Navitas Semiconductor Corp Q3 FY2025 Earnings Call

Thank you for joining us. My name is Jordan, and I will be your conference operator today. I would like to welcome everyone to the Navitas Semiconductor Third Quarter 2025 Earnings Call. Now, I will hand the call over to Lori Barker from Investor Relations. You may begin.

Good afternoon, everyone. I'm Lori Barker, Investor Relations for Navitas. Thank you for joining Navitas Semiconductor's Third Quarter 2025 Results Conference Call. I'm joined today by Chris Allexandre, President and CEO; and Todd Glickman, CFO. A replay of this webcast will be available on our website approximately one hour following this conference call and available for approximately 30 days. Additional information related to our business is also posted on the Investor Relations section of our website. Our earnings release includes non-GAAP financial measures. Reconciliations of these non-GAAP financial measures with the most directly comparable GAAP measures are included in our third quarter earnings release and also posted on our website in the Investor Relations section. Non-GAAP expenses and operating margin exclude stock-based compensation, amortization of intangible assets, and other nonrecurring items. In this conference call, we will make forward-looking statements about future events, our future strategy, or the future financial performance of Navitas. We may make predictions or describe trends in our industry and markets. You can identify some of these statements by words like 'we expect' or 'we believe' or similar items. We wish to caution you that all such forward-looking statements are subject to assumptions, 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 include 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 section in our most recent 10-K and 10-Q. Our actual performance may differ from our projections and our estimates, assumptions, and strategies may change. Navitas assumes no obligation to update forward-looking statements to reflect actual results, changed circumstances, or other events that may occur except as required by law. And now over to Chris Allexandre, CEO.

