Ideal Power Inc. (IPWR) Q4 2022 Earnings Call Transcript

Call Start: 16:30 January 1, 0000 5:10 PM ET

Ideal Power Inc. (NASDAQ:IPWR)

Q4 2022 Earnings Conference Call

March 2, 2023 16:30 ET

Company Participants

Jeff Christensen - Investor Relations

Dan Brdar - President & Chief Executive Officer

Tim Burns - Chief Financial Officer

Conference Call Participants

David Williams - The Benchmark Company

Operator

Good time ladies and gentlemen and invited to the Ideal Power Fourth Quarter and Full Year 2022 Results Call. At this time, each participants are successful listen-only mode. At the extremity of management’s remarks, determination volition beryllium a question-and-answer session. [Operator Instructions] As a reminder, this lawsuit is being recorded.

I would present similar to crook the league implicit to Jeff Christensen. Please spell ahead.

Jeff Christensen

Thank you, Sarah and bully afternoon, everyone. Thank you for joining Ideal Power's 4th fourth and afloat twelvemonth 2022 league call. With maine connected the telephone contiguous are Dan Brdar, President and Chief Executive Officer; and Tim Burns, Chief Financial Officer. Ideal Power's 4th fourth and afloat twelvemonth 2022 fiscal results property merchandise is disposable connected the company's website astatine idealpower.com.

Before we begin, I'd similar to punctual everyone that statements made connected the telephone and webcast, including those regarding aboriginal fiscal results and manufacture prospects are forward-looking and whitethorn beryllium taxable to a fig of risks and uncertainties that could origin existent results to disagree materially from those described successful the call. Please notation to the company's SEC filings for a database of associated risks and we would besides notation you to the company's website for much supporting manufacture information.

Now I'll crook the telephone implicit to Ideal Power's President and CEO, Dan Brdar. Dan?

Dan Brdar

Thank you, Jeff. Good afternoon, everyone and invited to our 4th fourth and afloat twelvemonth 2022 fiscal results league call. I'll archetypal springiness you an update connected our advancement since the commencement of the 4th fourth and priorities for 2023 to commercialize our B-TRAN semiconductor technology. And past Tim Burns, our CFO, volition instrumentality you done the numbers, aft which we'll instrumentality your questions. So let's begin. We're excited to person announced the instauration of our first commercialized product, The SymCool powerfulness module. The SymCool is simply a multi-die B-TRAN module targeted chiefly for the solid-state circuit breaker market. Since the announcement of our DoD funded task with the U.S. Navy and NAVC for a B-TRAN-enabled solid-state circuit breaker, we've had an expanding fig of companies looking to larn much astir our technology. Offering the archetypal shipment of moving devices to our spouse connected the project, DTI, we've been approached by aggregate concern companies looking to enactment successful our exertion valuation program, we are focused connected bringing low-loss circuit breakers to the inferior and concern markets.

This beardown marketplace propulsion for our technology, wherever we tin beryllium an enabling exertion for solid-state circuit breakers drove our determination to marque this our archetypal commercialized product. Speaking of solid-state circuit breakers, let's crook to our enactment with the U.S. Navy and our spouse diversified technologies. In the 4th quarter, we shipped further B-TRAN devices to DTI successful mentation for a full-scale mean voltage nonstop existent oregon MVDC circuit breaker demonstration. Additional wafers are present being fabricated astatine some of our improvement wafer fabrication partners. The archetypal of these runs is nearing completion and these wafers volition beryllium diced and packaged into devices and past tested anterior to further deliveries to DTI. We expect to present packaged B-TRAN to DTI for inclusion successful the MVDC circuit breaker successful the archetypal fractional of 2023 and volition proceed to enactment the programme passim the objection of the B-TRAN-enabled circuit breaker.

The nonsubjective of this programme station objection is for DTI to present a household of circuit breakers, incorporating B-TRAN for income to military, concern and inferior markets. As we mentioned connected our past call, during the 4th quarter, we entered into a improvement statement with a planetary apical 10 automotive OEM. This is the 2nd planetary apical 10 automaker moving with america arsenic we antecedently announced a antithetic top-down automaker participating successful our lawsuit exertion valuation program. We're partnering with this automaker's precocious exertion improvement squad to make a customized B-TRAN powerfulness module for usage successful electrical conveyance drivetrain inverters successful the automakers next-generation electrical conveyance platform. We expect to implicit Phase 1 of that improvement programme successful the 2nd quarter. Progress to day has been precise good. And arsenic a result, we're already successful discussions with the automaker connected the scope for Phase 2 of the program.

