Power Integrations, Inc. (POWI)

Power Integrations designs chips for high-voltage power conversion. Most are ICs (integrated circuits) for AC-DC power supplies, which turn the high-voltage alternating current from a wall outlet into the low-voltage direct current that electronics run on; they sit in phone chargers, notebook adapters, appliances, air conditioners, smart utility meters and battery-powered tools, and variations of them convert power in electric vehicles. It also sells LED-lighting drivers, motor-driver chips for the brushless motors in appliances, fans and heating and cooling systems, and gate drivers, sold mainly under the SCALE name: circuit boards that switch the large power transistors (IGBTs and silicon carbide MOSFETs) in systems from about 100 kilowatts up to gigawatts, such as industrial motors, solar and wind power, electric locomotives and high-voltage transmission lines. The selling point is integration: one product holds the high-voltage transistor, the control circuitry and, in some cases, a safety-isolated link between the input and output sides, so a power converter needs far fewer parts than one built from separate components. 33343536373839404142

How it operates

Power Integrations designs chips for high-voltage power conversion. Most are ICs (integrated circuits) for AC-DC power supplies, which turn the high-voltage alternating current from a wall outlet into the low-voltage direct current that electronics run on; they sit in phone chargers, notebook adapters, appliances, air conditioners, smart utility meters and battery-powered tools, and variations of them convert power in electric vehicles. It also sells LED-lighting drivers, motor-driver chips for the brushless motors in appliances, fans and heating and cooling systems, and gate drivers, sold mainly under the SCALE name: circuit boards that switch the large power transistors (IGBTs and silicon carbide MOSFETs) in systems from about 100 kilowatts up to gigawatts, such as industrial motors, solar and wind power, electric locomotives and high-voltage transmission lines. The selling point is integration: one product holds the high-voltage transistor, the control circuitry and, in some cases, a safety-isolated link between the input and output sides, so a power converter needs far fewer parts than one built from separate components. 33343536373839404142

It sells to OEMs, the brands that build finished products, and to merchant power-supply makers, which build power supplies and sell them on to the brands, through its own sales staff and a worldwide network of independent representatives and distributors. Distributors took 69% of 2025 revenue, reselling to a broad range of OEMs and power-supply makers. The ten largest customers took 81%. Two customers, both distributors, each took more than 10%: Avnet with 32%, up from 30% the year before and 27% two years before, and Salcomp Group with 11%. Honestar Technologies, which took 18% in 2023 and 11% in 2024, fell below that line. Most distributors may return goods and are protected from price cuts on what they hold, and when one sells below the standard price to win business it claims the difference back as a ship-and-debit credit. Orders are mostly short-lead-time, with quick delivery. 4344454647484950

By where customers are billed, Hong Kong and China brought in 245.9 million dollars in 2025, 55.4% of revenue, up 3.1%; South Korea followed with 8.9%, then Germany with 6.1%, Taiwan with 5.8% and India with 5.3%, the one region that shrank, down 15.0%. Customers outside the United States accounted for 98% of revenue and Asia for about 84%, because most power converters using its chips are manufactured in Asia even though they are sold worldwide. It keeps sales offices across Asia, from China, Japan and South Korea to Taiwan, India, Singapore and the Philippines, as well as in the United States, Canada, the United Kingdom, Germany and Italy. 515253

Power Integrations is fabless, meaning it designs chips and hires others to make them, which keeps its capital spending low. Three foundries make the vast majority of its silicon wafers with its own high-voltage processes, in Japan, Germany and the United States: Lapis Semiconductor (formerly OKI Electric Industry), Seiko Epson and X-FAB. The contracts run to December 2028 for Lapis and X-FAB and to December 2035 for Epson, and the company estimates that bringing up a new source would take 12 to 24 months. Subcontractors in China, Malaysia, Thailand and the Philippines assemble and test its chips, with a small share tested at its California headquarters; gate-driver boards are assembled and tested in Sri Lanka and Thailand, some tested at its own facility in Switzerland. Because it buys a large share of its wafers in Japan, the yen matters: by its reckoning, a 10% move in the dollar against the yen would eventually shift gross margin by about 1.5%. 54555657585960

