Navitas Semiconductor Corp 10-Q

Item 1A. Risk Factors. We are adding the following risk factor to those previously disclosed under the category heading “Risks Related to Our Business and Strategy” and mofiying certain risk factors previously disclosed under the category headings “Product and Technology Development Risks” and “Supplier Risks” in the Risk Factors section of our most recent annual report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 19, 2025, as augmented by the additional risk factors set forth in the Risk Factors section of our quarterly report on Form 10-Q for the quarter ended March 31, 2025, filed with the SEC on May 9, 2025 and our quarterly report on Form 10-Q for the quarter ended June 30, 2025, filed with the SEC on August 4, 2025. All of these risk factors should be carefully considered in conjunction with the other information included in this quarterly report on Form 10-Q. The risk factors we disclose, as well as other risks not currently known to us or that we currently view as immaterial, could materially and adversely affect our business, financial condition, results of operations, or the value of our securities. Risks Related to Our Business and Strategy Our increased focus on AI data centers, performance computing, energy and grid infrastructure and industrial electrification, and our reduced emphasis on mobile and consumer products, may not achieve the anticipated results. We recently announced an enhanced focus on AI data centers, performance computing, energy and grid infrastructure and industrial electrification, and a de-emphasis on mobile and consumer products. We may not successfully execute our strategic transition to these new markets and customer applications, which could adversely affect our business, results of operations, and financial condition. We are in the process of redirecting our strategic focus away toward supplying products for AI data centers, performance computing, energy and grid infrastructure and industrial electrification. As a result, we will transition our strategic focus away from mobile and consumer electronic markets - the primary source of our historic revenue. This strategic realignment entails significant operational, technical, and market risks. Our success in these markets depends on factors including our ability to (i) develop and scale semiconductor solutions that meet demanding power, efficiency, and performance requirements of our customers; (ii) compete against established incumbents with substantial R&D and manufacturing resources; (iii) anticipate rapidly evolving customer needs and technological standards in these high-power and high-performance segments; and (iv) secure design wins and long-term supply agreements in new and unfamiliar market segments. This transition may also require additional capital to execute upon our strategy, which may not be available to us when we need it or on terms acceptable to us. If we are unable to secure the capital needed to execute upon our strategic initiatives, our business operations could be materially affected. Products for AI data centers, performance computing, energy and grid infrastructure and industrial electrification generally require larger, more complex die sizes, advanced process nodes, and longer qualification cycles than consumer products, leading to greater up-front R&D investments and longer payback periods. In addition, our existing manufacturing and supply-chain relationships, optimized for high-volume consumer devices, will need to be adjusted for these new products and customers. Any adverse outcomes in product qualification, manufacturing or performance could materially harm our margins and cash flows. 40 TABLE OF CONTENTS Furthermore, as we reduce our focus on the mobile and consumer markets, we may lose existing customer relationships and brand visibility in those sectors. The markets for AI data centers, performance computing, energy and grid infrastructure and industrial electrification are also subject to cycles of over-investment, component oversupply, and technological disruption, which can lead to sharp fluctuations in demand and variability in results. If our transition does not yield expected revenue growth or margin improvement, or if emerging competitors capture key design opportunities, our business, financial performance, and long-term growth prospects could be materially and adversely affected. Risks Related to Product or Technology Announcements The market price of our common stock may be affected by announcements regarding the selection of our products or technologies by key customers or industry participants, even though the events and corresponding business opportunities may not reflect binding commitments or future revenues. This may be particularly true following the Company’s announcement of a pivot towards high-power markets. Investors should not place undue reliance on such announcements as an indicator of our business prospects, future performance or otherwise when evaluating the value of our common stock. From time to time, key customers or other industry participants, with whom we have established relationships in connection with our product and technology development, may publicly announce that they have selected, qualified or approved our products or technologies for potential use in connection with their offerings or their own development programs, or that they are collaborating with us in connection with such programs. Such announcements may generate significant investor interest and may lead to temporary fluctuations in our stock price as the market reacts to perceived business opportunities. This may be particularly true following the Company’s announcement of a transition towards high-power markets. However, the events and corresponding business opportunities which are referred to in, or implied by, such announcements may not constitute binding commitments, and there can be no assurance that the underlying business relationships will endure, or that any such business opportunities will be realized. Our success ultimately depends on customers