Earnings Call Transcript - IPWR Q4 2022

Operator, Operator

Good day ladies and gentlemen and welcome to the Ideal Power Fourth Quarter and Full Year 2022 Results Call. At this time, all participants are in listen-only mode. At the end of management’s remarks, there will be a question-and-answer session. As a reminder, this event is being recorded. I would now like to turn the conference over to Jeff Christensen. Please go ahead.

Jeff Christensen, Conference Call Host

Thank you, Sarah and good afternoon, everyone. Thank you for joining Ideal Power's fourth quarter and full year 2022 conference call. With me on the call today are Dan Brdar, President and Chief Executive Officer; and Tim Burns, Chief Financial Officer. Ideal Power's fourth quarter and full year 2022 financial results press release is available on the company's website at idealpower.com. Before we begin, I'd like to remind everyone that statements made on the call and webcast, including those regarding future financial results and industry prospects are forward-looking and may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the call. Please refer to the company's SEC filings for a list of associated risks and we would also refer you to the company's website for more supporting industry information. Now I'll turn the call over to Ideal Power's President and CEO, Dan Brdar. Dan?

Dan Brdar, CEO

Thank you, Jeff. Good afternoon, everyone, and welcome to our fourth quarter and full year 2022 financial results conference call. I'll start by updating you on our progress since the beginning of the fourth quarter and our priorities for 2023 as we work to commercialize our B-TRAN semiconductor technology. After that, Tim Burns, our CFO, will walk you through the numbers, and then we'll open the floor for your questions. We are excited to announce the launch of our first commercial product, The SymCool power module. The SymCool is a multi-die B-TRAN module primarily aimed at the solid-state circuit breaker market. Following the announcement of our Department of Defense funded project with the U.S. Navy and NAVC for a B-TRAN-enabled solid-state circuit breaker, we have seen an increase in interest from various companies wanting to learn more about our technology. Having made the initial shipment of working devices to our partner on the project, DTI, we are being approached by several industrial companies interested in our technology evaluation program. Our focus is on providing low-loss circuit breakers to both utility and industrial markets. The strong market demand for our technology, which can enable solid-state circuit breakers, led us to prioritize this as our first commercial product. Regarding solid-state circuit breakers, let's discuss our collaboration with the U.S. Navy and our partner, Diversified Technologies. In the fourth quarter, we sent additional B-TRAN devices to DTI in preparation for a full-scale MVDC circuit breaker demonstration. We are also fabricating more wafers at both of our development wafer fabrication partners. The first batch is nearing completion, and these wafers will be diced and packaged into devices for testing before further shipments to DTI. We anticipate delivering packaged B-TRAN devices for the MVDC circuit breaker in the first half of 2023 and will continue to support this program throughout the demonstration phase. Our goal for this program post-demonstration is to assist DTI in launching a line of circuit breakers incorporating B-TRAN for the military, industrial, and utility markets. As we mentioned in our last call, we signed a development agreement with a global top 10 automotive OEM in the fourth quarter. This marks our second collaboration with a top-tier automaker, following an earlier announcement of a different automaker participating in our technology evaluation program. We are working with this automaker's advanced technology team to develop a custom B-TRAN power module for use in electric vehicle drivetrain inverters in their next-generation electric vehicle platform. We expect to complete Phase 1 of this development program in the second quarter, with progress to date being very positive. Consequently, we're already in discussions with the automaker regarding the scope for Phase 2, which will focus on integrating B-TRAN dies into the power module in collaboration with a packaging company also chosen by this automaker. We had to navigate a rigorous technology competition to be selected for this program, and we will need to continue meeting program milestones and performance expectations as we move forward. Insights gained from the technology competition and our ongoing discussions with the automaker reinforce the competitive advantages we can bring to electric vehicles. Automakers face two significant issues: high electric vehicle costs and range anxiety due to the nascent charging infrastructure. Rising battery costs, which have quintupled since mid-2020, have worsened the EV cost challenge. Our semiconductor technology that enhances vehicle drivetrain efficiency can significantly improve EV range. Unfortunately, traditional semiconductor performance enhancements have relied on moving to wide bandgap materials like silicon carbide, which only worsens the cost issue since silicon carbide devices are considerably pricier than silicon devices. With B-TRAN now entering commercialization, automakers are finding a more affordable path to improved vehicle range. Additionally, given B-TRAN's architecture, we can transition to silicon carbide as wafer costs, processing, and quality improve over time. Looking to 2023, we have several key objectives to help you track our product development and commercialization progress. This year, we plan to: complete the full process flow run at a high-volume wafer fabricator to prepare for scaling our commercial product sales; ship packaged devices under the NAPS program for inclusion in a medium voltage DC circuit breaker for demonstration; finish Phase 1 and win Phase 2 of the custom module development program with a global top 10 automaker; fabricate and initiate sales of our first commercial product, The SymCool power module; design and introduce our second commercial product, an intelligent power module; onboard additional potential high-volume customers to our B-TRAN test and evaluation program; and deliver customer kits, which will include a packaged B-TRAN device, driver, test board, and safety enclosure to participants in our evaluation program. While we've