納微半導體 (NVTS) 2022 Q1 法說會逐字稿

Good day. Thank you for standing by, and welcome to the Navitas Semiconductor First Quarter 2022 Results Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions)

I would now like to hand the conference over to your host today, Stephen Oliver. Please go ahead.

Good afternoon, everyone. This is Stephen Oliver from -- Good afternoon, everyone. I'm Stephen Oliver, Vice President of Corporate Marketing and Investor Relations. Thank you for joining Navitas Semiconductor's First Quarter 2022 Results Conference Call. I'm joined today by Gene Sheridan, our Chairman, President and CEO; and Todd Glickman, our CFO.

A replay of this webcast will be available on the Investor Relations section of our website at ir.navitassemi.com, approximately 1 hour following this call and the recording will be available for approximately 30 days following this call. Additional information related to our business is also posted on the Investor Relations section of our website.

Our earnings release and this presentation includes certain non-GAAP financial measures. Reconciliations 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 such 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' business, including facts 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 31, 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 over to Gene Sheridan, CEO.

Thank you, Steve, and thanks to everyone joining today's call. We continue to focus on building our foundational technology and market leadership position in GaN power IC. In particular, we are growing our leadership position in the mobile and consumer segments, while we expand our technology to address the exciting new opportunities in data center, solar, EV and related markets. As we announced last week, Navitas has now shipped over 50 million units, reinforcing our #1 position in the power GaN market.

Q1 revenue grew 27% year-on-year to $6.7 million, and our gross margin of 44% was in line with expectations. Our lead in the fast and ultra-fast charger market was increased by major customer additions. Samsung's flagship Galaxy S22 Plus and S22 Ultra have adopted Navitas GaN technology for their 45 watt fast chargers, our first design win at Samsung and their smallest ever 45-watt charger. In addition, Vivo has adopted our GaN ICs in-box with their first folding smartphone, the 8-inch screen X fold utilizing our GaN ICs for their 80-watt dual USB-C charger, fast charging from 0% to 100% in only 37 minutes.

Motorola's edge+ smartphone launched with a 68-watt in-box GaNFast charger with 1 watt per cubic centimeter power density and a 0% to 50% charge time of only 15 minutes. In addition, we are working closely with Motorola on a comprehensive co-op marketing campaign. In the emerging and fast-growing new segment of ultrafast smartphone chargers, we had extended our leadership position with a number of additional major customer announcements. Xiaomi has adopted our GaN technology for their Redmi AMG Mercedes Formula One Champion smartphone, which utilizes a compact 120-watt in-box charger that achieves 0% to 100% charging in only 37 minutes. Realme's GT Neo3 launched at Mobile World Congress utilizes our GaN ICs to deliver the world's fastest charging time, 0% to 50% in only 5 minutes and an impressive 1.5 watts per cubic centimeter power density. This translates to big power delivery in a very small form factor. And the OnePlus Ace utilizing our GaN IC technology for their in-box 150-watt ultrafast charger.

Beyond our significant smartphone GaN market position, Navitas is also leading the way in GaN adoption for notebook chargers. Dell was an early adopter of our GaN IC technology with their 100-watt accessory laptop charger launched in 2020, and we followed with a 60-watt optional GaN charger for Latitude laptops in 2021. We're also announcing another 60-watt charger that is now shipping in-box with the Dell XPS Plus. At the same time, Xiaomi has launched their 14-inch and 15-inch laptops powered by 100-watt in-box GaN fast chargers. And Lenovo Legion 5 Gen 7 gaming laptops with 135-watt GaNFast chargers have launched in April. This 135-watt charger is 40% smaller than legacy chargers at a power density over 1 watt per cubic centimeter, a huge 80-watt hour battery is charged in only 65 minutes.

Navitas GaN is now in mass production with 9 of the top 10 mobile OEMs across smartphone and laptops, and we expect all 10 of the 10 by the end of the year. Our technology innovation continues at a rapid pace. Our Generation 3 GaNSense technology was launched late last year and has already been adopted for mass production by over 15 customers across multiple end applications enabling all new levels of energy efficiency, fast charging and higher power density. This week, at the prestigious PCIM Conference in Nuremberg, Germany, we introduced our highest power-rated GaNFast power IC with proprietary GaNSense technology. The NV6169 delivers 50% more power as a high reliability building block for applications such as 4K, 8K TVs, next-generation gaming systems, solar microinverters and 1 kilowatt plus data center power supplies.