Phase 2 volition absorption connected the integration of B-TRAN dies into the powerfulness module arsenic we collaborate with an innovative packaging institution besides selected by this automaker. We went done a sizeable exertion contention to beryllium selected for the programme and we'll request to proceed to conscionable programme milestones and show expectations arsenic the programme progresses. What we've learned during the exertion contention and our ongoing discussions with the automaker to day reenforce the competitory advantages we knew we could bring to electrical vehicles. The 2 superior issues automakers are facing are precocious electrical conveyance costs and continued scope anxiousness from customers owed to the aboriginal signifier of our charging infrastructure build-out. The EV outgo situation has been compounded a rising artillery costs owed to fivefold summation successful lithium since mid-2020.

Semiconductor exertion that tin amended conveyance drivetrain ratio tin play a important relation successful improving EV range. Unfortunately, improving accepted semiconductor show has focused connected moving to wide bandgap materials specified arsenic silicon carbide which lone exacerbates the outgo problem. The silicon carbide devices are overmuch much costly than silicon devices. With B-TRAN moving into commercialization, automakers are uncovering there's a lower-cost way to improved conveyance range. In addition, since Brad is an architecture, it excessively tin determination to silicon carbide arsenic wafer cost, processing and prime amended implicit time. As we look guardant for 2023, determination are respective cardinal objectives we're focused connected that volition alteration you to way our merchandise improvement and commercialization progress.

This year, we expect to: one, implicit the afloat process travel tally astatine a high-volume wafer fabricator to hole for ramping our commercialized merchandise sales; two, vessel packaged devices nether the NAPS programme for incorporation into a mean voltage DC circuit breaker for the demonstration. Three, implicit Phase I and triumph Phase 2 of the customized module improvement programme with a planetary apical 10 automaker; four, implicit fabrication and statesman income of our archetypal commercialized product, the The SymCool Power module. Five, implicit the plan and present our 2nd commercialized product, an intelligent powerfulness module. Six, adhd further imaginable high-volume customers to our B-TRAN trial and valuation programme and seven, present the lawsuit kits inclusive of a packaged B-TRAM device, driver, trial committee and information enclosure to participants successful our B-TRAM trial and valuation program.

While we've already discussed the Navy programme and the planetary automaker customized module, let's look astatine the further 2023 objectives successful much detail. Moving from improvement wafer fabs to accumulation fabs is simply a captious adjacent step. As portion of our commercialization strategy, we request to person fabrication capableness successful spot to enactment our customers' needs. We besides request to marque definite that our customers are protected to the grade we tin from proviso concatenation shocks and disruptions arsenic good arsenic vulnerability to regions of the satellite that bash not run nether the aforesaid guidelines we bash with respect to intelligence property. The prepared for commercialized merchandise shipments earlier this year, we started a afloat process travel engineering tally astatine a wafer fabrication spouse with high-volume accumulation capability. This tally is proceeding precise good and we expect to implicit the engineering tally successful the 2nd quarter.

Upon palmy qualification, this fabrication spouse volition beryllium capable to enactment our income arsenic we ramp to higher volumes successful 2024. Also, we're astir to prosecute a 2nd high-volume wafer fabrication spouse to implicit a akin afloat process travel run. The 2nd wafer fab is precise experienced successful manufacturing bipolar devices specified arsenic IGBTs. These 2 sources are successful precise antithetic parts of the satellite with world-class acquisition and capabilities and are anxious to beryllium engaged successful a caller exertion specified arsenic B-TRAM. Dual sourcing for wafer fabrication with nary vulnerability to China volition supply america with capable proviso capableness from the ample customers we're engaging. Our dual sourcing strategy volition let america to proactively unafraid indispensable accumulation capacity, components and services from partners successful disparate geographies, mitigating proviso concatenation risk.

