Navitas Semiconductor Corporation Common Stock Q2 2026 Earnings Call

Hello. Thank you for standing by. My name is Liza. I will be your conference operator today. At this time, I would like to welcome everyone to the Navitas Semiconductor second quarter 2026 earnings. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask questions during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the call over to Brett Perry of Shelton Group investor relations. Please go ahead. Good afternoon.

Welcome to Navitas Semiconductor second quarter 2026 financial results conference call. Joining us today are Navitas' President and CEO, Chris Allexandre, and CFO, Tonya Stevens. I'd like to remind listeners that management's prepared remarks contain forward-looking statements, which are subject to risks and uncertainties. Management may make additional forward-looking statements in response to your questions. Therefore, the company claims the protection of the safe harbor for forward-looking statements that's contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from those discussed today. Therefore, we refer you to a more detailed discussion of risks and uncertainties in the company's filings with the Securities and Exchange Commission, including Forms 10-K and 10-Q. In addition, any projections as to the company's future performance represent management's estimates as of today, July 27th, 2026.

Navitas assumes no obligation to update these projections in the future as market conditions may or may not change, except to the extent required by applicable law. Additionally, the company's press release and management statements during this conference call will include discussions of certain measures and financial information in GAAP and non-GAAP terms. Included in the company's press release are definitions and reconciliations of GAAP to non-GAAP items, which provide additional details. For those of you unable to listen to the entire call at this time, a recording will be available via webcast for 90 days in the investor relations section of Navitas' website at www.navitassemi.com. Now it's my pleasure to turn the call over to Navitas' President and CEO. Chris, please go ahead. Good afternoon.

Thank you for joining us on today's second quarter 2026 earning call. We appreciate your continued interest and support as we execute our strategic transformation to Navitas 2.0. In the second quarter, we delivered increasing revenue of 22% sequentially, coupled with a stronger third quarter guidance. High-power markets grew more than 50% year-over-year, serving as further evidence of the building momentum in our GaN and high voltage SiC product, especially in our focus area of AI infrastructure. We're also delivering on our Navitas 2.0 transformation. We are well ahead by over one quarter of expected traction for nearly all sales to be coming from high-power market by year-end, with revenue contribution for mobile and low-end consumer being insignificant. We continue to deliver step-by-step on what we said we would do. This quarter serves as another proof point of our consistent progress.

Over the past several quarters, we have aggressively pivoted the entire organization to focus on high-power market, where Navitas GaN and high voltage SiC technology can deliver meaningful differentiation and increase long-term value. The resource reallocation and organization realignment is now substantially complete. With new leadership in place and a refreshed product and technology roadmap, we are sharpening our focus on AI infrastructure, which comprise both AI data center and the grid energy infrastructure required to power them. Combined, these AI infrastructure market represent the vast majority of our long-term serviceable addressable market for GaN and high voltage SiC and underpin our future growth trajectory as a high-power company. Turning into a closer look at our reported result and progress for the second quarter. As previously mentioned, total revenue increased 22% sequentially to $10.5 million, driven by growth across our high-power markets.

High power represent the majority of our overall revenue mix, with revenue contribution for mobile in Q2 declining both sequentially and year-over-year as in the prior quarter. I also want to highlight that both GaN and SiC contributed to our sequential growth, with a particular acceleration in our SiC business during the quarter. As expected, we also delivered expanded gross margin as a result of more favorable revenue mix towards higher value, higher power product, and improving scale. Notably, our strong momentum continues to build and accelerate into the second half of the year. Our expanding backlogs extend beyond 2026, coupled with record book-to-bill, supporting our expectation for continued double-digit quarterly growth through the second half of the year. The third quarter will also represent a return to year-over-year growth, driven entirely by high-power markets.

This also translate to achieving mid-single-digit revenue growth for the full year, while simultaneously having substantially exceeded the mobile and the low-end consumer market. This is a significant change in the revenue composition for the company and clear evidence that we are delivering on the Navitas 2.0 transformation. With growth increasingly driven by a combination of AI and data center and grid and energy infrastructure, we expect AI infrastructure market will represent more than one-third of our total sales by year-end, setting the stage for continued momentum in 2027. While we are nearing completion of our transformation to a higher power company, our focus continue to be grounded in four key pillars: market focus, technology leadership, operational efficiency, and financial discipline.

Starting with our focus on high-power market, the rapid adoption of AI is driving immense market demand for overcome critical power bottlenecks across AI infrastructure, including both AI data center and grid energy. As a result of Navitas unique ability to deliver high-power product leveraging both GaN and high voltage SiC technologies, we are benefiting from accelerating momentum to enable customers high-power application within AI data center as well as the grid and energy infrastructure needed to supply them with power. Together, those two areas of AI infrastructure represent the large majority of our long-term plan, growth trajectory, and where the company is headed. In AI data center, we are currently generating growth ahead of the market transition to 800V DC.

