Good afternoon, everyone.
Good afternoon.
Welcome. I'm Stephen Oliver, Navitas VP of Corporate Marketing and Investor Relations. Welcome to Navitas 2022 investor meeting at the Nasdaq MarketSite ere in Times Square, New York. It's great to be here again in person and also a warm welcome to those attending via live stream. Today, we'll hear from Gene Sheridan, our CEO and co-founder, and from Ron Shelton, our CFO and Treasurer. We'll have a main presentation followed by Q&A. For those online, please enter your questions via the app, and Lori will take those questions into the group. For those with us today in New York, as the only pure play next generation power semiconductor company and in mass production, we have a broad range of hands-on hardware covering a broad range of applications from mobile fast charging through data centers and EV applications.
Navitas' Grace Li and Nabil Akel will help us with those demonstrations. Thanks also to Graham Robertson of Grand Bridges PR and Lori Barker and [Shayo Deloye] from Blueshirt Group Investor Relations. Thanks, of course, to Molly, Andrew, and the Nasdaq team for helping us today. A replay of this investor meeting will be available on our website shortly following the meeting. Additional information related to our business is also posted on the investor relations section of our website. This presentation includes certain non-GAAP financial measures. Reconciliation 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 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 businesses, 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 our annual report on Form 10-K filed on March 31st, 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, let's hear from Gene Sheridan, our CEO.
Great. Thank you, Steve. Welcome, everybody. It was just about a little over a year ago, we were here ringing the bell, so this is a perfect time to take a look back, talk about what we've done over the last year and where we're going over the next year or two. Welcome, and let's not start a journey, 'cause the button doesn't work. There we go.
There we go. We're clicking through.
Good.
Excellent. All right, so quick summary. Who's Navitas? If you're new to the company, let me give you a few highlights and facts. We started the company in 2014. We've got over 200 employees. We are now the leading, not only GaN power IC company, but leading power silicon carbide technology company. We'll tell you a lot more about that acquisition. In aggregate, over 185 patents issued or pending. We've now become the industry's only and first pure-play next generation power semiconductor company with both GaN and silicon carbide. It's our mission in life, and you'll see a lot of that, it's a theme for today, to electrify our world.
There's a lot of reasons for that mission, a lot of reasons to be excited about it as a human being, as an investor, and certainly as an employee. We'll tell you a lot more from Ron about our financial performance, but it's been a hell of a ride growing from our first $1 million just a few years ago, projecting about $40 million this year with a nice growth rate of over 150%. We started, as most of you know, in the mobile charger space, very, very focused on taking gallium nitride and inventing the world's first GaN power integrated circuit. When we did, solving some of these inherent challenges, holding the entire market back from adopting GaN. When we solved that problem, and we brought it to bear in the mobile charger space, the market took off.
Over 225 GaN chargers shipping from every good big brand out there. Already in production, another 290 in customer development as we speak that will launch in coming quarters. 10 out of the top 10 smartphone players and laptop players around the world are adopting Navitas GaN, either already shipping in production or designing their next generation with our Navitas GaN technology. Very exciting stuff. With that said, we're only at 1% or 2% adoption of the mobile market. We have a long way to go and a whole lot of upside to plan in that market space. In aggregate, since we launched our first chips in 2018, we've shipped over 50 million units. Equally important, not a single GaN related field failure. That is especially important in the power electronics industry, reliability and robustness is critical.
The power supply doesn't work, nothing's gonna work. On top of that, yes, consumer and mobile, not too difficult on reliability, 1-3-year lifetimes. Where are we going in the future? 5-year, 10-year, 15-year, 20-year lifetimes. That's why we're excited about not only that field track record. We backed it up with the industry's first 20-year warranty. Never been done before, not in the history of power semiconductors, not in silicon, not in gallium nitride, until Navitas. We're also expanding. We did our IPO about a year ago, raised $300 million with the clear intent of expanding this technology into new markets and high power markets while still fueling and accelerating our growth in mobile chargers. We've done exactly that. We developed the high-power GaN chips targeting 1 kW-20 kW applications, data center, solar, electric vehicle. Did exactly what we said.
Developed those chips, started sampling them in the last two quarters. Now we'll tell you more about what we're turning those chips into real power platforms in each of those markets, and how we're engaging key leading customers that will commercialize them in coming years. We're on track to see data center customers create the world's first GaN-based data center shipping next year in 2023. Following that, the world's first GaN-based solar inverters, solar implementations, shipping in 2024. It takes the longest, but it's the biggest market and certainly worth waiting for, GaN-based electric vehicles, which will be shipping by 2025. We completed a smaller acquisition earlier this year, VDD Tech. They make silicon CMOS digital isolator chips. These are actually necessary ingredients to almost every power system. You can use up to 12 of them in each of the systems.
Problem is, nobody had ever optimized them for high frequency GaN or silicon carbide-based systems. VDD Tech had done exactly that, gave us exactly what we're looking for at a time when we could integrate it, especially into these high-power systems. Goes right into the data centers, right into the solar and the EV, all those same applications. Now we have a more complete chipset cell to bring to our customers. That technology will start getting commercialized next year. Then the biggest and the best of all the highlights here today, our acquisition of GeneSiC. This is a little unknown hidden gem, zero marketing, zero sales force, but heads down developing the world's best silicon carbide technology for the better part of the last 20 years. Silicon carbide is not easy technology to develop. Case in point of the time these guys put into it.
Their third generation, which they just launched in the last couple of years, is an industry standard. We spent six months with our due diligence doing head-to-head bench testing, and we're bringing that bench testing to you here today, which we'll take a look at, when we do the demo afterwards. Head-to-head, real-life circuits, high temperature, high switching speed. It beats everything out there that we could find in efficiency, in temperature and thermal performance, in reliability and robustness. We'll give you some of that data. We'll show you the demo. On top of this, financially, it's an incredible deal for the company, because they didn't invest in sales and marketing. They didn't invest in the big management team to scale the company like we have done for our IPO. Very accretive, immediately accretive in every way.
Ron will walk you through that step by step. It's about a $25 million revenue business, which is nearly doubling our company. Certainly a big upside. We'll go through those numbers and specifics. The bulk of their revenue, as much as I love the diversity of it, and we'll talk about that, the biggest applications in that $25 million, solar and related energy storage and electric vehicle, exactly where we're going with GaN. Instead of waiting 2-3 years to roll it out as we are going to do with GaN, we now have that market engagement. We have that revenue, we have that market adoption immediately, 2-3-year acceleration. What is gallium nitride? What is silicon carbide? We're not gonna get too techie here. I know a lot of you study the space, so you're familiar with it.
In the way of a brief introduction, gallium combines with nitrogen to form a very powerful bond, 10x stronger electric fields, 3x higher electron mobility compared to silicon. Most of us, before Navitas, have worked in power semiconductors trying to get more out of silicon. In fact, we were part of the teams that invented the world's first silicon power MOSFET. Steve's gonna give you a little bit of a history lesson shortly. We spent the last three decades trying to get the most we could out of this technology, but frankly, it's run out of steam. Incremental cost, incremental efficiency gains, largely getting commoditized. Luckily, there's not one new game in town, there's two new games in town, gallium nitride and silicon carbide, both different materials.
Compound semiconductors, 'cause you're compounding two different dissimilar materials together to create a much more powerful bond. The bond is really important 'cause you have to handle high voltage without breaking down, and you wanna handle high voltage and high power in the smallest chip possible. Smaller usually means faster switching. Of course, it means a smaller footprint. It also means lower cost. We're gonna talk to you about the key themes today. In all power electronics, speed and efficiency is the name of the game. That's what's gonna open the doors to so many good things, and we're gonna break that down for you step by step.
Specifically, gallium nitride and silicon carbide together, and largely in a complementary way, bring a lot of the same values, up to 20 x faster switching, up to 3 x higher power density, smaller size, lighter weight, faster charging, up to 40% energy savings, and ultimately up to conservatively a 20% lower system cost. Let's look at this acquisition and Navitas and GeneSiC side by side. It really is a perfect combination, and frankly, there's not a lot of GeneSiCs out there in the world. There's a real scarcity value. The big guys are doing their own silicon carbide. There are not many startups. Certainly, nobody like GeneSiC that we found. Navitas obviously already has the leading GaN IC technology. This is recognized around the world. We now have the leading silicon carbide technology, and again, the test results will speak for themselves.
While these technologies are similar in how they are better than silicon, they're actually different, largely in their applications. GaN fits really well in what we call low to medium power space. Here we'd estimate that as 20 W up to about 20 kW. Silicon carbide really takes over as you push power and voltages to another level. There's some overlap here, but we'd put that at around 1 kW up to tens of megawatts. Imagine, we'll show you pictures of these really big installations. The bigger the equipment, the bigger the installation, the bigger the power. There's a crossover point. You're gonna go to silicon carbide. In that regard, a great synergy and complement to our low power focus. Initially mobile and consumer, just getting started on data center, solar and EV.