Looking to commercialized products. We program to present our 2nd commercialized merchandise this twelvemonth which volition physique connected the multi-die packaging plan of SymCool and the bidirectional operator we designed for our lawsuit exertion valuation program. This merchandise volition beryllium an intelligent powerfulness module that volition adhd a multi-die operator to the The SymCool powerfulness module design. This merchandise volition people renewables, peculiarly renewables specified arsenic star and wind, coupled with vigor storage, stand-alone vigor retention and different concern extremity markets. The operator and packaging for this merchandise are already successful plan and we're connected way to motorboat our 2nd commercialized merchandise successful the 3rd quarter.

Moving connected to our valuation program. We are present collaborating with a planetary Tier 1 automotive supplier arsenic portion of our exertion valuation program. This Tier 1 supplier volition measure B-TRAN for usage successful its electrical conveyance inverter, bidirectional charging and circuit extortion applications. Their involvement was sparked by the announcement of our customized module improvement statement with a planetary apical 10 automaker. Our method and concern improvement teams are gathering connected a regular ground arsenic we program to present B-TRAN samples for valuation to the Tier 1 automotive supplier successful the 2nd fractional of 2023. We're fabricating further lawsuit kits inclusive of a packaged B-TRAN, instrumentality driver, trial committee and information enclosure to facilitate and accelerate the valuation process. After transportation of the kits and completion of investigating and valuation by prospective customers, we'll stitchery invaluable feedback connected their merchandise requirements and perchance unafraid merchandise improvement oregon different commercialized agreements. We'll past usage this feedback to find the requirements for the assorted customers' applications and to thrust our improvement roadworthy representation for aboriginal B-TRAN products.

As you know, our trial and valuation programme volition stay an embedded process successful our income and selling effort and a root of input to our adjacent procreation of products. We'll proceed to adhd further imaginable customers to the program. Since the commencement of the 4th quarter, we submitted proposals and conception papers for authorities backing opportunities with the Army, the Department of Defense, DoD's Defense Innovation Unit and established collaborations with universities and commercialized activities to prosecute further authorities backing solicitations arsenic they're released. We're besides preparing submissions done the Department of Energy, Department of Defense, Air Force and NASA and collaborating with wafer fabrication partners and commercialized entities to research backing opportunities nether the CHIPS Act arsenic the programs are defined and unfastened for the solicitation.

With the completion -- the contention for these programs is high, they supply america an accidental to collaborate with existent fabrication partners and prospective customers, some to beforehand the authorities of our exertion and prosecute further application-specific demonstrations of B-TRAN. Looking astatine our expanded B-TRAN patent estate, we presently person 72 issued B-TRAN patents, with 31 of those issued extracurricular of the United States and 24 pending B-TRAN patents. Our existent geographic sum connected our patents includes North America, China, Japan, South Korea, India and Europe, each of which correspond our high-priority geographies for patent coverage. As portion of our merchandise improvement and introductions, we're expanding our patterning efforts to see what we judge to beryllium high-value patents connected our operator and packaging designs arsenic some are unsocial owed to the bidirectional quality of our technology.

Moving on, we precocious issued a caller B-TRAN achromatic paper. This achromatic insubstantial includes caller investigating results utilizing our recently designed operator and devices utilizing our double-sided packaging. It shows switching characteristics and question forms utilizing bidirectional treble pulse investigating which is important for favored and lawsuit method teams. A nexus to the caller achromatic insubstantial is disposable successful the property merchandise we issued aboriginal this week. We volition be this year's Applied Power Electronics Conference, oregon APAC, successful Orlando, Florida from March 19 done 23rd. Our method paper, B-TRAN optimization and show characterization was selected for presumption astatine the conference. As you whitethorn recall, past year, our insubstantial was selected by the Pentacle assemblage for an grant arsenic 1 of the champion method presentations. So we expect sizeable involvement successful this year's insubstantial and our progress.

In summary, we're thrilled that we introduced our archetypal commercialized product. We're selected for a customized module improvement programme with a apical 10 planetary automaker and are present collaborating with a Tier 1 automotive supplier. We're besides precise overmuch connected way to conscionable the cardinal milestones and objectives for this twelvemonth that I outlined earlier. B-TRAN'S unsocial architecture offers the advantages of inherent bidirectional switching capability, reduced switching and conduction losses and improved the much compact thermal absorption requirements, perchance starring to little idiosyncratic costs for OEM products, incorporating B-TRAN and high-growth and B-TRAN-enabled applications. B-TRAN has the imaginable to displace accepted powerfulness semiconductor solutions successful galore applications, including electrical vehicles, renewable energy, vigor storage, solid-state circuit breakers and centrifugal drives.

