POWI investor presentation january 2014

Power Integrations, Inc.Nasdaq: POWI

January 2014

© Copyright 2014 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).


Secular Growth Story in Analog Semis Focused on energy-efficient high-voltage power conversion

Clean-tech enabler: efficient appliances, LED lighting, DC motor drives, renewable energy, electric transportation

Expanding market opportunity with higher-power products, rapid-charging for mobile devices

Double-digit revenue CAGR since 2001


Ultra-simple power converters• Fewer components

• Shorter design cycles

• Easier to manufacture

• Higher reliability

BOM cost similar to discrete designs

Highly energy-efficient

Comprehensive Expertise in High-Voltage


Highly Integrated Power Converters 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.


Relentless Innovation

534 U.S. Patents390 Non-U.S. Patents

at 12/31/2012

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100

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U.S

. Pat

ents

Gra

nted


Vast Addressable Market –Power Conversion Is Needed Everywhere


Long-Term Secular Growth Drivers

1. Ongoing transition to IC-based power supplies• Integration saves labor and materials, improves reliability


Leading Transition to IC-Based Power Supplies

Linear Transformers

1970 1994

Discretes

1994 Today1970

Integrated•Fairchild•Sanken•ST Micro•ON Semi• Infineon POWI

• iWatt/Dialog•BCD/Diodes•Active•Leadtrend•OnBright

•Fairchild• Infineon•ON Semi•ST Micro•NXP 80%

20%

Pow

er S

uppl

y U

nit V

olum

e




2. Energy-efficient electronics & appliances• Driven by standards and consumer awareness


Energy Specs Continue to Tighten

ENERGY STAR® “Most Efficient” label rewards top performers

New CEC battery-charger standards in 2013; U.S. to tighten federal standards for external power supplies

European standby power limitation tightened to 0.5 W in 2013

Traditional 40 W and 60 W light bulbs banned in U.S. starting 2014


“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


Energy Vampire vs. LinkZero™





3. LED lighting• Requires low-cost, efficient, reliable power supplies


Well-Positioned in LED Lighting

Traditional bulbs phasing out

LEDs need efficient, reliable drivers

Integration brings reliability, efficiency, size advantage

0

5

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15

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25

2007 2008 2009 2010 2011 2012

LED Lighting Revenues ($M)





3. LED lighting• Requires low-cost, efficient, reliable power supplies

4. Expanding market opportunity• Rapid charging for mobile-device market

• Higher-power products add ~$1B to addressable market


Rapid Charging: Emerging Trend in Mobility

Larger batteries causing extended downtime for charging Qualcomm Quick Charge 2.0 cuts charge time up to 75% POWI is lead strategic partner on the charger side Higher dollar content than a standard charger

ConventionalCharging

Quick Charge 2.0

Quick Charge 2.0 PMIC

Charger Interface Chip + Power Conversion Chip


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


Radically Simplifying Mid-Power Converters

HiperPFS™ and HiperTFS™ replace up to 100 components

HiperTFS + HiperPFS


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


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, potential dollar content >5x higher


Concept Deal Extends High-Voltage Leadership

CONCEPT drivers reduce component count, enhance efficiency, reliability

Acquired CT-Concept in 2012

IGBT drivers for industrial motors, renewables, locomotives, DC transmission

Addressable market ~$500M; now ~10% of POWI revenue

Broadens POWI opportunity in clean-power applications


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


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


Consistent Track Record of Growth

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2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Revenue ($M)


Outperforming the Peer Group

-10%

0%

10%

20%

30%

40%

2007 2008 2009 2010 2011 2012 6-yearCAGR

Annual Revenue Growth POWIAnalog Semis (SIA)


Recent Outperformance Masked by End-Customer Mix in Cellphone Chargers

-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)


Well-Diversified Revenue Mix

25%Consumer

23%Computer

43%Comms

20022013 (Nine Months)

21%Comms

35%Consumer

34% Industrial

10%Computer

Higher-margin industrial & consumer markets now >2/3 of revenues; cellphone chargers down from 40% to ~10%


Consistent Cash Flow Generation

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2008 2009 2010 2011 2012

Cash Flow from Operations ($M)

Effect of one-time tax payment


Strong Balance Sheet

$180M cash and investments• Used $116M for Concept acquisition

No debt

Quarterly dividend increasing to $0.10 in Q1 2014

$260M of repurchases since 2004• Average price of $23

• 6% net reduction in shares outstanding (Feb. 2004 – Feb. 2013)

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Q3'08 Q1'11 Q3'13

Cash and Investments ($M)

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Q3'08 Q1'11 Q3'13

Diluted Shares Outstanding (M)

At September 30, 2013


Recognized Leader in Clean Technology

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

Power Integrations, Inc.Nasdaq: POWI

POWI investor presentation january 2014

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Transcript of POWI investor presentation january 2014