Welcome back, everyone. We have an update from Ideal Power. It trades on the NASDAQ under the symbol IPWR. It's the developer and innovative provider of its broadly patented bi-directional semiconductor power switch. Happy to welcome its CFO, Tim Burns. Welcome back to the conference today, Tim. What's your update?
Thank you, Ana. Last update, I really focused on how solid-state switchgear and energy and power, so industrial markets, were going to really drive our revenue ramp and get us to profitability. For this update, I'd like to focus a little, take a little bit deeper dive on solid-state circuit breakers and also give the audience an update now that we've published our 2025 milestones. First, if we look at solid-state circuit breakers, really there's a need for solid-state circuit breakers because of the growth in things like renewables, energy storage, EV charging, DC sources being added to the grid. This requires a pretty significant investment both from the industrial and utility side on the infrastructure. It's really because these DC sources need faster circuit protection solutions. Solid-state circuit breakers, or semiconductor-based circuit breakers, operate more than 100 times faster than electromechanical breakers.
This eliminates arcing, which is very important for safety and also the safety of the downstream equipment. Electromechanical breakers have contacts that wear. Solid-state circuit breakers do not have physical contacts, so there's improved reliability from these systems. If you utilize semiconductors, you add the functionality of programmability and diagnostic capabilities, so you can really have a smart grid. If you go move from there on why solid-state circuit breakers to why B-TRAN-enabled solid-state circuit breakers, there's really a few reasons. First, it's ultra-low conduction losses. Typically, solid-state circuit breakers have not been adopted in wide scale because there hasn't been a semiconductor solution with low enough conduction losses. IGBTs and even silicon carbide MOSFETs don't really offer the low conduction losses that you'd like to see from a solid-state circuit breaker. B-TRAN, with its ultra-low conduction losses, is really an enabling technology.
Also, the fact that it's inherently bi-directional, where you can reduce the number of devices required for a given breaker rating, is very important to make solid-state circuit breakers much more cost competitive. Because of the lower losses, there's much less heat that needs to be generated, so you can really have a lower system cost. B-TRAN really enables smart, efficient solid-state circuit breakers with lower system costs. Moving on to our 2025 milestones, which is something that we announced since our last update. We set several milestones for the year for the investment community. The first is to secure the next phase of our development program with Stellantis. This is something that we actually just recently met with Stellantis and their global production teams. We're expecting to be able to announce something here in the coming months.
A second milestone is to complete the deliverables in the first half of this year related to our first design win, which we announced back in December. We are well on track to complete those deliverables. The third milestone is to really leverage that first design win to capture additional design wins and custom development agreements. Those will really be the precursor to the revenue ramp that we are expecting in the second half of the year. Our next milestone, following up on that, is to start that initial sales ramp in the second half of the year. We think we are in really good shape. We expect that first design win to result in actual sales here later this year. We are expecting to capture additional design wins, as I had mentioned, that will also contribute to that sales ramp.
We're also looking to increase the current rating of our products. From a customer perspective, this is relatively invisible. There's no change in the form factor of the product. It's really just improving the performance and how much current that our current products can handle. It's a win-win for both us and the customer, and we'll have no impact on the time it will take for customers to adopt our technology. Lastly, late last year, we'd announced that we had started third-party automotive qualification testing. Here in 2025, we'll have to complete that testing. Even though we don't necessarily need it for automotive purposes here in 2025, because that's a little bit longer-term market for us, these are the most stringent codes and standards that will test our semiconductor devices against.
This will really go over well with the industrial customers, as it'll give them much more confidence in our technology and the reliability of our technology if we can pass these tests that go above and beyond what's required for industrial products. That's a quick update of a couple of things that have changed here in the last few weeks. Happy to answer any questions that the audience has.
Wonderful. All right, thank you, Tim. Yeah. Can you talk about anything happening with the design win customer or in the market buying behavior recently, or Q4 in particular, that makes you feel different about starting the revenue ramp up in the second half of 2025?
Yeah, I would say, if anything, it gives us more confidence in the revenue ramp. We know with that first design win, their timetable is very consistent. They want to have a product here mid-year that they can start selling to their customer base. We are on track there. We also expect there is a lot of interest generated by getting a first design win. I think it is really going to help with some of the discussions and engagements we have ongoing with some very large players in the market that also could contribute to that ramp here in the second half of the year.
Can you talk about how complementary your technology is with the design win customers' products, especially the expected contributors to start your ramp revenue?
Yeah, so this gets back to really what I was saying about solid-state circuit breakers. They were evaluating our technology, actually, against silicon carbide MOSFETs. They realized that, one, our conduction losses are much better. It's just inherent to the architecture itself. Also, they could use fewer devices. They're saving in cost, one, by avoiding the three- to five-times more expensive silicon carbide options, but they're also reducing the number of parts. It's even a bigger cost savings versus silicon carbide . For us, it's a situation where we're working with them to develop the product. Obviously, the solid-state circuit breaker design itself is theirs, but we're providing that core with the semiconductor device. We're actually using the same box that they had already designed when they were looking at silicon carbide solutions.
