Navitas Semiconductor Corp

NASDAQ:NVTS

Good afternoon. Thank you for standing by, and welcome to Navitas Semiconductor Fourth Quarter and 2023 Financial Results Conference Call. Please be advised today's conference is being recorded. And a replay will be available on Navitas Investor Relations website. I would now like to hand the conference over to Stephen Oliver, Vice President of Corporate Marketing and Investor Relations. Stephen, over to you.

Good afternoon, everyone. I'm Stephen, Oliver Vice President of Corporate Marketing and Investor Relations. Thank you for joining Navitas Semiconductor's Fourth Quarter and Full Year 2023 Results Conference Call. I'm joined today by Gene Sheridan, our Chairman, President, CEO and Co-Founder; and Ron Shelton, our CFO and Treasurer. Also present is Janet Chou, who will take over as EVP, CFO and Treasurer, following this earnings report as announced earlier. A replay of this webcast will be available on our website approximately 1 hour following this conference call, and the recorded webcast will be available for approximately 30 days following the call. Additional information related to our business is also posted on the Investor Relations section of our website. Our earnings release includes non-GAAP financial measures. Reconciliations of these non-GAAP financial measures with the most directly comparable GAAP measures are included in our fourth quarter earnings release and also posted on our website in the Investor Relations section. In this conference call, we will make forward-looking statements about future events or about the future financial performance of Navitas, including acquisitions. 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 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 section in our most recent 10-K and 10-Qs. 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. And now over to Gene Sheridan, CEO.

