Transphorm, Inc.

Good afternoon. My name is Jason and I will be your conference operator today. I would like to welcome everyone to the Transform Incorporated Business Update conference call. All lines have been placed on mute to prevent any background noise. After the speaker's prepared remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Please be advised that today's conference is being recorded. I would now like to turn the call over to Brett Perry of Shelton Group Investor Relations. Brett, please go ahead.

Good afternoon and good morning to some. And welcome to Transform's quarterly business update conference call. Joining us today from Transform are Mario Rivas, Chief Executive Officer, Premit Parikh, Co-Founder and Chief Operating Officer, and Cameron McClay, Chief Financial Officer. Before we begin, I'd like to point out that there is a slide presentation associated with today's call that management will be referencing during the conference call. These slides can be accessed through the webcast link in the investor relations section of Transform's website, and they will also be posted and available as a linked PDF subsequent to today's conference call. Additionally, during the course of this call, the company may make forward-looking statements regarding the company's financial position, strategy, and plans, future operations, specific end markets, and other areas of discussion. It's not possible for the company or management to predict all risks, nor can the company assess the potential impact of all factors on its business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. In light of these risks, uncertainties, and assumptions, the forward-looking statements discussed during this call may not occur and actual results could differ materially and adversely from those anticipated or implied. Any projections as to the company's future performance represent management's estimates as of today, May 18, 2021. Neither the company nor any person assumes responsibility for the accuracy or completeness of the forward-looking statements. The company undertakes no obligation to publicly update forward-looking statements for any reason after the date of this call to conform such statements to actual results or the changes in the company's expectations. For more detailed information on risks associated with the company's business, we refer you to the risk factors described in Transform's S-1 and other subsequent filings with the SEC. With that said, it's now my pleasure to turn the call over to Transform CEO, Mario Rivas. Mario, please go ahead.

Thank you, Brad. And welcome, everyone, to today's call. Thank you very much for joining us today. Transform continues to lead the gun revolution with disruptive technologies, large market opportunities in electric vehicles and 5G, commercially ramping very quickly on this year with best-in-class gun technology and industry-strongest IP portfolio. Now, we have validation not only from blue-chip partners and customers, but also by the Department of Defense through the Office of Naval Research. And we have a team that is led by world-renowned gun experts with an accumulated experience of 300 years in gun in my time. We just had our most successful quarter with revenue of approximately $2.4 million and a sequential growth of 20%. You will hear Cameron detail it later today. First off, I want to thank all the shareholders, particularly TGAN associates, for your passion and commitment to transform. We simply would not be here without you. We led the GAN companies into public markets in 2020 in the midst of a pandemic, and we kept servicing our customers while taking care of our associates' health working remotely. This year, there will be other GAN companies, such as Navitas, which announced earlier this month, that will enter the public markets. This is positive news. It adds to the positive momentum for our technology and reinforces our GAN power message. We changed our fiscal year to the end of March this year, and we are pleased to announce the upgrade of our listing to the OTCQX, an important milestone in TGAN's growth and development toward our ultimate goal of trading in a national exchange. I now pass the call to Premat to detail the developments over the past few months.

