2023 Annual Report
Dear Fellow Stockholders,
In my letter last year, I addressed the cyclical downturn that began in mid-2022 and led to a seven-percent decline in our
revenues in that year after growth of more than 40 percent in 2021. The downturn deepened in 2023, causing our revenues
to fall by more than 30 percent—the first time in our history that revenues have declined in back-to-back years. In more
than forty-five years in the semiconductor industry I have learned that all cycles are different, and this one is certainly
unlike any other. As you may remember, the coronavirus pandemic resulted in an unprecedented surge in demand for
electronic goods—computer and networking equipment for remote work and school, TVs, appliances, etc., leading to
much-publicized shortages of semiconductor products. This in turn led to over-ordering at every link in the supply chain,
and once supply caught up with demand and those orders were filled, the supply chain was suddenly awash in inventory.
Layered on top of this inventory overshoot has been a macroeconomic slowdown dampening demand and hindering the
depletion of inventories. Economic challenges in China have severely impacted domestic demand in that country, while
inflation and higher interest rates have negatively affected consumer spending and home sales in markets around the world.
Moreover, after having purchased new appliances, computers and other products during the pandemic, consumers of late
have prioritized spending on travel, dining and entertainment rather than physical goods.
While macroeconomic challenges remain a concern, inventories throughout the supply chain have fallen significantly in
recent months, and we expect a gradual recovery beginning in the first half of 2024. Most importantly, we remain as excited
as ever about our long-term growth opportunities. We have managed through this downturn according to the playbook that
has served us well in the past, looking beyond the cycle and remaining focused on the long run. That includes building
wafer inventory to protect our dedicated foundry capacity and to be prepared in the event of a strong upturn, buying back
shares of our stock at opportune moments, and carefully managing expenses while investing in technologies and products
to drive revenue growth and expand our served available market (“SAM”) over the next several years.
One such growth driver is our high-power gate-driver business, which had a second consecutive year of growth in 2023
even as revenues from the broader industrial category were down almost 40 percent. Renewable energy is an important
piece of our high-power business, and we had significant wins last year not only in the utility-scale solar and wind markets
but also in the adjacent high-voltage DC transmission market. In July we announced that our gate drivers will be used in
an undersea link connecting a North Sea wind farm to the mainland, and later in the year we received an initial multi-
million-dollar purchase order for that design as the project prepares to ramp up in 2024.
Another bright spot in 2023 was India, where revenues increased year-over-year and where we are deploying more sales
and application-engineering resources. Growth in India is not just a result of manufacturing moving out of China, but also
a rising level of in-country design and production for the domestic market, which features a rapidly expanding middle class
and modernizing infrastructure. We are participating in a number of ways, with significant design wins in 5G fixed
wireless, smart utility meters, and appliances including ceiling fans, which are converting to brushless DC motors utilizing
our BridgeSwitch™ motor-drive ICs. We also have a strong pipeline of design opportunities in electric transportation, in
everything from two-wheelers to buses and locomotives.
Electrification of transportation is among the most important opportunities we are addressing, and we made tremendous
progress in 2023, racking up wins and expanding our design pipeline in high-voltage EV applications such as drivetrain
emergency power, 12-volt battery replacement and micro-DC-DC converters. Our automotive-qualified products are
extremely well suited for these applications, which not only require high efficiency but also benefit from the reliability and
space savings of our low-component-count designs. Our pipeline of EV design opportunities expanded significantly in
2023, and as of year-end eight car brands were shipping vehicles using our ICs. We expect many more designs to start
production in 2024.
Another 2023 success story was our proprietary gallium-nitride technology, known as PowiGaN™. We are full-speed-
ahead on GaN development, more confident than ever that GaN will not only overtake silicon as the technology of choice
for most high-voltage applications but will also be a greener, more cost-effective alternative to the other major “wide-
bandgap” semiconductor technology—silicon carbide, or SiC—over the long term. GaN has significant cost advantages
over SiC in the voltage and power ranges that it can address, and we expect the overlap between the two technologies to
increase over time as we further develop PowiGaN technology and introduce more products incorporating GaN switches.