Good afternoon, and thank you for joining us. I am very excited to have the opportunity to address you today. I have now been in my role for approximately 60 days, and I would like to take this opportunity to share with you my vision for the future of Navitas. I will start by saying that I feel incredibly proud to be leading the Navitas team, a world-class team that has been at the forefront of both gallium nitride or GaN and high-voltage silicon carbide or SiC since the very beginning of their development. Today marks a crucial moment for Navitas as we enter a transformation of our company. Over the last 60 days, I've been on the road meeting and collaborating with customers, employees, suppliers, and partners. That strategic tour gave me a clear view of our strengths and challenges and most importantly, the opportunity ahead. The conclusion is straightforward. Navitas is a company with enormous potential, underpinned by strong foundational elements already in place in both GaN and high-voltage SiC. And we have a tremendous opportunity to win in high-power, high-growth markets such as AI data centers, performance computing, energy and grid infrastructure, and industrial electrification. Customers are eager to adopt those technologies into their applications, and we have the experience and track record of delivering those technologies in scale and volume, and they want to collaborate. Simply put, we are in the right markets with the right technologies, and we can win with a focus on strong execution. We will accelerate, pivot, and double down on those high-power markets and customers as we move away from consumer and mobile. I call this Navitas 2.0, a transformation to a high-power, sharp-focused company serving grid to the GPU to drive more consistent, profitable, and sustainable results. Before we dig into what we are doing, let's quickly cover what is happening in the market right now. Across the entire market, electrification is accelerating and moving up in power demand. AI data centers necessitate accessing power distribution to achieve higher efficiency and density, and they are doing so exponentially. In parallel, the energy grid is transforming with storage, solid-state transformers, utility-scale renewables, and megawatt charging to support the AI catalyst, but also the overall growing energy demand. This is not a short cycle. It is a durable, multi-decade sustainable trend that will reshape power architecture at rack, system, and grid type levels. This requires fundamental change in customer system architecture, design, and technologies, and simply means the total market size Navitas is addressing has increased multiple folds. It opens immense opportunity for high-power players such as Navitas 2.0. I spoke to a variety of customers over the last 60 days. Every single customer I met in those segments from leading U.S. hyperscalers and AI GPU vendors, performance computing OEM, and ODM to the many very innovative customers told me the same message: GaN and high-voltage SiC technologies are the solution to the problem they are trying to solve and the revolution they are driving, and they view Navitas at the center of this transformation given our long history and track record in shipping those at scale. We have heard that message loud and clear, and therefore, will immediately accelerate accordingly. We are one of the few companies with a complete high-power portfolio, GaN, GaN integrated with IC, and high-voltage SiC. This combination, along with very strong system expertise built over the last many years, offers more value to customers. 10 years ago, Navitas was looking ahead at global energy demand, which was projected to grow by 200% to 300%, doubling to tripling over the next decade. EV, wind turbine, cloud computing, data centers, solar power, climate change, quantum computing, all these energy platforms required significant reformats to consume efficient high-voltage technologies, which did not exist at that time. This enormous forecasted demand made it clear that power electronics would need a transformative leap in efficiency and power level. Standing back, it was obvious even 10 years ago that existing silicon-based chip technology would simply not get us there. And we didn't even consider AI and its power-hungry implications back then. Navitas led the introduction of GaN into power electronics, leapfrogging established silicon players. Then we acquired and merged with GeneSiC, the leading advanced technology in high-voltage SiC. We've shipped over 300 million GaN units with proven quality and reliability over the last seven years, and GeneSiC brought leading-edge high-voltage SiC technology, both together enabling power architecture evolution in AI data centers, performance computing, energy and grid infrastructure, and industrial electrification. GaN is now mainstream for AI data centers, performance computing, and industrial electrification. The NVIDIA 800-volt DC AI factory ecosystem announcement is the first proof point, and we expect it to be adopted across many other players. High-voltage SiC is also supporting and enabling the energy grid transformation necessary to enable AI and the associated demand for more power. Both markets are intertwined. Underneath our portfolio are long-standing partnerships with leading fabs, back-end and module partners, deep co-design with customers, and a very advanced solution and system architecture understanding with more than 300 patents issued or pending. Our team has been at the forefront of GaN and high-voltage SiC from the early days, now reaching over two decades combined, and that experience matters when customers move fast and execution is critical. Going back to Navitas 2.0 and the transformation from a mobile and consumer-focused foundation to a high-power company, that pivot is backed by decisive actions that we have begun to take. Number one, resource realignment. We are reallocating engineering, commercial and application support, and R&D programs towards high-power platforms and customers. We're ensuring we have the right people in the right markets and the right geographies, led by a renewed global high-performance leadership team. Number two, road map acceleration. We are accelerating the release of new products tailored to high-power markets targeted at rack, system, and grid type nodes. We expand medium-voltage GaN devices, high-voltage GaN devices, IC, and high-voltage fixed module. Number three, go-to-market restructuring. We are focusing on hyperscalers, GPU vendors, Tier 1 OEM and ODM, and leaders in our focus markets: AI data centers, performance computing, energy and grid infrastructure, and industrial electrification. We intend to streamline our distribution network to align with those high-power focus markets. This also