Navitas Semiconductor Corporation (NVTS) Q4 FY2025 Earnings Call Transcript & Summary

Good afternoon, and welcome to Navitas Semiconductor's Fourth Quarter 2025 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded today, Tuesday, February 24, 2026. I would now like to turn the conference over to Brett Perry of Shelton Group Investor Relations. Brett, please go ahead.

Thank you, operator. Good afternoon, and welcome to Novitas Semiconductor's Fourth Quarter 2025 Financial Results Conference Call. Joining us on today's call are Navitas President and CEO, Chris Alexandre, CFO, Todd Glickman. I'd like to remind our listeners that the results announced today are preliminary as they are subject to the company's finalizing its closing procedures and customary quarterly review by the company's independent registered public firm. As such, these results are unaudited and subject to revision until the company files its Form 10-K for the year ended December 31, 2025. In addition, management's prepared remarks contain forward-looking statements, which are subject to risks and uncertainties, and management may make additional forward-looking statements in response to your questions. Therefore, the company claims the protection of the safe harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from those discussed today, and therefore, we refer you to a more detailed discussion of the risks and uncertainties in the company's filings with the Securities and Exchange commission, including Form 10-K and Form 10-Q. In addition, any projections as to the company's future performance represent management's estimates as of today, February 21, 2026. Navitas assumes no obligated to update these projections in the future as market conditions may or may not change, except to the extent required by applicable law, Additionally, in the company's press release and management statements during this conference call will include discussions of certain measures and financial information in both GAAP and non-GAAP terms, included in the company's press release of definitions and reconciliations of GAAP to non-GAAP items, will provide additional details. For those of you unable to listen to the entire call at this time, a recording will be available via webcast for 90 days in the Investor Relations section of Navitas' website at itassemi.com. And now it's my pleasure to turn the call over to Navitas President and CEO. Chris, go ahead.