Most GaN suppliers rely on the technology of one particular foundry, leaving little room for differentiation and affording
them no control over the technology roadmap. In contrast, our GaN is proprietary, which means that we not only control
the roadmap, but also that we can tailor our GaN switches for optimal system performance in each application. Our GaN
technology is also unique, with characteristics that make it better suited for higher voltages than other technologies in the
market today.
Last March we introduced a new version of our InnoSwitch™ products featuring a 900-volt PowiGaN switch, and in
November we took the next step on the roadmap with the introduction of 1250-volt technology. Higher-voltage InnoSwitch
ICs are ideal for many industrial applications and for geographies with unstable mains voltages, as well as power supplies
in 400-volt EVs. These higher-voltage GaN technologies will also enable us to expand our SAM with new products that
address applications up to about 10 kilowatts, such as power supplies for servers (including AI servers),
telecommunications equipment, EV on-board chargers and a range of industrial applications.
Some of these applications are served today by silicon carbide because there is no viable alternative that delivers the
necessary level of efficiency. However, GaN is fundamentally more cost-effective than SiC because it uses lower-cost raw
materials and requires a tiny fraction of the energy needed to produce SiC, which is processed at extremely high
temperatures. That also makes GaN a more sustainable technology than SiC, which squanders a portion of its efficiency
benefits in its own manufacture.
Our GaN roadmap does not end at 1250 volts. We expect to introduce even higher-voltage GaN in the near future, and our
longer-term vision includes the potential to drive the power capabilities of GaN beyond 10 kilowatts, making it a viable
replacement for SiC in an even wider range of applications.
GaN also features prominently in the roadmap for BridgeSwitch™ motor-drive products—another key pillar of our growth
strategy. Current BridgeSwitch products, covering applications up to about 400 watts, are gaining adoption at customers
in major appliances as well as air conditioners and ceiling fans. Future BridgeSwitch products, including some with GaN
transistors, will address higher power levels, more than doubling the current SAM for motor-drive products.
In addition to exceptional efficiency in active mode, BridgeSwitch offers very low standby consumption, which is
attracting strong interest from appliance customers in light of upcoming changes in the European EcoDesign efficiency
standards. The allowable standby consumption for a wide range of electronic products will be reduced beginning in 2025,
and we expect the new standards to be especially impactful in the appliance market. The low standby performance of
BridgeSwitch perfectly complements our EcoSmart™ technology, which has helped us win a healthy market share in
appliance auxiliary power supplies. In September we introduced our latest EcoSmart product, LinkSwitch™-XT2SR,
which offers no-load consumption of less than five milliwatts. In all, we estimate that EcoSmart technology saved nearly
15 terawatt-hours of electricity in 2023—an amount roughly equivalent to the annual consumption of two million homes.
Thank you for your continued support of our company—I look forward to reporting on our progress in the year ahead.
Sincerely,
Balu Balakrishnan
Chairman and Chief Executive Officer
March 2024
The statements in this Annual Report relating to future events or results are forward-looking statements that involve many risks and uncertainties. Such
statements may be indicated by the use of words such as “will,” “expect,” “estimate,” “plan,” “believe,” “look forward,” “anticipate,” “future,” and
similar words and phrases, or variations of these terms. Our actual results could differ materially from those contained in these forward-looking
statements due to a number of factors, including: changes in global macroeconomic and geopolitical conditions; changes and shifts in customer demand
away from end products that utilize our products; the timing and success of our product development and commercialization; the effects of trade tensions
and competition; the outcome and cost of patent litigation; unforeseen costs and expenses; and unfavorable fluctuations in component costs resulting
from changes in commodity prices and/or the exchange rate between the U.S. dollar and the Japanese yen. In addition, new product introductions and
design wins are subject to the risks and uncertainties that typically accompany development and delivery of complex technologies to the marketplace,
including product development delays and defects and market acceptance of the new products. These and other risk factors that may cause actual results
to differ are discussed in Part I, Item 1A — “Risk Factors” included in the Form 10-K which is part of this Annual Report.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from
to
Commission File Number 000-23441
POWER INTEGRATIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of Incorporation or organization)
94-3065014
(I.R.S. Employer Identification No.)
