Introducing Navitas Semiconductor Corporation, a leader in next-generation semiconductors specializing in GaN (Gallium Nitride) and SiC (Silicon Carbide). These advanced materials offer significant advantages over traditional silicon semiconductors:
- Higher Efficiency: GaN devices feature lower on-resistance (RDS(ON)) and faster switching speeds, leading to reduced power losses and higher efficiency in power conversion systems.
- Higher Switching Frequency: GaN semiconductors operate at much higher frequencies than silicon, allowing for smaller passive components and enhancing overall system performance and efficiency.
- Thermal Performance: Capable of operating at higher temperatures, GaN devices improve reliability and enable more compact thermal management solutions, critical for high-power applications.
- Compactness and Integration: Their efficiency and thermal benefits enable more compact and lightweight designs, ideal for applications like mobile fast chargers, electric vehicles, and data centers.
- Reduced Parasitic Capacitance: Lower parasitic capacitances contribute to higher switching speeds and better performance in high-speed applications.
- High Breakdown Voltage: GaN semiconductors offer higher breakdown voltages, making them suitable for demanding applications in renewable energy and industrial power supplies.
- Environmental Benefits: They contribute to energy savings and reduced carbon footprints due to their efficiency and lower energy consumption.
Navitas aims to drive the transition to a renewable electric grid with their innovative semiconductor solutions. For those unfamiliar with GaN it was infamous for being hard to use and optimize it took decades for scientist to develop a blue LED out of it. Navitas holds over 250 patents on GaN technology and is leading innovation in the field. GaN and SiC are actively taking market share from traditional semiconductors.
Product Applications:
- Data Center Power Supplies
- Heat Pumps
- Solar Panel Inverters (600W)
- High-Speed Phone Chargers (e.g., Samsung S23, 25W fast charger)
- Various Charging Devices
Customers by Sector:
- AI Data Centers
- 30 customer projects in development
- AWS, Azure, Google, Supermicro, Inspur and Baidu
- 30 customer projects in development
- EVs
- 160 EV-related customers
- Major OEMs like Hyundai, BYD, Volvo, Honda
- 160 EV-related customers
- Solar/Energy Storage
- Won 6 new designs across US, Europe and Asia
- Home Appliances/Industrial
- 25 customer development with 15 using GaNSense half Bridge
- Mobile
- 20 new fast chargers added last quarter. In over 450 products.
Financial Overview:
- Market Cap: $800M
- Last Quarter Revenue: $23.2M (75% YoY growth)
- Gross Margin: 39.3%
- Revenue Growth (Last four quarters): $18.1M → $22M → $26.1M → $23.2M
- Growth Rates: 109.8% → 114.6% → 111% → 73.5%
- Insiders own 57.35% of the company.
Who:
- CEO: Gene Sheridan
- 25 years experience in power management & semiconductors
- Recently CEO of BridgeCO that was purchased by SMSC
- CTO/COO: Dan Kinzer
- 30+ years leading R&D in semiconductors/power electronics
- Previously VP R&D at International Rectifier
- 2018 was inducted into the International Symposium on Power Semiconductor Devices and ICs (ISPSD) Hall of Fame
- CFO: Janet Chou(hired Jan 2024):
- 20 years of experience in the semiconductor industry
- Most recently VP and CFO at Global Operations for Western Digital
Key Insights from Conference Calls:
- Blackwell chipset requires over 1,000 Watts. This 300% increase in power in just 18 months, in combination with the EU driven titanium standard that requires 96% minimum energy efficiency creates a challenge for our customers and a big opportunity for us.
- Enabling server power supplies to increase from 3.2 kilowatts and 96% efficiency to 4.5 kilowatts and 97% efficiency, and now we are well on our way to 8 to 10 kilowatts at 97% to be delivered to our customers later this year.
- As the demand for AI ramps up we expect to see revenue in this area from 10-20M in 2025.
- Expect to see breakeven on profitability at 50-55 M.
- Lower Margins this quarter was driven by high Cell phone chargers which are lower margin but faster to market. Expect Margins to increase as EVs and Data Center power supplies go into production.
- EV Market with OEMs like Hyundai, BYD, Volvo, and Honda are programs are tracking for 25 ramp.
- Battery EVs sell 400-550 dollars worth of GaN or SiC. Plug-in hybrid sell 200-300 dollars.
- Q1-Q2 this year we see a slowdown in the semiconductor sector. NVTS is not seeing as much as their competitors. Expect that Q2 is the bottom of the slowdown.
- As batteries in cellphones get better for faster charging NVTS can sell higher watt chargers.
- Lots of appliances and products are launching in Europe first because they have regulations for higher efficiency components.
Overall:
Their guidance is 10%+ growth YoY for next quarter caused by the slowdown in the semiconductor industry which is cyclic. They previously guided at 40-50% growth YoY for the whole year, but they have a new CFO. When asked if 40-50% YoY was still achievable they said yes but they are lowering guidance for the short term because of the slowdown in the semiconductor industry as a whole. They are gaining market share in the semiconductor industry but the whole industry is cyclic and is contracting for Q1 and Q2 of this year. Large amounts of production lines will start up late in the year and ramp up till next year.
My personal opinion is that people saw the slow down at 10% growth and the price is well underpriced from the positive upside. I believe the majority of the downside is priced into the stock. The company should have rapid growth in the next years as they become a part in EV cars and make 400-500 dollars each EV sold that has their part in it. If they can capture 10% of the EV market share that would be 1.4 Million cars in 2023. They are going into some of the products of the second largest EV maker, BYD, later this year and early next year(BYD sold 3M cars in 2023). The demand for Nivida B200 products will have a demand on Navitas products because they have the highest power density and highest power efficiency power supplies. This allows for lower thermal cooling requirements as less energy is lost in heat.
From electronic Design “One of the unfortunate tradeoffs with Blackwell is its power consumption. The B200 burns through 1000 W (1 kW), and the B100 fits into the same 700-W power envelope (TDP) as its predecessor. Designing a power delivery network (PDN) that can supply enough power to AI accelerators like those from NVIDIA is becoming a daunting task, as is dissipating the heat that the chips generate.”
Long NVTS
