Navitas Semiconductor Corporation (NVTS) Q1 2022 Earnings Report, Transcript and Summary

Good day. Thank you for standing by, and welcome to Navitas Semiconductor’s First Quarter 2022 Results Conference Call. [Operator Instructions] Please be advised that today’s conference may be recorded. [Operator Instructions] I would now like to hand the conference over to your host today Stephen Oliver. Please go ahead.

Good afternoon, everyone. I’m Stephen Oliver, Vice President of Corporate Marketing and Investor Relations. Thank you for joining Navitas Semiconductor’s first quarter 2022 results conference call. I’m joined today by Gene Sheridan, our Chairman, President and CEO; and Todd Glickman, our CFO. A replay of this webcast will be available on the Investor Relations section of our website at ir.navitassemi.com, approximately one h our following this call and a recording will be available for approximately 30 days following this call. Additional information related to our business is also posted on the Investor Relations section of our website. Our earnings release and this presentation include certain non-GAAP financial measures. Reconciliations of these non-GAAP financial measures with the most directly comparable GAAP measures are included in our earnings release and also posted on our website in the Investor Relations section. In this conference call, we will also make forward-looking statements about future events or about the future financial performance of Navitas. You can identify these statements by words like we expect or we believe or similar terms. We wish to caution you that such forward-looking statements are subject to 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, including 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 affecting Navitas discussed in our SEC filings, including the annual reports on Form 10-K filed on March 31, 2022. Our estimates or other forward-looking statements may change, and Navitas assumes no obligation to update forward-looking statements to reflect actual results, changed assumptions or other events that may occur except as required by law. Now over to Gene Sheridan, CEO.

