Transphorm (TGAN) 23 Feb 232023 Q3 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Transphorm's Third Quarter 2023 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, David Hanover. Please go ahead.

to Quarter welcome Conference XXXX and Call. afternoon, Transphorm's Fiscal Third Earnings Good

from Rivas, and are Primit us Transphorm Joining today Mario Financial President Chief Chief Parikh, and Chief Operating McAulay, Officer; Cameron Officer. Co-Founder, Officer; Executive

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

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

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

any statements to this date in results obligation to to call company's the undertakes for to also company publicly the update such no of expectations. forward-looking the or changes actual conform after The reason statements

the quarterly the and with with refer subsequent other For Transphorm's recent filings to most associated business, associated we detailed information on SEC. on you report Form the risks risk company's in more XX-Q

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

call. today's Thanks, David, everyone and welcome on to

million million the in in Our revenue prior XXXX. to was prior XX% X% was and $X.X compared period to $X.X basis million revenue year. quarter up Product sequential quarterly same $X.X on of the revenue a the fiscal compared in and

total adapters fast of new growth for ratings of We orders believe gallium including nitride one best billion power. Increased X the manufacturing. the the chargers, The industry's design-ins operating X field power exceeded hours company's worldwide reliability have for and is of products shipment laptop production spectrum for of top XXX this power reliability.

to It a to Go the over is my ahead, achievements. of call now pleasure hand the Primit detailed for Primit. quarterly Parikh review

Mario, everyone. afternoon, and Thank good you,

of environment headwinds. in the was power the a And still portion total challenging revenue, mix million, is XX% of We product continue are over revenues Transphorm very in represents a revenue be to quarter revenue increase of increase what the high in which report line prior furthermore, third Product product quarter XX% of with pleased and to a with $X.X our over XX% quarter-over-quarter. long-term macroeconomic the revenue over the XX% goals.

chargers greater customers these We the in of energy in power investments realized have and of server Tier marquee power, quarter design-ins fast Overall, also high the both wins, strong industrial in in computing, blockchain gaming, segment. adopter global systems leader successes and our X This production. growth like another to and we moving markets as to a serving some from multi-kilowatt high a design-ins energy, including areas. power XX% targeted ranging segment, direct design and low-power charging achieved sequential been adapters result in and HP than

areas these our both and partners. external to investing the internally continue future, in plan We in with

like technologies higher-efficiency easy-to-use, are efforts, advantages more versus and gallium these recognizing the Transphorm's competing of GaN. more nitride e-mode customers With FETs

into straight key focus execution our revenues. with metrics dive scaling Let's of a

million adapters vehicles. server and We low-power strong of X-year including segments, are solar again high to and pipeline, consumers; from microinverters; $XXX telecom and electric plus computing; tracking markets a strong now pipeline power China a latter and industrial, is portion calendar energy, Greater those to year. of in from see expect Asia A the we from markets half the this positive healthy the impact

with With total product quarter of revenues, achieved total continued $X.X penetration dealing power, while also revenue our QX high low-power, successfully continued growth we capacity with faced. and greater some XX% challenges we leadership over than XX% and chain the at in the in of this fiscal revenue XXXX of supply million

than power than more facilitation more our shipped bringing Of worldwide our design-ins our XX top-tier are and e-retailer. demonstrated fundamental XX performance penetration multiple this also GaN We of a in X production to well material a high by lower customer with total production We repeat as another bill X total for more in new in ease-of-use, laptop adapter for maker top XX cost customers. driven to market, of lower the volumes leading HP, this around these, as design-ins quarter. Tier added design-ins quarter, transitioning production And orders. with X with FETs

Again, new previously solution. has for ease of up increased with as enabled we by our MPS reference designs opened like The multiple well mentioned USB partners the as and us multiple leading including in opportunities XX, customers PD ODMs same this use, XXX-watt our to penetration within customer the solutions area. product's X.X

and as bringing total with XX added than in more now the higher to segment, including XX the new production wins. also production in this plus to We quarter, more design-ins moving XX power X the UPS server X-kilowatt

high power by accelerate us power, electric traction unveiled This adoption and revenue design CY new EV recently is in also all XXXX. market with higher with the design inverter likes Microchip with X-kilowatt helping space. evaluation easily our for at has helped with the in our addressing the X-wheeler partnerships not available we reference of grow potential not other the gallium available packages, robust or thermally and nitride, whom Our availability of kits

