Power Integrations, Inc. · Rapid charging for mobile‐device market LED lighting Home & building...

Power Integrations, Inc.Nasdaq: POWI

December 2018

Forward‐Looking Statements/Non‐GAAP MetricsThese slides accompany an oral presentation by Power Integrations, Inc., which contains forward‐looking statements. Each statement relating to events that will or may occur in the future is a forward‐looking statement. The Company’s actual results may differ materially from those suggested in the presentation. Information concerning factors that could cause such a difference is contained in the Company’s most recent report on Form 10‐K.

This presentation may also contain certain non‐GAAP financial information. Reconciliations of non‐GAAP financial metrics to GAAP results are available on the investor page of the Power Integrations website, http://investors.power.com.

©2018 Power Integrations | www.power.com 2

Technology leader in ICs for energy‐efficient AC‐DC power supplies

High‐efficiency driver ICs energizingthe LED‐lighting revolution

Reliable gate drivers for vital systems when safety is paramount

High‐Voltage ICs for Production, Transmission and Efficient Consumption of Power

3©2018 Power Integrations | www.power.com

Comprehensive Expertise in High‐Voltage


Ultra‐simple power convertersFewer componentsShorter design cyclesEasier to manufactureHigher reliability

BOM cost similar to discrete designs

Highly energy‐efficient

Long‐Term Secular Growth DriversOngoing transition to IC‐based power supplies

Integration saves labor and materials, improves reliability

Energy‐efficient electronics & appliancesDriven by standards and consumer awareness

Expanding market opportunity – SAM has doubled since 2010Rapid charging for mobile‐device marketLED lightingHome & building automation / smart lighting and appliances / IoTBattery‐powered tools, e‐bikes, electric transportationSCALE‐iDriver™ doubles SAM for high‐power business to $1B


The Power Integrations Advantage


Conventional Phone Charger ‐ More than 60 Components

EMI filter and bridge rectifier Isolation transformer Synchronous rectification

Output current and voltage control

Opto‐coupler feedback

Switching MOSFET and current sense

The Power Integrations Advantage


Phone‐charger Power Supply Using InnoSwitch‐CH – only 24 parts

InnoSwitch™ • Switching MOSFET• Current sense• FluxLink™ replaces opto‐coupler• Synchronous rectification driver• Output current and voltage control

InnoSwitch™: A New Level of IntegrationFirst IC to integrate primary and secondary sides of power supply across safety barrier

Enabled by FluxLink™ technology

Enables drastic reduction in component count, complexityHighly energy‐efficient

Very high efficiencyVery low standby consumption


SecondaryPrimary

65 W adapter with discretes: 72 components, two heatsinks, 144 cm3

65 W adapter with POWI InnoSwitch™3 39 components, no heatsinks, 59 cm3

Highly Integrated Power Converters Replace Legacy Technologies


Radically Simplifying Power SuppliesHiperPFS™, HiperLCS™ / HiperTFS™ ICs replace up to 100 components


HiperPFS , HiperLCS / HiperTFS

Power Everywhere – A Vast Addressable Market


Addressable Market Now Exceeds $3B

Consumer

CommsComputer

Industrial

High‐power applications in red

● Desktop/server standby● Desktop main● Notebook adapters● LCD monitors● Printers

● LED lighting● Home/building automation● Smart meters ● Industrial controls● Battery‐powered tools● UPS● Industrial motor drives●Wind/solar inverters● Electric trains/buses● DC transmission●Medical

●White goods● Air conditioners● TV standby / TV main● Small appliances● Set‐top boxes● DVD players● Game consoles

●Mobile phone chargers● Cordless phone adapters● Broadband modems● VoIP phones●Wireless routers


Recognized Leader in Clean TechnologyMember of clean‐tech stock indices

The Cleantech Index (CTIUS)Nasdaq Clean Edge Green Energy (CELS)Ardour Global Index (AGIGL)

Twice named a top 20 sustainable stockby SustainableBusiness.com

ENERGY STAR® award recipient

Star of Energy Efficiency award recipient


EcoSmart Technology Saves Energy

14

>12 billion EcoSmartchips sold since 1998

Over 100B kWh of standby energy saved

$10B at $0.10/kWh

Millions of tons of CO2

emissions averted

©2018 Power Integrations | www.power.com

Energy Specs Continue to TightenU.S. Dept. of Energy tightened federal standards for external power supplies effective 2016

ENERGY STAR® “Most Efficient” label rewards top performers

SEAD competition recognizes most efficient TVs

European standby power limitation tightened to 0.5 W in 2013; further tightening under discussion

Traditional incandescent bulbs banned in U.S.


“Zero” Series Eliminates WasteLinkZero™ cuts waste to 0.00 W in chargers and auxiliary power supplies

CAPZero™ removes waste from X‐cap bleed resistors

SENZero™ disconnects sense resistors in main power supply


Energy Vampire vs. LinkZero™


Technology Trends Bring SAM ExpansionRapid charging for mobile‐device market

Faster chargers = higher power = greater dollar contentHigher power requires higher efficiency, more integration

LED lightingSolid‐state lighting requires AC‐DC converters (LED drivers)

Home & building automation / smart lighting and appliances / IoTSmarter homes and appliances = more power needed = greater POWI dollar content

Electrification creating new opportunities in tools, transportationLithium‐ion batteries replacing gas and plug‐in electric in lawn equipment, vacuumsElectric locomotives, buses, delivery vehicles, etc.SCALE‐iDriver™ now AEC‐Q100 qualified for automotive use


