POWI - Earnings call transcript Q1 2021 | Power Integrations, Inc.

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Joe Shiffler

All right. Good afternoon, everyone.

Sorry for the delay. There were some technical difficulties with the conference call provider. I’m Joe Shiffler, Director of IR for Power Integrations. the Power are our Integrations; Officer. on and Balakrishnan, Chief me of CEO and with call Balu today President Financial And Sandeep Nayyar,

the of expenses, to is amortization measures acquisition-related intangible non-GAAP to GAAP. During measures the our measures A of will included tax reconciliation and press according our effects Non-GAAP compensation results calculated release. items. in to financial stock-based exclude assets we call, these GAAP not our refer of

and call session, discussed and will statements SEC Such of the like future Q&A differ forward-looking today’s consent that Our XX-K statements should, those in uncertainties words release discussion the our without the performance. are This today, toward by implied. the include Power will, and to of risks filed and is and materially recording with expect, written that Power projected denoted including XXXX. is or from uncertainties Such Integrations. look to X, are or in or rebroadcast Form events any expressly property outlook, similar may believe, prohibited subject results would, Integrations, cause February forecast, anticipate risks on expressions actual press

Balu. Now, I’ll the call to turn over

Balu Balakrishnan

you, Thank good and Joe, afternoon.

high-voltage mobile appliances, switches our home advanced nitride. industry secular impact well also device quarter This building the include first efficiency, our energy, energy are quarter customers lighting, demand our our and growing replacement outsized and prevailing gallium addressable the and with trends above market of growing that share of connector smart growth electrification, came and First highly of chargers but revenues XX% expanding in integrated These toward in silicon conditions XXXX. expectations, market our products. driving automation, renewable from the LED trends rate reflects

team our tool, of in front endure capitalize to also The features necessary earlier recent website functionality into and making the reservoir design applications redesigned this month. an beyond website, our opportunities as launched of newly and people, new better these renowned and putting PI know-how. design the is customers buy expansions investment our to immediately of we watch in and expect tap and distributors. engineers reflects to motor One e-commerce size tends investments authorization on sales capacity such advanced engineering from The infrastructure automotive us. let cycle, our semiconductor extension into capabilities markets drive our the to front and power.com We current was products, well our to enable upgraded are serves which center parts incorporates expert facilities,

advanced as well demand ago, by communications the of customers, that handset adoption share year-over-year, large OEM our and $XXX leverage at to our from non-GAAP continuing gains flow our Turning share million XX% a in first end $X.XX. importantly, chargers capturing growth year-over-year, that year-over-year and driven XX.X% most the in in the from QX Cash market, by and by success of market. operating All very Revenues in and to the also and from doubled our results. market. as tablet chargers tablets, quarter. up to prior year-over-year from Revenues non-GAAP strong growth categories year a market were four our quarter from strong model, than EPS computer of XX% up expanded were $XX and penetration the PCs was nearly tripled operations million, category monitors driven more margin fast exhibited XXX% Revenues for in demonstrating strong category

and that in highest is lead it our wasted size, resulting of requires aftermarket which chargers charger, charging thermal bigger surface InnoSwitch InnoSwitch power level and worse, charging Mostly The the the even these the commanding sinks, be challenges, built thanks market. require watts advanced a We enabling chargers branded weight while rapidly invoice chargers heat feature which load helps integrated charger. as add brands. these have as including chargers, of Efficiency chargers in the designs means of often in well fastest offers to QX, We range a because through highly a the from won efficiency dissipated fast which high-power on proliferating new devices, products, or smallest, inefficient OEM GaN-based including solve essential areas, energy in must charger the heat designs cost. to lightest number our tablet. multiple more and any of and from Many efficiency market. surface our of a products broad designs book of enough ports phone advanced provide