Thank you, Steve, and thanks to everyone for joining the call today. As we celebrate our 10-year anniversary, I am very excited to announce a number of major milestones for the company, which includes cumulative shipments of over 150 million devices, savings of over 200,000 tons of CO2, a customer pipeline as announced in December of over $1.25 billion and our highest quarterly revenue ever with over $26 million in Q4. This quarterly result exceeds our guidance and reflects an increase of 111% from Q4 of the prior year. In total, 2023 annual revenue comes in at $79.5 million, which reflects growth of approximately 109% over 2022 in a year when overall semiconductors were generally down around 8%. Let me now turn to some of the market-specific developments and highlights. While the mobile market in general is experiencing limited growth in the near term, we continue to see solid revenue increases as major mobile players transition from silicon to GaN-based chargers. Our high-speed generation for GaNSense Half-Bridge platform is a key component in fast and ultrafast mobile charging. All 10 of the top 10 mobile OEMs are now in production with Navitas and again it's climbing the adoption curve rapidly. In 2024, we expect customers like OPPO and Xiaomi to ship over 30% of all their chargers with GaN technology. Navitas now powers 5 different OPPO models, and we're excited to announce 8 newly released Xiaomi phone models with GaN chargers ranging from 67 watts to 120 watts. In Korea, success with Samsung continues. We were already powering the S23 charger, and now we've been selected to power the new Galaxy S24. GaN has moved from beachhead to mainstream and is the technology of choice for new mobile designs across phones, tablets, laptops and aftermarket chargers. We have also developed a new M Series version of our Generation-4 half-bridge ICs, which are optimized for motor drives and a major driver in our home appliance pipeline. As noted in December, our appliance and industrial pipeline totaled over 200 projects and approximately $360 million in potential business. I'm pleased to announce another major appliance design win with a Tier 1 player, which leverages this latest M Series package, which we believe enables the highest frequency, highest efficiency and highest power density motor drive for appliance and is expected to add over $10 million per year in new revenue starting late this year. In total, Navitas is in development with 7 of the world's top 10 home appliance OEMs, which we expect will drive further revenue starting later this year and accelerate throughout 2025 and 2026. In Appliance and Industrial segments, major OEMs are moving to GaN or silicon carbide to meet regulatory requirements for energy efficiency and consumer demands for higher power density, along with transitions from gas-powered heating and cooling systems to fast adoption of heat pump technology. We now have customer designs underway at 2 of the top 3 global leaders in industrial pumps and 1 of the top 3 global leaders in heat pumps. The combination which is anticipated to drive tens of millions of new revenue starting late next year or 2026. We are also excited to share that Navitas GaN ICs have been designed into the ground-based terminal for a major Internet satellite rollout that is expected to drive over $5 million annually with shipments beginning late this year and continuing for the next 5 to 10 years. In September last year, we launched GaNSafe technology, a new industry benchmark as the world's most protected, most reliable and highest performance GaN power semiconductor technology. Just this week at the prestigious APEC Conference in Long Beach, we expanded that technology family to include a topside cooled packaging option. With a 20-year warranty, GaNSafe breaks the glass ceiling that has prevented GaN from entering high power, high reliability markets for decades. As power-hungry AI processors increased power demand by 2 to 3x, now increasing to 1,000 to 2,000 amps per processor and up to 100 kilowatts per rack new GaNSafe and Generation-3 Fast silicon carbide technologies are enabling drivers to deliver the needed power, densities and efficiencies required by these next-generation AI processors. Navitas dedicated data center design center is now achieving an unprecedented 4.5 kilowatts in the industry standard CRPS185 form factor, more than double the power density of legacy silicon solutions with lower temperatures, higher reliability and at a lower cost per watt. Over 20 designs are expected to ramp into initial mass production in 2024 at the top data center players, which we expect to contribute $3 million to $5 million in new revenue in the second half of this year. In electric vehicles, we observed the same slower growth rate as observed by our peers, which is creating some short-term revenue headwinds, but we're also benefiting from the introduction of our new GaNSafe technology plus our new Generation-3 Fast silicon carbide MOSFETs, which are significant drivers in our revenue pipeline for onboard and road size EV chargers for both 400-volt and 800-volt battery systems. Silicon carbide-based onboard chargers are in or moving to production this year with customers including top EV brands such as Zeekr, Volvo and Smart. We also have multiple design engagements underway in U.S., Europe, Korea, China and Japan. These silicon carbide chargers are expected to ramp later this year and into 2025. GaN ICs EV adoption is also on track for mass production ramps in 2025. Navitas is pioneering leading-edge onboard bidirectional charging at 6.6 kilowatt and 11 kilowatts with our dedicated EV design center. Last year, we announced a joint design center with Geely, a top 10 EV player. And now we're excited to announce another joint design center with Shinry, one of the top EV onboard charger suppliers for Hyundai, BYD, Honda, Geely and others. The first Shinry development projects are already underway and are expected to contribute appreciable revenues in early 2025. In EV roadside chargers in addition to our ongoing silicon carbide production with SK Signet, which is a major supplier to electrify America and [ EV Go ], we are adding multiple Tier 1 developments in U.S., Europe and Asia, with mass production starting in the second half of this year, which are expected to contribute over $5 million in 2025. In the solar space, while we are observing a continued general market slowdown, given high interest rates that limit our growth in the first half of 2024, we are seeing accelerating displacement of silicon with GaNSafe and Generation-3 Fast silicon carbide technologies in our solar and energy storage customer pipeline. We now have significant developments with 3 of the top 5 U.S. solar OEMs and the majority of the world's top 10 solar players. While we are already shipping silicon carbide in the market today, GaN adoption in solar is on track to start ramping late this year. And together, these new GaN and silicon carbide customer designs are expected to add tens of millions of revenue in 2025. Overall, while we're not immune to the near-term market headwinds, which are translating to more muted revenues in the first half of 2024, the significant new wins that I've highlighted in my remarks, in combination with an anticipated market recovery starting in the second half of the year, are expected to translate into full year 2024 revenue growth of 40% to 50% over 2023. For all of our target markets, the system benefits derived from gallium nitride and silicon carbide are amplified by long-term secular tailwinds. These include energy source conversion from fossil fuels to renewables, gas-powered vehicles, transitioning to all farms electric transportation and the intense and rapidly accelerating power demands of AI and edge computing. Our leading-edge GaN ICs and GeneSiC technologies are both displacement technologies in traditional markets and accelerating and enabling technologies in new energy markets. As we've stated before, these drivers, combined with our unique position as the industry's only pure-play power GaN and silicon carbide player position Navitas to grow at a rate that is 6x to 10x faster than the overall power semiconductor market for years to come. And now over to Ron to review the financials.