Good afternoon, and we appreciate you joining us today. I'm pleased to be hosting my second quarterly conference call as Navitas CEO. We closed out the year with a positive fourth quarter as we continue to accelerate our [indiscernible] to Navitas 2.0 and align the entire organization to focus on addressing high power markets. In fact, it has been energizing 5 months as I joined the company, and my conviction in our industry-leading GaN and high-voltage 6 solution has only grown stronger and our strategic pivot is on the right path to [indiscernible] the company to the next level. Before providing comments and update specific to the quarter, I will briefly reiterate several key events on our previously communicated strategic transformation and our vision to what we call Navitas 2.0. First, we're accelerating our pivot away from the company's historical mobile and lower consumer business to focus on high for markets, where GaN and high-voltage IC products can deliver real penetration and value through higher at least [indiscernible], efficiency and availability. We are laser-focused on 4 high-growth, high-value market segments, AI data center, energy and green infrastructure performance computing and industrial electrification. Collectively, this segment represents a service addressable market of EUR 3.5 billion by 2030, split roughly 50-50 between GaN and high voltage 6 with a combined CAGR of more than 60%. although the largest portion of this $3.5 billion time are within AI data centers and grid and energy infrastructure, I want to emphasize that AI is a shared underlying catalyst across our 4 target markets. driving a rapid acceleration in terms of reactor infrastructure, customer expectation and the adoption of the new high-voltage technology. While leveraging our proven 10-year track record as a pioneer of Ghana scale, having shipped over 300 million net gain devices, coupled with the deep expertise in system and application as well as our leadership in high reality, high-voltage sick to our genetic technology. The end goal of Navitas strategic transformation is straightforward to rapidly penetrate secure expanded customer engagement and achieve scale, resulting in a more sustainable, consistent and future profitable growth for Navitas. Turning to a brief recap of our fourth quarter results. As initial progress of our pivot to Navitas 2.0, we've completed a realignment of the entire organization, both in terms of skills and geography to focus on addressing high power markets. This includes fully redeployed organizational resources, or roadmap and focus accordingly. Revenue in the fourth quarter and at the high end of our guidance range at $7.3 million, coupled with the fourth quarter being the first time that high power market represents the majority of our total revenue. We remain confident that the fourth quarter was the bottom. Notably, our mobile business declined sequentially from the majority of revenue in Q3 to less than 25% of total revenue in Q4. We expect mobile to continue going down as a percentage of quarterly revenue and become insignificant by the end of '26. Also consistent with our comment last quarter, guiding to quarter-over-quarter growth for Q1 and anticipate continued sequential growth throughout 2016, driven by increasing sales traction in the high role market. Over the last several months, as part of expanded needs with customers and partners, have seen numerous proof points that the new technology adoption is [indiscernible]. AI is a catalyst changing the game across markets. Existing technologies and architectures are no longer sufficient. The industry is moving faster than it ever has in terms of technology adoption with customers clearly moving to take advantage of gun and high-voltage technology. As previously mentioned, AI is a primary catalyst that's driving momentum and borrowing the adoption of high-power solutions across all 4 of our target high power markets. Every interaction with customers has confirmed the market is undoing secular change, and that AI is sparkling revolution we're focused on. This impelling inflection point in architecture design and technology adoption is highly favorable to GaN and high-voltage Tech, putting Navitas 2.0 at the center of this revolution. As outlined in our last call, the Navitas to transformation to a hyper company is being backed by decisive actions and grounded in 4 pillars that include market focus, technology leadership, operational efficiency and financial discipline. Let me now review with you the measure of progress that we've made in each of these areas since our last earnings call. Starting with market focus. As I mentioned earlier, we're sharply focused on the high-power market of AI as center, energy and green infrastructure, performance computing and industrial extrication. In AI as centers specifically, Navitas is uniquely positioned as one of the leaders in GaN and high-voltage SEC, supporting all major AI data center architectures. The density of compute power which required a higher efficiency and poor obesity. It's driving the acceleration of CAM in next-generation data center. During the quarter, we've accelerated samplings of product and solution delivery with our on Volcan and 6 Valgan targeted at AI glass center, onefold HVDC and 48-volt IBC HD box architecture. Samples are currently available in different package sites, and are being evaluated by more than a dozen customers. More recently, on February 9, we announced our breakthrough 10-kilowatt DCDC design platform. This is an all game 10-kilowatt, 800-volt to 50-volt DCDC platform, which employs advanced 650-volt and onboard a fast in a 3-level average architecture with synchronous actification. This platform has delivered a 98.5% peak efficiency, which we believe is the best in the industry so far. This full [indiscernible] package design platform achieved leading power density and support plus or minus 400-volt BDC standard for AI [indiscernible], this is a great example on how Navitas is able to leverage our 10 years of GaN and system expertise. We're setting the benchmark for scalable, high-performance AI infrastructure. Our product portfolio enables unprecedented power density to support rapid large-scale expansion of Aida center, while also allowing hyperscalers an OEM, the ability to maximize compute density and reduce energy loss in the top of the [indiscernible] AIU club. On the 6 front, we are very active customers in their ACDC PSU designs for current AI dacite architecture with our latest 2.2 KV [indiscernible] devices, leveraging our latest fifth generation genetic technology announced earlier this month. This product brings improved filed merit and best-in-class thermal behavior, the [indiscernible] QD pack packages that are being well released by customers. In the grid and energy and paper market, the energy grid is in the process of a major transformation and modernization to support the AI catalyst, but also overall growth in segment. This is not a short cycle, but rather a multi-decade secular and sustainable trend that will transform grid and energy infrastructure. As a result, we are seeing an acceleration in the design cycle here as well. We are leading this effort with our new ultra-high voltage 2.3 kV and 3.3 kbits module and road map to even higher voltage. We are not in evaluation with over 15 OEMs globally, mostly in U.S. and Europe with notable acceleration in the U.S. In percent computing, we continue to see increased gun adoption in high-power chargers and 4 units for high-end computing and AI notebooks. The placing silicon. We have more than 15 projects in production, and [indiscernible] twice that in designing across 1200-watt 2041 and up to 360-watt with leading global contain companies. We expect to continue gaining momentum in the performance complete market through opens. And lastly, in industrial explication we're starting to see GaN and high-voltage secation in high-performance applications, spanning industrial pumps and heavy equipment electrification like DDC converts and megawatt orders. Turning to our second pillar, technology leadership. We continue to prioritize ovation across GaN and high-voltage fit technology. including both product and solutions, supported by expanding customer engagement and core development project. One example of this innovation and system expertise with our breakthrough 10-kilowatt DC/AC platform that I just discussed previously. Another highlight was our announcement during the last quarter of our and 3,300 volt ultra-high-voltage SiC module portfolio, which we have accelerated simply to more customers. These modules feature providence assisted planar technology for [indiscernible] balance robustness and performance in mission clinical application across grid-tied infrastructure, energy storage and the [indiscernible] scale fast charging. This structure available in six-pack G+ power modules, discrete packages and nongood [indiscernible] by point with extended AACs lalability testing. As mentioned earlier, we announced last week our Gen 5 technology and upcoming new 1.2 kV security pack product again PSU CDC for AI as centers. Our new Gen 5 technology continues to improve the figure of merit of our leading genetic technology. It leverages our trench assisted plan or TAP architecture best-in-class thermal behaviors and top 5 cooling unpack. We're now somnour first new 1.2 Ken product to multiple OEM and ODM designing high-power and AC/DC or AI [indiscernible]. On our third pillar, operational efficiency. We have taken actionable steps to create a more streamlined and rebalance erotic deploy organization. We have been leasing strong employee buying and resin tangible benefits from this [indiscernible]. Also, on November 20, we were pleased to announce long-term strategies technogy and manufacturing partnership with Global Foundries to accelerate an technology design and manufacturing in United States. This partnership enables secure scalable solution for our target high power market and ensures that Navitas can deliver the performance efficiency and scale our customer demand. It also provides Navitas the opportunity to manufacture our solution in critical and national security applications in U.S. Development began a few weeks ago, and both companies are duly collaborating with production expected to begin later in the year and accelerate in 2027. Over time, we expect to transition to [indiscernible] in order to lower products and increased scale. Also, during the quarter, we executed actions to restructure and optimize our go-to-market rate. This included significant consolidation of distribution channel partners from approximately 40 to less than 10 [indiscernible] we have the ability to scale and are well suited for serving high-power market while removing previously mobile-centric distributors. And our fourth pillar, financial discipline centers and resource realignment in support of our focus on high power markets. This includes very targeted 90% reduction in head count in the fourth quarter. offset by alignment actions to support the Navitas 2.0 shift, including hiring new employees well equipped for high-power markets, in particular within the United States. As evidenced by our fourth quarter revenue mix we have made tremendous progress. We also brought in new additional leaders with skills in sales and marketing, R&D and operations with a focus on enabling stronger execution. These collective actions focused the entire company on high power market and provide a foundation for efficient and effective execution going forward. Even with a larger market opportunity, our resource alignment allows us to efficiently focus our quarterly spend on the high-power market. As a result, we're targeting to maintain operating expenses flat throughout the coming year. We also expect to drive gradual margin expansion throughout '26 through improving scale and mix of high power business. Lastly, to further strengthen our balance sheet and fund future operations, we completed a private placement of common stock in November with net proceeds of approximately $96 million. contributing to a quarterly end cash balance of $237 million. These proceeds further support our Navitas 2.0 strategy axing our transformation and funding working capital for scalable growth and long-term value creation. In closing, I am very pleased with the overall progress we achieved in a relatively short period of time. Speed is a financial element of our company's culture and it's clearly working. We are positioning Navitas 2.0 as a high power company, sharpening our focus on execution to enable scalable growth. Looking ahead, we anticipate a return to top line sequential growth starting in the first quarter, fueled by increased revenue from high-power markets. When combined with the benefit of our optimized cost structure, streamline go-to-market approach, an accelerated product road map, we also positioned to achieve gradual improvement in gross margin and bottom line results over the coming year. I'm incredibly proud of the team's dedication, hard work and agility in platination vision. I also want to thank our customers for their support to our new strategic dilation as well as ongoing contribution to mature beneficial collaboration partnership. With that, I'll turn the call over to Todd to review our fourth quarter and full year results as well as our first quarter guidance.

