Transphorm Technology Inc (TGAN) 2021 Q1 法說會逐字稿

Good afternoon. My name is Jason, and I will be your conference operator today. I would like to welcome everyone to the Transphorm, Inc. Business Update Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. I would now like to turn the call over to Brett Perry of Shelton Group Investor Relations. Brett, please go ahead.

Good afternoon, and good morning to some, and welcome to Transphorm's Quarterly Business Update Conference Call. Joining us today from Transphorm are Mario Rivas, Chief Executive Officer; Primit Parikh, Co-Founder and Chief Operating Officer; and Cameron McAulay, Chief Financial Officer.

Before we begin, I'd like to point out that there is a slide presentation associated with today's call that management will be referencing during the conference call. These slides can be accessed through the webcast link in the Investor Relations section of Transphorm's website, and they will also be posted and available as a link to PDF subsequent to today's conference call.

Additionally, during the course of this call, the company may make forward-looking statements regarding the company's financial position, strategy and plans, future operations, specific end markets and other areas of discussion. It's not possible for the company or management to predict all risks nor can the company assess the potential impact of all factors on its business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements.

In light of these risks, uncertainties and assumptions, the forward-looking statements discussed during this call may not occur and actual results could differ materially and adversely from those anticipated or implied. Any projections as to the company's future performance represent management's estimates as of today, May 18, 2021. Neither the company nor any person assumes responsibility for the accuracy or completeness of the forward-looking statements.

The company undertakes no obligation to publicly update forward-looking statements for any reason after the date of this call to confirm such statements to actual results or the changes in the company's expectations. For more detailed information on risks associated with the company's business, we refer you to the risk factors described in Transphorm's S-1 and other subsequent filings with the SEC.

With that said, it's now my pleasure to turn the call over to Transphorm's CEO, Mario Rivas. Mario, please go ahead.

Thank you, Brett, and welcome, everyone, to today's call. Now thank you very much for joining us today. Now Transphorm continues to lead the GaN revolution with disruptive technologies, large market opportunities in electric vehicles and 5G, commercially ramping very quickly on this year with best-in-class GaN technology and industry's strongest IP portfolio. Now we have validation not only from blue chip partners and customers, but also by the Department of Defense through the Office of Naval Research. And we have a team that is led by world-renowned GaN experts with an accumulated experience of 300 years in gallium nitride.

We just had our most successful quarter with revenue of approximately $2.4 million and a sequential growth of 20%. You will hear Cameron detail later today. First off, I want to thank all the shareholders, particularly TGAN associates for your passion and commitment to Transphorm. We simply would not be here without you. We led the GaN companies into public markets in 2020 in the midst of a pandemic, and we kept servicing our customers while taking care of our associates' health working remotely.

This year, there will be other GaN companies such as Navitas, which announced earlier this month that will enter the public markets. This is positive news -- results to the positive momentum for our technology and reinforces our GaN power message.

We changed our fiscal year to the end of March this year, and we are pleased to announce the upgrade of our listing to the OTCQX, an important milestone in TGAN's growth and development toward our ultimate goal of trading in the national exchange.

I now pass the call to Primit to detail the developments over the past few months. Primit?

Thank you, Mario, and good afternoon, everyone. Transphorm has made very exciting progress in the last quarter, particularly market penetration and ramping product revenue. Before delving into it, I will first reiterate some of the overall GaN value, market and business opportunities in front of us and our IP and manufacturing capability that is opening new doors for us and at the end, walk you through execution and focused priorities to grow our business.

For those who are new to the field, the reason gallium nitride is becoming the future of power semiconductors is because existing silicon has reached its physical limits in powering what we termed the so-called Moore's Law of power conversion. Intrinsically, gallium nitride performs at higher efficiency, lowest losses versus silicon or silicon carbide and much faster switching, for example, 4 to 5x that of silicon.

In terms of cost and scalability, GaN on silicon is cheaper and compatible with the silicon wafer fab manufacturing world, paving the way for lower system cost versus silicon and strong road map for approaching silicon cost parity in future. The end result is highly efficient, cooler, compact and cost-effective power conversion system value proposition.

Another reminder for TGAN approach is our in-house capability of innovation across the entire value chain. With what we call the asset-light vertically integrated model, we own the key portions of manufacturing, the core epi wafer technology and manufacturing, which is a key in our opinion; wafer fab in which we had a joint venture partner and control our IP and manufacturing; package manufacturing through subcontractors but where we still control our IP in the package; and a strong emphasis on application-driven resources, both internally and externally with quality partners, like you may have seen in the press release we did yesterday with the new full adapter design.

