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What changed in POWER INTEGRATIONS INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of POWER INTEGRATIONS INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+193 added−190 removedSource: 10-K (2025-02-07) vs 10-K (2024-02-12)

Top changes in POWER INTEGRATIONS INC's 2024 10-K

193 paragraphs added · 190 removed · 165 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

52 edited+11 added−15 removed85 unchanged
Biggest changeFor 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 our proprietary GaN transistors in some our products, enabling a higher level of energy efficiency than ICs with silicon transistors.
Biggest changeWe 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.
Nayyar served as vice president of finance at Applied Biosystems, Inc., a developer and manufacturer of life-sciences products, from 2002 to 2009. Mr. Nayyar was a member of the executive team with world-wide responsibilities for finance. From 1990 to 2001, Mr.
Previously Mr. Nayyar served as vice president of finance at Applied Biosystems, Inc., a developer and manufacturer of life-sciences products, from 2002 to 2009. Mr. Nayyar was a member of the executive team with world-wide responsibilities for finance. From 1990 to 2001, Mr.
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.
Therefore, the growth of our business depends largely on increasing our penetration of the markets that we serve and on further expanding our addressable market. Our growth strategy includes the following elements: ● Increase our penetration of the markets we serve.
Therefore, the growth of our business depends largely on increasing our penetration of the markets that we serve and on further expanding our addressable market. Our growth strategy includes the following elements: ● Increase the size of our addressable market.
Approximately 97% of eligible U.S. employees participate in our 401(k) plan and 70% of eligible employees participated in the most recent offering period of our employee stock purchase plan. 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.
Approximately 97% of eligible U.S. employees participate in our 401(k) plan and 64% of eligible employees participated in the most recent offering period of our employee stock purchase plan. 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.
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.
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, electric locomotives, EVs and high-voltage DC transmission systems.
As of December 31, 2023, 6% of our worldwide employees were foreign nationals, defined as individuals requiring employment visas in the countries where they are employed. Women comprise approximately 24% of our total U.S. workforce and 34% of our non-technical U.S. workforce.
As of December 31, 2024, 6% of our worldwide employees were foreign nationals, defined as individuals requiring employment visas in the countries where they are employed. Women comprise approximately 24% of our total U.S. workforce and 34% of our non-technical U.S. workforce.
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 11 Table of Contents local, state or federal laws.
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.
We also now offer automotive-qualified versions of certain products, such as InnoSwitch ICs, for use in electric vehicles. ● High-voltage gate drivers We offer a range of high-voltage gate-driver products sold primarily under the SCALE and SCALE-2 product-family names. These products are fully assembled circuit boards incorporating multiple ICs, electrical isolation components and other circuitry.
We also now offer automotive-qualified versions of certain products, such as InnoSwitch ICs, for use in EVs. ● High-voltage gate drivers We offer a range of high-voltage gate-driver products sold primarily under the SCALE and SCALE-2 product-family names. These products are fully assembled circuit boards incorporating multiple ICs, electrical isolation components and other circuitry.
Other Product Information TOPSwitch, TinySwitch, LinkSwitch, DPA-Switch, EcoSmart, Hiper, Qspeed, InnoSwitch, BridgeSwitch, SCALE, SCALE-II, SCALE-III, SCALE-iDriver, PeakSwitch, CAPZero, SENZero, ChiPhy, FluxLink, CONCEPT, PI Expert and Motor-Expert are trademarks of Power Integrations, Inc. End Markets and Applications Our net revenues consist primarily of sales of the products described above.
Other Product Information TOPSwitch, TinySwitch, LinkSwitch, DPA-Switch, EcoSmart, Hiper, Qspeed, InnoSwitch, BridgeSwitch, SCALE, SCALE-II, SCALE-III, SCALE-iDriver, PeakSwitch, CAPZero, SENZero, ChiPhy, FluxLink, CONCEPT, PI Expert and Motor-Expert are trademarks of Power Integrations, Inc. 8 Table of Contents End Markets and Applications Our net revenues consist primarily of sales of the products described above.
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 5 Table of Contents semiconductors enabled the development of a new generation of power supplies known as switched-mode power supplies, or switchers.
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.
We also provide extensive hands-on design support as well as online design tools, such as our PI Expert design software, that further reduce time-to-market and product development risks. ● Energy Efficiency Our EcoSmart technology improves the energy efficiency of electronic devices during normal operation as well as standby and “no-load” conditions.
We also provide extensive hands-on design support as well as online design tools, such as our PI Expert design software, that further reduce time-to-market and product development risks. 6 Table of Contents ● Energy Efficiency Our EcoSmart technology improves the energy efficiency of electronic devices during normal operation as well as standby and “no-load” conditions.
Market Category Primary Applications Communications ​ Mobile-phone chargers, adapters for routers, cordless phones, broadband modems, voice-over-IP phones, other network and telecom gear Computer ​ Desktop PCs and monitors, servers, adapters for tablets and notebook computers, other computer peripherals Consumer ​ Major and small appliances, air conditioners and other comfort appliances, TVs and set-top boxes, video-game consoles Industrial ​ Industrial controls, LED lighting, utility meters, motor controls, uninterruptible power supplies, battery-powered tools, networked thermostats, power strips and other “smart home” devices, industrial motor drives, renewable energy systems, electric locomotives, electric passenger cars and commercial vehicles, high-voltage DC transmission systems ​ Sales, Distribution and Marketing 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.
Market Category Primary Applications Communications ​ Mobile-phone chargers, broadband modems, wi-fi routers, other network and telecom gear Computer ​ Desktop PCs and monitors, servers, adapters for tablets and notebook computers, other computer peripherals Consumer ​ Major and small appliances, air conditioners and other comfort appliances, TVs and set-top boxes, video-game consoles Industrial ​ Industrial controls, LED lighting, utility meters, motor controls, uninterruptible power supplies, battery-powered tools, networked thermostats, power strips and other “smart home” devices, industrial motor drives, renewable energy systems, electric locomotives, electric passenger cars and commercial vehicles, high-voltage DC transmission systems ​ Sales, Distribution and Marketing 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.
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 ranging from approximately 100 kilowatts to gigawatts, while our motor-driver ICs address BLDC 6 Table of Contents applications up to about 400 watts.
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 ranging from approximately 100 kilowatts to gigawatts, while our motor-driver ICs address BLDC applications up to about one horsepower.
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 11 Table of Contents 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.
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.
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.
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. We regard as proprietary some equipment, processes, information and knowledge that we have developed and used in the design and manufacture of our products.
We also hold trademarks in the U.S. 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.
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.
Direct sales to OEMs and merchant power supply manufacturers represented approximately 30%, 31% and 30% of our net product revenues in 2024, 2023 and 2022, respectively, while sales to distributors accounted for the remainder in each of the corresponding years.
In 2022 and 2023 we were certified by Great Place to Work® based on the results of an anonymous survey of employees; in the 2023 survey, 85% 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.
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.
The ethnic makeup of our U.S. workforce is approximately as follows: 62% Asian; 27% white; 6% Hispanic or Latino; 4% other. Innovation is the lifeblood of our company, and we depend on our people to sustain our competitive advantage. To attract and retain talented employees, we offer competitive compensation with generous comprehensive benefits for employees and dependents (including domestic partners).
The ethnic makeup of our U.S. workforce is approximately as follows: 63% Asian; 26% white; 6% Hispanic or Latino; 5% other. Innovation is the lifeblood of our company, and we depend on our people to sustain our competitive advantage. To attract and retain talented employees, we offer competitive compensation with generous comprehensive benefits for employees and dependents (including domestic partners).
Barsan has more than 40 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. Prior to joining Power Integrations, Mr.
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. Prior to joining Power Integrations, Mr.
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.
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.
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.
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 5 Table of Contents renewable energy installations to the power grid), and low-emissions transportation applications such as electric locomotives.
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.
Since 1998, our AC-DC power-conversion ICs have featured our EcoSmart technology which drastically reduces standby power waste. 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.
The table below provides the approximate mix of our net sales by end market: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, End Market 2023 ​ 2022 ​ 2021 Communications ​ 29 % ​ 21 % ​ 30 % Computer 12 % ​ 10 % ​ 10 % Consumer 27 % ​ 33 % ​ 32 % Industrial 32 % ​ 36 % ​ 28 % ​ 8 Table of Contents Our products are used in a vast range of power-conversion applications in the above-listed end-market categories.
The table below provides the approximate mix of our net sales by end market: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, End Market 2024 ​ 2023 ​ 2022 Communications ​ 12 % ​ 29 % ​ 21 % Computer 14 % ​ 12 % ​ 10 % Consumer 39 % ​ 27 % ​ 33 % Industrial 35 % ​ 32 % ​ 36 % ​ Our products are used in a vast range of power-conversion applications in the above-listed end-market categories.
These engineers have expertise in high-voltage device structure and process technology, analog and digital IC design, system architecture and packaging. Intellectual Property and Other Proprietary Rights We use a combination of patents, trademarks, copyrights, trade secrets and confidentiality procedures to protect our intellectual-property rights. In 2023, we received 17 U.S. and 48 foreign patents.
These engineers have expertise in high-voltage device structure and process technology, analog and digital IC design, system architecture and packaging. 9 Table of Contents Intellectual Property and Other Proprietary Rights We use a combination of patents, trademarks, copyrights, trade secrets and confidentiality procedures to protect our intellectual-property rights. In 2024, we received 26 U.S. and 49 foreign patents.
As of December 31, 2023, we held 300 U.S. and 349 foreign patents. Both U.S. and foreign patents have expiration dates ranging from 2024 to 2044. While our patent portfolio as a whole is important to the success of our business, we are not materially dependent upon any single patent.
As of December 31, 2024, we held 285 U.S. and 370 foreign patents. Both U.S. and foreign patents have expiration dates ranging from 2025 to 2045. While our patent portfolio as a whole is important to the success of our business, we are not materially dependent upon any single patent.
Mr. Gupta joined Intersil in 2012 as its Vice President, Quality and Reliability. Prior to joining Intersil, Mr. Gupta was the Director of Worldwide Customer Quality Engineering at Qualcomm, and prior to Qualcomm Mr. 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. Mr.
Mr. Gupta joined Intersil in 2012 as its Vice President, Quality and Reliability. Prior to joining Intersil, Mr. Gupta was the Director of Worldwide Customer Quality Engineering at Qualcomm, and prior to Qualcomm Mr. Gupta spent 16 years at National Semiconductor in wafer fab operations and quality. Gagan Jain has served as our vice president, worldwide sales since September 2024.
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.
In 2019 we began offering InnoSwitch ICs with more-efficient GaN transistors rather than silicon 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.
Risk Factors in this Annual Report on Form 10-K under “Risks Related to Laws and Regulations.” Human Capital As of December 31, 2023, we employed 819 full-time personnel across 14 countries with 361, or 44% of the total, residing in North America, while 56% resided offshore comprising 334 in the Asia-Pacific region and 124 across Europe.
Risk Factors in this Annual Report on Form 10-K under “Risks Related to Laws and Regulations.” Human Capital As of December 31, 2024, we employed 865 full-time personnel across 15 countries with 342, or 40% of the total, residing in North America, while 60% resided offshore comprising 400 in the Asia-Pacific region and 123 across Europe.
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 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.
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.
As a result, the value of our products is influenced by the prices of discrete components, which fluctuate in relation to market demand, raw-material prices and other factors, but have generally decreased over time.
