What changed in this filing

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Item 1. Business

2025-02-07 compared with 2024-02-12 · 57 added, 65 removed, 292 unchanged (29% of the section changed)

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A large percentage of our products are ICs used in AC-DC power supplies, which convert the high-voltage AC from a wall outlet to the low-voltage DC required by most electronic devices.

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.

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

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

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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 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;

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Our growth strategy includes the following elements:

● 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 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 In 2018 we introduced our BridgeSwitch™ motor-driver ICs for BLDC motors, and in 2024 we introduced BridgeSwitch-2, extending the addressable power range of our motor-driver products up to about one horsepower.

We have recently introduced a range of products targeting the EV market;

we plan to introduce additional products for EVs in the future, and expect automotive applications to become a significant portion of our SAM over time.

Also contributing to our SAM expansion has been the emergence of new applications within the power ranges that our products can address.

For example, applications such as “smart” utility meters, battery-powered lawn equipment and bicycles, and USB power receptacles (often installed alongside traditional AC wall outlets) can incorporate our products.

The increased use of connectivity, LED lighting and other power-consuming electronic features in consumer appliances has also enhanced our SAM.

We have also expanded our SAM through the development of technologies and architectures that increase the value (and therefore the average selling prices) of our products.

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.

Our InnoMux™ IC families provide up to three DC outputs, eliminating the need for additional power-management circuitry in certain end products requiring multiple voltages while significantly increasing efficiency.

● 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 approximately 100 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 from 100 kilowatts up to gigawatts, and motor-drive applications up to approximately one horsepower.

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.

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.

● Leverage the performance benefits of our proprietary gallium-nitride (“GaN”) technology.

In 2019 we began incorporating our proprietary PowiGaN ™ gallium-nitride transistors in some of 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 developed new generations of our GaN technology capable of supporting voltages as high as 1700 volts.

While high-voltage GaN transistors have historically been more costly to produce than comparable silicon transistors, we have achieved cost reductions such that our GaN devices are approaching cost parity with silicon MOSFETs.

We are developing additional products incorporating GaN transistors, which we believe will enable us to address higher-power applications than we address with our current range of products, and further expand our SAM as discussed above.

We expect such applications to include power supplies used in data centers delivering artificial intelligence (AI) services, in communications network infrastructure equipment and in onboard-charging circuitry for EVs, among others.

Additionally, we are developing GaN technologies capable of supporting higher power output than today’s GaN devices, with an aim of developing products to address power-switching modules in EV drivetrains, which currently incorporate SiC and IGBT modules.

In July 2024 we acquired the assets of Odyssey Semiconductor, a developer of so-called vertical GaN technology, in an effort to accelerate our development of higher-power GaN devices.

We believe the development of such technologies will take several years to complete.

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

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

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 for BLDC motors.

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

we expect to introduce additional products targeting EVs in the future, and expect automotive applications to become a significant portion of our SAM over time.

Also contributing to our SAM expansion has been the emergence of new applications within the power ranges that our products can address.

The increased use of connectivity, LED lighting and other power-consuming electronic features in consumer appliances has also enhanced our SAM.

Finally, we have expanded our SAM through the development of new technologies that increase the value (and therefore the average selling prices) of our products.

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.

renewable energy installations to the power grid), and low-emissions transportation applications such as electric locomotives.

Industry Background

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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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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 ranging from approximately 100 kilowatts to gigawatts, 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 one horsepower.

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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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 175 terawatt-hours of standby power worldwide.

We have sold more than 21 billion ICs featuring EcoSmart technology, resulting in estimated annual savings of about 15 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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Our GaN technology, introduced in 2019, also dramatically improves the active-mode efficiency of power-supplies.

Our InnoMux products, also introduced in 2019, enhance active-mode efficiency in systems with multiple DC outputs by eliminating the losses incurred in separate DC-DC conversion stages.

Below is a brief description of our products:

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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.

We have also introduced products designed specifically for LED-lighting applications, known as LYTSwitch ICs, as well as a range of high-performance, high-voltage diodes known as Qspeed diodes.

In 2014 we introduced our InnoSwitch product family, the first power-supply ICs to combine primary, secondary and feedback circuits into a single package.