We started sampling additional high power GaN ICs late last year, which targets data centers, solar, EV and other related markets. Customer designs are well underway with dozens of customers across those segments, many of which are accelerated by their cooperation with our data center and EV-focused Design Center. Both of these design centers offer customers complete capabilities at high frequency, high efficiency, high density GaN-based power system design. Our expectations for additional revenues from these new segments across the next few years remain unchanged.

In addition, this quarter, we started sampling our Generation 4 GaN ICs on schedule. These enable another 20% cost performance improvement and will serve to further accelerate our GaN IC adoption in our target markets. Quality and reliability continue to be foundational to our company strategy and expansion plan. With our announcement of 50 million units shipped, we also announced an unprecedented achievement of 0 reported GaN-related field failures with 192 billion device hours in the field.

We have another industry first with our 20-year product warranty. This is 10x to 20x longer than every other power semiconductor company, reflecting our confidence and our commitment, again, if not just as reliable as silicon, but actually more reliable courtesy of our integrated protection and robustness circuits and our unique and exhaustive GaN reliability program. When we combine these achievements with 5.8 billion device hours of accelerated reliability testing, we are delivering the level of confidence that our customers need to rapidly transition from silicon to GaN in the multibillion-dollar high-reliability markets of solar, data center, EV, energy storage and beyond.

Finally, I want to update all of you on our sustainability initiative. Over the last 3 years, we have carefully assessed the environmental benefits of both GaN as a next-generation material and Navitas as a next-generation semiconductor company. In January, we published the industry's first wide-band gap sustainability report that comprehensively quantifies the positive impact of GaN power semiconductors and climate change based on global standard.

Today, we're excited to announce that Navitas is the first semiconductor company worldwide to achieve carbon-neutral company status from the leading experts in carbon neutrality and climate finance, Natural Capital Partners. Achieving carbon-neutral status is another milestone in our mission to use wide-band gap materials to electrify our world and help our customers reach their own environmental goals.

With all of these positive achievements for our company, we do want to recognize some short-term turbulence, specifically in China, given the COVID-related shutdowns and some softness in the China smartphone market. These two factors, in combination with some continued non-GaN component shortages, are expected to have some impact on our growth rate in Q2. Fortunately, we see strength in other regions outside of China, which helps us to maintain a strong Q2 sequential and year-on-year growth rate, albeit with a mix-related modest reduction in our gross margins.

Despite these short-term challenges in China, I want to reiterate the strong fundamentals that are driving our business. The electrification of our planet and a transition of the $13 billion power semiconductor market from silicon to GaN is an underlying secular, multi-decade tailwind for our company. Navitas is #1 in fast and ultra-fast chargers. And even though we shipped over 50 million units, this still represents only about 2% of the charger market, less than 1% of the overall legacy silicon opportunity, leading dramatic adoption and growth ahead. Our GaN IC lead times remain low between 6 and 16 weeks, and this is accelerating GaN adoption given continued semiconductor shortages with power silicon lead times in the 6-plus month range.

We maintain a very healthy balance sheet with over $250 million of cash on the books, which gives us confidence to reach our targeted profitability by 2024, and to pursue strategic M&A activities, which will accelerate our top line revenue and increase our customer value as we pursue our mission to become the next-generation power semiconductor leader. And finally, GaN remains a revolutionary once-in-a-lifetime opportunity to disrupt and redefine the field of power semiconductors and power electronics. Thank you, and let me now turn it over to our CFO, Todd Glickman.

Thanks, Gene, and thanks, everyone, for joining us today. Let me take you through our first quarter numbers and guidance for Q2. GAAP revenue for the quarter grew to $6.7 million, representing 27% growth from the first quarter of 2021. Mobile demand remained solid throughout the quarter and the non-GaN supply constraints that had been impacting customers in the fourth quarter have improved somewhat, but continue to be a challenge for some of our customers. I would also like to note that last year, we sold our first in-box GaN chargers in the first quarter, which mitigated what would traditionally would have been a seasonally slower quarter.

GAAP gross margin was 44% in the first quarter, consistent with our guidance and flat compared to the fourth quarter of 2021 despite TSMC's 20% wafer price increase, which would have led to a 6% gross margin reduction. With regard to expenses, we continue to invest in our global field applications and sales and marketing teams to build out our capability to penetrate new markets and expand into new regions. In addition, we are completing our first audit as a public company. Both investments are reflected in our SG&A spending with a non-GAAP expense of $6.7 million in the first quarter of 2022.