Our technology can easily fit in that box, particularly given the fact that there's less devices involved. That's going really well. They've told us that these are customer projections, but they expect the first year of sales could translate to literally hundreds of thousands of dollars revenue for us. If you take that a step further, they said the second year of sales could be over $1 million for us just from that first product. We're expecting that over time, they'll develop a family of solid-state circuit breaker products at different ratings.
Wonderful. Michael asks for you to talk a little bit about you've mentioned in the past earnings calls, you were able to reduce the size of the B-TRAN. When you go to the new size, will this hamper OEM's progress having to test a new size?
What our plan is right now is not to change the packaging for this initial change in die size. It will still be, for us, a cost reduction activity because we're getting more usable die out of the same size wafer. We're getting over double the number of devices. Just so we don't impact customer adoption, we're actually not going to change the size of the package. From a customer looking at the device, it will look the exact same. It will just be the die inside that package is actually much smaller.
Ross wants to know, what part of your chips have IP protection?
It is pretty broad. It is the architecture itself is patented. Just like IGBT is an architecture or a MOSFET is an architecture, B-TRAN is an architecture. We actually have patents on the architecture itself. We also have patents on how do you control a double-sided device. We actually have some manufacturing-related, some drive circuitry-related patents as well, some application-specific patents. We have now, it's over 90 issued patents, and it's very broad in terms of coverage.
Our viewer, Tyse, says, "You state the solid-state switchgear market, SAM, is $1 billion. Is that Ideal Power SAM , or since you are asset-light, would you take a portion of that SAM ?
Yeah, the IGBT market's actually much bigger. That's our specific addressable market based on our technology, where we fit best, where it's not commoditized IGBTs that are unidirectional devices, where the only factor that matters is cost. We've broken down the market based on a market study we had conducted for us and looked specifically where B-TRAN would have a competitive advantage. That's represented in our SAM, both for the solid-state switchgear market and the other markets that we show in our investor presentation.
Bruce says, "Motor drives have been mentioned as a target market segment. Do you currently have any active participants in your test and evaluation program seeking to deploy your devices into motor drive applications?
Not yet if you're talking specifically about industrial motor drives. If you look at our investor presentation, that's actually the third box, one of the longer-term opportunities for us. That's, I would say, a more cost competitive market. It's much more about reliability, where they want proven run time. For a new technology, they're much slower to adopt. As it relates to industrial motor drives, that's one of the markets that we think will be great for us longer term, but is not something that will contribute to us getting to cash flow break-even and to profitability. That will really be the other industrial markets, things like solid-state switchgear, EV charging, renewable energy, energy storage. Those markets will really be what contribute here over the next 12-18 months in terms of revenue generation.
Nick wants to know, "How close are you to reaching commercial yield levels at each fab?
Yeah, I'd say we're a little bit further ahead with the first fab that we announced in Asia, which makes sense. They've been qualified for three or four quarters longer than the fab in Europe. I would say in the semiconductor space, it is an ongoing process. You're always trying to figure out something else to improve to bring up your yields. We're actually very happy with the yields from the Asian fab, and we're very close to getting to those levels here with the European fab. We'll have two fabs here in the near term that are ready for production, ready to ramp to production, and really support the revenue ramp we're expecting starting in the second half of this year.
Lindsay says, "Since the last time you were on, can you talk about new customers or increased distribution since you last presented?
In terms of distributors, we're still working with the same three distributors. It's Richardson Electronics here in the U.S. We also have two Asian distributors, one in Japan and one in China. They're actually performing very well for us. They're introducing some very large companies to us, so we have new engagements that we'll talk about more on our call here coming up next week. In terms of customer engagement, I'd say it's nothing but picked up since we announced our first design win, and we'll provide investors with a much more in-depth update here next week.
Sean asks, "Does your product benefit the quantum computing market?
It is not directly. I would say where it really fits in well is if you look at data centers and the uninterruptible power supply systems and the circuit protection required for data centers. It is not a memory device. This is a high-powered device. You would see in those type of applications, which things like data centers are obviously going to be growing as a result. That gives us a very good opportunity. It also fits in kind of that third bucket of a little bit longer term for us, similar to industrial motor drives, but it is a great opportunity for our technology. And something that could probably be served by our SymCool IQ, which we just started taking orders for here late last year.
Kurt asks, "Is cooling an issue with your chips since they work on two sides?
We do have double-sided cooling, but the big advantage of our chips is the losses are so low. Losses are what result in heat, right? If you can have much lower losses, you can have less complex thermal management systems. You need less area to dissipate that heat. You can have smaller heat sinks, those kind of things. For us, our technology really provides an advantage over the other semiconductor technologies in the power space.
All right, Tim. We are out of time. We've got some more questions for you, but we'll send them to you so you can answer on your own. Thank you for this great update. We appreciate you.
Thank you. Appreciate it. Thank you.
All right, everyone. We'll be right back.