Thank you, Chris. In my comments today, I will take you through our fourth quarter and full year 2025 financial results. And then I'll walk you through some of the important Q4 achievements and market dynamics as well as our outlook for the first quarter 2026. I will then return it to Chris for final remarks before we take questions. Revenue in the fourth quarter of 2025 exceeded the high end of guidance at $7.3 million compared to $10.1 million in the third quarter of 2025. As expected, revenue for the quarter reflects our strategic decision to deprioritize our low-power, lower-profit China mobile and consumer business, as well as our efforts to streamline our distribution network to align our focus on high power markets. . As Chris mentioned, our high-power markets represented a majority of our quarterly revenue for the first time in the company's history, with mobile declining to less than 25%. This is a very important milestone and representative of our strategic shift. As mentioned before, we believe that Q4 represented the bottom for revenue as our strategic actions support driving increased contribution from our high-power business going forward. Before addressing gross profit and expenses, I'd like to refer you to the GAAP to non-GAAP reconciliations in our press release. In the rest of my commentary, I will refer to non-GAAP measures. I would also like to point out that our GAAP results for the fourth quarter included a $16.6 million restructuring and impairment charge that consisted of approximately $10 million of distribution contract terminations, $4 million of fixed asset impairments and $2 million of workforce reduction expenses associated with realigning the entire organization and distribution channel to focus on addressing high power markets. Of the $16.6 million restructuring and impairment charge in the quarter, $3.8 million was noncash related items. Gross margin in the fourth quarter was $38.7 million, which was flat sequentially with the prior quarter, reflecting the ability to maintain our margin profile despite the lower quarterly revenue. At these revenue levels, we do not yet have the leverage to overcome our fixed costs. but we expect this to improve as we further grow revenue from high-power markets. As mentioned in our last earnings call, we expect to deliver expanded margins as we pursue a mix change towards higher power markets and away from mobile and low-end consumer. During the fourth quarter, we executed on a 19% workforce reduction, mostly deployed to mobile and consumer, and an organizational realignment towards U.S., high-power customers and markets, thereby reducing operating expenses sequentially from $15.4 million to $14.9 million. This is part of our strategic plan to realign company's resources to the Navitas 2.0 focus. Operating expenses were comprised of SG&A expenses of $6.8 million and R&D expenses of $8.1 mine. These expense levels align with our cost reduction targets. The fourth quarter of 2025 loss from operations was $12.1 million compared to $11.5 million in the third quarter of 2025 as the reduction in operating expenses did not fully offset the decrease in revenue. Our weighted average share count for the fourth quarter was approximately 222 million shares. For the full year 2025, revenue was $45.9 million compared to $83.3 million in 2024. Gross margin for the full year was 38.4% and compared to 40.4% last year. 2025 operating expenses were $63.6 million compared to $83.4 million in 2024. The full year loss from operation was $46 million versus $49.7 million last year. As Chris mentioned, the fourth quarter represented the bottom in quarterly revenue, and we expect to return to top line sequential growth throughout 2026 as we continue our transition to high power markets. Turning to the balance sheet. Accounts receivable was down to $3.6 million from $9.8 million in the third quarter, reducing our DSOs to 45 days. Inventory decreased to $13.3 million from $14.7 million last quarter. Cash and cash equivalents at quarter end were approximately $237 million, reflecting net proceeds of approximately $96 million from our completed private placement of common stock in November 2025. The company continues to carry no debt. Our balance sheet remains very strong as we exit the year with a high level of liquidity and improved working capital position. Moving to guidance for the first quarter of 2026. We expect revenue to increase sequentially to between $8 million and $8.5 million. This represents the first quarter-over-quarter growth since the company's pivot. As I just mentioned, we expect sequential growth to continue throughout the year, driven by increasing revenue contribution from high power markets. Gross margin for the first quarter is expected to be 38.7%, plus or minus 25 basis points. We continue to anticipate the technological innovations to bring to high-power high-growth markets will result in progressive expansion of future gross margins. Turning to operating expenses. We anticipate operating expenses to remain approximately $15 million for the first quarter. We expect to continue to allocate resources and expenses as we redeploy company resources towards higher power customer and markets, particularly within the U.S. This redeployment of resources is expected to offset the strategic downsizing of our facilities to result in flat operating expenses. For the first quarter, we expect our weighted average share count to be approximately 230 million shares. In closing, we are pleased with our initial progress and accelerate Pivot to non-top 2.0. As evidenced by high-power products representing the majority of our quarterly revenue for the first time, we expect to increasingly benefit from the broadening adoption of our GaN and high-voltage tick products. in targeted high-power markets. Together with our recent actions to reallocate resources, optimize operational efficiencies and and restructure distribution channels, we believe that Navitas is on a path to deliver improving margins and bottom line results. I'd now like to turn the call back to Chris for some final comments before opening the call to questions.