gallium establishing nitride Transphorm has led for power. in reliability

to another the fills way, similar which of achieved hours milestone exceeding And has and manufacturer quarter, is operations less operation, high our both excellent includes key hours traditional which now of fit field XXX billion passed than statistically till with GaN per products rates, of During we of the billion low power to date no our silicon-based this, knowledge. other power, devices. best by X.X

as while power continue gallium to higher in the than both nitride that platform. compatible as low pin We performance sample our nitride, for gallium to higher enable performance temperatures cooler performance SuperGaN to pin PQFN circuit. with same multiple Transphorm allowing these PQFN packages losses, sources use our delivering packages other our well customers of Both products lower

measure showcased carbide silicon frequency customers the the progress event. enable We solid in at go X,XXX packages R&D power results up very Electron Leading wafer epi stabilizing our leading meeting, front, higher made we Japan IEEE conference with to losses. now capacity, against well which Premier on International watts R&D our Our lower a also and higher to Device ramping. is

track year with delivered on partner us also manufacturing XXXX. will installations reactor our site. in allow expected capacity initiatives are to already to demand fiscal These new to expand We meet rapidly

both margins. as lower-cost developing We are well subcontracting also partners as future for sourcing improving dual packaging

design-ins are India, requirements watts, and chargers over snapshot including our Fortune where customer traction, wins, of in and XXX pointing suited new now markets Tier bit the segment, from to in our a watts robust as in FETs XXX to like XX initial larger increasing more the grid the growth and Next, as well well adapters nitride adoption fluctuations account design to market. with gallium wins a stricter X

our market a customers large content of bringing is a area added leader. important kilowatt designs space The Transphorm. in higher higher with and the multi power energy semiconductor us, for and impact very space worldwide energy for UPS for We GaN Ampere new higher

X.X in efficiency by in X,XXX-watt field power areas segment to panels. now strongly either the new pole with XXX-watt also win the Transphorm IP-protected the a Our followed led X the in or are already X.X kilowatt titanium products total has with in segment architecture, And others. architecture being microinverters server where serving X microinverter and the

certain only Transphorm's of teardowns, knowledge, endorsed has is performance, of To customers have on reliability best it featured gallium products. in the high one-stop power range efficiency, us high to foundation in this enabled our the kilowatt in ease third-party today, a kilowatt Transphorm programs and from making in use shipping power anything multiple to true the volume also previously class. company of of still the is be As low shop nitride been for and GaN

Strategic partnership are our and business. of key initiatives part expansion for our a government

increasing wafer wafer year of of for schedule deliveries our capacity XXXX. acquired our manufacturing project We the on global completed now calendar with end for and on track reactors all expansion are of

to ramp equipment We qualification well production. time, have especially the as time lead due made long these as for and ahead investments to times of

On incremental our side, XXXX. are partners in capacity for continue the JV wafer and align fab to with we FY investing plans

Yaskawa funding product segment, In the we from after development industrial pending meeting secured certain development the milestones. $XXX,XXX

Nexperia, partnership is Our continuing remains arrangements. automotive with a focus robust strong supply with wafer which

executing grow and with year our now segment. this customers, discussion addressing We XXXX. completing $X Asia-based X- X-wheeler design-ins feel more route of XXXX in CY on this early end multimillion could dollar about first billion segment of now EV XX our our for efforts the revenues plans and are where and acceleration includes than we by believe to positive and in TAM the We business in calendar win to a

converters customers, other for OBC 'XX onboard X-wheelers with revenues. are with design-ins for also and Japan-based our in meaningful potential EV year Secondly, wins chargers DC/DC certain ongoing the and CY next and

is have GaN X-wheelers, initial boost X,XXX-volt our This prospects. in opportunities where been also investigating is long-term now further could drivetrain growth area generating an We strong which our also interest. technology EV the

remained the billing program government on fiscal QX about our the side, Navy QX to $XXX,XXX. On at the fiscal similar

expected expanding to starting manufacturing second next $XX now significantly and X giving U.S.-based a we significant initial funding, which epi years, our over vertical United FY submissions later XXXX. fiscal our of the new wafer act to the to in business momentum secure of QX, nitride With epi States, a are this RF targeting helping core our is a We are expect be million CHIPS epi value portion make quarter. to program in aiming also and we manufacturing gallium wafer