They are immediately shipping in EV, solar, energy storage, and bringing an incredible diversity to the customer base we never imagined possible, and certainly wouldn't get that in GaN for quite some time. Great complement there. The Navitas business demonstrated last year, been growing around 40%, even with some of this mobile slowdown that everybody's talking about. GeneSiC demonstrated already growing 60%. Put them together, we see synergy. We see us growing at least at that 60% going forward. Market opportunities, massive. We've talked about the $13.1 billion GaN potential by 2026. We've now more than doubled that with silicon carbide, north of $15 billion. These are big numbers. We have a lot of opportunity in front of us.
We've invested heavily in our world-class sales team, our world-class operations team, GaN, and all the costs that go with being public and getting ready to scale. That puts us a couple of years away from profitability. GeneSiC, immediately profitable, impressively profitable. Over 20% EBITDA off of just $25 million of revenue. Very financially disciplined, as well as incredibly inventive with their technology. Another great financial move for us. Let me give you a little bit better view on that market map. This is voltage on the X-axis, power on the Y-axis. Not too important other than as equipment gets bigger, you tend to go to, it consumes more power. As you consume more power, we tend to distribute that power more efficiently if we move to higher voltages. You'll find a very wide range in the 650 V range. Why is that?
'Cause that's a perfect power semiconductor voltage to handle anything that plugs into the grid. You plug into the wall, in the U.S., you get 110 V AC. You plug it in in Europe, you get 220 V, 240 V. We have to apply a lot of voltage margin and make sure that power supply could work anywhere in the world. 650 V is the answer. So you get a ton of applications. Then we're talking from low power, small stuff, to high power, big stuff. At some point, you wanna step that voltage up to handle really big power stuff, which I'll talk about in a minute. Navit as started with 650 V. All of our GaN is 650 V, and we started at the low power and our roadmap is quite simply going from low power to higher power.
First in mobile and consumers, fast charging those laptops and phones, and then moving into TVs and PCs, and we're gonna talk about home appliance today. Then expanding into data center, server, solar, energy storage and EV. If I jump to the other extreme with silicon carbide, silicon carbide is very good as you get north of 1,000 volts. Nobody has a commercially viable 1,000 V or higher GaN, so it's really not even an option. The future of the really big stuff is silicon carbide, exactly where GeneSiC is perfectly positioned. Already selling into a lot of these applications listed here, already selling into the higher performance EVs, especially 800 V batteries. Now you need that 1,000 V
There is an overlap, this light blue section in the middle, where you can have 650 V, 750 V silicon carbide and of course GaN, and you have choices. Frankly, the technical choice is not obvious. You have to take them application by application. You need a deep understanding of the system goals of the economics, of the value we're trying to bring to determine which tool in our toolbox is the right tool to apply. Sometimes that might even be a combination. We love this overlap region, and it's pretty big numbers, $6 billion in its own right. We love the fact, 'cause we're already a market-focused company, a system and application-focused company. We wanna deeply understand the customer's requirements as good, if not better than they do, and then find the right solution. Now we show up with the best of GaN, the best in silicon carbide.
We will be the ones to find the right path, the right technology, whether it's GaN, whether it's silicon carbide or a combination of both to solve that overlap region and in turn, address the full power range and the full $20 billion+ market opportunity. Let me talk a little bit about electrification or start the conversation around electrification, which is very central to today. Most people are quite familiar with renewable energy being a trend, but it's still a minority of our energy sources. Fossil fuels dominate. It's about 80% today. Within renewables, solar and wind, where we're focused, are really only a few %, I think sub 5%. That's a heck of an opportunity. It's a heck of a need for climate reasons, for other reasons, to flip that around.
I think we will get to 80% renewables, 20% fossil fuels. The timeframe, of course, is hard to predict, but in the coming decades, this is a big goal of the Paris Accord. This is a big goal of so many countries and companies around the world. Of course, there are zero power chips used in the fossil fuels. There's a whole lot of power chips, especially efficient ones like GaN and silicon carbide, needed in renewable sources like solar and wind. I think an even interesting and less known and less discussed opportunity, but ends up being very analogous is the use, not the creation of the energy. What do we do with it?
Of course, everybody thinks about cars, and it's a great example of electrifying cars, going from gas cars to electric cars is a huge thing and a huge opportunity. This applies to everything. 80% or more of all of our energy applications are fossil fuel-based, mainly gas. Gas cooking, gas heating, gas cleaning, gas cooling. Motors are used everywhere in motion. Motion of people, of transportation, but motion of water, motion of air. We're gonna talk a lot about motors or at least start introducing the concept of motors and how to make them dramatically more efficient and electrify all of those applications. Turns out the numbers are similar. 80% or more of our end applications are fossil fuel-based, combustion-based, instead of electrified.
When we go to electrification, again, I think we can flip that around and electrify 80% or more of all those applications. How many power chips used here? About zero. How many here? A whole lot of them, and they need to be efficient. That's what GaN and silicon carbide brings us. A few more words on this, my own sort of personal view and our company view. Again, people appreciate already why should we go from fossil fuels to electrifying the sources and the uses? Well, it's a limited supply. Some people say we could use it all up. Took us 5 billion years, by the way, to create fossil fuels, right? It's really created from the death of living organisms. 5 billion years. It could be completely consumed in a few hundred years.
Just since the industrial age, we started using it up, and they could all be gone in 100, 200 years. Now that's debatable, and that's not the main point, but obviously an unlimited supply of energy, as long as the sun keeps shining and the wind keeps blowing, this is a good reason to do it. Obviously, we want efficient things. We wanna use the energy productively. We don't wanna waste it. Why would you use gas-based energy applications that are 30%-60% efficient, wasting the balance of it? We can get very efficient with electrified applications, specifically with GaN and silicon carbide, 95%, 96%, even 99% efficient, and of course, get rid of all that carbon emissions, hurting our planet and creating the climate challenges that we see.
I wanna talk about the other half of the reasons, in my opinion, that I think are arguably equally important and frankly more compelling to you as a consumer and as a worker who wants to be productive. There's a lot of bad things that goes with gas-powered stuff and fossil fuel-based stuff, starting with things like noise and odor. I mean, when it's electric, it's quiet. You don't hear it. You don't see it. You don't smell it. It's. In many cases, it's simply a better experience, better for noise pollution, odor pollution, all of that. They tend to be highly mechanical. Now why does that matter? It usually means lots of discrete components. That's a lot of components to wear out mechanically. That degrades reliability. That can sometimes be a safety issue. Reliability is generally inversely proportional to the number of interconnects.
More discrete components, more things to fail in between those components. Conversely, we go to something that's highly, if not fully electric, it gets digitized. Semiconductors come to work. They dramatically integrate things. They eliminate interconnects. They eliminate the discretes. You have the potential for significant gains in reliability, but also naturally intelligence and connectivity. Now I can put in safety systems I could never do before. I can put in monitoring systems I could never do before. Many good things start to happen when we go digital, when we go electric, when we go connected, that I would argue the kind of use cases you can't even imagine today. We're just seeing the tip of the iceberg, a little Nest thermostat. Where does that end up going exactly? An electric vehicle is not. You shouldn't buy an EV just 'cause it saves the planet.
I would say it's just a better car. It's just a better experience. I can control it with my phone. It can get software updates. It can play crazy sounds when I made a left turn and a right turn. Like, it's just ridiculous the sorts of things that start happening when we electrify all these applications, and it's not just about the car. It's about all those 80% of applications that are not electrified today. Last point, and Bill Gates talks about this, and I love it in his book, Around the World, the green premium has got to go. We'll take the government subsidies to temporarily fund this transition. We'll take everybody who's a tree hugger that wants to pay a lot of money to get us to take care of the planet. Love it. All good stuff.
If you want this to make sense to the masses, to all 8 billion of us, it should economically make sense, and it will economically make sense. The green premium needs to go away. Solar today is still kind of a 10-year payback, and you're scratching your head saying, "Well, am I gonna be here for 10 years? Will I get the premium from the new buyer? What do I really do?" This needs to be an economic slam dunk. We can do it. Power chips alone won't do it, but we're gonna be a big part of that equation to make it economically eliminate the green premium. Across the board, it's simply a better experience, better consumer value, better business value, better productivity, and obviously better for our planet. With that said, I said we take the government subsidies, we'll take it.
$369 billion just approved, all focused on clean energy. They're not coming directly to Navitas, but going to the consumers and our customers. That's a heck of a catalyst. This is an unprecedented amount of government funding to go into clean energy initiatives, and they're all in the areas we're targeting, whether it's electric vehicle acceleration, solar and renewable acceleration, or my favorite that usually gets the least amount of attention, home energy appliances, home energy efficiency. Either move the remaining gas dryers and gas cooking and gas heating over to electrical to fully electrify them, or if they're already electrified, take them from 80% efficiency to 90%, 95%, 97%, as we can do this with GaN and silicon carbide. Right up our alley, a perfect accelerant to a direction that the industry is already moving in, certainly the direction of Navitas.