This approach is precisely what has resulted in our strongest IP portfolio coupled with the 300-plus years of all-around GaN experience that our phenomenal team has. As a reminder, these patents span materials, devices, design, wafer fabrication, packaging and equally importantly, the use of these devices in applications, for example, such as ACF adapters for fast charging, amongst others.

This 1,000-patent strong portfolio is estimated to be 5 to 10x stronger larger than many of the stand-alone GaN companies in the market. Our primary mission here is to grow the GaN market fast. Customers should be most assured about intellectual property when powering their systems with Transphorm GaN.

With this background, there's nothing more exciting at this time for us than TGAN to be addressing several key trends in semiconductor technology today. That or the rapidly growing smartphone adapters' fast-charging 5G market in the near term and electric vehicles in the long term. As a reminder, our primary vertical is gallium nitride power products, and our second vertical is epi wafers for RF gallium nitride.

We have synergy there with our government programs. And as a general -- we also include crypto mining, data servers, gaming broadly into the 5G category. Overall, we are addressing a tremendous market opportunity here with GaN power conversion. We estimate the GaN TAM as $1.5 billion in 2020 to what will be well over $3 billion in 2024. And that more than doubles when we include the electric vehicle powertrain inverter segment, which we have considered here in our model only after 2025 to be a valid part of the GaN TAM.

In the near term, our revenues are being derived from power adapters and chargers, computing and gaming, data center infrastructure, crypto mining, followed by broad industrial and energy. In the long term and mid to long-term automotive electric vehicles and charging remain a very, very strong opportunity, and all of these are with healthy and growing GaN TAMs.

As you may be familiar, across this application set, TGAN platform provides higher efficiency, compact systems and does this very reliably with easy-to-use products by customers with proven performance benefits against silicon, silicon carbide and other GaN solution as well as I will cover.

Next, some insights into our growth and how we are driving it. We are very pleased to report a 12-month CAGR estimated to be approaching 200% with doubling of our power products unit shipments over the last few quarters and set for more than tripling this quarter. This rapid expansion is driven by growth in the adapter charger market as we continue to make inroads there with superior technology and sustained shipments in the higher power segments, which has always been a unique strength of Transphorm.

We have outlined before for you that adapters, chargers customers are appreciating TGAN's reliability, robustness, smaller die as much as 50% in some cases, higher figure of merit and performance, leading to increase in design-ins since we fully entered this segment. Now we have secured a couple of external customer and partner validations as well to the same effect.

What we show here is 2 popular architectures for fast chargers and adapters, namely ACF active clamp flyback and QRF quality resonance flyback. Superiority of transformed gallium nitride [specs] in both is clear versus other GaN solutions, be it e-mode GaN or IC-mode GaN, et cetera.

On the left side here, we show a design that we debit Silanna, a strong and innovative controller company, where they realized over 94% efficiency with high-power density compact with our GaN performing better than other e-mode gallium nitride due to the fundamental device technology superiority. On the right side is one of our QRF adapters -- one of our customers' QRF adapters rather with TGAN in sight; and recently, a third-party report confirming that TGAN parts do more with less. Here, as they said, a 300 milliohm part doing the job of a competing 175 milliohm, basically, a smaller TGAN part doing the job of a larger competing GaN and better.

So basically, our parts have demonstrated higher efficiency, lower temperature rise and also need less bond components as we use standard drivers. We don't need or our customers don't need any shrubbery for biasing circuits around the GaN that other solutions -- other GaN solutions may need.

The higher power space is equally important and again, we have high-performance and high-reliability products in this area. An example shown here is our highest power 15 milliohm product. By the way, to the best we can tell, this is the lowest ohm resistance for a 650-volt gallium nitride in a discrete package. It outperformed silicon carbide, both MOSFETs or the GFET [cache code] variety in a standard package as we show here in a standard bread circuit, realizing a 25% to 35% lower loss and able to deliver over 10 kilowatts from a single part in a half-bridge setting in our lab testing.

Complementing this, our 35 milliohm and 50 milliohm products, which are already in manufacturing, in production, the SuperGaN family we have talked about before, are offering a robust 1.5-kilowatt to 4-kilowatt solution for gaming, crypto mining, servers, industrial power, renewable and UPS.