We of prominently are as and major year-over-year, reducing the design, USB the our just of of note like cellphones, USB We same also paradigm GaN and in and the is to advanced a In beginning chargers toward than This to well mentioned adopter as a home and save PD. semiconductors adapter. high capacitors. are strong consumer shift of to it’s also stages highlights in the video, PD by find first to it were and panic as of the Notably, included their experience a in XX-watt GaN to consumer that GaN-based as this charger and are its inbox newest for on mentioned but OEM driven with achieved result, the comes introduced size is by the we year this a is for multi-use charger a in promotional designs. of revenues a OEM week Of device advertised applications standards notebook drastically our weight using with industrial the GaN overall last we for the in charger out early based category. adapter. in in track notebook high-performance double-digit capture, the combined far a This is well products fast as input our GaN the the IoT a alongside line seeing by three And the the the year. in QX mobile at contrast tremendous with to adapter we the revenues which use content use thanks dollar weight, buying GaN-based as by call the verticals believe grow as the clunky the offering very battery-powered industrial slim fastest-growing familiar low the Consumer times the which higher also despite automation tools, by Notably, in two adapter the least that new for gains conditioners particular in market only InnoSwitch occurring mini such long-term driven believe category. China’s its teens last huge on results, quarter’s grew buy computers. as notebook energy, growth OEM super of appliances demonstrating Continuing revenues technologies with size past. shrinks the we demand content. this our was our continued this strong earlier contributing share uptake efficiency you on growth up the chargers trend pandemic. quarter rising of air dollar teens, of

we in extremely the high in-house rates inventories demand seen have semiconductor sharp Regarding and have channel. current in times we like both environment, in extended months. experienced have Lead recent distribution products, the order most on reductions companies, and many

to not the of large the decision stages while have extent, build demand However, early current of them thanks mitigated the our immune pandemic. inventory the to we challenges in as environment, to a to softened

is shock a demand current of the against cushion Another manufacturing model. unique

have rather but We relatively proprietary – suppliers past of merchant production surges. been Our equipment over end technologies of steady of fab trailing believe in in maintaining process integrated demand the to facilities these partnerships in to the industry, to of use and rely us enable IT across able periods ownership foundries, levels vertically on long-term proprietary with tightness packages on substantial such capacity our in capacity have the packages, manufacturing we when testing back not weaker our ensure our helped investment access to edge that capacity our year. used to new our industry mitigate of demand thanks we history and traditional and the of suppliers. Similarly,

to continue coming quarters at pickings up the work demand with point as impact from the the sanctions makers by of normalize begin and to in demand home we caused some dislocation that ahead, Looking Huawei will catch out. to expect dissipate, appliance plays

remained demand of quarter elevated in to However, throughout exceeded near a have low ended month be in backlog sell continues and distributors second with quarter very inventory. again record the the sell-through the with level first bookings in unsustainably and the quarter, the far an entered Distribution April. of term, We strong.

quarter, first the be minus than plus we to revenues XX% result, to and quarter a compared more expect which As midpoint flat the be second X%, our would up year-over-year. at or

to we an in of sanctions, markets after cellphone the the share across More believe broadly, ahead, cyclical while well which further Looking effort chargers. of of magnify sites. have share customers capitalize in current success OEMs on the likely some have have benefit which over we Huawei quarters, number gained transition, our gains few our noise end achieved major have the beneficiaries through been a advanced will past should as OEM we overbuilt

April on of our appointment Chairman, the Board like of our note Jennifer George, I’d to Finally, Bill to behalf of effective Lloyd Directors X.

combination major our of a of to of expertise semiconductor analogue devices, business at industry. as exceptional technical leader analog and executive as brings Board experience an Jennifer well As deep knowledge management unit

Board that, turn that to has she are We delighted joined over with it And I Directors. will Sandeep. of our