As we close today's call, I want to address 1 additional matter. After an extraordinary 10 years of dedicated service, Todd has decided to step down as CFO to push other opportunities. He has been an invaluable partner to every 1 company. bringing financial discipline, strategic insight and weathering integrity that help steer us through pay of both growth and challenges. Todd has been a great partner over the last 6 months, helping to pivot and furnish the company to agitate 2.0. On behalf of the entire Board and executive team, I want to extend our grategic for all of this solution over the past decade. We have true financial organization in place and [indiscernible] fully committed to assisting in a seamless transition until a successor has been made. We expect to communicate in the coming weeks regarding [indiscernible] replacement and Navitas new CFO. We enter in this chapter with confidence in our strategy, our momentum and our ability to continue delivering long-term value for our shareholders. Thank you again for joining us today. Operator, we might now open the call to questions.

[Operator Instructions] And our first question comes from the line of Kevin Garrigan with Jefferies.

Congrats on the results. Can you guys just walk us through how each of the high-power end markets performed in Q4? And how we should think about the trajectory for each of those markets in Q1?

Yes. Well, our quarter-on-quarter growth in revenue was due to the high power markets. So they are performing well. We're not going to sort of break out the high power market at this time. But we do expect all of them to be performing on a go-forward basis as mobile becomes immaterial as we move through the year. .