Generally, our products enable customers to design power converters with total bill-of-materials costs similar to those of competing alternatives. As a result, the value of our products is influenced by the prices of discrete components, which fluctuate in relation to market demand, raw-material prices and other factors, but have generally decreased over time.
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.
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.
Prior to joining Power Integrations, Dr. Barsan served as chairman and CEO at Redfern Integrated Optics, Inc., a supplier of single frequency narrow linewidth lasers, modules, and subsystems, from 2001 to 2013.
Radu Barsan has served as our vice president of technology since January 2013, leading our foundry engineering, technology development and quality organizations. Prior to joining Power Integrations, Dr. Barsan served as chairman and CEO at Redfern Integrated Optics, Inc., a supplier of single frequency narrow linewidth lasers, modules, and subsystems, from 2001 to 2013.
Walker served as vice president of Reach Software Corporation, a software company. From December 1993 to September 1994, Mr. 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.
Clifford Walker has served as our vice president, corporate development since June 1995. From September 1994 to June 1995, Mr. Walker served as vice president of Reach Software Corporation, a software company. From December 1993 to September 1994, Mr. Walker served as president of Morgan Walker International, a consulting company.
Nayyar served in a succession of financial roles including vice president of finance at Quantum Corporation, a computer storage company. Mr. Nayyar also worked for five years in the public-accounting field at Ernst & Young LLP. Mr. Nayyar is a Certified Public Accountant, Chartered Accountant and has a Bachelor of Commerce from the University of Delhi, India. Mr.
Nayyar served in a succession of financial roles including vice president of finance at Quantum Corporation, a computer storage company. Mr. Nayyar also worked for five years in the public-accounting field at Ernst 13 Table of Contents & Young LLP. Mr.
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. Variations of our power-supply ICs are used for high-voltage power conversion in electric vehicles (“EVs”).
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.
We attempt to protect our trade secrets and other proprietary information through non-disclosure agreements, proprietary-information agreements with employees and consultants, and other security measures. 9 Table of Contents Manufacturing We contract with three foundries for the manufacture of the vast majority of our silicon wafers: (1) Lapis Semiconductor Co., Ltd., or Lapis, (formerly OKI Electric Industry), (2) Seiko Epson Corporation, or Epson and (3) X-FAB Semiconductor Foundries AG, or X-FAB.
Manufacturing We contract with three foundries for the manufacture of the vast majority of our silicon wafers: (1) Lapis Semiconductor Co., Ltd., or Lapis, (formerly OKI Electric Industry), (2) Seiko Epson Corporation, or Epson and (3) X-FAB Semiconductor Foundries AG, or X-FAB.
His earlier experience includes serving as business management and marketing consultant for Sapiential Prime, Inc., director of sales and business unit manager for 8x8, Inc., and serving in application engineering management for IIT, Inc. and design engineering roles with LSI Logic, Inmos, Ltd. and Marconi. 12 Table of Contents Radu Barsan has served as our vice president of technology since January 2013, leading our foundry engineering, technology development and quality organizations.
His earlier experience includes serving as business management and marketing consultant for Sapiential Prime, Inc., director of sales and business unit manager for 8x8, Inc., and serving in application engineering management for IIT, Inc. and design engineering roles with LSI Logic, Inmos, Ltd. and Marconi.
Information About Our Executive Officers As of January 31, 2024, our executive officers, who were appointed by and serve at the discretion of our board of directors, were as follows: ​ ​ ​ ​ ​ Name Position With Power Integrations Age Balu Balakrishnan President, Chief Executive Officer and Director 69 Douglas Bailey Vice President, Marketing 57 Radu Barsan Vice President, Technology 71 Sunil Gupta Vice President, Operations 51 David “Mike” Matthews Chief Technical Officer 59 Sandeep Nayyar Vice President, Finance and Chief Financial Officer 64 Clifford Walker Vice President, Corporate Development 72 Yang Chiah Yee Vice President, Worldwide Sales 57 Balu Balakrishnan has served as president, chief executive officer and as a director of Power Integrations since January 2002; he has also served as chairman of the board since May 2023.
Power Integrations, Inc. was incorporated in California on March 25, 1988, and reincorporated in Delaware in December 1997. 12 Table of Contents Information About Our Executive Officers As of January 31, 2025, our executive officers, who were appointed by and serve at the discretion of our board of directors, were as follows: ​ ​ ​ ​ ​ Name Position With Power Integrations Age Balu Balakrishnan President, Chief Executive Officer and Director 70 Douglas Bailey Vice President, Marketing 58 Radu Barsan Vice President, Technology 72 Sunil Gupta Vice President, Operations 52 Gagan Jain ​ Vice President, Worldwide Sales ​ 47 Sandeep Nayyar Vice President, Finance and Chief Financial Officer 65 Clifford Walker Vice President, Corporate Development 73 Balu Balakrishnan has served as president, chief executive officer and as a director of Power Integrations since January 2002; he has also served as chairman of the board since May 2023.
Competition 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.
We try to carry a substantial amount of wafer and finished-goods inventory to help offset these risks and to better serve our markets and meet customer demand. 10 Table of Contents Competition 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.
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.
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.
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.
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.
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. He was the lead independent director from 2021 to 2022. Clifford Walker has served as our vice president, corporate development since June 1995. From September 1994 to June 1995, Mr.
Nayyar is a Certified Public Accountant, Chartered Accountant and has a Bachelor of Commerce from the University of Delhi, India. Mr. 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.
In 2022 we launched PowerPros ℠ , a live online video support service that 4 Table of Contents 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 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.
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.
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.
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.
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.
Products Below is a brief description of our products: ● AC-DC power conversion products TOPSwitch, our first commercially successful product family, was introduced in 1994.
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. 7 Table of Contents Products Below is a brief description of our products: ● AC-DC power conversion products TOPSwitch, our first commercially successful product family, was introduced in 1994.
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.
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. 4 Table of Contents Also contributing to our SAM expansion has been the emergence of new applications within the power ranges that our products can address.
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).
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.
Our trade secrets include a high-volume production process used in the manufacture of our high-voltage ICs.
Our trade secrets include a high-volume production process used in the manufacture of our high-voltage ICs. We attempt to protect our trade secrets and other proprietary information through non-disclosure agreements, proprietary-information agreements with employees and consultants, and other security measures.
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. BridgeSwitch products are complemented by our Motor-Expert software, which provides configuration and diagnostic tools for design engineers.
BridgeSwitch products are complemented by our Motor-Expert software, which provides configuration and diagnostic tools for design engineers.
Removed
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.
Added
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.
Removed
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.
Added
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.
Removed
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.
Added
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.
Removed
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.
Added
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.
Removed
Our ClampZero ICs, introduced in 2021 alongside the GaN-based InnoSwitch4-CZ family of 7 Table of Contents ICs, further enhance efficiency by recovering power losses associated with the high switching frequency of GaN transistors.
Added
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.
Removed
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.
Added
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.
Removed
We try to carry a substantial amount of wafer and finished-goods inventory to help offset these risks and to better serve our markets and meet customer demand.
Added
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.
Removed
In general, we expect competition from Chinese semiconductor vendors to intensify over time reflecting China’s stated aim to develop its domestic semiconductor industry. 10 Table of Contents Generally, our products enable customers to design power converters with total bill-of-materials costs similar to those of competing alternatives.
Added
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.
Removed
Power Integrations, Inc. was incorporated in California on March 25, 1988, and reincorporated in Delaware in December 1997.
Added
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.
Removed
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.
Added
Mr. 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.
Removed
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. Sandeep Nayyar has served as our vice president and chief financial officer since June 2010. Previously Mr.
Added
Prior to joining Power Integrations, Mr. 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.
Removed
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.
Removed
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.
Removed
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. Mr. Yee’s earlier experience includes senior sales roles at Xilinx Inc. and Memec LLC focusing on the Asia-Pacific region. Mr.
Removed
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. 13 Table of Contents

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

32 edited+13 added−2 removed83 unchanged
Biggest changeSome of the factors that could affect our operating results include the following: ● the demand for our products declining in the major end markets we serve, which may occur due to competitive factors, supply-chain fluctuations, rising inflation or other changes in macroeconomic conditions; ● reliance on international sales activities for a substantial portion of our net revenues; ● the volume and timing of orders received from customers; ● our products are sold through distributors, which limits our direct interaction with our end customers, which reduces our ability to forecast sales and increases the complexity of our business; ● the ability of our products to penetrate additional markets; ● our ability to develop and bring to market new products and technologies on a timely basis; ● failure, disruption, security breaches, or other incidents impacting our information technology infrastructure or information management systems; ● interruptions in our information technology systems; ● competitive pressures on selling prices; ● we face risks related to the Novel Coronavirus pandemic (“COVID-19”), which has disrupted and may again disrupt our operations, including our manufacturing, research and development, and sales and marketing activities, which could have a material adverse impact on our business, financial condition, operating results and cash flows; ● risks associated with our supply chain including, the volume, cost and timing of delivery of orders placed by us with our wafer foundries and assembly subcontractors, and their ability to procure materials; ● our ability to attract and retain qualified personnel; ● the lengthy timing of our sales cycle; ● earthquakes, fire, pandemics or other disasters; ● undetected defects and failures in meeting the exact specifications required by our products; ● fluctuations in exchange rates, particularly the exchange rate between the U.S. dollar and the Japanese yen, the Euro and the Swiss franc; ● the inability to adequately protect or enforce our intellectual property rights; ● expenses we are required to incur (or choose to incur) in connection with our intellectual property litigations; ● changes in tax rules and regulations, changes in interpretation of tax rules and regulations, or unfavorable assessments from tax audits may increase the amount of taxes we are required to pay; 14 Table of Contents ● changes in environmental laws and regulations, including with respect to energy consumption and climate change; ● uncertainties arising out of economic consequences of current and potential military actions, including current on-going conflicts in Ukraine and the Middle East, or terrorist activities and associated political instability; ● risks associated with acquisitions and strategic investments; ● our ability to successfully integrate, or realize the expected benefits from, our acquisitions; and ● continued impact of changes in securities laws and regulations, including potential risks resulting from our evaluation of our internal controls over financial reporting.
Biggest changeSome of the factors that could affect our operating results include the following: ● the demand for our products declining in the major end markets we serve, which may occur due to competitive factors, supply-chain fluctuations, rising inflation or other changes in macroeconomic conditions; ● reliance on international sales activities for a substantial portion of our net revenues; ● the volume and timing of orders received from customers; ● our products are sold through distributors, which limits our direct interaction with our end customers, which reduces our ability to forecast sales and increases the complexity of our business; ● the ability of our products to penetrate additional markets; ● our ability to develop and bring to market new products and technologies on a timely basis; ● undetected defects and failures in meeting the exact specifications required by our products; ● warranty claims, product liability claims and product recalls; ● failure, disruption, security breaches, or other incidents impacting our information technology infrastructure or information management systems; ● interruptions in our information technology systems; ● competitive pressures on selling prices; ● risks associated with our supply chain including, the volume, cost and timing of delivery of orders placed by us with our wafer foundries and assembly subcontractors, and their ability to procure materials; ● our ability to attract and retain qualified personnel; ● the lengthy timing of our sales cycle; ● earthquakes, fire or other disasters; ● we face risks related to global health crises, which has disrupted and may again disrupt our operations, including our manufacturing, research and development, and sales and marketing activities, which could have a material adverse impact on our business, financial condition, operating results and cash flows; 14 Table of Contents ● fluctuations in exchange rates, particularly the exchange rate between the U.S. dollar and the Japanese yen, the Euro and the Swiss franc; ● the inability to adequately protect or enforce our intellectual property rights; ● expenses we are required to incur (or choose to incur) in connection with our intellectual property litigations; ● changes in tax rules and regulations, changes in interpretation of tax rules and regulations, or unfavorable assessments from tax audits may increase the amount of taxes we are required to pay; ● changes in environmental laws and regulations, including with respect to energy consumption and climate change; ● uncertainties arising out of economic consequences of current and potential military actions, including current on-going conflicts in Ukraine and the Middle East, or terrorist activities and associated political instability; ● risks associated with acquisitions and strategic investments; ● our ability to successfully integrate, or realize the expected benefits from, our acquisitions; and ● continued impact of changes in securities laws and regulations, including potential risks resulting from our evaluation of our internal controls over financial reporting.