Non-GAAP R&D was $5.8 million in the first quarter of 2022 as we continue developing multiple new generations of GaN ICs and invest in new GaN IC technology and our unique application-specific design centers to expand into data center, solar, EV and energy storage markets. Putting all this together, non-GAAP net loss from operations was $9.6 million compared to a net loss from operations of $5.3 million in the first quarter of 2021 as we invest simultaneously across new markets in this rapid growth phase of our company.

In March, we completed the redemption of both public and private warrants adding approximately 3.3 million shares of common stock and generating a onetime gain of $51.8 million as a result of the elimination of warrant liability. Our basic and diluted share count at the end of the first quarter was 123.5 million.

Turning to the balance sheet. Cash and cash equivalents were $253.8 million. Inventory was $13.1 million compared to $12 million in the prior quarter as we maintained healthy inventories to support short lead times, significant growth and upside opportunities with our customers.

Moving on to guidance. For the second quarter of 2022, GAAP revenues are expected to be between $8 million and $9 million compared to $5.5 million in the second quarter of 2021. Next quarter is tracking to be a record quarter for the company, representing at least 47% growth from the second quarter of 2021. Despite softness in Asia due to China shutdowns and some reduction in smartphone sales, we are experiencing upside in other regions as customers convert from silicon to GaN faster, putting us in a position to offset China weakness and to reiterate our expectation to double full year revenue from 2021.

GAAP gross margin for the second quarter is expected to be approximately 41%, plus or minus 1%. As mentioned earlier, China softness is being offset by stronger growth in other regions, which have somewhat lower gross margins and is expected to lead to a lower second quarter gross margin mix. GAAP full year 2022 gross margin is expected at approximately 42%, plus or minus 1% as revenues begin to diversify outside of Asia.

As Eugene mentioned, our launch of Generation 4 in the second half is expected to fuel margin expansion in the fourth quarter of this year and into 2023. Our long-term strategy and expectation to achieve system cost parity with silicon in 2023 and deliver 55% gross margin long term is unchanged. In total, our non-GAAP operating expenses in Q2 are expected to be approximately $14 million, which excludes stock-based compensation and amortization of intangible assets.

In summary, we are excited to meet this milestone of shipping more than 50 million units and proving our leadership in mobile GaN chargers. We are looking forward to our exciting new opportunities in data center, solar and EV. Gene and I are now ready to take your questions. Operator, let's begin the Q&A session.

(Operator Instructions) Our first question comes from the line of Kevin Cassidy with Rosenblatt Securities.

Just quickly, maybe if you could explain why the other regions have lower gross margin than, say, in China?

Sure, Kevin. This is Gene. Thanks for your question. Yes, so last year, we had an opportunity to kick off some major strategic programs in other regions with some pretty strategic customers. We took that opportunity and went for it, even though the price points were a little bit lower, which is not too surprising for the very first program to start their GaN adoption knowing full well that we would, one, balance that out with higher-margin business elsewhere, including China. But two, that we would move them over the next few quarters this year to Generation 4, improving the profitability.

So with China weakening, that's a higher proportion than we expected, which has led to this sort of mix-related gross margin shift, but it also puts us on track to improve the profitability, gross margin of those other non-China programs and move towards margin expansion late in the year as we move them to Gen 4.

Okay. Great. And maybe if I think out to 2023, would you think your mix, assuming things get better in China, the mix and your gross margins will move up over that 45% range again?

Yes. I think we'll be headed in that direction. Of course, this year, as a reminder, we had the significant impact of the TSMC 20% wafer cost increase, so that's all factored and rolled into the numbers we discussed for this year, but that will be behind us. We'll be squarely on Gen 4 late in the year and into next year and expect multi-point gross margin expansion in the next year, as you indicated.

And our next question comes from the line of Trevor Janoski with Needham.

This is Trevor on for Quinn Bolton. So with the 44% gross margin this quarter and the guide to 41% for the full year, can you provide some additional color on the headwinds you're seeing as the year progresses? And we understand not raising ASPs in the near term to continue gaining share, but is there a specific floor on margins where you would consider raising prices?

