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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?
- 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.
- Strong, experienced semi executive team led by Gene Shridan, Dan Kinzer, and Jason Zhang
GaN's Potential to Replace Silicon for Power Applications
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
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.
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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report.)