means a change in geographical resource deployment, including creating a stronger presence in the U.S., where we have growing and promising engagement. Number four, portfolio and customer pruning. We are deprioritizing lower margin, short lifecycle projects, transactional markets and customers such as mobile and selected China-based segments to redeploy capacity and attention to durable high-power programs. Our focus is on long-term engagement where technological innovation makes a difference. We believe this will ultimately drive high-quality business with greater predictability, consistency, and higher margins. Overall, this change will impact our business model. High-power engagements are indeed deeper, longer-lasting, and multigenerational. We may often engage across multiple subsystems within the same customer, some served by GaN, others served by high-voltage SiC. That breadth is expected to increase win rates, raise the blended margin, and produce more predictable, repeatable revenue compared with transactional, lower-margin segments such as mobile. This is the foundation for Navitas 2.0, a scalable, profitable, and sustainable enterprise. At the OCP Global Summit, NVIDIA named Navitas a power selector partner for its next-generation 800-volt DC AI factory power architecture. That validates our ability to serve the entire power path from the grid to the GPU. In support of this ecosystem, we announced our first 100-volt GaNFast alongside our portfolio of 650 GaN discrete Fast and our GaN Safe IC and expanded high-voltage SiC products. This is our first formal entry into medium voltage GaN, the critical range for AI server power stages and rack-level distribution. We're sampling now 2.3 kilovolt and 3.3 kilovolt high-voltage SiC modules to leaders in battery energy storage systems, solid-state transformer programs, and megawatt charging. The strategy and opportunity are clear. To get there, our plan is grounded in four pillars: number one, market focus: AI data centers, performance computing, energy and grid infrastructure, and industrial electrification. We will stay sharply focused on those high-power markets only. Number two, technology and manufacturing leadership: continuous innovation in GaN, GaN IC, and high-voltage SiC informed by customer requirements and co-design. We have a strong foundation in technological innovation, and we'll continue to lead the industry. We will also expand our manufacturing footprint to better serve our high-power customers. You may also see us doing more partnerships to enable faster adoption. Number three, operational efficiency: a streamlined and rebalanced geographically deployed organization, a scalable foundry, packaging, and module partnerships. Number four, financial discipline: prioritized investment, leverageable OpEx, and a shift towards high-margin programs. In the near term, this transformation will have an impact, including a reduction in guidance before returning to growth. We expect Q4 to mark the bottom as we take decisive actions, including reducing channel inventory, consolidating the distribution channel, and adjusting our inventory to better align with our new high-power markets and customers. By deprioritizing lower-margin revenue and redirecting our roadmap and investment away from non-high power businesses, we believe we will accelerate our transformation and gradually improve the overall quality and profitability of our business throughout 2026. This is expected to yield more consistent growth and margin expansion. We'll continue to provide transparent updates on our progress throughout this transition to ensure accountability at every step. AI data centers and performance computing are already shaping product requirements and design wins. On the AI data center front, we expect material P&L contributions starting 2027. Our work with NVIDIA and other hyperscalers, GPU vendors, OEMs, and ODMs, however, is already establishing a durable design win foundation for long-term growth in 2026. On performance computing, we continue to make progress in engagement as GaN technology is gaining rapid adoption in higher power, and we expect this to drive growth already in 2026. In parallel, energy and grid infrastructure are multibillion-dollar markets with multi-decade opportunities where high-voltage SiC is exceptionally well suited to our customer roadmap. As we embark on this transformation and execute this transition, we will share information for you to track our progress through transparent and clear updates in the following areas. First, a sharper focus on high-power accounts and programs, which will be seen in growing importance and weight in our revenue, driving a change in mix. Second, operating expenses, financial discipline, and return on investment-driven roadmap decisions solely focused on Navitas 2.0 North Star. Third, gradual gross margin improvements as we reduce lower-value shipments, grow more higher power engagement, and overall improve the mix. In conclusion, our GaN and GaN IC built a strong presence in mobile fast charging, and we are very proud of the 300 million units shipped. This gives us an in-depth understanding, and this is the business that brought us to where we are today. We have complementary high-voltage SiC technology, products, and modules, enabling us to cover more of this high-power chain. High-power markets are different and more rewarding. Engagements are deeper, the past cycles are longer, and the value we deliver is measured in system-level performance and efficiency over multiple generations. This is where Navitas 2.0 will focus on. We're executing a clear pivot to high-growth, high-power markets focusing on AI and data centers, performance computing, energy and grid infrastructure, and industrial electrification, anchored by a complete GaN plus high-voltage SiC portfolio with long-standing customer relationships and disciplined operations. We're aligning our organization, resource allocation, roadmap, and channels to the markets that matter. We firmly believe that the change we are making will improve the quality of our business and position us for sustained growth and margin expansion throughout '26 and beyond. From the grid to the GPU, Navitas 2.0 is a high-power company built for scale and profitability. Thank you to our employees, customers, suppliers, and partners for their support during this transition. I look forward to deepening our partnership with stockholders, analysts, and investors with transparent updates as we execute. With that, I'll turn the call over to Todd to review our third quarter results and our guidance. After Todd's remarks, I'll return for Q&A, including detailing our high-power Navitas 2.0 strategy, the actions behind the transformation, and what it means for our business. Thank you.