For example, increasing power level in AC/DC power supply unit are driving the need for higher density, which in turn is accelerating the replacement of silicon with our high voltage SiC. We are also actively engaged with hyperscalers, merchant power customers, data centers, OEM, ODM on multiple program ramping in the second half of 2026 that will accelerate throughout 2027. We're also seeing strong traction in DC/DC PSUs and battery backup units, where both our SiC and GaN solutions are being designed in. Again, this activity is happening today in advance of the 800V transition. In fact, we continue to believe that the transition to 800V architecture for next generation AI data center will happen in 2027 as various XPUs, GPUs, hyperscalers will introduce it at different times, and it will unfold in a series of steps.

Each step will represent an inflection point that drive increasing momentum and explosive growth for Navitas high power GaN and high voltage SiC content. I will briefly walk through each of those inflection points, which are also outlined in the earnings related slide deck that we've posted to the investor section of our website. What's clear is the evolution to 800V is inevitable, as it remains the industry's only path forward to achieve much higher power and higher density AI racks. The first inflection point, second half 2026 ramp and accelerating in first half 2027. SiC adoption in AC/DC PSUs is being driven by power scaling and density requirement independent of the 800V DC initiatives.

As the AI data center racks require more power, it is driving high power level AC/DC PSUs, which ultimately drives high density and therefore accelerating the replacement of silicon by SiC, even with 50V DC output. This is already on the way and the growth is happening now and will continue throughout 2027 and beyond. Following, there will be a second inflection ramping in mid-2027. First, the introduction of the 800V busbar in the sidecar rack with power system elements such as AC/DC power shelves and BBU moving from the IT rack to the power sidecar with output of 800V DC to the IT rack. This change is bringing additional high voltage SiC content in higher power AC/DC PSUs now with 800V DC output, plus new SiC and GaN content in top of rack DC PSUs and BBUs.

We are in advanced system design and reliability testing with several key customers and are preparing the ramp. The third inflection point, ramping mid to late 2027, really accelerating in late 2027 and early 2028. The integration of the high density DC/DC conversion directly into the GPU and XPU trays using GaN for its superior switching frequency and power density in megawatt scales rack across various GPU and XPU and hyperscalers at various time. At that point, a fundamental change happen in data center IC rack power architecture. 800V comes in straight to the server trays. This is what most are referring as native 800V. We are highly confident in our position for 2027 ramp with our GaN. Similarly, the AC/DC PSU will continue to be in higher demand for high voltage SiC with increased power level and density on top of BBUs and other power systems.

Lastly, there will be a fourth inflection point, 2028 and beyond. This is where solid state transformers come into play and on-site data center taking mid-voltage AC electricity from utility grid and directly converting to 800V DC, which get distributed across the data center. This is the full 800V DC evolution with ultra-high voltage SiC and GaN across grid modernization, solid state transformers, and end-to-end power delivery from grid to core with full wide-bandgap solution. Complementing this significant opportunity within AI data center is the equally large and even longer duration market opportunity in grid and energy infrastructure.

Today, we're actively advancing design activity and sampling across BSS, solar farm converters, PSUs, and solid state transformers applications. Our recently introduced 2.3 kV and 3.3 kV GeneSiC modules are receiving excellent feedback, and customers have begun requesting volume samples for system-level testing in the second half of the year. We're also seeing early interest in our new isolated TO-247 family, which offers unique advantage in liquid cooling applications. Importantly, I want to reemphasize that Navitas remains technology agnostic, and we are prepared to offer customers the optimal solution, whether that be GaN or high-voltage SiC, across the full power chain from grid to rack. This unique flexibility allows us to capture greater content per system, as well as support multiple architectures.

As previously mentioned, both GaN and SiC are contributing to the current growth, and we expect AI infrastructure to drive the substantial majority of our revenue and growth going forward. Turning to our second key pillar, technology leadership is essential to our success, and we continue to diligently invest in innovation and expanded product roadmap for both GaN and high-voltage SiC. On GaN, we are advancing our reference platform solutions, including the 800V to 6V DC/DC power delivery board demonstrated at recent industry events, with the 800V to 12V version in development. We have kicked off new program utilizing Navitas' unique solution to maximize system efficiencies in the secondary side for 800V data center topologies. Our industry-leading DFN 8x8 dual-side cool package continues to gain broad adoption with superior power density, thermal performance, and board space savings.

Our 650V 11mΩ GaN FET remains the lowest RDS(on) high-voltage GaN device in the industry, and we have a significant number of customers preparing for mass production. Additionally, our medium-voltage 100V GaN is seeing increasing adoption for secondary side and other applications. On the high-voltage SiC, our GeneSiC technology, based on our proprietary trench-assisted planar architecture, continues to differentiate with its best-in-class scalability, efficiency, and manufacturability, attributes that are increasingly critical as voltage scale from grid and energy infrastructure applications. We recently introduced our isolated TO-247 product family, spanning 1.2 kV to 3.3 kV, delivering module-like performance in standard discrete footprint with integrated isolation for direct cooling and simplify customers' manufacturing. As mentioned earlier, we're also seeing customer traction in both AIDC and grid and energy infrastructure applications.