Okay, I want to shift gears and talk a little bit about the supply chain. This gets a lot of attention. We just bought a silicon carbide company. Everybody k nows silicon carbide is in short supply. People can't get enough of these chips to make electric vehicles. They're very fundamental to efficient electric vehicles, so it's worth a little bit of explanation. We're a fabless company. We buy all of our GaN chips from TSMC, who has the fab doing the manufacturing for us. They're in Taiwan. They're the biggest guy out there, great capability, great partner. GeneSiC's silicon carbide technology comes from X-FAB, actually right here in the U.S., in Lubbock, Texas. Very similar model. Some basics people know, you know, do you want to be an IDM? That's an integrated device manufacturer.
Do I want to have my own factory, or should I keep outsourcing that factory to others? We are clearly opting for the fabless model. Why? Well, one big benefit is these factories are very expensive. You can spend $1 billion or more. That's a lot of cash to be tied up. What people don't always realize is just 'cause you have your own factory doesn't mean you can make the chips cheaper. Not only do you need to get to 90% yields, which is damn hard in the world of gallium nitride and silicon carbide, you need to usually run those factories 70%, 80%, 90% full before you're actually cheaper than buying it from a foundry. The fabless guys, we go to a foundry. A foundry is aggregating lots of technologies, lots of customers, and lots of volumes.
They, in general, are gonna have higher utilization rates. If their utilization rate is 70%, 80%, 90%, even if I have to pay them 30, 40 points margin, I can be cheaper or certainly competitive with the guy who's trying to build up his factory and go from 20% full to 40% to 60%. The economics I just wanna highlight are not obvious or intuitive, and sometimes the fabless model can be actually a cheaper way until you're at a point where you can fill an entire factory with your own volumes, your own technologies. People are always worried about supply assurance. That's a big topic with all the shortages, especially for EV. Yes, you can have control of your own factories. You can give a greater comfort to those customers.
Let's not underestimate the strategic nature, especially of a Navitas with GaN and TSMC. We're their largest customer, long-standing customer, very tight relationship there. Their word, their commitment is as strong as any internal allocation plan you might come up with your own factory. Similar relationship with GeneSiC going back almost 15 years with X-FAB. You can get very strong strategic relationships in place to give yourself and your customers a very high level of supply assurance. What's unique about GaN and silicon carbide, the material is very advanced and very unique. Navitas and GeneSiC have invented really cool designs in GaN and silicon carbide. Not a lot of people realize it's really low tech on manufacturing. This is the oldest semiconductor equipment you can find on the planet. In fact, at TSMC, we're using Fab 2. Fab 1 doesn't exist anymore. 6-inch, 0.5 micron.
If that's Intel, they're like laughing, like, "Does anybody even use those tools anymore? Like, what would that factory be for?" They're right. If they stayed with just silicon, they would be shutting down Fab 2 soon. X-FAB, GeneSiC, same story. 6-inch, 0.5 micron. Yeah, they're running some silicon in there to keep it full, but their future is GaN. Today, TSMC is at about 10% GaN utilization. The rest is keeping it economic, as I said before, running a lot of silicon. Step by step, they're in the process of tripling that to make it 30%. Then it'll go to 60, then it'll go to 90. All of that driving the cost down, giving us an incredible upside in volume capability. We're at 10% today, and we get a good share of that. They're gonna go to 90%.
That's a 9x increase in our revenue potential in coming years. All they generally do is add the epi reactors on the front end to grow more GaN epi and then run it through the silicon factory. Very similar at X-FAB, almost like uncanny. 10% of that factory right now, silicon carbide, they are in the process of tripling that to 30%. Again, GeneSiC gets a big share of that. You go from 30% to 60% to 90%, that's a whole lot of upside. In fact, we can confidently tell you as part of the tripling at TSMC, as part of the tripling at X-FAB, that Navitas stands to have capacity of well north of $100 million in revenue for GaN and well north of $100 million of silicon carbide capacity in just the next 12 - 18 months.
That's a relatively short near-term thing. It gives you a sense of the upside that we have in front of us as we drive growth and take advantage of those big expansion plans. The real story is why would you ever build a GaN or silicon carbide dedicated factory for $1 billion when they use old factories, depreciated factories that were built 20 years ago, fully depreciated, low cost, largely underutilized. You can spend pennies on the dollar, not billions, millions, $5 million, $10 million. These kind of investments can retrofit older factories. In the U.S. alone, there's over 45 older 6-inch and 8-inch silicon factories ripe for this kind of retrofit. Here comes the CHIPS Act with $52 billion for U.S. manufacturing.
I mean, there's gonna be some opportunities, let's say, for companies like Navitas or our foundry partners to make that happen. You do need the epi on the front end. I'm gonna talk about the epi and the materials on the next slide and give you a little bit more color on that. I'll break it down a little bit more. They both need an epi growth. You start with a substrate. In the case of GaN, it's a silicon substrate. It's really just a mechanical carrier. All the action and the electronics and circuit design are on the epi layer. This is a thin epitaxial layer, only microns thick or deep, but very critical. In the case of GaN, it's actually GaN on a silicon substrate. Silicon is dirt cheap, almost free, so you don't have to worry about that.
The GaN epi is very important. TSMC does that for us. They've got 15 years experience. They're exceptionally good at it, and there's many other GaN epi companies coming along if we needed a second source and a third source. I call it kind of moderate cost, and it's coming down over time. If you do it right, you take that GaN on silicon carbide epitaxy, you run it through a traditional silicon low cost, highly depreciated fab, and out the door, we'll call that manufacturing cost a 1x just for the relative discussion here. Silicon carbide, pretty different. Actually, epi is kind of similar. You got to run epi, a thin epi layer on top of the substrate. Silicon carbide is a vertical device.
The power runs from the top of the chip to the bottom, so the entire stack needs to be really efficient, and that's why we use silicon carbide epi on a silicon carbide substrate. This is the real trick. Let's say epi, a lot of guys can do it. We'll talk to you in a minute about that. This is the really expensive part. A lot of the big guys are talking about going in-house with it, doing it custom, doing it special. I agree. This is important, and it's expensive. You run that through with some epi. If you run it through even a low-cost silicon factory, today it's a good 70% more expensive to make a silicon carbide one compared to a GaN one. Where is it gonna go down?
They're both gonna come down in the future, of course, in the coming 2, 3, 4 years. The big news is, the silicon carbide substrate needs to come down. What's gonna happen? This was a good history lesson, working with the GeneSiC guys who have lived and breathed this for the last 20 years. They know. They've seen it all, and we walked through it. It's a pretty interesting story. Just a few years ago, Wolfspeed, Cree at the time, the only game in town pretty much for substrates and largely the epi. They were signing 10-year deals with their direct competitors to get material. I mean, that's kind of crazy to think a 10-year deal to be completely reliant on your direct competitor to fuel your growth in a key strategic area. Why is that? Because they had a near monopoly. Very expensive.
Look today, there are three guys that are kind of publicly known, so we mention them here, SK Siltron, II-VI, Wolfspeed, of course. Five others that GeneSiC has qualified or is qualifying today. Great quality, great performance, lower cost, a lot of options. That cost has already come down 3-to-1 in the last few years. This trend is not gonna stop. This is without even the Chinese suppliers. There are gonna be plenty of Chinese substrate suppliers. Quality is getting good. Performance is looking good. Price is good. So we project in just the coming years, 12 or more silicon carbide substrate providers, many choices. Another thing we loved about GeneSiC, their design is so robust that it can handle different substrate and epi suppliers. Sometimes you'd be nervous about variation. They have yields in the 90s across a wide variety.
In fact, they qualify. I think that's the point of the next slide. Let me jump there. They've qualified, you know, yields in the 90s%. That in itself is unprecedented. You know, we're hearing a lot of guys are 60%, 70, 80%, but also the robustness of the design to qualify and use in production over a dozen combinations of substrate and epi suppliers. It's a mixing and matching, and that's great for lead time flexibility, that's great for capacity upside, but it's also great for price negotiation to make sure we get the best deal depending upon who we're gonna mix and match to allow us to build it up. From that substrate with all those choices, the epi with now growing sets of choices, and they're running that through the low-cost X-FAB foundry process.
All of this translates to 16-26 week lead times, which are unprecedented in a largely allocated on allocation kind of industry. As I said, they're tripling their capacity as we speak, which will open up well over $100 million of capacity in revenue terms for Navitas. With that, let me turn it over to Steve. He is our VP of Corporate Marketing and Investor Relations, and he's gonna talk through more about the technology in the market. Thank you, Steve.
Hello again. The first thing is a history lesson. Back in the day, 1977, two things happened. One is Star Wars came out. There have been quite a few Star Wars movies after that. The second one is that the HEXFET was invented. Back then, that was the first time the silicon bipolar transistor became a switching power MOSFET. That was 1977. Over the next 10 years or so, we had a first revolution in power. The idea is you've got a new material, you've got integration, you've got new magnetics, you've got new topologies. You go from a linear power supply to a switching power supply. That meant you got a 5x increase in power density. That's how much power you can squeeze into a box in about 10 years.