previously discussed the Navy program and the global automaker custom module, let's delve into our additional 2023 objectives in greater detail. Transitioning from development wafer fabs to production fabs is a crucial next step. Our commercialization strategy necessitates fabrication capacity to meet customer needs, along with protecting our customers from supply chain shocks and exposure to regions operating under different intellectual property guidelines. As we prepared for commercial product shipments earlier this year, we initiated a full process flow engineering run at a high-volume wafer fabrication partner. This run is going smoothly, and we anticipate completing it in the second quarter. Upon successful qualification, this fabrication partner will support our sales as we ramp up to higher volumes in 2024. We are also initiating engagement with a second high-volume wafer fabrication partner for a similar full process flow run. This second fab is well-versed in producing bipolar devices like IGBTs. Both sources are located in different parts of the world, possess world-class experience, and are eager to participate in a new technology like B-TRAN. Our dual sourcing strategy ensures we can secure necessary production capacity, components, and services from partners in diverse locations, which will help mitigate supply chain risks. For commercial products, we intend to launch our second product this year, which will evolve from the multi-die packaging of SymCool and incorporate a multi-die driver we developed for our technology evaluation program. This product will target renewables—specifically solar and wind—paired with energy storage and other industrial markets. The driver and packaging designs for this product are underway, and we are on schedule to launch it in the third quarter. Next, regarding our evaluation program, we are collaborating with a global Tier 1 automotive supplier as part of our technology evaluation initiative. This Tier 1 supplier will assess B-TRAN for its use in electric vehicle inverters, bidirectional charging, and circuit protection applications. Their interest was piqued by our announcement of the custom module development agreement with the global top 10 automaker. Our technical and business development teams are meeting regularly as we plan to deliver B-TRAN samples for evaluation to the Tier 1 automotive supplier in the latter half of 2023. We are also preparing additional customer kits, which will include a packaged B-TRAN device, driver, test board, and safety enclosure to facilitate and expedite the evaluation process. After the kits are delivered and prospective customers complete their testing and evaluations, we will gather important feedback on their product needs, potentially establishing product development or other commercial agreements. This feedback will guide us in determining the requirements for various customer applications and inform our development roadmap for future B-TRAN products. As you know, our test and evaluation program will remain integrated into our sales and marketing efforts and will inform the next generation of products. We will continue to bring additional potential customers into the program. Since the start of the fourth quarter, we have submitted proposals and concept papers for government funding opportunities with the Army, the Department of Defense, the DoD's Defense Innovation Unit, and have partnered with universities and commercial entities to pursue additional government funding as opportunities arise. We are also preparing submissions through the Department of Energy, Department of Defense, Air Force, and NASA and collaborating with wafer fabrication partners and commercial organizations to explore funding possibilities under the CHIPS Act as the programs become defined and open for solicitation. While the competition for these programs is steep, they present us with opportunities to collaborate with existing fabrication partners and potential customers, both to advance our technology and pursue additional application-specific demonstrations of B-TRAN. Regarding our expanded B-TRAN patent portfolio, we currently hold 72 issued B-TRAN patents, with 31 of those issued outside of the United States and an additional 24 pending B-TRAN patents. Our current patent coverage includes North America, China, Japan, South Korea, India, and Europe, all of which are high-priority regions for patent protection. As part of our product development and launches, we are broadening our patent efforts to include what we consider high-value patents for our driver and packaging designs, both of which are distinguished by the bidirectional nature of our technology. Recently, we released a new B-TRAN white paper that includes recent testing results using our newly designed driver and devices that utilize our double-sided packaging. The paper presents switching characteristics and waveforms obtained through bidirectional double pulse testing, which is crucial for the potential and existing customer technical teams. A link to the white paper is available in the press release issued earlier this week. We will be attending this year's Applied Power Electronics Conference, or APAC, in Orlando, Florida, from March 19 to 23. Our technical paper titled "B-TRAN Optimization and Performance Characterization" has been selected for presentation at the conference. Last year, our paper won an award from the Pentacle community as one of the best technical presentations, so we anticipate significant interest in this year's paper and our advancements. In summary, we are thrilled to have launched our first commercial product, been selected for a custom module development initiative with a top 10 global automaker, and begun collaborating with a Tier 1 automotive supplier. We are well on track to meet the key milestones and objectives for this year, as outlined earlier. B-TRAN's unique architecture offers inherent bidirectional switching capability, reduced switching and conduction losses, and improved thermal management, which could result in lower costs for OEM products using B-TRAN and burgeoning B-TRAN-enabled applications. B-TRAN holds the potential to replace traditional power semiconductor solutions across many applications, including electric vehicles, renewable energy, energy storage, solid-state circuit breakers, and motor drives. Now, I would like to hand the call over to Chief Financial Officer, Tim Burns, to review our fourth quarter financial results. Tim?

