Welcome to the Power Integrations Second Quarter Earnings Call. At this time, all participants' lines are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. I would now like to hand the conference over to your speaker today, Mr. Joe Shiffler. Sir, please go ahead.

Thank you, everyone. Thanks for joining us. With me on the call today are Balu Balakrishnan, President and CEO of Power Integrations; and Sandeep Nayyar, our Chief Financial Officer. During the call today, we will refer to financial measures not calculated according to GAAP. Non-GAAP measures exclude stock-based compensation expenses, amortization of acquisition-related intangible assets, and the tax effects of these items. A reconciliation of non-GAAP measures to our GAAP results is included in our press release. Our discussion today, including the Q&A session, will include forward-looking statements, denoted by words like will, would, believe, should, expect, outlook, forecast, anticipate; and similar expressions that look toward future events or performance. Such statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected or implied. Such risks and uncertainties are discussed in today's press release and in our Form 10-K filed with the SEC on February 5, 2021. This call is the property of Power Integrations and any recording or rebroadcast is expressly prohibited without the written consent of Power Integrations. Now, I'll turn the call over to Balu.

Thanks, Joe, and good afternoon, everybody. This was another record quarter for Power Integrations, with revenues of $180 million, up 69% from a year ago. Demonstrating the leverage in our model, our non-GAAP operating margin surpassed 30% for the quarter and increased our non-GAAP EPS by more than 2.5 times year-over-year. For the first half of 2021, revenues grew 63% from the prior year. We are growing well above the growth rate of the analog industry, thanks to broad market share gains and secular trends that will endure even as demand normalizes over the coming quarters. One such trend is energy efficiency, which has been a key part of our story since the introduction of our EcoSmart technology over two decades ago. Energy efficiency has provided a tailwind ever since, driving OEMs to redesign their products in response to regulatory standards and consumer demand. At times, these tailwinds have been boosted by highly impactful standards like the 2007 California regulations on external power supplies, which quickly drove linear power supplies out of the market. Power Integrations had an outsized share of that opportunity because our LinkSwitch ICs were an ideal replacement for Linears. A similar transition has now taken place in the air conditioning market due to China's Nanotori standards for room AC units, announced in late 2019 and phased in over the past year. China's updated minimum efficiency performance standards essentially rule out fixed frequency AC units, which accounted for nearly half of China's production before the Chinese looked back. In response to the standards, manufacturers have transitioned most of their production to variable speed brushless DC motors and have also converted from linear to switch mode power supplies to drive the electronics. Power Integrations is a market leader in switched mode power supplies for air conditioners, and our position has allowed us to capture much of the volume transitioning away from Linears. It also created opportunities for our BridgeSwitch motor drive chips, which drive brushless DC motors, such as those used in variable speed AC units. In fact, we won one of our largest BridgeSwitch designs to date in Q2 with a major customer in the air conditioning market. We are also gaining share in major appliances, where we are already the leader in AC-DC power supplies, thanks to the efficiency and reliability benefits of our products. Our share gains have accelerated as competitors with capacity constraints have prioritized other products ahead of the power supply chains, and other competitors have deemphasized or exited the power supply market altogether. These gains are compounding the revenue benefit from rising dollar content in appliances, driven by tighter efficiency standards and the increasing penetration of electronic features, such as network connectivity, electronically controlled motors, and LED lighting. We also expect meaningful revenues from motor drive applications next year, as BridgeSwitch begins to ramp in earnest. Another important secular trend in the power supply market is the adoption of advanced chargers for mobile devices, which continues to drive strong growth in our communications and computer categories. Combined revenues from these categories more than doubled year-over-year in Q2, reflecting the market shares we have gained in OEM branded chargers for smartphones, tablets, and notebooks, as well as multipurpose chargers from a wide range of aftermarket brands. We have made it a priority to win share in this market today, knowing that the revenue stream will be stickier, less volatile, and more profitable than the commodity cell phone charger business of the past. Charger designs have always had longer life cycles than the mobile devices themselves, which are refreshed every year. But while simplistic low power chargers could easily be redesigned, just to shave a few pennies off the BOM cost, today's highly sophisticated chargers are more like appliances with a greater focus on features and performance and longer design life cycles. In short, we expect many of the designs in our pipeline to be in production for a long time, and we are pressing our advantage to lock in these designs today. We won a wide assortment of advanced charger designs in Q2, including a 33-watt in-box charger that will significantly increase our penetration at a top-tier handset OEM. Another OEM recently placed the largest single order to date for our GaN-based InnoSwitch products, which they have selected for new 67-watt in-box cell phone chargers for use with high-volume models. We also won a 130-watt design for a leading supplier of gaming notebooks, featuring four charging ports and using three GaN-based InnoSwitches. As announced in May, we have also been designed into Anker’s next-generation Nano II chargers, which come in 30, 45, and 65-watt versions. Notably, the 65-watt version is approximately the same size as a 30-watt charger from the first generation of Nano chargers. This improved power density is enabled by our latest product InnoSwitch4, which will be produced exclusively with GaN. GaN enables InnoSwitch4 to operate at higher frequency, resulting in a significant reduction in the size of the power supply transformer. We made the InnoSwitch4 device with our new ClampZero chip, which implements Active Clamp technology to recover losses associated with the higher switching frequency, enabling a truly exceptional level of efficiency. Combined with our mini cap, which uses GaN to enable the use of a much smaller input capacitor, we can deliver power density far superior to any solution available in the market today. The synergy between these products demonstrates the value of our comprehensive approach to power supply technology, including proprietary process technologies, high-voltage transistor technologies, highly integrated controllers, proprietary packaging, and system-level know-how. This has always been our approach, and we have continued it with our GaN technology, which we have seamlessly integrated into our product offerings. In fact, a GaN InnoSwitch works exactly like a silicon-based InnoSwitch, such that the customer doesn't have to know anything about GaN in order to realize its performance benefits. Other GaN devices offered in the market, including some marketed as ICs, are essentially discrete switches that require dozens of external components and many times even a separate circuit board that is incorporated into a power supply using an external controller chip sourced from a third-party. Engineers must learn the idiosyncrasies of GaN to design a working power supply. And even when successful, they end up with a design containing two to three times as many components and multiple circuit boards. This greatly complicates manufacturing and brings compromises on reliability, time to market, cost, and form factor. While the transition to GaN is a secular trend that will lift many boats, the benefit of integration is capable and we believe our approach is proving superior in the GaN world, just as it has with silicon over the past three decades. In fact, based on recent design wins, we are accelerating our capacity additions for GaN to accommodate a substantially higher level of growth than previously expected. Looking ahead, we have been anticipating significantly lower revenues in the second half, reflecting reduced demand from cellphone customers after aggressive handset builds meant to capitalize on the Huawei sanctions. We now believe that a significant portion of this adjustment took place in Q2, as evidenced by a sharp reduction in sell-through, as customers rapidly adjusted their charger inventories. With this correction largely behind us and taking into account our continuing market share gains and new design wins, we expect a more moderate reduction in second half revenues compared to our prior expectations. For Q3, we expect a 3% sequential decline in revenues, plus or minus 5%, and we believe we are on track for full year revenue growth in excess of 40%, compared to a projected growth rate of about 20% for the analog semiconductor industry according to WSTS. With that, I'll turn it over to Sandeep.