Rapid Charging – Important Trend in Mobility More power needed to charge bigger batteries fasterDemands ICs with high integration and maximum efficiencyInnoSwitch™ + ChiPhy™ Interface Chip = More POWI content


ConventionalCharging

With PI chipset

InnoSwitch3‐Pro: Digitally Programmable Power Conversion

20©2018 Power Integrations | www.power.com UNDER EMBARGO UNTIL MARCH 6TH

I2CAC Line Input

Micro‐controllerMicro‐

controller

Constant Current

Constant Voltage

Constant Power

Advanced control engine with digital interface (I2C) Output voltage and current control ‐ CV/CC/CP output characteristicConfigurable protection ‐ enable/disable, shutdown/auto‐restart, trigger‐points

Traditional light sources phasing outLEDs need efficient, reliable AC‐DC driversIntegration brings reliability, efficiency, size advantage

LYTSwitch™ for Solid‐State Lighting


Increasing IoT Footprint


Connected Power Strips / U Sockets

Connected smoke alarms, occupancy sensors, smart lighting


Gate Drivers for High‐Power MarketAcquired CT‐Concept in 2012 Addressing applications 10 kW to 1 GW

High‐efficiency industrial motors, renewable energy, electric transportation, DC transmission

New SCALE‐iDriver™ expands addressable market from ~$500M to ~$1B Now ~10% of POWI revenues

SCALE™ drivers reduce component count, enhance efficiency, reliability

Serving the Clean‐Power Ecosystem

Power Semiconductors

High‐voltage switches arranged to increase power capability

Driver optimizes efficiency, operating

performance and lifespan


Energy Ecosystem End Markets

Energy Generation

Energy Transmission

Energy Consumption

Wind TurbinesSolar Power

HVDC Transmission

Motor ControlHEV/EV

LocomotiveMedical

Gate Driver ModuleDriver


SCALE‐iDriver™ with FluxLink™Introduced in 2016; key synergy of Concept acquisitionFluxLink provides isolation without opto‐couplersAdds ~$500M to addressable market

IGBT1

IGBT2

Input (PWM)

Fault

Primary(high‐voltage)

Secondary(low‐voltage)

SCALE‐iDriver Applications: 10‐100 KW


Solar

Motor Drives MedicalUPS

Welding / Cutting Commercial Vehicles, Automotive (EV Drive Train & Chargers)

SCALE‐iDriver for Electric Vehicles

27

For drivetrain, DC‐DC and charging applications

Reliability, safety, efficiency critical for auto market

Significant dollar content


Expanded Power Range = Larger SAM

0W 500W5W 50W2W 20W 200W

TOPSwitch™

TinySwitch™ / InnoSwitch™3

LinkSwitch™ / InnoSwitch

LED Driver Products – LYTSwitch™


AC/DC

LED

IGBT

10 kW 100 kW 1 GW100W

Hiper™ FamilyCAPZero™ / SENZero™

Qspeed

SCALE‐iDriver™+ SCALE™‐2

Global PresenceHeadquarters in San José, CaliforniaDesign centers in Canada, Switzerland, UK, Germany19 field labs worldwide


Assembly Subcontractor Wafer Foundry (Lapis, EPSON, X‐FAB)

PI Locations

Target Financial ModelDouble‐digit revenue growth

11% growth in 2017

Non‐GAAP gross margin 50‐55% 50.7% in 2017

Non‐GAAP operating margin 20%+20.4% in 2017

Non‐GAAP tax rate 7‐8%4.9% in 2017; increase for 2018 driven by tax legislation


Note: Non‐GAAP results exclude amortization of acquisition‐related intangible assets and stock‐based compensation expenses

0

50

100

150

200

250

300

350

400

450

2001 2005 2009 2013 2017

Revenu

es ($

M)


Track Record of Growth

31

Note: Revenues prior to 2017 do not reflect ASC 606 recast; see company website for recast financial data for 2015‐2016

Well‐Diversified Revenue Mix

23%Computer

43%Comms

2002 2017

24%Comms

38%Consumer

33%Industrial

5%Computer

Higher‐margin industrial & consumer markets now >70% of revenues

24%Consumer

9%Industrial


Strong Cash Flow

13% 14% 10%

16%

12%

24%

18% 20%

22%

11%

0

10

20

30

40

50

60

70

80

90

100

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Cash flow from operations CAPEX FCF (with FCF Margin)$M

One‐time tax payment


FCF = Cash flow from operations less capital expenditures

Cash‐rich Business Model

Effective Tax Strategy

Healthy Balance Sheet, Domestic Cash Resources

Accelerated Internal Investment

Targeted M&A

Opportunistic Buybacks

Dividends

Four‐Prong Approach to Capital Management


Strong Balance Sheet

15

20

25

30

35

Q3'08 Q1'11 Q3'13 Q1'16 Q3'18

Diluted Shares Outstanding (M)

At September 30, 2018

$248M cash and investments$116M for Concept acquisition (2012)

No debt

Quarterly dividend of $0.16/share

Share count down 8% since 2008 on stock buybacks

050

100150200250300

Q3'08 Q1'11 Q3'13 Q1'16 Q3'18

Cash and Investments ($M)


Secular Growth Story in Analog SemisLeading innovator in high‐voltage power conversionClean‐tech enabler

Efficient appliances, LED lightingIndustrial DC motor drivesRenewable energy Electric transportation

Expanding market opportunityRapid charging for mobile devicesConnected appliances / smart‐home / IoTBattery‐driven tools, e‐bikesGate drivers for high‐power applications


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