The specifics

Power Integrations was incorporated in California on March 25, 1988, reincorporated in Delaware in December 1997 and has filed with the SEC since that year. In 1994 it introduced TOPSwitch, which it calls the industry's first cost-effective high-voltage IC for switched-mode power supplies, the smaller, more efficient kind that replaced heavy transformers but had been complex to build from separate parts. Since 1998 its power-supply chips have carried EcoSmart, which cuts the electricity a plugged-in device wastes on standby; more than 21 billion of them have been sold. InnoSwitch, launched in 2014, was the first power-supply IC to combine the primary, secondary and feedback circuits in one package, using its FluxLink technology instead of optical parts. Since 2019 it has put its own gallium nitride (GaN) transistors, PowiGaN, into some of its chips, saving energy against silicon, in generations rated up to 1700 volts. In July 2024 it bought the assets of Odyssey Semiconductor, a developer of vertical GaN, for 9.52 million dollars, to speed work on higher-power GaN for the power modules in electric-vehicle drivetrains, which it believes will take several years. 616263646566676869

It guards the technology with patents and trade secrets. At the end of 2025 it held 281 US and 329 foreign patents, expiring from 2026 to 2046, and says it depends on no single one. Its trade secrets include the high-volume production process for its high-voltage chips; those processes need no leading-edge geometries, so the foundries run them on older, lower-cost lines, working closely with the company to reach good yields. In court, CogniPower sued one of its customers in 2019 over two patents and the company stepped in; after a trial in August 2025 a jury found no infringement and found all the asserted claims invalid. A second trial went the other way in part: in June 2025 a jury sided with the company on age and disability discrimination but found for a former employee on harassment based on disability and on retaliation, awarding 3.2 million dollars in compensatory and 6.0 million in punitive damages. The company booked 11.3 million dollars of expense for that case in 2025 and has appealed. 7071727374757677

It names its competitors plainly. In power-supply chips: STMicroelectronics, Infineon Technologies and Sanken Electric, plus makers of controller chips paired with separate transistors, among them NXP, Texas Instruments, Diodes, On-Bright, MediaTek, Renesas and a growing number of Chinese suppliers such as Southchip, Chipown and Hangzhou Silan. In GaN: InnoScience, Infineon, Renesas, Texas Instruments and Navitas. In gate drivers: Infineon, Mitsubishi Electric, Fuji Electric, Semikron and Hangzhou Firstack. In motor drivers: ON Semiconductor, Infineon, STMicroelectronics, Mitsubishi and Sanken. It expects competition from Chinese vendors to intensify as China pursues its stated aim of building a domestic chip industry. Its chips let customers build a power converter for about the same total parts cost as the alternatives, so their value tracks the prices of separate components, which have generally fallen over time. 7879808182

Energy-efficiency rules shape its market. California made efficiency standards for external power supplies mandatory in 2007; they went nationwide in July 2008 under the Energy Independence and Security Act and were tightened in 2016. The European Union has limited standby power on a wide range of electronics since 2010, cut the limit by half in 2013, to 500 milliwatts for many products, and scheduled a further tightening from 2025. China's new efficiency standards for room air conditioners took effect in July 2020, and India's Bureau of Energy Efficiency brought in ceiling-fan labels in 2022 to push brushless DC motors in place of less efficient induction motors. Trade shapes it too: most power supplies using its chips are made by customers in Asia, so tariffs reach its business, and during 2025 the United States imposed and threatened large new tariffs while trading partners answered with their own. Some of its products fall under US export controls and sanctions. 838485868788

What drives growth, line by line

Revenue rose 5.9% in 2025 to 443.5 million dollars, the first rise after three years of decline from 703.3 million in 2021. The filing credits higher sales in the industrial end market, including its gate drivers, and more chips sold for electronic utility meters, electric vehicles and battery-powered tools. Operating income still fell, to 10.2 million dollars from 17.9 million, in a year that carried 19.7 million of other operating expenses: 11.3 million for the employee lawsuit and 8.4 million of stock compensation from changing the retiring chief executive's awards. 899076

Industrial. The largest end market in 2025 at 38% of revenue, up from 35% the year before and 32% two years before, and the one the filing credits for the year's growth, through its gate drivers and chips for electronic utility meters, electric vehicles and battery-powered tools. The group is broad: industrial motor drives, renewable energy systems, electric locomotives, electric cars and commercial vehicles, high-voltage DC transmission, utility meters, LED lighting, power tools and smart-home devices. 919092

Consumer. 37% of revenue in 2025, its share down from 39% the year before but well above the 27% of two years before. It covers major and small appliances, air conditioners, TVs, set-top boxes and game consoles. The filing names consumer appliances, with cellphone chargers, among the few applications that make up a significant share of revenue, and says recent results were hurt by soft housing markets, which weigh on appliance demand, and by inflation. 91939495

Computer. 13% of revenue in 2025, against 14% the year before and 12% two years before: chips for desktop PCs and monitors, servers, adapters for tablets and notebooks, and other computer peripherals. The filing gives no separate account of what moved this market in the year. 9136

