Power Integrations Inc 10-Q for FY2025 Q1
Power Integrations Inc (POWI)
About this 10-Q
Power Integrations Inc filed this 10-Q on May 12, 2025, covering the quarter ended March 31, 2025 (FY2025 Q1).
Headline figures
Quarter ended March 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $105.53M
- up 15.1% from $91.69M a year earlier
- Net income
- $8.79M
- up 122.3% from net income of $3.95M a year earlier
- Diluted EPS
- $0.15
- up 114.3% from $0.07 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
or
For the transition period from ______ to ______
Commission File Number
(Exact name of registrant as specified in its charter)
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(Address of Principal Executive Offices) |
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☒ | Accelerated Filer | ☐ | |
Non-accelerated Filer | ☐ | Smaller Reporting Company | |
| | Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class | Shares Outstanding at May 8, 2025 |
Common Stock, $ |
POWER INTEGRATIONS, INC.
TABLE OF CONTENTS
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| Condensed Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024 (Unaudited) | 4 |
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| Notes to Unaudited Condensed Consolidated Financial Statements | 9 |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations | 22 | |
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2
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes a number of forward-looking statements that involve many risks and uncertainties. Forward-looking statements are identified by the use of the words “would,” “could,” “will,” “may,” “expect,” “believe,” “should,” “anticipate,” “if,” “future,” “intend,” “plan,” “estimate,” “potential,” “target,” “seek,” or “continue” and similar words and phrases, including the negatives of these terms, or other variations of these terms, that denote future events. These statements reflect our current views with respect to future events and our potential financial performance and are subject to risks and uncertainties that could cause our actual results and financial position to differ materially and/or adversely from what is projected or implied in any forward-looking statements included in this Quarterly Report on Form 10-Q. These factors include, but are not limited to: changes in trade policies among the United States and other countries could reduce demand for end products that incorporate our integrated circuits, which could have a material adverse effect on our revenues and operating results; if demand for our products declines in our major end markets, our net revenues will decline; we do not have long-term contracts with any of our customers and if they fail to place orders for our products, or if they cancel or reschedule orders, our operating results and our business may suffer; our products are sold through distributors, which limits our direct interaction with our end customers, therefore reducing our ability to forecast sales and increasing the complexity of our business; if our products do not penetrate additional markets, our business will not grow as we expect; intense competition in the high-voltage power supply industry may lead to a decrease in our average selling price and reduced sales volume of our products; we depend on third-party suppliers to provide us with wafers for our products, and if they fail to provide us sufficient quantities of wafers, our business may suffer; if we are unable to adequately protect or enforce our intellectual property rights, we could lose market share, incur costly litigation expenses, suffer incremental price erosion or lose valuable assets, any of which could harm our operations and negatively impact our profitability; and the other risk factors described under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024, in this Quarterly Report on Form 10-Q and under the caption - “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q. We make these forward-looking statements based upon information available on the date of this Quarterly Report on Form 10-Q, and we expressly disclaim any obligation to update or alter any forward-looking statements, whether as a result of new information or otherwise, except as required by laws.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
POWER INTEGRATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
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(In thousands) | | March 31, 2025 | | December 31, 2024 | ||
ASSETS | | | | | | |
CURRENT ASSETS: | | | | | | |
Cash and cash equivalents | | $ | | | $ | |
Short-term marketable securities | |
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Accounts receivable, net | |
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Inventories | |
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Prepaid expenses and other current assets | |
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Total current assets | |
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PROPERTY AND EQUIPMENT, net | |
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INTANGIBLE ASSETS, net | |
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GOODWILL | |
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DEFERRED TAX ASSETS | |
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OTHER ASSETS | |
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Total assets | | $ | | | $ | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | |
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CURRENT LIABILITIES: | |
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Accounts payable | | $ | | | $ | |
Accrued payroll and related expenses | |
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Taxes payable | |
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Other accrued liabilities | |
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Total current liabilities | |
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LONG-TERM INCOME TAXES PAYABLE | |
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OTHER LIABILITIES | |
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Total liabilities | |
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COMMITMENTS AND CONTINGENCIES (Notes 11, 13 and 14) | |
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STOCKHOLDERS’ EQUITY: | |
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Common stock | |
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Additional paid-in capital | |
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Accumulated other comprehensive loss | |
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Retained earnings | |
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Total stockholders’ equity | |
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Total liabilities and stockholders’ equity | | $ | | | $ | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
POWER INTEGRATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| | Three Months Ended | ||||
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| March 31, | ||||
(In thousands, except per share amounts) | | 2025 |
| 2024 | ||
NET REVENUES | | $ | | | $ | |
COST OF REVENUES | |
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GROSS PROFIT | |
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OPERATING EXPENSES: | |
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Research and development | |
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Sales and marketing | |
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General and administrative | | | | |
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Total operating expenses | |
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INCOME FROM OPERATIONS | |
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OTHER INCOME | |
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INCOME BEFORE INCOME TAXES | |
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PROVISION FOR INCOME TAXES | |
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NET INCOME | | $ | | | $ | |
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EARNINGS PER SHARE: | |
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Basic | | $ | | | $ | |
Diluted | | $ | | | $ | |
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SHARES USED IN PER SHARE CALCULATION: | |
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Basic | | | | | | |
Diluted | | | | | | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
POWER INTEGRATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
| | Three Months Ended | ||||
| | March 31, | ||||
(In thousands) |
| 2025 |
| 2024 | ||
Net income | | $ | | | $ | |
Other comprehensive income (loss), net of tax: | |
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Foreign currency translation adjustments, net of $ | | | | | | ( |
Unrealized gain (loss) on marketable securities, net of ($ | | | | | | ( |
Amortization of defined benefit pension items, net of $ | | | ( | | | ( |
Total other comprehensive income (loss) | |
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| ( |
TOTAL COMPREHENSIVE INCOME | | $ | | | $ | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
POWER INTEGRATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
| | Three Months Ended | ||||
| | March 31, | ||||
(In thousands) |
| 2025 |
| 2024 | ||
Common stock |
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Beginning balance |
| $ | | | $ | |
Repurchase of common stock |
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| ( |
Ending balance |
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Additional paid-in capital |
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Beginning balance |
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Common stock issued under employee stock plans |
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Repurchase of common stock |
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Stock-based compensation |
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Ending balance |
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Accumulated other comprehensive income (loss) |
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Beginning balance |
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Other comprehensive income (loss) |
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Ending balance |
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Retained earnings |
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Beginning balance |
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Net income |
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Repurchase of common stock | | | | | | ( |
Payment of dividends to stockholders | | | ( | | | ( |
Ending balance | | | | | | |
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Total stockholders’ equity |
| $ | | | $ | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7
POWER INTEGRATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| | Three Months Ended | ||||
| | March 31, | ||||
(In thousands) |
| 2025 |
| 2024 | ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income | | $ | | | $ | |
Adjustments to reconcile net income to net cash provided by operating activities: | |
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Depreciation | |
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Amortization of intangibles | |
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Loss on disposal of property and equipment | |
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Stock-based compensation expense | |
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Accretion of discount on marketable securities | |
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Deferred income taxes | |
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Increase (decrease) in accounts receivable allowance for credit losses | |
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Change in operating assets and liabilities: | |
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Accounts receivable | |
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Inventories | |
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Prepaid expenses and other assets | |
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Accounts payable | |
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Taxes payable and accrued liabilities | |
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Net cash provided by operating activities | |
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CASH FLOWS FROM INVESTING ACTIVITIES: | |
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Purchases of property and equipment | |
| ( | |
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Purchases of marketable securities | |
| ( | |
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Proceeds from sales and maturities of marketable securities | |
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Net cash provided by (used in) investing activities | |
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CASH FLOWS FROM FINANCING ACTIVITIES: | |
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Issuance of common stock under employee stock plans | |
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Repurchase of common stock | |
| ( | |
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Payments of dividends to stockholders | |
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Net cash used in financing activities | |
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NET DECREASE IN CASH AND CASH EQUIVALENTS | |
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CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | |
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CASH AND CASH EQUIVALENTS AT END OF PERIOD | | $ | | | $ | |
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SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | |
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Unpaid property and equipment | | $ | | | $ | |
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |
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Cash paid for income taxes, net | | $ | | | $ | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
8
POWER INTEGRATIONS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION:
The condensed consolidated financial statements include the accounts of Power Integrations, Inc., a Delaware corporation (the “Company”), and its wholly owned subsidiaries. Significant intercompany accounts and transactions have been eliminated in consolidation.
While the financial information furnished is unaudited, the condensed consolidated financial statements included in this report reflect all adjustments (consisting only of normal recurring adjustments) that the Company considers necessary for the fair presentation of the results of operations for the interim periods covered and the financial condition of the Company at the date of the interim balance sheet in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The results for interim periods are not necessarily indicative of the results for the entire year. The condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and the notes thereto for the year ended December 31, 2024, included in its Form 10-K filed on February 7, 2025, with the Securities and Exchange Commission.
2. SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS:
Significant Accounting Policies and Estimates
No material changes have been made to the Company’s significant accounting policies disclosed in Note 2, Significant Accounting Policies and Recent Accounting Pronouncements, of the Company’s financial statements set forth in Item 8 of the Company’s Annual Report on Form 10-K, filed on February 7, 2025, for the year ended December 31, 2024.
Adoption of New Accounting Standards
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which is intended to improve reportable segment disclosure requirements and expand public entities’ segment disclosures in the annual and interim financial statements. The amendment requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and within each reported measure of segment profit or loss, an amount and description of its composition for other segment items and interim disclosures of a reportable segment’s profit or loss and assets. All disclosure requirements of ASU 2023-07 are required for entities with a single reportable segment. The Company adopted the annual disclosure requirements in fiscal year 2024 and the interim disclosure requirements beginning in the first quarter of fiscal year 2025. Refer to Note 12. Segment Reporting.
Recent Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. The Company does not expect the amendment to have a material impact on its consolidated financial statements upon adoption of the annual disclosure requirements in fiscal year 2025.
In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40) which requires additional disclosure of certain costs and expenses, including inventory purchases, employee compensation, selling expense and depreciation expense within the notes to financial statements. The guidance is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The Company is currently evaluating the impact that the updated standard will have on its financial statement disclosures.