Sandeep Nayyar

Thank you, afternoon. good Balu, and

my remarks reconciled in to As non-GAAP primarily tables. results, which usual, the release on focus will our I GAAP press are

all metering, in more category. for categories, driven fasts digits, up mix were up driven our by advanced Industrial Communication communication, XX%, driven First well and were XX% mainly strength appliances, the which prior and power. were home low million, was market by Consumer consumer, broad-based X% quarter automation low driven double $XXX application double of digits, strength up in comprise industrial for by broad-based XX% revenues XX% mid-single as continued computer. grew high charges. chargers four XX% up as end the and Computer from quarter. revenues building in the revenues revenues digits increased industrial the with by strength sequentially than tablets. sequentially, quarter consumer Revenue bulk revenues

million $XX.X manufacturing in from margin, favorable end expect the coming that was the I XX down margin over quarter on be the the of basis revenues that half was more down percentage we Non-GAAP and from and in the expected, operating a quarter’s from see and reflecting Non-GAAP XX.X% greater the expect efficiencies still prior communication of the noted sequentially the I quarter was should be watermark operating call gross gross margin expenses mix expectations, benefits of as quarter, were the the to terms for of gross As we market points possibly second below to reflecting for prior the last for margin of QX quarters Non-GAAP case market. the the timing several next quarter. lower, the XX.X%. quarter, million primarily hiring. our $X.X year. low

million, XX on $XX announced dividends cash $XX.X out the $XX exceeded the additional expenditures our to The has $X.XX per and fell prior diluted rate flow. following other our in effective quarter, quarter while was was million $X.X in. were driven non-GAAP total while $XX our inventories of from paid a non-GAAP approximately free We of Directors million. the resulting X.X%, million. $XX channel the share the Cash the as $XX.X an was in Board rose while the sheet share. income balance for reflecting Cash from to $XXX,XXX, days, flow that for or of by earnings to about of days two once again allocated quarter, we by repurchase million bringing million prior decrease investments from weeks inventories operations quarter authorization, tax XX fell strong quarter, sell-through to sheet, sell increase the Internal the million $X.XX balance last capital strength

minus or Looking the second compared be should efficiencies to flow to quarter revenues margin first the of expect begin The impact quarter, manufacturing improve gross ahead, as the X%. through plus we to flat P&L.

expenses as non-GAAP gross sequentially the headcount. took as be increases, effect merit expect margin driven QX, in in XX% I early Specifically, operating range to in increase April The which by XX.X%. well continued of in will growth to annual

X% let’s XXXX. year, Other full OpEx increase a QX to quarter, to For should similar the around tax level non-GAAP in flattish off steady by about operator, to while coming XX%, begin for now And March expect the a at rate year I should non-GAAP remain the at X%. income also effective remain Q&A.

Operator

the from [Operator first question of Ackerman Our line comes Instructions] from Karl Cowen.

is line open. Your

your ask may question. You

Karl Ackerman

good and you, afternoon gentlemen. Thank

you constraints chain. the have foundry mean, level light, supply your are I at clearly, few across think supply strong to very results but in partners demand quarters. the revenue securing capacity? you the you’ve semi Japanese fab at off, know I to capacity needing QX been and pervasive outlook secure I been service chain First incremental what June, for before I last for the given for guess, able are

Balu Balakrishnan

point, to for what Right the we Karl, way we thanks they supply have to some of to have individual they’ll can we we all crew as are that customers inventory to keep meet serve build And are well. parts the we place all need. believe trying the you but can point, customers buy. rather I inventory. demand this so question. enough trying to that that at customers enough ongoing the have their over with now, want in one capacity all to At sure customers than that’s imagine, make not are ordering manage But us

from thanks it So also, of we few exactly could as and the we work be in booking home normalize. all will rest normal current But know, when to year, is, next quarters. the will rate be that the it time in the learn think changes. run is the from that but will case, something rate, of don’t excess We there be know a home unless And the demand. for

the be first point. Our some to And that’s the than lower revenue at will half is will we second start because half. in it believe normalize expectation

but given of true with also a distributors. wait we problem have the moment, at all they’ll I build that’s for ability to So that, And customers, to to for believe while care don’t have a our of take inventory.

because upon is. low. two We inventory depend it is will what too But true build the more will try to all demand weeks