conversion, next we microinverters, doubling summary, the TAM the datacom charges $X our we in power of solar, are power to inverters, in in spectrum. blockchain market unique the nitride to power and are GaN years. adapters and Products power a a today from for suppliers billion spanning Again, in address with energy, to to among position X production In $X the power areas, gallium a lower industrial, ramping. server over platform opportunity all that wide for and higher X GaN already market a differentiated billion-plus range core

growth Transphorm's both mid- EV 'XX. vehicles, and automotive in X-wheelers X- long-term, and beyond followed In continuing and XXXX, electric EV X-wheelers XXXX by the to opportunities first gallium large further with growth CY nitride

in kilowatts, in easy are with silicon systems We compact world solutions to field in billion our benefits, very silicon, silicon devices. key our nitride confidence enthused make our ability least, markets higher. gallium environmental the alone. from the with low fast Transphorm's electricity tons the needed to use in of but power and products, our over the energy with savings sub-X.X an serve fit with to XX,XXX against from other impact size or XXX-terawatt much especially metric to impact production like field traditional of that solutions alone a for XX smaller is term. have of customers been where deliver term, failure long and products gallium and interface GaN combination e-mode. Last fact over in X Transphorm hours with to nitride the now no have the higher efficiency, the a in of GaN in to watts XXX interface that customers of charging easy near those not And dioxide outside products impact Transphorm's performance efficiency, over And overall, today X year rivaling carbon and proven rates, high rate, ability impact for hours carbide

fit have this headwinds while in and in increasing the tackle and capacity FY towards over faced and near-term we past industry our current XXXX, broader and challenging expansion quarter, continue few sales all, positioned in to the our quarters worldwide aggressively to remain conditions progress fact, All outreach. long-term aided by the model Transphorm semiconductor both in both

our add heading solutions leadership to customers sales X higher closing EV end power area focus in aggressive the expanding One, generation, FY in on lower the design for year 'XX of expand continue areas. in Our remains key and wins calendar demand area X by our in XXXX. and also power Tier into further and

road increased supply and demand third, solutions products on for and strategic our chain meeting partnerships, be and both technology and on leadership in expect expansion ecosystem. key the to And 'XX we and partner management beyond. partners capacity prepared Second, focus map, to continue solutions exit FY

Cameron through With that, to want detail. over I in you walk to to go our financials

periods Thank by no the our you, in Primit, The as few to in today. filing. a reactors, auditing the There us epi nature a to providing conclusion, I grown made required I would behind addition wafer to reconfirm as in of of context to firm like related reference work. procedures. some especially notable of was took hello process days the prior to as was of was required wafer in remarks, This And that documentation will joining complete. and our had to to in there this everyone my quarter, the balance with this the adjustment up were our Japan. delay adjustment. delay a the In adjustments bringing establish audit result inventory result and a start our epi typical

start Let most recap quarter. recently now standard completed for remarks me results with our my our financial a of brief

adjustments reconciled results exclude non-GAAP my value to and results, in which are compensation, depreciation release For fair Non-GAAP note. GAAP will our convertible I our to held stock-based refer press and remarks, of table. GAAP both previously and amortization to

Total the as non-GAAP our product revenue a Starting with forms number, quarter increase statement. and XX% completed. and million was applications. revenue the power total quarter. being revenue, income generated in This of revenue of over with our majority and Product GAAP represents The the in revenue the the XX% $X.X target product prior just in met quarter-on-quarter. higher this now quarter, comprising majority

the target allowed now Continuing chargers range us customers conversion broad a XX execution Primit, strong applications, an noted product to exceed from of production, the quarter. in focus and to on increase prior a product $X.X revenue including in quarter. our power have adapters, is sales is as product across XX% current by revenue data This solid of of driven million. we And generate fast gaming, and sales, This centers. in increase over being

the working $X.X $XX prior expected is to in drive from X-year, government revenue future was revenue quarter. million program a X% The that an of quarter, the to million Government in secure is company increase new quarters.