9
POWER INTEGRATIONS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. COMPONENTS OF THE COMPANY’S CONDENSED CONSOLIDATED BALANCE SHEETS:
Accounts Receivable
|
| March 31, |
| December 31, | ||
(In thousands) | | 2025 | | 2024 | ||
Accounts receivable trade | | $ | | | $ | |
Allowance for ship and debit | |
| ( | |
| ( |
Allowance for stock rotation and rebate | |
| ( | |
| ( |
Allowance for credit losses | | | ( | | | ( |
Total | | $ | | | $ | |
The Company maintains an allowance for estimated credit losses resulting from the inability of customers to make required payments. This allowance is established using estimates formulated by the Company’s management based upon factors such as the composition of the accounts receivable aging, historical losses, changes in payment patterns, customer creditworthiness and current economic trends. Receivables determined to be uncollectible are written off and deducted from the allowance.
| | Allowance for Credit Losses | ||||
| | Three Months Ended | ||||
| | March 31, | ||||
(In thousands) | | 2025 |
| 2024 | ||
Beginning balance | | $ | ( | | $ | ( |
Provision for credit loss expense | |
| ( | |
| ( |
Receivables written off | |
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Recoveries collected | |
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Ending balance | | $ | ( | | $ | ( |
Inventories
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| March 31, |
| December 31, | ||
(In thousands) | | 2025 | | 2024 | ||
Raw materials | | $ | | | $ | |
Work-in-process | |
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Finished goods | |
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Total | | $ | | | $ | |
Intangible Assets
| | March 31, 2025 | | December 31, 2024 | ||||||||||||||
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| Accumulated |
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| Accumulated |
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(In thousands) | | Gross | | Amortization | | Net | | Gross | | Amortization | | Net | ||||||
Domain name | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
In-process research and development | |
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Developed technology | |
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| ( | |
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| ( | |
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Technology licenses | |
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| ( | |
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| ( | |
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Total intangible assets | | $ | | | $ | ( | | $ | | | $ | | | $ | ( | | $ | |
10
POWER INTEGRATIONS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The estimated future amortization expense related to finite-lived intangible assets at March 31, 2025, is as follows:
|
| Estimated | |
| | Amortization | |
Fiscal Year | | (In thousands) | |
2025 (remaining nine months) | | $ | |
2026 | |
| |
2027 | |
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Total* | | $ | |
* | Total excludes $ |
Accumulated Other Comprehensive Income (Loss)
Changes in accumulated other comprehensive income (loss) for the three months ended March 31, 2025 and 2024, were as follows:
| Unrealized Gains | | | | | | | | | | | | | ||||||||||
| and Losses on | | Defined Benefit | | Foreign Currency | | | | |||||||||||||||
| Marketable Securities | | Pension Items | | Items | | Total | ||||||||||||||||
| Three Months Ended | | Three Months Ended | | Three Months Ended | | Three Months Ended | ||||||||||||||||
| March 31, | | March 31, | | March 31, | | March 31, | ||||||||||||||||
(In thousands) | 2025 |
| 2024 |
| 2025 | | 2024 |
| 2025 |
| 2024 |
| 2025 |
| 2024 | ||||||||
Beginning balance | $ | | | $ | | | $ | | | $ | | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
Other comprehensive income (loss) before reclassifications |
| | |
| ( | |
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| ( | |
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| ( |
Amounts reclassified from accumulated other comprehensive loss |
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| ( | (1) |
| ( | (1) |
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| | |
| ( | |
| ( |
Net-current period other comprehensive income (loss) |
| | |
| ( | |
| ( | |
| ( | |
| | |
| ( | |
| | |
| ( |
Ending balance | $ | | | $ | ( | | $ | | | $ | | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
| (1) | This component of accumulated other comprehensive income (loss) is included in the computation of net periodic pension cost for the three months ended March 31, 2025 and 2024. |
4. FAIR VALUE MEASUREMENTS:
The FASB established a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices for identical assets in active markets; (Level 2) inputs other than the quoted prices in active markets that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions. This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.
The Company’s cash equivalents and short-term marketable securities are classified within Level 1 or Level 2 of the fair-value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency.
11
POWER INTEGRATIONS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The fair-value hierarchy of the Company’s cash equivalents and marketable securities at March 31, 2025 and December 31, 2024, was as follows:
| | Fair Value Measurement at | |||||||
| | March 31, 2025 | |||||||
| | | | | Quoted Prices in | | | | |
| | | | | Active Markets for | | Significant Other | ||
| | | | | Identical Assets | | Observable Inputs | ||
(In thousands) | | Total Fair Value | | (Level 1) | | (Level 2) | |||
Commercial paper | | $ | | | $ | | | $ | |
Corporate securities | | | | | | | | | |
Money market funds | |
| | |
| | |
| |
Total | | $ | | | $ | | | $ | |
| | Fair Value Measurement at | |||||||
| | December 31, 2024 | |||||||
| | | | | Quoted Prices in | | | | |
| | | | | Active Markets for | | Significant Other | ||
| | | | | Identical Assets | | Observable Inputs | ||
(In thousands) | | Total Fair Value | | (Level 1) | | (Level 2) | |||
Commercial paper | | $ | | | $ | | | $ | |
Corporate securities | | | | | | | | | |
Money market funds | |
| | |
| | |
| |
U.S. government securities | | | | | | | | | |
Total | | $ | | | $ | | | $ | |
The Company did not transfer any investments between Level 1 and Level 2 of the fair-value hierarchy in the three months ended March 31, 2025 and the twelve months ended December 31, 2024.
5. MARKETABLE SECURITIES:
Amortized cost and estimated fair market value of marketable securities classified as available-for-sale (excluding cash equivalents) at March 31, 2025, were as follows:
| | Amortized | | Gross Unrealized | | Estimated Fair | ||||||
(In thousands) |
| Cost |
| Gains |
| Losses |
| Market Value | ||||
Investments due in 3 months or less: |
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Commercial paper | | $ | | | $ | | | $ | | | $ | |
Corporate securities | | | | | | | | | ( | | | |
Total | |
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| ( | |
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Investments due in 4-12 months: | |
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Corporate securities | | | | | | | | | ( | | | |
Total | |
| | |
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| ( | |
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Investments due in 12 months or greater: | |
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Corporate securities | |
| | |
| | |
| ( | |
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Total | | | | |
| | | | ( | |
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Total marketable securities | | $ | | | $ | | | $ | ( | | $ | |
Accrued interest receivable was $
12
POWER INTEGRATIONS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Amortized cost and estimated fair market value of marketable securities classified as available-for-sale (excluding cash equivalents) at December 31, 2024, were as follows:
| | Amortized | | Gross Unrealized | | Estimated Fair | ||||||
(In thousands) |
| Cost |
| Gains |
| Losses |
| Market Value | ||||
Investments due in 3 months or less: |
| |
|
| |
|
| |
|
| |
|
Corporate securities | | $ | | | $ | | | $ | ( | | $ | |
Total | |
| | |
| | |
| ( | |
| |
Investments due in 4-12 months: | |
|
| |
|
| |
|
| |
|
|
Corporate securities | |
| | |
| | |
| ( | |
| |
Total | |
| | |
| | |
| ( | |
| |
Investments due in 12 months or greater: | |
|
| |
|
| |
|
| |
|
|
Corporate securities | | | | |
| | |
| ( | |
| |
Total | |
| | |
| | |
| ( | |
| |
Total marketable securities | | $ | | | $ | | | $ | ( | | $ | |
Accrued interest receivable was $
The following table summarizes marketable securities classified as available-for-sale (excluding cash equivalents) in a continuous unrealized loss position for which an allowance for credit losses was not recorded at March 31, 2025:
| | Less Than 12 Months | | 12 Months or Longer | | Total | ||||||||||||
|
| Estimated |
| Gross |
| Estimated |
| Gross |
| Estimated |
| Gross | ||||||
| | Fair Market | | Unrealized | | Fair Market | | Unrealized | | Fair Market | | Unrealized | ||||||
(In thousands) | | Value | | Losses | | Value | | Losses | | Value | | Losses | ||||||
Corporate securities | | $ | | | $ | ( | | $ | | | $ | ( | | $ | | | $ | ( |
Total marketable securities | | $ | | | $ | ( | | $ | | | $ | ( | | $ | | | $ | ( |
In the three months ended March 31, 2025 and 2024,
The Company does not intend to sell and it is unlikely that it will be required to sell the securities prior to their anticipated recovery. The issuers are high quality (investment grade) and the decline in fair value is largely due to changes in interest rates. Additionally, the issuers continue to make timely interest payments on the marketable securities with the fair value expected to recover as they reach maturity.
6. STOCK-BASED COMPENSATION:
The following table summarizes the stock-based compensation expense recognized in accordance with ASC 718-10 for the three months ended March 31, 2025 and 2024:
| | Three Months Ended | ||||
| | March 31, | ||||
(In thousands) |
| 2025 |
| 2024 | ||
Cost of revenues | | $ | | | $ | |
Research and development | |
| | |
| |
Sales and marketing | |
| | |
| |
General and administrative | |
| | |
| |
Total stock-based compensation expense | | $ | | | $ | |
Stock-based compensation expense in the three months ended March 31, 2025, was approximately $
13
POWER INTEGRATIONS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Stock-based compensation expense in the three months ended March 31, 2024, was approximately $
PSU Awards
Under the performance-based awards program, the Company grants awards in the performance year in an amount equal to twice the target number of shares to be issued if the maximum performance metrics are met. The number of shares that are released at the end of the performance year can range from
As the net revenue, non-GAAP operating income and strategic goals are considered performance conditions, expense associated with these awards, net of estimated forfeitures, is recognized over the service period based on an assessment of the expected achievement of the performance targets. The fair value of these PSUs is determined using the fair value of the Company’s common stock on the date of the grant, reduced by the discounted present value of dividends expected to be declared before the awards vest. If the performance conditions are not achieved, no compensation cost is recognized and any previously recognized compensation is reversed.
In February 2025, it was determined that approximately
A summary of PSUs outstanding as of March 31, 2025 and activity during the three months ended, is presented below:
| | | | | | Weighted-Average | | | | |
| | | | Weighted-Average | | Remaining | | Aggregate | ||
| | Shares | | Grant Date Fair | | Contractual Term | | Intrinsic Value | ||
|
| (In thousands) |
| Value Per Share |
| (In years) |
| (In thousands) | ||
Outstanding at January 1, 2025 |
| | | $ | |
| |
| | |
Granted |
| | | $ | |
| |
| |
|
Vested |
| ( | | $ | |
|
|
| |
|
Forfeited |
| | | | |
|
|
| |
|
Outstanding at March 31, 2025 |
| | | $ | |
| | $ | | |
Outstanding and expected to vest at March 31, 2025 |
| | |
| | | | $ | | |
PRSU Awards
The Company’s PRSU program provides for the issuance of PRSUs which will vest based on the Company’s performance measured against the PRSU program’s established performance targets. PRSUs are granted in an amount equal to twice the target number of shares to be issued if the maximum performance metrics are met. The actual number of shares the recipient receives is determined at the end of a
In February 2025, it was determined that
14
POWER INTEGRATIONS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
A summary of PRSUs outstanding as of March 31, 2025 and activity during the three months ended, is presented below:
| | | | | | | Weighted-Average | | Aggregate | |
| | | | Weighted-Average | | Remaining | | Intrinsic | ||
| | Shares | | Grant Date Fair | | Contractual Term | | Value | ||
|
| (In thousands) |
| Value Per Share |
| (In years) |
| (In thousands) | ||
Outstanding at January 1, 2025 |
| | | $ | |
| |
| | |
Granted |
| | | $ | |
|
|
| |
|
Vested |
| | | | |
|
|
| |
|
Forfeited |
| | | | |
|
|
| |
|
Outstanding at March 31, 2025 |
| | | $ | |
| | $ | | |
Outstanding and expected to vest at March 31, 2025 |
| | | | | | | $ | | |
RSU Awards
A summary of RSUs outstanding as of March 31, 2025 and activity during the three months ended, is presented below:
| | | | | | | Weighted-Average | | Aggregate | |
| | | | Weighted-Average | | Remaining | | Intrinsic | ||
| | Shares | | Grant Date Fair | | Contractual Term | | Value | ||
|
| (In thousands) |
| Value Per Share |
| (In years) |
| (In thousands) | ||
Outstanding at January 1, 2025 |
| | | $ | | | | | | |
Granted |
| | | $ | | | | | | |
Vested |
| ( | | $ | | |
| | | |
Forfeited |
| ( | | $ | | |
| | | |
Outstanding at March 31, 2025 |
| | | $ | | | | $ | | |
Outstanding and expected to vest at March 31, 2025 |
| | |
| | | | $ | | |
7. SIGNIFICANT CUSTOMERS AND GEOGRAPHIC NET REVENUES:
Customer Concentration
The Company’s top
The following customers represented 10% or more of the Company’s net revenues for the respective periods:
|
| Three Months Ended | ||||
| | March 31, | ||||
Customer | | 2025 | | 2024 | ||
Avnet |
| | % | | | % |
Honestar Technologies Co., Ltd. | | * | | | | % |
*Total customer revenue was less than 10% of net revenues.
No other customers accounted for 10% or more of the Company’s net revenues in the periods presented.
15
POWER INTEGRATIONS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash investments and trade receivables. The Company does not have any off-balance-sheet credit exposure related to its customers.