placing orders for, and purchasing, our products, and there is no guarantee, based on such announcements, that any customer will ultimately place orders for our products or that any such orders will be material in amount. For example, on May 20, 2025, Nvidia Corporation announced that our company had been selected, among several “key industry partners across the data center electrical ecosystem,” as part of an Nvidia initiative to advance innovations in high-efficiency, scalable power delivery for next-generation AI data centers. We also announced this technology collaboration with Nvidia on May 21, 2025. Although our collaboration with Nvidia does not involve any binding commitments by Nvidia or any customer, and there is no guarantee that we will achieve any revenues as a result, our stock price and the trading volume of our common stock nevertheless experienced significant increases in the days following our announcement. As a result, our stock price may experience volatility based on news of potential activities by customers or other industry participants that may not ultimately translate into actual sales or revenue. Investors should not place undue reliance on such announcements as an indicator of our business prospects, future performance or otherwise when evaluating the value of our common stock. Our ability to accurately predict future revenues and profits is inherently subject to significant uncertainties, particularly as our products are designed to disrupt existing markets and create new or emerging markets. For example, the success of our strategic focus on products intended for high-power markets, including AI data centers, performance computing, energy and grid infrastructure and industrial electrification, depends on our assumptions about end-customer acceptance of both our products in those applications, and our assumptions about customers’ acceptance of advanced system architectures for servers used in high-power markets, either of which may turn out to be inaccurate. 41 TABLE OF CONTENTS Unlike established markets, such as those for legacy silicon solutions, where historical trends offer some predictive value, new and emerging markets present unique challenges: • Market Acceptance and Addressable Market Uncertainty : The demand for our products, and our customers’ products, in new or emerging markets is difficult to forecast, as customer preferences may not be fully known and can evolve rapidly. Further, demand for our products depends on the acceptance of underlying new and developing system architectures. For example, our predictions for the use of GaN- and SiC-based products in 800V AI data center power applications depend on assumptions regarding the acceptance and growth of 800V systems themselves. • Lack of Historical Data : In established markets, revenue projections can be supported by trends from prior periods. In contrast, there is little or no precedent for products aimed at new use cases, rendering traditional forecasting methods less reliable. • Unpredictable Competitive Dynamics : To the extent our products reshape or create new market landscapes, the competitive environment may evolve in unexpected ways. For example, new competitors may emerge, or traditional competitors with established R&D and manufacturing resources, and long-standing customer relationships, may choose to offer competitive GaN or high-voltage SiC solutions. • Cyclical and Volatile Industry Conditions : The semiconductor sector is known for cyclical volatility. This inherent unpredictability is amplified in new and emerging markets, where demand can swing sharply due to macroeconomic events, supply chain shocks, regulatory changes, or technology cycles. Because our growth strategy depends on the successful creation and expansion of markets that did not previously exist—or were substantially different prior to our entry—we may experience periods of inconsistent or lower-than-expected revenue growth and profitability. These factors may materially impact our operating results and financial condition. Investors should not rely on past performance or management projections as an indication of future results in these dynamic markets. Risks Related to Our Supply Chain and Manufacturing We rely on a sole supplier for our GaN wafers, and the announced discontinuation of GaN production by this supplier may adversely affect our operations, financial results, and growth prospects. We have relied on Taiwan Semiconductor Manufacturing Company Limited (“TSMC”) as our sole supplier of gallium nitride (“GaN”) wafers, a key component in our product offerings. On July 1, 2025, TSMC announced its intention to cease GaN production in July 2027. While we have taken proactive steps to mitigate this risk, including expanding our collaboration with Powerchip Semiconductor Manufacturing Corporation (“Powerchip”), with qualification of initial devices expected in the fourth quarter of 2025 and mass production anticipated in the first half of 2026, there is no assurance that Powerchip or any other supplier will meet our quality, volume, cost, or timeline requirements. Any delays or disruptions in qualifying or ramping production with Powerchip or other alternative suppliers could negatively impact our ability to fulfill customer orders, lead to increased costs, or cause a loss of revenue and market share. In addition, the transition may require us to modify our designs or manufacturing processes, which could result in increased engineering costs and potential delays in product availability. We are continuing to evaluate the impact of this transition on our financial statements, and there can be no assurance that our mitigation efforts will fully address the risks associated with TSMC’s exit from GaN production. Our failure to secure a stable and diversified supply of GaN wafers could materially adversely affect our business, financial condition, and results of operations. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. None. Item 3. Defaults Upon Senior Securities. 42 TABLE OF CONTENTS None. Item 4. Mine Safety Disclosures. None.