Okay. Got it. And then as a follow-up, can you just update us on the progress of the 800-volt architecture opportunity? And can you give us a sense of a time line on customer decisions?

Kevin, this is Chris. As we talked last time, there's a lot of work going on between us and the hyperscalers not only one, but multiple of them on the adoption of the 800-volt AC/DC. We sampled, as we mentioned in the press release and in the script, some of the new products that will be used in this type of architecture. We also announced a leading-edge 800-volt to 50-volt AC/DC brick that demonstrates the performance we can get with those products. So there's a contingent of collaboration. It's a bit too early to kind of tell you when this will be confirmed, but I think we are getting closer and closer with our customers. .

Congrats again on the results.

And the one thing I would add, given is everybody refers to the 800-volt HVDC as a step function for power content in the AI data center, and this is true, especially with the adoption of GaN replacing silicon as you move to the [indiscernible] HVDC, right? But I would outline that in IDC, and you've heard it from multiple vendors, is that there is an acceleration of demand also in using the classic architecture, which is ACDC, right, using SiC and we see a growth throughout the year ahead of the step function with GaN in HVDC. .

Our next question comes from the line of Kevin Cassidy with Rosenblatt.

Congratulations on the progress. Just as you mentioned, you're working with the hyperscalers. Is this -- are you working directly with them? Would they be building their own power supplies or is that going to be a pull from the current power suppliers to the hyperscalers.

Kevin, it's actually all of you above, okay? So the hyperscalers, partially are driving the new architecture, right, both in terms of what they expect in terms of density and power level in the AC/DCs as well as the 800-volt and the 50-volt or even lower voltage HVDC architecture. Now we don't work only with the hyperscalers. If you think about PSU, which is clearly designed in OEMs and ODMs that are serving those hyperscalers. And if you look at the HBDC is that our classic merchant power company serving the scales also doing designs on these new architectures. So we work with everybody. I would tell you that the driver of the change of the acitecture comes from the U.S. and hyperscalers. But a lot of the OEM and ODM in Taiwan, in China, but also in the U.S., are driving that. And as you know, we just announced this Board, right, which I mentioned, which was basically a co-development with the customer. And that's basically to showcase the level of efficiency you can get by using GaN on the primary side and gain on the secondary side in 800-volt to 50-volt AC/DC brick. And you're going to see more of those reference implementation in the future as well.

Okay. Great. And many of your customers are the hyperscalers giving you an idea of when that inflection point would be when they start doing the installations.

I mean the thing I would say, as I said just earlier on Kevin's question, there are 2 stream, if you prefer, of the AI [indiscernible] growth. Number one is more data centers, more power, and that drives more PSUs, higher power PSUs and that drives the growth in SIC, which we are seeing throughout '26. When it comes to the 800-volt HVDC, which I think is your question, when there is a discontinuity and you cannot use silicon anymore on the reside because you're 800-volt and you have to move to high-voltage GaN. This is really driven by not the GPU change, but the rack architecture change. As you compact more GPUs into a seal rack, and you get to a megawatt rack, you cannot get the power density and the efficiency with silicon. And that's this discontinue. I would say, as we said before, this is really about '27. Can be used slightly earlier it could. There is a case where you can use GaN in the 48-volt IBC replacing silicon. As I mentioned in the script, where GaN brings higher efficiency, you can do it with silicon, but you get higher efficiency. And this might be the first time you see GaN in data center [indiscernible] the real step function is really coming from the 800-volt DC, which is really kind of linked to the [indiscernible], okay, which is the higher integration of GPUs in 7.

Next question comes from the Nathaniel Quinn Bolton with Needham.

Congratulations on the progress on the transformation to Navitas to and gestations to you, Todd. I guess, Chris, I wanted to come back on the 800 HBDC solution, especially if you think about the primary side of that 800-volt rail, there still a lot of folks in the industry that I think are talking about using silicon carbide in that 100-volt conversion step you guys are obviously pushing the GaN solution. But I guess can you say what are you seeing from the leading GDU and hyperscaler vendors that are looking at the 800-volt for the 400 plus/minus rack architecture. Are they pushing more for GaN? Are they open to begin and silicon carbide solutions. Just how do you see this playing out from a technology perspective between GaN and silicon carbide?

It's a very good question, actually, because I think there is some level of confusion. First of all, I would tell you that we are not pushing anything both SiC and GaN and we welcome stick being used on the primary side if it's needed and GaN being used on the primary if that's needed. So we're not pushing anything. We are being pulled. We've not seen any significant use case our Board implementation of customer evaluation using SIC on the primary side. SiC is being used widely at 1 to 2-kilovolt I mentioned in the classic AC/DC, right, which is basically prior to the and. But when it comes to Eden DC, we've been pulled by customers, and I'm talking about hyperscalers to Kevin's question here that are driving the adoption because it's more efficient and more driving higher density.

