What changed in this filing

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Item 1. Business

2024-02-12 compared with 2023-02-07 · 84 added, 65 removed, 273 unchanged (35% of the section changed)

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Power supplies incorporating our products are used with all manner of electronic products including mobile phones, computing and networking equipment, appliances, electronic utility meters, battery-powered tools, industrial controls, and “home-automation,” or “internet of things” applications such as networked thermostats, power strips and security devices.

We also supply high-voltage LED drivers, which are AC-DC ICs specifically designed for lighting applications that utilize light-emitting diodes, and motor-driver ICs addressing brushless DC (BLDC) motors used in refrigerators, HVAC systems, ceiling fans and other consumer-appliance and light commercial applications.

Variations of our power-supply ICs are used for high-voltage power conversion in electric vehicles (“EVs”).

We also supply high-voltage LED drivers, which are AC-DC ICs specifically designed for lighting applications that utilize light-emitting diodes, and motor-driver ICs for brushless DC (“BLDC”) motors used in consumer appliances, HVAC systems, ceiling fans and a variety of industrial applications.

We also offer high-voltage gate drivers—either standalone ICs or circuit boards containing ICs, electrical isolation components and other circuitry—used to operate high-voltage switches such as insulated-gate bipolar transistors (“IGBTs”) and silicon-carbide (“SiC”) MOSFETs.

These combinations of switches and drivers are used for power conversion in high-power applications (i.e., power levels ranging from a few kilowatts up to gigawatts) such as industrial motors, solar- and wind-power systems, electric vehicles (EVs) and high-voltage DC transmission systems.

Our products bring a number of important benefits to the power-conversion market compared with less advanced alternatives, including reduced component count and design complexity, smaller size, higher reliability and reduced time-to-market.

These combinations of switches and drivers are used for power conversion in high-power applications (i.e., power levels ranging from approximately 100 kilowatts up to gigawatts) such as industrial motors, solar- and wind-power systems, EVs and high-voltage DC transmission systems.

Our power-conversion products are distinguished by their “system-level” nature;

that is, they incorporate into a single product numerous elements of a power-conversion system including a high-voltage transistor, drivers, advanced control circuitry and, in some cases, a communication link connecting the primary (i.e., input) and secondary (i.e., output) sides of the power converter while maintaining safety isolation to protect the end user from exposure to high voltage.

Alternatively, a power converter can be designed and assembled using discrete components purchased from a variety of suppliers.

Our system-level products offer a number of important benefits compared with discrete designs, including:

reduced design complexity;

smaller size;

lower component count, which in turn results in higher reliability and easier sourcing of components;

reduced time-to-market;

and more efficient use of engineering resources.

Our products also reduce the energy consumption of power converters during normal use and in “standby” operation, when the end product is not in use.

In addition to the environmental benefits of reduced energy usage, our energy-saving technologies provide a number of benefits to our customers;

these include helping them meet the increasingly stringent efficiency standards now in effect for many electronic products, and enabling the elimination of bulky heatsinks used to dissipate the heat produced by wasted electricity.

In addition to the environmental and economic benefits of reduced energy usage, our energy-saving technologies provide a number of benefits to our customers;

these include helping them meet the increasingly stringent efficiency standards now in effect for many electronic products, and enabling the elimination of bulky, costly heatsinks used to dissipate the heat produced by wasted electricity.

By reducing component count, circuit-board size and the need for heatsinks, our products also contribute to a reduction in materials usage and electronic waste.

While the size of our addressable market fluctuates with changes in macroeconomic and industry conditions, the market has generally exhibited a modest growth rate over time as growth in the unit volume of power converters has been offset to a large degree by reductions in the average selling price of components in this market.

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● Increase our penetration of the markets we serve.

We currently address AC-DC applications with power outputs up to approximately 500 watts, gate-driver applications ranging from a few kilowatts up to gigawatts, and motor-drive applications up to approximately 400 watts.

We currently address AC-DC applications with power outputs up to approximately 500 watts, gate-driver applications ranging approximately 100 kilowatts up to gigawatts, and motor-drive applications up to approximately 400 watts.

