Earnings call transcript Q4 2022

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Operator

Good day, everyone and welcome to the Power Integrations Fourth Quarter Earnings Call. Today's call is being recorded. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]

to Investor conference Relations. like Shiffler, to now of Director would turn over the Joe I Please ahead, go sir.

Joe Shiffler

are and Thank you, Sandeep me today With for Nayyar, joining Balakrishnan, Lisa. Good Officer. afternoon, on everyone. our Chief the Integrations; of Power CEO Thanks Financial us. Balu and President call

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

press prospects Our risks events and will statements risks most year. will, and include that to the implied. discussion look cause words or February last session, are are expect, like discussed uncertainties projected subject the those would, by today, that X Q&A SEC forward-looking believe, performance. to statements today’s or and from anticipate, may differ outlook, filed Such and of similar toward with uncertainties Form including materially expressions XX-K future denoted release actual in Such should, on results forecast, in recent our plan,

Integrations, call of without and Finally, of expressly Integrations. recording property is is this the or rebroadcast the Power any consent Power prohibited written

turn Now over to the call I’ll Balu.

Balu Balakrishnan

our industry. line Thanks semiconductor XX% Joe, the and good million, in revenues guidance and the with down were afternoon. in Fourth quarter reflecting downturn $XXX sequentially,

remain to decline sequential soft further a March inventories as demand expect the elevated. be We quarter end and distribution in continues

an many than large end layer can also the power market. see additional products typically companies our advance often to of familiar the less are creating a of are dynamic supplies, OEMs, first because peers built because are to with This end in those in cyclical between inventory and customers downturn are For which suppliers of us our products. our fluctuations among used in we semiconductor result our history,

cycle, the of the tend side. apply peers outperform course, front underperform both our the Of cycle. tend end at to down we on And dynamics these we a to while of other end

we went For into were a margin analog outperform but We felt the the year. on in well. XXXX, as not we example, only as XXXX by two across to next each underperformed the down following wide in analog of in early the industry cycle, years industry the

quarter We of after and into sequentially inventories revenues third channel are our are in lower now the September peaking declining quarter.

March the growth the to of June slope the recovery revenues the depend demand, of end bottom While in course, quarter, strength the market expect by of quarter. followed a on we do sequential the will, in

quarter the by Looking category, the the Sell-through perspective, stimulation the end appliances, quarter at softer major in small consumer about have for for air pandemic. the was the considerably which appliances inflation of recent fourth consumer appliances weakened over housing category subcategories, dominate market during including months, year-over-year market, from XX% down demand conditioners. fourth an and and in the affecting and driven all

BridgeSwitch gained significant continues ongoing the Despite DC Wi-Fi products. are Dollar which adoption as as past we to driven with over where like opportunity years. have by of share penetration the appliances, bullish short-term connectivity, on the of content in products remain motors, we brushless addressing the rise, and we increased of couple the GaN features ever headwinds, to transition our

energy we than and offsetting in are about while inventories, elevated were only exploration. sequentially, XX% in In by seeing and power, building applications sell-through energy are down channel category, significantly, reflecting reported down automation but strength the Broad-based fell industrial more particularly home industrial and XX%. revenues high renewable

channel sell-through end has improved normal customer inventory by suggesting levels, category inventories communications dominated have smartphone that are the chargers, stabilized significantly. In and approaching

and we expect quarter. be the on Having we while strong, share -- double-digits across up looking of macro the were anticipate seasonally improvement XX% QX. geographies the and we short-term our do lower, The in the long-term this, to compared long-term QX more range cyclical markets business grew Revenues focused gain are all sequential and such June staying communications to for said and QX past And in to are Japan continue profitability. and growth we gyrations a end year. revenues fundamentals of as combined last India, and where profitability and broad than

out Day, are next to Analyst the Most including the plan importantly, in years. our we SAM over our laid opportunities on executing double several we our recent