We also recently expanded our SiC portfolio with newly introduced 1.2 kV JFET product line to be released early next year. Initially targeting AI data center, solid state transformers, and energy grid infrastructure application, our new JFET product line opens the door to address an additional $1 billion of incremental SAM by 2030. We continue accelerating towards our ambition to deliver best-in-class ultra-high voltage SiC technology and product and already in discussion with selected customers regarding the planned third quarter release of our new 6.5 kV SiC technology, which we expect to unveil very soon. Additionally, we are currently engaged on the development of next generation 10 kV SiC devices with a prominent lead customer and expected announcement in coming weeks.

In addition to expanding our existing SiC portfolio and technology, last week, we announced a strategic partnership for Magnachip to license our GeneSiC Gen4 and Gen5 trench-assisted planar technology spanning 1.2 kV, 2.3 kV, 3.3 kV, and higher voltage. Supported by our supply chain and material ecosystem, the technology will be fully qualified and internalized in their fab in South Korea. This partnership delivers two primary strategic benefits. First, it enables expanded adoption of our SiC technology across more target markets, expanding Navitas technology beyond the technology current focus. Second, and longer term, this collaboration facilitate establishing of another foundry source of Navitas SiC wafers, ultimately strengthening our supply chain resilience and supporting our ability to efficiently scale GeneSiC solution. Our deliberate strategic decision to prioritize AI infrastructure over automotive, unlike some of our competitors, has allowed us to bring focused high performance product to market faster.

Having both GaN and SiC is also seen by customers as a key differentiator and allows us to focus on customer needs independent of any technology bias. Additionally, this has allowed us to secure initial design wins with key customers that will continue to support our long-term growth trajectory for years to come. Operational efficiency. With respect to operations, we are making excellent progress on our strategic partnership with GlobalFoundries. Lead parts from our pivot to 8-inch GaN are on track for full customer sampling and qualification before year-end, and we expect to have initial qualified product in early 2027. This transition will enable U.S.-based GaN manufacturing, supporting national security application and long-term supply chain resilience. I also want to note that we have secured appropriate buffer capacity at TSMC to ensure a smooth transition for existing customers throughout 2029 and beyond.

In addition, we continue to further strengthen and streamline our supply chain, consolidating to fewer, more strategic OSAT partners that are better equipped to support high power at scale. Internally, we are also increasingly leveraging AI tools across designs, operations, and other functions to accelerate execution and improve efficiency as we scale. In term of the fourth pillar, maintaining financial discipline continues to be a fundamental operating principle. Over the past nine months, as we've transformed the organization, we've realized significant efficiency and have held operating expense essentially flat. With our transformation now substantially complete, and with a clear visibility into accelerating growth, we are prudently increasing investment in specific areas, including expanded product development like our GaN FET or ISO TO, strengthening customer support for key committed program, and enhancing operational readiness for upcoming ramp of volume shipments.

Each of these objectives are directly aligned with our goal of capturing the substantial multi-year growth opportunities for our GaN and high voltage SiC solution across AI infrastructure markets. We recently raised additional capital to further strengthen our balance sheet and support ongoing strategic execution. More specifically, with $567 million of cash at quarter end, we now have increased flexibility to fund strategic investment in our business, including our Foundry Plus program, capacity expansion, and supply reservation agreement with our foundry partners, as well as potential strategic inorganic opportunities. That being said, I want to be clear that our immediate and overarching focus remains on driving strong top-line growth together with gradual gross margin expansion through improving mix and scale while maintaining an unwavering path toward becoming a profitable high-power company. In closing, I'm very pleased with our continued progress and growing momentum.

Q2 represents another proof point that we are executing on our strategic Navitas 2.0 transformation. We are delivering on our commitment to achieve quarterly growth. By year-end, we'll have substantially completed our transition to a high-power company and expect to be back to year-over-year growth. The majority of the growth is being driven by AI infrastructure market. This is also supporting our expectation for continued double-digit growth for the second half, setting the stage for continued growth momentum into 2027 and beyond. With our substantial cash balance and market leadership, we are well positioned to deliver sustained growth as we capitalize on the opportunity to enable the AI revolution with our differentiated high-power GaN and high voltage SiC. With that, I'll pass the call to Tonya to review our second quarter financials and the third quarter outlook.

Thank you, Chris. Before I begin, please note, unless otherwise indicated, I will focus my comments on non-GAAP results. A detailed reconciliation of all non-GAAP to GAAP financial measures can be found in our press release published earlier today. Revenue in the second quarter of 2026 was at the high end of guidance, increasing 22% sequentially to $10.5 million. This represents an increase of approximately $1.9 million from the $8.6 million in the first quarter. As Chris highlighted, the double-digit growth was driven by increased traction in high-power markets, which grew more than 50% year-over-year and reflects a notable improvement in our revenue composition as our mobile and low-end consumer business continues to be a smaller portion of overall revenue. We continue to expect this historical business to become insignificant by year-end.

As a result of improved product mix and higher quarterly revenue, gross margin expanded by 50 basis points sequentially and 100 basis points year-over-year to 39.5%. Our accelerating shift in overall revenue mix towards higher value, high-power markets and away from mobile and low-end consumer remains fundamental to our ongoing gross margin expansion strategy. We continue to expect gradual improvements in gross margin throughout the year as we drive top-line growth in high-power markets, coupled with expected return to year-over-year revenue growth. Operating expenses for the second quarter were $15.5 million, compared to $15.0 million in the prior quarter and $16.1 million in the same quarter a year ago. Operating expenses for the quarter continued to reflect our commitment to focused and disciplined spending.