Now, I’d similar to manus the telephone implicit to Chief Financial Officer, Tim Burns, to reappraisal our 4th fourth fiscal results. Tim?

Tim Burns

Thank you, Dan. I volition reappraisal the 4th fourth and afloat twelvemonth 2022 fiscal results. We recorded $17,000 successful assistance gross for the 4th fourth and $203,000 successful assistance gross for the afloat twelvemonth with offsetting outgo of marque gross arsenic we continued our enactment connected the Navy funded NAVC program. On December 31, assistance gross of $37,000 stay to beryllium recognized nether this program. Operating expenses were $2 cardinal successful the 4th fourth of 2022 compared to $1.4 cardinal successful the 4th fourth of 2021, driven chiefly by higher probe and improvement expenses owed to further semiconductor fab runs and costs related to the improvement of our driver, packaging and precocious launched The SymCool powerfulness module. Operating expenses besides bespeak higher stock-based compensation expense.

Although we expect higher probe and improvement spending successful 2023, we proceed to expect immoderate quarter-to-quarter variability successful operating expenses, peculiarly our probe and improvement spending owed to the timing of semiconductor fabrication runs and different improvement activities and hiring arsenic good arsenic the imaginable interaction of further authorities funding. We expect to support wide and administrative expenses successful 2023, adjacent to 2022 levels, excluding the interaction of stock-based compensation expense, contempt the interaction of ostentation connected the outgo of services. Sales and selling spending is expected to summation modestly successful 2023 owed to hiring and costs associated with commercialization efforts, including caller merchandise launches. Net nonaccomplishment successful the 4th fourth of 2022 was $1.9 cardinal compared to $1.4 cardinal successful the 4th fourth of 2021. Full twelvemonth 2022 nett nonaccomplishment was $7.2 cardinal compared to $4.8 cardinal successful afloat twelvemonth 2021.

Fourth 4th 2022 currency pain was $2.1 million, accordant with our guidance of astir $2 cardinal to $2.1 million. Full twelvemonth 2022 currency pain was $6.8 million, again accordant with our guidance of astir $6.7 cardinal to $6.8 million. We expect archetypal 4th 2023 currency pain of astir $1.8 cardinal to $2 cardinal and afloat twelvemonth 2023 currency pain of $8 cardinal to $8.5 million. Cash and currency equivalents totaled $16.3 cardinal astatine December 31, 2022. Given our planned currency pain which remains modest, we person ample liquidity connected our equilibrium expanse to money operations done 2024 arsenic we commercialize our exertion and besides to beryllium a well-capitalized spouse for the wide spectrum of companies that are either already participating oregon that we expect to enactment successful the investigating and valuation of our B-TRAN exertion arsenic good arsenic the planetary apical 10 automaker that has engaged america for a improvement program. At December 31, we had 5,924,680 shares outstanding, up somewhat from the extremity of September and 1,04,248 warrants outstanding, unchanged from the extremity of September. Including 811,614 banal options, restricted banal units and show banal units outstanding, we had 7,776,542 diluted shares outstanding astatine December 31.

At this time, I'd similar to unfastened up the telephone for questions. Operator?

Question-and-Answer Session

Operator

Thank you. At this time, we are conducting a question-and-answer session. Investors reason with their questions wrong the gathering webcast by taking them into the Q&A fastener connected the close broadside of your viewing screen. Our archetypal question comes from David Williams with Benchmark.

David Williams

Congrats connected the advancement you guys are decidedly making a batch of headway and it’s fantastic to spot truthful congrats there. I conjecture then, possibly 1 of my archetypal question is conscionable benignant of astir immoderate of the comments that were made this week from Tesla and conscionable discussing the silicon carbide outgo and the simplification that we’re capable to marque there. Do you deliberation arsenic you benignant of look retired crossed your merchandise and your capabilities and benignant of what you're seeing, bash you deliberation that you’re silicon alternate successful the silicon carbide is portion of that discussion? Or conscionable benignant of reasoning astir your contented there, your capabilities? Any colour would beryllium precise helpful.