awarded this in the term. near We program are be targeting to

wafer of quarter locations the dispositioning of nonrecurring XX%. an The evaluation The resulting risk inventory principal now while was with from improved driver line those our specs strategic manufacturing inventory, online, epi-wafer subassembly our gross bringing fundamentally given epi margin produced and epi an in negative was units assessment a optimizing of processes. in using epi process reactors all across internal

we support design-in capacity on driven resources short-term that capacity bringing traction. lower This record up expansion. our growth contributed with being associated Secondly, design also yields company win focuses to done expansion strong our anticipate the by being and

write-offs, strategic prior onetime these margins the Excluding with comparable the those quarter. are in

our efficiency margins product in scale of model we towards continue and progress ongoing margins receive benefits new activities will to of long-term we remain actions, that A introduction, number excess of as XX%. contribute to we will including continue grow to cost and Our this. direct and consistent, gross

sales deepen Operating payroll non-GAAP in continue our to This were the in being quarter in compared leadership activities as quarter. a both an basis including by million on and largely to the in current increase driven prior we $X.X appointments increase $X.X is million team operations.

The contract. costs company reduced Non-GAAP together attributed here quarter with our of prior to the primarily with was same just is referenced a OpEx $X.X absorption associated personnel government the the increases R&D in across year in million. increase

EPS. increased from loss quarter to to $X.XX $X.XX. in the non-GAAP EPS The Turning

non-GAAP the $X.XX write-off, EPS the of inventory strategic non-GAAP within prior in onetime $X.XX EPS be would the the quarter. Excluding

in perspective, an solid activity. continue From evidenced our our customers improvement production in see operational we to and by in markets as design-in traction targeted both

Our short-term long-term and medium- capacity growth. product enabling expansion execution focus support being on to to

of company. We the also growth engine long-term in continue to the invest

balance sheet. the Turning now to

million Operational receivables burn, result reduction government as in in current reduction shipments. This quarter. investment from program. transition we QX Our shareholders' government cash $X.X of at also our equity by a the at excluding QX saw a end as increased capital the our primarily the our remains timing driven a collections to of was quarter solid $XX.X the of million. in

quarter, as $X Our and Cash million by of the shipments. quarter equivalents AR timing at QX increased $XX.X our in were driven noted the the end. cash million as

We expect current cash the burn the to decline in quarter.

liabilities additional CapEx Other continued stable. capacity growth. our we to assets Our look largely as to and enable investments remained support

ahead, Looking to growth our progress our open our continued strengthen the production invest customers. in and enabled continue ensure to that we're we and continue sheet to balance design growth, to opportunities remain able to further by to

accounted now revenues. target growth Transphorm rapid streams cash-generative The X-year product excess there current From of operating X of in look for high-growth perspective, Turning income: licensing, adoption of model. building product. XX% different expect revenue of continue. company is government the GaN to to And process markets are total forward, trend revenue and line end over a year, our has this with a in and we the business. In multiple across top XX%. as CAGR anticipates a our we fiscal

gross able in now company margin to confident improved from All are cost an the will that be benefit the of over achieve We can segments our overall XX%. current products. structure

to including of actions, margin, introduction, operating new ongoing to invest our company scaling support operations. of aspects core to will assist efficiency cost respect With number continue from activities a addition, In product all the discrete us. and will

a us gross stable deliver into ultimately line. translate the XX% environment will that have We margins to model an margin over operating our will OpEx structure, allow bottom an to

highlights. Transphorm conversion power devices. pioneer key is leading provider listed a publicly NASDAQ few and Exchange GaN a now Including the of with on

opportunity. growing is disruptive best-in-class technology addressing a Our market large

place. commercially pipeline strong are in ramping a with We

and blue-chip underpinned comprehensive All network today meets a strongest sheet, that solid a a of position balance balancing across of have We a customers' wide IP to strong deep by and have have partners and levels product established range needs team. a power offering industry's the segments.

the to remarks, materials we our any proceed. concludes now open would call That Operator, and prepared like to and questions. please

the [Operator Benchmark Instructions] from Company. Our first question David of line comes from Williams

maybe I guess first. Primit

what I you you that around about the some Can that really opportunities. think give of this And talked seeing? do you what's that of of When expect of you're pipeline that time you talk be $XXX what is pipeline? to million. think kind in the is you realized? heard first it -- as kind you maybe of kind kind And about that please? about bucket, in included If clarity we've And

Sure.