OPEX was at the high end of our guidance range as we began making incremental investments in the business, particularly in new R&D programs to accelerate growth. Having diligently maintained effectively flat OPEX in recent quarters during our strategic transformation, we are increasingly focused on the resources and investments required to support the longer-term success and sustained growth of the transformed company. As such, we are targeting a prudent increase of approximately $1.0 million to $1.5 million in quarterly OPEX beginning in the third quarter. This equates to a roughly 10% increase, yet remains meaningfully lower than our expected top-line growth rates. The incremental OPEX will be allocated to scaling the business, including investments to accelerate new product development, strengthen our engineering and application support for key committed programs, and reinforce operational readiness in advance of expected growth in ramping shipments.

Loss from operations in the second quarter was $11.4 million, compared to a loss of $11.7 million in the prior quarter and $10.6 million in the second quarter of 2025. In Q2, weighted average basic and diluted shares outstanding were approximately 240.7 million, resulting in a Q2 loss per share of $0.04, flat to the $0.04 per share loss in the prior quarter, and compared to a loss of $0.05 per share in the year-ago second quarter. Before moving to the balance sheet, I want to briefly provide additional context related to our reported GAAP net loss for the second quarter. Results on a GAAP basis included a non-cash charge of $203 million related to the October 2021 business combination earn-out share provisions that were contingent upon stock price appreciation targets.

These earn-out shares were deferred merger consideration paid out to stockholders in connection with the company's de-SPAC transaction. This earn-out was fully recognized and settled by the end of Q2, and no further charges related to it are expected. Going forward, there will no longer be an associated line item for the change in fair value of this earn-out liability reported under other income or expense on the company's statement of operations. Turning to the balance sheet. Cash and cash equivalents at the end of the second quarter 2026 were $557 million, compared to $221 million at the end of the first quarter. The increase in cash and cash equivalents primarily reflects the additional capital raised during the quarter of approximately $373 million at an average stock price of $21.89, which meaningfully strengthened the company's balance sheet and overall financial position.

As a reminder, the company continues to have no debt. In addition to bolstering liquidity and working capital flexibility, the significant added capital ensures ample resources for accelerating our continued transformation into a scaled high-power company. This includes strategic investments in support of advancing our Foundry+ initiative, potential capacity expansion, and supply reservation agreements with our U.S.-based foundry partners, as well as potential pursuit of selective strategic opportunities. With respect to inventory, we ended the second quarter with $19.5 million of inventory, compared to $14.9 million in the prior quarter, reflecting the start of our build of appropriate buffers of TSMC wafers to ensure a smooth transition for our customers. This buffer inventory is also reflected in an approximately $15 million increase in Q2 prepaid expenses and other current assets on the balance sheet until the wafers are received as inventory in future quarters.

The sequential $4.6 million increase in Q2 inventory and $15 million prepaid for future anticipated wafer receipts primarily reflects our measured investment to support customers' future anticipated AI data center growth. More broadly, channel and distributor inventory remains at healthy levels. Moving to guidance for the third quarter of 2026, we expect accelerated sequential growth, with revenue increasing 28% to $13.5 million ±$0.5 million. At the midpoint, this also represents a return to year-over-year growth while reflecting a completely different revenue composition as we rapidly shift away from mobile and low-end consumer, with growth driven by high-power markets and specifically AI infrastructure. Non-GAAP gross margin is expected to be 39.7% ±100 basis points, which at the midpoint represents a 20 basis point increase, reflecting a continued favorable shift in revenue mix toward high-power markets and some additional improved scale.

As previously discussed, we are moderately increasing our investment in OpEx going forward to further accelerate our expected future growth. Non-GAAP operating expenses are anticipated to range between $15.5 million-$17.5 million. That concludes our formal remarks. Operator, please open the call for questions.

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question Press star one on your telephone keypad to raise your hand and enter the queue. If you would like to withdraw your question, press star one again. On today's event, we request everyone to please limit yourself to one question and one follow-up only. Thank you. Your first question comes from Quinn Bolton from Needham & Company. Please go ahead. Chris, thank you very much for taking my question.

Congratulations on the nice third quarter outlook. Chris, I guess I wanted to start, there's been a lot of noise and sort of chatter in the market that 800-volt architectures may be delayed, including confirmation, I think, that NVIDIA's Kyber rack may have been canceled to be replaced by something as of now that's unannounced. Given some of this noise around 800-volt architectures, can you just sort of comment on what you're seeing in terms of adoption of 800-volt and whether there's any impact on your 2027 revenue outlook as a result of perhaps architecture shifting around?