Through our research and development efforts, we seek to introduce more advanced products for these markets offering higher levels of integration and performance compared to earlier products.

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These tools and services include our PI Expert™ design software, which we offer free of charge, and our transformer-sample service.

In 2022 we launched PowerPros ℠ , a live online video support service that enables power-supply designers to talk directly with members of our applications engineering team 24 hours a day, six days a week, anywhere in the world.

Our market-penetration strategy also includes capitalizing on the importance of energy efficiency and renewable energy in the power conversion market.

For example, our EcoSmart™ technology drastically reduces the amount of energy consumed by electronic products when they are not in use, helping our customers comply with regulations that seek to curb this so-called “standby” energy consumption.

Also, our gate-driver products are critical components in energy-efficient DC motor drives, high-voltage DC transmission systems, solar and wind energy systems and electric transportation applications.

In 2022 we launched PowerPros ℠ , a live online video support service that

enables power-supply designers to talk directly with members of our applications engineering team 24 hours a day, six days a week, anywhere in the world.

● Capitalize on efforts to reduce carbon emissions by providing products that contribute to improved energy efficiency and increased use of renewable energy.

In its 2019 World Energy Outlook , the International Energy Agency estimated that more than two-thirds of the reduction in carbon-dioxide (“CO2”) emissions needed to achieve the “Sustainable Development Scenario” of the United Nations Sustainable Development Agenda is to come from improved energy efficiency and increased use of renewable energy.

Energy savings enabled by our products help our customers comply with regulations that seek to curb energy consumption in support of reducing CO2 emissions.

our EcoSmart™ technology drastically reduces the amount of energy consumed by electronic products when they are plugged in but not in use;

our PowiGaN™ gallium-nitride (“GaN”) transistors reduce energy consumption compared to silicon transistors;

and our BridgeSwitch™ motor-driver ICs provide highly efficient power conversion for BLDC motors in appliances and industrial applications.

Also, our gate-driver products are critical components in energy-efficient DC motor drives, solar- and wind-power systems, efficient high-voltage DC transmission systems (including transmission of energy from renewable energy installations to the power grid), and low-emissions transportation applications such as electric locomotives.

● Increase the size of our addressable market.

Prior to 2010 our addressable market consisted of AC-DC applications with up to about 50 watts of output, a served available market (“SAM”) opportunity of approximately $1.5 billion.

Since that time we have expanded our SAM to approximately $4 billion through a variety of means.

Since then we have expanded our SAM to approximately $4 billion through a variety of means.

These include the introduction of products that enable us to address higher-power AC-DC applications (such as our Hiper™ product families), the introduction of LED-driver products, and our entry into the gate-driver market through the acquisition of CT-Concept Technologie AG in 2012.

In 2016 we introduced the SCALE-iDriver TM family of ICs, broadening the range of gate-driver applications we can address, and in 2018 we introduced our BridgeSwitch™ motor-driver ICs, addressing BLDC motors, as described above.

We have recently introduced a series of automotive-qualified versions of our products, including SCALE-iDriver, InnoSwitch™ and LinkSwitch™ ICs, targeting the EV market;

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For example, our InnoSwitch™ ICs integrate circuitry from the secondary, or low-voltage, side of AC-DC power supplies, whereas earlier product families integrated circuitry only on the primary, or high-voltage side.

In 2019 we began incorporating proprietary gallium-nitride (GaN) transistors in some our products, enabling a higher level of energy efficiency than ICs with silicon transistors.

Since then, we have introduced a variety of new products utilizing GaN technology and we expect to address a wider range of applications with GaN-based products in the years ahead.

In 2019 we began incorporating our proprietary GaN transistors in some our products, enabling a higher level of energy efficiency than ICs with silicon transistors.

Since then, we have introduced a variety of new products utilizing GaN technology, as well as new generations of our GaN technology capable of supporting higher voltages (as high as 1250 volts).

We are currently developing new products incorporating these technologies, which we believe will enable us to address higher-power applications than we address with our current range of products and therefore further expand our SAM.

We intend to continue expanding our SAM in the years ahead through all of the means described above.