5245 Hellyer Avenue
San Jose, California
(Address of principal executive offices)
95138-1002
(Zip code)
(408) 414-9200
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Common Stock
Trading Symbol(s)
Name of Each Exchange on Which Registered
POWI
The Nasdaq Global Select Market
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth
company” in Rule 12b-2 of the Exchange Act:
Large Accelerated Filer
Non-accelerated Filer
☒
☐
Accelerated Filer ☐
Smaller Reporting Company ☐
Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐No
The aggregate market value of registrant’s voting and non-voting common stock held by non-affiliates of registrant on June 30, 2023, the last business
day of the registrant’s most recently completed second fiscal quarter, was approximately $4.1 billion, based upon the closing sale price of the common
stock as reported on The Nasdaq Global Select Market. Shares of common stock held by each officer and director have been excluded in that such
persons may be deemed to be affiliates. This determination of affiliate status is not a conclusive determination for other purposes.
As of February 5, 2024, 56,886 thousand shares of the registrant’s common stock, $0.001 par value, were issued and outstanding.
The information required by Part III of this report, to the extent not set forth herein, is incorporated by reference from the Registrant’s
definitive proxy statement relating to the 2024 annual meeting of stockholders, which definitive proxy statement will be filed with the Securities and
Exchange Commission within 120 days after the fiscal year to which this Report relates.
DOCUMENTS INCORPORATED BY REFERENCE
POWER INTEGRATIONS, INC.
TABLE OF CONTENTS
PART I.
ITEM 1. BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 1A. RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 1B. UNRESOLVED STAFF COMMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 1C. CYBERSECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 2. PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 4. MINE SAFETY DISCLOSURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART II.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[RESERVED] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 6.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK . . . . . . . . . . . .
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 9A. CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 9B. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS . . .
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE . . . . . . . . . . . . . . . . .
ITEM 11. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
PART III.
Page
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14
21
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64
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RELATED STOCKHOLDER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
67
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART IV.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 16. FORM 10-K SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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2
Cautionary Note Regarding Forward-Looking Statements
This Annual Report on Form 10-K includes a number of forward-looking statements that involve many risks and
uncertainties. Forward-looking statements are identified by the use of the words “would,” “could,” “will,” “may,”
“expect,” “believe,” “should,” “anticipate,” “if,” “future,” “intend,” “plan,” “estimate,” “potential,” “target,” “seek” or
“continue” and similar words and phrases, including the negatives of these terms, or other variations of these terms, that
denote future events. These statements reflect our current views with respect to future events and our potential financial
performance and are subject to risks and uncertainties that could cause our actual results and financial position to differ
materially and/or adversely from what is projected or implied in any forward-looking statements included in this
Form 10-K. These factors include, but are not limited to: if demand for our products continues to decline in our major end
markets, our net revenues will decline further; we do not have long-term contracts with any of our customers and if they
fail to place, or if they cancel or reschedule orders for our products, our operating results and our business may suffer; our
products are sold through distributors, which limits our direct interaction with our end customers, therefore reducing our
ability to forecast sales and increasing the complexity of our business; if our products do not penetrate additional markets,
our business will not grow as we expect; 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; 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; if we are unable to adequately protect or enforce our intellectual property rights, we could lose market share, incur
costly litigation expenses, suffer incremental price erosion or lose valuable assets, any of which could harm our operations
and negatively impact our profitability; and the other risk factors described in Part I, Item 1A, “Risk Factors” of this
Annual Report on Form 10-K. We make these forward-looking statements based upon information available on the date
of this Form 10-K, and expressly disclaim any obligation to update or alter any forward-looking statements, whether as a
result of new information or otherwise, except as required by laws. In evaluating these statements, you should specifically
consider the risks described under Part I, Item 1A, “Risk Factors,” Part II, Item 7, “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” and elsewhere in this Annual Report on Form 10-K.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant
subject. These statements are based upon information available to us as of the date of this Annual Report on Form 10-K,
and while we believe such information forms a reasonable basis for such statements, such information may be limited or
incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review
of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not
to unduly rely upon these statements.