range We opportunity our will by EVs, while wider we products in address of GaN XXXX. a also do each DC to a by of be billion brushless which and growing expect portfolio presence applications our $X of to expanding so motors

renewable competitive Our and and power high will applications, products grid winning the are industrial in in power. our long-term position products power new gate have pipeline we driver energy, strengthen motor high in that

tighter meet recently continue those conditioners India press also implemented ceiling advantage We air energy for China specs efficiency, for fans. in to in helping and like customers our

all, after our in and In our XXXX. wins funnel In in now BridgeSwitch largest a BridgeSwitch is QX customers, customer our motor drive while major conditioning in among for the air a users production China, grow products. fact, is than we of tripling customers expect in of more several number Indian now of design were the largest significantly that with to design dozen size

fit pipeline carbide last We supplies in cars silicon tripled passenger products commercial year and exceptional vehicles. an opportunity electric InnoSwitch in our the EV market, for our power are also where

creating and chips conversion EV reliability, efficiency using XX-volt trend battery main are other discrete As in solutions for our of which terms power today footprint. evolve, subsystems is by for This InnoSwitch standard the automotive increasingly are powered sockets that to are superior qualified and architectures voltage new customers batteries. still

designs these already end now enter in on scheduled more won production of significantly in many new Both We at the production as about as this XX programs many pipeline. new to dozen and raise are designs automotive XX in to more five QX and than customers. figures three track have with year

rebounded high-teens industrial our pandemic-induced business two XXXX and category. growing from the the prior power years, in high contributing nicely more growth of in XX% than slowdown Our to

in expect XXXX, growth by projects. renewable power grid energy We and again primarily strong driven

of summary, long-term in exciting are us fundamentals sound, continue for business we front In to of the invest ever as as are the our growth. opportunities and

continue to well to cash also We price as through stockholders of dividends. return as buyback a combination conscious

the payout. in the our noted the As X%, beginning press release Board increased has with today, dividend quarterly March by

in two XX industry, of turn years Gioia, Ford it in carrier very had who X. the manufacturing, roles like Sandeep, January planning. Electrification, to EV manufacturer. Board Before space a additions Board with Group, the executive EV a Global at including I as distinguished of Director she of the strategy in serves Company, Directors, part welcome Nancy leading of Motor the experience Lucid Nancy She in to starting on product later currently service on highlight Board of our Ford's period served development, and to and over has the extensive I'd comprising the automotive joined having

Sanken Board will Allegro CEO at company, be concluding our April parent Microsystems career and was who until Ravi X of Vig, Allegro Joining America. its on year, a North last XX-year

combustion the supplying years to addition transition IPO leading internal after vehicles. several sensor ago, chips In decades for the to Allegro market navigate helped Ravi power EV and their

and our automotive highly EV support adding our underscoring these one commitment out highly are market relevant industry accomplished the speaking we from one to and expertise efforts. from the the side, to executives, In semiconductor

Just to in says attractiveness as the about importantly, Power effort EV this their a I believe the for willingness us Integrations. of lot opportunity join

great focus survey Place anonymous Work which in higher the believe fact I will that our received macroeconomic the Certification our strategy. consistency to of place cycles health our of is our reflects following award and we than regardless our an we of that U.S. company. innovation, is value Great That products contribute I Finally, The turbulence. a semiconductor note XX the to and average December, employees of work. this planet culture stated that Integrations in XX% employees that points Power of and to