Thank you Steve, and thanks to everyone joining today’s call. We continue to focus on building our foundational technology and market leadership position in GaN Power IC. In particular, we are growing our leadership position in the mobile and consumer segments while we expand our technology to address the exciting new opportunities in data center, solar, EV and related markets. As we announced last week Navitas has now shipped over 50 million units reinforcing our number one position of the power GaN market. Q1 revenue grew 27% year-on-year to $6.7 million in our gross margin of 44% was in line with expectations. Our lead in the fast and ultra-fast charger market was increased by major customer additions. Samsung’s flagship Galaxy S22+ and S22 Ultra have adopted Navitasto GaN technology for their 45 watt fast chargers, our first design win at Samsung and their smallest ever 45 watt charger. In addition Vivo has adopted our GaN ICs inbox with their first folding smartphone the 8-inch screen X Fold utilizing our GaN ICs fir their 80 watt dual USB-C charger, fast charging from 0% to 100% in only 37 minutes. Motorola’s edge+ smartphone launched with a 68 watt inbox GaNFast charger with one watt per cubic centimeter power density and a 0% to 50% charge time of only 15 minutes. In addition we are working closely with Motorola on a comprehensive co-op marketing campaign. In the emerging and fast growing new segment of ultra-fast smartphone chargers we have extended our leadership position with a number of additional major customer announcements. Xiaomi has adopted our GaN technology for their Redmi AMG Mercedes F1 Champion smartphone, which utilizes a compact 120 watt inbox charger that achieves 0% to 100% charging in only 37 minutes. Realme’s GT Neo 3 launched at Mobile World Congress utilizes our GaN ICs to deliver the world’s fastest charging time 0% to 50% in only five minutes, and an impressive 1.5 watts per cubic centimeter of power density. This translates to big power delivery in a very small form factor. And the OnePlus Ace utilizing GaN IC technology for their inbox 150 watt ultra-fast charger. Beyond our significant smartphone GaN market position Navitas is also leading the way in GaN adoption for notebook chargers. Dell was an early adopter of our GaN IC technology with their 100 watt accessory laptop charger launched in 2020 and we followed with a 60 watt optional GaN charger for latitude laptops in 2021. We’re also announcing another 60 watt charger that is now shipping inbox with the Dell XPS Plus. At the same time Xiaomi have launched their 14-inch and 15-inch laptops powered by 100 watt inbox GaNFast chargers. Ad Lenovo Legion 5 Gen 7 gaming laptops with 135 watt GaNFast chargers have launched in April. This 135 watt charger is 40% smaller than legacy chargers at a power density over one watt per cubic centimeter, a huge 80 watt hour battery is charged in only 65 minutes. Navitas GaN is now in mass production with nine of the top 10 mobile OEM’s across smartphones and laptops and we expect all 10 of the 10 by the end of the year. Our technology innovation continues at a rapid pace. Our Generation 3 GaNSense technology was launched late last year and has already been adopted for mass production by over 15 customers across multiple and applications enabling all new levels of energy efficiency, fast charging and higher power density. This week at the prestigious PCIM Conference in Nuremberg, Germany we introduced our highest power rated GaNFast Power IC with proprietor against since technology. the NV6169 delivers 50% more power as a high reliability building block for applications such as 4K, 8K TVs, next-generation gaming systems, solar micro inverters and one kilowatt plus data center power supplies. We started sampling additional high power GaN ICs late last year, which target data centers solar EV and other related markets. Customer designs are well underway with dozens of customers across those segments, many of which are accelerated by their cooperation with our data center and EV focused design center. Both of these design centers offer customers complete capabilities and high frequency, high efficiency, high density GaN-based power system design. Our expectations for additional revenues from these new segments across the next two years remain unchanged. In addition, this quarter we started sampling our Generation 4 GaN ICs on schedule. These enable another 20% cost performance improvements and will serve to further accelerate our GaN IC adoption in our target markets. Quality and reliability continue to be foundational to our company strategy and expansion plans. With our announcement of 50 million units shipped, we also announced an unprecedented achievement of zero reported GaN-related field failures with 192 billion device hours in the field. We have another industry first with our 20-year product warranty. This is 10 times to 20 times longer than every other power semiconductor company reflecting our confidence and our commitment again it’s not just as reliable as silicon, but actually more reliable courtesy of our integrated protection and robustness circuits, and are unique and exhaustive GaN reliability program. When we combine these achievements with 5.8 billion device hours of accelerated reliability testing we are delivering the level of confidence that our customers need to rapidly transition from silicon to GaN in the multibillion dollar high reliability markets of solar data center, EV, energy storage and beyond. Finally I want to update all of you on our sustainability initiatives. Over the last three years we have carefully assessed the environmental benefits of both GaN as the next generation of material and Navitas as the next generation semiconductor company. In January we published the industry’s first wide GaN-GaP sustainability report that comprehensively quantifies the positive impact of GaN Power semiconductors and climate change based on global standards. Today we’re excited to announce that now that Navitas the first semiconductor company worldwide to achieve carbon neutral company status from the leading experts in carbon neutrality and climate finance Natural capital Partners, achieving carbon neutral status is another milestone in our mission to use wide GaN-GaP materials to electrify our world and help our customers reach their own environmental goals. With all of these positive achievements for our company, we do want to recognize from short term turbulence specifically in China given the COVID-related shutdowns and some softness in the China’s smartphone market. These two factors in combination with some continued non-GaN component shortages are expected to have some impact on our growth rate in Q2. Unfortunately we see strength in other regions outside of China, which helps us to maintain a strong Q2 sequential and year-on-year growth rate albeit with a mixed-related modest reduction in a gross margin. Despite these short-term challenges in China, I want to reiterate the strong fundamentals that are driving our business. The electrification of our planet and the transition of the $13 billion power semiconductor market from silicon to GaN is an underlying secular multi-decade tailwind for our company. Navitas is number one in fast and ultra-fast chargers and even though we’ve shipped over 50 million units that still represents only about 2% of the charger market less than 1% of the overall legacy silicon opportunity leaving dramatic adoption and growth ahead. Our GaN IC lead times remain low between six weeks and 16 weeks and this is accelerating GaN adoption given continued semiconductor shortages with power silicon lead times in the six plus month range. We maintain a very healthy balance sheet with over $250 million of cash in a books which gives us confidence to recharge our targeted profitability by 2024 and to pursue strategic M&A activities, which will accelerate our top-line revenue and increase our customer value as we pursue our mission to become the next generation power semiconductor leader. And finally GaN remains a revolutionary once in a lifetime opportunity to disrupt and redefine the field of power semiconductors and power electronics. Thank you. And let me now turn it over to our CFO, Todd Glickman.

