Navitas Semiconductor Corporation

Thank you for standing by and welcome to Novitas Semiconductor's fourth quarter and full year 2021 results conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference may be recorded. Should you require any further assistance, please press star 0. I would now like to hand the conference over to your host, Vice President of Corporate Marketing and Investor Relations, Stephen Oliver.

Good afternoon, everyone. I'm Stephen Oliver, Vice President of Corporate Marketing and Investor Relations. Thank you for joining Navitas Semiconductors' fourth quarter and full year 2021 results conference call. 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 ir.navitassemi.com, and a replay will be available about an hour following this call and available for another 30 days. Additional information related to our business is posted on the investor relations section of our website. Our earnings release and this presentation include certain non-GAAP financial measures. Reconciliations of these non-GAAP financial measures with the most directly comparable GAAP measures are included in our earnings release and also posted 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 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 affecting Navitas discussed in our SEC filings, including the prospectus dated December 6, 2021, as supplemented or amended from time to time. 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, over to Gene Sheridan, CEO.

Thanks, Steve, and thank you to everyone for joining us today. As we close out 2021, I'd like to summarize some of our key accomplishments. In October, we celebrated our IPO within seven years of founding. We believe a record for any power semiconductor company and the result of intensive focus to establish Navitas as the clear technology and market leader in gallium nitride or GaN power ICs. GaN is a next generation power semiconductor with up to 20 times faster operation and our GaN fast power ICs deliver 3x more power and 3x faster charging in half the size and weight and with up to 40% energy savings compared to traditional silicon chips. In 2021, annual revenues doubled to nearly 24 million with Q4 revenue growing sequentially by over 30%. At the end of 21, our cumulative unit shipments increased to over 35 million units with zero GAN-related field failures. While Q1 will see slightly lower revenue compared to Q4 given expected seasonality, we anticipate sequential growth in Q2 of greater than 50% as we expect multiple major new Tier 1 Gantt Charger launches ramping significantly next quarter. In total, we continue to forecast another doubling of annual revenues for this year. Our gross margins improved in 2021 by over 10 points year-on-year as all customers adopted our Generation 2 in the first half and started ramp of our Generation 3 late in the year, both of which offered Navitas and our customers significant performance improvements and cost reductions. For 2022, we will see the impact of the TSMC 20% wafer price increase, which will limit our margin expansion in the year, while we look forward to our Generation 4 ramp in the second half of 2022, which will fuel our margin expansion into 2023. Taking a closer look at some of these new technology developments, Generation 3 with GANsense technology integrates critical sensing circuits monolithically into GAN for the first time in our industry. Generation 3 unlocks another 10% of energy savings while adding important new protection circuits to set a new standard and reliability. Already in mass production with Lenovo, Xiaomi, Vivo, among others, Gansense was honored last month in Las Vegas with a CES 2022 Innovation Award. Gansense is also a key enabler in the new exciting ultra-fast charger category. Hot on the heels of Generation 3, we have Generation 4, which will start sampling next quarter. This will bring further gains in energy savings and cost reduction, and we will give further details when that technology is fully launched later in the year. With all of these developments in mind, our patent portfolio now totals over 145 patents pending or issued, reinforcing strong competitive protection for our multi-year lead in GAN IC technology. Our high-power progress continued with two new industry firsts, GAN design centers dedicated to data center and to electric vehicles. And I'm excited to announce today two other industry firsts. We have just published the industry's only sustainability report dedicated to quantifying the positive impact GAN is having on decarbonization and on conserving our planet's natural resources. In addition, today we're announcing the industry's first 20-year warranty for our GAN ICs. I'll explain more about some of these new developments later, but let me first give you an update on our mobile charger business. At the end of 21, the number of customer chargers released to production increased 75% from the prior year, reaching an all-time high of 171. In addition, we have doubled our design pipeline compared to the prior year, with a new high of over 240 customer projects now in development with the vast majority of those expected to launch throughout the year. We announced a new strategic partnership with Anchor, a leader in aftermarket fast chargers with a number of GaN chargers already announced and many more in development. In addition to strong adoption in the aftermarket and accessory chargers, our tier one inbox charger introductions doubled in 21 compared to 2020. That list now includes Xiaomi, Vivo, Motorola, Dell, LG, among others. We also announced a new category of ultra-fast chargers, which delivers over 100 watts of power using our latest GANsense technology to charge smartphones from