A limited number of applications of our products, such as cellphone chargers and consumer appliances, make up a significant percentage of our net revenues. We expect that a significant level of our net revenues and operating results will continue to be dependent upon these applications in the near term.
A limited number of applications of our products, such as consumer appliances and cellphone chargers, make up a significant percentage of our net revenues. We expect that a significant level of our net revenues and operating results will continue to be dependent upon these applications in the near term.
Risks Related to the Operation and Growth of Our Business If demand for our products continues to decline in our major end markets, our net revenues will continue to decline further. When our customers are not successful in maintaining high levels of demand for their products, their demand for our ICs decreases, which adversely affects our operating results.
Risks Related to the Operation and Growth of Our Business If demand for our products continues to decline in our major end markets, our net revenues will decline further. When our customers are not successful in maintaining high levels of demand for their products, their demand for our ICs decreases, which adversely affects our operating results.
See Note 13, Legal Proceedings and Contingencies , in our Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K. For example, we are being sued in an ongoing case for patent infringement.
See Note 14, Legal Proceedings and Contingencies , in our Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K. For example, we are being sued in an ongoing case for patent infringement.
New environmental laws and regulations could require us or our suppliers to obtain alternative materials that may increase our costs more or be less available, which may adversely affect our operating results. General Risk Factors Uncertainties arising out of economic consequences of current and potential military actions or terrorist activities and associated political instability could adversely affect our business.
New environmental laws and regulations could require us or our suppliers to obtain alternative materials that may increase our costs more or be less available, which may adversely affect our operating results. 20 Table of Contents General Risk Factors Uncertainties arising out of economic consequences of current and potential military actions or terrorist activities and associated political instability could adversely affect our business.
Sales to customers outside of the United States of America account for, and have accounted for a large portion of our net revenues, including approximately 98%, 96% and 98% of our net revenues for the years ended December 31, 2023, 2022 and 2021, respectively.
Sales to customers outside of the United States of America account for, and have accounted for a large portion of our net revenues, including approximately 98%, 98% and 96% of our net revenues for the years ended December 31, 2024, 2023 and 2022, respectively.
Not only does the volume of units ordered by particular customers vary substantially from period to period, but also purchase orders received from particular customers often vary substantially from early oral estimates provided by those customers for planning purposes. In addition, customer 15 Table of Contents orders can be canceled or rescheduled without significant penalty to the customer.
Not only does the volume of units ordered by particular customers vary substantially from period to period, but also purchase orders received from particular customers often vary substantially from early oral estimates provided by those customers for planning purposes. In addition, customer orders can be canceled or rescheduled without significant penalty to the customer.
We cannot assure that we will continue to work successfully with Epson, Lapis and X-FAB in the future, and that the wafer foundries’ capacity will meet our needs. 17 Table of Contents Additionally, one or more of these wafer foundries could seek an early termination of our wafer supply agreements.
We cannot assure that we will continue to work successfully with Epson, Lapis and X-FAB in the future, and that the wafer foundries’ capacity will meet our needs. Additionally, one or more of these wafer foundries could seek an early termination of our wafer supply agreements.
Specifically, our top ten customers, including distributors, accounted for 80%, 76% and 78% of our net revenues in each of the years ended December 31, 2023, 2022 and 2021, respectively. However, a significant portion of these revenues are attributable to sales of our products through distributors of electronic components.
Specifically, our top ten customers, including distributors, accounted for 79%, 80% and 76% of our net revenues in each of the years ended December 31, 2024, 2023 and 2022, respectively. However, a significant portion of these revenues are attributable to sales of our products through distributors of electronic components.
Thus, even if 19 Table of Contents we are successful in these lawsuits, the benefits of this success may fail to outweigh the significant legal costs we will have incurred.
Thus, even if we are successful in these lawsuits, the benefits of this success may fail to outweigh the significant legal costs we will have incurred.
Sales to distributors accounted for approximately 69%, 70% and 75% of net revenues in the years ended December 31, 2023, 2022 and 2021, respectively.
Sales to distributors accounted for approximately 70%, 69% and 70% of net revenues in the years ended December 31, 2024, 2023 and 2022, respectively.
Federal and state laws; and ● foreign-currency exchange risk. Our failure to adequately address these risks could reduce our international sales and materially and adversely affect our operating results.
Federal and state laws; and ● foreign-currency exchange risk. 15 Table of Contents Our failure to adequately address these risks could reduce our international sales and materially and adversely affect our operating results.
Our current patents may or may not inhibit our competitors from getting any benefit from an expired patent. Our U.S. patents have expiration dates ranging from 2024 to 2044.
Our current patents may or may not inhibit our competitors from getting any benefit from an expired patent. Our U.S. patents have expiration dates ranging from 2025 to 2045.
Our contracts with these suppliers expire on varying dates, with the earliest to expire in December 2025. Although some aspects of our relationships with Lapis, X-FAB and Epson are contractual, many important aspects of these relationships depend on their continued cooperation.
Our primary supply arrangements for the production of wafers are with Epson, Lapis and X-FAB. Our contracts with these suppliers expire on varying dates, with the earliest to expire in December 2025. Although some aspects of our relationships with Lapis, X-FAB and Epson are contractual, many important aspects of these relationships depend on their continued cooperation.
Costly litigation may be necessary to enforce our intellectual property rights or to defend us against claimed infringement. The failure to obtain necessary licenses and other rights, and/or litigation arising out of infringement claims could cause us to lose market share and harm our business. As our patents expire, we will lose intellectual property protection previously afforded by those patents.
The failure to obtain necessary licenses and other rights, and/or litigation arising out of infringement claims could cause us to lose market share and harm our business. As our patents expire, we will lose intellectual property protection previously afforded by those patents.
Acquisitions involve numerous risks, including but not limited to: ● inability to realize anticipated benefits, which may occur due to any of the reasons described below, or for other unanticipated reasons; ● the risk of litigation or disputes with customers, suppliers, partners or stockholders of an acquisition target arising from a proposed or completed transaction; ● impairment of acquired intangible assets and goodwill as a result of changing business conditions, technological advancements or worse-than-expected performance, which would adversely affect our financial results; and ● unknown, underestimated and/or undisclosed commitments, liabilities or issues not discovered in our due diligence of such transactions. 20 Table of Contents We also in the future may have strategic relationships with other companies, which may decline in value and/or not meet desired objectives.
Acquisitions involve numerous risks, including but not limited to: ● inability to realize anticipated benefits, which may occur due to any of the reasons described below, or for other unanticipated reasons; ● the risk of litigation or disputes with customers, suppliers, partners or stockholders of an acquisition target arising from a proposed or completed transaction; ● impairment of acquired intangible assets and goodwill as a result of changing business conditions, technological advancements or worse-than-expected performance, which would adversely affect our financial results; and ● unknown, underestimated and/or undisclosed commitments, liabilities or issues not discovered in our due diligence of such transactions.
This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions to our disclosure and governance practices. ​ Item 1B. Unresolved Staff Comments. Not applicable. ​
This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions to our disclosure and governance practices. ​
If the price of competing solutions decreases significantly, the cost effectiveness of our products will be adversely affected. If power requirements for applications in which our products are currently utilized go outside the cost-effective range of our products, some of these alternative technologies can be used more cost effectively.
If power requirements for applications in which our products are currently utilized go outside the cost-effective range of our products, some of these alternative technologies can be used more cost effectively.
Our inability to successfully integrate, or realize the expected benefits from, our acquisitions could adversely affect our results. We have made, and in the future intend to make, acquisitions of other businesses and with these acquisitions there is a risk that integration difficulties may cause us not to realize expected benefits.
We have made, and in the future intend to make, acquisitions of other businesses and with these acquisitions there is a risk that integration difficulties may cause us not to realize expected benefits.
The loss of the services of one or more of our engineers, executive officers or other key personnel could harm our business. In addition, if one or more of these individuals leaves our employ, and we are unable to quickly and efficiently replace those individuals with qualified personnel who can smoothly transition into their new roles, our business may suffer.
In addition, if one or more of these individuals leaves our employ, and we are 18 Table of Contents unable to quickly and efficiently replace those individuals with qualified personnel who can smoothly transition into their new roles, our business may suffer.
Costs or payments in connection with such claims could harm our operating results. Risks Related to Financial Performance Fluctuations in exchange rates, particularly the exchange rate between the U.S. dollar and the Japanese yen, Swiss franc and euro, may impact our gross margin and net income .
Risks Related to Financial Performance Fluctuations in exchange rates, particularly the exchange rate between the U.S. dollar and the Japanese yen, Swiss franc and euro, may impact our gross margin and net income .
While we do not anticipate that this will have a material impact on our tax provision or effective tax rate, we will continue to monitor the evolving tax legislation in the jurisdictions in which we operate.
While we do not anticipate that this will have a material impact on our tax provision or effective tax rate, we will continue to monitor the evolving tax legislation in the jurisdictions in which we operate. The foregoing items could have a material effect on our business, cash flow, results of operations or financial conditions.
We have implemented measures to manage our risks related to such disruptions, but such disruptions could still occur and negatively impact our operations and financial results. Furthermore, the risk of state-supported and geopolitically motivated cybersecurity incidents may increase due to geopolitical instability. In addition, we may incur additional costs to remedy any damages caused by these disruptions or security breaches.
We have implemented measures to manage our risks related to such disruptions, but such disruptions could still occur and negatively impact our operations and financial results. 17 Table of Contents Furthermore, the risk of state-supported and geopolitically motivated cybersecurity incidents may increase due to geopolitical instability.
We rely on the efficient and uninterrupted operation of complex information technology systems and networks to operate our business. Any significant system or network disruption, including but not limited to new system implementations, computer viruses, security breaches, or energy blackouts could have a material adverse impact on our operations, sales and operating results.
Any significant system or network disruption, including but not limited to new system implementations, faulty software provided by one of our security vendors, computer viruses, security breaches, or energy blackouts could have a material adverse impact on our operations, sales and operating results.
As the frequency of cyber-attacks and resulting breaches reported by other businesses and governments increases, we expect to continue to devote significant resources to improve and maintain our IT infrastructure. We have incurred and may in the future incur significant costs in order to implement, maintain and/or update security systems we believe are necessary to protect our IT infrastructure.
As the frequency of cyber-attacks and resulting breaches reported by other businesses and governments increases, we expect to continue to devote significant resources to improve and maintain our IT infrastructure and its security.
We believe our failure to compete successfully in the high-voltage power supply business, including our ability to introduce new products with higher average selling prices, would materially harm our operating results.
We believe our failure to compete successfully in the high-voltage power supply business, including our ability to introduce new products with higher average selling prices, would materially harm our operating results. We depend on third-party suppliers to provide us with wafers for our products and if they fail to provide us sufficient quantities of wafers, our business may suffer .