Thanks, Balu, and good afternoon. As usual, I will focus my remarks primarily on the non-GAAP results, which are reconciled to GAAP in our press release tables. Revenues for the June quarter were $180 million, up 4% sequentially and above the midpoint of our guidance. Consumer revenues were up about 10% sequentially, driven by broad-based growth in appliances and consumer electronics. Industrial revenues were also up about 10% sequentially, driven by a range of verticals, including home and building automation, lighting application and broad-based industrial applications. Computer revenues increased mid-single digits, driven by share gains in notebook chargers, which offset broader softness likely reflecting less demand related to work from home. Communications revenues were down mid-single digits, reflecting lower demand from cellphone customers, offset partially by channel replenishment. Revenue mix for the quarter was 35% communications, 31% consumer, 26% industrial and 8% computer. We stated last quarter that March would be the low watermark for gross margin, and that is proving to be the case. Non-GAAP gross margin rose to 51.4% in the June quarter, up 200 basis points sequentially, driven primarily by a more favorable end market mix and manufacturing efficiencies. Non-GAAP operating expenses were $37.6 million for the quarter, up $1.4 million from the prior quarter, driven by annual salary increases and higher R&D investment, but slightly below our expectations, reflecting the pace of headcount additions. Non-GAAP operating margin for the quarter was 30.5%. While I expect operating margin to settle back into the high 20s over the next couple of quarters, crossing the 30% threshold in the June quarter clearly demonstrates the leverage in our financial model. This leverage can also be seen in our EPS growth. Non-GAAP earnings were $50.8 million in the June quarter, or $0.83 per diluted share. That's an increase of more than 150% from the second quarter of 2020 on revenue growth of 69%. Cash flow was also strong, with $67 million generated from operations, while CapEx was just over $8 million. We paid out just under $8 million in dividends and utilized $26 million for share repurchases, buying back 335,000 shares, or roughly 0.5% of our float at an average price of less than $79 per share. Buyback activity has been ongoing since the end of the quarter and will continue to be driven by a preset price-volume matrix. Cash and investments on the balance sheet rose by $24 million from the prior quarter and stood at $515 million at quarter-end. Internal inventories held steady at 92 days, while channel inventories recovered from the unsustainably low levels reached last quarter, ending June at 5.2 weeks, still below our expected steady state levels of about six to seven weeks. Looking ahead, we expect third quarter revenues to be down 3% sequentially, plus or minus 5%. At the midpoint of the range that would be an increase of 44% year-over-year. While it is too early to project revenues for the fourth quarter, we believe we are on track for revenue growth in excess of 40% for 2021. And we believe we are very well positioned for growth in 2022, based on the market share gains and the secular drivers that Balu outlined in his remarks. Our gross margin outlook for the year has improved, reflecting our expectations for end market mix and the impact of manufacturing efficiencies. I expect non-GAAP gross margin for the third quarter to be approximately 51.5% and around 51% for the full year. Operating expenses will continue to rise gradually as the headcount in both R&D and sales work to bring more products to market with our industry-leading technologies such as FluxLink and GaN. For the September quarter, non-GAAP OpEx should be between $38.5 million and $39 million. For the full year, expenses should grow about 9% to 10% coming off a flat year in 2020. Other income for Q3 should be in the range of $300,000 to $400,000, while the non-GAAP effective tax rate should remain at approximately 8%. And now operator, let's begin the Q&A session.