As of March 31, 2025 and December 31, 2024,
The following customers represented 10% or more of accounts receivable at March 31, 2025 and December 31, 2024:
| | March 31, | | December 31, | ||
Customer |
| 2025 | | 2024 | ||
Avnet | | | % | | | % |
Powertech Distribution Ltd. | | | % | | * | |
Honestar Technologies Co., Ltd. | | * | | | | % |
Salcomp Group | | * | | | | % |
*Total customer accounts receivable was less than 10% of accounts receivable.
No other customers accounted for 10% or more of the Company’s accounts receivable in the periods presented.
Geographic Net Revenues
The Company markets its products globally through its sales personnel and a worldwide network of independent sales representatives and distributors. Geographic net revenues by region and country with 5% or more of the Company’s revenue during any of the periods presented, based on “bill to” customer locations were as follows:
| | Three Months Ended | ||||
| | March 31, | ||||
(In thousands) |
| 2025 |
| 2024 | ||
Americas: | | $ | | | $ | |
EMEA: | |
| | |
| |
Germany | |
| | |
| |
Other EMEA | |
| | |
| |
APAC: | |
| | |
| |
Hong Kong/China | |
| | |
| |
India | |
| | |
| |
Korea | | | | | | |
Taiwan | | | | | | |
Other APAC | |
| | |
| |
Total net revenues | | $ | | | $ | |
8. STOCKHOLDERS’ EQUITY:
Common Stock Shares Outstanding
| | Three Months Ended | ||||
| | March 31, | ||||
(In thousands) |
| 2025 |
| 2024 | ||
Beginning balance | | | | | | |
Common stock issued under employee stock plans | |
| | |
| |
Repurchased | |
| ( | |
| ( |
Ending balance | | | | | | |
16
POWER INTEGRATIONS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Common Stock Repurchases
As of December 31, 2024, the Company had $
Cash Dividends
In October 2023, the Company’s board of directors declared dividends of $
In October 2024, the Company’s board of directors raised the quarterly cash dividend with the declaration of
For the three months ended March 31, 2025 and 2024, cash dividends declared and paid were as follows:
| | Three Months Ended | ||||
| | March 31, | ||||
(In thousands, except per share amounts) |
| 2025 |
| 2024 | ||
Dividends declared and paid | | $ | | | $ | |
Dividends declared per common share | | $ | | | $ | |
17
POWER INTEGRATIONS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. EARNINGS PER SHARE:
Basic earnings per share are calculated by dividing net income by the weighted-average shares of common stock outstanding during the period. Diluted earnings per share are calculated by dividing net income by the weighted-average shares of common stock and dilutive common equivalent shares outstanding during the period. Dilutive common equivalent shares included in this calculation consist of dilutive shares issuable upon the assumed exercise of outstanding common stock options, the assumed vesting of outstanding restricted stock units, the assumed issuance of awards under the stock purchase plan and contingently issuable performance-based awards, as computed using the treasury stock method.
A summary of the earnings per share calculation is as follows:
| | Three Months Ended | ||||
| | March 31, | ||||
(In thousands, except per share amounts) |
| 2025 |
| 2024 | ||
Basic earnings per share: |
| |
|
| |
|
Net income | | $ | | | $ | |
Weighted-average common shares | |
| | |
| |
Basic earnings per share | | $ | | | $ | |
Diluted earnings per share: (1) | |
|
| |
|
|
Net income | | $ | | | $ | |
Weighted-average common shares | |
| | |
| |
Effect of dilutive awards: | |
|
| |
|
|
Employee stock plans | |
| | |
| |
Diluted weighted-average common shares | |
| | |
| |
Diluted earnings per share | | $ | | | $ | |
| (1) | The Company includes the shares underlying performance-based awards in the calculation of diluted earnings per share if the performance conditions have been satisfied as of the end of the reporting period and excludes such shares when the necessary conditions have not been met. The Company has excluded the shares underlying the outstanding performance-based awards in the 2025 and 2024 calculations as the shares were not contingently issuable as of the end of the reporting periods. |
10. PROVISION FOR INCOME TAXES:
Income-tax expense includes a provision for federal, state and foreign taxes based on the annual estimated effective tax rate applicable to the Company and its subsidiaries, adjusted for certain discrete items which are fully recognized in the period they occur. Accordingly, the interim effective tax rate may not be reflective of the annual estimated effective tax rate.
The Company’s effective tax rate for the three months ended March 31, 2025 and 2024 was
As of March 31, 2025, the Company maintained a valuation allowance on its California deferred tax assets, New Jersey deferred tax assets and a valuation allowance with respect to its deferred tax assets relating to tax credits in Canada.
18
POWER INTEGRATIONS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Determining the consolidated provision for income-tax expense, income-tax liabilities and deferred tax assets and liabilities involves judgment. The Company calculates and provides for income taxes in each of the tax jurisdictions in which it operates, which involves estimating current tax exposures as well as making judgments regarding the recoverability of deferred tax assets in each jurisdiction. The estimates used could differ from actual results, which may have a significant impact on operating results in future periods.
11. COMMITMENTS:
Supplier Agreements
Under the terms of the Company’s wafer-supply agreements with Seiko Epson Corporation ("Epson") and ROHM Lapis Semiconductor Co., Ltd. ("Lapis"), the wafers purchased from these suppliers are priced in U.S. dollars, with mutual sharing of the impact of fluctuations in the exchange rate between the Japanese yen and the U.S. dollar on future purchases. Each year, the Company’s management and these two suppliers review and negotiate future pricing; the negotiated pricing is denominated in U.S. dollars but is subject to contractual exchange-rate provisions. The fluctuation in the exchange rate is shared equally between the Company and each of these suppliers on future purchases.
12. SEGMENT REPORTING:
The Company is organized and operates as
The CODM uses net income as the measure of profit or loss to allocate resources and assess performance. The CODM regularly reviews net income as reported on the Company’s consolidated statements of income. Financial forecasts and budget to actual results used by the CODM to assess performance and allocate resources, as well as those used for strategic decisions related to headcount and capital expenditures are also reviewed on a consolidated basis. The CODM considers the impact on net income of the significant segment expenses in the table below when deciding whether to reinvest profits, propose dividends or share repurchase, or pursue strategic mergers and acquisitions.
The measure of segment assets is reported on the balance sheet as total assets. The CODM does not review segment assets at a level other than that presented in the Company’s consolidated balance sheets.
19
POWER INTEGRATIONS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The table below presents the Company’s consolidated operating results including significant segment expenses:
| | Three Months Ended | ||||
| | March 31, | ||||
(In thousands) | | 2025 |
| 2024 | ||
NET REVENUES | | $ | | | $ | |
Less: | | | | | | |
Stock-based compensation (1) | | | | | | |
Amortization of acquisition-related intangible assets (2) | | | | | | |
Cost of revenues (excluding 1 & 2) | | | | | | |
Research and development (excluding 1) | | | | | | |
Sales and marketing (excluding 1) | | | | | | |
General and administrative (excluding 1) | | | | | | |
INCOME FROM OPERATIONS | | | | | | |
| | | | | | |
OTHER INCOME | | | | | | |
PROVISION FOR INCOME TAXES | | | | | | |
NET INCOME | | $ | | | $ | |
The table below presents other segment information:
| | Three Months Ended | ||||
| | March 31, | ||||
(In thousands) | | 2025 |
| 2024 | ||
Depreciation | | $ | | | $ | |
Amortization of intangibles | | $ | | | $ | |
Interest income | | $ | | | $ | |
13. LEGAL PROCEEDINGS AND CONTINGENCIES:
From time to time in the ordinary course of business, the Company becomes involved in lawsuits, or customers and distributors may make claims against the Company. In accordance with ASC 450-10, Contingencies, the Company makes a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.
On December 18, 2019, CogniPower LLC (“CogniPower”) filed a complaint against a customer of the Company in the United States District Court for the District of Delaware for infringement of
The Company is unable to predict the outcome of legal proceedings with certainty, and there can be no assurance that the Company will prevail in the above-mentioned unsettled litigations. These litigations, whether or not determined in the Company’s favor or settled, will be costly and will divert the efforts and attention of the Company’s management and technical personnel from normal business operations, potentially causing a material adverse effect on the business, financial condition and operating results. Currently, the Company is not able to estimate a loss or a range of loss for the ongoing litigations disclosed above, however adverse determinations in litigation could result in monetary losses, the loss of proprietary rights, subject the Company to significant liabilities, require the Company to seek licenses from third parties or prevent the Company from licensing the technology, any of which could have a material adverse effect on the Company’s business, financial condition and operating results.
20
POWER INTEGRATIONS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. INDEMNIFICATIONS:
The Company sells products to its distributors under contracts, collectively referred to as Distributor Sales Agreements (“DSA”). Each DSA contains the relevant terms of the contractual arrangement with the distributor, and generally includes certain provisions for indemnifying the distributor against losses, expenses, and liabilities from damages that may be awarded against the distributor in the event the Company’s products are found to infringe upon a patent, copyright, trademark, or other proprietary right of a third party (“Customer Indemnification”). The DSA generally limits the scope of and remedies for the Customer Indemnification obligations in a variety of industry-standard respects, including, but not limited to, limitations based on time and geography, and a right to replace an infringing product. The Company also, from time to time, has granted a specific indemnification right to individual customers.
The Company believes its internal development processes and other policies and practices limit its exposure related to such indemnifications. In addition, the Company requires its employees to sign a proprietary information and inventions agreement, which assigns the rights to its employees’ development work to the Company. To date, the Company has not had to reimburse any of its distributors or customers for any losses related to these indemnifications and no material claims were outstanding as of March 31, 2025. For several reasons, including the lack of prior indemnification claims and the lack of a monetary liability limit for certain infringement cases, the Company cannot determine the maximum amount of potential future payments, if any, related to such indemnifications.
15. ACQUISITION:
Odyssey Semiconductor Technologies
On March 12, 2024, the Company agreed to acquire the assets of Odyssey, a U.S. company and a developer of vertical gallium-nitride (“GaN”) transistor technology. The transaction closed on July 1, 2024, at which time all key Odyssey employees joined the Company. Pursuant to the asset purchase agreement, Odyssey sold, transferred and assigned substantially all of its assets to the Company for $
The acquisition has been accounted for using the acquisition method of accounting in accordance with ASC 805 - Business Combinations. Under the acquisition method of accounting, the total purchase consideration of the acquisition is allocated to the tangible assets and identifiable intangible assets acquired based on their relative fair values. The excess of the purchase consideration over the net tangible and identifiable intangible assets is recorded as goodwill, the amount of which represents the expected benefits to the Company of future technology and the knowledgeable and experienced employees who joined the Company. Goodwill is expected to be deductible over
The fair value of in-process research and development was determined based on the cost approach using the Company’s estimate of the costs that would be incurred if a market participant were to create the acquired technology from scratch. The Company considered the number of engineers required, salaries and related benefits, allocated overhead and the development time required to recreate the technology. The Company will record the in-process research and development as an intangible asset with an indefinite life until completion or abandonment of the associated research and development efforts, and will begin amortizing the value over the estimated life of the technology upon completion of development. Consistent with the treatment of other intangible assets with indefinite lives, the Company will test the in-process research and development for impairment on an annual basis or when impairment indicators are present.
Pro forma results of operations for this acquisition have not been presented because they are not material to the Company’s consolidated financial statements.
21
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis has been prepared as an aid to understanding our financial condition and results of operations. It should be read in conjunction with the condensed consolidated financial statements and the notes to those statements included elsewhere in this Quarterly Report on Form 10-Q, and with the consolidated financial statements and management’s discussion and analysis of our financial condition and results of operations in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 7, 2025. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024, and in Part II, Item 1A - “Risk Factors” and elsewhere in this report. See also “Cautionary Note Regarding Forward-Looking Statements” at the beginning of this report.
Overview
We design, develop and market analog and mixed-signal integrated circuits (“ICs”) and other electronic components and circuitry used in high-voltage power conversion. Our products are used in power converters that convert electricity from a high-voltage source to the type of power required for a specified downstream use. In most cases, this conversion entails, among other functions, converting alternating current (“AC”) to direct current (“DC”) or vice versa, reducing or increasing the voltage, and regulating the output voltage and/or current according to the customer’s specifications.