Yes, I'll start. Maybe Todd could add color or specifics, if he'd like. But as I mentioned with Kevin's question, the main driver is the strategic programs we committed to last year, frankly, before the TSMC wafer price increase. So those are -- we're happy we did in the end, of course, because of the short-term softness in China. This is helping to compensate quite a bit. But in the end, it drives key top line growth that will ultimately be in line with our gross margin expectations as we transition to Gen 4 later in the year. Todd, anything you want to add to that?

Yes, but we are still tracking to get 42% is the guidance for the full year, plus or minus 1%. So that is our goal. And to answer the second question of, is there a floor on ASP? Our ultimate goal is to create a system cost parity with silicon. So that is our goal, and we're still on track for that occurring in 2023.

Okay. And are you able to quantify the effect that China had on the quarter and revenue and your margin guidance as well?

Well, I could add, again, this is Gene. For Q1, by the way, we didn't see a significant impact on revenue. We came in in-line or even a bit higher than guidance on revenue. There does continue to be non-GaN component shortages that have some effect, but hard to quantify. Certainly, in Q2 is where we're seeing the short-term China effect. We think that's probably about a $2 million-ish impact. But luckily with the growth and robustness in other regions, that's offsetting a good $1 million of that or so. So that gives you sort of a rough idea of the magnitude of the short-term pluses and minuses between the regions.

And our next question comes from the line of Ross Seymore with Deutsche Bank.

This is (inaudible) asking on behalf of Ross. Could you double-click? So I guess with the new guidance numbers for Q2 and the full year top line remaining unchanged, it seems you have to grow at least 50% Q3, Q4. So if you can give us some additional color in terms of how do we look at linearity in those 2 quarters?

Yes. We continue to see robust growth and outlook in the second half of the year based on all the number of programs that are now pretty regionally diversified, as we talked about. I think we mentioned in the past, typical seasonality we expect is probably 1/3-ish revenues in the first half of the year and 2/3 in the second half. Last year was a bit of an anomaly as we've discussed before, with Xiaomi launching their first in-box in Q1, which is not a typical major production year. It's usually a softer quarter, and that bled into Q2. So we had a more balanced, let's say, split between first half and second half last year. But I think this year is still shaping up to be in that range of 1/3 first half, 2/3 second half.

Thank you. So would it be fair to assume that in terms of sequential, Q4 would be the highest growing quarter?

Yes, probably so. That's typically the case, yes.

Our next question comes from the line of Jon Tanwanteng with CJS.

My first one, just -- not to beat a dead horse, but I was wondering if you could give us a little more color on the margin progression through the year, 42% for Q2, higher volumes in Q3 and Q4. Does that mean we're going to see a little bit lower gross margin in one of those two quarters as we progress that your average for the year is going to be 42% and kind of give me the reason why?

Todd, do you want to handle that? Recognizing Gen 4 is probably the biggest driver, but there's obviously the regional balance in the mix that we talked about. But Todd, do you want to give a little bit more color?

Yes. As we gave the sort of guidance of 41%, plus or minus in Q2, you would expect that same guidance coming in Q3 with the margin expansion really coming in Q4 to allow us to hit that 42% plus or minus 1% as Gene touched on, driven by our sale of Gen 4 devices, which are allowing us to recapture margin and proceed to expanding that.

Okay. Great. And then just a little bit more color on the confidence in the second half outlook. Is that based on discussions with your customers? Any indications of what they're producing? Or is it more firm orders in hand? And kind of how do you cast that visibility and assortments of those orders?

Yes. I think it's a combination of both. Certainly, we're very close to our customers, very well connected at the OEMs and the ODMs at all levels. That's sort of part of our business model. So that helps, and it's based upon both the Chinese customers' view on improving conditions in Q3 and in the second half of the year. And then more importantly, really robust and stable revenue outlooks, forecast and production orders for the other regions. So all of those work hand in hand. In addition, Gen 4 is not only important to the gross margin expansion later in the year, but Gen 4 is already sampling now on schedule, as we said earlier, and the reception has been phenomenal. And that's actually spurring additional programs that could create upside. So we're taking all that into account as we gave our updated guidance.

Understood. And then, Todd, I don't know if you've mentioned in the prepared remarks, but did you have any directional commentary on OpEx past Q2?

For the full year, we're not changing our guidance on OpEx on a non-GAAP basis of $58 million. With the $14 million in Q2, we expect to continue to move higher in Q3 and Q4 to track towards that $58 million.

(Operator Instructions) Our next question comes from the line of Richard Shannon with Craig-Hallum.