Thank you, Mario, and good afternoon, everyone. Transform has made very exciting progress in the last quarter, particularly market penetration and ramping product revenue. Before delving into it, I will first reiterate some of the overall GAN value, market and business opportunities in front of us, and our IP and manufacturing capability that is opening new doors for us. and at the end, walk you through execution and focus priorities to grow our business. For those who are new to the field, the reason gallium nitride is becoming the future of power semiconductors is because existing silicon has reached its physical limits, empowering what we term the so-called Moore's law of power conversion. Intrinsically, gallium nitride performs at higher efficiency, lowest losses versus silicon or silicon carbide, and much faster switching. for example, four to five times that of silicon. In terms of cost and scalability, Ganon's silicon is cheaper and compatible with the silicon wafer fab manufacturing world, paving the way for lower system cost versus silicon and strong roadmap for approaching silicon cost parity in future. The end result is highly efficient, cooler, compact, and cost-effective power conversion system value proposition. Another reminder for TGAN approach is our in-house capability of innovation across the entire value chain. With what we call the asset light vertically integrated model, we own the key portions of manufacturing, the core epi wafer technology and manufacturing, which is a key in our opinion, wafer fab in which we are a joint venture partner and control our IP and manufacturing. package manufacturing through subcontractors, but where we still control our IP in the package, and a strong emphasis on application-driven resources, both internally and externally with quality partners, like you may have seen in the press release we did yesterday with the new full adapter design. This approach is precisely what has resulted in our strongest IP portfolio, coupled with the 300-plus years of all-round GAN experience that our phenomenal team has. As a reminder, these patent spans span materials, devices, design, wafer fabrication, packaging, and equally importantly, the use of these devices and applications, for example, such as ACF adapters for fast charging, amongst others. This 1,000-patent strong portfolio is is estimated to be 5 to 10 times stronger, larger than many of the standalone GAN companies in the market. Our primary mission here is to grow the GAN market fast. Customers should be most assured about intellectual property when powering their systems with Transform GAN. With this background, there's nothing more exciting at this time for us than TGAN to be addressing several key trends in semiconductor technology today. that of the rapidly growing smartphone adapters fast-charging 5G market in the near term and electric vehicles in the long term. As a reminder, our primary vertical is gallium nitride power products, and our second vertical is epi wafers for RF gallium nitride. We have synergy there with our government programs. And as a general, we also include crypto mining, data servers, gaming broadly into the 5G category. Overall, we are addressing a tremendous market opportunity here with GaN power conversion. We estimate the GaN TAM as 1.5 billion in 2020 to what will be well over 3 billion in 2024. And that more than doubles when we include the electric vehicle powertrain inverter segment, which we have considered here in our model only after 2025 to be a valid part of the Gantam. In the near term, our revenues are being derived from power adapters and chargers, computing and gaming, data center infrastructure, crypto mining, followed by broad industrial and energy. In the long term, and mid- to long-term automotive electric vehicles and charging remain a very, very strong opportunity. And all of these are with healthy and growing GaN TAMs. As you may be familiar, across this application set, T-GaN platform provides higher efficiency, compact systems, and does this very reliably with easy-to-use products by customers with proven performance benefits against silicon, silicon carbide, and other GaN solution as well, as I will cover. Next, some insights into our growth and how we are driving it. We are very pleased to report a 12-month CAGR estimated to be approaching 200% with doubling of our power products unit shipments over the last few quarters and set for more than tripling this quarter. This rapid expansion is driven by growth in the adapter charger market as we continue to make inroads there with superior technology and sustained shipments in the higher power segments which has always been a unique strength of Transform. We have outlined before for you that adapters, chargers, customers are appreciating TGAN's reliability, robustness, smaller die, as much as 50% in some cases, higher figure of merit and performance, leading to increase in design needs since we fully entered this segment. Now we have secured a couple of external customer and partner validations as well to the same effect. What we show here is two popular architectures for fast chargers and adapters, namely ACF active clamp feedback and QRF quasi-resonant flyback. Superiority of transformed gallium nitride set in both is clear versus other GaN solutions, be it E-mode GaN or ICU-mode GaN, et cetera. On the left side here, we show a design that we did with Cylana, a strong and innovative controller company. where they realized over 94% efficiency with high power density compact with our GAN performing better than other emote gallium nitride due to the fundamental device technology superiority. On the right side is one of our QRF adapters, one of our customers' QRF adapters, rather, with TGAN inside. And recently, a third-party report confirming that TGAN parts do more with less Here, as they said, a 300 milliohm part doing the job of a competing 175 milliohm. Basically, a smaller T-gain part doing the job of a larger competing end-bearer. So basically, our parts have demonstrated higher efficiency, lower temperature rise, and also need less bomb components as we use standard