That all happened at a little company called International Rectifier based in El Segundo, California. No coincidence. In 1977, Dan Kinzer, our CTO, was a young process engineer helping to give birth to the HEXFET. Gene Sheridan, our CEO, was in charge of the biggest business unit within International Rectifier. I came through IR. Several VP of Applications, Quality, IC Design came through IR. We have lived the first revolution in power electronics. Since that point, silicon stagnated. It went to finer geometries, more expensive processing, but the performance didn't get there. In 2014, Navitas was founded. In 2018, the first GaNFast power IC hit mass production in Q1 of 2018. At the same quarter, a company called Mu One came out with a 45 W USB Type-C, the smallest power supply on the planet, enabled by gallium nitride technology.
At that time, we were with the GaNFast power ICs. Again, new technology, new magnetics, new controllers, new topologies. This is the Leonardo principle. You have all of these great ideas, but without the right material, you can't make your helicopter or whatever it is that Leonardo wanted to do. Now you can. We've gone from the GaNFast power IC now to the GaNSense half-bridge power ICs. This is another step on that way to the second revolution, and we're living this revolution right now. You've seen the adoption of GaN in fast mobile charges. You're seeing the adoption of GaN in data center, EV, solar, all of these different applications. The same time, the key is speed. We're getting faster and faster. Before this second step, we're still at slow silicon speeds. GaN gives you that acceleration factor, that gets you the high speed.
A similar story could be told for silicon carbide as well. Starting a little earlier, the same kind of kick at the high-power applications. We're in the second revolution in power electronics. With that, you've got old silicon, slow. You've got early forms of gallium nitride, things called D-mode, depletion mode, which are restricted to slow speeds. Whether it's a discrete or it's a multi-chip module, it's still a very low-speed technology. When you go to high speed, when you get up into the hundreds and hundreds or the megahertz range, that's when everything shrinks down. Basically, you're putting less energy into a transformer or a capacitor at any one point in time, but doing it faster, and those elements shrink size, weight, and cost.
At the same time as going up in frequency and shrinking, you go up in efficiency and frequency, and this means that as you get more efficient, things run cooler as well. When things run cooler, they extend the life. As well as being more efficient and smaller and lighter and cheaper, things last longer. This is a big step for gallium nitride as well. A little more on those older technologies, just to check our understanding. In the beginning, this technology, this D-mode, depletion-mode, it's probably 15 years old, which in gallium nitride terms, that is history. These are normally-on devices, which means that you put them across AC mains. You've got a short circuit, not a good thing. You have to put another switch in series to keep it turned off until you're ready to switch.
That's complex, that's expensive, and you get these, what are called parasitic elements. They're literally parasites. They take energy out of the system, so you're not as efficient. It also means that they introduce some random voltages and current spikes, which makes the rest of the system pretty tricky. Now we move forward a few years, you get the E-mode, that's enhancement mode, which means now the switch is normally off, which is good. Though GaN is a great technology, it has one big weakness. It's called the gate. The gate is the part that turns it on and off. The voltage is too low, you don't get performance, you may as well use silicon. The voltage is too high, it will break. You have to be very careful with the voltage on the gate.
Now, to do that with a discrete device, you have to put a lot of shrubbery, that's a technical term, around the device to protect this point, but you've still got this parasitic element. That means that all of these on the left-hand side, they're complex, they're lossy, and because they're complex, to keep them safe, you slow them down, and that defeats the point. You look at a real GaN power IC, it's the smallest piece of chip. It's also the most rugged, the most reliable, and it's the highest speed. This integration of GaN switch with GaN drive, plus control and sensing of level shifting and shoot-through protection, ESD protection diodes undervoltage lockout, it's a real IC. That's the benefit of Navitas. We go from slow speed, older technologies, to high speed, modern technology. An example of that, on the left-hand side, we have a charger.
This charger. This uses the depletion mode, that's the old silicon with a silicon MOSFET, with control ICs, with isolators in this multi-chip module. This is a grouping of disparate technologies in a box. It is good for lowering system component count. It's good for the more novice engineer as he or she designs a circuit, but it's still slow, which means the transformer, the bulk caps, the output caps, the EMI filters are still as large as they were with silicon. If you go forward, if you get the GaN power ICs, you're running now at 6x the speed. When you do that, this bulky transformer goes from being a wire wound bobbin-based transformer to what's called a planar magnetic. These are two magnetic plates clamped either side of a printed circuit board. Very, very low profile.
At the same time, these are the end-on capacitors, electrolytic technology, they've gone. At the same time, the whole thing has shrunk, and this is a top-down view. If you look side to side, that's the height. This thing's about a quarter the height of this one, which really shows speed drives down size. That's the real key. 45 W, 50 W, 3x more. That's the difference that speed brings. Now it has to be speed with reliability and features and functions. Again, in the history of the switch, we've gone from silicon, slow speed, the discrete GaN, slow speed, up to the first GaN power IC using that GaN FET, drive, control, protection. About 18 months ago, we had our GaNSense program. This won a CES Innovation Award. We now have autonomy, sensing, and protection.
This thing can look at the system and detect a short circuit and autonomously turn itself off in 30 nanoseconds, which is 6 x faster than discrete technologies. Which means not only is our device rugged, it helps the system become more reliable as well. That's a huge benefit. Last week, we introduced the GaNFast technology with GaNSense in a half bridge. Now we've got two GaN switches, two GaN drivers, control, level shifting, sensing in something that you really can't see from the back of the room. This is a 6-by-8 millimeter chip. We've already shipped millions of these devices. Ron will talk about our diversification later. The biggest adopter of this so far is in the home appliance motor drive market. We've gone from fast chargers straight into motor drive as well.
That's a big focus for us, and we'll go in more detail. The GaNSense half-bridge, already in millions and millions of production, shipping very well, continues the path of zero reported field failures. Why is that important for the integration? This is a discrete arrangement of a half bridge function, half bridge being one switch above another switch. You've got discrete GaN, discrete GaN, a lot of shrubbery. You go to something which is 60% less area, 60% fewer parts. Also, the parasitic elements that are in this spaghetti mean that you have conditions which can be dangerous to the device. You get rogue voltages and currents in these systems, and you can pop those GaN devices. With the integrated approach, you don't have that. You're going from cross your fingers to no worry, sleep on it.
What does that mean for a system again? In the low frequency world, the low speed world, you're still looking at having very large passive components, EMI filters, transformers, and filters. You go forward to GaNFast technology with single devices. You're increasing from 75-ish kHz to 400 kHz, and you're shrinking things down. You're now going from 46 cc down to 31 cc for the same power. You roll the clock forwards to the half bridge, you now have something which is similar size to these guys and about 2x the power, which means for your phone or your laptop or taking it on to higher powers, your car, 2x faster charging. This is the story of speed, the story of integration. In terms of markets, the mobile market, Gene referred to this earlier on, 225 in production.
Naming names, Samsung, Dell, Lenovo, we've got Motorola, we've got LG. These are the household names, as well as the aftermarket guys as well, the Belkin, the Anker, the AUKEY, the Satechi. This is a big success for us, and that 50 million shipped with zero reported field failures gives us a firm foundation for the next level of power, level of reliability. That's not the end of the mobile story. In terms of revenue, this is a major trend. In the old days, your Apple sugar cube was a 5 W device, which takes about eight hours to charge a modern phone. You need more power. You don't want more size with it, but we've now got this crazy world, which is a great world for us, we've now got silicon being left behind and gallium nitride being adopted for higher power.
90% of these GaN wins are Navitas. It's a big growing market. These are the household names. Power's going up because users need short charging times, even though phones are huge with huge batteries. This is a big element. Every time we go higher power, we sell more product. If you're at 65 W, it might be $0.80, $0.90 per device. You go to 120 W-150 W, you might be talking three chips, you're over $2 per unit. That's big. That's a multiplication of our ASP, sorry, multiplication of our revenue per device. You can see, you know, these are the household names. We've got a big demonstration showing a 200 W phone charger next door after the presentation. That's crazy in a good way.
Going up into higher power, higher power introducing GeneSiC technology. This is a Patented Trench-Assisted Planar SiC MOSFET. That's a long name. What does that mean? It means it brings the performance of what's called trench technology, the ability to squeeze more transistors into a single chip, but it has the planar, which means it's a very rugged design as well. It's the right hybrid between two approaches. This means that we've got a very strong device, very rugged device. When it comes to avalanche is how much energy a device can handle in abnormal conditions. You're asking it to do more than it should, and it survives. We've got great results compared to everybody else who publishes this tested information. Withstand time means while I'm enduring that abnormal condition, can I keep alive? The answer is yes.
We've got the ability to handle the most power over what we should, and we've got the ability to last for longer than we should. This makes an incredibly strong device. That's the basic technology. When it comes to applying that into the market, this is the broadest range of SiC MOSFETs. All the way from the areas where we do have overlap with gallium nitride, and as Gene said, you know, some applications will choose GaN, some will choose silicon carbide. We go through the high volume sweet spots right now, 1,200 V, for example, for an 800-volt Porsche Taycan battery charger, into the industrial markets and on to 6,500 volts. This is the largest voltage range.