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In 2019 we began offering InnoSwitch ICs with more-efficient GaN transistors rather than silicon transistors.

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.

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, 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.

In 2019 we introduced InnoMux ICs, which provide up to three DC outputs, eliminating the need for additional power-management circuitry in certain end products requiring multiple voltages while significantly increasing efficiency.

In 2024 we introduced InnoMux-2 products, featuring GaN transistors rated at 1700 volts.

This portfolio of power-conversion products generally addresses power supplies up to about 500 watts of output.

This market consists of an extremely broad range of applications including consumer appliances, utility meters, LCD monitors, tablets, smartphones, computers, 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 EVs.

● High-voltage gate drivers

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The BridgeSwitch family of products, introduced in 2018, is a family of motor-driver ICs addressing BLDC motor applications up to approximately 400 watts.

Such applications include refrigerator compressors, ceiling fans, air purifiers as well as pumps, fans and blowers used in consumer appliances such as dishwashers and laundry machines.

In 2024 we introduced BridgeSwitch-2 ICs, extending the addressable power range to about one horsepower, or 746 watts.

Applications for ICs in the BridgeSwitch families include refrigerator compressors, ceiling fans, air purifiers and circulation pumps, as well as pumps and fans used in appliances such as dishwashers, laundry machines and boilers.

BridgeSwitch products are complemented by our Motor-Expert software, which provides configuration and diagnostic tools for design engineers.

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Communications

Mobile-phone chargers, adapters for routers, cordless phones, broadband modems, voice-over-IP phones, other network and telecom gear

Mobile-phone chargers, broadband modems, wi-fi routers, other network and telecom gear

Desktop PCs and monitors, servers, adapters for tablets and notebook computers, other computer peripherals

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Our top ten customers, including distributors that resell to OEMs and merchant power supply manufacturers, accounted for approximately 79%, 80% and 76% of net revenues in 2024, 2023 and 2022, respectively.

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.

In 2024, two customers, both distributors, each accounted for more than 10% of revenues, in 2023, three customers, all distributors, each accounted for more than 10% of revenues, and in 2022, 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, Russia and Switzerland.

and various other geographies including Brazil, China, the European Union, Hong Kong, India, Japan, Korea, Russia, Switzerland, Taiwan, Turkey, and the United Kingdom.

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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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 gate-driver products compete with alternatives from such companies as 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.

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To attract and retain talented employees, we offer competitive compensation with generous comprehensive benefits for employees and dependents (including domestic partners).

We offer health, dental and vision insurance, covering 85% of the cost of employee health insurance in 2023, flexible spending accounts for healthcare and child-care expenses, matching 401(k) contributions (at a rate of 50% of the employee contribution, up to a maximum of 4% of the employee’s eligible compensation), employee stock plans, paid vacation and family leave, life and disability insurance, flu vaccinations, tuition reimbursement, charitable gift matching, health-and-wellness programs designed to promote physical well-being and other mental health services.

We offer health, dental and vision insurance, covering 85% of

the cost of employee health insurance in 2024, flexible spending accounts for healthcare and child-care expenses, matching 401(k) contributions (at a rate of 50% of the employee contribution, up to a maximum of 4% of the employee’s eligible compensation), employee stock plans, paid vacation and family leave, life and disability insurance, flu vaccinations, tuition reimbursement, charitable gift matching, health-and-wellness programs designed to promote physical well-being and other mental health services.

Approximately 97% of eligible U.S.

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These benefits, combined with our culture of innovation and sustainable growth, contribute to below-average employee turnover relative to our industry and an average tenure of nearly 7 years.

In 2022 and 2023 we were certified by Great Place to Work® based on the results of an anonymous survey of employees;

In 2022, 2023 and 2024 we were certified by Great Place to Work® based on the results of anonymous surveys of employees;

in the 2024 survey, 87% of employees stated that Power Integrations is a great place to work, compared to an average of 57% for U.S.

companies according to Great Place to Work.

It is our policy to ensure equal employment opportunity for all applicants and employees without regard to prohibited considerations of race, color, religion, sex (including pregnancy, gender identity and sexual orientation), national origin, age, disability or genetic information, marital status or any other classification protected by applicable

local, state or federal laws.