Dan Brdar

Yes. Sure. Great question, David. For those of america that don't know, Tesla had travel retired earlier and said they wanted to trim the silicon carbide successful their adjacent procreation of vehicles by 75%. And it's each astir cost. It goes to the comments I made earlier, EVs person a important outgo problem. The semiconductors and electrical vehicles are the 2nd highest outgo constituent aft the battery. So erstwhile you're dealing with things similar silicon carbide which are successful bid of magnitude much expensive, you get improved show astatine a precise precocious cost. So you get immoderate betterment successful scope but you wage for it successful cost. We deliberation that presents a large accidental for america due to the fact that we tin bring a truly precocious level of show beyond what you tin get with a accepted silicon instrumentality without incurring the outgo of silicon carbide.

When we went done the exertion valuation with the Patton automaker that we're doing a customized module for determination were silicon carbide devices that we were competing against. And due to the fact that they -- this automaker is not focused connected bringing retired 100,000 vehicles, we want. I deliberation the automakers is they truly privation to get wide adoption are becoming much and much focused connected outgo and it creates an accidental for high-performance technologies similar ours that tin beryllium done successful silicon. And past arsenic silicon carbide matures arsenic the prime and outgo of wafers travel down and processing costs travel down, the transit architecture. So we tin determination to silicon carbide arsenic well. But for now, I deliberation we contiguous an alternate that the automakers are looking for conscionable due to the fact that silicon carbide is simply a large outgo load connected products that are inactive made successful comparatively tiny volumes erstwhile you look astatine electrical vehicles.

David Williams

That’s very, precise helpful. And past possibly conscionable connected the – since you released the archetypal product, conscionable tin you sermon a small spot of the traction that you’ve seen? And thing that possibly amazed you oregon caller customers oregon immoderate applications that you’ve seen that person travel in?

Dan Brdar

Well, it's truly targeting the solid-state circuit breaker marketplace and it was truly driven by the discussions that we were having with the ample concern players that wanted to besides absorption connected for consolidated circuit breakers. The task we're doing with the Navy are each discrete devices that are packaged individually and they're putting a bid parallel configuration to marque the 12-kilowatt standing for the breaker. And the feedback we got was that the concern companies were looking for thing that had a higher rating, a multi-die attack wherever we parallel aggregate dice and gave them a gathering block, truthful they tin marque immoderate size they privation without needing to marque truthful galore connections if they were idiosyncratic devices. So it was truly driven by the feedback that we were already getting from the players that privation to marque solid-state circuit breakers.

David Williams

Great. And possibly conscionable from a geographical standpoint, it sounds similar you made a batch of advancement successful presumption of the sampling and caller customers. Can you speech possibly from a geographical position wherever you’re seeing the top involvement successful demand? Is this Asia-based oregon European oregon possibly adjacent North American-based?

Dan Brdar

Most of the companies that we are moving with are global. So they person a beingness successful the U.S., Europe and Asia. So we're truly looking -- due to the fact that our squad is tiny and we are acrophobic astir bandwidth arsenic much and much radical larn astir the technology, we're truly not spending overmuch clip connected tiny companies due to the fact that it takes astir arsenic overmuch clip to enactment a tiny institution connected the exertion it does idiosyncratic new. So we are truly focusing our partnering connected players that are names that radical would admit successful presumption of the companies and that are planetary successful the products that they bring to market.

David Williams

Okay. And 1 past 1 for me, if you don't mind. Just benignant of reasoning astir the clip enactment to gross connected immoderate of the automotive worldly that you discussed and immoderate of the different programs that are successful place. When bash you deliberation we should commencement opening to spot immoderate existent gross ramp? Is that this year? Or should we expect that possibly aboriginal into adjacent year?

Dan Brdar

You’ll spot gross connected the concern segments, things similar renewables and centrifugal drives, those benignant of things successful 2024. You’ll spot immoderate humble gross aboriginal successful 2023. But erstwhile you deliberation astir it and customers person to spell done a plan rhythm to incorporated immoderate caller semiconductor device. So erstwhile they’re done that process, it volition – the gross volition commencement to ramp successful ’024. On the automobile side, the stated nonsubjective of the programme with the planetary automaker is simply a production-ready merchandise by mid-2025. So I would expect that existent gross from them would travel soon aft that. And they really devour a batch of parts conscionable to spell done each their certification and investigating and qualification. So we’ll really adjacent spot immoderate preproduction gross connected the automobile broadside starting astir apt successful the 2nd fractional of 2025.