Tim Burns, CFO

Thank you, Dan. I will review the fourth quarter and full year 2022 financial results. We recorded $17,000 in grant revenue for the fourth quarter and $203,000 in grant revenue for the full year, with offsetting costs of grant revenue as we continued our work on the Navy funded NAVC program. On December 31, grant revenue of $37,000 remained to be recognized under this program. Operating expenses were $2 million in the fourth quarter of 2022 compared to $1.4 million in the fourth quarter of 2021, driven primarily by higher research and development expenses due to additional semiconductor fab runs and costs related to the development of our driver, packaging and recently launched The SymCool power module. Operating expenses also reflect higher stock-based compensation expense. Although we expect higher research and development spending in 2023, we continue to expect some quarter-to-quarter variability in operating expenses, particularly our research and development spending due to the timing of semiconductor fabrication runs and other development activities and hiring as well as the potential impact of additional government funding. We expect to keep general and administrative expenses in 2023 close to 2022 levels, excluding the impact of stock-based compensation expense, despite the impact of inflation on the cost of services. Sales and marketing spending is expected to increase modestly in 2023 due to hiring and costs associated with commercialization efforts, including new product launches. Net loss in the fourth quarter of 2022 was $1.9 million compared to $1.4 million in the fourth quarter of 2021. Full year 2022 net loss was $7.2 million compared to $4.8 million in full year 2021. Fourth quarter 2022 cash burn was $2.1 million, consistent with our guidance of approximately $2 million to $2.1 million. Full year 2022 cash burn was $6.8 million, again consistent with our guidance of approximately $6.7 million to $6.8 million. We expect first quarter 2023 cash burn of approximately $1.8 million to $2 million and full year 2023 cash burn of $8 million to $8.5 million. Cash and cash equivalents totaled $16.3 million at December 31, 2022. Given our planned cash burn, which remains modest, we have ample liquidity on our balance sheet to fund operations through 2024 as we commercialize our technology and also to be a well-capitalized partner for the broad spectrum of companies that are either already participating or that we expect to participate in the testing and evaluation of our B-TRAN technology as well as the global top 10 automaker that has engaged us for a development program. At December 31, we had 5,924,680 shares outstanding, up slightly from the end of September and 1,040,248 warrants outstanding, unchanged from the end of September. Including 811,614 stock options, restricted stock units and performance stock units outstanding, we had 7,776,542 diluted shares outstanding at December 31. At this time, I'd like to open up the call for questions. Operator?

Operator, Operator

Thank you. At this time, we are conducting a question-and-answer session. Investors conclude with their questions within the meeting webcast by typing them into the Q&A button on the right side of your viewing screen. Our first question comes from David Williams with Benchmark.

David Williams, Analyst

Congrats on the progress you guys are definitely making a lot of headway and it’s fantastic to see so congrats there. I guess then, maybe one of my first question is just kind of around some of the comments that were made this week from Tesla and just discussing the silicon carbide cost and the reduction that we’re able to make there. Do you think as you kind of look out across your product and your capabilities and kind of what you're seeing, do you think that you’re silicon alternative in the silicon carbide is part of that discussion? Or just kind of thinking about your content there, your capabilities? Any color would be very helpful.

