Navitas Semiconductor Corporation

Welcome to Navitas Semiconductor Third Quarter 2021 Quarterly Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during that session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker, Stephen Oliver.

Thank you. Good afternoon. I'm Stephen Oliver, Navitas Vice President of Corporate Marketing and Investor Relations. Thank you for joining Navitas Semiconductors' third quarter 2021 results conference call, our first as NVTS, a public company. I'm joined today by Gene Sheridan, our Chairman, President, and CEO, and Todd Glickman, our CFO, This call is being webcast on the investor relations section of our website at NavitasSemi.com forward slash IR. A replay of this webcast, along with our 2021 third quarter earnings release, will be available on our website approximately one hour following this call. And the recorded webcast will be available for approximately 30 days following this call. Additional information related to our business is also posted on the investor relations section of our website. Our earnings release and this presentation include certain non-GAAP financial measures. Reconciliation of these non-GAAP financial measures with the most directly comparable GAAP measures are included in our earnings release, which is posted separately on our website in the investor relations section. In this conference call, we will also make forward-looking statements about future events or about the future financial performance of Navitas. You can identify those 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 affecting Navitas discussed in SEC filings that were made in connection with our recently completed business combination with Live Oak Acquisition Corp. 2, including the proxy statement or prospectus filed with the SEC by Live Oak on September 20th, 2021. 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. Now, I would like to welcome Jean Sheridan, Navitas co-founder and CEO, to begin the main section.

Thank you, Steve. After our IPO celebration and ringing the NASDAQ opening bell, this is our first earnings call as a public company. We'll share our third quarter and year-to-date 2021 results, as well as describe the fundamental opportunity and unique differentiation Novitas possesses with our GaN PowerIC technology. In Q3, our total revenue grew 61% year-over-year, to $5.6 million and 128% on a year-to-date basis. Demand was solid in the mobile charging market with continued and growing business from Dell, LG, Amazon, Oppo, Xiaomi, Lenovo, and dozens of other customers. And we see over 90% of the top smartphone and laptop customers designing their next-generation fast chargers with our GaN power ICs. We are pleased with our growth trajectory and believe we will continue to double our revenues annually. Our customers were targeting even faster growth in GaN chargers, but were limited in Q3 by industry-wide silicon supply constraints. In Q3, we saw our customers launch 24 new GaN chargers, which includes major launches from the top mobile and aftermarket players. Last week, we announced our third-generation GaN power ICs, which integrates new GaNSense technology and is already being adopted in major customer launches. And we are making good progress on our plans to expand into data centers, solar, and EV markets. Leading customers like Enphase Energy, BRUSA, and CompuWare provided strong endorsements of our GaN power ICs and are excellent early adopter partners to Navitas. We are on track to sample these new higher-power GAN ICs this quarter to these and other top-tier customers in each of those target markets, which represents multi-billion-dollar market additions to the $4 billion opportunity we've already identified in mobile and consumer. Before I go into further details on these significant Q3 business highlights, I want to share a brief introduction on the opportunity and strategy for our GAN PowerIC technologies. GaN is comprised of both gallium and nitrogen, which combine together to form an incredibly powerful bond that is 10 times stronger than silicon with two times higher electron mobility. In power electronics, this translates to semiconductor devices that run up to 20 times faster than legacy silicon and enables up to three times more power and three times faster charging with greater energy savings and in half the size and weight. Navitas GaN fast power ICs integrate GaN, power, and drive, plus protection and control to deliver simple, small, fast, and efficient performance. Our GaN ICs enable speed and efficiencies that are far greater than silicon, but also far greater than other suppliers' discrete GaN implementations. Navitas has created this leading technology and number one market position in GaN power ICs in just seven years based upon a unique and proven founding management team that has worked together for decades. We've also developed a systems-driven approach to create application-specific GAN ICs, which offer more differentiation and value compared to other GAN suppliers that offer only a standard discrete with a multi-market approach. Let's take a more detailed look at our progress and plans in each of our target markets. In mobile chargers for