So the pipeline way funnel design-ins defined. sales design from stages systematic are we a we pipeline various have to the -- XXX% at it's -- quantifiably tracking of XX%

all the team are these -- being again sales XXX% the our opportunities stages pipeline, various discussed So production have that various orders. customers, at repeat with opportunities, in design qualified

very it's than like -- with our to more does only up another exciting not example, totals Nexperia. over actually epi our this That's are, partners, where products actually, million. strategic include $XXX David, well power It that pipeline. that totals And wafers for to And up million. includes we actually $XXX

over million million And million, weigh brings this it pipeline, if if is over pipeline number that epi about wafer power well is probabilistically another the weigh and $XXX and growing $XXX And million to $XXX is weighted, pipeline, wafer also $XXX that to plus to we and we adding products the the probabilistically -- talked over of X -- rapidly. pipeline take probabilistically we that I the all years.

quickly. you're very, of those And helpful. And wins. kind design then Very just maybe about obviously, very are thinking growing the if

maybe than think And think expand you of up, months? your will demand? maybe you're about today how you're do do over you to sufficient next XX targeted that to be that? kind further this fulfill about to capacity at bringing thinking where your the opportunity capacity XX Just And capacity still that

ahead Correct. Yes, of why part this investments that's in we reactor made time.

million at reactor-based If in look X investment. several of investment, both capital dollars most quarters last CVD our you included

the cycles preparing long are well we especially that as we installation qualification. time, some So ahead in get of for that as of with

in It delivered, And allows track. with Global of XXXX year and very like also the of track bringing reactors we we in our previously on with place us of which opportunity noted. said, about remains also that like on is that like Wafers, calendar facilities excited first are -- are expansion partnership for where are future for reactors. We there for the end process we now up

And ahead, the look where about then is that secondly, mentioned as U.S. we CHIPS we program.

potential help We to and further act also expand from with ahead time, the CHIPS of try need our program. capacity

just And Fantastic. maybe laptop Okay. side. the on one

making little competitors, how yourself are OEM or of those talked bit Are think nice of specifically? there. at more ODM And You you're that seeing market level? you about developments differentiating progress some kind the but a some you with you versus maybe this, the the of about if

Sure.

both the power typically chargers, ODM involved. laptops, on So lower are OEM closely specifically the and it's

the of OEM the initiated projects ODM. are the and designed then Some at at in

lot gives designing traction further OEMs actually, projects the which working about, for And of talked are across win like credibility from that helps RFQs both -- marquee excited we really we directly those us well. of a progress. the those different with gives example, they so us Some sell various OEMs, in get win the at at what about, accelerate then expect ODMs, ODMs the that win, as are to multiple the we what HP ODM us for visibility the ODM because really and

to your part with And seamlessly it's the has have the our we GaN designed similar integrate Transphorm FET things reason of world. the second question, that before, your outside said

So and controllers. use can we standard drivers

is for we with any In so helpful. literally in. are because integrated is of driver very need it part as low-power fact, the the And integration the side the already that controller, on don't free drivers comes the controllers,

we -- gallium nitride gallium with and gallium all nitride, nitride have see competing our better Of actually What nitride standard silicon. what that we right? done, to Second, replace improvement loss course, also XX% our gallium X%, simply if customers gallium done our silicon a is versus we is e-mode nitride, This take better. is have performance of immediately.

the performance, those momentum billion and now lower of all reliability, things X X growing XXX our mentioned, to field the operation ease that our things, our those of adding of now use, in power all we hours space. our So are

Very your good you and kind of add if gross profile Once But you think last to up you margin there. GaN And one the and term? real about not ramp leave you and and levels talked a in do there's to of there's XX% value think run product, XX-ish kind above structural get Cameron longer-term of XX an range to Or one do color the that into here, longer you just out. about range? maybe the margin. you get anything keep production that that opportunity percent you think you're -- will

that us was there prevent anything though we'll think value. margins. be the from and higher would David, higher is maximizing of I margins a releasing, the the maximizing can mean, that think in of feel from glean margins don't new obviously, structural, very we'll We nature. there. -- economies products marker if terms certainly good that Obviously, hunting product I of XX% targeting and things we I that get introductions, we're scale

of next Riley. from Craig comes from the B. Our question Ellis line

with the Congratulations on design-ins progress the all wins. and design the

percent wanted And that expect the the help us just as will laptop calendar through an business. up product substantial I given revenue? how that question Is product a of profile is? design-in/win of the on follow revenues? 'XX that So how we Could you should you're earlier seeing, on understand to percent evolve