Dan Brdar, CEO

Yes, that's a great question, David. Tesla recently mentioned their goal to reduce silicon carbide in their next generation vehicles by 75%, primarily due to cost concerns. Electric vehicles face significant cost challenges, with semiconductors being the second highest cost component after the battery. Silicon carbide is much more expensive, offering improved performance but at a high cost, resulting in some range improvements that come with a financial trade-off. We see this as a significant opportunity because we can deliver high performance that exceeds traditional silicon devices without the expense associated with silicon carbide. During our technology evaluation process with an automaker for a custom module, we faced competition from silicon carbide devices. However, since this automaker isn't focused on producing large volumes like 100,000 vehicles, there's a growing emphasis on cost among those seeking broad adoption. This opens doors for high-performance technologies like ours based on silicon. As silicon carbide technology matures and the quality and cost of wafers and processing go down, we can consider transitioning to silicon carbide as well. For now, we offer an alternative for automakers, particularly since incorporating silicon carbide represents a substantial cost challenge for products still being produced in relatively low volumes, such as electric vehicles.

David Williams, Analyst

That’s very, very helpful. And then maybe just on the – since you released the first product, just can you discuss a little bit of the traction that you’ve seen? And anything that maybe surprised you or new customers or any applications that you’ve seen that have come in?

Dan Brdar, CEO

Well, it's really targeting the solid-state circuit breaker market and it was really driven by the discussions that we were having with the large industrial players that wanted to also focus on for consolidated circuit breakers. The project we're doing with the Navy are all discrete devices that are packaged individually and they're putting a series parallel configuration to make the 12-kilowatt rating for the breaker. And the feedback we got was that the industrial companies were looking for something that had a higher rating, a multi-die approach where we parallel multiple die and gave them a building block, so they can make whatever size they want without needing to make so many connections if they were individual devices. So it was really driven by the feedback that we were already getting from the players that want to make solid-state circuit breakers.

David Williams, Analyst

Great. And maybe just from a geographical standpoint, it sounds like you made a lot of progress in terms of the sampling and new customers. Can you talk maybe from a geographical perspective where you’re seeing the greatest interest in demand? Is this Asia-based or European or maybe even North American-based?

Dan Brdar, CEO

Most of the companies we are collaborating with are global, with a presence in the U.S., Europe, and Asia. Given our small team and concerns about bandwidth as interest in the technology grows, we are not dedicating much time to small companies since supporting them requires nearly as much effort as working with new, larger partners. Therefore, we are concentrating our partnerships on well-known global companies and the products they offer.

David Williams, Analyst

Okay. And one last one for me, if you don't mind. Just kind of thinking about the timeline to revenue on some of the automotive stuff that you discussed and some of the other programs that are in place. When do you think we should start beginning to see some real revenue ramp? Is that this year? Or should we expect that maybe later into next year?

Dan Brdar, CEO

You’ll see revenue on the industrial segments, things like renewables and motor drives, those sort of things in 2024. You’ll see some modest revenue later in 2023. But when you think about it and customers have to go through a design cycle to incorporate any new semiconductor device. So once they’re through that process, the revenue will start to ramp in ’024. On the automobile side, the stated objective of the program with the global automaker is a production-ready product by mid-2025. So I would expect that real revenue from them would follow shortly after that. And they actually consume a lot of parts just to go through all their certification and testing and qualification. So we’ll actually even see some preproduction revenue on the automobile side starting probably in the second half of 2025.

Operator, Operator

I will now turn the call back to Jeff Christensen to read questions submitted through the webcast. Thank you.

Jeff Christensen, Conference Call Host

Thank you, Sarah. First question that's been posted to the Q&A button is, could you describe the development agreement with a top 10 global automaker in more detail, including the phases of the program?

Dan Brdar, CEO

Sure. We were selected from several competing technologies. And so folks that know us know that we were getting pretty frustrated because it was just a very long evaluation process took over a year. As you can imagine, the automakers are looking at all the technologies that are out there as they think about how are they going to bring out products that are differentiated from what’s already in the market, how are they going to manage costs, how are they going to improve range. So we were competing against a whole variety of technologies, including some silicon carbide technologies. We were selected for that program. They also selected an innovative packaging company that was also going through its own selection of technologies and innovation. And then we’re going to be married together. The way the program itself works, Phase 1 is really us doing our part and the packaging firm doing their part independently, where we provide them test data, we provide them devices and we provide them a bunch of technical documentation as it relates to the technology itself. Then Phase 2 which we expect to move into here in the not-too-distant future, will be us providing devices to the innovative packaging company who will incorporate those into the packaging design that they have come up with. And then Phase 3 will be that module with B-TRAN devices being extensively tested to meet the auto certification standards which are pretty substantial. The program is really on a pretty fast timeline to try and get this thing to the point where it is production-ready by 2025. That is the stated goal of this program. So it’s really us and the packaging company working independently in Phase 1 and us providing devices to them for incorporation into the module in Phase 2, and then Phase 3 is really all about the testing and certification of the module itself.