drivers. We don't need, or our customers don't need, any shrubbery for biasing circuits around the GAN that other GAN solutions may need. The higher power space is equally important. And again, we have high performance and high reliability products in this area. An example shown here is our highest power 15 milliohm product. By the way, to the best we can tell, this is the lowest on resistance. for 650-volt gallium nitride in a discrete package. It outperforms silicon carbide, both MOSFETs or the JFET cascode variety, in a standard package, as we show here in a standard bridge circuit, realizing a 25% to 35% lower loss and able to deliver over 10 kilowatts from a single path in a half-bridge setting in our lab testing. Complementing this, Our 35 million and 50 million products, which are already in manufacturing, in production, the SuperGAN family we have talked about before, are offering a robust 1.5 kilowatt to 4 kilowatt solution for gaming, crypto mining, servers, industrial power, renewable, and UPS. So laying this out, our product portfolio spans 45 watts to 10 kilowatts. Unique in the industry. TGAN is not a one-trick pony. In fact, we started off building a fundamental platform for robust devices around 1 to 2 kilowatt, the middle of this range, then moved left into the lower power adapter charger segment and right into the higher power renewables and automotive. Some mutables, again, here are the lowest R1 in a package for a discrete gallium nitride, and so far, again, to the best of our knowledge, the only qualified 900-volt gallium nitride product. This is what is allowing us to address the various key verticals from adapters to automotive, fast chargers, server, telecom, mining, industrial, UPS, and electric vehicles. Next, I will talk about some of the specifics of the last quarter and current business. First and foremost, in the fast charger space is where we have made very rapid progress. We expected, as we said last time, 10 designs in production in the first half of the year, and we have already secured that. We also got additional seven-figure unit POs that we are driving our ramp with. We have 10-plus design-ins ongoing, and that number is expected to increase. We are focused well on complete adapter reference designs. And you saw again yesterday with on this on the ACF65 water doctor we released. And our goal is to have two to three by end of June. So at least one more you can expect is coming soon. On the shipment side, we are tracking what we said last time. The goal is greater than one million per month capacity in Q4. And that is being done by activities like releasing a second source for packaging, which is good to have anyway, and 24-7 epi-wafer, MOCVD epi-wafer manufacturing. Our supply and manufacturing teams are intensely focused on this. The higher power area remains a solid one for us. And we have product shipping today. This is just not talk about higher power. We have also doubled our higher power TO247 package ships with five customers in production. We have demonstrated a record low 15 milliohm RON, highest current, highest power from a single package, which we expect to release next quarter. This is our Gen 5 product for a commercial release. On the EpiWave for Business, our second vertical, we have multiple customers now with repeat orders for gallium polar and what is called nitrogen polar RSIP, which is a unique new epi development in gallium nitride. And Transform has fundamental and unique IP for that. Our goal is to establish five to six repeat customers And we are well on track for that. Equally exciting, we have also made our first pilot shipments now to standard gallium nitride RF to a large commercial entity supplying RF GaN power transistors. And we want to target our first win for standard commercial GaN on RF epi wafer by end of 2021. Continuing on the execution focus, We aim to continue to bring out new products and reference designs to accelerate the ramp. Expect to see more Gen 4 SuperGAN products for 45-watt to over 100-watt fast chargers. More reference designs in the second half of the year. On the higher power parts, we will sample our Gen 4 for automotive and continuing Gen 5 automotive qualification after the commercial release that I just talked we will target next quarter. Strategic partnerships have always been central to Transform, and we list the three key ones here. Our technology team is making very good progress on the Yaskawa product development agreement with the goal to secure the next milestones and NRE payments associated with that of 0.75 million. Nexperia is a key partner and licensee, and we are extending our long-term cooperation agreements that we already have in place with them. so that we can address the next phase of GAN market explosion, particularly the growth in the automotive segment. And we continue strong product development with Morelli, with multiple Morelli groups now. As a reminder, Morelli having invested a total of $5 million, $1 million of which came recently at the end of March. Government programs have formed a strong base of our revenues, income, and we aim to continue to deliver on the goals of the Navy contract we have, which is boosting our US EPI manufacturing. We also target at least 3 million in revenue from this in calendar 2021. We are also pleased to report on a new DARPA program that we expect to complete the contract negotiations for. And this program is $1 million for 18 months and focused on newer types of RF GAN EPI. Both of these highlight strong public-private partnership that TGAN has successfully deployed while being synergistic to our business goals. Net-net, to summarize, I'm very pleased to say we had a very strong quarter, a solid start to the calendar year or what is now the end of the fiscal year, exceeding on revenue metrics, achieving design objectives, continued rollout of products and reference designs with solid progress on partners, epi-business, and government programs. We look forward to continue our robust growth as the GAN revolution goes to the next level. I will now hand over to Cameron, our CFO, who will walk you through financial metrics.