At the same time, if you take one example, the 1700 V range, we've got the most die sizes, chip sizes within that range. That means that once a customer has decided they need a certain voltage grade, we can fine-tune the offering to get the right performance and cost point. There's no point in paying extra for something you don't need. In this case, we've got the broadest voltage range, and within a voltage, many, many different products to optimize performance. This is a huge range of package options. With the gallium nitride chips, we've got the QFN, that's a standard. Here we're talking surface mount, through-hole, and bare chip. We're selling die to high power module manufacturers. We're not restricted to, say, 20 kW or 40 kW. We sell into markets that are megawatts.
A little more detail on the device performance. When you look at any power electronics, they're not perfect. They do have a certain heat, a certain loss. You need to operate well at high temperature. If we remember that speed drives down the size, the weight, and the cost, you need to operate at a high speed. This technology gives you the highest performance at high temperature, so this is the loss or the resistance at high temperature. Low number is good. The energy lost during switching, that high-speed operation, is also the lowest. You combine these two, and you get the lowest number, which means the highest performance of any of these technologies. These are the household names of the silicon carbide industry, okay? You know these names.
That means we've got the lowest power loss at the highest temperature and high speed, delivers everything for the customer. The high efficiency, the energy savings, small size, lightweight, low cost, with a very robust, reliable product. A little more detail on that head-to-head example. This is a half bridge demo board using SiC MOSFETs. It's a half bridge simplified circuit. It's switching very quickly. It has loss. On the left-hand side, we've got a 45 W loss in this example. This is the heat being taken away. This is the competitor for the system. This 45 W going to 40 W, that's the GeneSiC technology system. So that's about a 10% reduction for the system. But actually, if you look at the transistor itself, the FET, it's actually a 30% reduction in loss.
The rest of it is in the inductor and the rest of the system that we need to maybe change the topology. We're burning less energy, which means you save more over time in terms of cents per kilowatt hour, but this is the key. This guy from the competition is running hot, 124 degrees Celsius. That one over there, the GeneSiC part, is running cool. This kind of 25-degree variance extends the life of that silicon carbide FET by 3x . The lower the temperature, the longer lasting it is, more reliability systems. Perfect for solar. It's on a roof. Perfect for an EV. You don't want it to break. Perfect for industrial appliances. You don't want a conveyor belt to stop. You want it to keep running. This performance means you've got a very high efficiency, very longer lasting technology.
Compared to silicon. We're talking 80% energy savings, even head-to-head with silicon carbide, this extended lifetime is a key factor here as well. There's a head-to-head with reference to silicon and examples from the silicon carbide industry. Moving on to data centers for the high power application. The big thing coming like a brick wall in January is that the European Union has said data centers must be efficient. Any power supply going into a data center in Europe must be 96% peak efficiency or better. That's called Titanium-class. And they've said, basically, if you ship it into Europe, it has to meet this high spec. Now, you can do that with silicon, but you're really looking at very large, very expensive systems.
By doing this with gallium nitride, you're shrinking down the size, and we're already across the price point to the extent that now silicon is the expensive guy in town, gallium nitride gives you the cost savings as well as the efficiency, as well as the size. This is across the tipping point on price. For the data center market, we have one of our dedicated system design centers. They're working on four different platforms right now, engaging eight different customers. One of them is Compuware. They're based in New Taipei City in Taiwan. They are the leading company in terms of high efficiency power supplies for data centers, and they love the Navitas technology. This is one of the big adopters. Over time, we can take up the efficiency of data centers from about 75% to about 84%.
That saves a lot of money and a lot of CO₂. That's a big factor. Now, coming on to electric vehicles. When we first started, we were looking at DC-DC converter with gallium nitride, the onboard charger, and then maybe optimistically looking at the traction drive. Now, with the GeneSiC acquisition, 100% in DC-DC, 100% in onboard charger, and the best technology for traction drive. That's important because this is the biggest dollar content in the vehicle. Onboard charger, DC-DC, traction drive, this is the sweet spot. We have the technology to address all of these, whether it's a 400 V rail, 800 V rail, whether you're also charging from the roadside as well as in the car. There's an opportunity of $1.9 billion just on the roadside charges as well.
If you add all of this together, gallium nitride, silicon carbide, it's about a $12 billion per year opportunity. We've got the technology to do that. Now, in terms of customer engagements, we'll be working with GaN, top right, with a system design center, with some really experienced guys that we hired from automotive customers. Engaged five different customers in that development. We talked last year about BRUSA, about EV Tech. Now, with GeneSiC coming in, we're already either adding new names like AMG, Mercedes, or LG, or Shinry, or Geely, but we're adding synergy as well. This is the one plus one equals three classic. We can go in to BRUSA and say, "Hey, we know you want some 400 V stuff. You know you want some 800 V stuff. Let's talk about it." We're not fighting ourselves to do that.
We're also not fighting against the anchor of legacy silicon IGBTs. We're really clear to go forward. This is a synergistic approach in this industry. That's really gonna accelerate. Gene mentioned that 60% growth, and this is one area we can do that with synergy. In terms of the solar market, we talked about Enphase last year. We had the testimonial there. That was for the residential microinverter, 400 W-500 W area using gallium nitride. Enphase have been very public. Their own investor presentations say they will move from silicon to gallium nitride. Another major player has stated that as well. We've got major players in the industry. If you go from the residential up in power to what's called a string inverter, that's where you start to need silicon carbide. Guess what? GeneSiC technology.
As you go from residential into commercial, you go up in power and voltage, GeneSiC technology. Now we've got a much larger area of market potential than we did with the original GaN. It also means that where we originally planned for two or three years out with EV revenue, solar revenue, we now have immediate revenue. The GeneSiC acquisition has pulled in by two or three years our expansion in these high power markets. I'm really excited about this one. Not about this kind of motor, the rusty old ones here. Over half of the electricity in the world gets used by motors, whether it's an elevator, escalator, your blender at home, your washing machine, your air conditioner, your heat pump, your everything. The big ones, the old ones, are simple AC. You flick a switch, it connects, and it turns.
They're only 60% efficient, and that's a real problem for us or a real opportunity. It's a real problem for the planet, providing that electrical energy. It's an opportunity because first of all, we can go from 60% with AC motors. We can go up to 80% for what's called a brushless DC. This now uses switching devices, IGBTs or silicon FETs to do this. About 80%, but we can take that further. Using the half-bridge GaNSense products, we can do a similar thing. Guess what? Speed goes up. We can use the gallium nitride technology to make 2x higher frequency. We can shrink things down by that integration. That means we've got about 90% energy saving compared to the old AC motors. We've got 80% energy saving compared to this old thing here.
This is the kind of application where we have that very, very large increase in the consumer or home appliance motor drive. This application is key. It's actually this product that we're selling, this half bridge unit that's going into the motor drive applications. And it has a very big range from, you know, air conditioning, hair dryers, air purifiers, refrigerator pumps. This is a huge, huge market. It's a $1.5 billion per year opportunity, we think, just for this low power. That's about 700 million motors a year. It's a big, big market. Moving from the low power to the high power, and this is where I will introduce Ben here. Ben Schuler from Infinitum Electric. Infinitum Electric is a company from Texas.
They've taken the concept of leaving behind the old silicon-based slow technology, really reached forward, looked at silicon carbide, gallium nitride to overcome the old motor limitations. These things are still lossy, heavy, expensive. This unit does away with the copper winding of what's called a stator, and instead uses a printed circuit board to do those loops. By running at high frequency, speed always matters, you can increase the inductance, even though you've got a low inductance system, to get the torque to turn those axles. So you go from something that's very big and very heavy to something that's very light and very small. This is a huge step. Thanks to Ben for allowing us to show this presentation today. At the same time, you're also lowering the CO₂ footprint from the whole system as well, based on energy efficiency, based on dematerialization.
This is a huge step. Obviously, this kind of application covers a huge range from a half horsepower to 400W. That's 400 W to 300 W. It's a very big range. That is a quick look at some of the new technology and also some of the expanding markets that we have. I will be around later for more technical discussion, but now I'd like to introduce Ron Shelton, our CFO and treasurer, to take us home.
Thanks, Steve. Steve finished with saying a more technical discussion, so I'm not sure how I should take that. Let me just get into some of the financial and operational aspects of the company, and first talk about the GeneSiC acquisition. I mean, we've spent time talking about it. When we announced it, you know, we talked about it being accretive in every way. Oftentimes, we've all been part of many transactions inside the company, you know, accretive, you know, people will talk about, well, we'll take a bunch of costs out, and it'll be accretive in a year and things like that. When we say accretive in every way, I mean, it is literally today.
If you roll the clock back only 30 days before the acquisition, the change since then in terms of our financial profile has moved significantly. Recently, I mean, if I look at first half, 2022 over 2021, Navitas has had top line growth of more than 40%, which is super good. GeneSiC's over 60% is what we've indicated for the year. When we think about the business and putting it together, we've talked about GeneSiC, and for those of you who might not know, there were only 19 employees. 19 employees doing $25 million is pretty extraordinary. Most of that was R&D. They had almost no sales and marketing, almost no operations, no G&A.