Thank you, Chris. In my comments today, I will take you through our third quarter 2025 financial results, and then I'll discuss the financial implications of Navitas 2.0 with our accelerated transition to a high-power company with a focus on AI data centers, performance computing, energy and grid infrastructure, and industrial electrification markets. Also, I will outline how we plan to reallocate our resources with our new, more focused approach designed to grow revenue and seek profitability. Revenue in the third quarter of 2025 was at the midpoint of guidance at $10.1 million. While the industry environment remained relatively static compared to the second quarter of 2025, the expected revenue reduction reflects both adverse impacts from the China tariff risk for our silicon carbide business and pricing pressure in our mobile business, particularly in China. Before addressing gross profit and expenses, I'd like to refer you to the GAAP to non-GAAP reconciliation in our press release. In the rest of my commentary, I will refer to non-GAAP measures. Gross margin in the third quarter was 38.7%, which was up sequentially compared to 38.5% in the second quarter, primarily due to a slight favorable change in end market mix. In the third quarter, we executed on further operational efficiencies, and we reduced operating expenses sequentially from $16.1 million to $15.4 million. Operating expenses were comprised of SG&A expenses of $7.1 million and R&D expenses of $8.3 million. These expenses align with our cost reduction target. Adding all this together, the third quarter 2025 loss from operations increased sequentially to $11.5 million from $10.6 million in the second quarter of 2025 as cost reductions did not fully offset the sequential decline in revenue. Our weighted average share count for the third quarter was 213 million shares. Turning to the balance sheet. Accounts receivable were down to $9.8 million from $12.5 million in the second quarter. Inventory was relatively flat since last quarter at $14.7 million. Our balance sheet remains very strong as we exit Q3 2025 with high levels of liquidity and an improved working capital position. Cash and cash equivalents at quarter end were $151 million, and we continue to carry no debt. Moving on to guidance for the fourth quarter. We currently expect revenues at $7 million, plus or minus $250,000. This expected revenue reduction reflects our strategic decision to deprioritize our low-power, lower-profit China mobile business as well as our efforts to level set channel inventory and streamline the distribution network to align ourselves with our high-power directive. We believe that Q4 will represent the bottom for revenue as these actions will allow us to move faster to concentrate on the high-power business and customers that will, in turn, enable consistent gradual revenue growth throughout 2026. Gross margin for the fourth quarter is expected to be relatively flat compared to the third quarter with our guidance at 38.5%, plus or minus 50 basis points. However, we anticipate the technological innovation we bring to high-power, high-growth markets will result in a progressive increase in gross margins going forward. Turning to operating expenses. We anticipate continuing to trim expenses to $15 million in the fourth quarter, reflecting a 24% year-over-year reduction. We expect to continue to reallocate resources and expenses as we redeploy the company towards higher-power customers and markets, notably U.S. customers. The redeployment and an appropriate downsizing of our facilities will result in a lower quarterly operating expense level, and we believe we will be well positioned with our personnel and resources to execute on our pivot to higher power, resulting in quarter-over-quarter quality sales and margin growth on the route to profitability. For the fourth quarter of 2025, we expect our weighted average share count to be approximately 214 million shares. In closing, it is an exciting time at Navitas 2.0 as we leverage our leadership in GaN and high-voltage SiC to pivot to a high-power company and capture the exponential growth expected to come from AI data center, performance computing, energy and grid infrastructure, and industrial electrification. We are moving fast to transition from consumer and mobile markets to more sustainable, higher power segments where Navitas is well positioned as the leader in GaN devices shipped and high-voltage SiC to deliver a high-quality, scalable business. We are confident these strategic moves position the company for its next wave of more profitable growth.