Thank you, Pranit, and hello to everyone joining us today. Let me start with a brief recap of our most recently completed quarter. Please note that these numbers are preliminary as the audit procedures pertaining to the quarter remain ongoing. Total revenue for the three months to March 31st 2021 is approximately $2.4 million. This is an excess of our target and represents a 20% sequential increase from the prior three months and is more than double the total revenue when compared to the March quarter in 2020. Focusing specifically on product revenue, the three months to March 31st saw our second successive quarter of doubling shipments, fueling continued growth and resulting in our highest quarterly production revenue number to date. This is our fifth successful quarter of product revenue growth, and we anticipate a continuation of this trend going forward. This will be driven across several segments, including the consumer adapter space, industrial, crypto mining, data centers, and our epi vertical. Turning to operating expenses, we are projecting an increase of approximately 10% in the quarter. Firstly, we have increased our employee base across several areas of the company. Manufacturing to support our revenue ramp, sales and applications to build and execute on our expanding customer base, and G&A to continue to ensure that we maintain our robust compliance and governance environment. Compliance costs were higher due primarily to our year-end procedures. R&D costs increased modestly due to lower absorption with respect to our government programmes. Comparing this quarter to Q1 2020, the OPEX increase is primarily driven by increased COGS due to our revenue ramp. We also saw an increase in non-cash items, such as stock-based comp. G&A is lower due to a number of one-off costs associated with the 2020 transition from private to public. Moving to the next slide. On the balance sheet, the company executed the quarter with just over $9.5 million in cash. In addition to increased staffing investment, the company has increased spend and working capital to support our product revenue growth. We also secured the final $1 million from Morelli as part of their overall $5 million investment into the company. Other assets and liabilities remains largely stable in the quarter. During the quarter, the company changed its fiscal year end from December 31st to March 31st. We are currently progressing through our audit procedures and anticipate this audit being concluded well in advance of the filing deadlines. As previously stated, the company is targeting an uplist onto NASDAQ, and this fiscal year-end change is a stepping stone toward that. The company continues to perform due diligence internally as we work towards this goal. I'm also very pleased to say that the company, effective from today, is now trading on the OTC QX. This is the highest tier of the OTC markets and demonstrates the company's abilities to meet high financial standards, follow strong governance and compliance practices, and maintain current disclosures. Coming now from the current year, to reiterate our long-term business model. We are in the progress of building a high-growth, cash-generative business. The company has three distinct revenue streams, licensing, government, and product. As we move into 2021, we are continuing to generate revenue from both licensing and government contracts, but this is being supported by significant growth in our product revenue, illustrated by our strong performance in Q1. we are seeing solid traction across several market segments, including consumer, AP, data centers, and more recently, crypto. From 2022 onwards, as we continue to accelerate our product revenue across our target segments, product will form a significant majority of our revenue. This acceleration in our product revenue allows the company to target a five-year annual CAGR in excess of 50%. We're also confident the company can achieve a gross margin in the 40% and above range. With respect to operating margin, the company will continue to invest, support all aspects of its core operations. Our strong, stable structure, allowing us to translate gross margins into delivering an operating margin that will be in excess of 20%. From a cash perspective, CapEx will be required to fuel our ongoing revenue ramp. In the longer term, this CapEx, together with working capital support, will translate into a free cash flow model in excess of 10%. In conclusion, TGAN is a pioneer and leading provider of GAN power conversion devices. We have disruptive technology that provides solutions across a number of significant growing markets. We are commercially ramping with strong production revenue growth today, together with a manufacturing structure in place that can support our long-term position. The company has best-in-class technology and the industry's strongest IP position. a comprehensive product offering to meet our customers' needs across a wide range of power levels and segments, all of which underpinned by a deep, talented team led by world-renowned GAN experts. That completes our prepared materials and remarks, and we would now like to open the call to any questions. Operator, please proceed with managing the Q&A portion of the calls.

