. And that's going into solar later this year, Going into the data centers, it's going into EV, so almost across the board in those areas. And the others you mentioned, going first into a lot of aftermarket chargers today and we expect it going into a lot more inbox and Tier 1 mobile players in the future.

Speaker 11

Okay, perfect. Thank you guys.

Speaker 1

Thanks, Richard.

Operator

Thank you. Your next question comes from the line of Kevin Cassidy from Rosenblatt Securities. Please go ahead.

Speaker 7

Thanks for letting me ask a follow-up. And just on Synry, if you could tell a little more about the relationships, maybe give some details. Were they making prior or were they using GaN in the past? Or is this going to be their first GaN products?

Speaker 2

Yes. I know it's not a name people would know, but they're actually a major onboard charger supplier to top players like Hyundai, BYD, Honda and many others. So for us, it's a super exciting way to kind of get access and into those cars in the future. The first project here will actually be silicon carbide for onboard chargers and I do believe it's going to be their first implementation of silicon carbide certainly with us. And those are already underway expected to launch early next year.

Speaker 7

Okay, great. Thanks.

Speaker 2

Thanks, Kevin.

Operator

The next question comes from the line of Joe Moore from Morgan Stanley. Please go ahead.

Speaker 12

Great. Thank you. I know at CES and at recent conferences, you had talked a lot about the specific opportunities in data center around AI servers. And just given the very high power on those servers that there should be opportunity for GaN there. Can you just talk about that specifically with AI when you could start to see that be a more material revenue contributor?

Speaker 2

Yes. Thanks, Joe. It's a big one and I think we're still at the tip of the iceberg here. We've got 20 projects in development. They're all going to production throughout this year.

Speaker 2

I estimated $3,000,000 to $5,000,000 revenue impact for the second half of the year. We've had meetings with a lot of the AI guys and the numbers, the power requirements, the current requirements keep going up and up over the next 1, 2, 3 years. I mentioned on my remarks 1,000 to 2,000 amps per processor. So I think this ripple effect on how the power has to get delivered is still really being worked out by the industry and the numbers keep going up. And our system design center is designing things that we never thought was possible a year ago, 4.5 kilowatts is unprecedented in a specific form factor that's going to power all those processors.

Speaker 2

And now they're pushing us to go to 5.5, 6.5 even higher. So I think this is all about the data center today, but ultimately these AI chips end up in driver self driving cars. These AI chips end up in the client and on the edge computing. So I think it's early days and it's exciting because the power requirements are really unheard of. And that's exactly the kind of challenge we want to tackle with our system design center and with our gallium nitride and our silicon carbide.

Operator

Great. Thank you.

Speaker 1

Thanks, Joe.

Operator

As there are no further questions, I would like to thank our speakers for today's presentation and thank you all for joining us. This now concludes today's conference. You may now disconnect.

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Earnings Conference Call
Navitas Semiconductor Q4 2023
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