And then, Chris, you also talked about your 10-kilowatt all GaN BRIC solution. Can you give us a sense, is that more of a reference platform? Or would that be a solution that Novitas would look to source that entire brick level product? Because I imagine it includes a fair amount of additional componentry. And so just thinking about to the extent you're selling the full brick solution, I imagine that might be pretty high [indiscernible]. So could you just talk about whether you sell the GaN solutions [indiscernible] Portet brick would you sell the entire brick? And if you did sell the entire brick, what would the margin inflation stay?

It's a very good question. Thank you, Quinn. We view this as enabling solution enabling technology for the customer. So first of all, as I mentioned, this is something we've done with [indiscernible]. We have not done that in a vacuum on our own, right? This is something that we could develop with a leading customer. Number one. Number two is we don't compete with customers, okay? At this stage, we don't see a path where we're going to sell the modules. Now that design is shared with our customers and the hyperscalers as well as the ODM and OEM that are looking at how we've been able to achieve that high level of efficiency, right, 98.5%, which we believe, based on what we've seen and some of our competitors' feedback on top of customers are 1 of the best in the industry, right? So I would tell you, this is for us. This is what we've done in GaN historically. We pioneered GaN in mobile by demonstrating and helping customers to get to a higher level of efficiency, lower EMI, highest level of density. And we are doing the same in AI data center. And this is what I talk about when we talk about -- we're leveraging the benefit and the skills of 1.0, right? And this system expertise makes a difference. At the end of the day, we are in the business of selling GaN and silicon carbide and enabling our customers. As a matter of fact, on that board, we're using some of our competitors in our silicon and other technologies and products that we don't have. But the focus is how to show and help the customers to accelerate the adoption of GaN in HVDC.

Next comes from the line of John Tanwanteng with CJS Securities.

if you could start, maybe talk a little bit about the competitive landscape in supplying the 800-volt data center. What are you seeing just in terms of who you're bidding against in these sockets if they're outpricing you or we're doing better in technology. And on top of that, how is your partnership with [indiscernible] and evolving in that space as well?

So thank you for your question, John. So I'll start with the end. We continue our partnership with Infineon. We have a cross license, as you know, and we share the same vision, which is to enable the accelerated adoption of GaN and silicon carbide in the IDC, right? So sick as the traditional accenture and GaN in the 80s, right? So there's a lot of dialogue between the 2 companies on that front, right? Number two, you will have seen that there are multiple vendors having been listed on the 800-volt AI factory kind of ecosystem. As a matter of fact, I think it's up to 13 vendors relay. But we don't see all of them in each of the socket we target. So I would recommend that you look at how many of those 14 are actually in the high-voltage game. So how many of them have a 650-volt gain in the right package to be able to enable donor HVDC. How many of them have been voltage GaN to enable the 50-volt secondary side. Some of them are listed as a silicon vendor, okay? We are listed as a gun vendor. The other thing is, as we talked about seeing used on the AC/DC as well, there is a natural pool and more sick as we get to a higher voltage and also outside of data center. To do the 800-volt HVDC, you need to enable a change of the grid architecture. This is a pure, high voltage, ultrahigh-voltage sticky. So I will tell you is there's a lot of competition, but not everybody is feeling on the same thing. And there are not many of the vendors being listed that have both high voltage SiC or Ultra voltages and the competing in the AC/DC with 12 kV or in the grid with 2 KV and above and adding high-voltage and [indiscernible]. So this competition pool is actually being reduced. That's why we are very clear about what we do, we play in the silicon, we play in the again, high-voltage mid-voltage and in the high voltage and high voltage [indiscernible]

Got it. And then second, could you us on the incremental margin of either this 800-volt data center products or high-power products in general, especially as you roll out new suppliers?

So first of all, as Todd said, right, we expect continued gross margin expansion. So remember that the growth this year is coming from all high power markets and basically mobile going down, right, being less than the 5%. What I would tell you is the scale is going to help more gross margin as we grow revenues for our fixed costs, so that and that drives margin expansion. Number two is the HIBOR product in the high-power market are coming at higher margin than mobile work, okay? And that mix is going to change. And the third one is we are very active in ramping new suppliers, partially on the package side that will help us to reduce cost, right? So there is multiple aspects of our we are confident to see gross margin expansion as we clearly outlined for the rest of '26, right? And as we scale further in '27, we expect to continue.

[Operator Instructions] Next question comes from the line of Jack Egan with Charter Equity Research.