Certainly, at this time, if you would like to ask a question, please press star, then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Craig Ellis from B-Rally Securities. Your line is open.

Yeah, thanks for taking the question and appreciate the color on the business with the nice course that you're seeing there. Guys, I wanted to start just with an inquiry on the design in and design when funnel and get a better sense of what you're seeing as it relates to activity that could come in either in the back half of the year, maybe a little bit further out by application area. And then wall charges were mentioned a number of times. To what extent is that really aftermarket activity versus aftermarket? versus OEM inbox activity that could ship out with the device, whether it's a smartphone or something else.

Sure. Thank you, Craig. And I'll take that. This is Pramit. So on the first on the spot charger adapters, we have a lot of aftermarket activity, mid-volume to some of the very high volume addressing and some of those aftermarket Craig addressing main brand customers. name brand large customers. And among the design inns that I mentioned we have ongoing, there are a number of inbox opportunities that we are targeting there.

And just on that point, Pramit, as you get more experience ramping your manufacturing capability to higher volume, can you provide us with some color on what you might be looking at beyond the fourth quarter where I think the the business could scale to a million a month. But as you look at flexing manufacturing up to some of these higher volume needs, what are some of the milestones that would exist beyond the fourth quarter that would give investors some visibility on the degree of growth potential in the business?

Sure. No, as you see, it's a very exciting area. And first things first, we want to be very solid with that million per month capacity. and then grow from there. We're definitely preparing, like I said, multiple packaging suppliers for growth. We obviously, Transform, owns our own wafer manufacturing, both on the epi-wafer side as well as the wafer fab. So that's in our hands to plan to continue to ramp. So we continue. You saw a nice doubling, doubling, and actually tripling this quarter. So we hope to... be reached at $1 million a month and then continue rapidly up from there. We have certainly, when we talk to these OEMs and inbox, we have to give a strong, you know, picture of our manufacturing, our supply chain, and so far we are successfully doing that, Craig.

Good to hear. And then lastly, for you, Pramit, before I shoot a few at Cameron, we've clearly seen – cryptocurrency activity in the news a lot. The company had a press release out, I think, in the March timeframe, talking about the suitability of its power conversion capability to gaming charges and some of the charging requirements of that market. As you look at the funnel, as you look at the engagement activity that you and your agents have, to what extent is crypto coming in as a demand driver, and how significant is it with the funnel activity that you have right now?

Sure. So in the Q1, actually, the design that we announced earlier, that has already ramped in production. And when I talked about our higher power TO247 doubling from calendar Q4 to calendar Q120, the new crypto win and our existing win was an important part of that. So we have a couple of customers there who, in turn, are working with the larger end providers of these mining rigs.