And a review financials. Sandeep the over to of for with turn I'll that, it

Sandeep Nayyar

what good we expense to are thanks current and last is balance by start the well-positioned I quarter afternoon. weather which that to Balu said lean our on and Thanks will call, the sheet reiterating structure. our I downturn,

not production ready people of and will recent long-term includes maintaining in steps an theme our looking we invest spending well was While the important upturn are focus beyond in we products moderate That that Day. and taking as to to Analyst prudent be demand. from deviate continuing to the levels, as capacity for and downturn production an

have history. While consistent how managed through throughout well target, this internal with served our that an we us past downturns, has approach above inventories are our is

kept and especially fungible largely are have wafer risk, products obsolescence Our across in end minimal markets when form. and customers

despite average rates. to the downturn develop the benefits We the above of world, pay cost also This employees. while continue rapidly current increases around hire includes continuing retain an and normal insurance rising and despite working salary hard to economic of portion to

categories the the down the now and with session. appliances. discuss dominated prior I by all is The QX guidance and of Q&A XX% in we begin weakness of range Revenues from the quarter. category, was down the million XX% were quarter will middle $XXX across for consumer the which appliances, outlook more numbers our before than

to more elevated continues inventories. in has demand The category XX% reflecting down industrial soft, broadened in sequentially, geographically. channel domestic be While primarily slowdown the China appliances than was

in the As was Balu XX% sell-through only noted, sequentially lower by industrial category.

the ongoing reflecting communications that of low end which by low is smartphone fell increased quarter dominated prior Revenues high-teens revenues softness a chargers, category, a Computer sequentially market. from sequentially, by in low-teens percentage by percentage level.

than the been indicating sell-through Overall, quarter-end, most in to has sell-in continues stood at though that $X levels, inventory inventory near with about from by decrease demand normal slightly some channel weak, below smartphones quarter, healthier at have weeks inventories XX.X fallen they was be in time. prior terms, million. significant end exceeding the just customer While dollar channel are to

consumer, XX% Collectively, a the computer by and we less eight quarter, quarter from points favorable resulting and XX% prior in gross markets the XX% XX% Revenue industrial, mix communication communication margins. anticipated, percentage the than increased for fourth mix lower-than-expected was computer.

gross margin to about by our points, production driven prior three XX% guide volumes. Specifically, primarily to XX.X%. percentage of was non-GAAP were of and down compared lower gross the the mix to XX.X% Relative impact quarter, margin

other expenses for our guidance, about operating primarily below the Non-GAAP of and and $X headcount additions prior million, from $XX.X the down million were quarter the slightly timing spending. reflecting quarter

earnings our non-GAAP non-GAAP quarter The to for rate of and full tax quarter was XX.X% $X.XX operating catch-up to Non-GAAP the year X.X%. share. the reflecting a effective margin diluted rate X.X%, per for tax was bring

for about just million the over remaining $XX price for during $XX. at on shares share utilized repurchases million, Weighted average the of the an XXX,XXX average quarter quarter. We down our count back $XX the March prior was authorization had quarter, buying quarter. million diluted XX.X We XXX,XXX from entering

million $X in used flow the CapEx Cash We over during the for $XX from $XX quarter was out dividends. million paid quarter operations for million. and

As share, Board Balu the noted, increased per our an increase has X%. $X.XX dividend to quarterly of

returned all of buybacks the cash For investments at of to flow. That's XXXX, last the dividends. and year through about of two-thirds stockholders free and about we we XXX% $XXX of start had cash million year's and the

remains our Inventories at $XXX extremely million days Nevertheless, to cash rose the sheet XXX balance sheet strong on investments in at year-end. quarter-end. balance and with

to product in in noted of in then of access wafer sudden quarter to through days us the March inventory As allows expect year. demand. ready peak and ensure taper remainder to the earlier, to be down the continued to during foundry recovery the gradually our inventory to and downturns the I nature capacity of event a build

outlook. the to Turning

for plus revenues $X quarter March million. million, expect be minus We the to or $XXX

again expect revenues to reported to sell-through meaningfully be higher continue channel as once down. inventories than We come

we benefit gross less expect a volumes be for manufacturing margin sequential QX Gross with March yen decrease of weaker a back-end margin the XX.X% half favorable rebound I volume again to the driven and abate, after related lower in and headwinds second end the quarter of mix. as market prevailed and the mix XXXX. by that approximately non-GAAP should realized

non-GAAP $XX million reflecting XX%. our well be X.X% plans FICA range the full rate expenses of expect as quarter, should X%. the the and year, I the around as tax up quarter year Non-GAAP hiring target of in for XX% quarter the impact effective prior high of the for and of to fourth the our be $XX.X end to margin from year-end million, March taxes non-GAAP and For and the resumption first between operating for shutdown comparative gross the should between be quarter.