One things in X the mentioned. win. market started of first -- an things laptop have some we HP, you is wins with after it adapter And there are about the laptop all. of there that thank shipped it Craig, which already. And with production started adapter significant are -- X we

to has has XX the don't kind are next what's volumes. go designs a we over multiple those that that So the those significant volume of we opened to synonymous that disclose months. of equally design-ins or what it up done that's volumes volumes, So -- same with grow those to customer, important, right? multiple importantly, the kind within high customer But but aftermarket expect is exact are more is

plus ODMs, Secondly, million -- what designs at be and it's are designs them are the can inbox, unit opened targeting has more that up the done of is at some ODMs which these year we about kind customer, talked then opportunities a worldwide leading -- didn't of manufacturer. second, second name in the cases. laptop the some even we but we or said And higher

shipped towards have production we high-volume also. our So initial quantities that

calendar we those to those, in And this So designs ODMs the customers. of for themselves at a expect, half both then especially open are that ramp year for the OEMs. variety second up respective of ODMs the it of more doing

So of How adds about percent products how year Primit, you're traction across the win of think very a revenue revenue, should that how good mix, we just will percent product from that as a product a up? seeing design all be meaningful host that exiting this given of other as well?

Yes.

us expect -- of the very because We than this are overall, power is superiority our more were the of, still -- the We quarter. or feel revenues. for high now high-power XX% again, still we growing XX% revenues about low -- we So the December power products.

say, remain the value and that as trend, product of the that to expect power X/X grow. We to That's our expect rough -- of The we expectation revenue, XX% percentage power, low high a X/X to expect with at we revenue. both that. XX%

That's talk the really about capacity then little bit helpful. more a And can point. you

calendar 'XX help And much Is year? are in year? the through Very revenue through linear steady fourth setting it will the up. we us capacity fairly expect been you've the of see see that it's should quarter capacity would the But development? calibrate become generative? how pace Just ramp a with at capacity ramp which all nice that us place. reactors to to the So expectation that

Yes.

epi -- online. reactors and kind existing, of at X the reactor that from X in One to maximizing there. have more reactors capacity, bringing wafer the of specifically output we have So terms are is of things we the look the

talked online. Cameron certain bringing of Those not online Transphorm at reactors about reactors early the So the phase yet. were were but existing that

coming So are up. those

Some online. of already them are

production shipping volume are them. We with

are -- coming will Some online.

quarter. to production them fully to expect in June in We be April the

nice. very going that's So

now, part we And And that as both by previously, new the expected end. is as those more fiscal we of They then but are second XXXX. our have in of online production reactors March kind they're Wafers, well of expected like the to to California place XXXX. be be are reactors and acquired, to year in by -- in Global said the partner. capacity have the fully production January in the online end calendar facilitized early of in And

this second of to January this And quarter. with about the very quarter, all David excited time having to the in allows demand the us what allows again, us half what and the is, at in of of quarter year capacity that do the calendar current all ahead and March this space capacity do we to the are current future,

about $X.X January quarter. to million March tracking the million to $X are We in

X in course, uncertainty to plus Of weeks remains. there's little go bit A China there. still of

quite But demand on power. in capacity And converting the the traction the on appropriately side, power asked, poised high flip question, specifically especially to growth and revenue, year. the with and we calendar side, the strong the both strong expect you a are to designing again well half in low of second

and in issue quarter, with a for as will of $X.X regards into of been sense. we that makes COGS all of use capacity those active persist? the fiscal the you a to cue part segue no inventory longer through look to have And And charge that Cameron. identified fourth third ahead? that quarter current year, charges then see be the resolved? those in million expect that lot the That Cameron, the a should we at I'll as calendar as quarters given something the Or we types issues ramp

we we the had in not that think not built growth. that for see is got have Sure. of you bring of I There's an up good the think always And the up Japan. noted, in we relation This our focus, some question. much that short-term time processes, a the and specs. quarter. our the solved that was Thanks, And reactors, will yields, inventory of magnitude that this in in terms up as adjustment one you that as lower We've as over QX. future. mean improved I we particularly Craig, more remarks. in magnitude the when But mentioned had I the was production. in to of of reactors in optimized We've brought Primit to a it's issues things we experienced possibility some prepared

it. Got

over So and a bit Japan significantly, mostly but this maybe side, States little was there.