Got it. Thank you. And then, Cameron, over to you. So thanks for the additional color on some of the income statement balance sheet items. So one, maybe just a timing question, housekeeping question. When do you expect to have audited financials published for the March quarter?

sure sure so we're we're in the middle of it uh right now uh craig where we're looking at um it's a 90-day deadline which is the end of june and we're certainly targeting to be making a mid-june uh time frame so somewhere around the middle of june is our current target okay mid-june and then uh nine and a half million in cash exiting the calendar first quarter i think i heard you say uh any notable uh um either uses of cash in the calendar second quarter

or anything on the horizon from partners or strategics that would supplement the cash balance?

Nothing to report specifically on that, Craig. I think what we'll look for in Q2 is a continuation of investing in the team, a continuation of obviously supporting our industry position. We'll see the higher revenue numbers obviously increasing receivables, and we'll work towards that over the course of the Q2. We will see in the Q2Q timeframe, obviously, the continuation of the investment from the Scala relative to the development agreement that we signed up on last year.

Yep. And then on operating expense, I know we've got some unusual items in the first quarter and probably the second quarter just related to the change in the fiscal year. Obviously, there's a higher level of audit expense that goes along with that. But you also mentioned in your comments that there were investments in both sales and finance. Would we expect then that the business, at least for how we're looking at calendar 21, would be appropriately provisioned with new resources? Or should we expect incremental resources to be added through the year? And to what extent and what does that do to OpEx by the time we get to the end of the year?

Sure, sure. I think we added in the quarter manufacturing resource, sales resource. We added to the finance team to support it. And I think that we'll continue to add. But it's going to be one here, one there, Craig. This isn't going to be a situation where we're adding significant headcount. So I think as we think about the OPEX going forward and the staffing going forward, it may increase, but it's not going to increase materially because the additions we've got are very targeted because we've got a very stable team in place. Got it.

And then just lastly... a lot of helpful color on the financials. Any color you can provide on gross margins and what you're seeing in the business. There's obviously input costs are moving in this environment and anything that's notable either in the quarter or that we should bear in mind as we think through the middle to the back half of the year.

Nothing specific. I think we continue obviously to increase our volume and we We're looking to do that over the course of the year. From a margin perspective, there's nothing I would say that would be particularly surprising. Again, we'll see when the final audit results come out in mid-June. But at this point, I think from a business perspective, we were the overall blended margin that we're looking to achieve in 2021. We're still very comfortable with that.

Got it. Thanks for that, guys, and I'll get back to you.

Thank you. Your next question comes from the line of Richard Shannon from Craig Hallam. Your line is open.

Great. Thanks, guys, for taking my questions. Pramit, maybe I'll start with the first one for you on the fast charger market here. You talked, I think, for Transformer here on the order of a couple dozen wins or at least wins in process. Nice improvement there. We've also seen, as I think Mario mentioned briefly in his prepared statements, you mentioned another GAN company who's tended to come to market here via SPAC, and their presentation talks about a number of designs, I think, in three figures. Even Power Integrations, who's also been here, has talked about a fair number here. Can you kind of give us some color into this market here in terms of whether this is still kind of a greenfield opportunity or you're bumping against where you're seeing others here? And then if we look forward one to two to four quarters, how many designs could we ultimately see Transform being involved with?

Thanks, Richard. And I think this is really, it's still, to be honest, it's still like a so-called greenfield opportunity as we see it. The growth has just started, right? And there is a very, very strong opportunity. What I like to say is this is like the, you know, my favorite analogy is this is like the early days of the GAN LED industry, which just exploded for a number of years through worldwide penetration and the transformation of the industry took place. And companies with strong product, strong IP, strong manufacturing, there are four or five or six companies that were required to satisfy and sustain our market. So we see strong growth going on. Like we said, we are in a fortunate place to have a product portfolio across the entire power range, not just 45 watts, 65 watts, but from adapters to automotive. And as we fully dove into this adapter charger market over the last several quarters, progress has been very fast. So we hope to continue to increase that number, those 10-plus wins and 10-plus design-ins. We hope to triple that as we go forward, right, in the next year or so. And we are... Transform surely will get more than our fair share in this segment. But all those good companies you mentioned, it will be needed to sustain this very rapid growing and large market.