the Q&A. begin now, operator, let's And

Operator

Thank you. [Operator Instructions]

We'll Seymore Bank. from take Ross question our first Deutsche with

Ross Seymore

Thanks for asking Hi, the question. guys.

takes flattish that quarter sequentially. quarter Just Obviously, might ago course the you to Is during of the headed but March? It wanted the the see, a thought directionally wanted the it weakened? expected, to that first happen. into some the of demand just guys had causing and like the quarter fourth that March be puts quarter, you and heading just get like inventory didn't the in sounds channel weakness that's

Balu Balakrishnan

the We thought and we but as in to especially than clearly definitely never only more space. appliances. as and slowdown that is the -- did, it our channel weakening it the in That go demand, It's we not down mainly our it expected also -- is thought, OEM. reflects demand consumer inventory at far which would

think as I reduction they in surprised surprised of are sudden in were -- we as demand. the terms

Sandeep Nayyar

the than where started lower and before couple publicly again. conferences. after in somewhere the quarter we indicate moving Ross, we this And December, QX bottom be will there, they be seeing will actually did start November attended we'll March we where a call, that be we and it probably and upward earnings that to timeframe expected of And out

Ross Seymore

the follow-up, about the are will guide for side. guess and it talk a year? I as mix talked kind Sandeep, mix side headwinds then be progresses? to of quarter the lessening shape Thanks of a the the but coming to and year of upturn for XX% March dynamics of quarter? on you within expect linearity said about revenue the range What know, expect if you than XX% gross the of of the to you and you the in how question, kind out that. the And be do close color other you normalize talked gross talked those the and And that my high by margin would to I the the things, as you end the that work As your the margin segment this

Balu Balakrishnan

Correct.

a in look able So, that's QX. by came and in saw was even the though at came weaker, lot it, XX% to the better. even we And kind computer in in being why communication were like at consumer you if make you little the cellphone QX, of we a

which really even And every and will We communication the is though we strong as more Plus computer a is decline giving percentage, category a the remain industrial result, lower, consumer expect us. communications side to will healthier still really an be are and the in a impact But bit. the are as QX. decline having guidance. in and a little volumes for

seeing yen. the headwind the year And volumes, And had will the we basically, of as start progresses, the we away. start that benefit will going

If had the and flowing dollar you because half -- which the know remember, inventory the starts QX weakening. the yen And in you really back of in of moved is now very well will XXXX, QX.

go of the reversal QX other so, in was XXXX. direction And actually the

of XX% start year, you take if quarter, the of the quarters. the the the So, I think look will we at after first moving towards give rest and of rest the for each

and exactly remain on yen the the margin mix, but little moving a higher moving are had even to was that you the we long-term, end on that Analyst end my I start higher happening. talked look if I anticipating about model was talked of And because Day on though what's the I had the primarily the gross and back about it's would towards

Ross Seymore

Thank you. Okay.

Operator

We'll take question Tore our with next Stifel. Svanberg from

Tore Svanberg

Yes. Thank you.