Todd, I guess I just want to reverify on the gross margins. I perhaps misheard, but I thought you said the opposite numbers of what's in the press release. Your press release says 42% in the second quarter and 41% for the year, but you've been seeing the opposite. Can you verify which one is correct?

Yes. For the full -- our full year guidance for gross margin is 42%, plus or minus 1%, and our Q2 guidance for gross margin is 41%, plus or minus 1%.

Okay. You probably should correct the press release because it says the opposite. So thanks for making sure we got that right. Let's see here. Maybe a question on the Gen 4 ramp. I guess how fast will, in general and specifically with the Gen 4, do you expect the transition to be? Like, at one point, does it get to, say, 50% of your total sales? Is that something that happens fairly quickly like within a year or does it take a little bit longer than that?

Yes, great question. And each generation can be different depending upon what we're adding in terms of features and capability. Generation 3 as an example introduced all new integration capabilities called GaNSense, which really applies then to brand-new designs to take advantage of that. Gen 4 is a little bit more classic, die shrink cost reduction with some performance enhancement, but actually serves to drop in replacing Gen 3 or prior generations very quickly on a pin-to-pin basis. So that will actually drive the adoption a lot faster than Gen 3. And as much as we saw and continue to see Gen 3 picking up very quickly, the Gen 4 transition will be faster. So I don't feel we'll cross the 50% point by Q4 of this year, but probably early next year. It's a pretty quick ramp in transition.

Okay. Great to know that. One last question for me, again, just on the charger part of the market here. I think in the last couple of calls, you've had discussions, you provide great detail on charges at particular power levels. And I think about 65% you're expecting a second -- in many cases, you'll see a second chip. So I wonder if you can kind of profile what you're seeing throughout this year or the next year -- over the next year, whatever, about when percentage of wins and volumes that will be for chargers that have double the number of chips and a higher content level?

Yes. Yes. No, great question. We especially focus in on or highlight the ultra-fast charger category, which is typically things that are delivering more than 100 watts of power to a smartphone, which is an extraordinary amount. And usually, once you get to that 100-watt level and up, you have to add additional circuitry. It's called pfc, or power factor correction, that doubles typically the GaN content. And as you go up from 100 watts, that can even triple or even quadruple the GaN content.

So we definitely see that segment growing probably the fastest of all segments. We highlighted in our prepared remarks, the 3 categories, kind of traditional fast chargers below 100 watts growing nicely with 3 major announcements there, Samsung, Vivo and Motorola. But in the ultrafast category, we highlighted Xiaomi, Realme and OnePlus Ace, and there's a whole lot more coming behind that. So I think we'll see that ultimately probably the largest segment over time. We'll have to see how that plays out. The bigger volume is in the fast charging category today, but ultrafast is the fastest growing.

And we shouldn't forget about notebooks. Notebooks are pretty stable, strong market for us, doesn't have the short-term China softness that we talked about. And that's also growing really nicely for us with Dell now going in-box with our GaN chargers, Xiaomi launching a family of notebooks with our chargers and even Lenovo now with multiple launches, including notebooks. So anyway, that gives you a little bit more color on the different segments and in particular, that ultrafast category driving more content.

And our next question comes from the line of Mark Lipacis with Jefferies.

So the question I have is, as you look into 2023, I think you had earlier expressed a view that you thought that you would start to see enterprise and renewable solar kind of programs starting to ramp in 2023. And so the question is, do you still believe that to be the case? And if so, is there -- should we think about the -- those vertical markets or the products that you're supplying into those vertical markets different, either from a pricing standpoint or a margin standpoint? Or would these be very similarly priced and margin kind of products?

Yes. No, good questions, and certainly good memory, and we are on track with those plans. In fact, we announced this week the NV6169, which is the highest power version of our GaNSense family, but that's the tip of the iceberg. There's all new families that we're already sampling, but haven't publicly announced that are serving all of those markets you talked about, data center, solar, EV and energy storage. We're still on track with multiple programs, especially in the data center space that would start ramping in '23. We think solar and some energy storage would catch a little bit of late '23 and most of the EV, because of the longer development times, would start ramping in '25.