Communications. 12% of revenue in 2025, the same as the year before but down from 29% two years earlier: mobile-phone chargers, broadband modems, wi-fi routers and other network and telecom gear. This annual report does not explain that fall; it leaves the comparison of those two earlier years to the previous year's annual report. 913596

What comes next, in the company's own words. It describes its market as growing only modestly over time, as more power converters are offset by falling component prices, so its own growth depends on winning more of the markets it serves and widening them. It says it has widened its served market to about 5 billion dollars and expects automotive applications to become a significant part of it over time. It is developing more GaN products for higher power, which it expects to include power supplies for data centers delivering AI services, communications network equipment and on-board chargers for electric vehicles, and it expects its 2026 capital spending to go mainly to machinery and equipment for making its products. 979899100101

The read's section on the people who run it is on the People tab.

What the desk infers Inferred

1. Inferred

   Honestar Technologies, a distributor whose share of revenue shrank from 18% in 2023 to below 10% in 2025, was most likely the main channel for a mobile-phone charger business that fell away in 2024, when communications dropped to 12% of revenue from 29% and then stayed there.

   Because

   • Honestar took 18% of revenue in 2023 and 11% in 2024, then fell below the 10% line in 2025. 47
   • Communications fell from 29% of revenue to 12% in one step and stayed at 12% in 2025, the shape of one large piece of business ending rather than a broad slide. 91
   • Mobile-phone chargers lead the filing's list of communications applications, and it names cellphone chargers among the few applications that make up a significant share of revenue. 3594
   • Every customer above 10% in 2023 was a distributor, and distributors resell to OEMs and power-supply makers. 4645
   Confidence 50 of 100Wrong if A filing showing that Honestar bought mainly for appliance, industrial or computer products, or that the fall in communications came from many customers rather than one.
2. Inferred

   Industrial is most likely the higher-margin end market the filing credits without naming it: gross margin rose in 2025, the year industrial was the only end market to gain share of revenue, and gate drivers led that gain.

   Because

   • Gross margin rose to 54.5% in 2025 from 53.6%, which the filing puts down to manufacturing efficiencies and a favorable end-market mix, with more sales from higher-margin market categories. 102103
   • Industrial was the only end market whose share of revenue grew in 2025, to 38% from 35%, while consumer and computer slipped and communications held at 12%. 91
   • The filing credits the year's growth to industrial sales, gate drivers among them, and its gate drivers are fully assembled circuit boards for systems of about 100 kilowatts and up, far more than a single chip. 903840
   • It calls its industry intensely price-sensitive and names a growing number of Chinese suppliers of the controller chips that compete in power supplies. 10479
   Confidence 65 of 100Wrong if A filing that names consumer, computer or communications as the company's highest-margin end market, or a year in which industrial gains share while the filing blames end-market mix for a lower gross margin.
3. Inferred

   Part of the 2025 rise in industrial sales went onto distributors' shelves rather than straight into customers' products: the company books a sale when a distributor takes the goods, and distributors ended the year holding more of its industrial inventory.

   Because

   • The company recognizes revenue on sales to distributors when control passes to the distributor, before the distributor resells. 105
   • The reserve for distributors' ship-and-debit claims rose by 7.2 million dollars during 2025, which the filing puts down mainly to higher inventory held by distributors in its industrial end market. 106
   • Industrial is the end market the filing credits for the year's revenue growth. 90
   • Avnet, one of the two distributors above 10% of revenue, rose to 32% from 30%. 4746
   Confidence 65 of 100Wrong if A filing showing that distributors held no more industrial inventory at the end of 2025 than a year earlier, or that the larger reserve reflected deeper price concessions on the same inventory rather than more of it.
4. Inferred

   The profit is booked offshore: a subsidiary in the Cayman Islands, most likely Power Integrations International, holds the wafer contracts and books the sales abroad, so the margin on its chips lands where no tax is levied, while its US operations showed a loss before taxes in 2025.

   Because

   • The wafer agreements with Seiko Epson, Lapis and X-FAB have been made or amended by Power Integrations International, Ltd., as the exhibit list shows. 107108109
   • About 98% of revenue comes from customers outside the United States. 52
   • The filing names the Cayman Islands, a non-taxing jurisdiction, as the main source of its foreign earnings and calls income in other foreign jurisdictions not material. 110
   • In 2025 its US operations lost money before taxes while its foreign operations earned more than the whole company did. 111
   • The effective tax rate was minus 5.3% in 2025, below the 21% federal rate, which the filing puts down partly to earnings in lower-tax jurisdictions. 112113
   Confidence 65 of 100Wrong if A filing showing that Power Integrations International, Ltd. is organized outside the Cayman Islands, or that the sales outside the United States are booked by a subsidiary in a taxing jurisdiction.