$NVTS: Revenue Growth and Market Diversification in 2022, Expected to Double in 2023

In today's edition, we will track the fundamental readings of long-term bullish companies in strong (TigerTrade Top 1 Gainer) concepts each week and look forward to your attention and discussion.

Disclaimer: Capital at risk. This is not direct financial advice or a recommendation to acquire or dispose of any investment, but for communication only.

Strength in the tech sector, foreign stocks, and regional banks helped push the U.S. stock market indexes higher despite the debt ceiling uncertainty.

The best-performing industries are semiconductors, regional banks, semiconductor materials, real estate operating companies and diversified real estate activities.

Considering the different perceptions of the stock, this time TigerPicks choose  $Navitas Semiconductor Corp(NVTS)$ to have a fundamental highlight to help users understand it better.

$Navitas Semiconductor Corp(NVTS)$

Navitas Semiconductor Corporation designs, develops, manufactures, and markets power semiconductors including gallium nitride (GaN) and silicon carbide (SiC) integrated circuits and associated devices.

• Compared to legacy silicon technology, power supplies built with NVTS GaN and SiC devices offer improved performance and reduced size, weight, energy loss, parts count, and complexity. The end user markets include mobile devices, home appliances, industrial motors, data centers, solar power systems, energy storage, and EVs.

• These technical advantages, the achievement of broad GaN system cost parity vs. legacy silicon in 2023, and a macro environment demanding increased energy efficiency and performance (e.g. faster charge times for mobile devices and EVs), should drive growth for NVTS for years.

• NVTS has demonstrated the ability to deliver real products. As of March 2023, over 75 million NVTS GaN devices, and 9 million GeneSiC devices, have shipped.

• The potential market for their devices is estimated to be ~ $22 billion. NVTS will not capture all of this market, but for a company with 2022 revenue of $38 million, that leaves a lot of room for growth. Indeed, NVTS expects to double revenue in 2023.

A Big Potential Market

The current estimated potential market for GaN and SiC power semiconductors is ~ $22 billion per year; 30% GaN, 40% SiC, and 30% overlapping GaN/SiC. The transition from legacy silicon to GaN and SiC is still in its early days; about 30% market penetration by GaN and SiC is projected by 2028.

This provides a very long runway for growth.

Mobile chargers were the foundational market segment for NVTS. They estimate ~ 2.5 billion chargers for mobile devices (i.e. with a battery) are shipped annually. As of March 2023, about 250 chargers with NVTS GaN components have entered mass production, with 250 more in development. All of the top 10 mobile OEMs have chargers with NVTS components in production or design. NVTS revenue is typically ~ $1 for each charger.

As a crude estimate of scale, NVTS might have earned $20 million in 2022 from the charger segment, suggesting a 20 million / 2.5 billion unit share, or < 1%. Achieving cost parity with legacy silicon, expected in 2023, could open up significant additional opportunities here.

In the mobile segment, Q4 2022 smartphone sales were down 18.3% year one year, leaving 2022 annual sales down 11.3%, the lowest annual sales in almost a decade. NVTS saw this decline in demand in Q3 and Q4, but reports a pickup in orders going into 2023.

Similarly, ~ 600 million consumer devices (TVs, desktop computers, etc.) are shipped annually, with ~$3 of revenue for each device using NVTS components.

Power consumption (running and then cooling equipment) accounts for ~ 40% of data center costs. GaN technology offer significant efficiency improvements - less electricity used, less heat to remove. The Titanium Plus efficiency standard for power supplies, in effect in the EU from January 2023, will encourage adoption of GaN solutions. NVTS estimates this to be a ~ $1 billion market.

Acquisition of GeneSiC

The acquisition of GeneSiC in August 2022 provided immediate access to the markets segments (solar, EVs) demanding higher power levels, and better served (at least today) with SiC. This greatly expanded the potential market available to NVTS, and accelerated segment and geographic diversification.

Germany's KATEK Group provides an example of GeneSic based success in the residential solar market. KATEK's Steca brand coolcept fleX model residential solar inverter converts DC power from a string of solar panels into AC power. Each 4.6kW Steca inverter uses 16x GeneSiC G3R75MT12J SiC MOSFETs.

In EVs, GeneSic is winning designs in onboard and roadside chargers, with traction opportunities - the highest dollar per vehicle wins - later on.

Growing Revenue

Revenues for 2022 were $37.9 million, an increase of 60% compared to 2021. Revenues for 2023 are expected to be 2X 2022 results, i.e. ~ $75 million.

The slide below provides a convenient visual summary of quarterly and annual revenue growth, as well as market segment and region mix.

NVTS Revenue Growth

NVTS - March 2023 Investor Presentation

GeneSiC was acquired for $246 million in stock and cash in August 2022, and appears to be meeting or exceeding expectations.

The chart below provides an indication of NVTS revenue growth in 2022 compared to two power semiconductor competitors.

Revenue Change - NVTS and Competitors

2023 Developments

In February 2023, NVTS completed the buyout of a joint venture with Halo Microelectronics. The resulting application-specific silicon controllers allow optimized design, efficiency, and integration with GaN and SiC power components. NVTS paid $20 million in stock. See report here. Formally launched at APEC 2023 in March, more than a million units with this technology have already been shipped.

On 20 March 2023, NVTS announced passing the milestone of shipping 75 million GaN power ICs. GeneSiC had shipped 9 million SiC devices.

Manufacturing capacity expansions are underway; 3x in GaN and 5x in SiC. This expansion reflects SiC demand in excess of supply in 2022, and allows for adequate manufacturing capacity in 2023 and later years.

Stock Price Forecast:

Here are the target price forecast for the future 12 months from analysts on CNNMoney.com.

The 8 analysts offering 12-month price forecasts for Navitas Semiconductor Corp have a median target of 9.50, with a high estimate of 14.00 and a low estimate of 8.00. The median estimate represents a +11.83% increase from the last price of 8.49.

Hope this analysis helps you get more understanding of the company's whole image, Tiger Picks will follow up the monthly performance as a longterm track.

Resource:

https://seekingalpha.com/article/4594044-navitas-semiconductor-impressive-progress

What are your thoughts on $Navitas Semiconductor Corp(NVTS)$?

Bullish or bearish? Please leave your comment below.