smartphones, tablets, and laptops, we're pleased to announce an additional new 24 fast chargers using Navitas GAN ICs released to the market in Q3, taking the total to 164. We believe this to be more than all other GAN companies combined. These include five new chargers from Bezos, one of the fastest-growing aftermarket suppliers in the mobile charger space, and includes the world's smallest 100-watt charger that supports Qualcomm Quick Charge 5.0. Q3 launches also included significant new products from major mobile brands, such as Xiaomi's CD phone charger and Lenovo's Yoga laptop chargers. With Lenovo, we created an impressive co-op marketing campaign with GANFAST branding in Lenovo online and live stream video collateral. Today, we are very proud to announce a new strategic partnership with Anker, a global leader in fast charging technology. Anchor is both a long-time customer and an investor in Navitas. This new agreement dedicates engineering teams at both Navitas and Anchor to be co-located at Anchor offices to develop and launch leading-edge GANFest chargers with very short development times. The focus will be on next-generation mobile chargers, but will also include expansion into high-growth energy storage markets. In fact, the partnership is already paying off quickly, with two new GAN chargers launched in Q3 2021. including a 30-watt smartphone charger, which is similar in size to the original 5-watt so-called sugar cube charger and 70% smaller than the standard silicon 30-watt. Last week, we announced our third-generation GaN power ICs, which integrate GaN Sense technology. GaN Sense enables up to an additional 10% of energy savings, as well as all new autonomous protection circuits, which we expect to set a new standard in the industry for reliability and robustness. not just for GAN, but also as compared to all power semis across silicon, GAN, and silicon carbide. This new technology builds on our already impressive track record with now over 30 million units shipped without a single reported GAN-related field failure. Of greatest importance this morning, we are very pleased to announce a new category of mobile chargers defined as ultra-fast chargers that have been developed and launched with our new GANsense technology, This new category of chargers delivers over 100 watts efficiently to enable smartphones to achieve zero to 100% charging in just 20 minutes or less. This is an incredible new industry development that will redefine the charging experience for consumers globally. The first such product was just announced by Xiaomi for the Note 11 Pro Plus. It's 120 watts, packed in the size of a typical silicon 45-watt charger, three times smaller than typical silicon-based 120-watt laptop chargers, yet achieves 0% to 100% in only 17 minutes. In addition, these ultra-fast chargers require double began content per charger, which of course doubles the revenue opportunity for Navitas. By our estimates, we project this ultra-fast charger category will represent up to half of began potential in mobile chargers over the next few years. This translates to up to $1 billion per year out of the broader $2 billion per year mobile GAN charger potential. More ultra-fast chargers are in development now with our GAN Sense technology and will be launched by a number of major brands in the coming months. With worldwide GAN shipments currently representing an adoption rate of only about 2% to 3% of this estimated $2 billion market, we have an incredible opportunity ahead of us in this segment. From mobile applications, we believe there is a relatively easy transition and expansion to broader consumer applications, including TV, all-in-one PC, smart home devices, and game consoles. Here, we access another $2 billion market, starting with designs like all-in-one PCs and TVs, where efficient, slimline power supplies can enable the sleek design demanded by these applications. we anticipate first shipments of our GaN ICs into this broader non-mobile consumer market starting this quarter and ramping throughout next year. In particular, the change in TV screen technology from Ultra HD to 8K means a four times increase in power needs, and GaN power ICs deliver that power in small, low-profile form factors. Moving on to higher power applications like data centers, Our high-speed GaN ICs translate into shrinking the size of server power supplies, which creates more space for data processing with CPUs, GPUs, and memory chips. However, the additional major value for GaN is driven by energy savings. Data center operators pay more in electricity per year than they do for the hardware itself. Each efficiency point can be translated directly into significant running cost savings, and with GaN, Typical efficiency can be increased by almost 10 points, in other words, about a 40% energy savings compared to silicon-based data centers. Worldwide, we expect a transition from silicon to GAN could save up to $1.9 billion per year, with an extremely fast payback estimated to be around two months. The leader in high-efficiency server power is CompuWare, based in Taipei, with number one share in designs that can achieve the highly efficient platinum and