Karl Ackerman

getting of times are I supply the guess that low. about little right? for costs. that, a across many better chain next question, margins second shipping the on peers bit dovetails my substrate lead understanding same is have rising view quarter, which indicated just distributor gross and just You your quite time, spoken hey, At

value I many distribution the for But prices how are a volume so outlook volume many I due longer-term and that And are giving versus sign peers price appreciate you of if lead thinking bit guess, that in raising And forward? between times mobile. the I if the are are these your guess to you mix June, offering extending, agreements perhaps lines, little able you about with volume, customers larger and the read I across you going customers. to with less purely in channel

Balu Balakrishnan

there parts, way lot cost, would I all reduction yes, we you, believe, we the position to the I most cautions the will like believe beginning gross we XX%. we year I’d to in We And way we that that think of be are, with feel is our it’s approximately demand the because provided long-haul it tent competitors built in true of the the that think best for a a will about one to also of whether parts, meeting add guidance year on our the margin achieve not took, better the moving XX%. be the we are of is still the moving of answer confident so foreign that the the the we a a reasons I of impact than inventory. at is, around still look it whether currency of lot at the

year. growth fab additional capacity committed we next partners. continuing capacity And are build from to our for integration We have

I other in think than much companies. shape we most better are

Karl Ackerman

Thank you.

Operator

Svanberg question you, do Thank from another the line of We sir. have Tore Stifel. from

line Your is open.

You may question. ask your

Tore Svanberg

your to you the would and would other of to good integrated obviously, record in that several Yes. sort share? also you course, way, those by selling comes equal ways weight of is probably Balu, the that on lead and on gain when mentioned keeping high having inventories this little and the them, Thank gain of gains, But share. guess times, bit environment, one results. congratulations capacity. it is when that? But gain there’s Could share. ability I comment to share your discretes have at more on very long I a you guess a solution, why And would reason you a are

Balu Balakrishnan

of Tore. far the size The Thanks, reasons attractive hit Yes, we terms have is solution one you rate. in several on shares. by are getting and biggest efficiency most

In fact, adapter, place go. there other if is smallest want no to you the size

That’s to make somebody that power solution. number to have up use a bigger one. bigger supply else’s You

share, And that, half But you huge get are and so that compared continued because independent the on on have current top gaining we competitors. the has the to cycle, we through been cycle. our because hard a this it’s our components, right of space to the hit have point, components of advantage solutions

So our things of going on. a they other are solution. prefer There couple

Huawei As of share share prioritizing that, are they on shipping because areas have kind and so automotive of that ship products we you top to our a they competitors gains other customers And into. our from magnifies know, gaining the of have. having are are number like that trouble

So share as we getting result, are gains. a

are XX-watt having get that because of charger. XX-watt China. dual charger they solution power substitute otherwise, cases, even XX-watt they supply for they’ve what because cannot from particular a sometimes a our level. the sourcing if that simply But China In using of happens because from charger, cannot the our at type components get because matter. some to our charger gone challenges, is Sometimes a competitors that charger they

migration the accelerating end advanced phones. of into it’s lower ways, some in chargers So fast

are the is because is shift get benefits believe the to lot us, to we they news many, they reasons good we is permanent are The gaining once there shared a many of bring. So this used share.

supplies So the total, originally, there’s [ph] cycle. the where much are products, we to to where have enabling to gaining share. In frequency we from area fixed faster failure market variable us very happen. the thought power very, And are current power And substituted are like that change, share motors further is there and supply. we areas switch frequency great that we thrilled so an appliances a that it’s thanks standard electronic gain than the changes other again, with

talking are on, that coming big all that So are things That’s right now, seeing the market we our in seeing way. share gains we are end switch the we applications.

Tore Svanberg

is try perspective. inventory two weeks. great That’s My seen. think lowest I second question I’ve ever channel I eight the think on is weeks, seven you do that’s at mean, like And to will the that normalized use of Or new not ties and or that back the this forward? going new level? that supply where build there is to norm we a sort is number should a chain

Balu Balakrishnan

the No, weeks reasons couple be is a up They expectation levels. come is no. think at going customers could The QX. weeks serve weeks flat. just QX X.X of those two we or can’t And My to is of the one that’s unsustainable. that in

you lower be will we because had expect we’ve of in be of channel QX. inventory, the QX to now strength the If But thought low originally, QX remember, we flat. because and QX

buildup increases we the in demand unless channel expect So the further, some inventory. the

Tore Svanberg

be market? there’s say Or other demand the communications mentioned half. first chance you I question, segments assume half that versus will would as that’s applies for you last associated lower And with primarily second a Great. that good well?