We cannot assure that the steps we have taken to protect our intellectual property will be adequate to prevent misappropriation, or that others will not develop competitive technologies or products. From time to time, we have received, and we may receive in the future, communications alleging possible infringement of patents or other intellectual property rights of others.
We cannot assure that the steps we have 19 Table of Contents taken to protect our intellectual property will be adequate to prevent misappropriation, or that others will not develop competitive technologies or products.
Any interruption in our ability, or that of our major suppliers, to continue operations could delay the development and shipment of our products and have a substantial negative impact on our financial results. 18 Table of Contents Our products must meet exacting specifications, and undetected defects and failures may occur which may cause customers to return or stop buying our products and/or impose significant costs to us.
Any interruption in our ability, or that of our major suppliers, to continue operations could delay the development and shipment of our products and have a substantial negative impact on our financial results.
A breakdown in existing controls and procedures around our cyber-security environment may prevent us from detecting, reporting or responding to cyber incidents in a timely manner and could have a material adverse 16 Table of Contents effect on our financial position and value of our stock.
A breakdown in existing controls and procedures around our cyber-security environment may prevent us from detecting, reporting or responding to cyber incidents in a timely manner and could have a material adverse effect including but not limited to i nterruptions or delays in our business operations, loss of existing or future customers, and damage to our reputation, which could adversely affect our business, reputation, and financial results .
Intense competition in the high-voltage power supply industry may lead to a decrease in our average selling price and reduced sales volume of our products. The high-voltage power supply industry is intensely competitive and characterized by significant price sensitivity. Our products face competition from alternative technologies, such as linear transformers, discrete switcher power supplies, and other integrated and hybrid solutions.
In addition, we may incur additional costs to remedy any damages caused by these disruptions or security breaches. Intense competition in the high-voltage power supply industry may lead to a decrease in our average selling price and reduced sales volume of our products. The high-voltage power supply industry is intensely competitive and characterized by significant price sensitivity.
The success of these strategic relationships depends on various factors over which we may have limited or no control and requires ongoing and effective cooperation with strategic partners. Moreover, these relationships are often illiquid, such that it may be difficult or impossible for us to monetize such relationships.
We also in the future may have strategic relationships with other companies, which may decline in value and/or not meet desired objectives. The success of these strategic relationships depends on various factors over which we may have limited or no control and requires ongoing and effective cooperation with strategic partners.
In addition, customers may defer or return orders for existing products in response to the introduction of new products. When a potential liability exists we will maintain reserves for customer returns, however we cannot assure that these reserves will be adequate.
In addition, customers may defer or return orders for existing products in response to the introduction of new products.
Removed
We depend on third-party suppliers to provide us with wafers for our products and if they fail to provide us sufficient quantities of wafers, our business may suffer . Our primary supply arrangements for the production of wafers are with Epson, Lapis and X-FAB.
Added
When a potential liability exists we will maintain reserves for customer returns, however we cannot assure that these reserves will be adequate. 16 Table of Contents Our products must meet exacting specifications, and undetected defects and failures may occur which may cause customers to return or stop buying our products and/or impose significant costs to us.
Removed
As of December 31, 2023, we are currently subject to an ongoing audit with the California Franchise Tax Board for the tax years 2018 and 2019. The foregoing items could have a material effect on our business, cash flow, results of operations or financial conditions.
Added
Costs or payments in connection with such claims could harm our operating results. Warranty claims, product liability claims and product recalls could harm our business, results of operations and financial condition.
Added
We face an inherent business risk of exposure to warranty and product liability claims if products fail to perform as expected or any such failure is alleged to result in bodily injury, death, and/or property damage. In addition, if any of our designed products are alleged to be defective, we may be required to participate in their recalls.
Added
Some OEMs expect suppliers to warrant their products for longer periods of time and are increasingly looking to them for contribution when faced with product liability claims or recalls. We carry various commercial liability policies, including umbrella/excess policies which provide some protection against product liability exposure.
Added
However, a successful warranty or product liability claim against us in excess of our available insurance coverage, or a requirement that we participate in a product recall, could have adverse effects on our business results.
Added
Further, in the future, it is possible that we will not be able to obtain insurance coverage in the amounts and for the risks we seek at policy costs and terms we desire.
Added
Additionally, if our products fail to perform as expected or such failure of our products results in a recall, our reputation may be damaged, which could make it more difficult for us to sell our products to existing and prospective customers and could materially and adversely affect our business, results of operations and financial condition.
Added
We have incurred and may in the future incur significant costs in order to implement, maintain and/or update security systems we believe are necessary to protect our IT infrastructure.
Added
We rely on the efficient and uninterrupted operation of complex information technology systems and networks to operate our business.
Added
Our products face competition from alternative technologies, such as linear transformers, discrete switcher power supplies, and other integrated and hybrid solutions. If the price of competing solutions decreases significantly, the cost effectiveness of our products will be adversely affected.
Added
The loss of the services of one or more of our engineers, executive officers or other key personnel could harm our business.
Added
From time to time, we have received, and we may receive in the future, communications alleging possible infringement of patents or other intellectual property rights of others. Costly litigation may be necessary to enforce our intellectual property rights or to defend us against claimed infringement.
Added
Moreover, these relationships are often illiquid, such that it may be difficult or impossible for us to monetize such relationships. Our inability to successfully integrate, or realize the expected benefits from, our acquisitions could adversely affect our results.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

8 edited+0 added−0 removed17 unchanged
Biggest changeOur CISO has extensive experience serving in executive and senior IT leadership positions over the past 25 years including serving at Cavium in a succession of information security roles, including Vice President of Business Systems, for eleven years, Vice President of IT Applications at ServiceNow for two years, and overseeing worldwide IT Infrastructure, IT Operations and Information Security at Pinnacle Systems for eight years.
Biggest changeOur CISO has extensive experience serving in executive and senior IT leadership positions over the past 25 years including eleven years at Cavium in a succession of information technology roles, including vice president of business systems, two years at ServiceNow as vice president of IT Applications, and eight years overseeing worldwide IT infrastructure, IT operations and information security at Pinnacle Systems.
The report provides a comprehensive cybersecurity update for the past quarter, including topics such as details on threat landscape, incident response, security metrics and performance, compliance and regulatory updates, cybersecurity investments and budget, employee security awareness and trainings, vendor risk management updates, business continuity and disaster recovery updates, and an update on cybersecurity strategy, projects and roadmap. ​
The report provides a comprehensive cybersecurity update for the past quarter, usually including topics such as details on threat landscape, incident response, security metrics and performance, compliance and regulatory updates, cybersecurity investments and budget, employee security awareness and trainings, vendor risk management updates, business continuity and disaster recovery updates, and an update on cybersecurity strategy, projects and roadmap. ​
This policy serves to establish a formal process to report incidents and track response activities. It also defines escalation processes within the Information Security team and to our Cybersecurity Incident Response Team. It is the responsibility of the Cybersecurity Incident Response team to determine if an incident is material.
This policy serves to establish a formal process to report incidents and track response activities. It also defines escalation processes within the Information Security team and further escalation to our Cybersecurity Incident Response Team. It is the responsibility of the Cybersecurity Incident Response team to determine if an incident is material.
We have established disclosure controls and procedures to address cybersecurity events, which include elements relating to comprehensive analysis of events and communication within the company, as well as addressing potential disclosure obligations arising from security breaches. 21 Table of Contents We have partnered with third parties to support our information security systems and processes, and to help design, build, test, implement and maintain them.
We have established disclosure controls and procedures to address cybersecurity events, which include elements relating to comprehensive analysis of events and communication within the company, as well as addressing potential disclosure obligations arising from security breaches. We have partnered with third parties to support our information security systems and processes, and to help design, build, test, implement and maintain them.
We have established global IT policies as well as IT security management control procedures designed to assess, identify, and manage material risks from cybersecurity threats by: ● Creating information security awareness among our employees and business partners and defining responsibilities among them; ● Implementing controls to identify IT risks and monitor the use of our systems and information resources; ● Establishing key policies and processes to adequately and timely respond to security threats; ● Maintaining disaster recovery and business continuity plans; and ● Emphasizing compliance with applicable laws, regulations and contractual obligations regarding the management of information security.
We have established global IT policies as well as IT security management control procedures designed to assess, identify, and manage material risks from cybersecurity threats, including but not limited to: ● Creating information security awareness among our employees and business partners and defining responsibilities among them; ● Implementing controls to identify IT risks and monitor the use of our systems and information resources; ● Establishing key policies and processes to adequately and timely respond to security threats; ● Maintaining disaster recovery and business continuity plans; and ● Emphasizing compliance with applicable laws, regulations and contractual obligations regarding the management of information security.
Risk Factors in this Annual Report on Form 10-K under “Risks Related to the Operation and Growth of Our Business.” Management Oversight Our IT infrastructure and the assessment and management of associated risks are primarily the responsibility of our Chief Information Security Officer (“CISO”).
Risk Factors in this Annual Report on Form 10-K under “Risks Related to the Operation and Growth of Our Business.” 22 Table of Contents Management Oversight Our IT infrastructure and the assessment and management of associated risks are primarily the responsibility of our Chief Information Security Officer (“CISO”).
The Cybersecurity Incident Response Team consists of members from functional groups across our organization including executive management, IT, Information Security, legal, finance and operations. We may include other individuals, including third parties, as appropriate depending on the nature of the incident and system(s) involved.
The Cybersecurity Incident Response Team consists of members from functional groups across our organization including executive management, IT, the CISO, legal, finance and operations. We may include other individuals, including third parties, as appropriate depending on the nature of the incident and system(s) involved.
In addition, the Company’s Incident Response Procedure policy includes reporting to the board of directors for certain cybersecurity incidents. 22 Table of Contents Board Governance Our full board of directors oversees our risk management including but not limited to IT and cybersecurity policies, procedures, and risk assessments.
In addition, the Company’s Incident Response Procedure policy includes reporting to the board of directors for certain cybersecurity incidents. Board Governance Our full board of directors oversees our risk management including but not limited to IT and cybersecurity policies, procedures, and risk assessments.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe lease administrative office space in Singapore, R&D facilities in Canada, United Kingdom, the Philippines and Malaysia, in addition to sales offices in various countries around the world to accommodate our sales force. We believe that our current facilities are sufficient for our company; however, if headcount increases above capacity we may need to lease additional space. ​
Biggest changeWe lease administrative office space in Singapore, R&D facilities in Canada, the United Kingdom, the Philippines, New York, and Malaysia, and sales offices in various countries around the world to accommodate our sales force. We believe that our current facilities are sufficient for our near-term needs; however, if headcount increases above capacity we may need to lease additional space. ​

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings. Information with respect to this item may be found in Note 13, Legal Proceedings and Contingencies, in our Notes to Consolidated Financial Statements included later in this Annual Report on Form 10-K, which information is incorporated here by reference. ​ Item 4. Mine Safety Disclosures. Not applicable. 23 Table of Contents PART II
Biggest changeItem 3. Legal Proceedings. Information with respect to this item may be found in Note 14, Legal Proceedings and Contingencies, in our Notes to Consolidated Financial Statements included later in this Annual Report on Form 10-K, which information is incorporated here by reference. 23 Table of Contents ​ Item 4. Mine Safety Disclosures.