We think there's a tremendous amount of leverage in terms of pulling them into our organization and driving top line. We think on a combined basis, I mean, we have sustainable 60%+ revenue growth. Gross margins, they're well over 50 today. The GaN business has been low 40s. It's expanding. But again, over time, we think those margins will trend over 50. Our belief is, look, when you get gross margins in the 50s, we think that drives premium valuation. EBITDA, you know, we were not yet EBITDA positive, but GeneSiC is very, very profitable. I mean, EBITDA margins of well north of 25% today. The market opportunity, and we've talked about this, has literally doubled overnight.
Again, 30, literally 30 days ago, you know, we were about $13 billion market opportunity, and today it's doubled. Market expansion. When you think about the end markets, you know, that we were transitioning into anyway, and we've got design centers set up to drive that. When you think about EV and solar and data center, that's all been accelerated. That's happening today. We'll talk about end market diversification here in a second. Lastly, cash flow. They're cash flow positive, and we're growing into that. In all these metrics, when you think about it, many of them are getting pulled in, and they're just accelerating our path to hitting these kinda top-line targets. From a transaction summary, just to run through it real quick.
It was $100 million in cash, about 20% of our shares is outstanding, so about 25 million shares. It's a deal value of a little north of $240 million. There is a $25 million earnout, and the key to that earnout is it's tied to substantial revenue and margin targets. When I say substantial revenue and margin targets, it's well above those, the 60% growth rate and the 50% margin. It's you know the belief is you could get there, but they are substantial. At the end of the day, I'll walk through the balance sheet here in a second, we have over $100 million right around $140 million in cash. I'll talk about what benefits we think that gives us.
A big thing to think about here is this was done off the balance sheet, so there was no incremental debt or equity financing needed to do this acquisition. On the balance sheet, this is a pro forma of June 30, so this would reflect the GeneSiC deal. The key here is when I look at this is a really strong balance sheet. We have over $140 million in cash and virtually no debt today. When we look at it, and we think about the business, you know, it's strong enough where it drives flexibility for us. This is gonna give us the opportunity to react quickly to different opportunities that may come up. It's...
We have a balance sheet today, and we talk about expected growth in our targeted markets. We can fund that off the balance sheet, right? We're growing into that. We talk about opportunities for inorganic M&A or inorganic growth. You know, we've done it with GeneSiC. There have been VDD, which was another transaction we did last quarter. It's something we've stated publicly that we would look at, and we're in a position today to be opportunistic, right, on the M&A side. When I'm standing here today, and I look at the balance sheet and I wake up in the morning and people say, "What do you worry about?" I don't worry about my balance sheet. Balance sheet's in great position.
In fact, I think from a competitive standpoint, it gives us the opportunity to move much more quickly than others might. We've demonstrated that. I think this is a big one, and this is important for us. You know, revenue growth is exceptional. I mean, over 150% growth since 2018. One of the things we've been focused on and we've talked about is diversifying end markets. This doesn't mean moving away from mobile. I mean, mobile's a big market, and while there have been some headwinds, we lean into that market because it'll drive significant growth in the future, and it's very profitable for us. Part of what we've done is how do we take, and Stephen and Gene have talked about this, GaN and now silicon carbide into other end markets?
Last quarter we talked about on our earnings call was the first real quarter outside where we moved outside the mobile space. Stephen talked about it. It was a consumer appliance, really motor drive business. We saw that coming in Q2. It's a very strong business, and we see very strong bookings on that, and the outlook for that is very strong today. Then GeneSiC brought even further diversification. We've talked about it. They are in EV today. They're in solar today. When we look at the business today, it's well-diversified, but it's in all the targeted markets that we've been talking about, and they're all, each one individually, are very high growth markets. I'll just summarize, you know, how I view or how we view the operating model.
The first one is from a technology standpoint, and we've kinda segregated this slide between, you know, I'll call them the legacy power semiconductor companies and us. We are today, and this is very important, the only pure play kinda GaN silicon carbide power semiconductor business in the world. The only one. If you believe in the thesis that we've been talking about here, and we've talked about technology and markets and the benefits of GaN and the benefits of silicon carbide. If you believe in that, then we'll win, 'cause we're the only ones there. So there's no internal competition.
We've all been part of big companies, where, you know, there's a business over here in this group that wants to get into GaN, but there's a legacy power business over there that throws off a lot of cash. There's none of that. We're focused on only one thing, and that's next generation. We think we win there. We are fabless, and Gene laid it out, and we think it gives us a lot more flexibility on the manufacturing side than some of our competitors who are going captive. You know, I've been there, and I've lived that, and that can turn against you really quickly. We feel really good, and we've talked about committed capacity today. Both for GaN and silicon carbide, and it's in place today that gets each well over $100 million of revenue.
That's without any investment in the factory. It's without investments in equipment. It's just committed capacity today. Very focused. Similar to the pure play concept, we are very focused on the end markets, and we've touched on application specific. This isn't throw it against the wall and see what sticks. We are very, very focused. The design centers, I think, back that up. Everything we do is very focused and targeted today. Growth rates, you know, without question, well above the competition. I don't think there's any debate. We're focused on GaN and silicon carbide. That's where the market's going. That's all we do, and that will drive superior growth rates. Gross margins, again, we're looking for superior gross margins, okay. Without all the fixed overhead of manufacturing or a fab, we think that not only will it happen, it'll be sustainable.
Capital intensity, it's really CapEx. Our CapEx for the first six months of the year was under $2.5 million. This is not something where it's CapEx intensive. We have a balance sheet, and we're not gonna invest it in equipment or manufacturing in a fab. I mean, we'll invest it in the existing business and the technology and also be opportunistic in M&A. I think we are incredibly well positioned today to not only execute on what we have and address the markets that we're going after, but I think we have the financial strength and the balance sheet to keep driving that forward. We're super excited about the business. I appreciate the time. I'll turn it back to Gene, and he'll wrap it up.
Awesome. Excellent. Thank you, Ron. Good summary. I share his excitement about the operating model, where we're going, what the financial outlook is. I wanted to shift gears a little bit as we look to wrap up, and we don't usually talk about company culture and values, but they're very fundamental to us, very personal to me, and I think important to our strategy and our success going forward. Steve touched on this too. Many of us have worked together for decades, our whole careers, and this is a culmination. Navitas is a culmination of decades of teamwork, collaboration, building a common culture, and now a common mission and a common company. It all sort of comes together really nicely. We've coined our kinda core values around the letters that spell Navitas, and Navitas itself is a Latin word. It means energy.
Of course, we're in the energy saving business, but this word, this connotation of energy is actually get up and go. We love that because we've been part of the big companies. You know, Steve talked about it, Ron talked about it. We're not that excited about being part of legacy companies. We've been there, done that. We wanna build something new, something special, something disruptive, something innovative, and we think we have the opportunity to do it. We certainly have the technologies now to do it, and every day we get up and go to bring that energy, bring that positive energy to a sleepy industry, a bit of a conservative and commoditized industry. That's pretty fundamental. Everybody's an owner. Everybody's a shareholder. That's true of now our GeneSiC team. Every acquisition we do, you are an owner, think like an owner, act like an owner.
I think it's a powerful, empowering thing that doesn't always get stated enough. In the end of the day, no one person is an expert. This is complicated business. It's very complex. It's about how you mix the ingredients together, and I think one of my best skills is tapping into talents, finding the talents. Nobody's all good. Nobody's all bad. Can you tap into those talents? The best way you're gonna tap into them is by finding them, valuing them, respecting them, and acting in a way that shows that and commands that value and that respect back. You need that, and you need to do it with integrity to do what you say and say what you mean. When that respect, that integrity comes, it is very fundamental to solving complex technical problems.
It's fundamental, of course, to any good company culture and good human dynamics. I would argue in this black magic world of power electronics and analog, there's not a lot of zeros and ones here. It's not easy stuff. The answer is not easy. Everything's a trade-off. Constantly pursuing the data, constantly pursuing the facts, getting an honest understanding of what the problem is, how you fix it, how do you stand competitively, the data is something we are constantly driven for. I think ultimately that underlies why integrity is so important, why technical excellence and the transparency around that are so important, and of course, the accountability, as I said, to do what you say and say what you do. When it comes to the S, we couldn't pick just one. Let's go. GaNFast is a mantra. Speed is important.
There's a sense of urgency here. These sort of disruptions do not come along very often. Steve outlined it very well. This is a once in a lifetime, a once in a three or four decade opportunity in front of us. This is not every decade that brand new materials come along, and you have a massive need for electrification being driven by countries, and some obvious benefits that we outlined. That intersection is a perfect storm. That perfect storm, we hope, has Navitas in the center of it, certainly participating in it, certainly trying to accelerate it. Speed is critical, and obviously, there's a strong sustainability theme that goes inherent with the electrification of our company. With that, I'll just really have a wrap-up slide and just say a few words about some of the key takeaways. We're excited to launch our new GaNSense half-bridge.