Thank you. We have a first question from the line of Ross Seymore from Deutsche Bank. Your line is now open. You may ask your question.

Hi, guys. Thanks for letting me ask a question. Congrats on the solid results. I wanted to talk about the channel, first and foremost. And really what it means to your second half expectations being higher or less bad than you said a quarter ago. The channel looked like it got back closer to normal. Is that going to be a tailwind and get back to normal in your second half expectations, or do you think that the sell-through is going to be strong enough that refilling the channel is going to take a little bit longer?

So as we said, our normal levels are six to seven weeks. And here we are at five. The predominant growth in the channel came from the cell phone area. And we believe that because of the share gains we have had and the secular drivers, we are going to have a better second half than we had previously anticipated. So in terms of the channel, we expect it to be relatively flat for Q3. There is a possibility it could go a little bit higher in Q4, and eventually, it will go to normal, but that's our best guess at this point.

Got it. Thanks for the color on that. And I guess as my follow-up, nice performance on the gross margin side of things. Sandeep, you talked about the two reasons, mix, I think we can see a little bit of that mix. And why that would happen. But with the manufacturing side, a little bit more of a surprise to you? That you're usually pretty accurate on that; it's always good to be surprised to the upside more than the downside. But I just want to get a little bit more color on the drivers, especially on the manufacturing side, what happened there and how sustainable it is?

Well, the volumes are going up. And we've had yield improvements, test time reductions. And also, as the mix in communication moves to aftermarket chargers, that helps our margin also because the volumes are lower and they have a favorable contribution. And the environment where we are, where costs have gone up, we do value pricing. As a result of that, when you're competing against the discrete and you're doing value pricing, that also helps a bit.

Yeah, utilization and also test cost improvements are probably the biggest manufacturing cost improvements. In the test, we have migrated to a new test platform which is more cost-effective and that happened over the last 12 months or so. So that has helped us. But as Sandeep said, even in communications, we are seeing improving gross margins for the reasons you mentioned, like the aftermarket and the fact that everybody is going to very high-end chargers.

Got it. Congrats again, and thanks guys.

Thanks, Ross.

Thank you. Next question from the line of Christopher Rolland from SIG. Your line is now open. You may ask your question.