Your first question comes from Kevin Cassidy from Rosenblatt Securities.

Welcome, Chris. Looking forward to working with you. Maybe just to understand a little better the shape of this transition. How long of a tail is the mobile market? Do you have some higher voltage applications in the mobile market that could continue on and then cross over to the power supplies, high-voltage power supplies? When do you expect that would be more than 50% of the business?

Yes. No, that's a great question. Maybe I could start there and Chris can add color. So when we're looking at the business today, right, I think as we look at Q3, mobile represented the vast majority of our business. And as we move into Q4, it's going to actually represent less than 50%. All the growth going forward in our company as we go quarter-on-quarter, as we discussed, the gradual growth is going to come from these new markets of AI data centers, performance computing, and grid infrastructure.

It's nice to meet you, and that's a very good question. As we approach 2026, we see that while mobile continues to decline, there is an acceleration in the high-power market that was just discussed. We believe this will help us achieve the quarter-over-quarter growth we mentioned. When considering mobile, it's important to distinguish between the high-end and low-end segments. The low-end has rapidly commoditized in recent years, while the high-end has reached a plateau. Currently, there is diminishing differentiation among 100-watt chargers, and we expect this commoditization trend to speed up. That's why we've chosen to expedite our transition towards the high-power market opportunity that was mentioned.

Okay. Great. And just as a follow-up, just to understand the AI data center, I see it as two stages. One, you have the power supply companies that tend to be more conservative, we'll say, in making transitions compared to the AI data centers that are starving for more power and would probably want to switch over more aggressively. So what is the strategy there? Do you work with the end users and pull the power supply customers along with them? Or do you work behind the power supply customers?

It's a great question. We actually do both. However, as we shift our focus, we are definitely engaging more with the OEMs and hyperscalers. Let's begin with AI, since it's a popular topic. AI serves as a catalyst for change across all the markets we've discussed, including data centers, performance computing, and grid energy infrastructure. Currently, we are shipping to AI, particularly to power companies mainly located in Taiwan. Yet, with hyperscalers taking charge and driving architectural disruption, our engagement is increasingly shifting towards the U.S. The recent announcement by NVIDIA regarding the 800-volt DC AI factory exemplifies how hyperscalers are pushing change from the grid to the GPU and across various architecture stages. We interact with these hyperscalers at all stages, collaborating with their partners to implement solutions. The system-level discussions we've had in recent weeks and months are facilitating the transition that NVIDIA highlighted, for both GaN and high-voltage SiC. Apologies for not using the right name earlier.

Chris, welcome aboard, and you can call me Kevin if you want. I guess a bigger picture question just to start. So when you guys were added to the collaboration list for the 800-volt data center stuff at NVIDIA, there were 10 names. The line at the time was you were the only one with GaN and silicon carbide. Now there are 14 names, and the incremental four, a bunch of them do have the GaN side, maybe not as much silicon carbide. So I guess the question is, when you look at 14 potential competitors or whatever subset you align to, what do you think the true competitive differentiation is for Navitas? And is it more on the silicon carbide or the GaN side?

Thank you for your question. I want to emphasize that we still possess both high-voltage SiC and GaN, which continues to set us apart, as not many of our competitors have this capability. Over the past eight weeks, I've spent considerable time with our customers, and they consistently highlighted the importance of our proven track record in adopting GaN technology during this shift. We pioneered GaN in the mobile charger market, which has given us valuable expertise and a deep understanding of the technology. Additionally, I believe that our combination of speed and proven experience will be a significant differentiator. In conversations with NVIDIA and other hyperscalers, they echoed that it's crucial for them to have speed and support to ensure a safe and effective transition. This is where we will stand out against our competitors.

And I guess whether it be you or Todd, it's nice that the fourth quarter is the bottom. When you think about growth going forward, I thought I heard, and forgive me if I missed out a little bit on this, but I thought I heard a significant portion of the data center side would be more in 2027. Just not putting absolute numbers around it, but the tailwinds sequentially in Q1, Q2, etc. of '26, what gives you the confidence this is the bottom? And just conceptually, what are the areas that are going to grow off of the $7 million in the fourth quarter?

Yes. I think what gives us confidence that this is the bottom is we are actively walking away from revenue in mobile. We want to ensure that there's not a distraction in the business and we can concentrate on the long-term goal here, which is data centers, performance computing, and grid infrastructure. So that's how it gives us confidence. Going forward, the growth is going to come out of those markets and not mobile, and today, mobile represents a large majority going forward. That's going to continuously go down as we move through 2026. So that gives us confidence not only in better revenue, but it will be more sustainable and more profitable.