Balu Balakrishnan

consumer computer will and apply other segments, like for markets. it Well,

the looks from work and at like at now. look it you it’s driven situation learn right all demand, If home home by

They’re buying more more are computers. people appliances. So buying

is Whirlpool right six look retail – to that. to now, their you’ll appliance, you an if have five if hard fact, chain. weeks appliances at announced you buy six their now In just that to to backlog a doing time try

pretty And we whether So QX don’t if the those to at I COVID, some in will demand is recover appliance still have that from has QX, normalization demand be in know at it QX. some or point, occur to will will high. normalize normalize. especially satisfied, point,

half did second be remember, that Tore best half. year, last Our growth. thing, we a you will estimate than XX% other the the if lower is first

upside will sooner. and you talk you’re know sooner this that then tend That’s as and So sooner. because things to about normalize, and will way see we the normalize, things we that turn we historically, cease us it see seeing why in

Tore Svanberg

so Yes. I transparency there. appreciate you Thank really much. the

Balu Balakrishnan

Tore. Thanks

Operator

Bank. Thank you, line do the sir. We from question of another Seymore have Ross Deutsche from

Your is open. line

ask your may question. You

Ross Seymore

actually the to strong congress and channel Hi things other and more ridiculously you ways little that I you Balu, results. It’s inventory solely to the the very rise, I guys. to weeks shipping echo more bookings it the revenues on the are guess some want question first of dollar same guys, weeks guys the talked impressive. have channel? channel actually a that do weaker, about the on rates of you a guys your side, second that the and will first, of has blend can ways from I of drop so two it inventory amounts quarter. comment will be going second orders there’s the that if little two Or and for there’s they half tailwind customers in rise the on believe the you by inventory I then the refilling guess might is guys

Balu Balakrishnan

have backlog many bookings push dynamic we gets and also terms we ways of question. know have a strong in very pull-ins different outs, terms though on. and of very the it’s in in That’s that backlog a I wares very strong mix, adjusted see situation. knowing. All Even is no so I that good

It hard to normalize. it know. happens but is Whether this that feel looks I point. has are a I just at QX, to just predict, the That’s point, giving. am to there mean, we’re gut this guidance giving strong But at feeling why in pretty we thinking I will QX it’s don’t some be some us. QX, or that normalization. So I

Ross Seymore

might below the into my guess Fair feeling half and category, the enough. gut but versus being it same follow-up, fall as first second the I half.

to bookings. what run wouldn’t not And be what said you’re those again, news. sort magnitudes, any you of as or Any true to that appreciate magnitude, tons I the even roughly you of like between sense. the Tory think companies ability to on demand logic you’ve deem that have is demand, considering? the front first to potential color half I second your delta real the sort shift most all Any but your numbers, makes as transparency half, far of bad said,

Balu Balakrishnan

again, building up smoother place, more sort one speak. at they that in if to customer, so that will will it make I the of wanted the we that’s this reason the normalization inventory. at slightly speculation it pure going more happen. add we is sure take just What because inventory in normalization all our customer be keep means first be customers, what’s end we inventory always than Sandeep feeling you’ll it wants Well, My be which point. of to to can care it the half. lot building that whatever cause because on problems will going up believe lower than speculate both to will to we be don’t a drastic more because ship is end

looking ship they multiple at lower that we very of time. be simply book may bookings And be The who other had gets it somebody can badly several don’t we who way getting the anticipate we it else reason are better. we If that semiconductor either is we overtaking didn’t the if everybody customers, ahead back serve because the because our of distributed inventory they’re panic. companies. among customers in have careful case and to They – to needs no do therefore, that

it’s cases, It it was are of harder. sales force because shipping a perfect are many industrial is No, absolutely like more markets. are how and we each have confident, some we not sold knowing way that So we In fragmented situation? into inventory. know lot in like appliances cellphones we no from a much

build have takes will the happen Eventually, get they safe not just and that needed we and back to while. in a for So weeks, have course, inventory customer run is stock. normal but distributors to customer with that products it to inventory levels, at work our us build need to we’ll the And inventory a only because time. the heat five to the which are that of this have won’t to cooperates with hope production, seven will