Okay, that's a helpful perspective from it. Well, you talked about the 1 million months per goal capacity in your last quarter, and you confirmed that now. I mean, if we talk about the number of designs tripling here and increasing attention here, I mean, you've got to be targeting a capacity goal that's got to be getting 2 million, even higher than not-too-distant future. Is that something that you're looking forward to getting to some point next year, calendar, or even early calendar next year?

Yeah, those are the, when I talk about the, you know, the tripling of the designs, those are exactly the things for next year calendar that we do. And hand in hand with that goes the capacity, obviously. The wafer capacity is in our own control. Package capacity, we work very closely with our packaging subcontractors, well in advance now with the lead times and associated things that we are seeing in the entire semiconductor industry. So yeah, those are the kind of things that we would look to be in sometime in 2022.

Okay, thanks for that. Quick question on the Gen 5 product. I think you mentioned the commercial version that is being released to the market here in the third quarter calendar. When should we expect to see, you know, design wins and then, you know, noticeable revenues from that? Is that a calendar 22 story? Would that be after that?

We are targeting actually the first one in the second half of calendar 21 itself. So sometimes, you know, we don't wait till a full release when we start early strategic, early sampling to a few chosen customer partners. So we've been doing that and we expect the first production to be sometime before end of 2021 itself. And then obviously we try to grow that more in 2022.

Okay, that's helpful. Let's see here. Following up on one of the, I think I heard a comment a couple times about end market splits here. I'm wondering if you can provide a little bit more specificity here, maybe even quantifying the end markets here in terms of contribution or at least a rank order here. I know you talked about several and they went by kind of fast, but I'm wondering if you can provide a little more detail to that, please.

Correct. So a lot of the recent growth at the top level, a lot of the recent growth when we talked about doubling and then two quarter over quarter and then tripling this quarter, that has come from the adapters and fast chargers. But still the solid CO247, which is a unique high-powered product that TransformGAN has, that has also doubled. So I would say unit volume-wise, the adapter and charger definitely is dominant. If you look at a large product, right, one large die that we have to put in perspective, for example, our largest, our 35-milli-ohm die, not even talking about the largest product, can be like you know, six to seven times the area of a small device. So that is equivalent to shipping, like one unit is equivalent to shipping seven units. So it's difficult to make an exact unit comparison there, but fair to say that a lot of the rapid growth in the last two quarters has come from adapter chargers.

Okay. That is helpful. My last question, kind of a two-parter here. One of the slides showed a line chart over time here, and I think they had an estimate for the June quarter, and I think it was measured by units. If I caught the numbers right, it was 2.3 times X for the last quarter, and then 3.8 for this quarter, which would, if my math is right, would suggest 65% growth quarter-on-quarter in units. Did I catch that? Is that the right interpretation of those numbers? And how do we, you know, then take that to think about a revenue number for this current quarter?

Yeah, it's so – yeah, it's – let me say it's a relative, right? So we normalized it to Q3. So it's kind of a – the Q4-20 calendar to Q1-20 was 2.3 times – And Q1-20 to Q2-20 is 3.8 times. So those revenues, we are comfortable with the models out there on the street. We have not given formal guidance, but safe to say that we are quite comfortable with the numbers out there.

Okay. You know, I think that's about all for me. I will jump out of line. Thank you very much, guys. Thank you.

Your next question comes from the line of David Williams from Loop Capital. Your line is open.

Hey, good afternoon, and thanks for letting me ask the question, and congrats on the progress.

Thank you.