So laying this out, our product portfolio spans 45 watts to 10 kilowatts, unique in the industry. TGAN is not a one-trick pony. In fact, we started off building a fundamental platform for robust devices around 1 to 2 kilowatt, the middle of this range, then would left into the lower-power adapter charger segment and right into the higher-power renewables and automotive. Some multiples at the end here are the lowest Ron in a package for a discrete gallium nitride and so far, again, to the best of our knowledge, the only qualified 900-volt gallium nitride product. This is what is allowing us to address the various key verticals from adapters to automotive, fast chargers, server, telecom, mining, industrial, UPS and electric vehicles.

Next, I will talk about some of the specifics of the last quarter and current business. First and foremost, in the fast charger space is where we have made very rapid progress. We expected, as we said last time, 10 design-in production in the first half of the year, and we have already secured that. We also got additional 7-figure unit POs that we are driving our ramp with.

We have 10-plus design-ins ongoing, and that number is expected to increase. We have focused well on complete adapter reference designs. And you saw our press release again yesterday with Silanna on this, on the ACF 65-watt adapter we released. And our goal is to have 2 to 3 by end of June. So at least one more you can expect is coming soon.

On the shipment side, we are tracking what we said last time. The goal is greater than 1 million per month capacity in Q4, and that is being done by activities like releasing a second source for packaging, which is good to have anyway, and 24/7 epi wafer and mostly (inaudible) for manufacturing. Our supply and manufacturing teams are intensely focused on this.

The higher power area remains a solid one for us, and we have product shipping today. This is just not talk about higher power. We have also doubled our higher-power TO247 package chips with 5 customers in production. We have demonstrated a record low 15 milliohm Ron highest -- current highest power from a single package, which we expect to release next quarter. This is our gen 5 product for a commercial release.

On the epi wafer business, our second vertical, we have multiple customers now with repeat orders for gallium polar and what is called nitrogen polar RF epi, which is a unique new epi development in gallium nitride, and Transphorm has fundamental and unique IP for that. Our goal is to establish 5 to 6 repeat customers, and we are well on track for that.

Equally exciting, we have also made our first pilot shipments now to standard gallium nitride RF to a large commercial entity supplying RF GaN power transistors. And we want to target our first win for standard commercial GaN on RF epi wafer by end of 2021. Continuing on the execution focus, we aim to continue to bring out new products and reference designs to accelerate the ramp, expect to see more gen 4 SuperGaN products for 45-watt to over 100-watt fast chargers, more reference designs in the second half of the year.

On the higher-power parts, we will sample our gen 4 for automotive and continuing gen 5 automotive qualification for the -- after the commercial release that I just talked we will target next quarter. Strategic partnerships have always been central to Transphorm, and we listed 3 key ones here. Our technology team is making very good progress on the Yaskawa product development agreement with the goal to secure the next milestones and our payments associated with that of $0.75 million.

Nexperia is a key partner and licensee, and we are extending our long-term cooperation agreements that we already have in place with them so that we can address the next phase of GaN market explosion, particularly the growth in the automotive segment. And we continue strong product development with Marelli -- with multiple Marelli groups now. As a reminder, Marelli having invested a total of $5 million, $1 million of which came recently at the end of March.

Government programs have formed a strong base of our revenues, income, and we aim to continue to deliver on the goals of the Navy contract we have, which is boosting our U.S. epi manufacturing. We also target at least $3 million in revenue from this in calendar 2021. We are also pleased to report on a new DARPA program that we expect to complete the contract negotiations for, and this program is over $1 million for 18 months and focused on newer types of RF GaN epi. Both of these highlight strong public/private partnership that TGAN has successfully deployed while being synergistic to our business goals.

Net-net, to summarize, I'm very pleased to say we had a very strong quarter, a solid start to the calendar year or what is now the end of the fiscal year, exceeding on revenue metrics, achieving design win objectives, continued rollout of products and reference designs with solid progress on partners, epi business and government programs. We look forward to continue our robust growth as the GaN revolution goes to the next level.

I will now hand over to Cameron, our CFO, who will walk you through financial metrics.

Thank you, Primit, and hello to everyone joining us today. Let me start with a brief recap of our most recently completed quarter. Please note that these numbers are preliminary as the audit procedures pertaining to the quarter remain ongoing.

