Power Integrations, Inc. (POWI) | The Buildout — AI Infrastructure
The Verdict
Power Integrations sells analog and mixed-signal chips that convert high-voltage electricity to the voltages electronics need. Its parts bundle a high-voltage transistor, drivers, and control circuitry into a single package — a "system-level" approach the company says replaces a multi-component subsystem. For AI, the exposure is to the power around data centers: auxiliary power supplies inside servers, the higher-voltage conversion a rack needs as architectures move to 800V DC, and the grid equipment feeding it. Management describes POWI as "a pure-play high-voltage company" built on two technology pillars, PowiGaN switches and SCALE gate drivers.
| Market Cap | — |
| Revenue (TTM) | $449M |
| Revenue Growth | +1.6% |
| EBITDA Margin (TTM) | 13.8% |
| Net Cash | $263M |
| Earnings Beats | 7 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- The data-center opportunity is now sized: management estimates its data-center SAM will exceed $1B by 2030, including both rack and grid applications.
- Industrial revenue rose 23% year over year in Q1 2026 and reached 41% of revenue, up from 34% a year earlier.
- PowiGaN revenue grew more than 40% in 2025 — the GaN franchise is already a revenue business, not just a pipeline.
- NVIDIA is a named collaborator for 1,250V and 1,700V GaN in forthcoming 800V DC architectures, and Kyber 800 VDC auxiliary power reference designs were published in June 2026.
- Management says the company is in production or design engagements with 17 of the top 20 EV manufacturers, and it targets $100M of automotive revenue by 2029.
What We’re Watching
- The most valuable revenue is years out. Management says the high-voltage main-power opportunity is "not next year… in a couple of years," and calls data center "probably our longest-term play."
- Concentration is extreme: one customer was ~30% of Q1 2026 revenue and receivables, and the top ten were ~80% of revenue.
- Inventory runs above target: 292 days on hand versus a below-200 goal, and channel inventory at 8.9 weeks versus an 8-week target (Q1 2026 figures).
- The 800V socket is contested before volume. The source's neighbor read flags Monolithic Power sampling 800V AC-DC (using SiC) and Navitas targeting GaN 800V ramps in 2027.
The thesis reads as intact but slow-moving. The near-term business is executing — Industrial is growing, gross margin recovered sequentially, and the latest quarter's revenue landed within the range management guided — while the multi-year promises around data center and automotive keep being pushed to the right. Management is quantifying more than before, and the company has beaten analyst earnings expectations in 7 of 7 tracked quarters, but no data-center revenue is yet visible in any reported segment. The open question is whether the high-voltage sockets POWI is designing into convert to production before rivals reach the same socket.
Earnings Beat
Revenue was $118.9M in the quarter ended June 30, 2026, up 9.8% sequentially and 2.6% from a year earlier. Gross margin came in at 54.3%, up from 52.6% in the prior quarter. The revenue figure sits within the $115M–$120M range management guided in May 2026. Free cash flow was $17.7M.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $119M | $108M | $116M | +2.6% |
| Gross margin | 54.3% | 52.6% | 55.2% | -90bps |
| EBITDA | $15M | $13M | $6M | +159.3% |
| EPS | $0.18 | $0.06 | $0.02 | +623.1% |
we've seen an increase in order activity since our last earnings call, and we're forecasting seasonally higher revenue in the second quarter, along with higher gross margin.— Jen Lloyd, Chief Executive Officer, May 9, 2026
Management tone: On the most recent call in the source material (May 2026), management led with improved order activity and a seasonally higher forecast. It quantified the data-center opportunity for the first time while repeating that main-power revenue is "a couple of years" out. Management acknowledged the automotive market has been slow and that revenue would push out, while holding the doubling claim and the 2029 target. It was candid about inventory, giving exact weeks and days and conceding both are above target, and about the roughly one-year lag between yen moves and the P&L. New CFO Nancy Erba emphasized operating discipline, and OpEx came in below the guided range.