Let inventories, internal with start Sandeep. the me

mean, also cyclical, But of shelf build inventory -- life. Japanese opportunistically that obviously on what But seen of think So, I meaning the because of how of -- much I number during is I've more taking do I buy is the downturn of get the understand think much I that was probably that's yen? you POWI. XXX, I sort to why. from And highest advantage you how the wanted color

Sandeep Nayyar

to the trying Well, honest. tie Japanese I'll were be yen we just

with I ahead, look not we think always million has planning have I this gone model their if But because more tapering going $XXX half, about in quarter million look partners. already in foundry if when you of see going happen it the first. in probably And as we is more And on QX, we talked in the really we in come it peak, with were looking think Even at will $X at strong. to expect looked QX, and you terms, in value down This each you $X but back, historically, from analog, days to we be second we really what's downturn partnership, QX, is as the move we to working XXXX, looking about come I it's the million. to had the the back and a always when end start out days will our $XXX think dollar sync if than million. dollar the back though to come I QX and above our economics look to. the is to even

I we had that being have really happens. very we inventory got, in when side the of on think it a half if believe a keeping at the it long has do, and we if we pull-in So, you helped we said consumer I've hopefully, the -- should because good QX of think you about talked are believe appliances, anniversarying of demand and the well bode the run second second feel where I in the XXXX. stronger, demand rebound pull-in year. because us And very really for historically, that's the very which half if why we

Tore Svanberg

early on XXXX. that's at trying on inventory when $XXX there, that's moving that's back guidance, versus you're down to million, to a Fair look of so But I enough. get sell-through. the And I the obviously, And QX forth, and and fair. do sort the channel sell-in to understand what so

to be in shipping you So, end under going QX? materially is pretty to mean, demand to I that say are it fair

Sandeep Nayyar

it and around sell-in last probably QX think expect to disconnect from we -- QX, I sell-through about if year, $XX million. Yeah. you just was

So, at million expect you a QX. QX, and And than will QX, at will $XX higher And by why story. the where in I sell-in look kind sell-through by least about be what give than sell-in. if million. half was balance the then happened the adjust higher sell-through in of $X take, that's second

Tore Svanberg

helpful. very That's

that one of become a XX% to Because with either now percentage obviously, think obviously, with seeing chance a the Just the next segments, other automotive revenues one Balu. some or Is that I mean, this there. last has shine, possibility? you're Is it right? I down year? possible real could automotive year coming for your of growth Balu,

Balu Balakrishnan

No, It that it would not. to slower grow much develop. is say nicely. a market very I will

it grow. are We single to millions go and single continue XXXX onwards mid low digit believe, to in strongly, industrial. But is take very will longer But growth we come millions, of will it other year expecting back will digit the real from really in much designs last the come to all especially some where because consumer I areas, to and develop. will

than Certainly, they weakness the us. not general of pandemic just the and much to world GDP In because is China be weakness to appliances. be us And in consumer, the the significantly. I continuing in the has a looks inventories has It's everybody buying a start of going it is hurt the the like channel will growth hurt out worldwide But will we up and better market. the to the anticipated. time -- lot and there point during one want not share just bought thing too showing in are gain people across when people,

at is look saying the IMF what right now. you If

So, will we come that are that, back. optimistic

in of competitors you BLDC penetration across our making we chips, us high on appliances. huge well. And in many that, two are the space, automation well. a the And with top a share know The building doing in share those home is the gains, of industrial The give really to we back that appliances. and BridgeSwitch. power very combination get importantly, springboard motor gaining doing is the should are extremely our More

also So, I'm optimistic. very

chargers, grow more a kind of even cellphones, even into is the of lull the when notebook because market. a moment, And simply demand, low, in the there because the have not to we of because Computer, they what to though have cost. also focus demand Chinese lot but moved in that's some the at companies a share only lower weakness happens on end is

is the performance that, to companies which on said tells products. high it of type that working are Having back power higher same charges, temporary and me higher come really power they'll some and

capability. lot of really us. So, growth I of what's we all now I'm will because long-term I doesn't overlooking shares of the eventually going completely have mean, it growth. think into I turn a on mean, wins ahead right reflect our

Tore Svanberg

Thank you. Great perspective.