Thanks guys, and congrats on the quarter. So I actually wanted to talk about the non-GAAP operating margin for a second here. I think your long-term model is 20-plus. And I know you guys had an outstanding quarter of plus 30 this quarter. And I know you said it was going to go back into the high 20s. But I was wondering if you had any plans on updating that long-term op margin target and where that might go over time?

Our long-term model continues to grow our top line low double-digit for revenue growth with OpEx growing at about 60%. And we have always talked about this being a three to five-year period on average. We have had a step function increase in revenues that has caused our operating margin to move up. Our goal has always been to maximize our operating margin over a period of time and not in a particular given year.

Yeah. Would you say that 30% plus could be a stretch goal for you guys over time?

Yeah, I really think if you remember, I talked about 20%. And again, you have to look over a three to five-year period. We had previously mentioned a mid-20% goal. While we are not ready to confirm that again, I believe that being in the mid-20s plus seems to be definitely in the direction we are heading. Our goal moving forward is to enhance that towards the number you indicated. However, at this point, we want to focus on a three to five-year timeframe. I believe we have achieved the mid-20s and hopefully can sustain that and start moving in a larger direction from there.

Yeah. Okay, great. And then, it does seem like there are one or two newer game companies out there looking to go public. And maybe you can talk about that market, how you see share shaking out? And then ultimately, pricing dynamics moving forward, as we have some more, newer entrants into the market?

Sure. Just to be clear, all other GaN companies offer discrete devices. They don't provide a system-level solution. I think that's where we have a huge advantage. GaN is very difficult to use. It's a very fast device, and many customers struggle with it. When they use our products, GaN is embedded within the whole product. So we handle all of the idiosyncrasies of them. As far as the customer is concerned, they can't even tell the difference from a design point of view. Of course, they can tell the difference in terms of performance. That's how easy we've made GaNs for our customers. As far as the other side of it, the number of components required to implement our solution is far less. We typically have anywhere from one-half to one-third the number of components, which is really needed to make the power supply small. It's not just a question of using GaN; you have to be able to reduce the size of the power supply. For that, you have to reduce the component count. We also have to implement features like currently inside of product in a lossless way; otherwise, you end up having additional losses outside, which really negates the use of GaN. So talking about GaN as a device is not very useful. You have to look at the system. That's why GaN has had challenges for many, many years, and we are able to break through that. Lastly, I would say that in terms of the technology, we believe we have the most cost-effective technology in the world in GaN. That's because our structure is very different from everybody else's. It's uniquely different because we wanted the most cost-effective technology for our switch-mode power supplies; that's where we are now. I think we are in a fantastic position compared to any of the other competitors.

Awesome. Thanks guys.

Thank you. We have the next question from the line of Tore Svanberg from Stifel. Your line is now open. You may ask your question.

Yes, thank you, and congratulations on key records. I think it's revenue, operating margin, and cash flow. So congratulations on that.

Thank you.

First question is on the communications business. It was down sequentially this quarter, but you said that the correction seems to be behind you. I assume that business is still going to be down in Q3. Is that how we should view it?

To the best of our ability to model, we expect it to be slightly down in Q3. I think the Huawei distribution has completed to the best we estimate. That's why we saw a significant reduction offset by channel replenishment. But in Q3, we think that will be slightly down, yes.

Got it. So what takes the revenues down? Is the consumer business going to take, or…?

The consumer business should be relatively flat from what we can tell. Even though it's usually seasonally down because of AC, AC is down in Q3, but we have so many new design wins that we believe will offset that.

That's the reason we have provided a range. It is difficult to be precise given our guidance, considering the 3% decline plus or minus. There will be no clear communication indicating any slight decline. Typically, air conditioning sales drop in Q3, but we anticipate that our market share gains will offset this, resulting in a relatively flat performance. The industrial sector has many variables, making it challenging to provide precise guidance; hence, the range is difficult to specify, but this is the best directional insight we can offer at this time.

That's great. Thanks for that color. Moving on to the product. So BridgeSwitch, it sounds like that product line is really hitting momentum. You talked about some big design wins there. How should we think about the margin profile of that product and that business; is it similar to the other products?

Well, again, it depends on the market, and in the consumer market, it will be similar to the consumer gross margin we have. We expect it to grow very nicely next year. We have many design wins this year; we will get a few million dollars in revenue this year, but it will really start accelerating next year. The revenue growth on BridgeSwitch has been delayed because of COVID; when they go to a new platform like BridgeSwitch, it takes a lot of design work, and we were unable to physically go and help them. That made the design-in process much longer than trying to assist them remotely. But the interest level has always been high; we are finally seeing the benefit of this revolutionary product. We think it's going to do extremely well going forward.