Okay. Got it.

Yes. characterize good to way That's yes. a it,

Yes.

things X Okay. those factor just that And listed could you you as the can your just help we remarks, think margins those business Can into toward -- had the then guidance, broad 'XX? through things of insight some margins? calendar What 'XX finally, as you back levels? us specific take and some current gets how business prepared into rate much just target level. can with margin ultimately coming gross exit you in fiscal go it for year looking Not fiscal but does for off gross gross builds tailwinds of the and the mean for this strokes of

Sure. a great No, it's question.

product to new got to products scale, particularly extent. efficiency certain on activity, the them cost want of mean contribute newer you've each one But I design-in our the think activities. will is probably with that biggest obviously margins, the introductions, helps we which our people Craig. get I a

As they business, business, of and we the grow on lower costs operating as the have drag we are we the business. margins do fixed much a grow

we the So think, that's margins that going the to go as I forward. be one, decreases

other that them looking as the be once this of in FY course over we're and that steadily increase pretty to assist and revenue I product we will And secure looking of that that the we're will certainly And government factor 'XX. secure, stream increase think that well. program FY will 'XX the to the

So X factors. X different or

the points of is the I seeing X biggest on just one, of think in margin. as and design-in that X And scale the execute to think, contribute I terms of each we're will of business activity the product them today. we

Craig-Hallum. next Instructions] of question Richard Shannon [Operator from comes line the Our from

quarter think here. I'll kind want margin hit up to the follow Cameron. gross I which the on, December on you maybe of I topic, replay just

the characterizing the catch that margins as year, I the write-down yield gross we've correctly? excluding issues. similar Did think I the that past seen inventory recent in and you're

right, Yes, That's Richard. characterized. that's perfectly

Okay.

So $X.X a if get, million, I I here. X% I number think, take out the

yields XXs is into the the take would that then, teens somewhere So right? or us

had to of associated is capacity. historical quarter yields current $X.X we issue the in million a kind Japan. that And up centered also other bringing Yes. The lower particular with

both short-term Richard, of of, yields, obviously, model. These comparable think So part long-term neither those instances, of I be margin are when comprehend them I about because will a instances.

Okay. And March this to is that something in point short term, or beyond? that hear issues about you'd any see quarter yield

into you quarter. much to that's same from may improved that never There's away so extent like certainly our fix that's that company. we to bring strategic one-off next this lesser -- fair than one you quarter, allow optimize This the But a To the It scale always quarter. in X and not go a to things linger to bit to adjustment say. was XXX% result, extent to experienced saw when this little a processes in us right use we anything saw. of the we

Okay.

impacted bit -- of to So kind time. can we'll see it we'll towards and maybe over level, maybe and margin -- get it so if a March little a grow normal see margin in a I in XX% June hopefully more then after,

if X XXs. the prior low mid-teens So saw we at I and last between look to quarters December,

higher So it? would end hopefully, to about somewhere at that think that would Is think way fair it in fair about range, that June. in be happen to a the

so. think I

from those following And I the think on a scale mid-teens manageable continue as to question, the should you number grow conservative see you're and looking the pick margins company at we as March is for company quarter. up. Craig's

exactly we what expect -- March is pretty quarter quarter you to. alluded is June quarter target Cameron the to said. much the the For what And June

V the well Gen to just in And call last IV on referred of one products, here as here understand this getting the trying is dynamic to Perfect. Gen -- do this us today that Gen transition we split And a V older? here. fast in how you IV, year? sit even Maybe can if the of Gen and you see then where think, newer I one or as into benefits between give other Okay. sense call, the and

Sure.