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These devices, consisting primarily of copper wire wound around an iron core, tend to be bulky and heavy, and typically waste a substantial amount of electricity.

In the 1970s, the availability of high-voltage discrete semiconductors enabled the development of a new generation of power supplies known as switched-mode power supplies, or switchers.

In the 1970s, the availability of high-voltage discrete

semiconductors enabled the development of a new generation of power supplies known as switched-mode power supplies, or switchers.

These switchers generally came to be cost-effective alternatives to linear transformers in applications requiring more than a few watts of power;

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these modules are operated by electronic circuitry known as gate drivers (or IGBT drivers), whose function is to ensure accurate, safe and reliable operation of the IGBT modules.

Much like discrete power supplies, discrete gate drivers tend to be highly complex, requiring a large number of components and a great deal of design expertise.

Like discrete power supplies, discrete gate drivers tend to be highly complex, requiring a large number of components and a great deal of design expertise.

Our Highly Integrated Approach

In 1994 we introduced TOPSwitch, the industry’s first cost-effective high-voltage IC for switched-mode AC-DC power supplies.

We have since introduced a range of other product families, expanding the range of power-supply applications we can serve and enhancing our competitiveness in applications that we already addressed .

In 2012 we expanded our addressable market to include high-voltage gate drivers.

Our ICs and gate drivers drastically reduce the complexity and component count of power converters compared to typical discrete designs by integrating many of the functions otherwise performed by numerous discrete electronic components, and by eliminating (or reducing the size and cost of) additional components through innovative system design.

We have since introduced a range of other product families, expanding the range of power-supply applications we can serve and enhancing our competitiveness in applications we already addressed .

In 2012 we expanded our addressable market to include high-voltage gate drivers, and in 2018 we introduced our BridgeSwitch motor-driver ICs for BLDC motors.

Our products drastically reduce the complexity and component count of power converters compared to typical discrete designs by integrating many of the functions otherwise performed by numerous discrete electronic components, and by eliminating (or reducing the size and cost of) additional components through innovative system design.

As a result, our products enable power converters to have superior features and functionality at a total cost equal to or lower than that of many competing alternatives.

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● Energy Efficiency

Our patented EcoSmart technology, introduced in 1998, improves the energy efficiency of electronic devices during normal operation as well as standby and “no-load” conditions.

Our EcoSmart technology improves the energy efficiency of electronic devices during normal operation as well as standby and “no-load” conditions.

This technology enables manufacturers to cost-effectively meet the growing demand for energy-efficient products, and to comply with increasingly stringent energy-efficiency requirements.

Also, our GaN transistor technology, introduced in 2019, offers substantially higher levels of active-mode efficiency compared to traditional silicon-based switches, while our BridgeSwitch motor-driver ICs enable efficiency of up to 98.5 percent, not only minimizing waste but also eliminating the need for heatsinks in many applications, which in turn reduces cost and weight.

Our proprietary GaN transistor technology, introduced in 2019, offers substantially higher levels of active-mode efficiency compared to traditional silicon switches, while our BridgeSwitch motor-driver ICs enable efficiency of up to 98.5%, not only minimizing waste but also eliminating the need for heatsinks in many applications, which in turn reduces cost and weight.

● Wide Power Range and Scalability

Products in our current IC families can address AC-DC power supplies with output power up to approximately 500 watts as well as some high-voltage DC-DC applications;

our high-voltage gate drivers are used in applications with power levels as high as one gigawatt, while our motor-driver ICs address BLDC applications up to about 400 watts.

our high-voltage gate drivers are used in applications with power levels ranging from approximately 100 kilowatts to gigawatts, while our motor-driver ICs address BLDC

applications up to about 400 watts.

Within each of our product families, designers can scale up or down in power to address a wide range of designs with minimal design effort.

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In fact, a 2015 study by the National Resources Defense Council found that devices that are “always-on” but inactive may be causing as much as $19 billion in annual energy waste in the United States alone.

Lighting is another major source of energy waste.

Less than 5% of the energy consumed by traditional incandescent light bulbs is converted to light, while the remainder is wasted as heat.