Great. Just one last question. I know the trend that the fast charger market has been for moving out of the box. But you talked about several in-box design wins. I think you said even your largest single order to date for InnoSwitch for a 67-watt in-box. Is there still a mixed bag as far as where the trend is between out of box and in-box?

Yes, that's still true, because the Chinese OEMs are really focusing on charge time and they believe that their unique approach allows them to charge at a much faster rate. You can imagine, a 67-watt charger is a lot of power. If you're used to the five-watt cube charger, this is substantially higher. It's about 13 to 14 times higher in charge rate, and they believe their protocol allows them to do that. So, they are not too anxious to go to a standardized protocol like USBPD because they think they'll lose their advantage. They are able to do something that others can’t do. So, we don't see them transitioning in the near future. And could it happen in the long term? Yes. But is it going to happen quickly? I think it's happening slower than we anticipated. As you already know, one of the major OEMs has switched to USBPD. Another one is switching partially to USBPD. But beyond that, we have not seen a significant move to USBPD, which is actually good for us because it's all different designs. The fact that they are focusing on fast charging means they will continue to put it in-box because each generation has a higher feature level, whether it's higher power or higher performance. They use that as a marketing tool. So they haven't transitioned out of the box.

Sounds good. Congrats again on an outstanding quarter. Thank you.

Yes. Thanks, Tore.

Thank you. We have the next question from the line of Gus Richard of Northland. Your line is now open. You may ask a question.

Yes. Thanks for taking the question. And my congratulations on a good quarter as well. Just real quick, can you talk a little bit about channel inventory on the consumer side? You said it built up in communications, but I was wondering if that was true for a consumer as well.

It’s not gone up as much in the consumer because the demand on the appliance side continues to be extremely strong. As we have said, the normalizations in different end markets would happen at different points in time. But the demand on the consumer, especially on the major appliances, continues to be very strong. That's an area we're waiting to see when that normalizes because it has been way above normal levels. The other part, which is very good that is happening, as we talked about in our map, is where our gains have accelerated because people have prioritized other stuff, plus people exiting this market or defocusing the gains that we would have had over a period of time has actually accelerated. That is going to be very positive even when things normalize because that will be a nice offset for those share gains.

Got it. Got it. And then just thinking about the model going forward if one were to assume that you hit normal seasonality, whatever that is, going forward, would your operating margins stay above 25% to below 30 going through next year?

I believe that at this moment, although I haven't finalized my annual plan, I can share my thoughts. If we consider where we expect to end up this year, it should be within the range that we're discussing, and I think it will fluctuate around that.

Yes. I think next year's model will be similar to this year's gross margin because we believe we are going to grow next year. It's hard to tell how much, but we feel very good about growing next year.

Is the gross margin in the consumer communications market better because there are more aftermarket businesses taking smaller volumes? Is that a good perspective to have?

Exactly, yes. Our communication gross margin is increasing because of that.

Okay, I understand. I've spoken with your competitors to determine which topology is the most effective. They claim to have better energy efficiency due to their use of soft switching, meaning they avoid simultaneous crossover of current and voltage. Could you explain how your topology compares to theirs and why you believe yours is superior in terms of current usage? Could you simplify that explanation?

Yes, absolutely. This is almost strange because our entry product is a soft-switching product called a resonant converter. Switch IV is even better at zero voltage switching, which is even more efficient by using our plans see products. I don't think anybody can even come close to our efficiency at all. If you want to build the smallest transformer possible, we are on top today.

And does that enable you to use smaller magnetics?

Yes. So we talked about it in my prepared remarks that our latest product features high frequency, and that's why we only use GaN. It doesn't have a silicon switch at all because of the higher frequency operation. When you go to higher frequency, you can reduce the size of the transformer, but you end up increasing the losses in the transformer and the switch. To recover that we have another technology called ClampZero, which recovers the losses and sends them to the output. So you can not only maintain efficiency; you can actually further increase efficiency using zero voltage switching. On top of that, we also have mini cap, which nobody else has by the way, that will also reduce the size of the capacitor by 40%. Between mini cap and ClampZero, we are able to reduce the size of the transformer and capacitor, which are the biggest components in the power supply. So, in both cases, we've reduced it by about 40% of each one of them. To make the end product very small, even that is not sufficient because you have to have very few components so that you can actually fit it into a small enclosure. That's where we really excel because we have typically one-third of the components of a competitor's GaN-based design.

