Power Integrations sees a recovery in the second half of the year folling the Covid-19 pandemic, supported by growth in a new generation of chargers based on gallium nitride (GaN) and USB Power Delivery (PD).
“Second quarter revenues were $106.8 million in line with our guidance and up 4% year-over-year in spite of a challenging environment,” said Balu Balakrishnan, CEO of Power Integrations
The year-over-year growth was driven by communications and industrial categories, while consumer business fell sharply and automotive for electric vehicles is still growing from a low base. The industrial business grew high single digits year-over-year and was the largest category in the quarter at 35 percent of sales.
“We saw a combination of the recovery and broad-based industrial applications as well as incremental growth across diverse range of verticals, where trends like home and building automation, electrification are creating opportunities,” said Balakrishnan. “On the automation side, we are seeing growth in USB wall outlets, smart meters, and other IoT applications such as network thermostats and door locks, where high reliability, compact size, low standby power consumption are critical factors.”
“Electrification is creating opportunities in applications like lawn equipment, vacuum cleaners, and personnel transportation such as scooters and e-bikes, where rechargeable batteries are replacing traditional power sources. Growth in these areas was offset somewhat by lower revenues from high-power due to softer demand in the energy exploration and a slowdown in infrastructure projects due to the pandemic. However, high power has its own attractive verticals with strong long-term growth prospects including renewable energy, long distance DC transmission, and electric transportation,” he said.
PI’s gate drivers are in use today in electric buses and locomotives and are in testing at several automotive OEMs and Tier 1 suppliers for drivetrain and charging applications in next generation electric cars, he says.
“We are also aggressively pursuing low power opportunities in electric cars, which can contain as many as 10 power supplies to drive various subsystems from main high voltage battery. Our InnoSwitch 3 and LinkSwitch-TN2 ICs and our Qspeed diodes have been qualified for automotive use and we are building a pipeline of design opportunities that should begin to generate revenues in 2021,” he said.
In the communications business revenues grew more than 20 percent year-over-year driven by the continued adoption of fast chargers for mobile devices. “We believe we are the leading supplier of power conversion ICs for smartphone chargers as our InnoSwitch products continue to win a sizable share of designs, spanning a wide range of power levels, form factors and customers, including both inbox and aftermarket designs,” said Balakrishnan. Gallium nitride GaN switching technology has been key to reducing the size of the chargers.
“We won more than a dozen new inbox designs in Q2 with power levels ranging from 15 watts to 50 watts. End-users are becoming increasingly aware of differences in charging speed and the OEMs are steadily rolling out new higher power charger models. We expect this trend to continue as 5G devices incorporate larger batteries to support increased consumption of medial and other power heavy functionality,” he added.
While inbox OEM chargers account for vast majority of the market today, aftermarket brands are proliferating rapidly through the use of USB PD technology to handle 65W and up to 100W for smartphones and laptops. “Such designs dramatically increase our dollar content since we typically sell one chip for each USB port,” he said.
“Our GaN technology is also being adopted in fixed USB wall outlets installed alongside AC outlets. Because spaces behind the wall is limited, these power supplies must be extremely compact. Limited space also allows for very little heat dissipation, making efficiency a critical factor,” he said.
“We expect consumer revenues to be roughly flat sequentially in Q3 with the inventory situation improving, but demand is still affected by the pandemic, as well as seasonality in air conditioning. Longer term, we expect healthy growth from consumer market driven by growing electronic content in appliances.”
“We also expect GaN to play a significant role in consumer end market and have a number of designs in progress for TVs and appliances as well as notebook chargers and monitors and server standby power supplies in the Computing category. Overall, we remain cautious on the demand environment in light of the economic impact of the pandemic, but we are maintaining an elevated level of inventory to be prepared in the event of a sudden recovery in demand.
He sees an upturn in the rest of the year. “In Q3, we expect revenues to increase sequentially, driven by continued growth in fast-charging, up about 8% for the first nine months of the year, which would put us on track to outperform the broader analog industry by a significant margin for the full year,” he said.
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