A large percentage of our products are ICs used in AC-DC power supplies, which convert the high-voltage AC from a wall outlet to the low-voltage DC required by most electronic devices. Power supplies incorporating our products are used with all manner of electronic products including appliances, industrial controls, mobile devices such as smartphones, tablets and notebook computers, electronic utility meters, battery-powered tools, and “home-automation,” or “internet of things” applications such as networked thermostats, power strips and security devices. Variations of our power-supply ICs are used for high-voltage power conversion in electric vehicles (“EVs”). We also supply high-voltage LED drivers, which are AC-DC ICs specifically designed for lighting applications that utilize light-emitting diodes, and motor-driver ICs for brushless DC (“BLDC”) motors used in consumer appliances, HVAC systems, ceiling fans and a variety of industrial applications.
We also offer high-voltage gate drivers—either standalone ICs or circuit boards containing ICs, electrical isolation components and other circuitry—used to operate high-voltage switches such as insulated-gate bipolar transistors (“IGBTs”) and silicon-carbide (“SiC”) MOSFETs. These combinations of switches and drivers are used for power conversion in high-power applications (i.e., power levels ranging from approximately 100 kilowatts up to gigawatts) such as industrial motors, solar- and wind-power systems, electric locomotives, EVs and high-voltage DC transmission systems.
Our power-conversion products are distinguished by their “system-level” nature; that is, they incorporate into a single product numerous elements of a power-conversion system including a high-voltage transistor, drivers, advanced control circuitry and, in some cases, a communication link connecting the primary (i.e., input) and secondary (i.e., output) sides of the power converter while maintaining safety isolation to protect the end user from exposure to high voltage. Alternatively, a power converter can be designed and assembled using discrete components purchased from a variety of suppliers.
Our system-level products offer a number of important benefits compared with discrete designs, including: reduced design complexity; smaller size; lower component count, which in turn results in higher reliability and easier sourcing of components; reduced time-to-market; and more efficient use of engineering resources. Our products also reduce the energy consumption of power converters during normal use and in “standby” operation, when the end product is not in use. In addition to the environmental and economic benefits of reduced energy usage, our energy-saving technologies provide a number of benefits to our customers; these include helping them meet the increasingly stringent efficiency standards now in effect for many electronic products, and enabling the elimination of bulky, costly heatsinks used to dissipate the heat produced by wasted electricity. By reducing component count, circuit-board size and the need for heatsinks, our products also contribute to a reduction in materials usage and electronic waste.
22
While the size of our addressable market fluctuates with changes in macroeconomic and industry conditions, the market has generally exhibited a modest growth rate over time as growth in the unit volume of power converters has been offset to a large degree by reductions in the average selling price of components in this market. Therefore, the growth of our business depends largely on increasing our penetration of the markets that we serve and on further expanding our addressable market. Our growth strategy includes the following elements:
| ● | Increase the size of our addressable market. Prior to 2010 our addressable market consisted of AC-DC applications with up to about 50 watts of output, a served available market (“SAM”) opportunity of approximately $1.5 billion. Since then, we have expanded our SAM to approximately $4 billion through a variety of means. These include the introduction of products that enable us to address higher-power AC-DC applications (such as our Hiper™ product families), the introduction of LED-driver products, and our entry into the gate-driver market In 2018 we introduced our BridgeSwitch™ motor-driver ICs for BLDC motors, and in 2024 we introduced BridgeSwitch-2, extending the addressable power range of our motor-driver products up to about one horsepower. We have recently introduced a range of products targeting the EV market; we plan to introduce additional products for EVs in the future and expect automotive applications to become a significant portion of our SAM over time. |
Also contributing to our SAM expansion has been the emergence of new applications within the power ranges that our products can address. For example, applications such as “smart” utility meters, battery-powered lawn equipment and bicycles, and USB power receptacles (often installed alongside traditional AC wall outlets) can incorporate our products. The increased use of connectivity, LED lighting and other power-consuming electronic features in consumer appliances has also enhanced our SAM.
We have also expanded our SAM through the development of technologies and architectures that increase the value (and therefore the average selling prices) of our products. For example, our InnoSwitch™ ICs integrate circuitry from the secondary, or low-voltage, side of AC-DC power supplies, whereas earlier product families integrated circuitry only on the primary, or high-voltage side. Our InnoMux™ IC families provide up to three DC outputs, eliminating the need for additional power-management circuitry in certain end products requiring multiple voltages while significantly increasing efficiency.
| ● | Increase our penetration of the markets we serve. We currently address AC-DC applications with power outputs up to approximately 500 watts, gate-driver applications ranging from 100 kilowatts up to gigawatts, and motor-drive applications up to approximately one horsepower. Through our research and development efforts, we seek to introduce more advanced products for these markets offering higher levels of integration and performance compared to earlier products. We also continue to expand our sales and application-engineering staff and our network of distributors, as well as our offerings of technical documentation and design-support tools and services to help customers use our products. These tools and services include our PI Expert™ design software, which we offer free of charge, and our transformer-sample service. In 2022 we launched PowerPros℠, a live online video support service that enables power-supply designers to talk directly with members of our applications engineering team 24 hours a day, six days a week, anywhere in the world. |
| ● | Leverage the performance benefits of our proprietary gallium-nitride (“GaN”) technology. In 2019 we began incorporating our proprietary PowiGaN™ gallium-nitride transistors in some of our products, enabling a higher level of energy efficiency than ICs with silicon transistors. Since then, we have introduced a variety of new products utilizing GaN technology and developed new generations of our GaN technology capable of supporting voltages as high as 1700 volts. While high-voltage GaN transistors have historically been more costly to produce than comparable silicon transistors, we have achieved cost reductions such that our GaN devices are approaching cost parity with silicon MOSFETs. |
We are developing additional products incorporating GaN transistors, which we believe will enable us to address higher-power applications than we address with our current range of products, and further expand our SAM as discussed above. We expect such applications to include power supplies used in data centers delivering artificial intelligence (AI) services, in communications network infrastructure equipment and in onboard-charging circuitry for EVs, among others.
23
Additionally, we are developing GaN technologies capable of supporting higher power output than today’s GaN devices, with an aim of developing products to address power-switching modules in EV drivetrains, which currently incorporate SiC and IGBT modules. In July 2024 we acquired the assets of Odyssey Semiconductor, a developer of so-called vertical GaN technology, in an effort to accelerate our development of higher-power GaN devices. We believe the development of such technologies will take several years to complete.
| ● | Capitalize on efforts to reduce carbon emissions by providing products that contribute to improved energy efficiency and increased use of renewable energy. In its 2019 World Energy Outlook, the International Energy Agency estimated that more than two-thirds of the reduction in carbon-dioxide (“CO2”) emissions needed to achieve the “Sustainable Development Scenario” of the United Nations Sustainable Development Agenda is to come from improved energy efficiency and increased use of renewable energy. Energy savings enabled by our products help our customers comply with regulations that seek to curb energy consumption in support of reducing CO2 emissions. For example: our EcoSmart™ technology drastically reduces the amount of energy consumed by electronic products when they are plugged in but not in use; our PowiGaN™ gallium-nitride (“GaN”) transistors reduce energy consumption compared to silicon transistors; and our BridgeSwitch™ motor-driver ICs provide highly efficient power conversion for BLDC motors in appliances and industrial applications. Also, our gate-driver products are critical components in energy-efficient DC motor drives, solar- and wind-power systems, efficient high-voltage DC transmission systems (including transmission of energy from renewable energy installations to the power grid), and low-emissions transportation applications such as electric locomotives. |
We intend to continue expanding our SAM in the years ahead through all of the means described above.
Our quarterly operating results are difficult to predict and subject to significant fluctuations. We plan our production and inventory levels based on internal forecasts of projected customer demand, which are highly unpredictable and can fluctuate substantially. Customers typically may cancel or reschedule orders on short notice without significant penalty and, conversely, often place orders with very short lead times to delivery. Changes in trade policies among the United States and other countries, in particular the escalation of trade tensions and higher tariffs as well as the imposition of other barriers to international trade could reduce demand for end products that incorporate our integrated circuits which could adversely affect our business and operating results. See also our risk factor under Part II, Item 1A captioned, “Changes in trade policies among the United States and other countries, in particular the escalation and imposition of new and higher tariffs, could reduce demand for end products that incorporate our integrated circuits, which could have a material adverse effect on our revenues and operating results. Further, increased tariffs or the imposition of other barriers to international trade could place pressure on our prices as our customers seek to offset the impact of increased tariffs on their own products.” Also, external factors such as supply-chain dynamics, widespread health emergencies, and macroeconomic conditions including inflation, fluctuations in interest and exchange rates and bank failures, have caused and can continue to cause our operating results to be volatile. Furthermore, because our industry is intensely price-sensitive, our gross margin (gross profit divided by net revenues) is subject to change based on the relative pricing of solutions that compete with ours. Variations in product mix, end-market mix and customer mix can also cause our gross margin to fluctuate. Because we purchase a large percentage of our silicon wafers from foundries located in Japan, our gross margin is influenced by fluctuations in the exchange rate between the U.S. dollar and the Japanese yen. Changes in the prices of raw materials used in our products, such as copper and gold, can also affect our gross margin. Although our wafer fabrication and assembly operations are outsourced, as are most of our test operations, a portion of our production costs are fixed in nature. As a result, our unit costs and gross margin are impacted by the volume of units we produce.
Recent Results
Our net revenues were $105.5 million and $91.7 million in the three months ended March 31, 2025 and 2024, respectively. The increase in net revenues was due to higher sales in all four end-market categories, most significantly in the consumer end-market.
Our top ten customers, including distributors that resell to OEMs and merchant power supply manufacturers, accounted for 80% and 77% of net revenues for the three months ended March 31, 2025 and 2024, respectively. International sales accounted for 99% and 98% of our net revenues for the three months ended March 31, 2025 and 2024, respectively.
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Our gross margin was 55% and 52% for the three months ended March 31, 2025 and 2024, respectively. The increase in gross margin was primarily due to the favorable impact of the dollar/yen exchange rate on our wafer costs and the favorable impact of higher manufacturing volumes on our cost per unit.
Total operating expenses were $51.5 million and $47.3 million for the three months ended March 31, 2025 and 2024, respectively. The increase in operating expenses for the three-month period was primarily due to increased stock-based compensation expense and employee-related expenses driven by headcount growth and higher costs associated with employee health insurance and other benefits. These increases were partially offset by a credit recognized in the three months ended March 31, 2025 related to the recovery of bad debt.
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we evaluate our estimates, including those listed below. We base our estimates on historical facts and various other assumptions that we believe to be reasonable at the time the estimates are made. Actual results could differ from those estimates.
Critical accounting policies are important to the portrayal of our financial condition and results of operations and require us to make judgments and estimates about matters that are inherently uncertain. There have been no material changes to our critical accounting policies and estimates disclosed in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” and Note 2, Significant Accounting Policies and Recent Accounting Pronouncements, in each case in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 7, 2025. Currently, our only critical accounting policies relate to revenue recognition and estimating write-downs for excess and obsolete inventory.
Results of Operations
The following table sets forth certain operating data as a percentage of net revenues for the periods indicated:
| | Three Months Ended | ||||
| | March 31, | ||||
|
| 2025 | | 2024 | ||
Net revenues | | 100.0 | % | | 100.0 | % |
Cost of revenues |
| 44.8 |
| | 47.9 |
|
Gross profit |
| 55.2 |
| | 52.1 |
|
Operating expenses: |
| |
| | |
|
Research and development |
| 22.8 |
| | 25.3 |
|
Sales and marketing |
| 15.5 |
| | 17.2 |
|
General and administrative |
| 10.5 |
| | 9.1 |
|
Total operating expenses |
| 48.8 |
| | 51.6 |
|
Income from operations |
| 6.4 |
| | 0.5 |
|
Other income |
| 3.0 |
| | 3.8 |
|
Income before income taxes |
| 9.4 |
| | 4.3 |
|
Provision for income taxes |
| 1.0 |
| | — |
|
Net income |
| 8.4 | % | | 4.3 | % |
Comparison of the three months ended March 31, 2025 and 2024
Net revenues. Net revenues consist of revenues from product sales, which are calculated net of returns and allowances. Net revenues for the three months ended March 31, 2024 and 2024 were $105.5 million and $91.7 million, respectively. The increase in net revenues was due to higher sales in all four end-market categories, most significantly in the consumer end-market.