Gen the power, areas design-ins, low that's some already is So IV we of have reasonable percentage high But right transitioned. of are transitioning still had one III, power and we both mix. the Gen which in now, the we

is what microinverters, about company very some depends tends power area sometimes we be XXX-watt only micro are actually inverters, application We've so believe talked I to X,XXX lower faster got GaN watts, production the We it in far. the transition. who's with nice wins right? the or So wins. announced production

an going That Gen are IV, So to was segment even us. for that example. to we -- that's exciting transition for

cusp. Gen Gen of V, of some we only Gen have design our very early have wins on some the V, just V. our with UPS wins, been

So remains. that whole transition

older the on Gen our right would So on now, of the V still III I Gen the supporting generation just and Gen median introductions. IV side is, say, cusp

we we second the a driving also the key which alluded in thing factor presentation, generation, of But is and the independent packaging, for do is like example.

for bringing partners, second are we We other up both subcontractors. up cost target as purpose source well we down, volumes skilled the of as bringing as are packaging packaging

partners. points And the volume improvement on time margin over XX And new additional would with of higher that independent side power the generation. that, to X especially some of with our of can be be the packaging

it, those back to but probably That's helpful. that's I'll get and comments Okay. review to very have great detail.

for it be a the $X.X revenues the Let's $X the are this below million talked programs levels anything previous going past? per question, talked, $X.X of recent prior quarter about Wondering of going quarter? think, million. kind to see, Or you you to in million government contributing the think I current is quarter I about kind if be being to on to

The million... $X.X

Go ahead, Cameron.

really was that down I million, $X.X Richard, to that going fact prior is program. just winding the of we're say the the indicative

we this would the if contribution the from that we awarded should get quarters, You were government quarter. saw hope we see run in higher we greater for are that award, rates a earlier would March in and well positioned

into at happens? Is could it these levels, so it when if it be that and upside baked all range at

Yes, that's what the range is about.

is the what range that's for. Yeah,

Got it.

helpful. That's Perfect. Okay.

Let's the you've about see or and here. Primit, X-wheeler I X- on for more specifically talking a few on quarters opportunity guess here. the automotive been

wins last building about that getting some in fiscal for you of And I multimillion about in ends I think in a 'XX talked talked this calendar dollar this here revenues quarter, think place year. you base quarter March.

is just last change push time a quarter. get understanding sure viewpoint relative new a my to in to I here in So want frame comments here. just of to want that possibly make this your or out

activities. right, I is market, think we the itself we are on design-in there, the thing, market probably working -- in the and the

had calendar end wins the dispersed production we believe said XXXX. I by So of year

the XXXX. in put year that calendar ramp would So

Okay.

and glad think straight transcripts that fair okay. okay, I here. it's I 'XX that thought in have -- I'm fiscal enough the to that away

Kind line. Let's jump see on a of here. and Primit, big question here, picture I'll

think I long again costs getting drivers here of down one big over the below period is a time of silicon.

in even you we get that when happen? of point? here I to you how as to your you have point that of first do will prices and And And silicon? obviously inflection getting think You in here you demand, see a that get guess, do But value-add before here. the sit do lien terms where and specifically GaN chargers towards of adapters

that, high which and It's, the that in GaN, both again, carbide improve there. general, for to and is parts right? power, power, significantly us we for carbide is in the and happening X low silicon costs On high on us, power long-term inflection and silicon Transphorm, on a take it we performance demand also directly for with

the taking On low-power side, silicon. on it's

early lot ODMs, our call. in ODMs of of talked about Some we and a the OEMs the part

the this of one commented, adapter market are actually they the X see the say nitride. from gallium what from in entire of world, years, X top years, Some they to the is they ODM X our ODMs expect they we in expect particular is others move serving, that trends one in Transphorm

So lower respect solution. the to of with that BoM total we trend cost the happening -- like is we said, enable

wins especially some BoM increasing in of penetration actually, very today, customers the even want should when because is -- the they So reasons side and these similar adapter -- we inbox, silicon. of get getting for our or are the -- to what what at the same look very, they as cost be the the is

the approaches we several of GaN, years, over GaN. cost silicon, cost enabling the time, and next we today. the the the of that lower the value get definitely BoM Over performance So the price of are

now like conference would turn to Primit for back Parikh I to remarks. the closing

growing enabling GaN all. execution amount and Transphorm's our to GaN day win forward tuning you significant of Thank Thank for market, enabling you and in, and and so every efficiency everyone, the we much, look savings. which energy to products, customers

This concludes today's conference call. Thank you for participating.

may disconnect. You now