You've heard it here for the first time. It just hit the press days ago. That's immediately shipping in home appliance. That's going to immediately have an impact on the mobile charger market into that ultra-fast charging market and so much more. GaNSense half-bridge, it even uses our new generation four technology. We didn't talk about that too much today. That's a very exciting new introduction. The VDD Tech acquisition, didn't talk about it a lot. You're gonna see a lot of that next year as it rolls out. Obviously, GeneSiC, a big deal, accelerating our market by 2-3 years, accelerating all of our financial metrics across the board, as Ron described. Putting it all together, we're super excited. Looking back, it's not even been a year. What are we gonna do for the next year? Steve, Ron, that's a real question.
What are we gonna do for the next year? We got a lot to do, and it's gonna be an accelerating path going forward, but we feel awfully good about what we've created so far. We hope you do too. Now we wanna wrap it up, and I think transition to a Q&A session. Thank you to all of you.
Thank you for being here.
Should we stay, guys?
We'll now kick into the Q&A session. Laurie will be also looking at Q&A online. For those who are attending via live stream, please use the live stream app to enter your questions, and then Laurie will transfer those to the room. We'll also have Shayo, who will walk around with the mic to make sure that your question is heard. Usual rules, please state your name, affiliation so that everyone knows what's happening. Go for it. Kevin.
Thanks. Kevin Cassidy from Rosenblatt Securities. Thank you for the presentation today. For the GeneSiC products, you use a lot of different foundries you're pointing out. Is there something special that you do to the process at those foundries, or is it you're using? You know, do you bring a secret sauce to them to make your products?
Yeah, pretty analogous to the TSMC GaN model we have. Our GaN ICs are our own proprietary PDKs. We call it our own design. That's a design that we work closely with to create the TSMC GaN technology, but it's also portable that we can bring to others. It's very similar to the GeneSiC capability. Highly proprietary, process-optimized design that they work closely with X-FAB, but also has the flexibility to bring that, design to other foundries over time.
If I could just have a follow-up question?
Yeah.
On that. The packaging, again, is that anything special about those packages, and do you also make modules that you would sell?
Yeah, very good question. Steve outlined a broad range of packages. The good thing is, in the silicon carbide world, these are standard off-the-shelf packages largely. You don't need to do much customization, kind of similar to GaN. There's a little bit more internal customization on the GaN chips. You need to be careful about the resistance, and the chip is so low resistance as Steve described, you wanna make sure you don't add much resistance to it. There's a little bit of design invention inside the package, but generally speaking, there are standard form factors you can buy from multiple suppliers all around the world. Most of them are discretes. We're really just starting on our module strategy, so there'll be a lot more to talk about as that module strategy rolls out.
Thank you. I think,
You know.
I'll leave it with Shayo to decide who's next.
Yeah. He can arbitrate. Yeah.
Sure. Quinn Bolton with Needham & Company. Two questions. First, on the GeneSiC design, you described it as a trench-assisted planar process. I know on the GaN side, you've highlighted the fact that GaN is a planar transistor, allows you to do higher levels of monolithic integration. Are you saying that this GeneSiC design could potentially also lead to higher levels of integration over time? Is it a planar process, or is it a vertical process like most other silicon carbide transistors?
Yeah, that's a good question. I mean, it can be a little confusing. It's vertical structure. So like every other silicon carbide, the power and current is flowing from the top of the chip to the bottom. When you get down to the actual transistor levels, they're either sort of shaped left to right in sort of a single plane, which is why it's called planar, even though the power level and current flow is from top to bottom. Or you can make a little trench to kind of pack them in a little tighter. This is an interesting hybrid or combo approach that's very proprietary, but it's still fundamentally vertical, where the GaN device is fundamentally lateral.
As a consequence, as you're implying, you wouldn't anticipate, and we don't anticipate to see monolithically integrated circuit, analog circuits, which are lateral by their nature, being integrated with a vertical silicon carbide device. With that said, though, we do expect adding a lot of the circuit and system and package value we've done in GaN, but it might be with some complementary silicon chips rather than monolithic silicon carbide integration.
Market opportunity and traction, drive motors for EVs. I think you gave us a $286 of silicon carbide content. Can you roughly size that? Is that, you know, 10 transistors at nearly $30 a piece? You know, how do you get to that sort of nearly $300 per motor?
Yeah. It's pretty simple. It's usually in multiples of a dozen, so 24, 36, 48. Depends on how many you're paralleling of these things in these three-phase motors. The ASPs can range anywhere from $5 to $20. You know, you get all over the map 'cause it depends on the size of the motor, how performance driven it is. You've got anything from 100 kW to 300 kW, people are putting that up. That gives you a rough idea for the part count and the ASP.
Thank you.
Yeah.
Hi, I'm Tumas Rackaitis from Gilder. My question is a little bit more abstract. From my understanding, adjacent discoveries are really common in science and engineering. With GeneSiC, your, you know, your inverter is much better than the competition with the specs you've outlined. What I'm curious about is, since you don't vertically integrate the whole production, what makes that durable? What's stopping a competitor who's vertically integrated from capturing that?
Yeah, I think I tried to outline that the vertical integration, one, it's not always more cost effective. As we said, with semiconductor factories, you need to have them fully utilized. That's not always easy to achieve. These are still relatively new markets, both certainly in GaN, but even in silicon carbide. So can you fill up the factory to make it more cost effective? The other is that you're betting on one factory. What if that one factory causes you some trouble? We at least at the material level, which is probably the more critical piece of this, the epi and the substrate, as we outlined, we have a whole lot of flexibility.
As I mentioned, we are qualified or qualifying over a dozen combinations of substrate and epi suppliers, and we see new qualified, capable, and really cost-effective substrate and epi guys coming along almost every month or every quarter. We've got built-in a whole lot of flexibility that ultimately we think is both cost-effective and it delivers great availability. The proof in the end is in the pudding. We have 16- to 26-week lead times, which I think is unmatched by the competitors. We have capacity coming online, which can take us from $25 million to well over $100 million of revenue. All of that, I think, helps.
Die sizes.
Yeah, the die sizes are smaller. Yeah, that's a good point. We didn't touch on that too much. The chips, the planar-assisted, the trench-assisted planar is actually a smaller chip than others. That means more die per wafer, so we can be more productive with the wafers that are available to us. Yeah.
Thanks so much guys .
Oh.
With the gross margin goal, what are your expectations for cost inflation with foundry partners going forward?
Could you repeat please on the louder mic there?
Yeah, the louder. Could you-
I think I got it, Laurie. Our expectations with respect to cost increases from our foundry suppliers.
Go on. Yeah.
Couple comments there. I think we've stated publicly, and I think all of you know, that TSMC put in last year a 20% price increase across the board. It wasn't unique to us. It was across all of their customer base. I think there's nothing, you know. We've been asked the question, and we've heard verbally that there's rumors of a price increase next year from TSMC, but we haven't negotiated any pricing or contracts for next year. On the other side, if anything, we are seeing, like Jean pointed out on the silicon carbide side, costs coming down relatively quickly. We think overall our cost structure is decreasing, and in fact it is.
Even in the GaN side, when you look at our back end, our assembly and test, those costs are coming down. Again, on the other side, silicon carbide, we think costs are coming down more quickly, especially in the substrates.
To give a little bit more color too, make sure everybody has the right priorities in their mind, wafer price is just one of the components. We do expect in normal times it'll continue to come down, especially as volumes of GaN and silicon carbide grow. Our biggest leverage is not actually with the wafer price itself. The materials are very important, especially on silicon carbide. We talked a lot about that, and you saw that trend on silicon carbide substrates. At the device and design and system level, we have a huge amount of impact. With each generation, we shrink the chip down to get more die per wafer and reduce the cost. That is largely design driven. With GaN ICs, we're integrating more circuits cost effectively.
Circuits that could cost $0.10, $0.20, $0.30, $0.40, 0$.50 cents into our chip for pennies, virtually free. Then the highest leverage in both GaN and silicon carbide is faster switching speeds. Steve spent a lot of time talking about that. That's where the real action is, getting those passive components size, weight, and cost out of that system. 70% of virtually all power electronics in the world are dominated by passive components, energy storage components, capacitors, inductors, transformers, filters. That's the real target and that's the real exciting value, and that's really under our control as we continue to push switching frequencies higher and higher in each of these applications with both GaN and silicon carbide.
Great question.
Blake Friedman, Bank of America. Just kinda to back to that point with regards to gross margin. I noticed, I remember I think the last analyst day you cited a long-term target closer to 55%, and in the current model it said greater than 50%. Wasn't sure if there was reason to read into that differential or if there's just been a different thought process.
There was a plus right after the 50%.
I saw that.
Which includes 55%. Anywhere from 50% - 59% fits in the 55%.
Yeah. Yeah.
Yeah, look, the long-term thesis hasn't changed at all. Again, the comment was margins over 50% and that's where they're headed.
Fair.
Good question.
Yeah, fair enough.
We knew you would ask that question.
Just quickly actually touching on the consumer side, I think you cited about a $1 billion TAM on the mobile charging side by 2025. I was just curious around GaN penetration assumptions in that number. Any comment on that would be great.
I missed that one.
It as GaN penetration of the mobile market.