Total revenue for the 3 months to March 31, 2021, is approximately $2.4 million. This is in excess of our target and represents a 20% sequential increase from the prior 3 months and is more than double the total revenue when compared to the March quarter in 2020.

Focusing specifically on product revenue, the 3 months to March 31 saw our second successive quarter of doubling shipments fueling continued growth and resulting in our highest quarterly production revenue number to date. This is our fifth successive quarter of product revenue growth, and we anticipate a continuation of this trend going forward. This will be driven across several segments, including the consumer adapter space, industrial, crypto mining, data centers and our epi vertical.

Turning to operating expenses. We are projecting an increase of approximately 10% in the quarter. Firstly, we have increased our employee base across several areas of the company, manufacturing to support our revenue ramp, sales and applications to build and execute on our expanding customer base and G&A to continue to ensure that we maintain our robust compliance and governance environment.

Compliance costs were higher due primarily to our year-end procedures. R&D costs increased modestly due to lower absorption with respect to our government programs. Comparing this quarter to Q1 2020, the OpEx increase is primarily driven by increased COGS due to our revenue ramp. We also saw an increase in noncash items such as stock-based comp. G&A is lower due to a number of one-off costs associated with the 2020 transition from private to public.

Moving to the next slide. On the balance sheet, the company exited the quarter with just over $9.5 million in cash. In addition to our increased staffing investment, the company has increased spend in working capital to support our product revenue growth. We also secured the final $1 million from Marelli as part of their overall $5 million investment into the company. Other assets and liabilities remains largely stable in the quarter.

During the quarter, the company changed its fiscal year-end from December 31 to March 31. We are currently progressing through our audit procedures and anticipate this audit being concluded well in advance of the filing deadline. As previously stated, the company is targeting an [uplift] onto NASDAQ, and this fiscal year-end change is a stepping stone toward that. The company continues to perform due diligence internally as we work towards this goal.

I'm also very pleased to say that the company effective from today is now trading on the OTCQX. This is the highest tier of the OTC markets and demonstrates the company's abilities to meet high financial standards, follow strong governance and compliance practices and maintain current disclosures.

Coming now from the current year to reiterate our long-term business model. We are in the progress of building a high-growth, cash-generative business. The company has 3 distinct revenue streams: licensing, government and product. As we move into 2021, we are continuing to generate revenue from both licensing and government contracts, but this is being supported by significant growth in our product revenue, illustrated by our strong performance in Q1. We are seeing solid traction across several market segments, including consumer, epi, data centers and more recently crypto mining.

For 2022 onwards, as we continue to accelerate our product revenue across our target segments, product will form a significant majority of our revenue. This acceleration in our product revenue allows the company to target a 5-year annual CAGR in excess of 50%. We're also confident the company can achieve a gross margin in the 40% and above range.

With respect to operating margin, the company will continue to invest, support all aspects of its core operations, our strong stable structure, allowing us to translate gross margins into delivering an operating margin that will be in excess of 20%. From a cash perspective, CapEx will be required to fuel our ongoing revenue ramp. In the longer term, this CapEx, together with working capital support, will translate into free cash flow model in excess of 10%.

In conclusion, TGAN is a pioneer and leading provider of GaN power conduction devices. We have disruptive technology that provides solutions across a number of significant growing markets. We are commercially ramping with strong production revenue growth today together with a manufacturing structure in place that can support our long-term position. The company has best-in-class technology and the industry's strongest IP position, a comprehensive product offering to meet our customers' needs across a wide range of power levels and segments, all of which underpinned by a deep talented team led by world-renowned GaN experts.

That completes our prepared materials and remarks, and we would now like to open the call to any questions. Operator, please proceed with managing the Q&A portion of the call.

(Operator Instructions) Your first question comes from the line of Craig Ellis from B. Riley Securities.

Appreciate the color on the business with the nice growth that you're seeing there. Guys, I wanted to start just with an inquiry on the design-in and design win funnel and get a better sense of what you're seeing as it relates to activity that could come in either in the back half of the year or maybe a little bit further out by application area. And then wall chargers were mentioned a number of times. To what extent is that really aftermarket activity versus OEM in-box activity that could ship out with the device, whether it's a smartphone or something else?

Sure. Thank you, Craig, and I'll take that. This is Primit. So on the first, on the spot charger adapters, we have a lot of aftermarket activity, mid volume to some of the very high volume addressing some of those aftermarket, Craig, addressing name brand customers -- name brand large customers. And among the design-ins that I mentioned we have ongoing, there are a number of in-box opportunities that we are targeting there.