3
Item 1. Business.
Overview
PART I
We design, develop and market analog and mixed-signal integrated circuits (“ICs”) and other electronic
components and circuitry used in high-voltage power conversion. Our products are used in power converters that convert
electricity from a high-voltage source to the type of power required for a specified downstream use. In most cases, this
conversion entails, among other functions, converting alternating current (“AC”) to direct current (“DC”) or vice versa,
reducing or increasing the voltage, and regulating the output voltage and/or current according to the customer’s
specifications.
A large percentage of our products are ICs used in AC-DC power supplies, which convert the high-voltage AC
from a wall outlet to the low-voltage DC required by most electronic devices. Power supplies incorporating our products
are used with all manner of electronic products including mobile phones, computing and networking equipment,
appliances, electronic utility meters, battery-powered tools, industrial controls, and “home-automation,” or “internet of
things” applications such as networked thermostats, power strips and security devices. Variations of our power-supply ICs
are used for high-voltage power conversion in electric vehicles (“EVs”). We also supply high-voltage LED drivers, which
are AC-DC ICs specifically designed for lighting applications that utilize light-emitting diodes, and motor-driver ICs for
brushless DC (“BLDC”) motors used in consumer appliances, HVAC systems, ceiling fans and a variety of industrial
applications.
We also offer high-voltage gate drivers—either standalone ICs or circuit boards containing ICs, electrical
isolation components and other circuitry—used to operate high-voltage switches such as insulated-gate bipolar transistors
(“IGBTs”) and silicon-carbide (“SiC”) MOSFETs. These combinations of switches and drivers are used for power
conversion in high-power applications (i.e., power levels ranging from approximately 100 kilowatts up to gigawatts) such
as industrial motors, solar- and wind-power systems, EVs and high-voltage DC transmission systems.
Our power-conversion products are distinguished by their “system-level” nature; that is, they incorporate into a
single product numerous elements of a power-conversion system including a high-voltage transistor, drivers, advanced
control circuitry and, in some cases, a communication link connecting the primary (i.e., input) and secondary (i.e., output)
sides of the power converter while maintaining safety isolation to protect the end user from exposure to high voltage.
Alternatively, a power converter can be designed and assembled using discrete components purchased from a variety of
suppliers.
Our system-level products offer a number of important benefits compared with discrete designs, including:
reduced design complexity; smaller size; lower component count, which in turn results in higher reliability and easier
sourcing of components; reduced time-to-market; and more efficient use of engineering resources. Our products also
reduce the energy consumption of power converters during normal use and in “standby” operation, when the end product
is not in use. In addition to the environmental and economic benefits of reduced energy usage, our energy-saving
technologies provide a number of benefits to our customers; these include helping them meet the increasingly stringent
efficiency standards now in effect for many electronic products, and enabling the elimination of bulky, costly heatsinks
used to dissipate the heat produced by wasted electricity. By reducing component count, circuit-board size and the need
for heatsinks, our products also contribute to a reduction in materials usage and electronic waste.
While the size of our addressable market fluctuates with changes in macroeconomic and industry conditions, the
market has generally exhibited a modest growth rate over time as growth in the unit volume of power converters has been
offset to a large degree by reductions in the average selling price of components in this market. 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. 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 also continue to expand our sales
and application-engineering staff and our network of distributors, as well as our offerings of technical
documentation and design-support tools and services to help customers use our products. These tools
and services include our PI Expert™ design software, which we offer free of charge, and our
transformer-sample service. In 2022 we launched PowerPros℠, a live online video support service that
4
•
•
enables power-supply designers to talk directly with members of our applications engineering team 24
hours a day, six days a week, anywhere in the world.