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Our revenue mix by end market for the three months ended March 31, 2025 and 2024 was as follows:
|
| Three Months Ended | ||||
| | March 31, | ||||
End Market |
| 2025 | | 2024 | ||
Communications | | 10 | % | | 11 | % |
Computer |
| 12 | % | | 11 | % |
Consumer |
| 44 | % | | 41 | % |
Industrial |
| 34 | % | | 37 | % |
International sales, consisting of sales outside of the United States of America based on “bill to” customer locations, were $104.2 million and $90.1 million in the three months ended March 31, 2025 and 2024, respectively. Although power converters using our products are distributed to end markets worldwide, most are manufactured in Asia. As a result, sales to this region represented 84% and 81% of our net revenues in the three months ended March 31, 2025 and 2024, respectively. We expect international sales, and sales to the Asia region in particular, to continue to account for a large portion of our net revenues in the future.
Sales to distributors accounted for 71% and 72% of our net revenues in the three months ended March 31, 2025 and 2024, respectively, with direct sales to OEMs and merchant power supply manufacturers accounting for the remainder.
The following customers represented 10% or more of our net revenues for the respective periods:
| | Three Months Ended | ||||
| | March 31, | ||||
Customer |
| 2025 | | 2024 | ||
Avnet |
| 32 | % | | 29 | % |
Honestar Technologies Co., Ltd. | | * | | | 11 | % |
*Total customer revenue was less than 10% of net revenues.
No other customers accounted for 10% or more of our net revenues in these periods.
Gross profit. Gross profit is net revenues less cost of revenues. Our cost of revenues consists primarily of the purchase of wafers from our contracted foundries, the assembly, packaging and testing of our products by sub-contractors, product testing performed in our own facility, overhead associated with the management of our supply chain and the amortization of acquired intangible assets. Gross margin is gross profit divided by net revenues. The following table compares gross profit and gross margin for the three months ended March 31, 2025 and 2024:
| | Three Months Ended | ||||||
| | March 31, | ||||||
(dollars in millions) |
| 2025 |
| 2024 | ||||
Net revenues | | $ | 105.5 | | | $ | 91.7 | |
Gross profit |
| $ | 58.2 |
| | $ | 47.8 |
|
Gross margin | |
| 55.2 | % | |
| 52.1 | % |
Our gross margin increased primarily due to favorable impact of the dollar/yen exchange rate on our wafer costs and the favorable impact of higher manufacturing volumes on our cost per unit.
Research and development expenses. Research and development (“R&D”) expenses consist primarily of employee-related expenses including salaries and stock-based compensation, as well as expensed material and facility costs associated with the development of new processes and products. We also record R&D expenses for prototype wafers related to new products until the products are released to production. The following table compares R&D expenses for the three months ended March 31, 2025 and 2024:
| | Three Months Ended | ||||
| | March 31, | ||||
(dollars in millions) | | 2025 | | 2024 | ||
R&D expenses | | $ | 24.1 | | $ | 23.2 |
Headcount (at period end) | | | 294 | | | 299 |
R&D expenses increased for the three months ended March 31, 2025 compared to the corresponding period of 2024 primarily due to higher employee benefit-related expenses and increased equipment-related expenses.
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Sales and marketing expenses. Sales and marketing (“S&M”) expenses consist primarily of employee-related expenses, including salaries and stock-based compensation, and commissions to sales representatives, as well as facilities expenses, including expenses associated with our regional sales and support offices. The following table below compares S&M expenses for the three months ended March 31, 2025 and 2024:
| | Three Months Ended | ||||
| | March 31, | ||||
(dollars in millions) |
| 2025 | | 2024 | ||
Sales and marketing expenses | | $ | 16.4 | | $ | 15.7 |
Headcount (at period end) | |
| 330 | | | 322 |
S&M expenses increased for the three months ended March 31, 2025 compared to the corresponding period of 2024, primarily due to higher sales commissions and increased employee benefit-related expenses.
General and administrative expenses. General and administrative (“G&A”) expenses consist primarily of employee-related expenses, including salaries and stock-based compensation expenses for administration, finance, human resources and general management, as well as consulting, professional services, legal and auditing expenses. The following table below compares G&A expenses for the three months ended March 31, 2025 and 2024:
| | Three Months Ended | ||||
| | March 31, | ||||
(dollars in millions) |
| 2025 | | 2024 | ||
G&A expenses |
| $ | 11.0 | | $ | 8.4 |
Headcount (at period end) | |
| 83 | | | 74 |
G&A expenses increased for the three months ended March 31, 2025 compared to the corresponding period of 2024, primarily due to increased stock-based compensation expense related to performance-based awards as well as increased expenses for legal and other professional services. These increases were partially offset by a credit recognized in the three months ended March 31, 2025 related to the recovery of bad debt.
Other income. Other income consists primarily of interest income earned on cash and cash equivalents, marketable securities and other investments, and the impact of foreign exchange gains or losses. The table below compares other income for the three months ended March 31, 2025 and 2024:
| | Three Months Ended | ||||
| | March 31, | ||||
(dollars in millions) |
| 2025 | | 2024 | ||
Other income |
| $ | 3.2 | | $ | 3.5 |
Other income for the three months ended March 31, 2025 was similar to the corresponding period of 2024.
Provision for income taxes. Provision for income taxes represents federal, state and foreign taxes. The table below compares income-tax expense for the three months ended March 31, 2025 and 2024:
| | Three Months Ended | ||||||
| | March 31, | ||||||
(dollars in millions) |
| 2025 |
| 2024 | ||||
Provision for income taxes |
| $ | 1.1 |
|
| $ | — |
|
Effective tax rate | |
| 11.1 | % | |
| 0.5 | % |
Income-tax expense includes a provision for federal, state and foreign taxes based on the annual estimated effective tax rate applicable to us and our subsidiaries, adjusted for certain discrete items which are fully recognized in the period in which they occur. Accordingly, the interim effective tax rate may not be reflective of the annual estimated effective tax rate.
Our effective tax rates for the three months ended March 31, 2025 and 2024 was 11.1% and 0.5%, respectively. The effective tax rate in these periods was lower than the statutory federal income-tax rate of 21% due to the geographic distribution of our world-wide earnings in lower-tax jurisdictions and the impact of federal research tax credits. In the three months ended March 31, 2025, our effective tax rate was unfavorably impacted by the recognition of share-based payments and foreign income subject to U.S. tax (GILTI). In the three months ended March 31, 2024, our effective tax
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rate was favorably impacted by the recognition of excess tax benefits related to share-based payments and the release of unrecognized tax benefits and unfavorably impacted by foreign income subject to U.S. tax (GILTI). These benefits were partially offset by U.S. tax on foreign income, known as global intangible low-taxed income. The primary jurisdiction from which our foreign earnings are derived is the Cayman Islands, which is a non-taxing jurisdiction. Income earned in other foreign jurisdictions was not material. We have not been granted any incentivized tax rates and do not operate under any tax holidays in any jurisdiction.
Liquidity and Capital Resources
As of March 31, 2025, we had $289.3 million in cash, cash equivalents and short-term marketable securities, a decrease of $10.7 million from $300.0 million as of December 31, 2024. As of March 31, 2025, we had working capital, defined as current assets less current liabilities, of $444.9 million, a decrease of approximately $13.8 million from $458.7 million as of December 31, 2024.
We have a Credit Agreement with Wells Fargo Bank, National Association (the "Credit Agreement") that provides us with a $75.0 million revolving line of credit to use for general corporate purposes with a $20.0 million sub-limit for the issuance of standby and trade letters of credit. The Credit Agreement was amended on June 7, 2021, to provide an alternate borrowing rate as a replacement for LIBOR and extend the termination date from April 30, 2022, to June 7, 2026, with all other terms remaining the same. The Credit Agreement was amended with an effective date of June 28, 2023 to include the Secured Overnight Financing Rates (“SOFR”) as interest rate benchmark rates, with all other terms remaining the same. Our ability to borrow under the revolving line of credit is conditioned upon our compliance with specified covenants, including reporting and financial covenants, primarily a minimum liquidity measure and a debt to earnings ratio, with which we are currently in compliance. The Credit Agreement terminates on June 7, 2026; all advances under the revolving line of credit will become due on such date, or earlier in the event of a default. As of March 31, 2025, we had no advances outstanding under the Credit Agreement.
Cash from Operating Activities
Our operating activities generated $26.4 million of cash in the three months ended March 31, 2025. Net income for this period was $8.8 million; we also incurred non-cash stock-based compensation expense, depreciation and an increase in deferred tax assets of $8.7 million, $7.2 million and $2.5 million, respectively. Sources of cash included a $4.7 million decrease in accounts receivable due to timing of receipts, an increase of $4.0 million in accounts payable (excluding payables related to property and equipment) due to timing of payments and a $3.4 million decrease in prepaid expenses and other assets. These sources of cash were partially offset by a $3.9 million decrease in taxes payable and accrued liabilities and a $3.5 million increase in inventories.
Operating activities generated $15.9 million of cash in the three months ended March 31, 2024. Net income for this period was $4.0 million; we also incurred depreciation, non-cash stock-based compensation expense, increase in deferred tax assets, accretion of discount on marketable securities, and amortization of intangibles of $8.7 million, $6.4 million, $1.3 million, $0.5 million and $0.5 million, respectively. Sources of cash included a $2.2 million decrease in accounts receivable due to timing of receipts, a $1.3 million increase in accounts payable (excluding payables related to property and equipment) due to timing of payments and a $0.8 million decrease in prepaid expenses and other assets. These sources of cash were partially offset by a $4.7 million increase in inventories due to lower demand during the quarter and a $1.7 million decrease in taxes payable and accrued liabilities.
Cash from Investing Activities
Our investing activities in the three months ended March 31, 2025, generated $4.5 million of cash, primarily consisting of $10.3 million from sales and maturities of marketable securities, net of purchases, offset by $5.7 million for purchases of property and equipment (primarily production-related machinery and equipment).
Our investing activities in the three months ended March 31, 2024 resulted in $0.1 million net use of cash, primarily consisting of $4.3 million used for purchases of property and equipment (primarily production-related machinery and equipment), partially offset by $4.3 million from sales and maturities of marketable securities, net of purchases.
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Cash from Financing Activities
Our financing activities in the three months ended March 31, 2025 resulted in a $32.3 million net use of cash, consisting of $23.1 million for the repurchase of our common stock and $12.0 million for the payment of dividends to stockholders, partially offset by proceeds of $2.8 million from the issuance of shares through our employee stock purchase plan.
Our financing activities in the three months ended March 31, 2024 resulted in a $23.3 million net use of cash, consisting of $14.6 million for the repurchase of our common stock and $11.4 million for the payment of dividends to stockholders, partially offset by proceeds of $2.7 million from the issuance of shares through our employee stock purchase plan.
Dividends
In October 2023, our board of directors declared dividends of $0.20 per share to be paid to stockholders of record at the end of each quarter in 2024.
In October 2024, our board of directors raised the cash dividend with the declaration of five cash dividends of $0.21 per share to be paid at the end of the fourth quarter in 2024 (in lieu of the previously declared dividend of $0.20 per share announced in October 2023) and at the end of each quarter in 2025. A dividend payout of $12.0 million occurred on March 31, 2025.
The declaration of any future cash dividend is at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, business conditions and other factors, as well as a determination that cash dividends are in the best interest of our stockholders.