And just on that point, Primit, as you get more experience ramping your manufacturing capability to higher volume, can you provide us with some color on what you might be looking at beyond the fourth quarter where I think the business could scale to 1 million a month? But as you look at flexing manufacturing up to some of these higher volume needs, what are some of the milestones that would exist beyond the fourth quarter that would give investors some visibility on the degree of growth potential in the business?

Sure. No. As you see, it's a very exciting area. And first things first, we want to be very solid with that 1 million per month capacity and then grow from there. We're definitely preparing, like I said, multiple packaging suppliers for growth. We -- obviously, Transphorm owns our own wafer manufacturing, both on the epi wafer side as well as the wafer fab. So that's in our hands to plan to continue to ramp.

So we -- yes, we continue. You saw a nice doubling and actually tripling this quarter. So we hope to be reached at 1 million a month and then continue rapidly up from there. We have certainly -- when we talk to these OEMs and in-box, we have to give a strong picture of our manufacturing, our supply chain. And so far, we are successfully doing that right now.

Good for you. And then lastly, for you, Primit, before I shoot a few at Cameron. We've clearly seen cryptocurrency activity in the news a lot. The company had a press release out, I think, in the March time frame, talking about the suitability of its power conversion capability to [gaming] charging and some of the charging requirements of that market. As you look at the funnel, as you look at the engagement activity that you and your agents have, to what extent is crypto coming in as a demand driver? And how significant is it with the funnel activity that you have right now?

Sure. So in the Q1, actually, when we -- the design that we announced earlier, that has already ramped in production. And when I talked about our higher-power TO247 doubling from Q4 to -- calendar Q4 to calendar Q1 '20, the crypto -- the new crypto win and our existing win was an important part of that. So we have a couple of customers there who in turn are working with the larger end providers of these mining rigs.

Got it. And then, Cameron, over to you. So thanks for the additional color on some of the income statement balance sheet items. So one, maybe just a timing question, housekeeping question. When do you expect to have audited financials published for the March quarter?

Sure. Sure. So we're in the middle of it right now, Craig. Where we're looking at, it's a 90-day deadline, which is the end of June, and we're certainly targeting to be making a mid-June time frame. So somewhere around the middle of June is our current target.

Okay, mid-June. And then $9.5 million in cash exiting the calendar first quarter, I think I heard you say. Any notable either uses of cash in the calendar second quarter or anything on the horizon from partners or strategics that would supplement the cash balance?

Nothing to report specifically on that, Craig. I think what we look for in Q2 is a continuation of investing in the team, a continuation of obviously supporting our inventory position. We'll see the higher revenue numbers, obviously, increasing receivables, and we'll work towards that over the course of the Q2. We will see in the Q2 time frame, obviously, the continuation of the investment from Yaskawa relative to the development agreement that we signed with them last year.

Yes. And then on operating expense, I know we've got some unusual items in the first quarter and probably the second quarter just related to the change in the fiscal year. Obviously, there's a higher level of audit expense that goes along with that. But you also mentioned in your comments that there were investments in both sales and finance. Would we expect then that the business, at least for how we're looking at calendar '21, would be appropriately provisioned with new resources? Or should we expect incremental resources to be added through the year? And to what extent and what does that do to OpEx by the time we get to the end of the year?

Sure. Sure. I think we added in the quarter manufacturing resource, sales resource. We added to the finance team to support it. And I think that we'll continue to add, but it's going to be one here, one there, Craig. This isn't going to be a situation where we're adding significant headcount.

So I think as we think about the OpEx going forward and the staffing going forward, it may increase, but it's not going to increase materially because the additions we've got are very targeted, because we've got a very stable team in place.

Got it. And then just lastly, a lot of helpful color on the financials. Any color you can provide on gross margins and what you're seeing in the business? There's -- obviously, input costs are moving in this environment. And anything that's notable either in the quarter or that we should bear in mind as we think through the middle to the back half of the year?

Nothing specific. I don't think -- Craig, I think that we continue, obviously, to increase our volume, and we're looking to do that over the course of the year. From a margin perspective, there's nothing I would say that would be particularly surprising.

And again, we'll see when the final audit results come out in mid-June at this point, I think, from a business perspective. We were -- the overall blended margin that we're looking to achieve in 2021, we're still very comfortable with that.

Your next question comes from the line of Richard Shannon from Craig-Hallum.