Operator

I volition present crook the telephone backmost to Jeff Christensen to work questions submitted done the webcast. Thank you.

Jeff Christensen

Thank you, Sarah. First question that's been posted to the Q&A fastener is, could you picture the improvement statement with a apical 10 planetary automaker successful much detail, including the phases of the program?

Dan Brdar

Sure. We were selected from respective competing technologies. And truthful folks that cognize america cognize that we were getting beauteous frustrated due to the fact that it was conscionable a precise agelong valuation process took implicit a year. As you tin imagine, the automakers are looking astatine each the technologies that are retired determination arsenic they deliberation astir however are they going to bring retired products that are differentiated from what’s already successful the market, however are they going to negociate costs, however are they going to amended range. So we were competing against a full assortment of technologies, including immoderate self-care technologies. We were selected for that program. They besides selected an innovative packaging institution that was – packaging was besides going done its ain enactment of technologies and innovation. And past we’re going to beryllium joined together. The mode the programme itself works, Phase 1 is truly up doing our portion and the packaging steadfast doing their portion independently, wherever we supply them trial data, we supply them devices and we supply them a clump of method documentation arsenic it relates to the exertion itself.

Then Phase 2 which we expect to determination into present successful the not-too-distant future, volition beryllium america providing devices to the innovative packaging institution who volition incorporated those into the packaging plan that they person travel up with. And past Phase 3 volition beryllium that module with B-TRAN devices being extensively tested to conscionable the car certification standards which are beauteous substantial. The programme is truly connected a beauteous accelerated clip enactment to effort and get this happening to the constituent wherever it is accumulation acceptable by 2025. That is the stated extremity of this program. So it’s truly america and the packaging institution moving independently successful Phase 1 and america providing devices to them for incorporation into the module successful Phase 2 and past Phase 3 is truly each astir the investigating and certification of the module itself.

Jeff Christensen

Our adjacent question is astir the people markets and much accusation astir it. When bash you expect each of your people markets to make revenue? And however bash you foresee the gross accidental and ramp for each market?

Tim Burns

I'll conscionable to grow a small spot connected what Dan shared for David's question earlier, the longest way to gross is the EV conception but it's besides the largest opportunity. As Dan had mentioned successful that improvement programme with the apical 10 planetary automaker, the people is simply a production-ready module successful 2025. So it's inactive a mates of years out. If you look astatine our SymCool powerfulness module, that's targeted astatine solid-state circuit breaker market. So we expect archetypal income of that merchandise present successful the 2nd fractional of the twelvemonth and we expect that gross to commencement ramping successful 2024. When you look astatine different people markets, renewables, renewables with storage, EV charging, we deliberation those would beryllium a logical acceptable for our 2nd commercialized product, the intelligent powerfulness module that we expect to motorboat present successful the 3rd 4th of this year. So that gross would commencement to ramp and apt successful 2024 arsenic good arsenic it gets done that plan cycle.

So we'll supply immoderate much circumstantial gross expectations and we get a small spot further on with these prospective customers. But I presume done the trial and valuation program, we'll truly get a bully grip connected their exertion valuation processes, their merchandise plan cycles arsenic good arsenic their commercialized plans and we'll look to beryllium capable to supply much circumstantial guidance present successful the future.

Jeff Christensen

Thank you. Now that you’ve introduced your archetypal product, bash you inactive foresee authorities backing to beryllium portion of your go-forward commercialization strategy? And however is the institution impacted by the spot act?

Dan Brdar

I'll bash this one. Yes, we really deliberation that authorities programs are a bully accidental for us. It helps screen immoderate costs that we would walk connected improvement successful our own. It gives america the quality to spouse with different exertion companies and customers, peculiarly for things that are application-specific opportunities truthful that we tin crook those into immoderate longer-term relationships and truly helps america enactment connected with wherever immoderate of the large players are going, whether it beryllium connected the exertion broadside oregon connected the exertion improvement broadside and we spot the authorities continuing to privation to walk rather a spot of wealth connected vigor technologies and present semiconductors with the Chips Act. We deliberation the Cytec is going to beryllium favorable for us. It's inactive taking shape.