Management Guidance
On the May 2026 call, management guided Q2 2026 revenue to $115M–$120M, about 8.5% higher sequentially at the midpoint, with non-GAAP gross margin of 54%–55% (roughly 100 basis points above Q1) and non-GAAP operating margin of 13.5%–15.5%. Non-GAAP OpEx was guided to $47M ±$0.5M, reflecting annual merit increases that took effect in April. Management said second-half OpEx would stay roughly flat with the Q2 run rate and full-year 2026 OpEx would grow at a low single-digit rate. CapEx for 2026 was set at 5%–6% of revenue, weighted to the second half. Longer term, the company targets OpEx growing at less than half the rate of revenue.
Trajectory
Revenue has turned back up. After a soft December 2025 quarter of $103M — down 13% sequentially as the channel was deliberately worked down — revenue was $108M in March 2026 and $119M in June 2026, up 9.8% sequentially. That matches the $119M level of the September 2025 quarter. Reported gross margin is roughly flat across these periods, while the trailing figures show operating and EBITDA margins compressing. Industrial has been the growth engine, up 23% year over year in the March 2026 quarter, while consumer, communications, and computer move with seasonality. Year over year, June revenue was up 2.6%.
The Model
The model projects FY+1 revenue of $475.2M and EBITDA of $64M, a 13.5% margin, rising to FY+2 revenue of $527.0M and EBITDA of $82M, a 15.5% margin. The near term rests on the Industrial franchise and the seasonal recovery in communications and computer, with gross margin guided higher. The FY+2 step-up would depend on the data-center and automotive design wins management says are years out beginning to convert, and on operating leverage following from OpEx growing more slowly than revenue.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $444M | $475M | $527M |
| YoY Growth | — | +7.1% | +10.9% |
| EBITDA | $54M | $64M | $82M |
| EBITDA Margin | 12.2% | 13.5% | 15.5% |
Projections are the median of 5 independent model runs. The model’s revenue sits 3.6% below analyst consensus.
On the May 2026 call, management guided Q2 2026 revenue to $115M–$120M, about 8.5% higher sequentially at the midpoint, with non-GAAP gross margin of 54%–55% (roughly 100 basis points above Q1) and non-GAAP operating margin of 13.5%–15.5%. Non-GAAP OpEx was guided to $47M ±$0.5M, reflecting annual merit increases that took effect in April. Management said second-half OpEx would stay roughly flat with the Q2 run rate and full-year 2026 OpEx would grow at a low single-digit rate. CapEx for 2026 was set at 5%–6% of revenue, weighted to the second half. Longer term, the company targets OpEx growing at less than half the rate of revenue.
What Could Go Right — and Wrong
- Named 800V DC or Kyber design wins convert to production sockets, turning part of the >$1B 2030 data-center SAM into revenue.
- Industrial keeps growing sequentially, with high-power renewables, storage, and HVDC sustaining the mix.
- Automotive revenue doubles in 2026 as management claims, building toward the $100M 2029 target.
- Inventory falls below 200 days and channel inventory reaches ~8 weeks, releasing cash and confirming demand absorption.
- 2,200V GaN moves from demonstration to qualification or design wins, extending the high-voltage lead.
- The 800V data-center ramp slips beyond "a couple of years," deferring the >$1B 2030 SAM further.
- A competitor takes the 800V socket — Monolithic Power is already sampling 800V AC-DC, and Navitas points to GaN 800V ramps in 2027.
- The top customer (~30% of revenue) reduces orders, moving the whole revenue line.
- Consumer and major-appliance weakness persists, stalling the sequential recovery management guided as "flattish."
- Inventory stays above target and OpEx growth outpaces revenue, weakening the operating-leverage case.
Looking Ahead
Over the next 12 months the story turns on whether design wins convert. Management expects TinySwitch-5 designs to ramp in H2 2026, automotive revenue to double this year, and inventory to exit 2026 near target. The higher-value sockets are later: management puts the high-voltage main-power opportunity "in a couple of years" and calls data center its longest-term play. The near term is governed by Industrial strength, the seasonal recovery in communications and computer, and the company's discipline on operating expenses.
