Advanced Products in the data ceentre and automotive markets and IP are key to future growth, says Vicor.
“For the full year 2020 revenue totalled $296.6m, up 12.8 percent from $263m for 2019. Quarterly Advanced Products revenue rose 10.4 percent sequentially, reflecting the continued ramp of shipments of our lateral power solutions for AI acceleration,” said Jamie Simms, the departing CFO of Vicor.
Profits were up at $17.9m, up from $14.1m, and the company expects to boost its IP business, both for licensing and enforcement of IP infringement.
“Misinformed and unscrupulous competitors are exposing OEMs, purchasing infringing converters to significant risk of supply chain disruption,” said Philip Davies, Vice President of Global Sales and Marketing. “Having learned how to protect its inventions and assert its IP, Vicor’s IP strategy is to hold OEMs accountable for OEM products incorporating infringing power modules from unlicensed module manufacturers. OEMs seeking an alternate source to Vicor can take an OEM license to Vicor IP.”
Demand for ‘Advanced Products’ such as the 48V direct to CPU devices and the first volume shipments of new satellite solutions was key to growth, says Simms “Brick product revenue rose 6.1 percent sequentially, reflecting a broad resumption of shipments to our North American customers after the pandemic-related trough of the second and third quarters. This increase offset a sequential decline in shipments to China with those export volumes of brick products returning to trend from Q3’s high level. Shipments to stocking distributors also rose sequentially,” he said.
“Fourth quarter results reflect improved margins in spite of manufacturing inefficiencies caused by outsourcing of critical process steps,” said Dr. Patrizio Vinciarelli, Chief Executive Officer and charman of Vicor. “Advanced Products bookings increased approximately 30 percent, offsetting a reduction in Brick Products orders.”
Next: Vicor Advanced products
“Our capacity expansion is on schedule and vertical integration of all of the process steps required by Advanced Products in our new facility should soon lead to shorter cycle times, greater efficiencies, and further improvements in gross and net margins,” said Vinciarelli.
“We believe Advanced Product sales will expand further as a percentage of total revenues, especially once new manufacturing capacity comes online, given the high-growth segments we are targeting with our 48V technology, including AI, data centre and automotive, in contrast to the mature growth of the segments we serve with Brick Products,” said Simms.
“In 2020, we not only expanded our customer base, but also solidified our position with existing large customers by starting next-generation projects for higher performance processes with significantly higher power levels, currently under development and scheduled for introduction in 2022 and 2023,” said Davies.
“In 2021, we will begin to ship our new proprietary vertical power delivery modules in volume to customers developing highly advanced supercomputers. These use large clusters of AI processors in close proximity to enable faster parallel processing of heavy and complex workloads such as those found in autonomous driving applications. These complex systems can use greater than 50 processes, all requiring a vertical power delivery module from Vicor,” he said.
The company also launched a line of single phase and three Phase AC power modules for 48V rack and data centre power that it expects to ship in Q3. The development was funded by customers and the company says it has key IP in this area.
The company also sees significant growth in electric vehicles with both 400V and 800V power packs with recent funding from a large North American OEM to be delivered next week. This is expected to start production in 2024. The factory expansion is key for this growth.
“The factory expansion gets us to the $750 million total capacity,” said Vinciarelli. “As soon as the dust settles with respect to this capacity expansion, we’re going to start pursuing the next phase. As we get further out with automotive opportunities going into volume production, there is plenty of opportunity for growth.”
“So an example of the level of capability that the technology enables, we have a chip that measures 60mm by 23mm, and it’s about 8-millimeter thick. And that device is capable of roughly speaking, five kilowatts of power conversion, 800V to 400V. It is so dense and so efficient, the efficiency is pretty close to 99 percent.”
OEMs also have issues with second sourcing the power modules.
“We recognize that the OEMs have real challenges with respect to continue to supply access to enabling technology,” said Vinciarelli. “Needless to say, their preference would be to have multiple sources. And when we have the situation that is present in our industry today with Vicor literally five years ahead of any competitor in terms of technological capabilities. That creates, in effect, a stress that needs to be addressed. And we’re mindful of that. We view ourselves as a reliable supplier, but we do appreciate the fact that it takes a great deal of faith to put all your eggs in one manufacturing basket so we want to provide the level of flexibility that OEMs would prefer to have.”
“We see the value of the IP side of the business running on a parallel path to our core competency of development and manufacturing in particular automated U.S.-based manufacturing of state-of-the-art-products. So it’s a complementary opportunity that should contribute to the total margin and net profitability of the company,” he said.
In the data centre, Vicor is targeting the next generation Intel chips. “The way we’re participating in that particular market at this point in time for the majority of it will be with 48V to 12V non-isolated bus converters,” said Davies. “Those will be ramping in production in Q2, Q3, Q4 of this year, with several of the hyperscalers.”
“We are engaged on next-generation and even generations after that, a process development with our leading customers today and several new ones that we’ve been able to work with in 2020,” he said.
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