Thank you, Quinn. This is Chris. I would have bet you would have asked that question. We provided in the early comments the steps, okay? I call that the inflection point. First of all, I want to reiterate that thanks to the fact that we have both GaN and SiC, we are able to grow ahead of the 800 volt. Number 2, you probably saw that what I call the inflection 2 is the introduction of the 800 volt through the power side car, right? By the way, that's valid as well for the plus or minus 400 volt, which is used for the XPUs and the ASIC. You can see there's already a step, okay, in the usage and a step up in the content in both GaN and SiC.

Moving to the third inflection point, which is, I think what you're referring to, so-called the native 800 volt, where the DC/DC conversion moves down to the GPU tray. Of course, I'm not going to comment on NVIDIA and Kyber plan. I believe they've made a communication about their plan, and I would refer you to that. What I would tell you, though, is I think there is a misconception in the 800 volt being a digital switch. If you look at the inflection 2, it's actually the start of the 800 volt through the sidecar rack, that's number 1, which will drive more SiC and more GaN content.

Number 2, even if you look at inflection 3, which is where the GaN content really step up as you move the DC/DC into the compute tray, and you have no choice than to use GaN because of the switching frequency. The one thing I would tell you is you have multiple GPUs, you have multiple XPUs, you have multiple platform. What we see is that this ramp will happen in steps throughout 2027, of course, accelerate in 2028. It's not a one thing, okay, and one customer. The short answer to your earlier question, do we see that as a change in our outlook of what we said? The answer is no. I think that goes back to multiple time you heard me saying that having both GaN and SiC is a strategic advantage for us to capture content, and is even more so today.

Got it. Thank you very much. I was wondering, Chris, if you could talk about sort of applications for your new silicon carbide JFET product line that you discussed on the call. Is that mostly AI infrastructure, energy grid infrastructure? What are some of the initial applications you'll target with the silicon JFETs?

Thank you for that question. It's actually a very strategic decision that we've made to expand our SAM. As I mentioned, this will add nearly $1 billion of SAM by 2030. I think Hansa Ma has even referred to $1.3 billion of SAM by 2030. This is essentially a product that is very well suited for safety critical application. The focus here is going to be both AI data center and the energy grid infrastructure. You find it in application like eFuse, ORing, of course, solid state circuit breakers. Anything that helps to protect. As you move to higher power, the circuit protection and power protection has become a bigger thing, and I think it's a SAM that will actually accelerate in the future. I'll just give you an example. I just met an SST customer, right?

We've been talking about ultra-high voltage SiC for a while with them. Just the fact that we can offer 1.2 kV up to 3.3 kV JFET, the SAM that we could capture in that SST went up by 40%. Okay? This is significant, and thank you for the question. I'm glad you did this. This is actually a significant decision that we've made to expand the portfolio with JFET.

Excellent. I'll go back in queue. Thank you. Thank you. Your next question comes from Jon Tanwanteng.

Please go ahead. I'm sorry, Jon.

Can you hear me? Yes.

I'm sorry. I got dropped. I got you dropped, you can go ahead and ask the question now.

First of all, congrats. Second, I was wondering if you could talk a little bit more about the Magnachip deal. Is that a volume or fix fee type of deal? When do you expect it to contribute? Would it be this year or next? After that, do you expect any more licensing to follow on the back of that as well?

First of all, thank you, Jon, for the question. This is Chris. Appreciate the question. We just announced that partnership with Magnachip, which, by the way, goes beyond the SiC, we just announced it, the SiC portion. First of all, it's a validation of the technology merits and benefit of trench-assisted SiC MOSFET from GeneSiC technology that we've been in business for quite some time. The way you have to use it, this is not so much about the licensing. Of course, it will, over time, play in our revenue stream, this is not the prime objective. Number one is expand our SAM, because per the press release we've made, Magnachip is actually going to focus on market that we don't serve. It's actually going to augment our ability to reach more customers, more market, and more SAM with our Gen8 SiC technology.

Number two is it creates an opportunity for us to partner with Magnachip in the foundry concept. As we talked about, as we see the huge demand ahead of us and the SiC growing at a 60%-70% CAGR in the context of data center and grid, I think adding more opportunity for us to secure capacity is essential, right? We're not creating competitor, we're creating an extension of Navitas, and we are very much looking forward to the partnership in the years to come with Magnachip.

Got it. I appreciate that color. Second, could you possibly comment on the Wolfspeed litigation? What's going on there? What do you think your chances might be, and kind of what's at risk?

I'm sure you understand that I cannot comment on the specifics of pending litigation. What I want is to give everybody some context around the litigation. I'll refer to the Wolfspeed because you asked the question about Wolfspeed, but I'll refer as well to the Renesas litigation that just came last week, right? The other thing I would say is everything I'm going to say is actually on public record. Number one, Wolfspeed already sued us because we stopped buying wafers from them a while back. They sued us, or they sued two of our employees that worked at Wolfspeed in the past, including one that they had riffed, okay, in their cost reduction effort a while back.

