Power Integrations NASDAQ: POWI reported first-quarter revenue of $108.3 million, up 3% from a year earlier and 5% sequentially, as growth in industrial markets offset weaker year-over-year consumer sales tied to last year’s appliance-related inventory pull-ins.
CEO Jen Lloyd said the company delivered a “solid start to the year,” with non-GAAP earnings of $0.25 per diluted share. Industrial revenue was again the primary growth driver, rising 23% year over year and 15% from the fourth quarter. Consumer revenue increased 17% sequentially as appliance inventory built ahead of tariffs appeared to have cleared, but remained down from an unusually strong prior-year quarter.
“Looking ahead, while visibility is somewhat hampered by the ongoing macro uncertainty, we’ve seen an increase in order activity since our last earnings call,” Lloyd said, adding that the company expects seasonally higher second-quarter revenue and higher gross margin.
Second-Quarter Outlook Calls for Sequential Growth
CFO Nancy Erba said Power Integrations expects second-quarter revenue of $115 million to $120 million, representing an 8.5% sequential increase at the midpoint. Communications and computer markets are expected to show the largest percentage increases after seasonal weakness in the first quarter, while industrial revenue is also expected to rise.
Consumer revenue is expected to be “flat to slightly up,” Erba said during the Q&A session, with normal air-conditioning seasonality offset by continued weakness in major appliances.
The company guided for non-GAAP gross margin of 54% to 55% in the second quarter, up from 53.5% in the first quarter. Erba said the expected improvement reflects manufacturing efficiencies, volume-related benefits from higher revenue and the dollar-yen exchange rate. Non-GAAP operating expenses are expected to be about $47 million, plus or minus $500,000, mainly due to annual merit increases that took effect in April.
Erba said non-GAAP operating margin is expected to be between 13.5% and 15.5% in the second quarter. She added that operating expenses in the second half are expected to remain roughly flat with the second-quarter run rate, putting the company on track for low single-digit expense growth in 2026.
Industrial, Automotive and Data Center Remain Strategic Priorities
Lloyd said Power Integrations is making progress on strategic priorities including customer centricity, faster time to market and operational efficiency. The company recently appointed Mike Balow as senior vice president of worldwide sales. Lloyd said Balow, who previously led sales organizations at onsemi, Infineon and Cypress, is expected to help strengthen customer relationships and expand the company’s reach in markets such as data center and automotive.
The company highlighted new product momentum from TinySwitch-5 and TOPSwitchGaN. Lloyd said TinySwitch-5 has a range of designs set to ramp in the second half, while TOPSwitchGaN, introduced at the APEC show in March, is expected to broaden the reach of the company’s flyback architecture.
Lloyd said the addition of a PowiGaN switch more than doubles the TOPSwitch architecture’s power capability to 440 watts, allowing flyback designs to address sockets that historically required more complex topologies. She said TOPSwitchGaN is opening opportunities with customers designing high-power chargers for industrial applications, drones and e-bikes, as well as with appliance customers seeking the efficiency benefits of gallium nitride.
In automotive, Lloyd said Power Integrations is in production or design engagements with 17 of the top 20 electric-vehicle manufacturers and remains on track to double automotive revenue this year. The company won a new emergency power supply design with China’s second-largest EV OEM during the quarter and began production at a major German automaker using a platform developed through its joint venture with a U.S. EV OEM.
Lloyd said the company still sees a path toward a previously stated $100 million automotive revenue target for 2029, though she noted that revenue growth has been slow and some opportunities have pushed out.
AI Data Center Opportunity Expands
Power Integrations continued to emphasize data centers as a major long-term growth opportunity. Lloyd said the company’s collaboration with NVIDIA includes sockets using its 1,250-volt and 1,700-volt GaN technologies in future 800-volt DC architectures. She also said Power Integrations won two new auxiliary power supply designs in the first quarter at Taiwan customers serving U.S. equipment makers.
During the Q&A session, Lloyd said auxiliary power and solid-state transformer opportunities are nearer-term, while higher-voltage GaN opportunities tied to 800-volt architectures are “a couple years out.” She said the company is engaging across hyperscalers, server OEMs, rack providers and power supply providers.
Lloyd also said the company sees opportunities beyond the rack, including power grid applications tied to data center growth. Renewable energy, battery storage and high-voltage transmission accounted for about 40% of high-power revenue in the first quarter, according to the company. Power Integrations estimates its data center serviceable available market, including rack and grid applications, will exceed $1 billion by 2030.
Cash Flow Improves as Inventories Decline
Power Integrations generated $20 million in operating cash flow and $18 million in free cash flow during the quarter. Capital expenditures were $2 million, and Erba said the company’s 2026 plan still calls for capital spending of 5% to 6% of revenue, weighted more heavily toward the second half of the year.
Inventory declined by $4 million during the quarter, while days on hand fell by 21 days to 292. Erba said the company’s target is to reduce days on hand below 200. Channel inventory fell by half a week to 8.9 weeks, nearing the company’s eight-week target.
Erba said the company is not taking “anything unnatural” to reduce channel inventory, but expects further improvement if demand continues. On internal inventory, she said management is applying stricter review and return-on-investment discipline.
GAAP results included $6.6 million in restructuring charges, primarily severance payments related to restructuring announced in February. Erba said the company also reclassified certain application engineering resources from marketing to research and development to better align product development with customer requirements.
Lloyd closed the call by saying electrification, AI and changes in the power grid are expected to support demand for advanced high-voltage semiconductors for years to come.
About Power Integrations NASDAQ: POWI
Power Integrations, Inc, based in Hillsboro, Oregon, specializes in the design and development of high-performance analog and mixed-signal integrated circuits for energy-efficient power conversion. The company's products are used to convert and regulate electrical power in a wide range of applications, from consumer electronics and industrial systems to communications equipment and electric vehicle charging. By providing compact, reliable, and highly integrated solutions, Power Integrations aims to reduce system size, improve efficiency, and simplify thermal management for its customers.
The firm's product portfolio encompasses isolated and non-isolated switching controllers for both AC-DC and DC-DC power conversion.
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