Jeff Christensen, Conference Call Host

Our next question is about the target markets and more information about it. When do you expect each of your target markets to generate revenue? And how do you foresee the revenue opportunity and ramp for each market?

Tim Burns, CFO

I'll just expand a little bit on what Dan shared for David's question earlier. The longest path to revenue is the EV segment but it's also the largest opportunity. As Dan had mentioned in that development program with the top 10 global automaker, the target is a production-ready module in 2025. So it's still a couple of years out. If you look at our SymCool power module, that's targeted at solid-state circuit breaker market. So we expect initial sales of that product here in the second half of the year and we expect that revenue to start ramping in 2024. When you look at other target markets, renewables, renewables with storage, EV charging, we think those would be a logical fit for our second commercial product, the intelligent power module that we expect to launch here in the third quarter of this year. So that revenue would start to ramp and likely in 2024 as well as it gets through that design cycle. So we'll provide some more specific revenue expectations as we get a little bit further along with these prospective customers. But I assume through the test and evaluation program, we'll really get a good handle on their technology evaluation processes, their product design cycles as well as their commercial plans and we'll look to be able to provide more specific guidance here in the future.

Jeff Christensen, Conference Call Host

Thank you. Now that you’ve introduced your first product, do you still foresee government funding to be part of your go-forward commercialization strategy? And how is the company impacted by the Chip Act?

Dan Brdar, CEO

I'll do this one. Yes, we actually think that government programs are a good opportunity for us. It helps cover some costs that we would spend on development in our own. It gives us the ability to partner with other technology companies and customers, particularly for things that are application-specific opportunities so that we can turn those into some longer-term relationships and really helps us stay connected with where some of the major players are going, whether it be on the application side or on the technology development side. We see the government continuing to want to spend quite a bit of money on energy technologies and now semiconductors with the Chips Act. We think the Chip Act is going to be favorable for us. It's still taking shape. According to our understanding of discussions we had as recently as this week, the government is going to form regional hubs that are really sort of anchored by wafer fabricators. Then people will be associated with those hubs, whether they're universities, technology providers or semiconductor companies like ourselves. We expect to submit proposals related to target applications as well as some longer-term silicon carbide development under the Chip Act as the funding programs get put in place and they start to roll out some other solicitations connected to the Chips Act through DoD and DOE.

Jeff Christensen, Conference Call Host

Thank you. We received some really good questions. We have more coming. In the meantime, if investors, you can submit your questions anytime within the meeting webcast by typing them into the Q&A button on the right side of the viewing screen. The next question is, how has semiconductor – how is the semiconductor supply chain disruptions impacted the company to date?

Dan Brdar, CEO

What will be the impact as you commercialize the technology and start to ramp volume.

Tim Burns, CFO

Yes. So on the supply chain side, I mean, the disruptions have had little impact actually on us to date. So we've intentionally made sure that we're dual sourced, not tied to a specific geography. And we also have things like wafers. We ordered wafers well in advance, so there wouldn't be any disruption to our wafer fabrication runs. I would say the bigger impact in the semiconductor supply chain disruption is really consumer electronics. So that's where you probably saw the greatest impact. But for a company like us, it's in power and we're still operating in relatively low volumes in terms of number of wafers we're processing, there really wasn't a significant impact. I guess looking forward as we start to ramp volumes in 2024, we don't expect our commercialization efforts to really be impacted by the semiconductor supply chain disruption that's really working itself out as we speak. We will continue to make sure we have a dual-source strategy, continue to make sure that we have suppliers in different geographies, just for geopolitical risk. And we'll just keep dual sourcing as a key part of our overall strategy.

Jeff Christensen, Conference Call Host

This comment and question was posted to the portal. In my discussions with Ideal Power shareholders, the investing public is fixated on automotive only, even though your technology will span multiple economic sectors and industries. What can you tell us that will help appreciate the broad economic potential of B-TRAN?

Dan Brdar, CEO

So yes, electric vehicles are obviously getting a lot of buzz just because it's one of probably the two macro trends that are really driving growth in power semiconductors. But right now, renewables is already over a $1 billion IGBT market. It's already an enormous market. Energy storage is becoming more and more prevalent and that will be paired with renewables. So that's a very large opportunity. The circuit breaker market itself is enormous. Now solid-state circuit breakers are really the enabling technology. So we'll have to see what we can displace in that market. The filler circuit breaker markets over $25 billion in total. There's the EV charging infrastructure that's going to be put in place. So there's a lot of significant opportunities for the technology. It's really any application that requires power semiconductor devices and we expect to generate significant revenue from areas other than electric vehicles and earlier than we will for electric vehicles, even though EVs are obviously a great long-term opportunity.