Ross Seymore

very it visibility by question handset That’s to just that helpful. guess you Huawei you bit is saying you the little that and and the last know that for share also the a quarter, where losing that And I dynamic you everybody alluded market, the have you one else has me, progressed? know on final Any to highlighted how but better trying us? in obviously the games that seem is sort update that update that. any the at bigger on hurt take all than on is latter quarter, didn’t first of you to former. It for

Balu Balakrishnan

Absolutely.

already were have in within also only share we within we have You from that and this have benefited them of since benefited OEMs – share growing going situation, than Huawei know the from a very their we demand. share it. from Chinese They not their good a got the all Huawei very indirectly more share, so We non-Chinese additional and OEMs good away.

benefit the And so got of we that.

more more in we Huawei. fragmented knowing the because don’t am that there we we HBA are they many from of how much manage. IoT to built, do we are are many a to the what excessively design, the demand – get There’s building of more cap not they and they’re built. that power compared have we so of and far supply we share more it, I So, know, really do best than They’re smaller the devices non are is OEMs manage. But as how I how we have markets push built, who I provide to we back overall, market also devices way. phones whether customers, way more supply harder selling think comfortable with Those react. no phones doing we shipping in have need that have we of many good anticipation them But at whether yes, to gain. a inventory the at meaning guys much tools pretty no they see a And don’t We that to it’s inventory. But course, new would chargers OEMs but this more appliances by to almost exact build inventory say, if many It’s – bandwidth that after job, built, are power what parts. rate. parts know, is how power and for the we as run booking we back say is can the won the guys, push Chinese are

Ross Seymore

again, and the Balu. you congrats details, Thank for

Balu Balakrishnan

Okay. Thanks, Ross.

Operator

We another Thank question of you, have line sir. [Operator Williams from do Capital. from Loop Instructions] the David

line Your open. is

David Williams

ask I me right the you’ve and about first in think you inventory been the Thanks appreciate seen backdrop the obviously, But But question. since I what quarter. market been the strong and you’ve congratulations, just on very you’ve talking Balu, build. is, thing the let

over be you So a you’re hand clearly, term, bit several this. seen? generating business? you terms market the automotive. on not if than in the up as have out that opportunity of steady a around business little anything revenue But design on managing maybe lot. but a of longer what Obviously, Or activity better could the maybe there what REIT, do and size the years, congratulations the your yet, think, REIT I you’ve size think but that in I terms could, of through we that look you could If

Balu Balakrishnan

question. Excellent

of automotive good a very into customers. getting these making are progress in We lot

which every to product. use is who InnoSwitch a the of wants customer version automotive visited fit. an fantastic have We Almost

takes get until on probably of there lot designed will long how is because of couple years this design won’t now maybe year. So we it be that’s year our expectation a and significant going activity to see to automotive. revenue from But next a that

just opener. InnoSwitch bold Now is a

into silicon the motor. at driver drives scheme. efficiency cars good because ability use isolation. get so significant the modules other have provide drivers products, expertise modules XXX robust trend advantage at And move their to IGBT terms very and have of the in We same provides inverter to batteries the is have voltage, is volts, it’s in highest a are much we the are like industry, level out will but have ETOs. superior a of those that terms that vehicles, fit of Fluxlink are plus far bigger our trucks XXX – really there And already most in volts. That we up these we an our in abnormal under have where that products conditions. modules driving strong go that market, That and these go advantage are very most this to the that especially using the the the of that in costs now, as the a protection isolation And we on carbide drivers the Right products voltages up. the of

get takes So that long very we will we are that we just to time are indications get to because are it optimistic. this a there. But market, new It’s there. all

is go little year, We bit into of will qualifications. to simply safety takes will have a the tiny really it is like two three the following the into the related it it to harder where drive years two three get some to to year. the It grow all through of and this we go next but will because before years revenue motor applications year or take car,