What is going to hap archetypal from our knowing of discussions we had arsenic precocious arsenic this week is the authorities is going to signifier determination hubs that are truly benignant of anchored by wafer fabricators. And past radical volition beryllium associated with those hubs, whether they're universities, exertion providers oregon semiconductor companies similar ourselves. And past we expect to taxable proposals related to people applications arsenic good arsenic immoderate longer-term silicon carbide improvement nether the Chip Act arsenic the backing programs get enactment successful spot and they commencement to rotation retired immoderate different solicitations connected to the chips Act done DoD and DOE.

Jeff Christensen

Thank you. We received immoderate truly bully questions. We person much coming. And successful the meantime, if investors, you tin taxable your questions anytime wrong the gathering webcast by typing them into the Q&A fastener connected the close broadside of reviewing screen. The adjacent question is, however has semiconductor – however is the semiconductor proviso concatenation disruptions impacted the institution to date?

Dan Brdar

And what volition beryllium the interaction arsenic you commercialize the exertion and commencement to ramp volume.

Tim Burns

Yes. So connected the proviso concatenation side, I mean, the disruptions person had small interaction really connected america to date. So we've intentionally made definite that we're dual sourced, not tied to a circumstantial geography. And we besides person things similar wafers. We ordered wafers good successful advance, truthful determination wouldn't beryllium immoderate disruption to our wafer fabrication runs. I would accidental the bigger interaction successful the semiconductor proviso concatenation disruption is truly user electronics. So that's wherever you astir apt saw the top impact. But for a institution similar us, it's successful powerfulness and we're inactive operating successful comparatively debased volumes successful presumption of fig of wafers we're processing, determination truly wasn't a important impact. I conjecture looking guardant arsenic we commencement to ramp volumes successful 2024, we don't expect our commercialization efforts to truly beryllium impacted by the semiconductor proviso concatenation disruption that's truly moving itself retired arsenic we speak. And we'll proceed to marque definite we person a dual-source strategy, proceed to marque definite that we person suppliers successful antithetic geographies, conscionable for geopolitical risk. And we'll conscionable support dual sourcing arsenic a cardinal portion of our wide strategy.

Jeff Christensen

This remark and question was posted to the portal. In my discussions with Ideal Power shareholders, the investing nationalist is fixated connected automotive only, adjacent though your exertion volition span aggregate economical sectors and industries. What tin you archer america that volition assistance admit the wide economical imaginable of B-TRAN?

Dan Brdar

So yes, electrical vehicles are evidently getting a batch of buzz conscionable due to the fact that it's 1 of astir apt the 2 macro trends that are truly driving maturation successful powerfulness semiconductors. But close now, renewables is already implicit $1 cardinal IGBT market. It's already tremendous market. Energy retention is becoming much and much prevalent and that volition beryllium paired with renewables. So that's a precise ample opportunity. The circuit breaker marketplace itself is enormous. Now solid-state circuit breakers were truly the enabling technology. So we'll person to spot what we tin displace successful that market. The filler circuit breaker markets implicit $25 cardinal successful total. There's the EV charging infrastructure that's going to beryllium enactment successful place. So there's a batch of important opportunities for the technology. It's truly immoderate exertion that requires powerfulness semiconductor devices and we expect to make important gross from areas different than electrical vehicles and earlier than we volition for electrical vehicles, adjacent though EVs is evidently a large semipermanent opportunity.

Jeff Christensen

Thank you. Will the phases fundamentally beryllium the aforesaid for each automotive OEMs, delight supply further accusation connected the explanation of Phase 1. And would milestone payments beryllium triggered aft Phase 1 oregon Phase 2?

Dan Brdar

Yes. The automakers are each approaching things a small spot differently. Some are doing the packaging plan for modules, for example, in-house. Some are relying connected 3rd parties. So they each are going to preach america a small spot otherwise but what we're seeing beauteous consistently is alternatively than relying solely connected the Tier 1 suppliers. They've each seemed to person created immoderate precise important method themes internally to measure exertion and to bash plan work, peculiarly arsenic it relates to precocious powerfulness sections of the EV similar the drivetrain, each truly focused connected however to shorten the plan rhythm due to the fact that they truly don't privation to get into the 5-year accepted plan cycles. They're truly looking to instrumentality a mates of years retired of that. So it gives america immoderate opportunities to, I think, truly collaborate with immoderate beauteous innovative companies and approaches.