Thanks, Gene, and thanks everyone for joining us today. Let me take you through our first quarter numbers and guidance for Q2. GAAP revenue for the quarter grew to $6.7 million representing 27% growth from the first quarter of 2021. Mobile demand remained solid throughout the quarter and the non-GAN supply constraints that had been impacting customers in the fourth quarter have improved somewhat, but continued to be a challenge for some of our customers. I would also like to note that last year we sold our first inbox GaN chargers in the first quarter, which mitigated what would traditionally would have been a seasonally slower quarter. GAAP gross margin was 44% in the first quarter consistent with our guidance and flat compared to the fourth quarter of 2021, despite TSMC’s 20% wafer price increase, which would have led to a 6% gross margin reduction. With regard to expenses we continue to invest in our global field applications and sales and marketing teams to build out our capability to penetrate new markets and expand into new regions. In addition, we are completing our first audit as a public company both investments are reflected in our SG&A spending with a non-GAAP expense of $6.7 million in the first quarter of 2022. Non-GAAP R&D was $5.8 million in the first quarter of 2022 as we continue developing multiple new generations of GaN ICs and invest in new GaN IC technology and our unique application specific design centers to expand into data center, solar, EV and energy storage markets. Putting all this together non-GAAP net loss from operations was $9.6 million compared to a net loss from operations of $5.3 million in the first quarter of 2021 as we invest simultaneously across new markets in this rapid growth phase of our company. In March, we completed the redemption of both public and private warrants adding approximately 3.3 million shares of common stock and generating a one-time gain of 51.8 million as a result of the elimination of warrant liability. Our basic and diluted share count at the end of the first quarter was $123.5 million. Turning to the balance sheet. Cash and cash equivalents were $253.8 million. Inventory was $13.1 million compared to $12 million in the prior quarter as we maintain healthy inventories to support short lead times, significant growth and upside opportunities with our customers. Moving on to guidance. For the second quarter of 2022 GAAP revenues are expected to be between $8 million and $9 million compared to $5.5 million in the second quarter of 2021. Next quarter is tracking to be a record quarter for the company representing at least 47% growth from the second quarter of 2021. Despite softness in Asia due to China shutdowns and some reduction in smartphone sales we are experiencing upside in other regions as customers convert from silicon to GaNFast [ph] putting us in a position to offset China weakness and to reiterate our expectations to double full year revenue from 2021. GAAP gross margin for the second quarter is expected to be approximately 41% plus or minus 1%. As mentioned earlier China softness is being offset by stronger growth in other regions, which have somewhat lower gross margins, and is expected to lead to a lower second quarter gross margin mix. GAAP full year 2022 gross margin is expected at approximately 42% plus or minus 1% as revenues begin to diversify outside of Asia. As Gene mentioned our launch of Generation 4 in the second half is expected to fuel margin expansion in the fourth quarter of this year, and into 2023. Our long term strategy and expectation to achieve system cost parity with silicon in 2023 and deliver 55% gross margin long term is unchanged. In total, our non-GAAP operating expenses in Q2 are expected to be approximately $14 million, which excludes stock-based compensation and amortization of intangible assets. In summary, we are excited to meet this milestone of shipping more than $50 million units and proving our leadership in mobile GaN chargers, we are looking forward to our exciting new opportunities in data center, solar and EV. Gene and I are now ready to take your questions. Operator, let’s begin the Q&A session.