They even tried to file, and they failed, a restraining order when third parties, recruiters, were calling their people for job position we had online on the web. They failed. Now they sue us for patent infringement, okay, in both GaN and SiC. In my opinion, this is the last step in a campaign of harassment and intimidation through litigation and looks like a desperate move. Two weeks later, just last week, okay, Wednesday, Renesas sued us. I'm not sure it's clear for everybody, but I want to make sure everybody understand that based on the public record, Renesas would own up to 39% of Wolfspeed. Is all this a coincidence the week before the earnings and all this coincidence? I'll let you decide. As I said, the timing is bizarre, okay, and curious. Okay. We've been in the GaN and SiC for more than a decade, and yet we just got sued by Wolfspeed.

I left Renesas more than a year ago, in June 25. I'm coming up to one year anniversary in Navitas, and yet we just got sued by Renesas last week. All this the week before earning. I don't think this is a coincidence. Let's face it, and I'll give you my view there. You don't start litigation like this if you are winning market share, your technology is superior. You heard today our financial result. You heard the momentum we are building. I give you the detail of the full inflection point we see for both GaN and SiC and the momentum we have with customers. We're making a lot of progress. Sorry for the long-winded answer, but I'll leave you with two things.

Number one is what we filed in the 8-K when the Wolfspeed litigation came. We respect IP and technology. Actually, the company is a result of decade of innovation coming from startups, okay, in both GaN and SiC. We'll defend ourself. Number two is we let everybody draw their own conclusion on why now Wolfspeed and their major shareholder are running to the courthouse instead of competing in a fair way in the marketplace. That's going to be my only comment on this case during that call.

Got it. I appreciate the call, Chris. Thank you. Thank you. Your next question comes from Madison DePaola from Rosenblatt Securities.

Please go ahead. Hi. This is Maddy calling on behalf of Kevin Cassidy.

Thanks for taking my question. Just in regards to the Magnachip partnership, what other technology licensing opportunities are you considering? I have a follow-up after that.

We licensed to Magnachip, as I mentioned, Maddy- Yeah the Gen8 SiC technology.

Yeah. We always consider we're not in the business of licensing our technology.

Yes. We are in the business of serving customers and growing the top line of Navitas and starting this multi-year growth journey I talked about with AI infrastructure.

We're always open to license our technology to partners and people we can partner with.

Okay, great. Then you mentioned the record book-to-bill and backlog extending beyond 2026. How much of the expected 2027 growth is supported by the committed programs versus programs that are still in qualification?

I'll start. This is Tanya, Maddy. Thank you for your question.

Hi. Hi. We aren't breaking out what % is committed in 2027 or what % relates to our backlog.

What we can say is. What gives us confidence is the various inflection points that Chris described in his prepared remarks and them coming on top of each other, so it's a compound growth effect. The fact that we have both GaN and SiC, which are both critical to gaining content. Few competitors have both, and having both allows us to participate, like Chris said, in all of those inflection points. Then also what gives us confidence is the number of programs that are moving through qualification and into production, including design wins and DVTs, EVTs, and PVTs.

Maddy, it's a very good question. I'll add two things. Yeah.

Number one is, you probably saw that we directionally gave you a sense of beyond Q3 how the business is going to continue, right? The reason we did that is despite mobile going down even faster than we talked about, we're going to grow more than we expected. We are surprised, and I'm sure you are surprised, by the momentum that we have in the business and the outlook that we have for that. That's pre-800 volt, as I mentioned. That's a very important thing to understand. This is not one program, as Tona said. No, this is multiple hyperscalers, multiple OEM, ODM, multiple power level of the AC/DC PSUs. That continues to the inflection number 2, okay? Which will be sometime in 2027.

For me, what gives me confidence is this is not like there is a bit of a shift of the view. I think up to now, the view was the growth of Navitas will come from one large GaN big socket that will come with the 800-volt transition, native, i.e. inflection number 3, and the SiC will come from the grid. This is very different. Today, what we see is across AC/DCs, DC/DCs, BBUs, the 800 volt in the sidecar wrap, in the compute tray. It's tens and twenties of programs, different programs, different board, different customers. Some of them are SiC, some of them are high voltage SiC, some of them ultra-high voltage SiC, some of them are GaN, some of them are both SiC and GaN. We've seen in a couple of cases that we have, especially for DC/DC PSUs and BBUs, both SiC and GaN.

That's what give us confidence, Maddy. Of course, we're not going to guide 2027. We only gave you directionally how Q4 is going to look like, just to make the point that the transition to Navitas 2.0 and to be a power company is essentially one quarter ahead, okay, of what I talked about six months ago. That's all driven by this pre-800 volt and the sidecar rack acceleration that we see.

Okay. Yeah. Great. Thank you guys so much.

Your next question comes from Joseph Moore from Morgan Stanley. Please go ahead. Great. Thank you.

On terms of the 800-volt sidecar, you talk about mid-2027 timing. I feel like there's some sidecars in the market maybe sooner. Can you talk about what's the progression for Navitas to penetrate that business?

Thank you, Joe. This is Chris. You're actually absolutely right. I think when I referred to the mid 2027, it's actually really when things accelerate. I think what you're referring to, the sidecar rack earlier ramp is the plus or minus 400 volt, which I think is also more attached to some ASIC and XPU. You're absolutely right that we see in particular with AC/DC PSUs and DC/DC PSUs, and to some extent, BBUs as well, that the sidecar rack 800 volt or plus or minus 400 volt is going to ramp earlier next year. Okay? From a meaningful, what I tried to give in the slide and the remark is trying to give a sense of the step functions of the inflection. I think clearly, there's going to be an acceleration in mid of the year, so Q2.