Added
Not applicable. 24 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOff-Balance-Sheet Arrangements As of December 31, 2023 and 2022, we did not have any off-balance-sheet arrangements or relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which are typically established for the purpose of facilitating off-balance-sheet arrangements or other contractually narrow or limited purposes. 32 Table of Contents Contractual Obligations As of December 31, 2023, we had the following non-cancelable contractual obligations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payments Due by Period ​ ​ ​ ​ ​ Less than 1 ​ ​ ​ ​ ​ ​ ​ ​ ​ (In thousands) Total Year 1 - 3 Years 4 - 5 Years Over 5 Years Operating lease obligations (1) ​ $ 11,239 ​ $ 3,168 ​ $ 5,617 ​ $ 2,211 ​ $ 243 Purchase obligations (2) ​ $ 41,585 ​ $ 41,585 ​ $ — ​ $ — ​ $ — (1) Operating lease obligations represent undiscounted non-cancelable remaining lease payments.
Biggest changeOff-Balance-Sheet Arrangements As of December 31, 2024 and 2023, we did not have any off-balance-sheet arrangements or relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which are typically established for the purpose of facilitating off-balance-sheet arrangements or other contractually narrow or limited purposes.
Cash from Investing Activities Our investing activities in the year ended December 31, 2023 resulted in a $14.2 million net use of cash, consisting primarily of $20.9 million for purchases of property and equipment, primarily production-related machinery and equipment, partially offset by $6.7 million from sales and maturities of marketable securities, net of purchases.
Our investing activities in the year ended December 31, 2023 resulted in a $14.2 million net use of cash, consisting primarily of $20.9 million for purchases of property and equipment, primarily production-related machinery and equipment, partially offset by $6.7 million of proceeds from sales and maturities of marketable securities, net of purchases.
All else being equal, a 10% change in the value of the U.S. dollar compared to the Japanese yen would eventually result in a corresponding change in our gross margin of approximately 1.5%; this sensitivity may increase or decrease depending on the percentage of our wafer supply that we purchase from Japanese suppliers.
All else being equal, a 10% change in the value of the U.S. dollar compared to the Japanese yen would eventually result in a corresponding change in our gross margin of approximately 1.4%; this sensitivity may increase or decrease depending on the percentage of our wafer supply that we purchase from Japanese suppliers.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 are not included in this Form 10-K, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 are not included in this Form 10-K, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
We expect international sales to continue to account for a large portion of our net revenues for the foreseeable future. Sales to distributors accounted for 69% and 70% of our net revenues in 2023 and 2022, respectively, with direct sales to OEMs and merchant power supply manufacturers accounting for the remainder in each of the corresponding years.
We expect international sales to continue to account for a large portion of our net revenues for the foreseeable future. Sales to distributors accounted for 70% and 69% of our net revenues in 2024 and 2023, respectively, with direct sales to OEMs and merchant power supply manufacturers accounting for the remainder in each of the corresponding years.
Cash from Financing Activities Our financing activities in the year ended December 31, 2023, resulted in a $93.0 million net use of cash.
Our financing activities in the year ended December 31, 2023, resulted in a $93.0 million net use of cash.
The Credit Agreement terminates on June 7, 2026; all advances under the revolving line of credit will become due on such date, or earlier in the event of a default. As of December 31, 2023 and 2022, we had no advances outstanding under the Credit Agreement.
The Credit Agreement terminates on June 7, 2026; all advances under the revolving line of credit will become due on such date, or earlier in the event of a default. As of December 31, 2024 and 2023, we had no advances outstanding under the Credit Agreement.
Accordingly, as of December 31, 2023, our worldwide cash and marketable securities are available to fund capital allocation needs, including capital and internal investments, acquisitions, stock repurchases and/or dividends without incurring significant U.S. federal income taxes.
Accordingly, as of December 31, 2024, our worldwide cash and marketable securities are available to fund capital allocation needs, including capital and internal investments, acquisitions, stock repurchases and/or dividends without incurring significant U.S. federal income taxes.
We expect capital expenditures in fiscal 2024 to be primarily for machinery and equipment for use in the manufacture of our products to support future growth. We expect to fund these capital expenditures with cash on hand as well as cash provided by future operations.
We expect capital expenditures in fiscal 2025 to be primarily for machinery and equipment for use in the manufacture of our products to support future growth. We expect to fund these capital expenditures with cash on hand as well as cash provided by future operations.
Authorization of future stock-repurchase programs is at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements and business conditions as well as other factors. There is no expiration date on the plan or the amount currently authorized.
Authorization of future repurchase programs is at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, business conditions and other factors. There is no expiration date on the plan or the amount currently authorized.
The Credit Agreement was amended on June 7, 2021, to provide an alternate borrowing rate as a replacement for LIBOR and extend the termination date from April 30, 2022 to 30 Table of Contents June 7, 2026, with all other terms remaining the same.
The Credit Agreement was amended on June 7, 2021, to provide an alternate borrowing rate as a replacement for LIBOR and extend the termination date from April 30, 2022 to June 7, 2026, with all other terms remaining the same.
The following customers represented 10% or more of our net revenues for the respective years: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Customer 2023 ​ 2022 ​ 2021 Avnet 27 % ​ 31 % ​ 30 % Honestar Technologies Co., Ltd. ​ 18 % ​ 11 % ​ 16 % Salcomp Group 10 % ​ * ​ ​ * ​ * Total customer revenue was less than 10% of net revenues.
The following customers represented 10% or more of our net revenues for the respective years: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Customer 2024 ​ 2023 ​ 2022 Avnet 30 % ​ 27 % ​ 31 % Honestar Technologies Co., Ltd. ​ 11 % ​ 18 % ​ 11 % Salcomp Group * ​ ​ 10 % ​ * ​ * Total customer revenue was less than 10% of net revenues.
Management’s Discussion and Analysis of Financial Condition and Results of Operations. This section of this Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
Management’s Discussion and Analysis of Financial Condition and Results of Operations. This section of this Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
Frequently, distributors need to sell at a price lower than the standard distribution price in order to win business. At the time the distributor invoices its customer or soon thereafter, the distributor submits a “ship-and-debit” price adjustment claim to us to adjust the distributor’s cost from the standard price to the pre-approved lower price.
Frequently, distributors need to sell at a price lower than the standard distribution price in order to win business. At the time the distributor invoices its customer 28 Table of Contents or soon thereafter, the distributor submits a “ship-and-debit” price adjustment claim to us to adjust the distributor’s cost from the standard price to the pre-approved lower price.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our common stock trades on the Nasdaq Global Select Market under the symbol “POWI”. As of January 31, 2024, there were approximately 60 stockholders of record.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our common stock trades on the Nasdaq Global Select Market under the symbol “POWI”. As of January 31, 2025, there were approximately 61 stockholders of record.
The following table compares the provision for income taxes for the years ended December 31, 2023, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in millions) 2023 ​ Change ​ 2022 ​ Change ​ 2021 Provision (benefit) for income taxes $ (9.8) ​ ​ (178.2) % ​ $ 12.6 ​ ​ 7.3 % ​ $ 11.7 ​ Effective tax rate ​ (21.4) % ​ ​ ​ ​ 6.9 % ​ ​ ​ ​ 6.7 % In 2023 and 2022, the effective tax rate was lower than the statutory U.S. federal income-tax rates of 21% due to the geographic distribution of our world-wide earnings in lower tax jurisdictions, the impact of federal research tax credits and the recognition of excess tax benefits related to share-based compensation.
The following table compares the provision for income taxes for the years ended December 31, 2024, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in millions) 2024 ​ Change ​ 2023 ​ Change ​ 2022 Provision (benefit) for income taxes $ (1.5) ​ ​ (84.9) % ​ $ (9.8) ​ ​ (178.2) % ​ $ 12.6 ​ Effective tax rate ​ (4.8) % ​ ​ ​ ​ (21.4) % ​ ​ ​ ​ 6.9 % In 2024 and 2023, the effective tax rate was lower than the statutory U.S. federal income-tax rates of 21% due to the geographic distribution of our world-wide earnings in lower tax jurisdictions, the impact of federal research tax credits and the recognition of excess tax benefits related to share-based compensation.
In addition to operating lease and purchase obligations, we have a contractual obligation related to income tax as of December 31, 2023, which primarily comprises unrecognized tax benefits of approximately $16.4 million, and was classified as contra deferred tax assets or long-term income taxes payable in our consolidated balance sheet.
In addition to operating lease and purchase obligations, we have a contractual obligation related to income tax as of December 31, 2024, which primarily comprises unrecognized tax benefits of approximately $15.2 million, and was classified as contra deferred tax assets or long-term income taxes payable in our consolidated balance sheet.
Results of Operations The following table sets forth statement of income data as a percentage of net revenues for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 ​ 2022 ​ 2021 Net revenues ​ 100.0 % ​ 100.0 % ​ 100.0 % Cost of revenues 48.5 ​ 43.7 ​ 48.7 ​ Gross profit 51.5 ​ 56.3 ​ 51.3 ​ Operating expenses: ​ ​ ​ ​ ​ ​ Research and development 21.6 ​ 14.4 ​ 12.1 ​ Sales and marketing 14.5 ​ 9.6 ​ 8.6 ​ General and administrative 7.5 ​ 4.4 ​ 5.7 ​ Other operating expenses, net — ​ 0.2 ​ — ​ Total operating expenses 43.6 ​ 28.6 ​ 26.4 ​ Income from operations 7.9 ​ 27.7 ​ 24.9 ​ Other income 2.4 ​ 0.5 ​ 0.2 ​ Income before income taxes 10.3 ​ 28.2 ​ 25.1 ​ Provision (benefit) for income taxes (2.2) ​ 2.0 ​ 1.7 ​ Net income 12.5 % ​ 26.2 % ​ 23.4 % ​ Comparison of Years Ended December 31, 2023 and 2022 Net revenues.
Results of Operations The following table sets forth statement of income data as a percentage of net revenues for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 ​ 2023 ​ 2022 Net revenues ​ 100.0 % ​ 100.0 % ​ 100.0 % Cost of revenues 46.4 ​ 48.5 ​ 43.7 ​ Gross profit 53.6 ​ 51.5 ​ 56.3 ​ Operating expenses: ​ ​ ​ ​ ​ ​ Research and development 24.1 ​ 21.6 ​ 14.4 ​ Sales and marketing 16.2 ​ 14.5 ​ 9.6 ​ General and administrative 9.1 ​ 7.5 ​ 4.4 ​ Other operating expenses, net — ​ — ​ 0.2 ​ Total operating expenses 49.4 ​ 43.6 ​ 28.6 ​ Income from operations 4.2 ​ 7.9 ​ 27.7 ​ Other income 3.1 ​ 2.4 ​ 0.5 ​ Income before income taxes 7.3 ​ 10.3 ​ 28.2 ​ Provision (benefit) for income taxes (0.4) ​ (2.2) ​ 2.0 ​ Net income 7.7 % ​ 12.5 % ​ 26.2 % ​ 29 Table of Contents Comparison of Years Ended December 31, 2024 and 2023 Net revenues.
We face global macroeconomic challenges and risks including the effects of the conflicts in Ukraine and the Middle East, potential risks stemming from tensions between China and Taiwan and between China and Western countries, health crises such as the COVID-19 pandemic, volatility in exchange rates, cyclical demand patterns common for our industry, inflation, tariffs and other risks associated with the global trade environment.
We face global macroeconomic challenges and risks including the effects of the conflicts in Ukraine and the Middle East, potential risks stemming from tensions between China and Taiwan and between China and Western countries, volatility in exchange rates, cyclical demand patterns common for our industry, inflation, tariffs and other risks associated with the global trade environment.
In 2023, our net income was $55.7 million, we also incurred $35.2 million of depreciation, $28.5 million of stock-based compensation and $2.2 million of intangibles amortization partially offset by a $9.2 million increase in deferred income taxes. Sources of cash also included a $6.6 million decrease in accounts receivable.