Thank you [Operator Instructions] And our first question comes from the line of Kevin Cassidy with Rosenblatt Securities. Your line is open. Please go ahead.

Sure. Thank you for taking my question. just quickly, but maybe if you could explain why the other regions have lower gross margins than say in China?

Sure Kevin. Hi, this is Gene. Thanks for the question. Yes. So last year we had an opportunity to kick off some major strategic programs, and other regions with some pretty strategic customers we took that opportunity went for it even though the price points were a little bit lower, which is not too surprising for the very first program to start their GaN adoption knowing for well that we would one balance that out with higher margin business elsewhere including China. But two that we would move them over the next few quarters this year to Gen 4 improving the profitability. So with china weakening that’s a higher proportion than we expected, which has led to this sort of mixed related gross margin shift, but it also puts us on track to improve the profitability gross margin of those other non-China programs and move towards margin expansion late in the year as we move them to Gen 4.

Okay, great. And maybe if I think out to 2023 would you think you’re mixed assuming things that are better in China that the mix and your gross margins will move up over that 45% range again?

Yes, I think we’ll be headed in that direction, of course, this year as a reminder we had the significant impact of the TSMC 20% wafer cost increase. So that’s all factored and rolled into the numbers we discussed for this year, but that will be behind us will be squarely on Gen 4 late in the year and then the next year and expect multi point gross margin expansion in the next year as you indicated.

Okay, thank you.

Thanks Kevin.

Thank you. And our next question comes from the line of Trevor Janowski with Needham. Your line is open. Please go ahead.

Yes, hey guys this is Trevor on for Quinn Bolton. So with the 44% gross margin this quarter and the guide to 41% for the full year, can you provide some additional color on the headwinds you’re seeing as the year progresses. And we understand not raising ASPs in the near term to continue gaining share. But is there a specific floor on margins where you would consider raising prices? Thanks.

Yes, I’ll start maybe Todd could add color or specifics if he’d like. But as I mentioned with Kevin’s question the main driver is the strategic programs we committed to last year frankly before the TSMC wafer price increase. So those are we’re happy we did in the end of course, because of the short term softness in China this is helping to compensate quite a bit, but in the end it drives key top line growth that will ultimately be in line with our gross margin expectations as we transition to Gen 4 for later in the year. Todd anything you want to add to that?

Yes. But we are still tracking to get 42% is the guidance for the full year plus or minus 1%. So that is our goal. And to answer the second question, is there a floor on ASP, our ultimate goal is to create a system cost parity with silicon, so that is our goal and we’re still on track for that occurring in 2023.

Okay. Thank you. And are you able to quantify the effect that China had on the quarter and revenue and your margin guidance as well?

I could add again, this is Gene. For Q1 by the way we didn’t see a significant impact on revenue. We came in line or even a bit higher than guidance on revenue, there does continue to be non-GaN component shortages that have some effect, but hard to quantify. Certainly in Q2 is where we’re seeing the short term China affect, we think that’s probably about a $2 million-ish impact, but luckily with the growth and robustness and other regions that’s offsetting good million dollars of that or so, so that gives you sort of a rough idea of the magnitude of the short term pluses and minuses between the regions.

Okay, that’s helpful Thank you.

You bet.

Thank you. And our next question comes from the line of Ross Seymore with Deutsche Bank. Your line is open. Please go ahead.

Hey, this is a [indiscernible] asking on behalf of Ross. Could you double click, so I guess with the new guidance numbers for Q2 and the full year top-line remaining unchanged, it seems you have to grow at least 50% Q3, Q4 so if you can give us some additional color in terms of how do we look at linearity in those two quarters?

Yes, we continue to see robust growth and outlook in the second half of the year based on all the number of programs that are now pretty regionally diversified as we talked about. I think we mentioned in the past typical seasonality, we expect is probably one third-ish revenues in the first half of the year and two thirds in the second half. Last year was a bit of anomaly as we’ve discussed before with Xiaomi launching their first inbox in Q1, which is not a typical major production year it’s usually a softer quarter and that bled into Q2, so we had a more balanced let’s say split between first half and second half last year, but I think this year is still shaping up to be in that range of one third first half, two thirds second half.