We see program ramping associated to the SiC in the first half of next year.

Okay. Very helpful. Thank you. In terms of the other markets, you talk about infrastructure as a third exit in the year. Can you talk about what's happening on the performance compute and in the non-infrastructure and electrification side?

On the high-performance compute, as the high-end computers are moving and accelerating, the use of much higher power type of architecture, including even embedded GPUs, we see a raise of the power level of the PSUs, okay? I mentioned that in the last earnings. We moved from 65 watt, 200 watt type of chargers. Now we have customers doing 200+, 280 watts. We see an acceleration in the GaN usage, and that's benefiting us. I would refer to some announcements that were made, for instance, by large U.S. OEM in computing, for instance, that came up with a super high-end GPU-enabled notebook that basically includes a 280-watt charger, which is full of GaN with a significant content. At that point, you have about $5-$6 of content of GaN.

When it comes to the even high level, we just released with a customer a 1,600 watt, okay, platform that basically helps to power the super high gaming platform. Those are, of course, not as high volume, but the content is so much higher that I think it has contributed to us. This business, as we mentioned in the last earnings, has actually helped us to compensate and really kind of neutralize the us moving away from mobile ahead of the AI data center growth, which I mentioned, with AI infrastructure being one-third of our revenue by Q4.

Great. Thank you. At this time, I would like to remind everyone, in order to ask question, press star, then the number 1 on your telephone keypad.

Your next question comes from Tristan Gerra from Baird. Please go ahead. Hi, this is Tyler Palmore for Tristan.

Building on the last question, what are your expectations for revenue mix between a high-end compute and data center exiting this year?

Yeah. I'll start. We don't break down our revenue by our high-power markets, the four high-power markets being data center, infrastructure, the two of those combined being AI infrastructure, then performance computing as well as industrial electrification. Chris did give more context relative to, by the end of the year, we expect the AI infrastructure to be 1/3 or greater of our total revenue by year-end.

I think the way you should think about this is basically over the last 12 months, we pivoted from being essentially mobile exposed to essentially being non-mobile exposed. In the last earnings, I referred to mobile being insignificant by the end of the year. The reason why we kind of gave a sense about the year-over-year growth by the end of Q4 is to kind of really outline that it's actually even less than insignificant. We're not going to get specific about the numbers here, but I think I said in my early script that basically we are one quarter ahead of my expectation in terms of mobile being gone. That give you a sense, right? The other thing that we gave color is the fact that one-third of Q4 revenue is coming from AI infrastructure.

You can see really this AI infrastructure being the acceleration of our growth Q2 to Q3 and Q3 to Q4, which I think is why we came higher than the Street expectation.

Yep. We've also said on prior earnings call and reiterate this time that AI infrastructure is growing at over 50% quarter-on-quarter, both in Q1 and in Q2, and we expect it to accelerate. It's accelerating every quarter. Yeah.

Very helpful. We've heard of price increases across the industry. Are you seeing this trend for your products as well, and does that vary across SiC and GaN?

We've seen price increase in silicon. I think you've seen that across the board and in other technologies like memory and so forth. I'm not going to get specific about price increase with customers. However, as I said before, is as tension come, you expect the pricing to go up. Right now we're focusing on getting our customers to adopt this new technology and transition to the new architecture. Price increase in the core market, and I'm not referring to the market we move away from, has not been so far a focus of our side.

Thanks for taking the questions.

You're welcome. Your next question comes from Richard Shannon from Craig-Hallum.

Please go ahead. Thanks, guys, for letting me ask a couple of questions.

First one for you, Chris, here. When you talk about the 4 stages of inflection within AI data center, are there any particular stages of inflection that you feel relatively more or less confident about the share you're going to get? If so, do you have any way to characterize where those differences come from, like GaN versus silicon carbide, or where you have both or anything else? I recognize the difficulty in answering a question about stages in terms of time when obviously the 4 stages are a couple of years out here, but love to get your sense on that, please.

First of all, I think on stage 1, it's happening now, okay? We are very excited about the amount of program and really something I mentioned in the earlier remarks is the acceleration of the replacement of silicon by silicon carbide, okay? As you move to a higher density and a higher efficiency, higher power level, there's an acceleration there. When it comes to stage 2, we are in a very advanced engagement and situation with the customer. I mean, at this stage, this is not any more prototype, right? This is basically a large quantity, system-level testing, system-level reliability. Should it be an AC/DC at 18, 23, 27, 30 kilowatt or a DC/DC at 15 to 30 kilowatt or even a BBU, right? What I like about stage 2 is that it's multiple platforms, multiple hyperscalers, and multiple merchant power per hyperscaler.