All of these products are much more powerful chips and with that comes a higher price point. So where the mobile charger and consumer chips tend to range around $1 or now a bit less as we're driving the price and system costs down closer to system -- silicon cost parity, as you go in the higher power range, we'll see ASPs that will often be in the $2 to $4 range. Also, given the higher quality and reliability demand that sort of fits perfectly with our capability, we expect and are already seeing higher margins to go with it. We've cited before how we expect, ultimately, mobile and consumer to be probably 10 or 15 points lower than the more industrial bigger -- barrier to entry markets like data center, solar and EV and the combination of both would get us through our long-term operating model of 55 points. So that gives you some sense of price points, improved margin as well as kind of revenue timing of when those things start to roll out and impact the top line.

And a follow-up, if I may. On the -- I think particularly on the enterprise side, there had been some regulatory kind of efforts to try to drive higher efficiencies. And I'm wondering, is there -- are you seeing any newer developments on this front associated with what we've been observing with higher energy prices? And that's all.

No, exactly right. And to add a finer point, that's a Titanium Plus standard being required in Europe in 2023, which is, of course, right around the corner. So virtually all the designs we're doing, because it's very hard to achieve that level of efficiency standard with silicon, virtually all we're doing with our data center customers today is demanding that standard Titanium Plus, and that will be a big piece of our data center revenue rollout in '23. So that's a great driver for us for Europe. And keep in mind, most feel designed power supplies should work around the world. So you have to design usually to your toughest standard. So Europe doesn't just impact Europe sales, it could actually impact a lot more than that. We're seeing that ripple effect today.

(Operator Instructions) And we do have a follow-up question from the line of Kevin Cassidy with Rosenblatt Securities.

Maybe along the lines of what Mark was asking, part of your strategy is to have these design centers and even a data center Design Center. Can you give us a little detail of what's happened there? How many people have you hired and, I guess, the activity of how many customers are utilizing it?

Yes. Great. Thank you for asking about that, Kevin. We didn't put a big spotlight on it, but it is a big story. Last year, we opened up the Design Center for data centers. And earlier this year, we announced the 1.3-kilowatt Titanium Plus full system design using our GaN ICs. And now we're working with specific customers who are adopting that design, putting it into commercial production and ramp, which will roll out next year as we talked about. But that Design Center has a whole road map of system level developments and innovations largely are developed collaboratively with key customers. And we can't name the names yet, but as those things become public, obviously, we'll love to share it. But we do have multiple customers engaged with that Design Center to influence the road map, collaboratively design these new systems and of course, bring them into production using our GaN ICs.

More recently, we announced in Q1 the automotive or EV Design Center out of Shanghai. That's earlier days. It's in Shanghai. So it's in the center of the storm there, but they're actually being very productive in getting equipment order, setting up the lab. There's a small team. In general, both of these design centers are looking at about a dozen engineers in their first phase, and then they'll grow from there. And the EV Design Center is already looking to produce its first GaN-based onboard chargers later this year, again, collaboratively with customers who are influencing those co-designing them with us and then ultimately bringing them to production.

And we're hopeful, even though I reiterated 2025 as our expected EV revenues, we certainly hope these things accelerate and expect that they accelerate. The timing, we'll see how that plays out and kind of give you updates as the technical achievements are done, the customer announcements can be made and the revenue impacts can be further forecasted.

And we have another follow-up question from the line of Ross Seymore more with Deutsche Bank.

I had a question, during the (inaudible) process, one of the key use of proceeds was acquisitions, and you've been carrying a pretty healthy cash amount on the balance sheet. If you can give us any update on that area in terms of horizon or if you have come across some targets, et cetera?

Yes, certainly. Gene again. Yes, you're exactly right. We anticipate no more than $100 million of our cash on the balance sheet to be needed to fuel our internal or organic business to reach cash flow positive in 2024, and that's a pretty conservative $100 million. So that leaves us a lot of capital to potentially put to work in different ways.

We remain really bullish about the opportunities. We do see a lot that we're exploring pretty seriously across a number of fields, whether they're GaN and expanding more in GaN in the field of silicon because every next-generation power system does need silicon controller chips or similar that go hand in hand with the GaN power device and even the field of silicon carbide, which is a nice complement for even higher voltages and higher powers. So while we don't have anything specific to announce or forecast yet today, we're definitely active on that front and look forward to giving you announcements in the future.

And I'm showing no further questions at this time. And I would like to hand the conference back over to Gene Sheridan for any further remarks.

Thank you, operator, and thanks, everyone, for a great discussion, questions and joining us today. So thank you so much, and let's go GaNFast.

This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.