Stock Repurchases
Over the years, our board of directors have authorized the use of funds to repurchase shares of our common stock. As of December 31, 2024, we had $48.1 million remaining under our stock-repurchase program. In the three months ended March 31, 2025, we repurchased approximately 404,000 shares for $23.1 million, leaving $25.0 million in funds authorized as of March 31, 2025. In April 2025, we utilized the remaining $25.0 million, repurchasing approximately 560,000 shares of our common stock. Subsequently, our board of directors authorized the use of an additional $50.0 million for the repurchase of our common stock, with repurchases to be executed according to pre-defined price/volume guidelines. The program has no expiration date. Authorization of future repurchase programs is at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, business conditions and other factors.
Contractual Commitments
As of March 31, 2025, there were no material changes in our contractual commitments from those reported in our Annual Report on Form 10-K for the year ended December 31, 2024.
Other Information
Our cash, cash equivalents and investment balances may change in future periods due to changes in our planned cash outlays, including changes in incremental costs such as direct and integration costs related to future acquisitions. Current U.S. tax laws generally allow companies to repatriate accumulated foreign earnings without incurring additional U.S. federal taxes. Accordingly, as of March 31, 2025, our worldwide cash and marketable securities are available to fund capital allocation needs, including capital and internal investments, acquisitions, stock repurchases and/or dividends without incurring significant U.S. federal income taxes.
If our operating results deteriorate in future periods, either as a result of a decrease in customer demand or pricing pressures from our customers or our competitors, or for other reasons, our ability to generate positive cash flow from operations may be jeopardized. In that case, we may be forced to use our cash, cash equivalents and short-term investments, use our current financing or seek additional financing from third parties to fund our operations. We believe that cash generated from operations, together with existing sources of liquidity, will satisfy our projected working capital and other cash requirements for at least the next 12 months. Our uses of cash beyond the next 12 months will depend on many factors, including the general economic environment in which we operate and our ability to generate cash flow from operations, which are uncertain but include funding our operations and additional capital expenditures.
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Recent Accounting Pronouncements
Information with respect to this item may be found in Note 2, Significant Accounting Policies and Recent Accounting Pronouncements, in our Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q, which information is incorporated herein by reference.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes to our interest rate risk and foreign currency exchange risk during the first three months of 2025. For a discussion of our exposure to interest rate risk and foreign currency exchange risk, refer to our market risk disclosures set forth in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” of the 2024 Form 10-K.
ITEM 4. CONTROLS AND PROCEDURES
Limitation on Effectiveness of Controls
Any control system, no matter how well designed and operated, can provide only reasonable assurance as to the tested objectives. The design of any control system is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. The inherent limitations in any control system include the realities that judgments related to decision-making can be faulty, and that reduced effectiveness in controls can occur because of simple errors or mistakes. Due to the inherent limitations in a cost-effective control system, misstatements due to error may occur and may not be detected.
Evaluation of Disclosure Controls and Procedures
Management is required to evaluate our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”). Disclosure controls and procedures are controls and other procedures designed to provide reasonable assurance that information required to be disclosed in our reports filed under the Exchange Act, such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to provide reasonable assurance that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer as appropriate to allow timely decisions regarding required disclosure. Based on our management’s evaluation (with the participation of our principal executive officer and principal financial officer), our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective as of the end of the period covered by this report.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended March 31, 2025, that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Information with respect to this item may be found in Note 13, Legal Proceedings and Contingencies, in our Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q, which information is incorporated herein by reference.
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ITEM 1A. RISK FACTORS
Except as discussed below, there have been no material changes to the risks described in Part I Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2024, which risk factors are incorporated herein by reference in this report from Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 7, 2025.
Risks Related to the Operation and Growth of Our Business
Changes in trade policies among the United States and other countries, in particular the escalation and imposition of new and higher tariffs, could reduce demand for end products that incorporate our integrated circuits, which could have a material adverse effect on our revenues and operating results. Further, increased tariffs or the imposition of other barriers to international trade could place pressure on our prices as our customers seek to offset the impact of increased tariffs on their own products.
Although power supplies using our products are designed and distributed worldwide, most of these power supplies are manufactured by our customers in Asia. As a result, our business is subject to risks related to tariffs and other trade protection measures put in place by the United States or other countries, as well as U.S. international trade relations, including but not limited to those with China, countries in the APAC region and the European Union.
In the first quarter of 2025, the United States government announced additional tariffs on goods imported into the U.S. from numerous countries, and multiple countries countered with reciprocal tariffs and other actions in response. Changes in trade policies and a heightened risk of further increased tariffs or other barriers to international trade could further decrease international demand. Many of our customers sell products incorporating our integrated circuits into international markets.
Existing or future tariffs proposed or imposed on our customers’ products may adversely affect our gross profit margins in the future due to the potential for increased pressure on our selling prices by customers seeking to offset the impact of tariffs on their own products. In addition, tariffs could make our customers’ products less attractive relative to products offered by their competitors, which may not be subject to similar tariffs. Further increases in tariffs on imported goods or the failure to resolve current international trade disputes could further decrease demand and have a material adverse effect on our business and operating results.
Resulting trade disputes, trade restrictions, tariffs and other political tensions between the U.S. and other countries may also exacerbate unfavorable macroeconomic conditions including inflationary pressures, foreign exchange volatility, financial market instability, and economic recessions or downturns, which may also negatively impact customer demand for our products or services, delay purchases or renewals, limit expansion opportunities with customers, limit our access to capital, or otherwise negatively affect our business and operations. Ongoing tariff, trade restrictions and macroeconomic uncertainty also has and may continue to contribute to volatility in the price of our common stock.
Furthermore, compliance with export controls and implementation of additional tariffs may increase compliance costs and further affect our business and operating results.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
In the three months ended March 31, 2025, we repurchased approximately 404,000 of our shares for $23.1 million, leaving $25.0 million remaining on the repurchase authorization as of March 31, 2025. In April 2025, we utilized the remaining $25.0 million, repurchasing approximately 560,000 shares of our common stock. Subsequently, our board of directors authorized the use of an additional $50.0 million for the repurchase of our common stock, with repurchases to be executed according to pre-defined price/volume guidelines. The program has no expiration date. Authorization of future repurchase programs is at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, business conditions and other factors.
The following table summarizes repurchases of our common stock made under our publicly announced repurchase program during the first quarter of fiscal 2025:
| | | | | | | | Approximate | ||
| | | | | | | | | Dollar Value that | |
| | | | | | | Total Number of | | May Yet be | |
| | | | | | Shares Purchased | | Repurchased | ||
| | Total | | Average | | as Part of | | Under the | ||
| | Number of | | Price Paid | | Publicly Announced | | Plans or Program | ||
Period |
| Shares Purchased |
| Per Share |
| Plans or Programs |
| (In millions) | ||
January 1, 2025 to January 31, 2025 | | 62,157 | | $ | 60.13 | | 62,157 | | $ | 44.4 |
February 1, 2025 to February 28, 2025 | | 79,947 | | $ | 59.66 | | 79,947 | | $ | 39.6 |
March 1, 2025 to March 31, 2025 | | 261,463 | | $ | 55.81 | | 261,463 | | $ | 25.0 |
Total | | 403,567 | | | | | 403,567 | | | |
ITEM 5. OTHER INFORMATION
Rule 10b5-1 Trading Plans
During the three months ended March 31, 2025,
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ITEM 6. EXHIBITS
| | | | Incorporation by Reference | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
EXHIBIT |
| Exhibit Description | | Form |
| File | | Exhibit/Other Reference | | Filing | | Filed |
| | | | | | | | | | | | |
3.1 | | | 10-K | | 000-23441 | | 3.1 | | 2/29/2012 | | | |
3.2 | | | 8-K | | 000-23441 | | 3.1 | | 4/26/2013 | | | |
10.1 | | | | | | | | | | | X | |
10.2 | | | | | | | | | | | X | |
10.3 | | | | | | | | | | | X | |
10.4 | | | | | | | | | | | X | |
10.5 | | | | | | | | | | | X | |
10.6 | | | | | | | | | | | X | |
10.7 | | | | | | | | | | | X | |
10.8 | | | | | | | | | | | X | |
10.9† | | | | | | | | | | | X | |
10.10† | | | | | | | | | | | X | |
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| | | | Incorporation by Reference | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
EXHIBIT |
| Exhibit Description | | Form |
| File | | Exhibit/Other Reference | | Filing | | Filed |
| | | | | | | | | | | | |
31.1 | | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | | | | | | | | | X |
31.2 | | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | | | | | | | | | X |
32.1** | | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | | | | | | | | | X |
32.2** | | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | | | | | | | | | X |
101.INS | | XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | | | | | | | | | | X |
101.SCH | | Inline XBRL Taxonomy Extension Schema Document | | | | | | | | | | X |
101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document | | | | | | | | | | X |
101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase Document | | | | | | | | | | X |
101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase Document | | | | | | | | | | X |
101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document | | | | | | | | | | X |
104 | | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | | | | | | | | | | |
All references in the table above to previously filed documents or descriptions are incorporating those documents and descriptions by reference thereto.
† | Portions of this exhibit have been omitted as being immaterial and is the type of information that Power Integrations, Inc. treats as private or confidential. |
** | The certifications attached as Exhibits 32.1 and 32.2 accompanying this Quarterly Report on Form 10-Q, are not deemed filed with the SEC, and are not to be incorporated by reference into any filing of Power Integrations, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing. |
34
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | POWER INTEGRATIONS, INC. | |
| | | |
Dated: | May 12, 2025 | By: | /s/ SANDEEP NAYYAR |
| | | Sandeep Nayyar |
| | | Chief Financial Officer |
| | | (Duly Authorized Officer, Principal Financial Officer and Principal Accounting Officer) |
35
Exhibit 10.1
AMENDMENT TO THE
AMENDED AND RESTATED EXECUTIVE OFFICER BENEFITS AGREEMENT
This AMENDMENT TO THE AMENDED AND RESTATED EXECUTIVE OFFICER BENEFITS AGREEMENT (this “Amendment”) is made and entered into as of January 28, 2025 by and between Power Integrations, Inc., a Delaware Corporation (the “Company”) and Balu Balakrishnan (“Executive’’).
RECITALS
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows
| 1. | The following shall be and hereby is added at the end of Section 5(b)(ii) (“Performance Stock Awards”) of the Agreement: |
“; and a Prorated Portion of all shares subject to Performance Stock Awards granted in connection with Executive’s Annual Performance Bonus (i.e., those awards with a performance period not greater than one (1) year) shall vest at such Performance Level as determined by the Board of Directors or Compensation Committee on the date of such determination; and”
[signature page follows]
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date set forth in the first paragraph hereof.
Exhibit 10.2
AMENDMENT TO THE
AMENDED AND RESTATED EXECUTIVE OFFICER BENEFITS AGREEMENT
This AMENDMENT TO THE AMENDED AND RESTATED EXECUTIVE OFFICER BENEFITS AGREEMENT (this “Amendment”) is made and entered into as of January 28, 2025 by and between Power Integrations, Inc., a Delaware Corporation (the “Company”) and Sandeep Nayyar (“Executive’’).
RECITALS
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows
| 1. | The following shall be and hereby is added at the end of Section 5(b)(ii) (“Performance Stock Awards”) of the Agreement: |
“; and a Prorated Portion of all shares subject to Performance Stock Awards granted in connection with Executive’s Annual Performance Bonus (i.e., those awards with a performance period not greater than one (1) year) shall vest at such Performance Level as determined by the Board of Directors or Compensation Committee on the date of such determination; and”
[signature page follows]
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date set forth in the first paragraph hereof.
Exhibit 10.3
AMENDMENT TO THE
AMENDED AND RESTATED EXECUTIVE OFFICER BENEFITS AGREEMENT
This AMENDMENT TO THE AMENDED AND RESTATED EXECUTIVE OFFICER BENEFITS AGREEMENT (this “Amendment”) is made and entered into as of January 28, 2025 by and between Power Integrations, Inc., a Delaware Corporation (the “Company”) and Doug Bailey (“Executive’’).