Thank you. So, would it be fair to assume that in terms of sequential Q4 would be the highest growing quarter?

Yes, probably, so that’s typically the case. Yes.

Thank you.

Yes, thank you.

Thank you. And our next question comes from the line of Jon Tanwanteng with CJS. Your line is open. Please go ahead.

Hi, good afternoon. Thank you for taking my questions. My first one just not to beat a dead horse, but I was wondering if you give us a little more color on the margin progression through the year 42% for Q2 the higher volumes in Q3 and Q4 does that mean we’re going to see a bit a little bit lower gross margin in one of those two quarters as we progress of your average for the year is only 42% and kind of give you the reason why?

Todd, do you want to handle that, recognizing Gen 4 is probably the biggest driver, but there’s obviously the regional balance in the mix that we talked about, but Todd you want to give a little bit more color.

Yes. As we gave sort of guidance of 41% plus or minus in Q2, you would expect that same guidance coming in Q3 with the margin expansion really coming in Q4 to allow us to hit that 42% plus or minus 1% as Gene touched on driven by our sale of Gen 4 devices, which are allowing us to recapture margin and proceed to expanding that.

Okay great. And then just a little bit more color on the confidence in the second half outlook. Is that based on discussions with your customers and indications of what they’re producing or is there more firm orders in hand and kind of how do you catch that, that visibility and departments of those orders?

Yes. I think it’s a combination of both, certainly were very close to our customers very well connected at the OEMs and the ODMs at all levels. That’s sort of part of our business models so that helps and it’s based upon on both the Chinese customers view on improving conditions in Q3, and then the second half of the year and then more importantly really robust and stable revenue outlooks forecasts and production orders for the other regions. So all of those work hand in hand. In addition Gen 4 is not only important to the gross margin expansion later in the year, but Gen 4 is already sampling now on schedule as we said earlier and the reception has been phenomenal and that’s actually spurring additional programs that could create outside. So, we’re taking all that into account as we gave our updated guidance.

Understood, Thank you. And then Todd, I don’t know if you’ve mentioned in the prepared remarks, but did you have any directional commentary in OpEx past Q2?

For the full year, we’re not changing our guidance on OpEx on a non-GAAP basis of $58 million with the $14 million in Q2, we expect to continue to move higher in Q3 and Q4 to track towards that $58 million.

Got it. Thank you very much.

Thank you. [Operator Instructions] And our next question comes from the line of Richard Shannon with Craig Hallum. Your line is open. Please go ahead.

Thanks guys for taking my question. Todd, I guess I just want to re-verify on the gross margins. I perhaps misheard, but I thought you said the opposite numbers that what’s in the press release, your press release says 42% in the second quarter and 41% for the year, but you’ve been saying the opposite can you verify which one is correct?

Yes, our full year guidance for gross margin is 42% plus or minus 1%. And our Q2 guidance for gross margin is 41% plus or minus 1%.

Okay, you probably should correct the press release, because it says the opposite, so thanks for making sure we got that right. Let’s see here maybe a question on the Gen 4 ramp, I guess, how fast will in general and specifically with the Gen 4 do you expect the transition to be like at one point does it get to say 50% of your total sales. Is that something that happens fairly quickly like within a year or does it take a little bit longer than that?

Yes. Great question and each generation can be different depending on what we’re adding in terms of features and capability Generation 3 as an example introduced all new integration capabilities called GaNSense, which really applies then to brand new designs to take advantage of that. Gen 4 is a little bit more classic die shrink cost reduction with some performance enhancement, but actually serves to drop in replacing Gen 3 or prior generations very quickly on a pin to pin basis. So that will actually drive the adoption a lot faster than Gen 3 and as much as we saw and continue to see Gen 3 picking up very quickly. The Gen 4 transition will be faster So, I don’t get across the 50% point by Q4 of this year, but probably early next year. It’s a pretty quick ramp and transition.