David Williams

Sure. a contingency, But got maybe it large working that you’ve a sense. seem you’re Makes product around. does like in design good

longer fair once way very it? it Is think that about does And to could ramp, so that be meaningful term. a

Balu Balakrishnan

absolutely. Absolutely,

to fully market. committed this are We

a customers, working are well-known We of of customers, optimistic. and question are with very we It’s time. just number a

David Williams

me, Great. around secondly Great. then capacity. for maybe GaN And the

you very you owns And there GaN way additional of a these what And your reception some maybe that had from GaN? terms little about incremental of maybe size good bit can maybe what just for terms talk have aspect winning to obviously standpoint, capacity up, that the seeing you’re in there. You’ve business? in a a does

Balu Balakrishnan

capacity Sure. for feel And least growth our we we GaN by three GaN. We our are by, time. revenue And we is every we to get about of – mentioned in day at also news is dramatic a more have GaN. that going times see compared good passes last plenty investing to year. because GaN grow over better The

restrictions don’t we capacity. any so GaN expect And on

proprietary can question are even we plenty capacity a world, fact, much we a separate high-power. tied case, and have, technology capacity as GaN, that the on And XX-year and But with restriction well. brought all In capacity, for partners they High-power capacities completely the Obviously, the to I capacity, different that’s have when somebody come it around contracts the more high support totally that now, and a about and depends that’s it our really fact up comes power. better optimistic most don’t we working how in of it the it the with. we have of we with plenty in mix. in true are for us silicon because also right where of position much – will very to up we see is the really add we when

So independent of the side. the if we on grow, have those that’s that do capacity silicon

David Williams

one you, I for more can, if Great. Okay. maybe Sandeep. And

as the of kind and that from margin that how third-party think do mix and margin, some mix thinking chargers I of the holds of think products – you uplift Or maybe you the about of maybe you the there? or do guess, both fairly from then could margin the see the think you that communications even On some business, as OEMs, aftermarket the we can in about Chinese steady? you’re move, about side, trend thinking customers,

Sandeep Nayyar

volumes margin much the products Well, the will multiport. get higher more, there. have lower, it’s had definitely, the But GaN power ASP mentioned, you generating the in higher I And much you benefits are the see aftermarket, gross improvement pricing level, dollar. margin as because higher when even

to move around year, should mark mix direction. the margin in We second original guidance half do in for the we for XX% the year. right as our the And a for the year, had will think still the said, expect the be second the mix do a go had half. of in will And a – lot transition. favorable in little the more that first the favorable Huawei’s we’ve than first the benefit from half expect or we slightly half for it is because we I meet gross the

David Williams

Appreciated. Thanks so much.

Operator

Northland sir. you, the question Gus do from from another of Capital. We Thank line have

Your line is open.

Gus Richard

question. Well taking for Thanks guys. done, Yes. the

Balu Balakrishnan

Thanks Gus.

Gus Richard

Quick growth ASP? on is sorry, versus – I’m your side, on cellphone semiconductor question much – of units the how the

Balu Balakrishnan

question. Very good

than to the We share, a lot higher, both. of the have market, simply significantly grown real share charger. much about of high especially They for the the unit end are charger is it talked super because when which XX-watt we a our revenue call the go power cellphone. higher the ASPs you But is for cellphone, a

used higher business. we than low significantly about talking of end the You’re get on the to ASPs

five ASP times that very the reason a to is more for We are about talking XX simple high, one. level power

that, GaN it’s have having they’re which adapter. we having charger. is you in in high means multiple more, end pay a because to Secondly, port One a to of you top smallest that, up looking but up do pro pay using customer our ends three the products on very the efficiency, And for need GaN But it. single charger, switch. one It’s more. we as chips that have to

one product ago. is also is introduced also but we mini which sell we uses [ph], time switch, a another The the second some X as cap, GaN which CaP

high moves more is So, high content the whole a relatively we footprint, more Right end. small end the have lot the business. a market toward dollar lot a as now,

solution, being about talked we the high using – end of solution saw adapter the notebook the on same a used You that cellphone.