RECITALS
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows
| 1. | The following shall be and hereby is added at the end of Section 5(b)(ii) (“Performance Stock Awards”) of the Agreement: |
“; and a Prorated Portion of all shares subject to Performance Stock Awards granted in connection with Executive’s Annual Performance Bonus (i.e., those awards with a performance period not greater than one (1) year) shall vest at such Performance Level as determined by the Board of Directors or Compensation Committee on the date of such determination; and”
[signature page follows]
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date set forth in the first paragraph hereof.
Exhibit 10.4
AMENDMENT TO THE
AMENDED AND RESTATED EXECUTIVE OFFICER BENEFITS AGREEMENT
This AMENDMENT TO THE AMENDED AND RESTATED EXECUTIVE OFFICER BENEFITS AGREEMENT (this “Amendment”) is made and entered into as of January 28, 2025 by and between Power Integrations, Inc., a Delaware Corporation (the “Company”) and Radu Barsan (“Executive’’).
RECITALS
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows
| 1. | The following shall be and hereby is added at the end of Section 5(b)(ii) (“Performance Stock Awards”) of the Agreement: |
“; and a Prorated Portion of all shares subject to Performance Stock Awards granted in connection with Executive’s Annual Performance Bonus (i.e., those awards with a performance period not greater than one (1) year) shall vest at such Performance Level as determined by the Board of Directors or Compensation Committee on the date of such determination; and”
[signature page follows]
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date set forth in the first paragraph hereof.
Exhibit 10.5
AMENDMENT TO THE
AMENDED AND RESTATED EXECUTIVE OFFICER BENEFITS AGREEMENT
This AMENDMENT TO THE AMENDED AND RESTATED EXECUTIVE OFFICER BENEFITS AGREEMENT (this “Amendment”) is made and entered into as of January 28, 2025 by and between Power Integrations, Inc., a Delaware Corporation (the “Company”) and Sunil Gupta (“Executive’’).
RECITALS
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows
| 1. | The following shall be and hereby is added at the end of Section 5(b)(ii) (“Performance Stock Awards”) of the Agreement: |
“; and a Prorated Portion of all shares subject to Performance Stock Awards granted in connection with Executive’s Annual Performance Bonus (i.e., those awards with a performance period not greater than one (1) year) shall vest at such Performance Level as determined by the Board of Directors or Compensation Committee on the date of such determination; and”
[signature page follows]
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date set forth in the first paragraph hereof.
Exhibit 10.6
AMENDMENT TO THE
AMENDED AND RESTATED EXECUTIVE OFFICER BENEFITS AGREEMENT
This AMENDMENT TO THE AMENDED AND RESTATED EXECUTIVE OFFICER BENEFITS AGREEMENT (this “Amendment”) is made and entered into as of January 28, 2025 by and between Power Integrations, Inc., a Delaware Corporation (the “Company”) and Clifford J. Walker (“Executive’’).
RECITALS
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows
| 1. | The following shall be and hereby is added at the end of Section 5(b)(ii) (“Performance Stock Awards”) of the Agreement: |
“; and a Prorated Portion of all shares subject to Performance Stock Awards granted in connection with Executive’s Annual Performance Bonus (i.e., those awards with a performance period not greater than one (1) year) shall vest at such Performance Level as determined by the Board of Directors or Compensation Committee on the date of such determination; and”
[signature page follows]
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date set forth in the first paragraph hereof.
Exhibit 10.7
POWER INTEGRATIONS, INC.
EXECUTIVE OFFICER BENEFITS AGREEMENT
This Executive Officer Benefits Agreement (the “Agreement”) is made and entered into as of January 28, 2025 (the “Effective Date”), by and between Power Integrations, Inc., a Delaware corporation, (the “Company”) and Vikram Balakrishnan (“Executive”).
Recitals
A.Executive is an Executive Officer of the Company and possesses valuable knowledge of the Company, its business and operations, and the markets in which the Company competes.
B.The Company draws upon the knowledge, experience and advice of Executive in order to manage its business for the benefit of the Company’s stockholders.
C.The Board of Directors desires to supplement Executive’s employment arrangements so as to provide additional compensation and benefits to the Executive to encourage Executive to continue to devote his attention and dedication to the Company and to create additional incentives to continue his employment with the Company.
Agreement
Therefore, in consideration of the mutual agreements, covenants and considerations contained herein, the undersigned hereby agree and acknowledge as follows:
* * * * *
1
IN WITNESS WHEREOF, the undersigned have executed this EXECUTIVE OFFICER BENEFIT AGREEMENT, intending to be legally bound as of the Effective Date.
COMPANY: | Power Integrations, Inc. By:/s/ BALU BALAKRISHNAN Name: Balu Balakrishnan Title: President and CEO |
EXECUTIVE: | /s/ VIKRAM BALAKRISHNAN Name: Vikram Balakrishnan Title: Vice President, High-Power Gate Drivers & Automotive Address for Notice: Executive’s home address as reflected in the records of the Company |
2
Exhibit A
TERMS OF EXECUTIVE OFFICER BENEFITS AGREEMENT
3
4
5
(A)COBRA Continuation Coverage. Upon the termination of Executive’s active employment with the Company, Executive shall be entitled to elect continued medical and dental insurance coverage in accordance with the applicable provisions of COBRA and the Company shall pay such COBRA premiums.
6
(B)Coverage After COBRA & Prior to Medicare Eligibility. In the event the Executive is not eligible for Medicare coverage at the end of his maximum applicable COBRA coverage period, then, the Executive shall identify and locate either or both an individual conversion policy through the insurer providing insurance coverage in connection with the Company sponsored medical and dental plans available to active employees (the “Conversion Policy”), and/or a supplemental individual policy or an individual policy on the open market (the “Individual Policy”) to be effective upon the termination of his COBRA continuation coverage so that, when the coverages for Executive provided by the Conversion Policy and/or the Individual Policy are combined, such coverages provide substantially similar medical and dental benefits in the aggregate as those provided under the medical and dental plans sponsored by the Company at such time, or at any time after the termination of Executive’s employment, for active employees (the “Comparable Coverage”). The Company shall be responsible for the payment of any Conversion Policy premiums and/or Individual Policy premiums for the Comparable Coverage which payment shall not exceed the cost of premiums for medical and dental coverage for then active employees. If Executive is at such time eligible to participate under the Company Plans, Executive will be entitled to so participate.
(C)Coverage After COBRA & Upon Medicare Eligibility. In the event the Executive is eligible for Medicare coverage at the end of his maximum applicable COBRA coverage period, the Executive may identify and locate a Medicare supplemental policy, which may include, to the extent permitted, the medical and dental plans sponsored by the Company at such time for active employees (the “Company Plans”), that, when combined with the coverage provided by Medicare, provides Comparable Coverage. If Executive is at such time eligible to participate under the Company Plans, Executive will be entitled to so participate; provided that Executive shall be solely responsible for the payment of any Medicare premiums and/or Medical supplemental policy premiums for the Comparable Coverage (including, if applicable, any premiums under the Company Plans).
(D)Taxes, Coverage. The Executive shall be responsible for any taxes that may be attributable to or result from the payments made by the Company in accordance with this Section 5(b)(iii) or receipt of medical and dental benefits attributable to or result from such payments. Notwithstanding Section 5(b)(iii)(A) or (B), in the event Executive becomes eligible to be covered under another employer’s group health plan (other than a plan which imposes a preexisting condition exclusion to the extent permissible by law, unless the preexisting condition exclusion does not apply) during the period provided for herein, the Company shall cease payment of any premiums. The Company will use commercially reasonable efforts to provide that Executive will continue to be eligible for coverage as provided under this Section 5(b)(iii) under the Company Plans, unless the Board of Directors or Compensation Committee determines that such coverage would create an undue burden on the Company.
7
8
9
if to the Company:
Power Integrations, Inc.
5245 Hellyer Avenue
San Jose, California 95138
Attn: Chief Executive Officer or Chief Financial Officer
and if to the Executive, at the address specified in this Agreement. Notice may also be given at such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.
10
11
12
(A)A director of the Company as of January 1, 2013; or
(B)A director who is elected or nominated for election to the Board of Directors of the Company with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company).
13
14
“Termination of Employment” shall not include any termination of the employment of the Executive (a) by the Company for Cause; (b) as a result of Permanent Disability of the Executive; (c) as a result of the death of the Executive; (d) as a result of the voluntary termination of employment by the Executive for reasons other than Good Reason; or (e) a Termination Upon Change of Control.
15
“Termination Upon Change of Control” shall not include any termination of the employment of the Executive (a) by the Company for Cause; (b) as a result of the Permanent Disability of the Executive; (c) as a result of the death of the Executive; or (d) as a result of the voluntary termination of employment by the Executive for reasons other than Good Reason.
* * * * *
16
Exhibit 10.8
POWER INTEGRATIONS, INC.
EXECUTIVE OFFICER BENEFITS AGREEMENT
THIS EXECUTIVE OFFICER BENEFITS AGREEMENT (the “Agreement”) is made and entered into as of January 28, 2025 (the “Effective Date”), by and between POWER INTEGRATIONS, INC., a Delaware corporation, (the “Company”) and Roland Saint-Pierre (“Executive”).
RECITALS
A.Executive is an Executive Officer of the Company and possesses valuable knowledge of the Company, its business and operations, and the markets in which the Company competes.
B.The Company draws upon the knowledge, experience and advice of Executive in order to manage its business for the benefit of the Company’s stockholders.
C.The Board of Directors desires to supplement Executive’s employment arrangements so as to provide additional compensation and benefits to the Executive to encourage Executive to continue to devote his attention and dedication to the Company and to create additional incentives to continue his employment with the Company.
AGREEMENT
THEREFORE, in consideration of the mutual agreements, covenants and considerations contained herein, the undersigned hereby agree and acknowledge as follows:
* * * * *
1
IN WITNESS WHEREOF, the undersigned have executed this EXECUTIVE OFFICER BENEFIT AGREEMENT, intending to be legally bound as of the Effective Date.
COMPANY: | Power Integrations, Inc. By: /s/ BALU BALAKRISHNAN Name: Balu Balakrishnan Title: President and CEO |
EXECUTIVE: | /s/ ROLAND SAINT-PIERRE Name: Roland Saint-Pierre Title: Vice President, Product Development Address for Notice: Executive’s home address as reflected in the records of the Company |
2
Exhibit A
TERMS OF EXECUTIVE OFFICER BENEFITS AGREEMENT
3
4
5
(A)COBRA Continuation Coverage. Upon the termination of Executive’s active employment with the Company, Executive shall be entitled to elect continued medical and dental insurance coverage in accordance with the applicable provisions of COBRA and the Company shall pay such COBRA premiums.
6
(B)Coverage After COBRA & Prior to Medicare Eligibility. In the event the Executive is not eligible for Medicare coverage at the end of his maximum applicable COBRA coverage period, then, the Executive shall identify and locate either or both an individual conversion policy through the insurer providing insurance coverage in connection with the Company sponsored medical and dental plans available to active employees (the “Conversion Policy”), and/or a supplemental individual policy or an individual policy on the open market (the “Individual Policy”) to be effective upon the termination of his COBRA continuation coverage so that, when the coverages for Executive provided by the Conversion Policy and/or the Individual Policy are combined, such coverages provide substantially similar medical and dental benefits in the aggregate as those provided under the medical and dental plans sponsored by the Company at such time, or at any time after the termination of Executive’s employment, for active employees (the “Comparable Coverage”). The Company shall be responsible for the payment of any Conversion Policy premiums and/or Individual Policy premiums for the Comparable Coverage which payment shall not exceed the cost of premiums for medical and dental coverage for then active employees. If Executive is at such time eligible to participate under the Company Plans, Executive will be entitled to so participate.