Capitalize on efforts to reduce carbon emissions by providing products that contribute to improved
energy efficiency and increased use of renewable energy. In its 2019 World Energy Outlook, the
International Energy Agency estimated that more than two-thirds of the reduction in carbon-dioxide
(“CO2”) emissions needed to achieve the “Sustainable Development Scenario” of the United Nations
Sustainable Development Agenda is to come from improved energy efficiency and increased use of
renewable energy. Energy savings enabled by our products help our customers comply with regulations
that seek to curb energy consumption in support of reducing CO2 emissions. For example: our
EcoSmart™ technology drastically reduces the amount of energy consumed by electronic products when
they are plugged in but not in use; our PowiGaN™ gallium-nitride (“GaN”) transistors reduce energy
consumption compared to silicon transistors; and our BridgeSwitch™ motor-driver ICs provide highly
efficient power conversion for BLDC motors in appliances and industrial applications. Also, our gate-
driver products are critical components in energy-efficient DC motor drives, solar- and wind-power
systems, efficient high-voltage DC transmission systems (including transmission of energy from
renewable energy installations to the power grid), and low-emissions transportation applications such as
electric locomotives.
Increase the size of our addressable market. Prior to 2010 our addressable market consisted of AC-DC
applications with up to about 50 watts of output, a served available market (“SAM”) opportunity of
approximately $1.5 billion. Since then we have expanded our SAM to approximately $4 billion through
a variety of means. These include the introduction of products that enable us to address higher-power
AC-DC applications (such as our Hiper™ product families), the introduction of LED-driver products,
and our entry into the gate-driver market through the acquisition of CT-Concept Technologie AG in
2012. In 2016 we introduced the SCALE-iDriverTM family of ICs, broadening the range of gate-driver
applications we can address, and in 2018 we introduced our BridgeSwitch™ motor-driver ICs for BLDC
motors. We have recently introduced a series of automotive-qualified versions of our products, including
SCALE-iDriver, InnoSwitch™ and LinkSwitch™ ICs, targeting the EV market; we expect to introduce
additional products targeting EVs in the future, and expect automotive applications to become a
significant portion of our SAM over time.
Also contributing to our SAM expansion has been the emergence of new applications within the power
ranges that our products can address. 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.
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. For example, our InnoSwitch™ ICs
integrate circuitry from the secondary, or low-voltage, side of AC-DC power supplies, whereas earlier
product families integrated circuitry only on the primary, or high-voltage side. In 2019 we began
incorporating our proprietary GaN transistors in some our products, enabling a higher level of energy
efficiency than ICs with silicon transistors. Since then, we have introduced a variety of new products
utilizing GaN technology, as well as new generations of our GaN technology capable of supporting
higher voltages (as high as 1250 volts). We are currently developing new products incorporating these
technologies, which we believe will enable us to address higher-power applications than we address with
our current range of products and therefore further expand our SAM.
We intend to continue expanding our SAM in the years ahead through all of the means described above.
Industry Background
Virtually every electronic device that plugs into a wall socket requires a power supply to convert the high-voltage
alternating current provided by electric utilities into the low-voltage direct current required by most electronic devices. A
power supply may be located inside a device, such as a consumer appliance or flat-panel TV, or it may be outside the
device as in the case of a mobile-phone charger or an adapter for a cordless phone or cable modem.
Until approximately 1970, AC-DC power supplies were generally in the form of line-frequency, or linear,
transformers. 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
semiconductors enabled the development of a new generation of power supplies known as switched-mode power supplies,
or switchers. These switchers generally came to be cost-effective alternatives to linear transformers in applications
requiring more than a few watts of power; in recent years the use of linear transformers has declined even further as a
result of energy-efficiency standards and higher raw-material prices.
Switchers are generally smaller, lighter-weight and more energy-efficient than linear transformers. However,
switchers designed with discrete components are highly complex, containing numerous components and requiring a high
level of analog design expertise. Further, the complexity and high component count of discrete switchers make them
relatively costly, difficult to manufacture and prone to failures. Also, some discrete switchers lack protection and energy-
efficiency features; adding these features may further increase the component count, cost and complexity of the power
supply.