Thank you, Gene, and good afternoon, everyone. In my comments today, I will first take you through our fourth quarter and annual 2023 financial results, and then I'll walk you through our outlook for the first quarter, along with some of the market dynamics we are currently seeing. Revenue in the fourth quarter of 2023 was again above our guidance, growing 111% year-over-year and 19% sequentially to approximately $26.1 million. For the full year of 2023, we grew revenue to $79.5 million, representing year-over-year growth of 109%. Before adjusting expenses, I'd like to refer you to the GAAP to non-GAAP reconciliations in our press release earlier today. In the rest of my commentary, I will refer to non-GAAP expense measures. Non-GAAP gross margin in the fourth quarter increased to 42.2% from 42.1% in the third quarter of 2023 and 40.6% in the fourth quarter of 2022. Gross margins in the quarter were at the low end of our guidance, primarily due to increased mobile market product mix as we continue to see strength in that part of our business. For fiscal year 2023, non-GAAP gross margin was 41.8% compared to 40.8% in the prior year. Fourth quarter total operating expenses were $20.7 million, comprising SG&A expense of $9.3 million and R&D of $11.4 million. This is a bit higher than our guidance due primarily to slightly higher spending on materials related to certain research and development activities. For fiscal year 2023, non-GAAP operating expenses were $73.5 million compared to $56.7 million in the prior year. This increase reflects continued significant investments in new products, technologies and markets. All of these investments are laying the stage for significant growth in the future. Putting all of this together, the loss from operations for the fourth quarter of 2023 was $9.7 million compared to a loss from operations of $12.4 million in the fourth quarter of 2022 and a loss of $40.3 million for the full year compared to a loss of $41.2 million for 2022. Our weighted average share count for the fourth quarter was 179 million shares. Turning to the balance sheet. It remains very strong with high levels of liquidity. Cash and cash equivalents at quarter end were $152.8 million, and we continue to carry no debt. Accounts receivable were $25.9 million compared to $17.6 million in the prior quarter, reflecting a product shipment pattern that was less linear than prior quarters. This wasn't a surprise as we had significant demand in December from our mobile customers. Inventory increased to $23.2 million compared to $15.9 million in the prior quarter. Similar to accounts receivable, we were not surprised by the near-term increase in inventory levels, which grew in anticipation of January shipments to the mobile market. Also, we procured additional silicon carbide substrates and epi wafers to support expected significant growth in the second half of the year in the EV, industrial and solar markets. Moving on to guidance for the first quarter. We currently expect revenues of $23 million, plus or minus $500,000. At the midpoint, this represents substantial year-over-year growth of more than 70% over the $13.4 million we recorded in the first quarter of 2023 and is slightly down off of the fourth quarter of 2023, largely due to expected seasonality in our mobile business and some softness in the other markets as we already discussed. Gross margins for the first quarter are expected to be approximately 41%, plus or minus 50 basis points as our mix continues to lean more towards the mobile market in the near term. As we move through the year, we expect improving margins aligned with an expected recovery in higher-margin markets, including EV and Industrial in the second half of 2024. In total, operating expenses in the first quarter, excluding stock-based comp and amortization of intangibles, are expected to be approximately $21.5 million. We continue to invest in growth-oriented initiatives for our end markets. As we have indicated before, we expect increases in our spending will be substantially less and growth in our revenues as we continue to see leverage in our business model. To put that in perspective compared to the first quarter of 2023, at the midpoint of our guidance, we expect revenues in the first quarter of 2024 to grow more than 70%, yet operating expenses based on our guidance are expected to grow only 20% over the same period. For the first quarter of 2024, we expect our weighted average share count to be approximately 180 million shares, stock-based compensation to be approximately $13 million in amortization of intangible assets to be approximately $5 million. In closing, we're extremely pleased with the results for the quarter and for all of fiscal 2023. Our results continue to demonstrate that we can and expect to grow significantly faster than the overall market. While we are not immune to some of the same macro trends seen by others, leading to more muted outlook for the first half of the year, we expect the strength of our pipeline and some market recovery in the second half of the year will support annual revenue growth of 40% to 50% in 2024 relative to 2023. Operator, let's begin the Q&A session.