I understand. Thank you. And then, last one for me. You said you're going to add capacity for GaN products because of the demand. Is that MOCVD? Is it testing? What do you need to add?

We plan to primarily increase capacity at the front end. While I can't provide specific details, I can mention that we currently have sufficient capacity from a packaging perspective and are in the process of expanding. The front end expansion is easier due to shorter lead times, but we are significantly increasing capacity at the back end in anticipation of substantial growth not just next year, but over the next several years.

Thank you so much.

Thanks, Gus.

We have the next question from the line of Karl Ackerman of Cowen. Your line is now open. You may ask a question.

Good afternoon, gentlemen. I wanted to follow up on the last question that Gus asked about your comments regarding the possibility of channel inventory increasing in Q4 and potentially returning to normal. I understand that you made investments in additional capacity in late 2020 and early 2021, which turned out to be beneficial as others reduced their capacity. My question is whether a normalization in channel inventory will affect your plans to further expand capacity moving forward. I have a follow-up.

Well, first of all, until the market stabilizes, we prefer to hold onto as much inventory as possible to effectively meet real demand. If our inventory is spread out among many customers and distributors, it becomes challenging to respond to the increases we are experiencing in the appliances sector. We are seeing a significant growth that we did not expect, largely due to our accelerated market share gains. Therefore, it is crucial for us to retain inventory. However, as conditions improve, we aim to rebuild our inventory to near normal levels. In the third quarter, the demand remains quite high. There is a possibility of an increase in the fourth quarter, but it may not happen; it all depends on how long the normalization process will take. In the cellphone segment, normalization largely occurred in the second quarter. However, in appliances, demand is still extremely strong, and it may take one to three quarters to normalize. That said, we continue to expand our capacity across all technologies, particularly in GaN, where we see the most significant growth in capacity demands. We also require additional silicon capacity and are actively working on that. We are on track to achieve a 40% growth. We have managed this because we have sufficient capacity and inventory in place, putting us in a much better position than most others in the semiconductor industry. Our unique manufacturing approach, using fabs owned by product companies with excess capacity committed to us through contracts, allows us to operate more effectively than nearly any other semiconductor firm.

The other thing I'd like to add is our internal inventories are only sitting at 92 days. Our running model is 125 days. So, we're well below the model that we would really like to be around. In spite of the growth we've had this year and the growth in the prior year, we feel very good because of the share gains in the secular growth that we will grow again very nicely next year.

I appreciate that following Sandeep. Very helpful. There's been much discussion on today's call regarding your competitive differentiation within GaN. I don't want to belabor that point. But I think what is interesting, and one of the questions that I've received quite a bit intra-quarter, is the growth trajectory that your peer has articulated over the next couple of years for GaN. The question is, is that indicative of a rapidly expanding TAM that's also greatly beneficial to you, or does that constrain your growth? As you address that question, I hope you could also talk about whether you are seeing new opportunities to maybe move into the server market or outside of your consumer offerings that could also expand your TAM over time. Thank you.

Yes, let me answer the last question first: GaN will enable us to go at much higher power levels with an integrated switch. However, we don't talk about products in the higher power areas until we have them. That's one of the reasons we don't go crazy about what this could be in the next five years. If you're being public to the pack, you have complete freedom to show whatever you want for the next five years. We are just very conservative in that regard. As far as the GaN propelling other companies, yes, GaN is a very, very important technology. When GaN gets popular, it will lift all boats, obviously. The question is, who is going to benefit the most? I believe the one who will benefit is the one who makes it easy for our customers to use GaN and secondly, the company that has the most cost-effective and reliable technology. I think we have proven that by shipping very high volume for the last four years that we have a very reliable technology and a very cost-effective technology. The proof is in the fact that we are now in a mainline in-box charger design at six to seven months. This is the first large volume GaN design that we know of. We are in a very high volume charger design with one of our OEMs.

Very helpful. Thank you.

Thank you. There are no further questions at this time. Please continue, presenters.

Thanks everyone for listening. There will be a replay of this call available via our website investors.power.com. Thanks again and good afternoon.

Thank you. Ladies and gentlemen, that concludes today's conference call. Thank you all for participating. You may now disconnect.