Let me add just one comment. As Todd said, by walking away from short-term, less long-term, less innovation-based engagement with customers and applications, we are pivoting our resources a lot faster to drive this new growth. Number two, there's a clear acceleration in those markets. Whether it be growth in data centers themselves through traditional power implementation before we move to the 800-volt DC, we benefit from the power vendors. If you look at the impact of AI in performance computing with those notebooks and other high-end computers getting more powerful, they also require a lot more power. We see an acceleration of that demand to higher power in '26 that is going to drive a lot of growth. Last but not least, we also see an acceleration of demand in any form of energy and green infrastructure. We have a lot of pull from midsized to large-sized customers really trying to accelerate how they can enable the AI revolution. Long story short, AI is a catalyst across multiple markets. Yes, data centers through the 800-volt DC will drive a lot of accelerated growth, but we see that catalyst already yielding fruit in '26.

This is Shadi Mitwalli on for Quinn. Obviously, the move away from China Mobile is having a bigger impact than expected. But I just want to get some more color on the puts and takes here. And just overall, has anything new changed over the last 90 days?

You know, nothing's changed besides the fact that Chris has been on the road talking to customers, and they've asked us to go faster. Instead of focusing on allowing mobile to still represent a large majority of our business going forward, we took a more proactive approach to walk away from that. That's really the key difference in the last 90 days that happened because the growth in these new sectors is extraordinary, and we want to be in the best position to take advantage of that.

Let me provide some additional insights since I joined 8 weeks ago. If there’s been any change, I’m likely the one responsible for it. The market itself hasn't shifted, but there’s been a noticeable acceleration that’s faster than just a few months back. What has changed is our understanding that we can’t smoothly transition while still dedicating resources to the past. My experience tells me that focusing on the biggest opportunities increases our chances of success. After a few weeks visiting clients, it became evident that we need to redirect most of our resources towards enabling the future to fully capitalize on our opportunities and enhance our chances of winning. The significant shift has been the clarity in our strategy and our pivot. In the past, we’ve attempted to manage both past and future with our resources, but now we need to speed up that transition. Yes, nothing has changed. I mean you're referring to the GaN BDS, which will ramp in '26 with our lead customer, which is part of the energy and green infrastructure segment that we talked about.

Chris, congrats on being appointed CEO. So Navitas, I mean, I guess kind of a high-level question. Navitas certainly has some exciting opportunities ahead of it. You came from Renesas, you had experience with quite a few large companies in the analog and power space. And so obviously, one big difference is going to be the culture of moving from a company with 10,000 employees to a few hundred. Just from a high level, what are some of maybe the cultural or operational characteristics, I guess, from your prior experiences that you might plan to install at Navitas?

Thank you for the question. Of course, we are transitioning the culture as we speak. I come from a culture of strong execution and pivot with clarity, and that's what we are bringing here. What I would say as well is that I have learned very well some of the pitfalls of big companies that do not always move the fastest. The culture that we are building in Navitas and what you are seeing in the choices we've made, walking away from our historical business, is, number one, clarity and being solely sharply focused on what's going to make us more profitable and more sustainable from a results point of view in the future. Number two, speed — speed so we can transition faster and execute the plan for our customers in a faster way. And number three, execution, which I think was probably missing in the culture that we had here so far.

Great. Okay. That's helpful. And then for the mobile business in China, you are sticking with the longer term, some of the higher voltage, higher value opportunities. Is there any reason why the competitive and pricing pressures won't eventually kind of move up to that side of the business, like what's happening with the lower value chargers now?

