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California semiconductor maker goes public in billion-dollar deal amid chip shortage

Russ Mitchell, Los Angeles Times on

Published in Science & Technology News

Sheridan and another Navitas co-founder, Chief Technology Officer Dan Kinzer, worked together at El Segundo-based International Rectifier, an old-fashioned name that conjures images of short-sleeve, button-down shirts and pocket protectors. (That company was later sold to German chipmaker Infineon.)

Sheridan, 55, sees the old-school image as an advantage. "We're made up of seasoned executives," he said. "We worked at big companies. We know how to scale the business."

Gallium nitride as a chip material has been around for decades. It's already common for use in video screen LEDs and at cell tower base stations.

The material is much harder than silicon, and its crystal structure can take higher voltages while significantly boosting "electron mobility" — which in lay terms means data can be crunched faster using less electricity per calculation.

The drawback is cost. Silicon has dominated the semiconductor industry almost from its beginning, with performance evolving rapidly alongside a dramatic reduction in price.

The "secret sauce," Sheridan said, is the company's ability to combine several functions onto one integrated circuit, which analysts say puts it ahead of the pack.

 

Navitas's chips are fabricated by Taiwan Semiconductor Manufacturing Co. and packaged onto circuits by Phoenix-based Amkor.

Within two years, system costs for gallium nitride should reach parity with silicon for charging and similar applications, Sheridan said.

Although Navitas might have been sold to a larger chip company, Sheridan acknowledged that given the easy financial markets of 2021, a public offering made more sense.

Navitas went public through a SPAC, or special purpose acquisition company, a popular if controversial alternative to the traditional initial public offering which requires less financial disclosure. It can be used as a quick way for management to cash out on a company that might not survive closer scrutiny.

The sketchy reputation of SPAC deals, Sheridan said, gave Navitas pause. To demonstrate that the company is in it for the long term, he said, it created a three-year lockup period before management can sell stock. Many SPAC lockups are set for a year or less.

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