Yeah. Yeah, I think I mentioned it's still really low, 1% or 2%, so there's a lot of room to grow. You know, we still estimated about $2 billion, especially across mobile chargers and the very similar consumer adapters, well north of $2 billion opportunity. Doing $25 million, $30 million, $40 million is still a drop in the bucket in terms of converting the rest of that market. We don't see any reason for it to not convert, especially as GaN costs keep coming down, the system costs come down, and the power levels keep driving up right into the sweet spot of GaN, as Steve outlined really well in his presentation.
Hi, Jon Tanwanteng with CJS Securities. My question is with the GeneSiC technology. It appears to be different from what you do on the GaN side, as it's a discrete component as opposed to an IC where you have a lot of fundamental patents. The question really is what prevents your competitors in silicon carbide from developing the same kind of performance that GeneSiC has?
Yeah, two thoughts quickly. One, we had the same thought, you know. Do we really wanna be in the transistor business? It is more prone to commoditization. You have three terminals. I mean, we live and breathe this. Steve went through this with MOSFETs. In part, that's why we were blown away with the level of differentiation they actually achieved with the same drop-in replacement part. You'll see it in the demo. I mean, 20 degrees difference, 30% energy loss. How do you do that? It's very impressive, and it's not easy, and it took 20 years and a third generation to get there. We're very impressed by that. It proves that you can drive a lot of differentiation in this relatively early stage market of silicon carbide.
With that said, we're very anxious to bring circuit package and system-level innovations to bear, wrapped around that amazing silicon carbide transistor. VDD Tech, those are great isolators. Are they gonna be standalone forever, or is there an integration opportunity? We're awfully good at creating silicon complementary chips to work with GaN or silicon carbide. So without disclosing too much about our roadmap, you know, smart, intelligent, isolated, self-protected, there's a lot of interesting possibilities, and they don't all have to be monolithically integrated right into that three terminal transistor to get there.
Great. Thank you. My second question. You guys spend a lot of time saying that there are a lot of old foundries around the world in the U.S. that could handle your technology. Is there a plan to actually use those foundries as an alternate supplier, just given that TSMC has the ability to raise prices on you and, you know, maybe you can get some leverage if you find some other suppliers as well?
Yeah. I think TSMC and X-FAB both have been great long-term partners to both businesses. We don't expect that to change anytime soon. I think they'll be great long-term partners for us well into the future. Does that mean, though, that the industry won't expect and our customers won't expect multi-sourcing over time? I think they will, and I think there's gonna be plenty of opportunities because of all these old silicon factories that are knocking on our door every day to look at how they can retrofit and breathe new life with GaN or silicon carbide into these foundries. I think there's gonna be plenty of options, and those options are good for everybody, certainly for our customers.
Hi. Suji Desilva, Roth Capital. I'm curious about the GeneSiC acquisition and the opportunity for high voltage applications, particularly 700 V. Where are you seeing earliest sort of opportunities and market-wise? 'Cause it's interesting.
You wanna talk to that one, Ian?
Yes. In terms of voltage, obviously 1200 volts, that's a great one for 800 V DC buses within vehicles. When you go to 1700 V and also 3300 V, you're looking at different voltage rails within 380 V AC or 480 V AC, whether single phase or three-phase industrial applications. One of the sweet spots is actually in a high voltage yet low power application because a lot of big machines, they need a little bit of power here, a little bit of power there. You need an isolated flyback converter, but you need the 1700 V or 3300 V withstand, but then it might be a 50 W or a 100 W converter.
It's a great feature that we've got this amazing range of both voltage and different die sizes, so we can address the, you know, the 300 kW as well as the 50 W across a huge matrix.
Okay. Great. Just follow up more broadly on the M&A strategy going forward. Now that you have a footprint in both silicon carbide and gallium nitride, what would be the kind of ongoing strategy at this point?
The key criteria for us is whether my name appears in the name of the company. If you find any other companies that have Gene in them, please let us know 'cause we gotta jump on that acquisition. No, I think, you know, we've been very open since the IPO that, you know, to be the next generation power semiconductor company, GaN, of course, is foundational and will continue to be. There could be additional acquisitions in the GaN space. I wouldn't rule it out, even though we've got the best technology and feel very good about what we have. Wouldn't rule out silicon carbide again, even though again, we've got a great starting point in silicon carbide, and you still need complementary silicon chips without investing in legacy silicon power devices.
All three categories still remain interesting to us, but we'll be very disciplined, especially when it comes to cash management, and opportunistic from the perspective of something comes along that surprises us, that's a killer deal, but also strategic. We're not going somewhere else. We have our vision. It's going to fit that vision. It's going to fit that direction that I just described, and if the right deal comes along, that's still very disciplined and careful with our cash. You know, that could be a possibility.
Yeah. Yeah, Suji , I would add, though, that it's, you know, we are laser focused on the integrations of GeneSiC right now. You know, so it's not something that we'll just be serially acquiring just to acquire. I mean, I think it's important that we integrate and integrate really well right now.
Is this explained by TSMC price increases or something else?
Yeah. I would just say that we're being a little conservative as we integrate the GeneSiC technology, understand exactly where we can go, how big we can make it, what are the price points to do it. We're being a little bit conservative as we see the softness of the China smartphone market and what's happening, the dynamics there. As a result of all of that, I think we're just a new CFO helping me to say, "Be conservative." You know, I think all three of those roll together to reflect what we've shown today.
As we dig deeper on the GeneSiC business and start to look at our multi-year model, we'll probably update some of these things a little bit more thoughtfully and thoroughly and with a little bit longer term outlook, you know, as we're ready to do that.
I was just wondering, you know, 30 days post-close, I think I asked this on the call. Have you thought about how these new climate bill incentives are going to affect the acceleration of these markets in renewable solar, wind, and efficiency and just, you know, have you put a plan in for that at all?
Yeah, we certainly haven't factored them into our business outlook yet. Another reason to be conservative, we don't know exactly. It's a lot of money. It's targeted in exactly the right areas that I outlined. How does it roll out? How fast does it roll out? How does it actually change demand trajectory? At the end of the day, are we gonna see more customers moving to electrified applications or more customers wanting to go from silicon to GaN and silicon carbide to make their electrified applications more efficient? I know those are gonna happen. There's clearly gonna have an impact. I just don't know how to quantify it yet. I think we need time to see how that rolls out and start to quantify that impact.
Just a follow-up question on the GeneSiC acquisition. Are there more details around the deal, like the earn-out, who gets the earn-out? Are there any lockup periods for the shares that were distributed?
For the shares that were distributed, there is a lockup, six months. Half in six months, half in 12 months for those shares. They're fully off lockup within a year. The earn-out is a $25 million target. We haven't disclosed.
Okay.
There we go, in here.
Tumas.
I think when I first met you had like 25 million parts shipped with zero field failures, and I think you've almost doubled that. You know, like I don't have to do too hard of a calculation to see how big the smartphone market is for each smartphone. What is like sort of prevented like a huge like supplier of smartphones, not, maybe not Apple, but like a Samsung. I know LG has started to really adopt you guys from like just integrating you guys on the default smartphone charger that gets shipped.
Well, it's certainly happening. We gave you a lot of the facts and figures of how it's happening. You know, I think at the end of the day, we've been in the power industry a long time. It's a very conservative industry. You have to design this from the start. You don't do it late, so you can't just jump in. To do what Steve described, you've got to start at the very beginning of the design cycle. It's a fast design cycle, but that's still 6-12 months. Then I think it is very conservative. The big guys don't do 10 models all moving to brand new technology at the same time. We're in the Samsung Galaxy S22+ and Samsung Galaxy S22 Ultra, very cool, 45 W. You go to buy it, that's an optional fast charger.
You can buy the slow silicon one for $25. They're in. One usually goes to two, which goes to four, which goes to 16. You know, it goes exponential. Classic S-curve. Each customer is at their own stage of their S-curve. Even the Cupertino company, there's stuff out there about where they're at in adopting GaN. So everybody's making this happen at different stages. It is happening, but you know, you gotta put the time into it, and when you're in the middle of it can almost sometimes feel like, "Wait, this is taking forever." Then you look back at that decade and say, "Holy crap, we changed the entire industry in a decade." That's what happened in switching silicon MOSFETs, and we're right in the middle of making that happen with GaN and silicon carbide.
All right.
All right. Shall we wrap it up?
I think so. Thank you to everyone for being here in person and also those who are live stream. If anyone has any more questions, obviously, we're here and we can answer. Anyone on live stream, please drop a note to ir@navitassemi.com, and that goes straight to me, so I'll be happy to answer your questions. Right now, in Nasdaq, we'll be going through to look at the hardware demonstrations. Nabil and myself, and Gene will be taking you through those.
Thank you to the whole Nasdaq team. Thank you for coming here today. We will also have some cocktails at Valerie, which is 45 West 45th Street from 5:00 PM- 7:00 PM tonight. We hope you can make that too. If there's anything else. Oh, thank you again to Mr. Ben Schuler, CEO of Infinitum Electric, for joining us today and for letting us talk about his technology as well. Thanks to Gene and Ron for their great work today. Thanks very much, everybody.
Thank you, everyone.
Thank you.