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© Copyright 2013 Power Integrations 2
Forward-Looking Statements/Non-GAAP Metrics
These slides accompany an oral presentation by Power Integrations, Inc., whichcontains forward-looking statements. Each statement relating to events that will ormay occur in the future is a forward-looking statement. The Company’s actualresults may differ materially from those suggested in the presentation. Informationconcerning factors that could cause such a difference is contained in theCompany’s most recent reports on Form 10-K and 10-Q.
This presentation may also contain certain non-GAAP financial information. Reconciliations of non-GAAP financial metrics to GAAP results are available at the end of this presentation and/or on the investor page of the Power Integrations website, http://investors.powerint.com (see “Historical Financials” data file).
© Copyright 2013 Power Integrations 3
Secular Growth Story in Analog Semis
Leader in bringing integration to high-voltage power conversion
Energy efficiency driving faster market penetration
Strong position in LED lighting
Expanding addressable market with higher-power products and strategic transactions
© Copyright 2013 Power Integrations 4
Highly Integrated Power Supplies Replacing Legacy Technologies
Discrete DVD power supply: 70 components
Equivalent power supply with POWI:36 components, smaller board
Linear transformer: weighs 12 oz.
Adapter with POWI: weighs 2 oz.
© Copyright 2013 Power Integrations 5
Ultra-simple power supplies• Fewer components
• Shorter design cycles
• Easier to manufacture
• Higher reliability
BOM cost similar to discrete designs
Highly energy-efficient
Dimensions of Innovation
© Copyright 2013 Power Integrations 6
Relentless Innovation
534 U.S. Patents390 Non-U.S. Patents
at 12/31/2012
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U.S
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nted
© Copyright 2013 Power Integrations 7
Broad Addressable Market –Power Conversion Is Needed Everywhere
© Copyright 2013 Power Integrations 8
Long-Term Secular Growth Drivers
1. Ongoing transition to IC-based power supplies• Integration saves labor and materials, improves reliability
© Copyright 2013 Power Integrations 9
Leading Transition to IC-Based Power Supplies
Linear Transformers
1970 1994
Discretes
1994 Today1970
Integrated•Fairchild•Sanken•ST Micro•ON Semi• Infineon POWI
• iWatt•BCD•Active•Leadtrend•OnBright
•Fairchild• Infineon•ON Semi•ST Micro•NXP 80%
20%
Pow
er S
uppl
y U
nit V
olum
e
© Copyright 2013 Power Integrations 10
Long-Term Secular Growth Drivers
1. Ongoing transition to IC-based power supplies• Integration saves labor and materials, improves reliability
2. Energy-efficiency• Driven by standards and consumer awareness
© Copyright 2013 Power Integrations 11
Recognized Leader in Energy Efficiency
Member of clean-tech stock indices• The Cleantech Index (CTIUS)• Nasdaq Clean Edge Green Energy (CELS)• Ardour Global Index (AGIGL)
Twice named a top 20 sustainable stock by SustainableBusiness.com
ENERGY STAR® award recipient
Star of Energy Efficiency award recipient
© Copyright 2013 Power Integrations 12
Energy Specs Continue to Tighten
New ENERGY STAR® label rewards top performers in designated product categories
New CEC battery-charger standards in 2013; U.S. to tighten federal standards for external power supplies
European standby power limitation tightens to 0.5 W as of 2013
© Copyright 2013 Power Integrations 13
“Zero” Series Zeroes Out Standby Waste
CAPZero™ eliminates waste from X-cap bleed resistors
SENZero™ disconnects sense resistors in main power supply
LinkZero™ cuts waste to 0.00 W in chargers and auxiliary power supplies
© Copyright 2013 Power Integrations 15
Long-Term Secular Growth Drivers
1. Ongoing transition to IC-based power supplies• Integration saves labor and materials, improves reliability
2. Energy-efficiency• Driven by standards and consumer awareness
3. LED lighting• Requires low-cost, efficient, reliable power supplies
© Copyright 2013 Power Integrations 16
Well Positioned in LED Lighting
Traditional incandescent lights phasing out
LEDs need efficient, reliable drivers
Integration, single-stage architecture bring reliability, efficiency, low cost
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2007 2008 2009 2010 2011 2012
LED Lighting Revenues ($M)
© Copyright 2013 Power Integrations 17
Long-Term Secular Growth Drivers
1. Ongoing transition to IC-based power supplies• Integration saves labor and materials, improves reliability
2. Energy-efficiency• Driven by standards and consumer awareness
3. LED lighting• Requires low-cost, efficient, reliable power supplies
4. Expanding addressable market to higher power levels• Mid-power (50-500 W) products plus Concept acquisition expand
