NVTS Q3 2024: GaN Cross-License with Infineon and Six New EV Wins
- Dual Sourcing Partnership with Infineon: The collaboration, supported by a broad-based GaN cross-license, reduces sole-sourcing risks for customers and accelerates adoption in high-volume markets such as AI data centers and EV, potentially unlocking significant market opportunities.
- Robust Design Wins and Expanding Pipeline: The call highlighted multiple new design wins across key markets including mobile chargers, EV onboard and roadside chargers, and AI data centers, signaling strong future revenue and market diversification.
- Operational Efficiency and Cost Reductions: The company is implementing headcount cuts (around 14% reduction) and expense savings (approximately $2 million per quarter) to streamline operations and accelerate the path to profitability while reinvesting in strategic growth areas.
- Lower near-term revenue growth: Q&A discussions highlighted expectations for softer revenue in Q1 due to seasonality (with last year’s Q1 down 11%) and delays in customer projects pushing revenue impacts into later quarters.
- Uncertain contribution from dual sourcing with Infineon: The new low-voltage GaN collaboration with Infineon introduces potential risks, as timelines are not fully clear and first production ramps are expected only late next year.
- Margin pressures from pricing dynamics: Analysts noted competitive pressures in the smartphone market—with a shift toward lower-powered, entry-level chargers potentially eroding pricing power and margins.
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Growth Outlook
Q: When will growth recovery occur?
A: Management expects Q1 to be seasonally soft, with recovery picking up in Q2/Q3 next year thanks to strong design wins and a healthier pipeline. -
Cost & Restructuring
Q: How do cost cuts impact profitability?
A: They are streamlining operations with a 14% headcount reduction and saving about $2 million per quarter in expenses, which should accelerate the move toward profitability. -
Margin Guidance
Q: How will margins stay flat despite revenue softness?
A: Improved mix in the mobile segment is offsetting lower revenue in higher-power areas, keeping gross margins near 40%. -
Low-voltage GaN Partnership
Q: What is the dual sourcing agreement with Infineon?
A: A broad-based GaN cross-license has been arranged with Infineon, ensuring two reliable sources for low-voltage (48V) GaN products and boosting customer confidence. -
Market Development (EV & Data Centers)
Q: How are EV and data center opportunities progressing?
A: There are notable design wins in EV—including six new designs in Q3—and new low-voltage GaN for AI data centers, with samples already underway and production expected late next year. -
Pricing Strategy
Q: How does pricing pressure affect new design wins?
A: Despite aggressive pricing due to market softness, renegotiated cost structures in both GaN and silicon carbide technologies are helping maintain margins and secure business. -
Automotive Segment
Q: How is the automotive market trending?
A: Momentum is building with increasing design wins for onboard and roadside chargers, indicating a gradual pickup in EV demand despite longer lead times. -
Channel Inventories
Q: What is the status of silicon carbide channel inventories?
A: Inventories are declining, reflecting a positive trend that should support recovery in high-power market segments. -
Liquid Cooling Impact
Q: Will liquid cooling affect semiconductor demand?
A: Liquid cooling is seen as a positive development, as it enables higher power budgets that support the need for efficient semiconductor solutions. -
Appliance & Industrial Outlook
Q: How do appliances fit into the new strategy?
A: Although focus is on mobile, EV, and data centers, management will continue pursuing growth in appliance and industrial segments through numerous design wins.
Research analysts covering Navitas Semiconductor.