titanium classes of power supplies. CompuWare declared that GaN is a breakthrough new technology that is enabling dramatic improvements in size, energy savings, and power density, and that Navitas is an excellent partner to CompuWare with our industry-leading GaN ICs. With over 13 million units of servers shipped each year, each with over $75 of GAN content, data centers represent another billion-dollar-a-year opportunity for our GAN ICs. Given data center development times of 12 to 18 months, we anticipate our first data center designs using our GAN Power ICs will start mass production ramps in early 2023. Now, let's turn to solar and energy storage. Renewable energy is critical for us all to reduce our dependence on fossil fuels. Enphase Energy, the world's leading supplier of microinverter-based solar plus storage systems, recently announced their plans to adopt GAN technology and their cooperation with Navitas. Enphase stated that it's the end of the road for silicon MOSFETs and that gallium nitride offers a tenfold switching frequency advantage at a significant system cost advantage. Navitas estimates that GaN power ICs can reduce inverter costs by 25%, accelerating solar installation payback by about a year, and that the total residential solar GaN IC opportunity is over $1 billion per year. Given solar development times of about two years, we anticipate our first solar designs using our GaN power ICs will start mass production ramps in the second half of 2023. Acceleration is also the focus in EVs or e-mobility as we cover all opportunities from electric scooters and electric bikes to full passenger EVs. There are three opportunities for GaN power ICs in EV. The onboard charger or OVC, which charges the battery. The DC to DC converters, which convert from the battery to lower voltage to power in-car electronics. And the traction drive, which is the electric motor to move the car. Our initial focus is on the OBC and DC-to-DC. One important power electronics supplier to EV customers worldwide is BRUSA. BRUSA publicly announced their intentions to move to GAN to meet future cost and performance needs beyond what is possible with silicon or silicon carbide. They also announced their strong validation of the benefits of our GAN power ICs for simplicity, reliability, speed, form factor, and cost. With a conservative estimate of $50 of GAN content per OVC, another $15 for the DC-to-DC converter, and $200 for traction drive, we believe each EV represents over $250 potential GAN content and a market opportunity over $2.5 billion per year. Given EV development times typically of four years, we expect our first EV designs using our GAN Pharisees to start their production ramp in 2025. Let's now turn to Navitas' team expansion and regional news. As the mobile market increases rapidly and the higher power expansion markets of EVs, solar, and data center begin, Navitas' design, applications, and sales support footprint are being strengthened and expanded. With confidence in the Navitas business model, we recruited these teams in advance of our IPO's capital raise. Since the start of 2021, we have now increased the team by over 50%, reaching over 150 highly skilled and experienced staff with an approximate 50-50 split between US and Asia. This includes many with deep domain and system expertise in our expansion markets of data centers, solar, and EV. In China, we have tripled our Shenzhen facilities to support the significant growth we see in that region, including major expansion of our applications lab capacity, which we use with our customers and our supply chain partners to co-develop these next-generation GaN fast chargers. We are also investing in Europe, building a world-class sales, tech support, and applications design center in that region. Europe is key to our plans for EV, solar, energy storage, and even broader industrial applications. We expect to announce significant new business in that region soon. And finally, I want to discuss the important topic of climate change and decarbonization. Today, only about 15% of our world's energy comes from sustainable sources utilizing electrical energy, while the balance is dependent on fossil fuels. We believe that ratio will reverse in the coming decades, and GAN is a critical element of this major energy transition. GAN makes electrical energy faster, more efficient, and lower costs, all of which will serve to accelerate the world's transition from coal-fired power plants to solar and wind electricity-based energy sources, as well as transition energy applications from gas-powered transportation, buildings, and industrial factories to clean electricity-based energy where GAN can have a significant impact. GAN offers a carbon footprint that is up to 10 times lower than that of silicon and makes all electrical energy uses sustainable. Faster, cleaner, more efficient, and lower cost. You can anticipate major announcements in this area from Navitas in the near future as we look to take a leadership role within the semiconductor industry in driving this energy transition and electrifying our world. With that, I'll hand it over to Todd Glickman, our CFO, for the financial update.