I had kind of a follow-up on the gross margin question before me. So as mobile is getting smaller and smaller, I'm kind of curious of the longer-term outlook. Are your gross engines more so going to be driven by mix as in data center or nondata center end market mix? Or is it more kind of the technological innovation, I guess, that Todd mentioned that -- it sounds like it's referring to new products with higher ASPs. I guess I'm trying to look at what the driver of the margins -- that margin expansion is whether it's end market mix or better product margins?

So it's actually going to be a combination of both. So definitely end product mix, right, as mobile decreases, the high power markets are going to give us higher margin. Those are more reliability and performance. But then on -- as we sort of scale and have these new products come into the high-power markets, we do expect like further expansions through like optimized process yields and packaging costs, which will help drive our product cost down, thereby driving our margins up as well.

The one thing I would add, Jack, is scale cost reduction and basically higher margin product, right, as Todd said. But the one thing I would say is that, again, the growth this year, and I think we've been very clear that we are very confident that Q4 at the bottom, we are guiding up for Q1, and we said we're going to grow quarter-over-quarter throughout the year with margin expansion. I would reemphasize again that the growth is coming from whole high-power market. . Yes, AI data center is a big part of the future outlook. And if you look at the SAM that we shared just a few weeks ago. It's nearly half of the SAM that we see for us in 2030. But I would outline that performance computing is growing this year, okay, and will continue to grow and also help on the margin mix. Grid infrastructure is really accelerating. And I think you're going to see higher ASP product, higher-margin product coming in play there, where it's more about reliability and performance and less about cost, of course, cost matter. And then as we talked about in [indiscernible] AI Center, which is a cost-sensitive market, it's all about efficiency right now, okay? And I think you're going to see all those markets contributing to the growth expansion in gross margins, right? So I just wanted to kind of calibrate a little bit your question to make sure that we don't see the gross margin expansion only coming from AI center.

Sure, Chris. No, that's super helpful then. And then I guess kind of from a higher level, I know you're not supplying as much into some of the automotive and industrial type markets. But silicon carbide has gone through just broadly speaking, has gone through a period of pretty significant oversupply. And so I was just kind of curious, what are your expectations on when that supply and demand in some of the other markets might balance out whether for Navitas or whether the industry as a whole. I know that you're dealing with some large volume wins that, so it might not apply to you as much, but just any commentary there would be helpful.

I mean, to be honest with you, John, I think, first of all, as an industry -- I would say it's going to take some time, but I think you should that to the vendors that are supplying to EV, we don't. We don't play in the same league of SIC, okay? You've seen me being very clear, but the fact that we compete and focus on 2 kV for the PSUs for AI data center and 2 KV and above up to 5 kV and even more for the grid. This is where -- this is not about scale of supply, this is about how reliable and efficient and high performance is your technology. So I think for some of the SI vendors operating at 450-volt 650-volt 80-volt focusing on EV, that's a valid concern. For us, it's about scaling with the Ultra voltage, okay, which is nothing really related to supply at this stage. .

Next question comes from the line of Richard Shannon with Craig-Hallum.

Apologies, the ambient noise just jumped off a plane here and I missed a bit of the call here. So I hope I don't repeat your question here. But Chris, one thing I'd love to ask you is in the data center opportunity here. To what degree are your opportunities coming from your partnership and kind of drafting behind, if you will, from Infineon versus other ways? And then also, are there any -- is there any cross-fertilization of wins within the rack between point of load and the 800-volt down, did those kind of cross-fertilize and give you additional benefit at all? .

So a very good question. As I mentioned, we partner with Infineon. We have a cross license. We've done that a couple of years ago. We continue to drive collaboration to enable GaN adoption, both high voltage and mid-voltage I would say that we don't leverage or benefit from [indiscernible] what you will see is, I think I got a question earlier from Kevin, who are you bumping into most of the time, I would say, it's fully Infineon and surely Infineon because they have the same vision. They have the same technology, high-voltage GaN, [indiscernible] voltage GaN and SiC and Ultra voltage as well for the green infrastructure. So very similar [indiscernible]. So we bump into each other. We follow each other, but I would not say that we leverage Infineon, right? Now interestingly enough, when we release the package, we found that we -- because we talk to the same customers, we think the same way is we end up seeing the technology the same way. That's what I would say. On your question about expansion of portfolio, that's something we are looking at. My focus right now was to pivot the company, okay? And put every eggs we have, every engineer we have, every focus we have on the 4 high power markets and high voltage GaN in hybrid SiC, but we are looking at opportunity to expand the portfolio as you get higher voltage in the data center, you're going to need circuit protection, and that's something we're going to look at in the future, right? But for now, we are laser-focused on execution with the product we have and we just released.