In high-power systems such as industrial motor drives, electric locomotives and renewable-energy systems, power
conversion is typically performed using arrays of high-power silicon transistors known as IGBT modules; these modules
are operated by electronic circuitry known as gate drivers (or IGBT drivers), whose function is to ensure accurate, safe
and reliable operation of the IGBT modules. Like discrete power supplies, discrete gate drivers tend to be highly complex,
requiring a large number of components and a great deal of design expertise.
Our Highly Integrated Approach
In 1994 we introduced TOPSwitch, the industry’s first cost-effective high-voltage IC for switched-mode AC-DC
power supplies. We have since introduced a range of other product families, expanding the range of power-supply
applications we can serve and enhancing our competitiveness in applications we already addressed. In 2012 we expanded
our addressable market to include high-voltage gate drivers, and in 2018 we introduced our BridgeSwitch motor-driver
ICs for BLDC motors.
Our products drastically reduce the complexity and component count of power converters compared to typical
discrete designs by integrating many of the functions otherwise performed by numerous discrete electronic components,
and by eliminating (or reducing the size and cost of) additional components through innovative system design. As a result,
our products enable power converters to have superior features and functionality at a total cost equal to or lower than that
of many competing alternatives. Our products offer the following key benefits:
•
Fewer Components, Reduced Size and Higher Reliability
Our highly integrated ICs and gate drivers enable designs with up to 70% fewer components than comparable
discrete designs. This reduction in component count enhances reliability and efficiency, reduces size, and results in lower
manufacturing costs for our customers. Power supplies that incorporate our ICs are also lighter and more portable than
comparable power supplies built with linear transformers, which are still used in some low-power applications.
•
Reduced Time-to-Market, Enhanced Manufacturability
Because our products eliminate much of the complexity associated with the design of power converters, designs
can typically be completed in much less time, resulting in more efficient use of our customers’ design resources and shorter
time-to-market for new designs. The lower component count and reduced complexity enabled by our products also makes
designs more suitable for high-volume manufacturing. 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. This technology enables manufacturers to cost-effectively meet the growing demand
for energy-efficient products, and to comply with increasingly stringent energy-efficiency requirements. 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
applications up to about 400 watts. Within each of our product families, designers can scale up or down in power to address
a wide range of designs with minimal design effort.
Energy Efficiency
Power supplies often draw significantly more electricity than the amount needed by the devices they power. As
a result, billions of dollars’ worth of electricity is wasted each year, and millions of tons of greenhouse gases are
unnecessarily produced by power plants. Energy waste occurs during the normal operation of a device and in standby
mode, when the device is plugged in but idle. For example: computers and printers waste energy while in “sleep” mode;
TVs that are turned off by remote control consume energy while awaiting a remote-control signal to turn them back on; a
mobile-phone charger left plugged into a wall outlet continues to draw electricity even when not connected to the phone
(a condition known as “no-load”); and many common household appliances, such as microwave ovens, dishwashers and
washing machines, also consume power when not in use. In fact, a 2015 study by the National Resources Defense Council
found that devices that are “always-on” but inactive may be causing as much as $19 billion in annual energy waste in the
United States alone.
In response to concerns about the environmental impact of carbon emissions, policymakers have taken action to
promote energy efficiency. For example, the ENERGY STAR® program and the European Union Code of Conduct
encourage manufacturers of electronic devices to comply with voluntary energy-efficiency specifications. In 2007 the
California Energy Commission (“CEC”) implemented mandatory efficiency standards for external power supplies. The
CEC standards were implemented nationwide in the United States in July 2008 as a result of the Energy Independence and
Security Act of 2007 (“EISA”); these federal standards were tightened in 2016. Similar standards for external power
supplies took effect in the European Union in 2010 as part of the EU’s EcoDesign Directive for Energy-Related Products.
In 2010, the EU EcoDesign Directive implemented standards limiting standby power consumption on a wide
range of electronic products. The limit was reduced by 50 percent beginning in 2013, with many products now limited to
500 milliwatts of standby usage; the EU standards are scheduled to tighten further beginning in 2025. The EISA legislation
also required substantial improvements in the efficiency of lighting technologies, effectively resulting in the phase-out of
most incandescent light sources and increased adoption of LED-lighting technology. In December 2019 the government
of China published new efficiency standards for room air conditioners, which took effect in July 2020. In 2022 India’s
Bureau of Energy Efficiency implemented new labeling standards for ceiling fans in an effort to drive adoption of BLDC
motors in place of less efficient induction motors.