zero to 100% in less than 20 minutes. This high power rating in this new category requires an additional PFC circuit, so two GAN power ICs are needed roughly doubling the GaN revenue opportunity per charger. Xiaomi was the first GaN fast launch in this new category with their Note 11 Pro Plus, and now Vivo has followed with their IQ9. We expect several others to join this exciting new product category later in the year. And today, we are very excited to announce a major win at a Tier 1 Korean smartphone customer. While we can't share further details until that customer makes more of a public announcement This is a major step forward in the adoption of GaN across all major mobile players in smartphones, tablets, and laptops. In fact, with this new announcement, we are now in mass production with eight out of the top 10 mobile players. And when considering customer projects in development, Navitas GaN technology has now been adopted by all of the top 10 mobile players. Next, let me share a few important updates on our market expansion plans. In Q4, as expected, we started sampling our higher power GaN ICs that are targeted for data center, solar, and electric vehicles. Our GaN IC technology is unique compared to our GaN discrete competitors as we integrate one or more power devices along with analog circuits that includes drive, control, sensing, and protection. This monolithic integration is essential to unlock the full system benefits of GaN by eliminating parasitics, increasing operating frequencies, reducing the size, weight, and cost of both passive and mechanical components, and maximizing the energy savings while reducing system costs. These benefits are actually magnified as our GAN ICs are applied to higher power applications, such as the ones we target in data center solar and EV. As a consequence, the customer response to these new higher power GAN ICs has been extraordinary, and we now have dozens of customer engagements well underway towards adopting our GAN technologies. To support and accelerate this customer adoption, we announced the opening of two new design centers to drive GAN adoption for data centers and for electric vehicles. We believe both of these design centers are a first for our industry and a key ingredient in our unique company strategy to co-develop GAN based power systems with our customers in each of our target markets. We have staffed these design centers with impressive industry recognized technical leaders and engineering teams that have a proven and unique set of capabilities to develop disruptive next-generation GAN-based power systems in each of our target markets. These teams are equipped with advanced tools along with the technical skills that span all hardware and software needs across power architectures, passive component optimization, thermal mechanical design, EMI mitigation, and system cost and manufacturability considerations. Last week, Navitas was the first company to publish a sustainability report that comprehensively quantifies the positive impact of GaN power semiconductors on climate change based on global standards. To share some highlights from the report, GaN power ICs have up to 10 times smaller CO2 footprint compared to silicon equivalents. Each GaN power IC shipped saves four kilograms of CO2 and can reduce customers' carbon footprints for example, by up to 30% savings for a 65-watt laptop adapter. Based on third-party reports, adopting GAN in electric vehicles could accelerate EV adoption by up to three years and eliminate 20% of road sector CO2 emissions by 2050. It is estimated that GAN could save 2.6 gigatons of CO2 per year by 2050, the critical timeframe of the Paris Accord. You can expect to see much more on this front as we look to take a leadership role across the entire semiconductor industry in accelerating the electrification of our world. In terms of quality and reliability, Navitas is already leading the industry by shipping a cumulative total of over 35 million units without a single reported GAN-related field failure, and we have also completed over 5.8 billion device hours of testing. Given harsh electrical and environmental conditions and the critical need to avoid power failures, which could shut down entire systems, we are pleased to announce another significant development, the industry's first 20-year product warranty. This warranty is unprecedented in our power semiconductor industry and reflects our commitment and confidence in the quality and reliability of our highly protected and integrated GAN ICs. This 20-year warranty supports our plans to extend the lifetime of mobile chargers and consumer power adapters, thereby further reducing waste and CO2 emissions, and is also an essential confidence factor and differentiator for NAVACOS as we look to enable GAN-based data centers, solar installations, and electric vehicles. You'll see us roll out this warranty across all of our GAN-IC product range in the coming weeks. Before I turn it over to Todd to discuss the financials in more detail, I want to summarize the many exciting industry-first achievements that we've announced recently or in today's earnings call. The first power semiconductor supplier to reach an IPO in seven years from its founding. The first to monolithically integrate sensing capabilities in GAN. The first GAN company to penetrate 10 of the top 10 mobile players. The first GAN company to reach 35 million units shipped and to do it with no GAN-related field failures. the first 20-year power semiconductor product warranty, the first design centers for GAN dedicated to data center and EV, and the first sustainability report dedicated to quantifying GAN's positive impact. And now, over to Todd Glickman, our CFO.