Primit, maybe I'll start with the first one for you on the fast charger market here. You talked, I think, for Transphorm here, on the order of a couple of dozen wins or at least wins in process, nice improvement there. We've also seen, and as you -- as I think Mario mentioned briefly in his prepared statements, you mentioned another GaN company who's -- tend to come to market here [via SPAC] and their presentation talks about a number of designs. I think it's 3 figures. Even Power Integrations, who's also been here has talked about a fair number here.

Can you kind of give us some color into this market here in terms of whether this is still kind of a greenfield opportunity or you're bumping against where you're seeing others here. And then if we look forward 1 to 2 to 4 quarters, how many designs could we ultimately see Transphorm being involved with?

Thanks, Richard. And I think this is really -- it's still -- to be honest, it's still like a so-called greenfield opportunity as we see it. The growth has just started, right? And there is a very, very strong opportunity. What I like to say is this is like the -- my favorite analogy is this is like the early days of the GaN LED industry, which just exploded for a number of years through worldwide penetration. And the transformation of the industry took place and companies with strong product, strong IP, strong manufacturing. There are 4 or 5 or 6 companies that were required to satisfy and sustain our market. So we see strong growth going on.

Like we said, we are in a fortunate place to have a product portfolio across the entire power range, not just 45 watts, 65 watts but from adapters to automotive. And as we fully dove into this adapter charger market, over the last several quarters, the progress has been very fast. So we hope to yet continue to increase that number, those 10-plus wins and 10-plus design-ins, we hope to double -- triple that as we go forward, right, in the next year or so. And we are -- Transphorm surely will get more than our fair share in this segment. But all those good companies you mentioned, it will be needed to sustain this very rapidly -- rapid growing and large market.

Okay. That's a helpful perspective, Primit. While you talked about the 1 million month per goal capacity, [the adds] in your last quarter, you confirmed that now. I mean if we talk about the number of designs tripling here and increasing attention here, I mean, you've got to be targeting a capacity goal that's got to be getting 2 million, even higher in the not too distant future. Is that something that you're looking for to getting to some point next year calendar or even early calendar next year?

Yes. Those are the -- when I talk about the tripling of the designs. Those are exactly the things for next year calendar that we do. And hand in hand with that goes the capacity, obviously. The wafer capacity is in our own control. Package capacity, we work very closely with our packaging subcontractors well in advance now with the lead times and associated things that we are seeing in the entire semiconductor industry. So yes, those are the kind of things that we would look to be in sometime in 2022.

Okay. A quick question on the gen 5 product. I think you mentioned your -- the commercial version that is being released to the market here in the third quarter calendar. When should we expect to see design wins and then the noticeable revenues from that? Is that a calendar '22 story or would that be after that?

We are targeting actually the first one in the second half of calendar '21 itself. So sometimes, we don't wait until a full release when we start early -- strategic early sampling to a few chosen customer partners. So we've been doing that, and we expect the first production to be sometime before end of 2021 itself. And then obviously, we try to grow that more in 2022.

Okay. That's helpful. Let's see here. Following up on one of the -- I think I heard a comment a couple of times about end market splits here. I wonder if you can provide a little bit more specificity here, maybe even quantifying the end markets here in terms of contribution or at least a rank order here. I know you talked about several and they went by kind of fast, but I'm wondering if you can provide a little more detail to that, please.

Correct. So a lot of the recent growth at the top level, a lot of the recent growth when we talked about doubling and then 2 quarter-over-quarter and then tripling this quarter, that has come from the adapters and fast chargers. And -- but still, the solid TO247, which is a unique high-power product that Transphorm GaN has, that has also doubled.

So I would say, unit volume wise, the adapter and charger definitely is dominant when you -- if you look at the large product, right, one large die that we have to put in perspective. For example, our largest -- our 35 milliohm die (inaudible) when talking about the largest product, can we like -- 6 to 7x the area of a small device. So that is equivalent to shipping like one unit, is equivalent to shipping 7 units.

So it's difficult to make an exact unit comparison there. But fair to say that a lot of the rapid growth the last 2 quarters has come from adapters chargers.

Okay. That is helpful. My last question, kind of a 2-parter here. One of the slides showed a line chart over time here, and I think they had an estimate for the June quarter, and I think it was measured by units. If I caught the numbers right, it was 2.3x extra last quarter and then 3.8x for this quarter, which would, if my math is right, would suggest 65% growth quarter-on-quarter in units. Did I catch that? Is that the right interpretation of those numbers? And how do we then take that to think about a revenue number for this current quarter?

