Navitas Semiconductor (NVTS) is the Next Big Thing in Chips

As one of the most successful deSPACs to date (almost 2x return for investors at NAV), Navitas and its GaN chips are set to replace legacy silicon chips and power the future of tech.

Author:
David Drapkin
Publish date:
Dec 3, 2021

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Navitas Semiconductor is the semiconductor leader in gallium nitride ("GaN") semiconductors that is aiming to replace legacy silicon chips for power applications. GaN is touted as a more sustainable, efficient, and reliable technology vs. silicon.

Veteran semi executive and Navitas Founder & CEO Gene Sheridan joins the Know Who Drives Return Podcast to discuss the future of GaN and future prospects for Navitas (NVTS), who recently went public via SPAC (Live Oak II). NVTS has been an early De-SPAC darling with the stock performing quite well hovering ~$19 in recent weeks.

GaN is already in many of your phone and tablet chargers, and is targeting several different industry verticals with its technology. Will GaN be successful in replacing silicon for power applications?

Key Takeaways:

Why GaN and NVTS?

GaN has the potential to grab a $2.1B TAM in the power semi space away from silicon
Navitas touts GaN as up to 3x smaller, faster, and more sustainable than silicon

Price Premium Becomes Price Advantage in 2 years

While GaN is currently charged at a premium today (~20%), the company is aiming for parity in 2 years and then GaN to be a cheaper solution thereafter

Customers / Applications

30M mobile chargers have been shipped. Started with mobile given clear value prop and lower lift to prove reliability (vs. larger/higher spend such as EVs or solar panels)
90% of top mobile players are designing next-gen fast chargers using NVTS.
Tier-1 customers with Dell, Xiaomi, Belkin, Amazon, LG, Lenovo.
Potential to enter various industries including EVs, renewables/solar, consumer

Potential ESG Play

Navitas and GaN technology can create significant cost and power usage savings for EV, data centers, and other applications.

Team

Strong, experienced semi executive team led by Gene Shridan, Dan Kinzer, and Jason Zhang

GaN's Potential to Replace Silicon for Power Applications

Background Resources:

Analyst Coverage

Given its size and the fact that it just recently deSPAC'd on, it is early to have much analyst coverage NVTS. Currently there are 4 covering it and all have it as a Buy or Outperform as of November.

11/22: Deutsche Bank - Buy - $22 target
11/15: Jefferies Financial Group - Buy - $24 target
11/10: Craig Hallam - Buy - $20 (up from $14)
11/10: Robert W. Baird - Outperform - $22

Recent Earnings

On November 11 Navitas issued its earnings for Q3 and gave a positive update on its business.

Net revenues for the Q321 were $5.6 million --> +61% vs Q320
Revenues for the first nine months of 2021 --> +128% year-over-year
GAAP net loss for Q321 was $9.5 million ($0.57 per share) --> up from Q320 net loss of $4.1 million ($0.27 per share) in the third quarter of 2020.
Q421 revenue guidance of $7.4M --> full year estimate from May investor deck was $27M

Podcast Topics Discussed

Gene's career history and background
Why did NVTS start with mobile charging as its first vertical?
5 areas for opportunity to replace silicon
Competitive landscape
Customers and visibility into near term wins
Global supply chain issues and chip shortage
SPAC Deal and Live Oak Merchant partnership, and importance of due diligence
Investors in NVTS and PIPE participants, S-1 effective date?
M&A: buying other business or potential acquisition target?
Navitas' leadership team and early life as a public company

About Gene Sheridan

Gene Sheridan brings over 25 years of experience in power management & semiconductors with an impressive track record in creating, leading and scaling businesses that have enjoyed excellent value creation, growth and profitability.

Most recently, Gene served as CEO of the VC-backed semiconductor start-up BridgeCo that captured 80% market share in the wireless audio market before a successful sale to Standard Microsystems Corporation (SMSC). Prior to BridgeCo, Gene served as VP & GM at International Rectifier where he managed a business unit with a team of over 100 employees and $600M annual revenues.

At IRF, Gene held several positions that spanned engineering, manufacturing, sales & marketing including the creation of a $70M/yr start-up. Gene holds a BSEE from Clarkson University.