Power Integrations Reports Strong Q2 with 16% Revenue Growth

Power Integrations, a prominent supplier of power supply components, has announced a 16% sequential increase in revenues for the second quarter of 2024. The company has experienced a notable recovery in its consumer segment, with revenues rising by 70% over the past two quarters.

Following its acquisition of Odyssey Semiconductor’s assets, Power Integrations aims to enhance its GaN technology capabilities, seeking significant advancements in the high-power GaN sector within the next three to five years. Although demand for appliances in China has been less than anticipated, the company is seeing growth in other markets and expects a key turning point for GaN technology around 2025.

### Key Takeaways
– Q2 revenues increased by 16% sequentially, primarily driven by a 70% rise in the consumer sector.
– The acquisition of Odyssey Semiconductor is expected to strengthen the company’s vertical GaN technology offerings.
– Projected Q3 revenue is $115 million, representing an 8% increase at the midpoint.
– Non-GAAP gross margin is expected to range between 54.5% and 55% for Q3.
– Continued growth is anticipated in the consumer business as cyclical influences diminish.
– GaN technology revenue could potentially reach $100 million by 2028.
– Fluctuations in the yen may affect financial results, with impacts potentially seen in Q4 or Q1 2026.

### Company Outlook
– Power Integrations is recognized as the leading supplier in the appliance market and expects to maintain this status.
– The company is optimistic about growth prospects in industrial and automotive applications for its GaN-based products.
– An effective tax rate of approximately 4% is anticipated for Q3.

### Challenges and Opportunities
Bearish concerns include:
– The lower demand for appliances in China may impact the company’s regional performance.
– Rising input costs present challenges, though margins are expected to remain robust.

Bullish highlights include:
– The acquisition of Odyssey Semiconductor positions the company favorably within the GaN technology arena.
– Confidence in growth trajectories remains high, with expectations for revenue increases and stable margins.

### Earnings Call Insights
– During the Q&A session, Sandeep Nayyar discussed the influence of currency fluctuations, specifically the yen, on company finances. Previously, a 10% change in the yen impacted the company by about 120 basis points, typically noticeable within six months. However, due to increased inventory levels, this now takes three to four quarters to materialize in the financial results.

Power Integrations continues to focus on strategic initiatives, including its leadership in the appliance market and advancements in GaN technology. Despite macroeconomic challenges and currency fluctuation concerns, the company’s financial health appears stable, with a positive revenue outlook. Investors will be monitoring the company closely as it adapts to these dynamics in the coming quarters.

### Summary
The recent performance of Power Integrations showcases a resilient strategy, driven by revenue growth and the strategic acquisition of Odyssey Semiconductor. With promising developments in GaN technology, the company is positioned to navigate future challenges while aiming to expand its market share across various sectors. Despite recent headwinds in revenue growth, Power Integrations maintains a strong balance sheet and a history of providing returns to its shareholders.