Key Highlights

● Microchip and Navitas Semiconductor unveiled an 800V reference design for next-generation AI data centers.

● The design delivers power density of up to 2,100 watts per cubic inch and will be shown at an Oct. 12-15 event.

● The announcement fit a broader wave of data-center power news, including BMO's new coverage of Vertiv.

Microchip Technology was in the spotlight on Monday after it and Navitas Semiconductor unveiled an 800-volt power reference design aimed at the next generation of artificial-intelligence data centers.

A new power design for AI

Microchip Technology (NASDAQ:MCHP) was in focus on Monday, Oct. 5, after announcing a collaboration with Navitas Semiconductor (NASDAQ:NVTS) on an 800V reference design for next-generation AI data centers.

The design converts 800V direct current down to the 6V direct current that computing equipment needs. It delivers power density of up to 2,100 watts per cubic inch, a measure of how much power can be packed into a small space. The companies plan to show the design at a Microchip event tied to the Open Compute Project on Oct. 12-15.

A closing move for Microchip shares was not clearly reported. Navitas traded around $12.40.

Why 800 volts matters

AI chips consume enormous amounts of electricity, and data centers are racing to deliver more power to each rack of servers. Moving to higher-voltage power systems such as 800V lets operators carry more power with less current, which can reduce energy lost as heat and cut the amount of copper wiring needed.

A reference design is a ready-made blueprint that equipment makers can use to build their own products faster. By offering one, Microchip and Navitas aim to make it easier for server and power-supply makers to adopt their chips.

Microchip makes microcontrollers, analog chips and other components used in everything from cars to factory equipment. Navitas specializes in power chips made from gallium nitride and silicon carbide, materials that can handle high voltages efficiently.

Data-center power is a hot theme

The announcement fit a broader wave of news about powering the AI boom. BMO Capital began coverage of data-center equipment maker Vertiv (NYSE:VRT) at Outperform with a $329 target, citing data center demand. Flex (NASDAQ:FLEX) announced a $2.0 billion investment in Axiom, its cloud and power unit. And the Department of Energy offered Vistra (NYSE:VST) a conditional loan of up to $4.2 billion to upgrade three nuclear plants.

Chip stocks were mixed. Nvidia (NASDAQ:NVDA) closed at a record high with a market value of about $5.76 trillion, and Taiwan Semiconductor's (NYSE:TSM) US-listed shares climbed. But Intel (NASDAQ:INTC) fell after Elon Musk confirmed early talks about TSMC joining his Terafab chip venture, and GlobalFoundries (NASDAQ:GFS) dropped after BNP Paribas Exane downgraded it to Neutral.

Records on the Nasdaq

The broader market rose. The Nasdaq Composite climbed 286.45 points to a record close of 27,477.31, and the Nasdaq-100 also set a record at 31,076.44. The S&P 500 added 51.23 points to 7,773.95, just shy of its summer record, and the Dow Jones Industrial Average gained 90.94 points to 51,267.90.

The gains came even as the 10-year Treasury yield climbed to its highest close since 2002. Friday's jobs report, showing only 29,000 jobs added in September, cut bets on an October Federal Reserve rate hike, but inflation worries kept long-term rates high. The ISM services prices-paid index rose to its highest level since July 2022.

Daniela Hathorn of Capital.com said "growth stocks are rallying because Fed expectations have softened, while the risk-free rate against which those valuations are judged remains exceptionally high."

What to watch

The next milestone for the Microchip-Navitas design is its showing at the Oct. 12-15 event. Investors will also watch Microchip's next quarterly report for signs of demand from data-center customers. On the macro calendar, the Federal Reserve releases minutes from its September meeting on Wednesday, Oct. 7, at 2pm ET, and the Fed meets again on Oct. 27-28.