In 2023, our net income was $55.7 million, which included non-cash expenses of $35.2 million of depreciation, $28.5 million of stock-based compensation and $2.2 million of intangibles amortization partially offset by a $9.2 million increase in deferred income taxes. Sources of cash included a $6.6 million decrease in accounts receivable.
The following table compares other income for the years ended December 31, 2023, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in millions) 2023 ​ Change ​ 2022 ​ Change ​ 2021 Other income $ 10.8 ​ ​ 259.9 % ​ $ 3.0 ​ 179.9 % ​ $ 1.1 ​ Other income increased in 2023 due primarily to an increase in interest income resu lting from higher yields earned on our investments .
The following table compares other income for the years ended December 31, 2024, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in millions) 2024 ​ Change ​ 2023 ​ Change ​ 2022 Other income $ 12.8 ​ ​ 18.2 % ​ $ 10.8 ​ 259.9 % ​ $ 3.0 ​ Other income increased in 2024 due primarily to an increase in interest income resu lting from higher yields earned on our investments .
Although power supplies using our products are designed and distributed worldwide, most of these power supplies are manufactured by our customers in Asia. As a result, sales to this region accounted for approximately 84% and 75% of our net revenues in 2023 and 2022, respectively.
Although power supplies using our products are designed and distributed worldwide, most of these power supplies are manufactured by our customers in Asia. As a result, sales to this region accounted for 84% of our net revenues in both 2024 and 2023.
Estimating write-downs for excess and obsolete inventory The bulk of our inventory is held in wafers, which combined with the fungibility of our products across customers and applications results in a lower risk of obsolescence. We routinely monitor the quality of our on-hand wafers to ensure that performance remains unchanged over time.
Inventory valuation The bulk of our inventory is held in wafers, which combined with the fungibility of our products across customers and applications results in a lower risk of obsolescence. We routinely monitor the quality of our on-hand wafers to ensure that performance remains unchanged over time.
We believe these factors have exacerbated the effects of a cyclical downturn in the semiconductor industry; such downturns are commonly experienced in our industry following periods of strong growth during which supply chain participants tend to accumulate excess inventories.
We believe these factors have exacerbated the effects of a cyclical downturn in the semiconductor industry; such downturns are commonly experienced following periods of strong growth­‒such as that observed during the COVID-19 pandemic‒during which supply-chain participants tend to accumulate excess inventories.
In October 2022, our board of directors authorized the use of an additional $100.0 million for the repurchase of our common stock, with repurchases to be executed according to pre-defined price/volume guidelines. As of December 31, 2023, we had approximately $26.0 million available for future stock repurchases.
In October 2024, our board of directors authorized the use of an additional $50.0 million for the repurchase of our common stock, with repurchases to be executed according to pre-defined price/volume guidelines. As of December 31, 2024, we had approximately $48.1 million available for future stock repurchases.
Authorization of future stock repurchase programs is at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements and business conditions as well as other factors. Capital Expenditures Cash paid for property and equipment in the year ended December 31, 2023 was $20.9 million.
Authorization of future repurchase programs is at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, business conditions and other factors. Capital Expenditures Cash paid for property and equipment in the year ended December 31, 2024 was $17.3 million.
Cash from Operating Activities Our operating activities generated cash of $65.8 million and $215.3 million in the years ended December 31, 2023 and 2022, respectively. We generate cash primarily from operating activities in the ordinary course of business.
Cash from Operating Activities Our operating activities generated cash of $81.2 million and $65.8 million in the years ended December 31, 2024 and 2023, respectively. We generate cash primarily from operating activities in the ordinary course of business.
The reserve for ship-and-debit 27 Table of Contents claims decreased by $17.2 million between December 31, 2023 and December 31, 2022, primarily due to lower inventory levels held by distributors. Historically, actual price adjustments for ship-and-debit claims have not materially differed from those estimated when determining the transaction price.
The reserve for ship-and-debit claims decreased by $9.6 million between December 31, 2024 and December 31, 2023, primarily due to lower inventory levels held by distributors. Historically, actual price adjustments for ship-and-debit claims have not materially differed from those estimated when determining the transaction price.
Because our industry is intensely price-sensitive, our gross margin (gross profit divided by net revenues) is subject to change based on the relative pricing of solutions that compete with ours. Variations in product mix, end-market mix 26 Table of Contents and customer mix can also cause our gross margin to fluctuate.
International sales represented approximately 98% of net revenues for both 2024 and 2023. Because our industry is intensely price-sensitive, our gross margin (gross profit divided by net revenues) is subject to change based on the relative pricing of solutions that compete with ours. Variations in product mix, end-market mix and customer mix can also cause our gross margin to fluctuate.
Dividends In January 2022, our board of directors declared dividends of $0.18 per share to be paid to stockholders of record at the end of each quarter in 2022.
Dividends In February 2023, our board of directors declared dividends of $0.19 per share to be paid to stockholders of record at the end of each quarter in 2023.
These increases were partially offset by decreased commissions expense. General and administrative expenses. General and administrative (“G&A”) expenses consist primarily of employee-related expenses, including salaries and stock-based compensation expenses for administration, finance, human resources and general management, as well as consulting, professional services, legal and auditing expenses.
General and administrative expenses. General and administrative (“G&A”) expenses consist primarily of employee-related expenses, including salaries and stock-based compensation expenses for administration, finance, human resources and general management, as well as consulting, professional services, legal and auditing expenses.
We base our estimates on historical facts and various other assumptions that we believe to be reasonable at the time the estimates are made. Actual results could differ from those estimates. Our critical accounting policies are as follows: ● revenue recognition; ● estimating write-downs for excess and obsolete inventory.
We base our estimates on historical facts and various other assumptions that we believe to be reasonable at the time the estimates are made. Actual results could differ from those estimates. Our critical accounting policies which reflect our more significant estimates are as follows: * revenue recognition; * inventory valuation.
Our approximate net revenue mix by end-markets served in 2023, 2022 and 2021 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ End Market 2023 ​ 2022 ​ 2021 Communications ​ 29 % ​ 21 % ​ 30 % Computer 12 % ​ 10 % ​ 10 % Consumer 27 % ​ 33 % ​ 32 % Industrial 32 % ​ 36 % ​ 28 % ​ 28 Table of Contents Sales to customers outside of the United States were $435.9 million and $625.6 million in 2023 and 2022, respectively, representing 98% and 96% of net revenues in 2023 and 2022, respectively.
Our approximate net revenue mix by end-markets served in 2024, 2023 and 2022 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ End Market 2024 ​ 2023 ​ 2022 Communications ​ 12 % ​ 29 % ​ 21 % Computer 14 % ​ 12 % ​ 10 % Consumer 39 % ​ 27 % ​ 33 % Industrial 35 % ​ 32 % ​ 36 % ​ Sales to customers outside of the United States were $412.5 million and $435.9 million in 2024 and 2023, respectively, representing 98% of net revenues in both 2024 and 2023.
The following table summarizes repurchases of our common stock during the fourth quarter of fiscal 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of ​ Approximate Dollar Value ​ ​ ​ ​ ​ Shares Purchased ​ that May Yet be ​ Total ​ Average ​ as Part of ​ Repurchased Under the ​ Number of ​ Price Paid ​ Publicly Announced ​ Plans or Program Period Shares Purchased ​ Per Share ​ Plans or Programs ​ (In millions) October 1, 2023 to October 31, 2023 464,903 ​ $ 69.83 ​ 464,903 ​ $ 41.0 November 1, 2023 to November 30, 2023 215,080 ​ $ 69.63 ​ 215,080 ​ $ 26.0 December 1, 2023 to December 31, 2023 — ​ ​ — ​ — ​ $ 26.0 Total 679,983 ​ ​ ​ ​ 679,983 ​ ​ ​ ​ 24 Table of Contents Performance Graph ( 1 ) The following graph shows the cumulative total return on an investment of $100 in cash on December 31, 2018, through December 31, 2023, in our common stock, the Nasdaq Composite Index and the PHLX Semiconductor Sector Index (SOX) and assuming that all dividends were reinvested.
The following table summarizes repurchases of our common stock made under our publicly announced repurchase program during the fourth quarter of fiscal 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of ​ Approximate Dollar Value ​ ​ ​ ​ ​ ​ Shares Purchased ​ that May Yet be ​ ​ Total ​ Average ​ as Part of ​ Repurchased Under the ​ ​ Number of ​ Price Paid ​ Publicly Announced ​ Plans or Program Period ​ Shares Purchased ​ Per Share ​ Plans or Programs ​ (In millions) October 1, 2024 to October 31, 2024 ​ — ​ ​ — ​ — ​ $ 50.0 November 1, 2024 to November 30, 2024 ​ 13,903 ​ $ 61.81 ​ 13,903 ​ $ 49.1 December 1, 2024 to December 31, 2024 ​ 16,445 ​ $ 63.38 ​ 16,445 ​ $ 48.1 Total ​ 30,348 ​ ​ ​ ​ 30,348 ​ ​ ​ ​ 25 Table of Contents Performance Graph ( 1 ) The following graph shows the cumulative total return on an investment of $100 in cash on December 31, 2019, through December 31, 2024, in our common stock, the Nasdaq Composite Index and the PHLX Semiconductor Sector Index (SOX) and assuming that all dividends were reinvested.
Our gross profit, defined as net revenues less cost of revenues, was $229.0 million or 52% of net revenues in 2023, compared to $366.9 million or 56% of net revenues in 2022.
Our gross profit, defined as net revenues less cost of revenues, was $224.8 million or 54% of net revenues in 2024, compared to $229.0 million or 52% of net revenues in 2023.
Our financing activities in the year ended December 31, 2022, resulted in a $346.4 million net use of cash.
Cash from Financing Activities Our financing activities in the year ended December 31, 2024, resulted in a $68.2 million net use of cash.
The following table compares sales and marketing expenses for the years ended December 31, 2023, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in millions) 2023 ​ Change ​ 2022 ​ Change ​ 2021 Sales and marketing expenses ​ $ 64.6 ​ 3.2 % ​ $ 62.6 ​ 2.9 % ​ $ 60.8 ​ Headcount (at period end) ​ ​ 317 ​ ​ ​ ​ ​ ​ 320 ​ ​ ​ ​ ​ ​ 280 ​ ​ 29 Table of Contents S&M expenses increased in 2023 compared to 2022 primarily due to higher salaries and related expenses, increased travel and trade show expenses, and increased stock-based compensation expense.
The following table compares sales and marketing expenses for the years ended December 31, 2024, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in millions) 2024 ​ Change ​ 2023 ​ Change ​ 2022 Sales and marketing expenses ​ $ 67.8 ​ 5.0 % ​ $ 64.6 ​ 3.2 % ​ $ 62.6 ​ Headcount (at period end) ​ ​ 330 ​ ​ ​ ​ ​ ​ 317 ​ ​ ​ ​ ​ ​ 320 ​ S&M expenses increased in 2024 compared to 2023 primarily due to increased stock-based compensation expense related to performance-based awards and higher salaries- and benefit-related expenses due to increased headcount and annual salary increases.
The table below compares G&A expenses for the years ended December 31, 2023, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in millions) 2023 ​ Change ​ 2022 ​ Change ​ 2021 G&A expenses $ 33.2 ​ 15.0 % ​ $ 28.9 ​ (27.5) % ​ $ 39.8 ​ Headcount (at period end) ​ ​ 79 ​ ​ ​ ​ ​ ​ 72 ​ ​ ​ ​ ​ ​ 70 ​ G&A expenses increased in 2023 primarily due to higher salaries and related expenses driven by increased headcount and increased stock-based compensation expense related to performance-based awards.