[Operator Instructions] Your first question comes from the line of Quinn Bolton from Needham.

Congratulations on the strong finish to 2023. Most metrics look pretty good in certainly the top line into next year, but the gross margin coming in a little light. You talked about the mix shift to mobile, driving some of that lower margin in the near term. But Ron or Gene, could you give us a sense, how do you see margin recovering through 2024? Can you give us sort of any thoughts on where margin might exit 2024? And then I've got a follow-up question.

Yes, sure. This is Gene. Yes, as you commented and we explained the margins are a little bit more muted in the first half of the year just purely due to market mix and the strength of the mobile market. Most other markets are a little softer in the first half of the year as we anticipate automotive and industrial strengthening in the back half of the year, but also the 4 major growth drivers that I highlighted, AI data centers ramping in the later part of the year, the Tier 1 appliance project ramping later in the year, again starting in solar later in the year, even the Internet satellite project, all of these are expected to be above that average. So all of these will contribute to a modest margin improvement throughout the year. We expect to end the year still below mid-40s, but we'll see incremental improvement in Q3 and Q4.

My next question, and I may have asked you this in the past, but just kind of walking the show floor here in APEC. You see GaN all over the place. I know you guys are targeting a lot of the higher power GaN to 650 volts and above. But it seems like there's increasing opportunity in kind of lower power or mid-power GaN as well. And just wondering, as you guys continue to grow, do you have any revised thoughts on potentially expanding the product portfolio to below a 650-volt GaN technology? Because again, it seems like there's some pretty good opportunities in that low or mid-power market as well.

Yes, I fully agree, Quinn. And that is definitely of interest. It's an area that we're working on actively. We don't have a specific launch schedule, development schedule to share. We certainly got our hands full with all the opportunities at 650 volts, but I agree with you. I think that's great opportunity for lower voltage GaN, and it's something we plan to pursue over time.

Perfect. We'll stay tuned. I'll go back in the queue.

Your next question comes from the line of Ross Seymore from Deutsche Bank.

Ron and Janet, congrats to both your transitions. I guess my question for this year is being second half weighted is no different than a lot of the peers. But just how second half weighted, do you expect it to be? Do you expect to grow sequentially in the second quarter? Or is it going to be much more of a stair step up as inventories normalize and a lot of these new design wins come in the second half?

Yes, sure. Yes, not to dissimilar than prior years. It's probably in the range of 40%, 60%. That's similar to what we saw last year. So I don't think there's much surprise there.

Okay. I guess as my follow-up, you talked about a ton of design wins ramping at various times and some really meaningful dollar amounts. How do you think the mix of the company changes by end markets, you guys had talked a little bit about how the split was between mobile and appliance, et cetera. How is that in 2023? And how do you expect that to transition into [indiscernible].

Yes. Yes, definitely. '23 saw a really nice surge in mobile that's continuing as we explained in early this year, that surge took mobile over 40%. The other markets were in the 10% to 20% range. I think we'll see that shift back throughout the year given the anticipated recovery in industrial and EV, but also the ramps we've talked about. AI data center is brand new for us. So that's really coming off of a 0 base appliance strengthening with that strong pipeline and that major new Tier 1 project that ramps. GaN and SiC both ramping into solar in the second half of the year. So I think we'll see it balance out pretty nicely where the mobile goes below 40%, and the other markets creep up from their 10% to 20%.

Your next question comes from the line of Kevin Cassidy from Rosenblatt Securities.

Congratulations on the good results. And Ron, happy trails. And Janet, look forward to working with you. On the mobile market, you mentioned that GaN has about 30% market share. Do you see that market share growing in the mobile chargers? Or is this going to be steady state? Maybe what do you see as the growth rate in the mobile market for GaN?

