NVTS Q2 2024: Forecasts 7% Q3 revenue gain; margins set to improve
- Robust and Expanding Customer Pipeline: Management highlighted that the number of customer projects—especially in data centers—has doubled from 30 to 60, reflecting growing market traction that could materially boost revenues in upcoming periods.
- Technological Leadership and Differentiation: The discussion emphasized advanced products like GaNSafe and Gen-3 fast silicon carbide, which offer superior efficiency and power density. These innovations help capture high-value opportunities in power-intensive markets and provide a competitive edge.
- Stable Execution Amid Uncertain Macroeconomic Conditions: Despite broader market challenges, executives noted no significant pushouts or delays in project execution and a stable backlog, reinforcing the company’s ability to deliver sequential revenue growth and margin improvements.
- Dependence on lower-margin mobile revenue: Executives indicated that while mobile business is strong, its increasing share is dilutive to overall gross margins, potentially hindering long-term profitability.
- Weaker performance and uncertainty in the solar segment: Q&A responses highlighted that solar remains a relatively small and softer segment compared to others, raising concerns that its delayed ramp could limit revenue diversification and growth.
- Fluctuations in production volumes and delayed capacity expansions: Management acknowledged that actual production volumes can vary significantly and noted a postponement in bringing internal silicon carbide epi capacity online due to market slowdown, suggesting underlying market uncertainty.
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Margin Outlook
Q: When will margins improve profitability?
A: Management explained that as higher‑margin segments like EV and solar ramp up, improved product mix will drive margins toward a long‑term target of 50%+, despite mobile’s current lower margin impact. -
Growth Outlook
Q: What is 2024 growth rate expectation?
A: Management expects moderated overall growth with a sequential Q3 revenue increase of about 7%, maintaining a positive outlook even without formal annual guidance. -
Capacity Expansion
Q: What is the SiC capacity expansion timeline?
A: Management stated that the planned internal silicon carbide epi expansion is now delayed by roughly 1 year from the original schedule to match softer near‑term growth. -
Backlog Trends
Q: What does near-term backlog look like?
A: Management noted that backlog coverage is solid, with inventory corrections stabilizing and production volumes remaining on track. -
Market Trends
Q: Are project ramps delayed?
A: Management clarified there are no significant delays or pushouts, as the pipeline continues growing steadily with robust performance in mobile and gradual improvements in other segments. -
EV Pipeline
Q: SiC vs GaN in EV projects?
A: Management emphasized that most of the EV pipeline is driven by silicon carbide for higher voltage needs, while GaN begins to emerge in lower voltage, onboard charger applications. -
Mobile Fast Charge
Q: When will 65W fast charging standardize?
A: Management indicated that 65W+ fast charging is rapidly being adopted—especially by aggressive Chinese OEMs—paving the way for higher power multiport chargers in coming years. -
GaNSlim Growth
Q: How fast will GaNSlim scale?
A: Management remarked that GaNSlim is gaining fast traction in mobile and consumer markets, likely accelerating wins in the appliance sector over time. -
GaN Competition
Q: How strong is competition in GaN?
A: Management noted that their integrated GaNSafe technology offers superior reliability and efficiency compared to discrete GaN options, thereby sustaining a competitive edge despite increasing entrants. -
Data Center Partners
Q: Who are key data center partners?
A: Management explained that they supply to major Asian power supply makers like LITEON and Delta and collaborate with hyperscalers such as AWS and Google to shape future power requirements. -
Non-mobile Trends
Q: Are non‑mobile segments stagnating?
A: Management reported that while segments like solar represent a smaller percentage of revenue, areas such as appliance and industrial continue progressing steadily. -
Early Revenue Segments
Q: Which non‑mobile segments deliver earlier revenue?
A: Management observed that EV and industrial segments are already shipping products, with solar gearing up to launch GaN‑based microinverters next year. -
Market Uncertainty
Q: Which markets face more uncertainty?
A: Management indicated that the solar segment appears softer relative to robust markets like mobile and EV, even as its microinverter program remains on schedule. -
AI/Data Center Orders
Q: Are AI/data center orders delayed?
A: Management noted that although the data center sector is complex, production volumes are the primary variable, with no major delays reported in project execution. -
Design Challenges
Q: What challenges exist in high power design?
A: Management explained that increasing switching speeds and efficiency in GaN and SiC is crucial to reduce size and manage heat dissipation in high‑power supplies. -
Power Rack Margins
Q: Can higher power racks command premiums?
A: Management affirmed that delivering higher efficiency and better thermal performance in high‑power racks can justify premium pricing, supporting long‑term margin targets. -
Design Wins Additivity
Q: Are data center wins new or cumulative?
A: Management clarified that new design wins are additive, with the pipeline growing from 30 to 60 opportunities, which is expected to significantly boost future revenue. -
Data Center Competition
Q: How competitive are data center designs?
A: Management remarked that while competition in higher‑power designs is intensifying, their integrated and system‑oriented solutions continue to secure strong market share.