Jeff Christensen, Conference Call Host

Thank you. Will the phases essentially be the same for all automotive OEMs, please provide additional information on the definition of Phase 1. And would milestone payments be triggered after Phase 1 or Phase 2?

Dan Brdar, CEO

Yes. The automakers are each approaching things a little bit differently. Some are doing the packaging design for modules, for example, in-house. Some are relying on third parties. So they each are going to preach us a little bit differently but what we're seeing pretty consistently is rather than relying solely on the Tier 1 suppliers. They've all seemed to have created some very substantial technical themes internally to assess technology and to do design work, particularly as it relates to high power sections of the EV like the drivetrain, all really focused on how to shorten the design cycle because they really don't want to get into the five-year traditional design cycles. They're really looking to take a couple of years out of that. So it gives us some opportunities to, I think, really collaborate with some pretty innovative companies and approaches.

Tim Burns, CFO

And then on the milestone payment side, so there's relatively modest revenue associated with the first couple of phases of the program but it is based on one or more milestone payments for each phase. That's still a negotiation for Phase 2 but likely for Phase 1, it will be a single milestone payment.

Jeff Christensen, Conference Call Host

What do you estimate your tax loss carryforward will be at the end of fiscal 2023?

Dan Brdar, CEO

So we're still doing our taxes here for this year that just ended. But I think we had a carryforward of in excess of $40 million and growing. So it's pretty substantial. We have not done any kind of analysis to see under the tax code whether we've ever triggered as a company a change of control with capital raises which is an analysis we would have to do to really confirm that full carryforward but it is pretty sizable.

Jeff Christensen, Conference Call Host

How do you define top 10 automaker? Unit sold market cap revenue?

Dan Brdar, CEO

Units sold because that's what really matters to us is, how many vehicles are they selling because that really drives the size of the opportunity for us as a supplier to them?

Jeff Christensen, Conference Call Host

Thank you. Any update on the circuit breaker project for DOE you were mentioning a while ago with DTI?

Dan Brdar, CEO

The circuit breaker that we were doing with DTI for the Department of Energy, we won the Phase 1 award, successfully completed that. DTI submitted the proposal for Phase 2 but Phase 2 actually didn't get selected. And the only negative feedback that they got was there was concern on DTI's ability to be a significant supplier to the utility sector because they're not traditionally a big supplier to them. They're really more successful in terms of the government marketplace. And since there's so much competition for these, just that one negative was enough to result in us not getting selected for Phase 2. Now for us, what we're providing and what we're doing, whether it is a DC circuit page for the military or whether it's an AC circuit breaker for the Department of Energy for us, the work is exactly the same.

Jeff Christensen, Conference Call Host

Thank you. My understanding is Enphase researchers have started using gallium nitride to improve power electronics. Is it conceivable that this material could be used for Ideal Power’s Power Switch in addition to silicon and silicon carbide? Has any test been done in that regard?

Dan Brdar, CEO

Yes, gallium nitride will take quite a while for a couple of reasons. One is gallium nitride does really well in terms of very fast switching for lower voltage, lower power applications, things like power supplies for consumer electronics and low-power applications like microinverters, like what Enphase is doing. It's going to be a while before that technology has advanced enough that it can really be used in high-power applications. And there's also a challenge in making vertical structures in GaN, the ability to figure that out from a fabrication standpoint is something that people haven't been successfully doing that yet. So I think for us, GaN, for us or for any high-power application is quite a ways off in the future and it has its own set of cost issues also as a wideband gap material.

Jeff Christensen, Conference Call Host

Thank you. We do not have any other questions. Dan, do you have any closing remarks?

Dan Brdar, CEO

I just want to thank everybody for joining us on the call today. We made great progress last year in our path to commercializing our technology. And our talented team is on track for a very successful 2023. We'll continue to actively share our story with the investment community as we move forward in executing our milestones for this year. We'll be participating in four investor conferences in March. Information about each of those conferences is available in our press release today and we hope to speak further with those of you within the conferences. So at that point, I'd like to thank people for joining us and we will talk to you again next quarter.

Operator, Operator

Thank you. This concludes today's conference. All parties may disconnect and have a great day.