Balu Balakrishnan

You welcome. are

Operator

The Company. next take David Williams We'll question with from Benchmark our

David Williams

today, you guess, market are afternoon. just you talk Thanks you guess, currently? taking little would question. for of are bright about good that can see biggest expected? are you kind of level, a Hey, a areas strength spots the, seeing high I in stronger the from areas the I where have Balu, the that than maybe What

Balu Balakrishnan

are a and and locomotives. we renewables building power Currently, transmission These DC electric are seeing Traction solar high traction. products. strong home products like power growth like to voltage automation, high and refers grid also wind in the and

Now activity also in especially to -- overnight. seeing very they also and appliances, have we vehicles strong turn into but in cycles they have longer electric EVs. We'll design won't EVs, revenue are

we significant consumer that, said have share market. gained in the having But already

is that area, inventory year very the the it I means well. those rebound demand see over two should it's I we timing, know since appliances are come back markets. to also and should exact and feel a forward good almost that eventually we and as that for mentioned, the when normal so as pandemic-driven looking stimulated And has some really consumption, depleted, Sandeep a don't to but been, about

grow. us are in monitors. should then And notebooks we into inroads That and help computers, making

least it also And a see, our that's area. revenue, X% consistently XX% that now of has become think last three I be but from growing will been As the growth years. you for can at over

hold will Now think, I cellphones, own. our

higher more replenishing not that We But people benefit ASP. end, which in have us -- of the as because going market seeing towards the much. softened are terms market we will phones are itself has

David Williams

the inventories think normal do to this maybe that they're -- we Thanks get the levels you were do on to. they're Or we what than there. higher to it's saw maybe maybe level looking you down color that channel down back pre-pandemic? of there to out thoughts towards in sense Fantastic. And any Is level trying are previously. Okay. that terms then those for burn a

Just trying to inventory out going understand to completely? burned is be how need much tell to

Sandeep Nayyar

Yes.

if So, typically really weeks say channel I inventory look for you it, at us. we eight would run

at if to market of Now look if the coming OEMs around come it market an back. you be take standpoint, is be first from that end that why that to level, we you kind Communications have time at the which segment, will back, seems the some reflecting remember channel inventory that's and give inventory. the burned said And a

definitely normalized and we in I other QX areas And what are Now good start what will will of get about QX. elevated, and that's the part happen. very think feeling that's why

believe look their are QX they QX they better and And whenever out air very this which quarter happened XXXX, And clearing is what leads are you QX, actually if start we looking and we a this will second it and QX especially when expecting QX that are it for appliance happens, think come things then well position expecting will at we us And in well the QX, very do saw the to while a us we fact, conditioning, after stronger. we area we look happened typically, half we whenever for after as out in look decline, you in what to what XXXX. -- exactly if a first as to significant XXXX, typically in to, the when you out between I historically, If look that very, time. ramping, happened, downturn tends as of bodes And had if be downturn, us. come what started similar inventory.

David Williams

appreciate Thanks guys. for Certainly it. the color

Balu Balakrishnan

David. Thanks

Operator

next take from Rolland Susquehanna. our with We'll question Christopher

Christopher Rolland

Hey, guys. question. the for Thanks

as that force us sounds I I we incredibly might would give here. or consumer segments So, But color main down some next ranking perhaps be to all be It can assume the assume them? helpful. quarter culprit think like should

you Or segments And year-over-year there's those of one do well? you to would -- down then be up? could think XXXX expect all as also a in be chance

Balu Balakrishnan

QX, communication of in other be are and guiding Industrial which that the why the what and computer we will the as revenue you hold, of percentage down revenue than is should think percentage will result, consumer But to, more basically, two. talked a as I mix a see we about.

for year, say As the talked see I mix should and far to that's on segment. and as would of little headwind bit downturn a communication you computer more full about consumer a the in basis why a industrial, I compared the and