I think it's a very good question. What I would say is what's happening in mobile today is the fact that innovation has stopped bringing any value. For the last few years, we've been focused on how to basically get more power into a smaller form factor. Today, we've reached a plateau. 100-watt chargers are fairly small, and it's all about getting it cheaper. When you look at data centers, even in performance computing, we are not at that point. At this stage, it's about how do we accelerate the efficiency and the adoption of high-voltage SiC and GaN. We are at complete different power levels. If I give you an example about high-performance compute with AI going to the client, we are talking about getting those super-high-end computers into multiple hundred watts. This is a complete different ball game compared to what we've seen in mobile, where the content is much higher, expertise, and ability to execute is much harder. This will benefit companies like Navitas who have mastered GaN for the last few years into the first market that took it to scale. So yes, ultimately, when power levels plateaus and innovation stops making a difference, you will see that pressure. But we are very far away from this in any of the markets that we're talking about, particularly anything that touches AI. We're talking about 10x, 100x every generation in power delivery.

My first one is, could you just talk about the data center prospects in '26 before you ramp the 800-volt products? Just what kind of growth are you expecting in the next year with the legacy servers and ecosystems that are out there currently?

Yes. That's a great question. So Jon, I mean, we are shipping into AI data centers today. It's not material. As we look into '26, we'll continue to grow that revenue. At the end of the day, the materiality when this becomes a larger portion of our business is going to wait until 2027 when 800 volts becomes prime time. That's when we really expect exponential growth happening from data centers.

Sorry, do you mind if I just add a few colors? The way I view it is, again, there is a disruption in the adoption of GaN and high-voltage SiC coming with this new concept of breaking the traditional way the data centers were built — moving from super high voltage going through AC/DC, then converting it down to lower power. With the NVIDIA announcement, we are talking about volt going down to GPU. This will drive a lot more content and the rapid adoption of GaN. In the interim, as I said, AI is a catalyst. There's more server and AI deployment out there that drives growth for anybody serving power, right? So that's what Todd said. If you look at what we are shipping today in data centers, that revenue will grow. It's not material, and it will not represent a material impact. But in '27, as we pivot to the new architecture, this is where the content in GaN, mid-voltage GaN, and high-voltage GaN is going to drive to a completely different level.

Yes, absolutely. So we finished the quarter at $151 million, and it's a very healthy balance sheet with no debt. Right now, we're burning around $10 million to $11 million a quarter, and that should be plenty for ongoing operations. So that's where we stand today.

This is Tyler Bomba on for Tristan. Navitas was initially planning on starting to ramp silicon carbide epitaxy internally mid-2024. How much of your silicon carbide output is currently in-sourced? What is your target for that either in terms of dollars or as a percent of revenue?

Yes, that's a great question. So yes, we did initially when the market was tight, and we wanted to generate some epitaxy in-house. However, given the market has loosened, we no longer do that. We never initiated that project. All of our substrates and epi relating to high-voltage silicon carbide are outsourced today.

Chris, welcome to Navitas. I look forward to working with you as well. Let me ask my first question on data center here and talk about the engagement and how things are going here and ultimately when you expect to get wins here. I think one of the parts of the engagement model, which we didn't hear about in your prepared remarks, is working with Infineon as a second source into this area. Wondering if that's still part of the strategy here. And then ultimately, when do you expect to be able to talk about getting wins and having visibility on when they ramp?

Thank you for the question. To begin with, I will address the situation with Infineon. We are maintaining our communication with them, and as you know, we have a cross-licensing agreement in place. We share a common vision of promoting the adoption of GaN and high-voltage SiC in those hyper markets. Regarding our collaboration with NVIDIA and, more generally, with hyperscalers, I want to emphasize that our focus extends beyond just NVIDIA; we also engage with several other hyperscalers, OEMs, and ODMs. For me, 2026 is about facilitating the transition. We are not just concentrating on mid-voltage systems or those closer to GPUs; instead, we are looking at the entire chain. We have discussed energy and grid infrastructure, and the initial phase of 800-volt DC involves transitioning from transformers to solid-state transformers, in which high-voltage SiC is a key technology. There will be several stages of power conversion involved. Regarding your question about when we can provide updates on our engagement, we will ensure to give transparent updates as we grow our partnership. Unfortunately, we can't disclose specifics about any engagement, but I can assure you that our interactions at the system, product, and technology levels with the hyperscalers you mentioned are at an all-time high.