Yes. Good question. And that 30% was specific to Xiaomi and OPPO kind of leading the charge, so to speak. But I think most GaN mobile is probably still single-digit adoption rate. So we don't believe there's any limit to switching. I think ultimately, all of the silicon chargers will move to GaN over time. Part of that dynamic is not just driven by our technology or by the customer choice, but also the power levels moving up. So as the whole world goes from slow chargers, which are 5, 10, 15, 20 watts, where GaN doesn't bring much value to fast chargers in the 30, 40, 50 watts and then ultimately, the ultrafast chargers where we're really, really strong at 100 watts are higher. There's no limit to switching everything over from silicon again. So it's just a question of time. And I think the growth rates between now and then will continue pretty strongly.

And maybe if we look at the other markets that you're penetrating now, 20 design wins in data center and the home appliances, I mean, can you draw a parallel to the mobile market for where those markets will be going?

Yes. I think it's almost identical. I think you see these first few leader high-performance examples setting the example for the whole industry. Once you get your first beachhead customers beachhead applications within the market tends to be on the high end. That's an example for others. It proves that the value is there, that the quality, the reliability, everything is there. And then we see a pretty effective domino occurrence over the subsequent years where one project leads to 2 leads to 4 leads to 16 and things start to grow exponentially. So I think you can look back at what's happened what we've led in mobile charters just in the last 3 years, and we anticipate the same sort of domino effect, the same sort of accelerating adoption to occur in each of these new markets with their own sort of S-curve adoption.

Your next question comes from the line of Tristan Gerra from Baird.

This is Tyler on for Tristan. We noticed that Anker is advertising GaNPrime on their website as a -- for a home backup solution, they're advertising their products with your technology as a core competency. Could you please remind us how GaN Prime represents a step-up in performance, the potential size and growth of the home backup market and your content in these boxes?

Yes. Great, great. I'm glad you caught that. And we love the fact that we've got now major players featuring GaN right in the headline. In fact, anchor, I think, position themselves as the largest GaN charger lineup in the world. And while we're not the exclusive supplier, we're a major supplier to anchor, and this whole positioning obviously benefits the whole industry. It certainly benefits Navitas. So the GaN prime products, in particular, can be up to 50% size reduction up to 30% energy efficiency improvement. And we're now actually at system cost parity. So they're not demanding a price premium in that solution. So all of those same benefits that we've seen at OPPO, Xiaomi and so many other Samsung S24 apply to the GaN Prime family. Operator, back to you for any follow-up questions.

Next question comes from the line of Jon Tanwanteng from CJS Securities.

Gene, I was wondering, you had expected 50% or more growth when you had your investor event in December. What are the biggest changes from there? Is it mostly automotive and inventory issues and then maybe some solar in there? Is it more broad-based than that? Just help me understand what's changed in the pipeline for you?

Yes, Jon, that's exactly right. Last 2 months, 2.5 months, we've seen the slowdown as many have commented about. Really, it's not a decline. It's just slower growth in EV and slower growth in industrial. Any time you get an adjustment in growth rates, you get pockets of inventory that build up, forecast come down temporarily to kind of swallow that change in growth rate, deal with that pocket of inventory, we see that a bit in the channel. And so by all of our indications, we think that's a couple of quarters and that's added to our more muted expectations for the first half of the year.

Got it. And then is there any update on just how operating expenses are expected to step up this year, especially with the lower growth expectations?

Yes, sure. Maybe this is a good chance for Janet to jump in and share her thoughts.

We have a very disciplined -- disciplined way to manage our OpEx. We see a lot of operating leverage as we scale up revenue. Right now, as you can see from our guidance, we guided Q1 to grow revenue at 70% versus OpEx growth of 20%. We will continue to monitor our headcount plan to make the necessary investment to drive profitable growth. And we laid out our long-term target model in our Investor Day, we still remain committed to that. For the longer term, we're working towards to achieve OpEx level at 20% to 30%.

Okay. Great. And then just any update on the time line to either EPS breakeven or cash flow breakeven or profitability?