Okay, great to know that. Thanks Gene. One last question for me again just on the charger part of the market here. I think in the last couple of calls you’ve had discussions, you provide great detail on charges that particular power levels and I think about 65% you’re expecting a second in many cases you’ll see a second chip. So, I wonder if you kind of profile what you’re seeing throughout this year or the next year, over the next year or whatever about what you know when the percentage of wins and volumes that will be for charges that have double the number of chips and a higher content level.

Yep. No. Great question And you know we especially focusing on or like ultra-fast charger category, which is typically things that are delivering more than 100 watts of power to a Smartphone which is an extraordinary amount and usually once you get to that 100 watt level end up you have to add additional circuitry it’s called PFC or Power Factor Correction that doubles typically began content and as you go up from 100 watts that can even triple or even quadruple begin content. So, we definitely see that segment growing probably the fastest of all segments we highlighted, prepared remarks the three categories kind of traditional fast chargers below 100 watts growing nicely with three major announcements there Samsung, Vivo, and Motorola. But in the ultra-fast category we highlighted Xiaomi, Realme and OnePlus Ace and there’s a whole lot more coming behind that. So, I think we’ll see that ultimately probably the largest segment over time we’ll have to see how that plays out. The bigger volume is in the fast charging category today, but ultra-fast is the fastest growing and we shouldn’t forget about notebooks. Notebooks are pretty stable, strong market for us doesn’t have the short term China’s softness that we talked about and that that’s also growing really nicely for us with Dell now going inbox with our GaN chargers, Xiaomi launching a family of notebooks with our chargers and even Lenovo now with multiple launches including notebook, so anyway that gives you a little bit more color on the different segments and in particular that ultra-fast category driving more content.

Okay, I appreciate that color. Gene and that’s all the questions from me. Thank you.

Thank you. And our next question comes from the line of Mark Lipacis with Jefferies. Your line is open. Please go ahead.

Hi thanks for taking my question. So the question I have is as you look into 2023. I think you had earlier expressed the view that you thought that, you would start to see enterprise and renewable solar kind of programs starting to ramp in 2023. And so the question is do you still believe that to be the case and if so is there, should we think about the those vertical markets or the products that you’re supplying into those vertical markets different either from a pricing standpoint or a margin standpoint or would these be very similarly priced on or price and margin kind of products. Thank you.

Yes. No good questions and certainly good memory and we are on track with those plans. In fact we announced this week the NV6169 which is the highest power version of our GaNSense family But that’s the tip of the IC power. There’s all new families that were already sampling but haven’t publicly announced that are serving all of those markets you talked about data center, solar, EV and energy storage. We’re still on track with multiple programs especially in the data center space that would start ramping in 2023. We think solar and some energy storage would catch a little bit of late 2023 most of the EV because of the longer development times would start ramping in 2025. All of these products are much more powerful chips and with that comes a higher price point. So where the mobile charger and consumer chips tend to range around a dollar or now a bit less as we’re driving the price and system costs down closer to system. So we can cost parity as you go in the higher power range we’ll see ASPs, that will often be in the $2 to $4 range. Also given the higher quality and reliability demands that sort of fits perfectly with our capability, we expect and are already seeing higher margins to go with it. We have cited before how we expect ultimately mobile and consumer, to be probably 10 or 15 points lower than the more industrial, bigger barrier to entry markets like data center solar and EV and the combination of both would get us to our long term operating model of 55 points. So that gives you some sense of price points, improved margin as well as revenue timing of when those things start to roll out and impact the top line.

And thank you and follow up if I may on the and I think particularly on the enterprise side there had been some regulatory kind of efforts to try to drive higher efficiencies and I’m wondering is there, are you seeing any newer developments on this front associated with what we’ve been observing with higher energy prices. And that’s all. Thank you.