addressable market by $1 billion
© Copyright 2013 Power Integrations 18
Expanding Market with Mid-Power Products
0W 500W5W 50W2W 20W 200W
CAPZero™/SENZero™/Qspeed™
Hiper™ Family
TOPSwitch™
TinySwitch™
LinkSwitch™ / LinkZero™
LinkSwitch-PL/PH / LYTSwitch™
LED Products
LOW-POWER MID-POWER
© Copyright 2013 Power Integrations 19
Radically Simplifying Mid-Power Converters
HiperPFS™ and HiperTFS™ replace up to 100 components
HiperTFS + HiperPFS
© Copyright 2013 Power Integrations 20
More Silicon Content at Higher Power Levels
EMI Filter PFC Stage Main and Standby Stage
Main & Standby Controller
Boost Inductor
PFC Controller
EMI Filter StandbyOutput
ACGate Drive
SR
Main Output
TNY
Before: Single IC for standby power supply
© Copyright 2013 Power Integrations 21
More Silicon Content at Higher Power Levels EMI Filter PFC Stage Main and Standby Stage
Main & Standby Controller
Boost Inductor
PFC Controller
EMI Filter StandbyOutput
AC
HiperPFS
HiperTFS
CpZ
Gate Drive
SnZ
QSpeed
SR
Main Output
HiperTFS™ main + standbyCapZero™ HiperPFS™ SenZero™ Qspeed™
Now: Up to five components, 5x-10x the dollar content
© Copyright 2013 Power Integrations 22
CONCEPT: Highly Integrated IGBT Drivers
Highly integrated drivers enhance cost, efficiency, size, reliability
Acquired in May 2012
Applications: industrial motors, solar/wind power, electric trains and cars
Addressable market approaching $500M
Adds ~10% to POWI revenue
© Copyright 2013 Power Integrations 23
Spanning the Clean-Power EcosystemEnergy
Ecosystem
Energy Generation
Energy Transmission
Energy Consumption
Wind TurbinesSolar Power
HVDC Transmission
Motor ControlHybrid Vehicles
LocomotiveMedical
End Markets
Power Semiconductors
IGBT module: Transistors arranged in parallel to increase switching
capacity at very high currents and high voltages
Driver optimizes efficiency, operating performance and lifespan of the IGBT module
IGBT ModuleDriver
© Copyright 2013 Power Integrations 24
Higher-Power Products Expand SAM to $2.5B
● Mobile phone chargers● Cordless phone adapters● Broadband modems● VoIP phones● Wireless routers● Desktop/server standby
● Desktop main● Notebook adapters● LCD monitors● Printers
● White goods● Air conditioners● TV standby / TV main● Small appliances● Set-top boxes● DVD players● Game consoles
● LED general lighting● LED street lights● Smart meters ● Industrial control● UPS● Industrial motor drives● Wind/solar inverters● Electric trains/cars● DC transmission
Consumer
Comms
Computer
Industrial
Mid-power applications in orange
High-power applications in green
© Copyright 2013 Power Integrations 25
Consistent Track Record of Growth
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2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Revenue ($M)
© Copyright 2013 Power Integrations 26
Outperforming the Peer Group
-10%
0%
10%
20%
30%
40%
2007 2008 2009 2010 2011 2012 6-yearCAGR
Annual Revenue Growth POWIAnalog Semis (SIA)
© Copyright 2013 Power Integrations 27
Headwinds Abating in Cellphone Market
-10%
0%
10%
2011 2012
0%
2%
5%
9%
5%
2%
0% -7%
Year/Year Revenue Growth
POWIPOWI ex-cellphonePOWI organic ex-cellphoneAnalog Semis (SIA)
Challenging end-customer mix in 2011-2012, but exited 2012 with sequential growth
© Copyright 2013 Power Integrations 28
Well Diversified Revenue Mix
25%Consumer
23%Computer
43%Comms
20022012
24%Comms
36%Consumer
28% Industrial
11%Computer
Higher-margin industrial & consumer markets now ~2/3 of revenues; cellphone chargers down from ~40% to less than 15%
© Copyright 2013 Power Integrations 29
Consistent Cash Flow Generation
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2008 2009 2010 2011 2012
Cash Flow from Operations ($M)
Effect of one-time tax
payment
© Copyright 2013 Power Integrations 30
Strong Balance Sheet
$95M cash and investments• Used $116M for Concept acquisition• $43M tax payment in Q3’12; tax rate
down to single digits in 2013
No debt
Quarterly dividend of $0.08/share• Announced 60% increase for 2013
$260M of repurchases since 2004• Repurchased >2% of outstanding shares
in Q4 2012 for ~$30/share
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Q3'08 Q4'12
Cash and Investments ($M)
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35
Q3'08 Q4'12
Diluted Shares Outstanding (M)
At December 31, 2012
© Copyright 2013 Power Integrations 31
Prudently Returning Cash to Stockholders
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2004 2013
Shares Outstanding (M)
$260M of share repurchases since 2004
Avg. price of repurchased shares: ~ $23
7% net reduction in outstanding shares (February 2004 to February 2013)
13th “most profitable” buyback since 2000 (The Buyback Monitor, July 2011*)
*Survey period January 2000 through March 2011; included 252 companies