(C)Coverage After COBRA & Upon Medicare Eligibility. In the event the Executive is eligible for Medicare coverage at the end of his maximum applicable COBRA coverage period, the Executive may identify and locate a Medicare supplemental policy, which may include, to the extent permitted, the medical and dental plans sponsored by the Company at such time for active employees (the “Company Plans”), that, when combined with the coverage provided by Medicare, provides Comparable Coverage. If Executive is at such time eligible to participate under the Company Plans, Executive will be entitled to so participate; provided that Executive shall be solely responsible for the payment of any Medicare premiums and/or Medical supplemental policy premiums for the Comparable Coverage (including, if applicable, any premiums under the Company Plans).
(D)Taxes, Coverage. The Executive shall be responsible for any taxes that may be attributable to or result from the payments made by the Company in accordance with this Section 5(b)(iii) or receipt of medical and dental benefits attributable to or result from such payments. Notwithstanding Section 5(b)(iii)(A) or (B), in the event Executive becomes eligible to be covered under another employer’s group health plan (other than a plan which imposes a preexisting condition exclusion to the extent permissible by law, unless the preexisting condition exclusion does not apply) during the period provided for herein, the Company shall cease payment of any premiums. The Company will use commercially reasonable efforts to provide that Executive will continue to be eligible for coverage as provided under this Section 5(b)(iii) under the Company Plans, unless the Board of Directors or Compensation Committee determines that such coverage would create an undue burden on the Company.
7
8
9
if to the Company:
Power Integrations, Inc.
5245 Hellyer Avenue
San Jose, California 95138
Attn: Chief Executive Officer or Chief Financial Officer
and if to the Executive, at the address specified in this Agreement. Notice may also be given at such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.
10
11
12
(A)A director of the Company as of January 1, 2013; or
(B)A director who is elected or nominated for election to the Board of Directors of the Company with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company).
13
14
“Termination of Employment” shall not include any termination of the employment of the Executive (a) by the Company for Cause; (b) as a result of Permanent Disability of the Executive; (c) as a result of the death of the Executive; (d) as a result of the voluntary termination of employment by the Executive for reasons other than Good Reason; or (e) a Termination Upon Change of Control.
15
“Termination Upon Change of Control” shall not include any termination of the employment of the Executive (a) by the Company for Cause; (b) as a result of the Permanent Disability of the Executive; (c) as a result of the death of the Executive; or (d) as a result of the voluntary termination of employment by the Executive for reasons other than Good Reason.
* * * * *
16
Exhibit 10.9
CERTAIN IDENTIFIED INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS THE TYPE OF INFORMATION THAT POWER INTEGRATIONS, INC. TREATS AS PRIVATE OR CONFIDENTIAL.
AMENDMENT NUMBER FOURTEEN TO
WAFER SUPPLY AGREEMENT
This Amendment Number Fourteen (the "Amendment"), is effective as of September 16, 2024 (the "Amendment Effective Date"), and amends the Amended and Restated Wafer Supply Agreement that is effective as of April 1, 2003, as further amended by Amendment Number One that is effective as of August 11, 2004, Amendment Number Two, that is effective as of April 1, 2008, Amendment Number Three, that is effective as of June 9, 2008, Amendment Number Four, that is effective as of June 13, 2008, Amendment Number Five that is effective as of November 14, 2008, Amendment Number Six that is effective as of November 1, 2015, Amendment Number Seven that is effective as of August 8, 2016, Amendment Number Eight that is effective as of July 26, 2017, Amendment Number Nine that is effective as of February 6, 2019, amendment Number 10 that is effective as of December 16, 2019, Amendment Number Eleven that is effective as of December 20, 2019, Amendment Number Twelve that is effective as of September 17, 2020 and Amendment Number Thirteen that is effective as of February 17, 2022 (the "Agreement"), by and between Lapis Semiconductor Co., Ltd., a Japanese corporation having its registered head office at 2-4-8 Shinyokohama, Kouhoku-ku Yokohama 222-8575 Japan (“LAPIS”), and Power Integrations, Ltd. d.b.a. Power Integrations International, Ltd. ("PI") a Cayman Islands corporation having its principal place of business at 4th Floor, Century Yard, Cricket Square, Elgin Avenue, P.O. Box 32322, Grand Cayman K Y 1-1209. Unless specifically designated otherwise, capitalized terms used herein shall have the same meanings given them in the Agreement.
RECITALS
WHEREAS, pursuant to the terms of the Agreement, PI grants to LAPIS licenses of certain of PI INTELLECTUAL PROPERTY for the sole purpose of PI acquiring from LAPIS the [***] of certain [***] products; and
WHEREAS, PI and LAPIS desire to amend the terms of the Agreement; and
1
WHEREAS, in accordance with Section 18.10 of the Agreement, the Agreement may be amended only by an instrument in writing duly executed by authorized representatives of LAPIS and PI.
Now, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby amend the Agreement as follows:
AGREEMENT
| 1. | Delete Section 24.7.2 and substitute therefor: |
24.7.2 The monthly commitment as defined in Article 2.2 of the WSA, to manufacture ([***] and [***]) at [***] shall [***], at maximum. Any changes to the maximum capacity must be agreed in writing by both parties. Any provisions of Article 2.2 of the WSA that conflict with this provision shall not apply after the Amendment Effective Date.
Effective as of the Amendment Effective Date, all references in the Agreement to "the Agreement" or "this Agreement" shall mean the Agreement as amended by this Amendment. Except as expressly amended herein, the terms of the Agreement continue unchanged and shall remain in full force and effect. This Amendment may be executed in one or more counterparts, each of which shall be considered an original, but all of which counterparts together shall constitute one and the same instrument.
[Signatures appear on the next page.]
2
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their duly authorized representatives, effective as of the Amendment Effective Date,
LAPIS SEMICONDUCTOR CO., LTD. | | POWER INTEGRATIONS, LTD. d.b.a. POWER INTEGRATIONS INTERNATIONAL, LTD. | ||
Signature: | /s/ Kazumasa Wakuno | | Signature: | /s/ Sunil Gupta |
Name: | Kazumasa Wakuno | | Name: | Sunil Gupta |
Title: | President | | Title: | President |
Date: | 1/19/2025 | | Date: | 1/7/2025 |
3
Exhibit 10.10
CERTAIN IDENTIFIED INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS THE TYPE OF INFORMATION THAT POWER INTEGRATIONS, INC. TREATS AS PRIVATE OR CONFIDENTIAL.
AMENDMENT NUMBER THIRTEEN TO WAFER SUPPLY AGREEMENT
This Amendment Number Thirteen[***]mendment"), effective as of March 26, 2025 (the "Amendment Effective Date"), amends the Wafer Supply Agreement effective April 1, 2005, as amended by Amendment Number One effective December 19, 2008, Amendment Number Two effective September 13, 2010, Amendment Number Three effective February 1, 2012, Amendment Number Four effective April 1, 2015, Amendment Number Five effective November 2, 2015, Amendment Number Six effective December 8, 2015, Amendment Number Seven effective October 3, 2016, Amendment Number Eight effective November 8, 2016, Amendment Number Nine effective as of October 1, 2017, Amendment Number Ten effective April 26, 2020 (the "Agreement"'), Amendment Number Eleven effective September 16, 2022 and Amendment Number Twelve effective February 26, 2024 (the "Agreement"') by and between:
POWER INTEGRATIONS, LTD. d.b.a. POWER INTEGRATIONS INTERNATIONAL, LTD., a Cayman Islands corporation having a place of business at, P.O. Box 32322, 4th Floor, Century Yard, Cricket Square, Elgin Avenue, George Town, Grand Cayman, Cayman Islands ("POWER INTEGRATIONS")
and
SElKO EPSON CORPORATION, a Japanese corporation having a place of business at 281 Fujimi, Fujimi-machi, Suwa-gun, Nagano-ken, 399-0293 Japan ("SEIKO EPSON").
RECITALS
WHEREAS, pursuant to the terms of the Agreement, PI grants to SEIKO EPSON licenses of certain of PI INTELLECTUAL PROPERTY for the sole purpose of POWER INTEGRATIONS acquiring from SEIKO EPSON the fabrication and supply of WAFERS of certain power IC products; and
WHEREAS, POWER INTEGRATIONS and SEIKO EPSON desire to amend the terms of the Agreement; and
WHEREAS, in accordance with Section 18.10 of the Agreement, the Agreement may be amended only by an instrument in writing duly executed by authorized representatives of SEIKO EPSON and POWER INTEGRATIONS.
Now, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby amend the Agreement as follows:
1
AGREEMENT
1.In Section 3.4 of the Agreement, delete “Epson Electronics America, Inc., 150 River Oaks Parkway, San Jose, CA 95134 (EEA)” and substitute therefor “Seiko Epson Corporation, 281 Fujimi, Fujimi-machi, Suwa-gun, Nagano-ken, 399-0293 Japan” on and after April 1st, 2025.
2.Section 13.1 of the Agreement is deleted in its entirety and replaced with the following:
13.1This Agreement shall continue in full force and effect from the Effective Date until [***], unless earlier terminated as provided herein ("Term"). If either party needs to terminate this Agreement for any reason after [***], the terminating party shall notify the other party without delay and Seiko Epson and POWER INTEGRATIONS shall discuss the termination and the schedule, etc. in good faith, provided however, that:
(1)the termination date, as it applies to [***] wafer production and [***] ([***]) inch [***] production, shall require [***] ([***]) months prior written notice to POWER INTEGRATIONS; and
(2)the termination date, as it applies to [***] ([***]) inch [***] production, shall require [***] ([***]) months prior written notice to POWER INTEGRATIONS. Notwithstanding the foregoing, if the total number of [***] fall below [***]/month for [***] ([***]) consecutive months, [***] ([***]) months prior written notice to POWER INTEGRATIONS shall be allowed to Seiko Epson.
If this Agreement has not been earlier terminated, the parties agree to negotiate in good faith beginning [***] prior to the end of the Term, for this Agreement’s continuation for another [***] period, on mutually agreeable terms and conditions.
2.Add the following new Section to Exhibit F.
1.12POWER INTEGRATIONS will pay SEIKO EPSON [***] fee of [***]Japanese Yen [***]¥) for modifications to [***] and [***] by the end of [***] fee to be paid in accordance with the [***] Disbursement Table set forth in Addendum 1 to this Exhibit F. The work will be performed in [***]. POWER INTEGRATIONS is not obligated to pay [***]. In consideration for the [***] fee, SEIKO EPSON will increase capacity of PI [***]from [***] per month to [***] per month no later than [***]. The [***] wafers per month number will include all [***] processes. The [***] will be PI INTELLECTUAL PROPERTY. Use of the [***] is irrevocably and indefinitely not limited to use for POWER INTEGRATIONS only, as long as capacity for PI [***] is not negatively impacted.
Effective as of the Amendment Effective Date, all references in the Agreement to "the Agreement" or "this Agreement" shall mean the Agreement as amended by this Amendment. Except as expressly amended herein, the terms of the Agreement continue unchanged and shall remain in full force and effect. This Amendment may be executed in one or more counterparts, each of which shall be considered an original, but all of which counterparts together shall constitute one and the same instrument.
2
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their duly authorized representatives, effective as of the Amendment Effective Date,
SEIKO EPSON CORPORATION | | POWER INTEGRATIONS, LTD. d.b.a. POWER INTEGRATIONS INTERNATIONAL, LTD. | ||
Signature: | /s/ Norimatsu Tsutomu | Signature: | /s/ Sunil Gupta | |
Name: | Norimatsu Tsutomu | Name: | Sunil Gupta | |
Title: | Chief Operating Officer | Title: | President | |
Date: | 2025-04-11 | Date: | 2025-04-11 | |
3
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Balu Balakrishnan certify that:
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Sandeep Nayyar, certify that:
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Power Integrations, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Balu Balakrishnan, Chief Executive Officer of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”), certify to the best of my knowledge that:
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Power Integrations, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Sandeep Nayyar, Chief Financial Officer of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”), certify to the best of my knowledge that:
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.