Yes, we're not giving [ any ] specific updates on long-term model, although committed to it over the next few years. I think profitability is still targeted for $50 million a quarter, where we hit that, I think, depends on market dynamics and of course, overall growth rate.

Your next question comes from the line of Jack Egan from Charter Equity Research.

I had a couple on some of your end markets and how GaN and SiC the interplay between those. So of course, there's a lots of buzz around AI, particularly with the big infrastructure build-outs going on. And so I was just curious about your approach to that market since both SiC and GaN can be used in data centers. So will those kind of be fighting for the same slots? Or can they coexist in those applications at different power levels or performance measures? Just anything there would be helpful.

Yes, it's a great topic, a really interesting one for us. We've got this data center design center that designs the entire power supply to a really deep system expertise. And now we've got leading edge, GaN leading edge silicon carbide. So we're in a unique position to figure the right answers to exactly that question. And it's actually not very -- it's not very intuitive. It's not very easy even for our customers to figure out, but we're doing some really exciting work on exactly that a combination of silicon carbide and GaN. There's actually 2 stages in the power converter. The first stage is called power factor correction, we're using silicon carbide often in that stage followed by the DC-to-DC converter stage with gallium nitride that kind of takes advantage of the strength of each of the technology, silicon carbide being more mature and very proven on its robustness facing the grid, gallium nitride achieving very high frequency and high efficiency in that DC-to-DC converter. So there's a lot more to that story than I'm touching here, but you brought up a really important point. You're going to see a lot of interesting, we call them kind of hybrid designs, where we leverage both GaN and silicon carbide, not only for this data center space, but others in that 1- to 20-kilowatt area like onboard chargers. So you'll see a lot more developments in that area.

Right. Okay. That's helpful. And then similarly on the automotive side. So you're expecting GaN to ramp for that later this year. And we're seeing more OEMs move to or at least announce 800-volt systems. And so I'm curious how that changes the opportunity or I guess the mix of silicon carbide and GaN and some of those automotive applications just because silicon carbide sometimes can be higher -- better at higher voltages, but you still have the benefits of that high frequency for GaN where it can function. So with more 800-volt systems, would it change your outlook at all? Or is it really kind of a wash for you since you do both silicon carbide and GaN?

Well, certainly, that's the beauty of it, whatever way the market goes. And I think [ 400-volt and 800-volt ] are going to coexist for a long, long time. At a high level, just like you described, the 800-volt is a better fit for the 1,200-volt silicon carbide, the 400-volt could be either, frankly, but we see a lot of that moving to GaN or a combination of GaN and silicon carbide. I would point out though, even for an 800-volt battery when you plug it into a single-phase AC input, which runs [ 110 to 220 ], you could actually use gallium nitride on that first phase, followed by the silicon carbide, which then sees the 800-volt battery to charge that battery. So here, again, I think the combination of having both technologies puts us in a really unique position to figure out the right approach and whichever approach is going to win, whether it's 400 volts or 800 volts, we're going to benefit from it.

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

I think I want to follow-up from a prior question here, really thinking about your yearly revenue growth by end market. I'm wondering if -- you answered the last question about talking about mobile being above 40% and going below as the other ones ramp up here. Maybe ask it in a different way here. Any way that you -- could you rank order kind of the dollar contributors to growth here by end market? I would assume mobile will probably be the biggest given it's starting at 40%, but maybe get a sense of how much dollar growth we're adding and some other ones that might be not obvious from how you described the opportunities you're seeing here, Gene.

Yes. It's a tough one to call. I gave a bunch of numbers. Data centers is coming off a base of 0. So I said $3 million to $5 million in the second half of the year. So that's still going to be on the smaller side compared to everything else. Appliance has been a great strength area for us, especially when mobile was a bit down, and that's going to pick up strongly in the second half of the year. I think the other markets depend a little bit on how the market recovers, too. We've got our product launches, which are going to give us some certainty of that growth that we outlined GaN going into solar, a bunch of additional silicon carbide going into solar, a bunch of OBCs, we talked about in silicon carbide that are ramping throughout the year. So it's pretty hard to predict. And it feels pretty balanced, honestly, to me as you look at what's going to add $20 million or $30 million to the back half of the year, it's going to be pretty broad-based across each of those areas I just mentioned.