Yes. So yes, when say it's relative, right, so we normalized it to Q3. So on a kind of Q4 '20 calendar to Q1 '20 was 2.3x. And Q1 '20 to Q2 '20, 3.8x. So we are -- those revenues, we are comfortable with the models out there on the street. We have not given formal guidance, but safe to say that we are quite comfortable with the numbers out there.

Your next question comes from the line of David Williams from Loop Capital.

Congrats on the progress. Just want to ask maybe a little bit about the epi wafer business and what you're seeing there. Obviously, you're making some really nice traction. But can you talk about maybe what your total expectations are in maybe the epi business on the RF side? Just thinking about how you're ramping the product side.

Sure. Our RF epi wafer business is twofold, right? One is what -- for the DoD government. So we have this Navy program, which is excellent for us in enhancing our manufacturing capability as a supplier -- as a U.S.-based supplier, which we are doing. And that also helps us -- separate from that is the supply of epi wafers to DoD [PRIMS], DoD customers for that activity. So that's additional to the Navy contract. The Navy contract itself is an epi wafer revenue opportunity. The DoD PRIMS is additional catalyzed and held by the Navy contract, but a separate business opportunity that we are growing.

And then the third is the commercial -- the existing commercial GaN RF market. Like I said, we have a sample pilot -- for pilot production to one of the large established players of GaN RF makers in the U.S. So we look forward to nailing that standard GaN RF epi wafer supplier design win by end of the year.

Okay. Okay. And then maybe on some of the new design wins, I guess, when you're talking with customers, what is really the, I guess, deciding factor? What is making them choose you versus maybe one of your competitors? Is it performance? Is it -- I guess, how are you winning and what's really driving that?

Sure. So like we [separated] into the adapter charger space and the higher power space, right? So in the higher power space, actually, we are one of the only ones with solid reliable GaN products out there. There are other companies, but we are leading that pack very significantly.

On the adapters and charger space, there are good companies, like I mentioned, the Power Integration, Navitas, all doing well. And there, like we have said before and what we are consistently seeing is -- and now, like I said, third parties have validated this. Our GaN product technology is fundamentally better, the chip itself. And that allows customers to do more with less.

So a smaller GaN die performs more efficiently than a competing GaN die. So they are seeing more performance with the smaller GaN die, the reliability and quality reputation that we have, again, from our high-power products, from the adapter products, now we have a field FIT rate failure in time of less than 0.5 with close to 14 billion hours of operation in the field. So reliability and quality performance.

And then ease of use, right? Our products, as I didn't lay it out specifically this time, but we have standard drivers. Our product architecture allows for the use of standard drivers without any, what I'd like to term, a shrubbery around that to add biasing circuits and whatnot. So one can allow for a smaller footprint and eliminate their certain bond components also from the reference designs like the Silanna reference design, for example, that we showed. So those are the 3 or 4 things that are allowing us to penetrate the customers.

Great. Very good color there. And then maybe lastly, just if you could -- as we think about the hurdles or constraints maybe towards the -- as we get to the end of the year, obviously, things are ramping very nicely. What are the biggest, I guess, hurdles that you're -- got to overcome maybe as we -- just with some of the growth that you're seeing here?

Sure. As you know, David, doubling or this quarter, tripling quarter-over-quarter is not easy, never been easy. So we got to keep our focus on execution and scaling. We got to manage our external suppliers carefully with plenty of lead time. And then we need to partner closely with our customers as we have always done and open up new designs with the partner network that we have set up. So 2022 is even more robust than 2021.

There are no further questions. I'll now turn the call back to management for any closing remarks.

Thank you, operator. Before closing out today's call, I want to highlight that we plan to participate in a series of upcoming investor events. Later this week, we will be presenting and hosting meetings at the Needham Virtual Technology Conference. We will also participate at the Craig-Hallum Institutional Investor Conference in June 2 and then the Cowen Annual TMT Conference on June 3. For those of you interested in meeting with us as part of one of these events, I encourage you to contact either of the hosting firms or reach out to the Shelton Group in order to schedule a meeting.

I want to thank you again for joining us on today's call, and we look forward to reporting on our continued progress over the coming months and quarters. Operator, you may now disconnect the call. Thank you.

That concludes today's conference call. You may now disconnect.