it’s I a and so in – the our cellphone of SAM it volume, for content, quite us and but therefore, notebook we a reasonable And have lot grow think market. room actually to the

Gus Richard

much dollars, want you And balance Sandeep, Okay. on sheet? Got inventory terms how how much of the in do it.

Sandeep Nayyar

to to the Yes. bit model it environment, indicated wouldn’t a up QX, that. in the at And I expect in it mind even with popping days. is do be bit XXX inventory, demand days, right But frankly, the even of would weeks short-term, even mean, in back until a I sustainable. be up as going it’s a challenge Balu surprised being things now we channel I Ideally, is that mind quite I than I won’t two quarters. higher. being our internally, not because the little coming even the XXX though is in a earlier, Obviously, higher I where least think pop But normalize. like wouldn’t

Gus Richard

revenue rate. the current Okay. run assuming And

Sandeep Nayyar

a gaining lot we’re And share. of Yes.

will we have tried having I normalization sooner. about normalize. And you think we we we will tell is that what as talked rate, upside do see some to impact XX% and sooner growth see point, the at that things

in grow irrespective our right started marketplace now. guide – to to the continue this even So we’ve several business I over always will think happening next what’s we years, of

seeing of that share in even normalize, want thing to that quarters end different markets. some the things are know as demand. gains But in gyrations I industry because is will our term, across because the the model, believe long share we believe, outperform, One the the gains. of Now we of I we I Yes. the clarify of

to So peers, can’t predict we going the share our when I we But the gains, believe. of normalization of demand is because outperform happen. will

Gus Richard

older to InnoSwitch the sort I the run products, relative of Let products think couple run some what and pretty to the the the last rate they’re about of steady over runners, volume was? of rate. older get what tiny switch, me done quarters the When your top at unit try is

Balu Balakrishnan

for a we escalates. industrial very in those and well. doing are are the those pet for even been demand of and But I has the up has I are XX old. processes adding the the that XX, to revenue these it. products old also mean, we of unit significantly. it them These not, packages. and because appliances growing. legacy are really all have can’t capacity capacity are believe because and – old and that – the some are gone or used packages are still It years These point And markets, believe volume increasing And

Gus Richard

a put on run is TopSwitch rate So from, me? increase can How from much XXXX you it I’d number for now? to say,

Balu Balakrishnan

high-teens percentage rest high-teens And and in the revenue, total low our the of InnoSwitch-related is revenue, of it Chinese revenue. is percentage switch that the about the still part at in He it’s tables. But – our like something of looking a can revenue of think rely the teens I and Sandeep is link of the significant switch is is on products. here. you top like the to I’d tell I with same is

Sandeep Nayyar

The roughly of InnoSwitch-related revenue. XX% products our

Gus Richard

curious what unit about But is on Is it been? up has the unit... what the Right. I’m trajectory

Sandeep Nayyar

don’t I have number. that

Balu Balakrishnan

Yes.

for it. don’t looking We it We are handy. have

So we can…

Gus Richard

would Yes. let up. so Thanks That much it helpful. super follow guys. be go. We’ll I’ll

Balu Balakrishnan

Thanks Gus.

Operator

time further at no There questions this Instructions] [Operator to answer. you. Thank are

continue, You please. may

Joe Shiffler

and All thanks the patience start it this our at call afternoon. difficulties technical investors.power.com. Thanks, replay And a We’ll for will right. for good be our everyone, Thanks leave listening, with as listening, there. call. the website, of again for and on your available

Operator

sir. gentlemen today's conference you, call. this and Thank Ladies concludes

may disconnect. You now

Power Integrations (POWI) 2 May 212021 Q1 Earnings call transcript