It's a lot of program, which I think give us kind of fairly good confidence that we're going to be able to capture a share. When you go to stage 3, what I like about this is we move from this is one customer, one large GPU vendor flipping to 800 volt native, as people call it, being now looked at not just in the GPU rack, computer rack, but across multiple racks, across multiple XPUs, across multiple ASICs. I think the fact that we've been in GaN for so long, I think give us a leading advantage. I think, I'll refer to the announcement that were made, the partnership that we announced in the past with some GPU vendors or other hyperscalers.

Stage number 4, I think the one thing I would change compared to what I said earlier, Richard, is stage number 4, the big jump is SST. Okay? When really the grid delivers you 8 on a volt. What we see is a lot more application than is SST. I referred to BSS last time, PCS, and solar. What I like is that, of course, the big jump is in 2028 with the SST, but really we start to see some nice ramp in 2027 as well, with the other application, right? I think it's hard to give you a where I think we're going to win more than the others. What I like is that we don't chase one thing here. Okay? It's multiple hyperscalers, multiple socket, multiple merchant power. It's SiC, high voltage, ultra-high voltage, and GaN.

gives me confidence that we're going to able to capture share.

Okay, great, Chris, for all that detail. Second question is for Tanya on the OpEx here. A couple questions. You got a little bit wider range than you've had in the past quarters here, $2 million worth. I may have also missed any dynamics of how to think about OpEx going forward here, but what's the variability or the size of the range, and how do we think about this over the next few quarters? Any seasonality, any other investment cycles, or should we expect it kind of largely flat for a period of time?

Sure. Great question. The way you should think about OpEx and OpEx expanding, we talked about this in the last earnings call, is relative to it being meaningfully less than our top-line growth, than our revenue growth. At the midpoint of our Q3 guide, that's a 28% revenue increase, even at the high end of our OpEx guide, that would be approximately a 10% increase. Meaningfully less, as in the one quarter to one-third range is how we think about it. You're right, we see a bigger step-up Q2 to Q3 than we're expecting going forward, because as Chris and I both talked about in our prepared remarks, we've held OpEx relatively flat for several quarters, then are also meaningfully and purposefully investing in opportunities to accelerate revenue, you're seeing that culminate in our revenue and our programs.

We talked about investing in new R&D projects like the JFET, like ultra high voltage SiC, the 6.5 kV, 10 kV, and beyond. More customer support programs as we ramp in the data center, including application engineering. Then that robust supply chain to make sure we're ready ahead of demand. That's kind of how you should think about that. We've been doing all of that while keeping OpEx flat in the past and having less of a focus on China market. The first thing we did is make sure all of our resources were shored up and focused and shifting toward R&D versus other OpEx. Then even within R&D, made sure it was all focused on high-power markets before we started investing again. That's how I would think of it, still meaningfully less than the revenue growth.

You see the revenue growth accelerating, so you see a little bit of an uptick in OpEx.

I'll add something, Richard. I think our focus and eyes on getting this company to get profitable has not changed. The focus is accelerate top-line growth and enabling the business with OpEx increase as a fraction of the revenue growth to stay on path for being profitable. With the larger number of program I mentioned, with the multiple inflection points, with the fact that we feel there is a big opportunity for us to expand our portfolio, which means expand our SAM, we decided with the growth coming sooner, in second half compared to what we had estimated six, nine months ago when I started, we decided to pull the trigger a lot faster, and that's a conscious decision.

Okay, sounds good. Thank you, guys.

That conclude our question and answer session. I will now turn the call back over to Chris Alexander for the closing remarks. Please go ahead. Thank you, operator, and thank you, everybody, for your interest and your question.

I'll leave you with a couple of things, right? Five, six points which I want you to take from this call. Number 1 is the transformation to Navitas 2.0 is essentially nearly complete. By the end of the year, as we told you, we are back to year-over-year growth despite mobile massive headwind. Four quarters of sequential growth, double digit, and a complete change of the mix of the revenue, with essentially all revenue by the end of the year being high power and mobile being gone. When I took that role a year ago, we talked about transforming Navitas. I think today it is transformed, and now the focus is how do we execute the strategy, right? The transformation is working. I talked about having both GaN and SiC being super critical, and we talked about the benefit in the inflection points of having both.

We talked about some platform using both GaN and SiC. We talked about the fact that AI infrastructure is one-third of our revenue by the end, right? This is all kind of showing that the transformation is working. The one thing I want to also highlight is this is not one customer. This is multiple hyperscalers, multiple merchant power, multiple platforms, okay? We refer to AC/DC PSUs, which is the first inflection, but I think we got the question earlier, AC/DC PSUs, DC/DC PSUs, BBUs, SSTs, multiple things, right? The way I view this is the AI is the catalyst of the large SAM that we go after. We added $1 billion with JFET. Now the revenue is conditioned to Navitas 2.0.

2.0 is actually who we are, not who we're going to become, and that came one quarter earlier than expected, to be honest with you. Credit to the team and the Navitas employee that did this amazing job to transition this company. Now it's about execution and operational discipline to basically be on the path of a multi-year growth journey and path to profitability, which I mentioned. That's what I want to leave you with. This is a very important quarter for us because it's not talking about transforming, it's talking about transformed, okay? Which is very important. Thank you.

Ladies and gentlemen, that concludes this call. Thank you all for joining.