Our employees are encouraged to engage with company leadership and raise concerns and questions in person, via e-mail (anonymously if desired), or at our quarterly employee communications meeting with the CEO and senior management team.

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Vice President, Operations

David “Mike” Matthews

Chief Technical Officer

Vice President, Worldwide Sales

Sandeep Nayyar

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Vice President, Corporate Development

Yang Chiah Yee

Vice President, Worldwide Sales

Balu Balakrishnan has served as president, chief executive officer and as a director of Power Integrations since January 2002;

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Previously, he served in a succession of engineering-management and technology development roles at Phaethon Communications, Inc., a photonics technology company, Cirrus Logic, Inc., a high-precision analog and digital signal processing company, Advanced Micro Devices, a semiconductor company, Cypress Semiconductor, Inc., a semiconductor company and Microelectronica a semiconductor company.

Barsan has more than 40 years of commercial experience in semiconductor and photonic components development, engineering and operations.

Barsan has 48 years of commercial experience in semiconductor and photonic components development, engineering and operations.

Sunil Gupta has served as our vice president of operations since August 2020.

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Gupta spent 16 years at National Semiconductor in wafer fab operations and quality.

Mike Matthews has served as our chief technical officer since February 2023.

Matthews joined Power Integrations in 1992, managing our European application engineering group and then our European sales organization as managing director of Power Integrations (Europe).

He led our product-definition team from 2000 through 2023, serving as director of strategic marketing until 2012 and then as vice president of product of development prior to assuming his current role.

Gagan Jain has served as our vice president, worldwide sales since September 2024.

Jain joined Power Integrations in 2013, managing the company's industrial and high-power gate-driver business in Japan before being promoted to director of sales for Japan.

In 2016, he relocated to the company's San Jose headquarters to assume the role of senior sales director for the Americas.

He was promoted to the role of vice president, worldwide sales in 2024.

Prior to joining Power Integrations, Mr.

Matthews worked at several electric motor-drive companies and then at Siliconix, a semiconductor company, as a motor-control applications specialist.

Jain held various managerial positions at Infineon Technologies Japan in the industrial module and bi-polar devices business;

earlier roles included business development and technical sales in India and Japan focusing on the Asia-Pacific, Europe and South Africa markets.

Sandeep Nayyar has served as our vice president and chief financial officer since June 2010.

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Nayyar served in a succession of financial roles including vice president of finance at Quantum Corporation, a computer storage company.

Nayyar also worked for five years in the public-accounting field at Ernst & Young LLP.

Nayyar also worked for five years in the public-accounting field at Ernst

Nayyar is a Certified Public Accountant, Chartered Accountant and has a Bachelor of Commerce from the University of Delhi, India.

Nayyar serves as a director and audit-committee chairman of Smart Global Holdings, Inc., a manufacturer of specialty memory solutions since his appointment in 2014.

Nayyar serves as a director and audit-committee chairman of Penguin Solutions, Inc.

(formerly Smart Global Holdings, Inc.), a manufacturer of specialty memory solutions since his appointment in 2014.

He was the lead independent director from 2021 to 2022.

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Walker served as president of Morgan Walker International, a consulting company.

Yang Chiah Yee has served as our vice president, worldwide sales since June 2021.

From March 2018 to June 2021, Mr.

Yee served as senior vice president of worldwide sales at NeoPhotonics Corporation, a supplier of optoelectronic modules and subsystems for high-speed communication networks, where he was responsible for managing the worldwide sales and customer service organization, meeting with major clients, designing effective sales strategies and negotiating major contracts.

From August 2016 to February 2017, Mr.

Yee served as senior vice president of worldwide sales at IDEX Biometrics ASA, a supplier of fingerprint sensor solutions for payment cards, digital wallets and cyber authentication.

From March 2008 to March 2016, Mr.

Yee served in various senior sales roles at Atmel Corporation, a semiconductor designer and manufacturer of microcontroller and memory chips before its acquisition by Microchip Technology, Inc.

Yee’s earlier experience includes senior sales roles at Xilinx Inc.

and Memec LLC focusing on the Asia-Pacific region.

Yee received a bachelor of engineering degree from Nanyang Technological Institute at the National University of Singapore, and holds a graduate diploma in marketing management from the Singapore Institute of Management.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business