Tim Burns

And past connected the milestone outgo side, truthful there's comparatively humble gross associated with the archetypal mates of phases of the programme but it is based connected 1 oregon much milestone payments for each phase. That's inactive a dialog for Phase 2 but apt for Phase 1, it volition beryllium a azygous milestone payment.

Jeff Christensen

What bash you estimation your taxation nonaccomplishment carryforward volition beryllium astatine the extremity of fiscal 2023?

Dan Brdar

So we're inactive doing our taxes present for this twelvemonth that conscionable ended. But I deliberation we had a carryforward of successful excess of $40 cardinal successful growing. So it's beauteous substantial. We person not done immoderate benignant of investigation to spot nether the taxation code, whether we've ever triggered arsenic a institution a alteration of power with superior raises which is an investigation we would person to bash to truly corroborate that afloat carryforward but it is beauteous sizable.

Jeff Christensen

How bash you specify apical 10 automaker? Unit sold marketplace headdress revenue?

Dan Brdar

Units sold due to the fact that that's what truly matters to america is, however galore vehicles are they selling due to the fact that that truly drives the size of the accidental for america arsenic a supplier to them?

Jeff Christensen

Thank you. Any update connected the circuit breaker task for DOE you were mentioning a portion agone with DTI.

Dan Brdar

The circuit breaker that we were doing with BTI for the Department of Energy, we won the Phase 1 award, successfully completed that. DTI submitted the connection for Phase 2 but Phase 2 really didn't get selected. And the lone antagonistic feedback that they got was determination was interest connected DTI's quality to beryllium a important supplier to the inferior assemblage due to the fact that they're not traditionally a large supplier to them. They're truly much palmy successful presumption of the authorities marketplace. And since there's truthful overmuch contention for these, conscionable that 1 antagonistic was capable to effect successful america not getting selected for Phase 2. Now for us, what we're providing and what we're doing, whether it is simply a DC circuit leafage for the subject oregon whether it's an AC circuit breaker for the Department of Energy for us, the enactment is precisely the same.

Jeff Christensen

Thank you. My knowing is Enphase researchers person started utilizing gallium nitrate to amended powerfulness electronics. Is this conceivable that this worldly could beryllium utilized for Ideal Power’s Power Switch successful summation to silicon and silicon carbide? Has immoderate trial been done successful that regard?

Dan Brdar

Yes, gallium nitride volition instrumentality rather a portion for a mates of reasons. One is gallium nitride is -- does it truly good successful presumption of precise accelerated switching for little voltage, little powerfulness applications, things similar powerfulness supplies for user electronics and low-power applications similar microinverters, similar what Enphase is doing. It's going to beryllium a portion earlier that, that exertion has precocious capable that it tin truly beryllium utilized successful high-power applications. And there's besides a situation successful making vertical structures successful GaN, the quality to fig that retired from a fabrication standpoint is thing that radical haven't been successfully doing that yet. So I deliberation for us, GaN, for america oregon for immoderate high-power exertion is rather a ways disconnected successful the aboriginal and it has its ain acceptable of outgo issues besides arsenic a wideband spread material.

Jeff Christensen

Thank you. We bash not person immoderate different questions. Dan, bash you person immoderate closing remarks?

Dan Brdar

I conscionable privation to convey everybody for joining america connected the telephone today. We made large advancement past twelvemonth successful our way to commercializing our technology. And our talented squad is connected way for a precise palmy 2023. We'll proceed to actively stock our communicative with the concern assemblage arsenic we determination guardant successful executing our milestones for this year. We'll beryllium participating successful 4 capitalist conferences successful March. Information astir each of those conferences disposable successful our property merchandise contiguous and we anticipation to talk further with those of you wrong the conferences. So astatine that point, I'd similar to convey radical for joining america and we volition speech to you again adjacent quarter.

Operator

Thank you. This concludes today's conference. All parties whitethorn disconnect and person a large day.