The Alliance to Save Energy estimated in 2007 that a conversion to efficient lighting technologies such as compact fluorescent bulbs and LEDs could save as much as $18 billion worth of electricity and 158 million tons of carbon dioxide emissions per year in the United States alone.

In response to concerns about the environmental impact of carbon emissions, policymakers have taken action to promote energy efficiency.

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The limit was reduced by 50 percent beginning in 2013, with many products now limited to 500 milliwatts of standby usage;

further tightening of the standards is under consideration.

The EISA legislation also required substantial improvements in the efficiency of lighting technologies;

the manufacture and sale of most incandescent bulbs has been illegal in the United States since 2014, while rules adopted in 2022 by the U.S.

government are expected to result in the phase-out of additional categories of inefficient bulbs.

Plans to eliminate incandescent bulbs have also been announced or enacted in other geographies such as Canada, Australia and Europe.

the EU standards are scheduled to tighten further beginning in 2025.

The EISA legislation also required substantial improvements in the efficiency of lighting technologies, effectively resulting in the phase-out of most incandescent light sources and increased adoption of LED-lighting technology.

In December 2019 the government of China published new efficiency standards for room air conditioners, which took effect in July 2020.

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Since 1998, our AC-DC power-conversion ICs have featured our EcoSmart technology which drastically reduces standby power waste.

We have sold more than 20 billion ICs featuring EcoSmart technology, resulting in estimated savings of more than 160 billion kilowatt-hours of standby power worldwide.

We have sold more than 20 billion ICs featuring EcoSmart technology, resulting in estimated savings of more than 175 terawatt-hours of standby power worldwide.

In 2010 we expanded our portfolio of energy-saving products with the introduction of our CapZero and SenZero IC families, which eliminate additional sources of standby waste in some power supplies.

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TOPSwitch, our first commercially successful product family, was introduced in 1994.

Since that time we have introduced a wide range of products (such as our TinySwitch, LinkSwitch and Hiper families) to increase the level of integration and improve upon the functionality of the original TOPSwitch, and to broaden the range of power levels we can address.

Since then we have introduced a wide range of products (such as our TinySwitch, LinkSwitch and Hiper families) to increase the level of integration and improve upon the functionality of the original TOPSwitch, and to broaden the range of power levels we can address.

In 2010 we introduced our CapZero and SenZero families, which reduce standby power consumption in certain applications by eliminating waste caused by so-called bleed resistors and sense resistors.

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In 2020 we introduced GaN-based MinE-CAP ICs, which enable the use of smaller input capacitors as a way to further reduce the size of a power supply.

Our ClampZero ICs, introduced in 2021 alongside the GaN-based InnoSwitch4-CZ family of ICs, further enhance efficiency by recovering power losses associated with the high switching frequency of GaN transistors.

Our ClampZero ICs, introduced in 2021 alongside the GaN-based InnoSwitch4-CZ family of

ICs, further enhance efficiency by recovering power losses associated with the high switching frequency of GaN transistors.

In 2023 we announced new versions of our InnoSwitch products incorporating GaN transistors with higher voltage ratings of 900 volts and 1250 volts;

earlier GaN products feature transistors rated at 750 volts.

This portfolio of power-conversion products generally addresses power supplies ranging from less than one watt of output up to approximately 500 watts of output, a market we refer to as the “low-power” market.

This market consists

of an extremely broad range of applications including mobile-device chargers, consumer appliances, utility meters, LCD monitors, main and standby power supplies for desktop computers and TVs, and numerous other consumer and industrial applications, as well as LED lighting.

This market consists of an extremely broad range of applications including mobile-device chargers, consumer appliances, utility meters, LCD monitors, main and standby power supplies for desktop computers, servers and TVs, and numerous other consumer and industrial applications, as well as LED lighting.

We also now offer automotive-qualified versions of certain products, such as InnoSwitch ICs, for use in electric vehicles.

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We sell our products to original equipment manufacturers, or OEMs, and merchant power-supply manufacturers through our direct sales staff and a worldwide network of independent sales representatives and distributors.