- H2 2026TinySwitch-5 ramp — Tests whether design wins convert to production on schedule.
- 2026Automotive doubling — Tests management's claim of doubling automotive revenue this year.
- 2026Inventory to target — Tests channel toward ~8 weeks and days on hand toward below 200.
- 2026CapEx step-up — Tests spending at 5%–6% of revenue, weighted to the second half.
- 2029Automotive $100M target — Long-dated goal for automotive revenue.
- 2030Data-center SAM >$1B — Management's estimate for rack and grid applications combined.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $419M | $444M | $449M | +5.9% |
| Gross Margin | 53.5% | 54.5% | 53.6% | +90bps |
| EBITDA | $52M | $54M | $62M | +2.9% |
| EBITDA Margin | 12.5% | 12.2% | 13.8% | 36bps |
| Net Income | $32M | $22M | $25M | -31.4% |
| Free Cash Flow | $64M | $87M | $79M | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)53.6%
- EBITDA Margin (TTM)13.8%
- Net Margin (TTM)5.6%
- ROIC6.7%
- FCF Conversion127.6%
- SBC / Revenue8.6%
The Company
Power Integrations designs analog and mixed-signal integrated circuits for high-voltage power conversion. Its products convert electricity from a high-voltage source to the voltage a downstream device needs. The company's approach is to integrate a high-voltage transistor, drivers, advanced control circuitry, and sometimes a communication link into a single package — a "system-level" part that replaces what would otherwise be a multi-component subsystem. Its product families span AC-DC conversion (TOPSwitch, TinySwitch, LinkSwitch, Hiper, InnoSwitch, InnoMux), motor drive (BridgeSwitch), high-voltage gate drivers (SCALE), and energy-saving ICs (CapZero, SenZero).
POWI is fab-lite. It contracts three foundries — Lapis Semiconductor, Seiko Epson, and X-FAB — for the vast majority of its silicon wafers, and its 10-K warns that a serious disruption at any of them could harm the business. The company owns its San Jose, California headquarters, which houses executive, administrative, manufacturing, and technical offices, plus a New Jersey R&D facility, and it runs a design center in Germany and an office in Switzerland. Sales run mostly through distribution — about 71% of Q1 2026 revenue — with the rest direct to OEMs and contract manufacturers. Roughly 46% of Q1 2026 revenue came from Hong Kong/China.
Business Segments
Competitive Landscape
POWI competes across three product areas. In PWM-controller chips it names NXP, Texas Instruments, Diodes, On-Bright Electronics, MediaTek, and Renesas, plus a growing set of Chinese suppliers including Southchip, Chipown, and Hangzhou Silan. In gate drivers it names Infineon, Mitsubishi Electric, Fuji Electric, Semikron, and Hangzhou Firstack. In motor-driver ICs it names ON Semiconductor, Infineon, STMicroelectronics, Mitsubishi, and Sanken. Its claim to differentiation rests on system-level integration and the two named technology pillars, PowiGaN and SCALE gate drivers. In the high-voltage data-center socket, the source's neighbor read finds competitors moving early: Monolithic Power is sampling 800V AC-DC using SiC, and Navitas points to GaN 800V ramps in 2027.
- Texas InstrumentsNamed in POWI's 10-K as a PWM-controller competitor.
- InfineonNamed in POWI's 10-K in both the gate-driver and motor-driver competitor lists.
- ON SemiconductorNamed in POWI's 10-K as a motor-driver competitor.
- NavitasNot named in POWI's filings. The source's neighbor read says Navitas targets GaN 800V ramps in 2027 and is moving to GlobalFoundries 8-inch GaN.
- Monolithic PowerNot named in POWI's filings. The source's neighbor read says it competes in cloud/data-center power and is sampling 800V AC-DC using SiC.
Supply Chain
POWI sits upstream in the AI power chain, supplying high-voltage conversion and gate-driver chips. It is fab-lite, buying wafers from three named foundries and selling mostly through distributors. No neighbor in the source material names POWI by name.