We believe we offer products that enable manufacturers to meet or exceed these regulations, and all other such
regulations of which we are aware. 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. In 2010 we expanded our
portfolio of energy-saving products with the introduction of our CapZero and SenZero IC families, which eliminate
additional sources of standby waste in some power supplies. We also offer a range of products designed specifically for
LED-lighting applications. Our GaN technology, introduced in 2019, also dramatically improves the active-mode
efficiency of power-supplies.
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. Since then we have
introduced a wide range of products (such as our TinySwitch, LinkSwitch and Hiper families) to increase the level of
integration and improve upon the functionality of the original TOPSwitch, and to broaden the range of power levels we
can address. In 2010 we introduced our CapZero and SenZero families, which reduce standby power consumption in
certain applications by eliminating waste caused by so-called bleed resistors and sense resistors. We have also introduced
products designed specifically for LED-lighting applications, known as LYTSwitch ICs, as well as a range of high-
performance, high-voltage diodes known as Qspeed diodes.
In 2014 we introduced our InnoSwitch product family, the first power-supply ICs to combine primary, secondary
and feedback circuits into a single package. These ICs employ a proprietary technology known as FluxLink to enable
precise control without the need for optical components, which tend to add cost and diminish the reliability of power
supplies. In 2019 we began offering InnoSwitch ICs with more-efficient GaN transistors rather than silicon transistors. In
2020 we introduced GaN-based MinE-CAP ICs, which enable the use of smaller input capacitors as a way to further reduce
the size of a power supply. Our ClampZero ICs, introduced in 2021 alongside the GaN-based InnoSwitch4-CZ family of
7
ICs, further enhance efficiency by recovering power losses associated with the high switching frequency of GaN
transistors. In 2023 we announced new versions of our InnoSwitch products incorporating GaN transistors with higher
voltage ratings of 900 volts and 1250 volts; earlier GaN products feature transistors rated at 750 volts.
This portfolio of power-conversion products generally addresses power supplies ranging from less than one watt
of output up to approximately 500 watts of output, a market we refer to as the “low-power” market. This market consists
of an extremely broad range of applications including mobile-device chargers, consumer appliances, utility meters, LCD
monitors, main and standby power supplies for desktop computers, servers and TVs, and numerous other consumer and
industrial applications, as well as LED lighting. We also now offer automotive-qualified versions of certain products, such
as InnoSwitch ICs, for use in electric vehicles.
•
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 offer both ready-to-operate “plug-and-play” drivers designed specifically for use with
particular IGBT modules, as well as “driver cores,” which provide more basic driver functionality that customers can
customize to their own specifications after purchase. In 2016 we introduced the SCALE-iDriver family of standalone ICs,
which enables us to address applications ranging from a few kilowatts up to about 100 kilowatts, whereas previously our
sales of high-power products were primarily for applications above 100 kilowatts. In 2020 we introduced an automotive-
qualified version of SCALE-iDriver suitable for use in powertrain and charging applications for electric vehicles.
•
Motor-driver products
The BridgeSwitch family of products, introduced in 2018, is a family of motor-driver ICs addressing BLDC
motor applications up to approximately 400 watts. Such applications include refrigerator compressors, ceiling fans, air
purifiers as well as pumps, fans and blowers used in consumer appliances such as dishwashers and laundry machines.
BridgeSwitch products are complemented by our Motor-Expert software, which provides configuration and diagnostic
tools for design engineers.
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. When evaluating our net revenues,
we categorize our sales into the following four major end-market groupings: communications, computer, consumer, and
industrial.
The table below provides the approximate mix of our net sales by end market:
End Market
Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Computer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Industrial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
Year Ended December 31,
2022
2021
29 %
12 %
27 %
32 %
21 %
10 %
33 %
36 %
30 %
10 %
32 %
28 %
8
Our products are used in a vast range of power-conversion applications in the above-listed end-market categories.