Sandeep Nayyar

Yeah. That's simply because…

Balu Balakrishnan

at first. corrected We

Christopher Rolland

than Exactly. XX% with would least I far. others, say think, Yeah. thus Yeah. expected little March. And be I to this point, plus This down, harder hit into at revenue has all at you guys a

didn't. inventory to know example, greater guys put opinion? others typically availability here of I there pieces together guys for build parts a when going communications, is all wanted first. But it what for had Was see on So, kind there. you you of the normal because in your I else than

built. the why could end to is significant drop main If of kind so culprits markets? just postmortem the kind than you others? was of on cyclicality were the you a point Or people the What much of So, more to? are it all do

Balu Balakrishnan

reasons us are good That's several a harder. setting question. there you're And why very

that we more downturn it one The we inventory supply primarily And layer also always power because manufacturers that. the to we before who of then talked first is sell one see other sell to about people have We do. OEM. is the

if gyrations we you are will. much So, bigger, -- get our

appliances. -- from point, where of look two-thirds been it But little the to have, year more than of that were at you automotive who areas so has if this our Hopefully, us other is very time. very much revenue the change analog most peers over one exposure hit of other differentially we hurt at market. exposure. harder have have beginning those will them good automotive, The And species like areas than at smartphone, and

non-cancelable, pricing, didn't peers. a of increase orders, the thing non-returnable as value And much our we prices that other of large peers did implement many agreements our because And done. have do not long-term as most we is we have or in

growth In look a in the you fact, change ASP. in large at XXXX, the growth if portion was of simply

And have you course, positive we mind of keep you to that that when will first. side is in compare. the recover So, of that

outperform think I when market so, And the recover. we'll we

go you similarities. you back see the can And if to XXXX,

us saw that The and half for in anybody down did. second was XXXX, before we else

was the years, X% significantly a next downturn. we and outperformed up also allowed were came share of lot industry in industry that XX% we and year. the and the the -- XXXX, us faster gained because three out down during So we we that But

So, always is invest gain opportunity an share we for for every to the future. us downturn because

fact, the downturn. into In invest we

So I to getting. we're I share too pay to attention because don't macro, the how pay attention gains that's I macro much the try control why not but to much

those peers. the differences our are Hopefully, seen that's we why than So, much change a larger have helpful.

Christopher Rolland

helpful. very was That Thank you.

Operator

We'll Ramsay Cowen Company. take question and Matt our next with from

Ethan Potasnick

expectations under segments correction you had recovery any might of what you kind to you have across little for shape want the I know the the to just I actually bunch been And any Hi, of a But anticipate flows shipping channel. questions wondering true selling of of I ask This as see kind are there Yeah. like demand. similar sense bit. and on what question is regarding when a a guys. in Matt. if Potasnick guys through? rolling was of inventory of Ethan look of kind

Balu Balakrishnan

Okay.

brought the sea inventories at normalized, cellphone were but inventory. market also demand OEMs understood because it already we are looks consumer, least that's quickly our level, close happens. We normal, how have until our customers normalizing have the so definitely now, there came the the like But at down in deep that slowdown think to getting it's quickly the surprised

So, consumer they the inventory much. the various are level. the because our at at and is so is back. course, this and at also it But what And of at come OEMs at OEM that's stuck then, painful point with at retail distributors will levels down

question is those will normalize. inventories The when

to growth. QX the and QX, be is is it see second will bet better sometime where than us it benefit half, significant second do but course, We QX, XXXX half. best the normalize, Our expect in the so of will we in will

can In over there is And is there terms sell-in. The the across of consumer, there is because bad buildup the is a -- is at clearly, in the broad-based XX% board. distribution. was slowdown only inventory over you not see our of as is and versus and that the down It's that, down, industrial inventory. industrial, news industrial, but good inventory as sell-through

as we is that improving So speak. also

QX the bottom likely So comfortable that's be. where to why been is we've saying is

Ethan Potasnick

as my then think the Okay. are Got it. penetration pre What should how it. correction? post I of follow-up, inventory outlook for and this about rates Got guys we kind XXXX? of GaN types guess, And seeing, you

Balu Balakrishnan

many to design nicely But industrial as that much market think very thought primarily GaN in we'll spite GaN well. of in grow very and wins were designs We of have expanded we as XXXX, grew And computer. In grow because some, marginally. obviously, didn't that, didn't most In we of grew including Yeah. do the XXXX. course, smartphone consumer other XXXX, and, designs, chargers. areas, in we our we

to a we As growth significant forward. see expect in going a result, GaN

Ethan Potasnick

you. Thank Okay.