The table below compares G&A expenses for the years ended December 31, 2024, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in millions) 2024 ​ Change ​ 2023 ​ Change ​ 2022 G&A expenses $ 38.2 ​ 15.0 % ​ $ 33.2 ​ 15.0 % ​ $ 28.9 ​ Headcount (at period end) ​ ​ 84 ​ ​ ​ ​ ​ ​ 79 ​ ​ ​ ​ ​ ​ 72 ​ G&A expenses increased i n 2024 primarily due to increased stock-based compensation expense related to performance-based awards, higher salaries- and benefit-related expenses due to increased headcount and annual salary increases as well as increased professional services.
Stock Repurchases Over the years our board of directors has authorized the use of funds to repurchase shares of our common stock, including $100.0 million in January 2022, $50.0 million in February 2022, $75.0 million in April 2022 and $100.0 million in October 2022 with repurchases to be executed according to pre-defined price/volume guidelines.
Stock Repurchases Over the years our board of directors has authorized the use of funds to repurchase shares of our common stock, including $100.0 million in October 2022 with repurchases to be executed according to pre-defined price/volume guidelines. As of December 31, 2022, we had $81.3 million remaining under our stock-repurchase program.
Sales and marketing expenses. Sales and marketing (“S&M”) expenses consist primarily of employee-related expenses, including salaries and stock-based compensation, and commissions to sales representatives, as well as amortization of acquired intangible assets and facilities expenses, including expenses associated with our regional sales and support offices.
The addition of the employees of Odyssey Semiconductor in July 2024 contributed to the increase. Sales and marketing expenses. Sales and marketing (“S&M”) expenses consist primarily of employee-related expenses, including salaries and stock-based compensation, and commissions to sales representatives, as well as facilities expenses, including expenses associated with our regional sales and support offices.
Financing activities consisted primarily of $311.1 million for the repurchase of our common stock and $41.5 million for the payment of dividends to stockholders, partially offset by proceeds of $6.2 million from the issuance of common stock, including the exercise of employee stock options and issuance of shares through our employee stock purchase plan.
Financing activities consisted primarily of $46.0 million for the payment of dividends to stockholders and $27.9 million for the repurchase of our common stock, partially offset by proceeds of $5.7 million from the issuance of common stock through our employee stock purchase plan.
The following table compares R&D expenses for the years ended years ended December 31, 2023, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in millions) 2023 ​ Change ​ 2022 ​ Change ​ 2021 R&D expenses $ 96.1 ​ 2.3 % ​ $ 93.9 ​ 10.6 % ​ $ 84.9 ​ Headcount (at period end) ​ ​ 282 ​ ​ ​ ​ ​ ​ 310 ​ ​ ​ ​ ​ ​ 304 ​ ​ R&D expenses increased in 2023 compared to 2022 primarily due to increased stock-based compensation expense, higher salaries and related expenses due to annual salary increases and increased equipment-related expenses, partially offset by lower product development costs.
The following table compares R&D expenses for the years ended years ended December 31, 2024, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in millions) 2024 ​ Change ​ 2023 ​ Change ​ 2022 R&D expenses $ 100.8 ​ 4.9 % ​ $ 96.1 ​ 2.3 % ​ $ 93.9 ​ Headcount (at period end) ​ ​ 311 ​ ​ ​ ​ ​ ​ 282 ​ ​ ​ ​ ​ ​ 310 ​ ​ 30 Table of Contents R&D expenses increased in 2024 compared to 2023 primarily due to increased stock-based compensation expense related to performance-based awards and higher salaries- and benefit-related expenses due to increased headcount and annual salary increases .
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 net revenues were $444.5 million and $651.1 million in 2023 and 2022, respectively.
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 business and financial performance depends significantly on worldwide economic conditions.
In February 2023, our board of directors raised the cash dividend with the declaration of four cash dividends of $0.19 per share to be paid to stockholders of record at the end of each quarter in 2023.
In October 2023, our board of directors raised the cash dividend with the declaration of five cash dividends of $0.20 per share to be paid to stockholders of record at the end of the fourth quarter in 2023 (in lieu of the $0.19 per share announced in February 2023) and at the end of each quarter in 2024. 32 Table of Contents In October 2024, our board of directors raised the cash dividend again with the declaration of five cash dividends of $0.21 per share to be paid to stockholders of record at the end of the fourth quarter in 2024 (in lieu of the $0.20 per share announced in October 2023) and at the end of each quarter in 2025.
We have a Credit Agreement with Wells Fargo Bank, National Association (the "Credit Agreement") that provides us with a $75.0 million revolving line of credit to use for general corporate purposes with a $20.0 million sub-limit for the issuance of standby and trade letters of credit.
As of December 31, 2024 and 2023, we had working capital, defined as current assets less current liabilities, of approximately $458.7 million and $462.7 million, respectively. 31 Table of Contents We have a Credit Agreement with Wells Fargo Bank, National Association (the "Credit Agreement") that provides us with a $75.0 million revolving line of credit to use for general corporate purposes with a $20.0 million sub-limit for the issuance of standby and trade letters of credit.
The stockholder return shown on the graph below is not necessarily indicative of future performance, and we do not make or endorse any predictions as to future stockholder returns. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Company/Index 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Power Integrations, Inc. ​ 100.00 ​ 163.64 ​ 272.93 ​ 311.49 ​ 242.66 ​ 280.41 Nasdaq Composite 100.00 ​ 136.69 ​ 198.10 ​ 242.03 ​ 163.28 ​ 236.17 PHLX Semiconductor (SOX) ​ 100.00 ​ 163.26 ​ 250.87 ​ 358.37 ​ 233.37 ​ 389.74 (1) This Section is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of Power Integrations under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. ​ Item 6. [Reserved ] 25 Table of Contents Item 7.
The stockholder return shown on the graph below is not necessarily indicative of future performance, and we do not make or endorse any predictions as to future stockholder returns. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Company/Index 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Power Integrations, Inc. ​ 100.00 ​ 166.78 ​ 190.35 ​ 148.28 ​ 171.35 ​ 130.27 Nasdaq Composite 100.00 ​ 144.92 ​ 177.06 ​ 119.45 ​ 172.77 ​ 223.87 PHLX Semiconductor (SOX) ​ 100.00 ​ 153.66 ​ 219.51 ​ 142.94 ​ 238.72 ​ 287.31 (1) This Section is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of Power Integrations under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. ​ Item 6. [Reserved ] 26 Table of Contents Item 7.
The following table compares gross profit and gross margin for the years ended December 31, 2023, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in millions) 2023 ​ Change ​ 2022 ​ Change ​ 2021 Gross profit $ 229.0 ​ (37.6) % ​ $ 366.9 ​ 1.7 % ​ $ 360.6 ​ Gross margin ​ 51.5 % ​ ​ ​ 56.3 % ​ ​ ​ 51.3 % Our gross margin decreased in 2023 as compared to 2022 due to a combination of factors, including a less favorable end-market mix, with a greater percentage of revenues coming from lower-margin end markets and applications and reduced production volumes, which impacted our manufacturing costs per unit.
The following table compares gross profit and gross margin for the years ended December 31, 2024, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in millions) 2024 ​ Change ​ 2023 ​ Change ​ 2022 Gross profit $ 224.8 ​ (1.8) % ​ $ 229.0 ​ (37.6) % ​ $ 366.9 ​ Gross margin ​ 53.6 % ​ ​ ​ 51.5 % ​ ​ ​ 56.3 % Our gross margin increased in 2024 as compared to 2023 due to the favorable impact of the dollar/yen exchange rate on our wafer costs, manufacturing efficiencies including the benefit of higher unit volumes on our manufacturing costs per unit, and favorable end-market mix with a greater percentage of sales coming from higher-margin end-market categories.
Other Information Our cash, cash equivalents and investment balances may change in future periods due to changes in our planned cash outlays, including changes in incremental costs such as direct and integration costs related to future acquisitions.
Other Information Our cash, cash equivalents and investment balances may change in future periods due to changes in our planned cash outlays, including changes in incremental costs such as direct and integration costs related to future acquisitions. Current U.S. tax laws generally allow companies to repatriate accumulated foreign earnings without incurring additional U.S. federal taxes.
In October 2023, our board of directors raised the cash dividend with the declaration of five cash dividends of $0.20 per share to be paid to stockholders of record at the end of the fourth quarter in 2023 (in lieu of the $0.19 per share announced in February 2023) and at the end of each quarter in 2024. 31 Table of Contents The declaration of any future cash dividend is at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, business conditions and other factors, as well as a determination that cash dividends are in the best interest of our stockholders.
The declaration of any future cash dividend is at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, business conditions and other factors, as well as a determination that cash dividends are in the best interest of our stockholders.
Total operating expenses in 2023 were $193.9 million, an increase of $7.4 million as compared to 2022 due to: higher stock-based compensation expenses reflecting a lower-than-usual level of such expenses in the prior year; higher salary- and benefit-related expenses reflecting annual salary increases and higher costs associated with employee health insurance and other benefits.
Total operating expenses in 2024 were $206.8 million, an increase of $12.9 million as compared to 2023, primarily due to increased stock-based compensation expense and higher salary- and benefit-related expenses driven by increased headcount, annual salary increases and higher costs associated with employee health insurance and other benefits.
We believe that demand for our products has been negatively affected by an array of macroeconomic and geopolitical factors including reduced consumer spending in response to inflation and higher interest rates, softer housing markets, weaker demand for mobile phones, general economic weakness in China, the conflicts in Ukraine and the Middle East, and a shift in consumer spending toward travel and services following a period of elevated spending on goods during the COVID-19 pandemic.
We believe that demand for our products has been negatively affected in recent years by an array of macroeconomic and geopolitical factors including reduced consumer spending and a reduction in home sales in response to inflation and higher interest rates, general economic weakness in China, particularly in the residential real estate market, weaker industrial activity and the conflicts in Ukraine and the Middle East.
These sources of cash were partially offset by a $36.2 million increase in inventories due to softening demand during the year and a $3.8 million decrease in accounts payable (excluding payables related to property and equipment) due to timing of payments and a $5.2 million decrease in taxes payable and accrued liabilities.
These sources of cash were partially offset by a $12.3 million increase in accounts receivable, a $2.4 million increase in inventories, and a $3.5 million decrease in taxes payable and accrued liabilities.
Our investing activities in the year ended December 31, 2022 generated $78.3 million of cash, consisting primarily of $116.3 million from sales and maturities of marketable securities, net of purchases, and proceeds of $1.2 million from the sale of an office building, partially offset by $39.2 million for purchases of property and equipment, primarily production-related machinery and equipment.
Cash from Investing Activities Our investing activities in the year ended December 31, 2024 resulted in a $25.9 million net use of cash, consisting primarily of $17.3 million for purchases of property and equipment and $9.5 million for the Odyssey acquisition, partially offset by $0.9 million of proceeds from sales and maturities of marketable securities, net of purchases.
In 2022, our net income was $170.9 million, which included non-cash expenses of $34.9 million of depreciation, $22.4 million of stock-based compensation, $3.3 million for amortization of premium on marketable securities, $2.4 million of intangibles amortization and a $2.6 million decrease in deferred income taxes.
In 2024, our net income was $32.2 million, which included non-cash expenses of $33.3 million of depreciation, $35.1 million of stock-based compensation and $1.3 million of intangibles amortization partially offset by a $8.4 million increase in deferred income taxes.