Just want to ask maybe a little bit about the FD Wafer business and what you're seeing there. Obviously, you're making some really nice traction. But can you talk about maybe what your total expectations are in maybe the epi business on the RF side, just thinking about how you're ramping the product side?

Sure. So our RF epi wafer business is twofold, right? One is what for the DOD government. So we have this Navy program, which is excellent for us in enhancing our manufacturing capability as a supplier, as a US-based supplier, which we are doing. And that also helps us separate from that is the supply of epiwafers to DoD, Prime's DoD customers for that activity. So that's additional to the Navy contract. The Navy contract itself is an epiwafer revenue. of opportunity the dod primes is additional uh catalyzed and helped by the navy contract but a separate business opportunity that we are going and then the third is the commercial the existing commercial gan rf market like i said we have a sample pilot for pilot production to one of the large established players of gan gan rf makers in the u.s so we look forward to uh nailing that standard GAN RF EpiWay for supplier design win by end of the year.

Okay, fantastic. And then maybe on some of the new design wins, I guess when you're talking with customers, what is really the, I guess, deciding factor? What is making them choose you versus maybe one of your competitors? Is it performance? Is it, I guess, how are you winning and what's really driving that?

Sure. So like we, we separated into the, uh, the doctor charger space and the higher power space, right? So, uh, in the higher power space, actually, we are one of the only ones with a solid, reliable GAN products out there. Uh, there are other companies, but we are leading that back, uh, very significantly, uh, uh, on the, on the doctors and chargers space. There are good companies, uh, like, um, mentioned the power integration Navitas all, all, all doing well. And there, like we have said before, and what we are consistently seeing is, and now, like I said, third parties have validated this. Our GAN product technology is fundamentally better than chip itself. And that allows customers to do more with less. So a smaller GAN die performs more efficiently than competing GAN die. So they're seeing more performance with a smaller GAN die. The reliability and quality reputation that we have, again, from our high-power products, from the adapter products, now we have a field fit rate failure in time of less than 0.5 with close to 14 billion hours of operation in the field. So, reliability and quality performance. And then ease of use, right? Our products, I didn't lay it out specifically this time, but we have standard drivers. Our product architecture allows for the use of handle drivers without any what I like to term as shrubbery around that to add biasing circuits and whatnot. So one can allow for a smaller footprint and eliminate certain bump components also from the reference designs, like the Cylana reference design, for example, that we showed. So those are the three or four things that are allowing us to penetrate the customers.

Great. Very good color there. Thank you. And then maybe lastly, just, if you could, uh, if we think about the hurdles or constraints, maybe towards the, uh, as we get to the end of the year, obviously things are ramping very nicely. What are the biggest, I guess, hurdles that you're, uh, got to overcome maybe as we, uh, just with some of the growth that you're seeing here.

Sure. As you know, uh, doubling or this quarter tripling quarter over quarter is not easy. Uh, never been easy. So we got to keep our focus on, uh, execution. and scaling. We got to manage our external suppliers carefully with plenty of lead time. And then we need to partner closely with our customers, as we have always done, and open up new designs with the partner network that we have set up so 2022 is even more robust than 2021. Thanks so much.

Thank you.

There are no further questions. I'll now turn the call back to management for any closing remarks.

Thank you, operator. Before closing out today's call, I want to highlight that we plan to participate at a series of upcoming investor events. Later this week, we'll be presenting and hosting meetings at the NEA Virtual Technology Conference. We will also participate at the Craig Hallam Institutional Investor Conference on June 2nd, and then the Cowan Arnold T&T Conference on June 3rd. For those of you interested in meeting with us as part of one of these events, I encourage you to contact either of the hosting firms or reach out to the Sheldon Group in order to schedule a meeting. I want to thank you again for joining us on today's call, and we look forward to reporting on our continued progress over the coming months and quarters. Operator, you may now disconnect the call. Thank you. That concludes today's conference call. You may now disconnect.