Okay, great. For my second question, I'm looking at calendar year 2026, and I have a multipart question. Can you provide some insight into the relative contributions of your lower voltage GaN and silicon carbide? Additionally, I anticipate that a common question tomorrow morning will be about how to view sales for calendar year 2026. Given the dynamics you've discussed, it seems unlikely that there will be year-on-year growth. Any comments on this would be appreciated.

I'll start by answering your question about GaN versus SiC and the growth towards '26, and I'll let Todd add some comment with a bit more detail. First of all, we don't look at the business as GaN versus SiC. As I mentioned early on, we are focusing on enabling this low power to high power. We look at revenue really from a segment point of view, okay? That's number one. Now if you want a bit more color, and we talked about the fact that starting Q4, which is the bottom, we're going to grow quarter-over-quarter gradually as the high-power markets offset the decline in mobile. Both GaN and SiC will grow in high-power markets. That's a fact for '26. If you look at segment level, mobile will be down, mobile consumer will be down, but high-power computing and energy grid infrastructure will be up. Data centers will grow even though not materially throughout '26 and really accelerate the growth in '27.

Great. And I think one of the other questions was on when low voltage was going to go into revenue. Is that correct, Richard? Yes. So low voltage, we went to market with low voltage, as you saw, PSMC. That's designed right now for the 800-volt data center. So when that ramps, you're going to see material revenue from low voltage taking place.

Yes. We just announced a couple of weeks ago our first — it's actually a mid-voltage GaN 100 volt, which was the first outcome of the partnership with TSMC that we had for a couple of years. That's really tailored towards the last stage of power conversion into the AI 800-volt DC, and we expect that to start to ramp in 2027.

I was just wondering if you could talk about the incremental margins in the high-voltage data centers and the great opportunities, if they're any different from the existing high-voltage businesses that you have for high-power businesses?

Yes. I think both those margins, we expect those markets to have higher margins and be more sustainable than our current mobile and consumer business, which is what is contributing to our guide to basically go quarter-on-quarter growth as margins as revenue pick up in 2026.

And Jon, what I would say is the high-power markets are very different in nature. First of all, as we talked about, they are at the beginning of the adoption of those high-voltage technologies, GaN and high-voltage SiC. Number two, it's about innovation; it's about speed, it's about execution. Yes, all those customers want us to be cost-competitive. Yes, cost is part of the criteria that they make a decision. What I can tell you, having met many of them over the last 60 days, is that they don't lead with that. This is very different from mobile, where we've plateaued from an innovation standpoint. Now it's about how can you make my charger cheaper. When we talk to the OEMs, ODMs, and hyperscalers, they are asking us how to do what we do faster. I believe that margin and the value we bring, along with the value we extract, will help us to uplift the margin as the high-power portion of our revenue increases over time.

Got it. And actually, the second question is a follow-up to that. How are you planning to accelerate that development? What are the remaining things that you need to do to produce products for these markets that work, and do you have the capacity to scale?

This is why we've decided to move faster away from mobile, right? It's application engineering, it's support to customers, it's system engineering, it's R&D. It's basically moving most of the R&D, if not the entire R&D, towards making a roadmap for those markets instead of maintaining generation-over-generation presence in the low-end mobile market. So it is basically pivoting — and I think I've heard the word pivot and transformation — it is pivoting the entire resource level to capture on that growing opportunity moving forward.

Okay, great. Last one for me. Can you just talk about the capacity to ramp for these customers? I know you have that new agreement with Powerchip. Just help me understand what the capacity there is to meet the demand if you do get a significant amount of share there.

What I would say is, first of all, TSMC has been a great partner, and they are helping us to transition for the next few years. We expect to continue to ship from TSMC for the next multiple years. Number two, we are ramping TSMC. We are in transition. We announced the first product from mid-voltage GaN. We're going to transition the high-voltage GaN in '27. Last but not least, we continue to look for new foundry partners to capitalize on the opportunity that we have, either from a geographical supply chain point of view or a cost point of view as well as volume point of view.

That concludes the Q&A session for today's meeting. You are now able to disconnect. Everybody, have a great day.