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    POWER INTEGRATIONS (POWI)

    POWI Q2 2024: GaN sales set for 50% growth next year

    Reported on Jun 22, 2025 (After Market Close)
    Pre-Earnings Price$64.27Last close (Aug 6, 2024)
    Post-Earnings Price$63.03Open (Aug 7, 2024)
    Price Change
    $-1.24(-1.93%)
    • 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.
    1. 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.

    2. 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.

    3. 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.

    4. 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.