We have sales offices in the United States, United Kingdom, Germany, Italy, India, China, Japan, South Korea, the Philippines, Singapore and Taiwan.

We have sales offices in the United States, United Kingdom, Germany, Italy, India, China, Japan, South Korea, the Philippines, Canada, Singapore and Taiwan.

Direct sales to OEMs and merchant power supply manufacturers represented approximately 31%, 30% and 25% of our net product revenues in 2023, 2022 and 2021, respectively, while sales to distributors accounted for the remainder in each of the corresponding years.

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Our top ten customers, including distributors that resell to OEMs and merchant power supply manufacturers, accounted for approximately 80%, 76% and 78% of net revenues in 2023, 2022 and 2021, respectively.

In 2022, 2021, and 2020 two customers, both distributors, each accounted for more than 10% of revenues.

In 2023, three customers each accounted for more than 10% of revenues, in 2022 and 2021, two customers, both distributors, each accounted for more than 10% of revenues.

Research and Development

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We also hold trademarks in the U.S.

and various other geographies including Taiwan, Korea, Hong Kong, China, United Kingdom, Europe, Japan, India, Brazil and Russia.

and various other geographies including Taiwan, Korea, Hong Kong, China, United Kingdom, Europe, Japan, India, Brazil, Russia and Switzerland.

We regard as proprietary some equipment, processes, information and knowledge that we have developed and used in the design and manufacture of our products.

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Some of the materials used in our packages and certain aspects of the assembly process are specific to our products.

We require our assembly manufacturers to use high-voltage molding compounds which are more difficult

to process than industry standard molding compounds.

We require our assembly manufacturers to use high-voltage molding compounds which are more difficult to process than industry standard molding compounds.

We work closely with our contractors on a continuous basis to maintain and improve our manufacturing processes.

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Competing alternatives to our high-voltage ICs for the power-supply market include monolithic and hybrid ICs from companies such as STMicroelectronics, Infineon Technologies and Sanken Electric Company, as well as PWM-controller chips paired with discrete high-voltage silicon or GaN transistors.

such controller chips are produced by a large number of vendors, including those listed above as well as such companies as NXP Semiconductors, Diodes Inc., On-Bright Electronics, MediaTek Inc., Southchip Semiconductor and Renesas Electronics.

Such controller chips are produced by a large number of vendors, including those listed above as well as others including NXP Semiconductors, Diodes Inc., On-Bright Electronics, MediaTek Inc., Renesas Electronics and, in recent years, an increasing number of Chinese suppliers such as Southchip Semiconductor, Chipown Microelectronics and Hangzhou Silan Microelectronics Co.

Our gate-driver products compete with alternatives from such companies as Broadcom, Infineon, Mitsubishi Electric, Fuji Electric, Semikron and Hangzhou Firstack Technology Co., as well as driver circuits made up of discrete devices.

Our motor-driver ICs compete with power modules from such companies as ON Semiconductor, Infineon, STMicroelectronics, Mitsubishi and Sanken as well as discrete designs from a wide range of other suppliers.

In general, we expect competition from Chinese semiconductor vendors to intensify over time reflecting China’s stated aim to develop its domestic semiconductor industry.

Generally, our products enable customers to design power converters with total bill-of-materials costs similar to those of competing alternatives.

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Under the terms and conditions of sale, our liability is limited generally to either a credit equal to the purchase price or replacement of the defective part.

Government Regulation

We are subject to a variety of federal, state and local governmental laws and regulations worldwide, including, but not limited to, laws, rules and regulations related to anti-corruption, antitrust, data privacy requirements, employment, environmental, foreign exchange controls, health and safety requirements, immigration, import/export requirements, IP and tax.

Any failure to comply with laws and regulations may subject us to a range of consequences including fines, suspension of certain of our business activities, limitations on our ability to sell our products, obligations to remediate in the case of environmental contamination, and criminal and civil liabilities or other sanctions.

Changes in environmental laws and regulations could require us to alter our manufacturing processes or use substitute materials.

Our failure to comply with laws, rules and regulations could subject us to future liabilities.

What changed 10-K

Item 1. Business