POWI Q2 2024: GaN sales set for 50% growth next year
- Strong GaN growth potential: Executives highlighted that GaN revenue could grow by 50% next year and reach around $100 million by 2028, driven by new products and design wins across multiple end markets.
- Improved market dynamics despite regional challenges: In China, even though raw demand remains flat, design wins and an increase in average selling prices for appliances suggest that Power Integrations is gaining market share and creating upward revenue momentum.
- Normalized inventory levels: The clearing of excess inventory, particularly in key markets, supports a more stable sales environment and positions the company well for sustainable revenue growth.
- Limited visibility and uncertain demand: Executives noted that customer orders are "last minute" with very low forward visibility for Q4, raising concerns about the predictability of future revenues.
- Weak demand in China: Discussion revealed that despite design wins and increased ASP, raw demand in China remains flat with the cell phone market down over 50%, which could hurt overall growth.
- Currency and cost headwinds: Concerns were raised about the delayed impact of yen fluctuations due to high inventory levels, which may translate into margin pressures in upcoming quarters.
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GaN Growth
Q: What drives GaN inflection from 2025?
A: Management expects a shift toward GaN across most products, with revenue growth approaching 50% next year and a potential to hit around $100 million by 2028, signaling a significant transition in their technology portfolio. -
Yen Impact
Q: How will yen moves affect margins?
A: They explained that a 10% yen fluctuation typically shifts margins by about 120 basis points, but with higher inventories now, the impact may take 3–4 quarters to fully appear, possibly affecting Q4 or early 2026. -
Market Outlook
Q: Why is second half growth tempered?
A: Despite normalized inventory levels, customer caution and last-minute ordering have created weaker visibility, resulting in less robust second-half growth than previously expected. -
China Sales
Q: How are China sales trending?
A: Management noted that in China, especially in the appliance segment, raw demand remains almost flat due to broader market challenges, with the cellphone segment declining over 50%, even though design wins and increased ASPs mitigate some issues.
Research analysts covering POWER INTEGRATIONS.