Revenues from all four end-market categories decreased in 2023 compared to the prior year.
Revenues from the consumer, industrial and computer end-market categories increased compared to the prior year.
Our uses of cash beyond the next 12 months will depend on many factors, including the general economic environment in which we operate and our ability to generate cash flow from operations, which are uncertain but include funding our operations and additional capital expenditures.
Our uses of cash beyond the next 12 months will depend on many factors, including the general economic environment in which we operate and our ability to generate cash flow from operations, which are uncertain but include funding our operations and additional capital expenditures. 33 Table of Contents Contractual Obligations As of December 31, 2024, we had the following non-cancelable contractual obligations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payments Due by Period ​ ​ ​ ​ ​ Less than 1 ​ ​ ​ ​ ​ ​ ​ ​ ​ (In thousands) Total Year 1 - 3 Years 4 - 5 Years Over 5 Years Operating lease obligations (1) ​ $ 19,003 ​ $ 3,849 ​ $ 7,054 ​ $ 4,035 ​ $ 4,065 Purchase obligations (2) ​ $ 37,877 ​ $ 37,877 ​ $ — ​ $ — ​ $ — (1) Operating lease obligations represent undiscounted non-cancelable remaining lease payments.
Our gross margin decreased in 2023 due to a combination of factors, including reduced production volumes, which impacted our manufacturing costs per unit, as well as a less favorable end-market mix, with a greater percentage of revenues coming from lower-margin end markets and applications .
Our gross margin increased in 2024 due to the favorable impact of the dollar/yen exchange rate on our wafer costs, manufacturing efficiencies including the benefit of higher unit volumes on our manufacturing costs per unit, and favorable end-market mix with a greater percentage of sales coming from higher-margin market categories.
Sources of cash also included a $19.9 million decrease in accounts receivable and a $7.3 million decrease in prepaid expenses and other assets.
Sources of cash included a $3.5 million increase in accounts payable (excluding payables related to property and equipment) due to timing of payments and a $4.0 million decrease in prepaid expenses and other assets.
For additional details, refer to Note 11, Provision for Income Taxes , in our Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K. Liquidity and Capital Resources We had $311.6 million in cash, cash equivalents and short-term marketable securities at December 31, 2023 compared to $353.8 million at December 31, 2022.
Liquidity and Capital Resources We had $300.0 million in cash, cash equivalents and short-term marketable securities at December 31, 2024 compared to $311.6 million at December 31, 2023.
Net revenues consist of revenues from product sales, which are calculated net of returns and allowances. Revenues from all four end-market categories decreased in 2023 compared to the prior year.
Net revenues consist of revenues from product sales, which are calculated net of returns and allowances. Revenues declined in 2024 compared to the prior year driven by lower sales into the communications end-market, primarily reflecting greater use of Chinese-made components in chargers manufactured for Chinese smartphone vendors, as well as increased decoupling of smartphone handsets and chargers.
The primary jurisdiction from which our foreign earnings are derived is the Cayman Islands, which is a non-taxing jurisdiction. Income earned in other foreign jurisdictions was not material. We have not been granted any incentivized tax rates and do not operate under tax holidays in any jurisdiction.
Income earned in other foreign jurisdictions was not material. We have not been granted any incentivized tax rates and do not operate under tax holidays in any jurisdiction. For additional details, refer to Note 11, Provision (Benefit) for Income Taxes , in our Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
In 2023, the rate was further favorably impacted by the release of $7.6 million of reserves related to federal uncertain tax positions as the statute of limitations for review of these positions expired. These benefits were partially offset by U.S. tax on foreign income, known as global intangible low-taxed income.
Additionally, in 2024 and 2023, our effective tax rate was favorably impacted by a discrete item associated with the release of unrecognized tax benefits. These benefits were offset by U.S. tax on foreign income, known as global intangible low-taxed income. The primary jurisdiction from which our foreign earnings are derived is the Cayman Islands, which is a non-taxing jurisdiction.
Our top ten customers, including distributors that resell to OEMs and merchant power supply manufacturers, accounted for approximately 80% and 76% of net revenues in 2023 and 2022, respectively. International sales represented approximately 98% and 96% of net revenues in 2023 and 2022, respectively. Our business and financial performance depends significantly on worldwide economic conditions.
Inventories at distributors of our products have decreased significantly in recent periods, enabling our sales to align more closely with end-market demand; this contributed to an increase in net revenues in the fourth quarter of 2024 compared to the fourth quarter of 2023. 27 Table of Contents Our top ten customers, including distributors that resell to OEMs and merchant power supply manufacturers, accounted for approximately 79% and 80% of net revenues in 2024 and 2023, respectively.
In 2022, we repurchased 3.8 million shares for $311.1 million, leaving $81.3 million in funds authorized as of December 31, 2022. In 2023, we repurchased 0.8 million shares for $55.3 million, leaving $26.0 million in funds authorized as of December 31, 2023.
In 2023, we repurchased 0.8 million shares for $55.3 million, leaving $26.0 million in funds authorized as of December 31, 2023. We exhausted this authorization in April 2024. In October 2024, our board of directors authorized the use of an additional $50.0 million for the repurchase of our common stock, with repurchases to be executed according to pre-defined price/volume guidelines.
Removed
We believe that demand for our products has been negatively affected by an array of macroeconomic and geopolitical factors including reduced consumer spending in response to inflation and higher interest rates, softer housing markets, weaker demand for mobile phones, general economic weakness in China, the conflicts in Ukraine and the Middle East, and a shift in consumer spending toward travel and services following a period of elevated spending on goods during the COVID-19 pandemic.
Added
Our net revenues were $419.0 million and $444.5 million in 2024 and 2023, respectively. The decline in revenues in 2024 was driven by lower sales into the communications end-market, primarily reflecting greater use of Chinese-made components in chargers manufactured for Chinese smartphone vendors, as well as increased decoupling of smartphone handsets and chargers.
Removed
We believe these factors have exacerbated the effects of a cyclical downturn in the semiconductor industry; such downturns are commonly experienced in our industry following periods of strong growth during which supply chain participants tend to accumulate excess inventories.
Added
Revenues from the consumer, industrial and computer categories increased compared to the prior year.
Removed
These increases were partially offset by recovery of bad debt and lower professional services expenses. Other operating expenses, net. Other operating expenses, net was $1.1 million in fiscal 2022.
Added
As of December 31, 2024, $48.1 million remained under this repurchase authorization; the program has no expiration date. In 2024, we repurchased a total of 0.4 million shares of the Company’s common stock for $27.9 million.
Removed
This amount consisted of a $2.9 million expense resulting from the settlement of our litigation with Opticurrent LLC on May 16, 2022, in which we agreed to pay Opticurrent $2.9 million to end all outstanding legal disputes, partially offset by receipt of a $1.7 million distribution related to the bankruptcy liquidation of SemiSouth Laboratories, Inc., of which we were a creditor as a result of investments made in SemiSouth in 2011.
Removed
Additionally, in 2023 and 2022, our effective tax rate was favorably impacted by the geographic distribution of our world-wide earnings in lower-tax jurisdictions and federal research tax credits.
Removed
As of December 31, 2023 and 2022, we had working capital, defined as current assets less current liabilities, of approximately $462.7 million and $466.7 million, respectively.
Removed
The Tax Act signed into law on December 22, 2017 generally allows companies to repatriate accumulated foreign earnings without incurring additional U.S. federal taxes beginning after December 31, 2017.
Removed
As of December 31, 2023 we also had approximately $1.7 million classified as long-term income taxes payable related to the estimated one-time transition tax from the enactment of the Tax Act which will be payable in three remaining annual installments.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+0 added−0 removed9 unchanged
Biggest changeThis sensitivity analysis applies a change in the U.S. dollar value of 5% and 10%. ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 (in thousands of USD) 5% 10% Swiss franc and euro foreign exchange impact ​ $ 125 ​ $ 250 ​ The foreign exchange rate fluctuation between the U.S. dollar versus the Swiss franc and euro is recorded in other income in our consolidated statements of income.
Biggest changeThis sensitivity analysis applies a change in the U.S. dollar value of 5% and 10%. ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 (in thousands of USD) 5% 10% Swiss franc and euro foreign exchange impact ​ $ 132 ​ $ 263 ​ 34 Table of Contents The foreign exchange rate fluctuation between the U.S. dollar versus the Swiss franc and euro is recorded in other income in our consolidated statements of income.
To minimize market risk, we invest in high-credit quality issuers and, by policy, limit the amount of credit exposure to any one issuer, and therefore if market interest rates were to increase or decrease by 10% from interest rates as of December 31, 2023 or December 31, 2022, the increase or decrease in the fair market value of our portfolio on these dates would not have been material.
To minimize market risk, we invest in high-credit quality issuers and, by policy, limit the amount of credit exposure to any one issuer, and therefore if market interest rates were to increase or decrease by 10% from interest rates as of December 31, 2024 or December 31, 2023, the increase or decrease in the fair market value of our portfolio on these dates would not have been material.
As of December 31, 2023, our primary transactional currency was the U.S. dollar; in addition, we hold cash in Swiss francs and euros to fund the operation of our Swiss subsidiary. Cash balances held in foreign countries are subject to local banking laws and may bear higher or lower risk than cash deposited in the United States.
As of December 31, 2024, our primary transactional currency was the U.S. dollar; in addition, we hold cash in Swiss francs and euros to fund the operation of our Swiss subsidiary. Cash balances held in foreign countries are subject to local banking laws and may bear higher or lower risk than cash deposited in the United States.
At December 31, 2023 and 2022, we held primarily cash equivalents and short-term investments with fixed interest rates. We do not hold any instruments for trading purposes. Our investment securities are subject to market interest rate risk and will vary in value as market interest rates fluctuate.
At December 31, 2024 and 2023, we held primarily cash equivalents and short-term investments with fixed interest rates. We do not hold any instruments for trading purposes. Our investment securities are subject to market interest rate risk and will vary in value as market interest rates fluctuate.
As of December 31, 2023 and 2022, we did not have an open foreign currency hedge program utilizing foreign currency forward exchange contracts. With two of our major suppliers, Seiko Epson Corporation (“Epson”) and ROHM Lapis Semiconductor Co., Ltd.
As of December 31, 2024 and 2023, we did not have an open foreign currency hedge program utilizing foreign currency forward exchange contracts. With two of our major suppliers, Seiko Epson Corporation (“Epson”) and ROHM Lapis Semiconductor Co., Ltd.
All else being equal, a 10% change in the value of the U.S. dollar compared to the Japanese yen would eventually result in a corresponding change in our gross margin of approximately 1.5%; this sensitivity may increase or decrease depending on the percentage of our wafer supply that we purchase from some of our Japanese suppliers and could subject our gross profit and operating results to the potential for material fluctuations. ​ 34 Table of Contents
All else being equal, a 10% change in the value of the U.S. dollar compared to the Japanese yen would eventually result in a corresponding change in our gross margin of approximately 1.4%; this sensitivity may increase or decrease depending on the percentage of our wafer supply that we purchase from some of our Japanese suppliers and could subject our gross profit and operating results to the potential for material fluctuations. ​ 35 Table of Contents
The following represents the potential impact on our pretax income from a change in the value of the U.S. 33 Table of Contents dollar compared to the Swiss franc and euro as of December 31, 2023.
The following represents the potential impact on our pretax income from a change in the value of the U.S. dollar compared to the Swiss franc and euro as of December 31, 2024.

Other POWI 10-K year-over-year comparisons