Navitas expands partnerships to shore up GaN supply but execution risk still dominates

What happened

Navitas announced an expansion of global partnerships aimed at strengthening its supply chain and preparing capacity for rising high‑power demand through 2026–27. This dovetails with the company’s disclosed Powerchip collaboration (device qualification targeted Q4’25 and mass production H1’26) and is a logical step to replace TSMC GaN capacity ahead of the July 2027 exit, but the new partnerships look incremental rather than a completed de‑risking of foundry exposure. The business remains very early stage: Q2’25 revenue was only $14.5M against large operating and net losses and a still‑unproven path to scale in higher‑power racks and EV markets. Competitive pressure from larger WBG incumbents, geographic/subcontractor concentration, and long customer qualification cycles mean partnership headlines cannot substitute for demonstrable yields, visible order flow, and margin improvement. In short, the development is constructive — it reduces a headline risk — but it does not obviate the execution milestones (Powerchip qualification/ramp, design‑win conversion, 200mm cost curve) needed to justify a more bullish stance.

Implication

The announced partnerships modestly reduce single‑source optics and show management is addressing the TSMC gap, which is a necessary precondition for growth; however, they are not proof of success. Investors should watch the Q4’25 Powerchip device qualification, H1’26 mass‑production metrics (yields, cycle times, MOQ commitments), and any early high‑power customer shipments that shift revenue and gross margin. Also monitor opex discipline and cash burn given prior ATM raises (~$100M) — additional dilution risk exists if ramps are delayed. If Powerchip meets targets and customer design‑ins convert to production with improving gross margins, risk/reward would tilt positive and could justify upgrading the stance; conversely, missed qualification/ramp milestones, yield shortfalls, or slower design‑win conversion would materially increase downside and argue for a sell call.

Thesis delta

Incremental de‑risking: the new partnerships reduce the immediacy of sole‑source headlines but do not materially change the core thesis. We remain HOLD because the company still needs on‑time Powerchip qualification/ramp, demonstrable yields and margin expansion, and evidence that high‑power design‑wins convert to production before the thesis becomes positive. The bar for upgrading to BUY remains successful H1’26 mass production and accelerating revenue/gross‑margin proof points.