Okay. Fair enough. And the second question, probably for Todd. Just on the gross margins. If I caught the end of his prepared remarks talked about not having enough scale to really drive leverage on gross margins quite yet here. Is there a revenue level by which that happens here? And kind of what's that fall-through margin when you start to see that trajectory?

Yes. That's a great question. As our mix changes, obviously, our margins will grow. But right now, we have that scale issue. We do see margins starting to expand again in Q2 and beyond. So that's sort of the tripping point right now. What I would tell you, Jack, is the high power markets and the high-power product in the high -- are coming at higher margins. The mobile is going down. We said that in Q4, it was 25%, and we said it's going to continue to go down and get insignificant by the tone, right? So I think we are very confident that the mix of the mix of the mix change, the higher power product in the high-power market increase as a percentage of the company and the new product and the cost reduction we have will yield to gross margin expansion. So you'll see it light and clear, okay, starting not very far from now.

Our last question comes from the line Quinn Bolton with Needham.

Chris, you spent a lot of time talking about the 800-volt data center opportunity, but you also talked about needing to rearchitect the grid. And I just wondering if you could spend a second talking about the opportunity for the high-voltage silicon carbide and the solid-state transformers from where are you in the design process for some of those solid state transformers. And is there a way you can ballpark like what's the dollar content opportunity? I don't know if it's on a per megabasis or a per unit basis. But is there a way to size what the amount high-voltage sick that goes into a solid-state transformers that start to be deployed as the grade is rearchitected.

Thank you, Quinn, for this follow-up on. Actually, I'm glad you asked that question because everybody focus on AI data center. [indiscernible] focusing on the 800-volt HVDC architecture, which is important because it's a discontinuity in the architecture. It's a replacement of silicon by GaN or by high-voltage technology. But none of this is possible if the grid is not changing. And this is not just about getting a more efficient grid. It's a change of the architecture. And you refer to SSEs, which is basically getting from 35,000 volt A, super high-power, high-voltage lines down to 800-volt DC at the highest level of renability. That drives the change. And I tell you, I've never seen the grid structure changing that fast. So you asked me, and I think we in the script and in the press release, we are accelerating the sampling of our 2.3 kV and 3.2 applications are any greed side application. SST, of course, but battery energy system, megawatt chargers, solar farm at the grid tide level. Any of those applications are in accelerated designs. We are very busy talking to all those customers. That's why I said it's 2 legs, okay? We have 4 high-power market. But if I look at the future, it was 2 legs, the IDC and the grid are equally important. And this is a pure high-voltage sick play. And to the earlier question about EV, this is not the technology because what you have to deliver is high-reliability technology, high reliable modules, so it's a different play. So I'm glad you asked the question. We see an accelerated design momentum. Of course, it's going to take time. This is a longer design cycle than computing. It's longer design cycle than AI DC, but I think you'll start to see a significant revenue growth starting with 7. To your question about content. In the last investor meeting we had, we basically referred to $25,000, $35,000 per megawatt of total content for Navitas as a SAM, which is based again on ultra-high-voltage, high-voltage 6, 12 kV and 2 KV and above and GaN. And about 10 to 12 is actually outside of data center. So if you think about 25 to 45, 10 to 12 is outside of the center, which is purely SST, BSS and all those applications, right? So -- and again, inside data center, you have a share between sick for PSUs and GaN as you move to it on a DC, but we should not underestimate the importance and the potential of the grid infrastructure. As a matter of fact, we released a couple of weeks ago, details some analysis that shows that both gain and sick of 50%, 50%, okay, in 2030, have of the potential for -- in terms of the [indiscernible] for Navitas to the [ $3.5 billion ] that we referred earlier. And you can see that the grid is not far off the SAM of data center. And the other thing I would say is this is just the beginning. So if you think about grid, this is a multiple decade transformation that will drive higher voltage continuously. We start with 2 KV, we get into 3 KV. We're going to get to 5 KV and above, and that's going to drive transformation for the next multiple decades.

That concludes the question-and-answer session. I would now like to turn the call back over to the management team for closing remarks.

Thank you, everybody, for attending this call. As you could tell, we are very proud of the progress we are making. The first 5 months and 6 months since I joined was about pivoting the company and being clear about where we are going. I think we've done that. We are focusing on accelerating samples of our technology. We have 4 pillars of the transformation, which I mentioned, market focus, technology leadership operational efficiency and financial discipline. And we'll continue to update you on how we make progress. And I think we have a bright future ahead of us.

Ladies and gentlemen, that concludes today's call. Thank you all for joining us. You may now disconnect.