Yes. Exactly Right and to add a finer point if that’s the titanium plus standard being required in Europe in 2023 which is of course right around the corner. So virtually all the designs were doing because it’s very hard to achieve that level of efficiency standard with silicon virtually all we’re doing with our data center customers today is demanding that standard titanium plus And that’ll be a big piece of our data center revenue rollouts in 2023, So that’s a great driver for us for Europe and keep in mind most fuel designed power spice to work around the world So you have to design usually to your toughest standards. So Europe doesn’t just impact Europe sales that could actually impact a lot more than that We’re seeing that ripple effect today.

Got it. Thank you.

Thank you, Mark.

Thank you. [Operator Instructions] And we do have a follow up question from the line of Kevin Cassidy with Rosenblatt Securities. Your line is open. Please go ahead.

Yes. Thanks for my follow up and yes maybe along the lines of what Mark was asking, part of your strategy is to have these design centers and even a data center design center, can you give us a little details of what’s happened there, how many people have you hired and I guess the activity of how many customers are utilizing it.

Yes, great. Thank you for asking about that. Kevin, we didn’t put a big spotlight on it but it is a big story Last year we opened up the design center for data centers and earlier this year we announced the 1.3 kilowatt titanium plus full system designed using our GaN ICs. And now we’re working with specific customers who are adopting that design putting it into commercial production and ramp which will roll out next year as we talked about but that design center has a whole roadmap of system level developments and innovations largely are developed collaboratively with key customers and we can’t name the names yet but as those things become public obviously we would love to share it but we do have multiple customers engaged with that design center to influence the roadmap, collaboratively designed these new systems and of course bring them into production using our GaN ICs. More recently we announced in Q1 the automotive or EV Design center out of Shanghai That’s earlier days it’s in Shanghai, so it’s in the center of the storm there. But they’re actually being very productive in getting equipment order setting up the lab. There’s a small team in general both of these design centers are looking at about a dozen engineers in their first phase and then they’ll grow from there and the EV Design Center is already looking to produce its first GaN based on board chargers later this year, again collaboratively with customers who are influencing those co designing them with us and then ultimately bringing them to production And we’re hopeful even though I reiterated 2025 as are expected EV revenues, we certainly hope these things accelerate and expect that they accelerate the timing. We’ll see how that plays out and kind of give you updates as the technical achievements done The customer announcements can be made and the revenue impacts can be further forecasted.

Great, thank you.

Thanks, Kevin.

Thank you. And we have another follow-up question from the line of Ross Seymore with Deutsche Bank. Your line is open. Please go ahead.

I had a question, during the idea process one of the key use of proceeds was acquisitions and you’ve been carrying a pretty healthy cash amount on the balance sheet. If you can give us any update on that area in terms of horizon or if you have come across some targets, et cetera. Thank you.

Yes, certainly Gene again. Yes, you’re exactly right. We anticipate no more than $100 million of our cash on the balance sheet to be needed to fuel our internal or organic business to reach cash flow positive in 2024 and that’s a pretty conservative $100 million So that leaves us a lot of capital to potentially put to work in different ways. We remain really bullish about the opportunities, we do see a lot that we’re exploring pretty seriously across a number of fields whether they’re GaN and expanding more in GaN in the field of silicon because every next generation power system does need silicon controller chips or similar that go hand in hand with the GaN power device. And even the field of silicon carbide which is a nice compliment for even higher voltages and higher powers. So while we don’t have anything specific to announce our forecasts yet today we’re definitely active on that front and look forward to giving you announcements in the future.

Thank you.

Thank you.

Thank you. And I’m showing no further questions at this time and I would like to hand the conference back over to Gene Sheridan for any further remarks.

Thank you, Operator and thanks everyone for great discussion questions and joining us today so thank you so much and let’s go GaNFast.

This concludes today’s conference call. Thank you for participating. You may now disconnect. Everyone have a great day.