Balu Balakrishnan

You are welcome.

Operator

[Operator Instructions]

comes question from with next Northland. Our Gus Richard

Gus Richard

Yes. question. for you asking Thank the

Could have very units also at ASP parse strong how of that -- just versus growth. Just you like annually. I'm ASP? XXXX, what And much back that Typically, you out looks that wondering what had looking today? X% was you guys decline

Balu Balakrishnan

products a nothing did significant we but components of we the as replace. at base our I numbers, extent so it somewhat value, product in So, we many benefit benefit that, know peers. unlike the we said, peers, on the XXXX, there exact our pricing to don't like we from we that. price -- our Obviously, increases. is And the do didn't to are but

tell couldn't our peers all So, very exact I strong increase is the I who it's you a did number. But far in very, price. of most less than say can

Gus Richard

in is demand? how that how back and pricing is you today? price reverting Or historic the normal weakness are norms And going, decreases? to given Or

Balu Balakrishnan

the normalize this pricing will year. I Well, think

You understand we annual years, reduction. have have to to price for give that didn't two any

helped that But bit. in quite going I things is because So, will ways, getting us forward, situation supply a better. some normalize think

Sandeep Nayyar

in significant front still thing end. a pressure, the costs have does one upward input the But very especially

right and that going the So, tension value I think now, pricing. is do on we that's

still we value will think So, pricing, pricing depending I see are pressure. stay how But the we having input on costs competitive. the

Balu Balakrishnan

us that go prevent much lowering because continuing market will very That to input -- just us will up. prevent the Yeah. not are prices costs from

Gus Richard

And it. business that Got then think just about of for last me. appliances? you When much one consumer, XXXX, in is how

Sandeep Nayyar

appliances consumer. XX% I Yeah. is XX%. mean,

Gus Richard

Okay.

Okay. Very good.

Sandeep Nayyar

three small, That is major, broken and buckets. comfort

Gus Richard

Right.

so much. you Thank Okay.

Balu Balakrishnan

Thanks Gus.

Operator

Stifel. with from a question have Svanberg we Tore follow-up And

Tore Svanberg

just hoping math the Yes. little Sandeep, could me I help here. was bit you a with

about mean, million growth the that kind looking be inventory, just year. since by It's revenue $XX XXXX. you I'm will adjusting of So, of looks growing I And that channel interesting. excess revenue XX% a kind at called out, for it like

adjust do that almost XX for $XX million, a you year. it's exactly If

So, within ahead. I long-term mean, how that interesting the of so is know But kind it's just that at look your going range. is Yeah. that forward? should Go I target obviously we business

Sandeep Nayyar

unfortunately, double-digit -- if look a we we of growth. do in growth and affects be It's so we you the growth, then happen middle model. know for year, -- couple to in our come But will double-digit gyrations the better bad close long-term, really pretty is -- observation. look happens, than we'll what downturn these Low great years comes, two But years, we the the have you on the seems two growth. if whenever to But happen, whenever years it of the of it you model.

Tore Svanberg

Great. you. Thank

Operator

call over I session. that Joe Shiffler to any And remarks. question-and-answer turn back the would or to like concludes for the closing additional

Joe Shiffler

will our Thanks this We'll listening. available Thanks right. All good on call investors.power.com. and of for a There afternoon. investor be everyone there. replay it again, website, leave

Operator

participation. presentation. Thank today's concludes you that for And your

You may now disconnect.

Power Integrations (POWI) 6 Feb 232022 Q4 Earnings call transcript