Okay. Maybe following up here, thinking about your new products that are ramping in here. You discussed some of them at your analyst event a couple of months ago. And I think you even less -- I think even on the last conference call, you talked about the new Half-Bridge offering here maybe doing a $10 million run rate exiting this year. Wondering if that's still kind of in the range of what you're thinking? And then as you think about your other products like the bidirectional 1 and the GaN control and the GaNSafe. To what degree are those going to be contributing to your revenues by the end of the year?

Yes. Great questions, Richard. Thanks for noting all of those exciting new products announcements. On the GaNSense Half-Bridge, we're especially excited about the motor versions we've created, which are then tuned orally for appliance motor in general, but appliance in particular. And that major Tier 1 that's driving $10 million a year starting late this year is actually adopting that motor version of our GaNSense Half-Bridge. And not only that, they're pushing it to a frequency, efficiency and density that nobody has ever seen before. So we're super excited. Once these products come out, they tend to set an example for the whole industry. There's a lot of reverse engineering that we expect will happen, and it will likely lead to a nice domino effect of even more. And we've already got a pretty strong appliance pipeline going. GaNSafe, I mentioned sort of throughout, because GaNSafe is really our high power. As you get above 1,000 watts, GaNSafe is our answer, the most protected, most reliable, most safe, even a 20-year warranty to back it up. And that's going into solar later this year. It's going into the data centers, it's going into EV, so almost across the board in those areas. And the others you mentioned GaNSense control is a big part of our mobile charger space. I didn't specifically highlight it, but that's a really nice growing family that's going first into a lot of aftermarket chargers today, and we expect it going into a lot more inbox and Tier 1 mobile players in the future.

[Operator Instructions] Your next question comes from the line of Kevin Cassidy from Rosenblatt Securities.

Ask a follow-up. And just on Shinry, if you could tell a little more about the relationships, maybe give some details. What were they making prior? Or were they using GaN in the past? Or is this going to be their first GaN products?

Yes. I know it's not a name people would know, but they're actually a major onboard charter supplier to top players like Hyundai, BYD, Honda and many others. So for us, it's a super exciting way to kind of get access into those cars in the future. The first projects here will actually be silicon carbide for onboard chargers, and we -- I do believe it's going to be their first implementation of silicon carbide certainly with us. And those are already underway expected to launch early next year.

The next question comes from the line of Joe Moore from Morgan Stanley.

Great. I know at CES and at recent conferences, you had talked a lot about the specific opportunities in data center around AI servers and just given the very high power on those servers that there should be opportunity for GaN there. Can you just talk about that specifically with AI when you could start to see that be a more material revenue contributor?

Yes. It's a big one. And I think we're still at the tip of the iceberg here. We've got 20 projects in development. They're all going to production throughout this year. I estimated $3 million to $5 million revenue impact for the second half of the year. We've had meetings with a lot of the AI guys and the numbers, the power requirements, the current requirements keep going up and up over the next 1, 2, 3 years. I mentioned in my remarks, a 1,000 to 2,000 amps per processor. So I think this ripple effect on how the power has to get delivered is still really being worked out by the industry and the numbers keep going up in our system design centers designing things that we never thought was possible a year ago, 4.5 kilowatts is unprecedented in a specific form factor that's going to power all those processors and now they're pushing us to go to 5.5, 6.5 even higher. So -- and I think this is all about the data center today, but ultimately, these AI chips end up in driving -- self-driving cars. These AI chips end up in the client and on the edge computing. So I think it's early days, and it's exciting because the power requirements are really unheard of, and that's exactly the kind of challenge we want to tackle with our system design center and with our gallium nitride and our silicon carbide.

[Operator Instructions] As there are no further questions, I would like to thank our speakers for today's presentation, and thank you all for joining us. This now concludes today's conference. You may now disconnect.