The following chart lists the most prominent applications for our products in each category.
Market Category
Communications . . . . . . Mobile-phone chargers, adapters for routers, cordless phones, broadband modems,
Primary Applications
Computer . . . . . . . . . . . . Desktop PCs and monitors, servers, adapters for tablets and notebook computers, other
voice-over-IP phones, other network and telecom gear
Consumer . . . . . . . . . . . Major and small appliances, air conditioners and other comfort appliances, TVs and set-top
computer peripherals
Industrial . . . . . . . . . . . .
boxes, video-game consoles
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. We have sales
offices in the United States, United Kingdom, Germany, Italy, India, China, Japan, South Korea, the Philippines, Canada,
Singapore and Taiwan. Direct sales to OEMs and merchant power supply manufacturers represented approximately 31%,
30% and 25% of our net product revenues in 2023, 2022 and 2021, respectively, while sales to distributors accounted for
the remainder in each of the corresponding years. Most of our distributors are entitled to return privileges based on
revenues and are protected from price reductions affecting their inventories. Our distributors are not subject to minimum
purchase requirements, and sales representatives and distributors can discontinue marketing our products at any time.
Our sales are primarily made pursuant to standard purchase orders. The quantity of products purchased by our
customers as well as shipment schedules are subject to revisions that reflect changes in both the customers’ requirements
and in manufacturing availability. Historically, our business has been characterized by short-lead-time orders and quick
delivery schedules.
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.
Research and Development
Our research and development efforts are focused on improving our technologies, introducing new products to
expand our addressable markets, reducing the costs of existing products, and improving the cost-effectiveness and
functionality of our customers’ power converters. We have assembled teams of highly skilled engineers to meet our
research and development goals. 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. 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. 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. 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.
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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. These contractors manufacture wafers using our proprietary high-voltage
process technologies at fabrication facilities located in Japan, Germany and the United States.
Our ICs are assembled, packaged and tested by independent subcontractors in China, Malaysia, Thailand and the
Philippines; a small percentage of our ICs are tested at our headquarters facility in California. Our gate-driver boards are
assembled and tested by independent subcontractors in Sri Lanka and Thailand; some of the boards are tested at our facility
in Switzerland.
Our fabless manufacturing model enables us to focus on our engineering and design strengths, minimize capital
expenditures and still have access to high-volume manufacturing capacity. We utilize both proprietary and standard IC
packages for assembly. Some of the materials used in our packages and certain aspects of the assembly process are specific
to our products. We require our assembly manufacturers to use high-voltage molding compounds which are more difficult
to process than industry standard molding compounds. We work closely with our contractors on a continuous basis to
maintain and improve our manufacturing processes.
Our proprietary high-voltage processes do not require leading-edge geometries, which enables us to use our
foundries’ older, lower-cost facilities for wafer manufacturing. However, because of our highly sensitive high-voltage
process, we must interact closely with our foundries to achieve satisfactory yields. Our wafer supply agreements with
Lapis, Epson and X-FAB expire in April 2028, December 2025 and December 2028, respectively. Under the terms of the
Lapis and Epson agreements, each supplier has agreed to reserve a specified amount of production capacity and to sell
wafers to us at fixed prices, which are subject to periodic review jointly by the supplier and us. In addition, Lapis and
Epson require us to supply them with a rolling six-month forecast on a monthly basis. Our agreements with Lapis and
Epson each provide for the purchase of wafers in U.S. dollars, with mutual sharing of the impact of the fluctuations in the
exchange rate between the Japanese yen and the U.S. dollar. Under the terms of the X-FAB agreement, X-FAB has agreed
to reserve a specified amount of production capacity and to sell wafers to us at fixed prices, which are subject to periodic
review jointly by X-FAB and us. The agreement with X-FAB also requires us to supply them with rolling six-month
forecasts on a monthly basis. Our purchases of wafers from X-FAB are denominated in U.S. dollars.
Although some aspects of our relationships with Lapis, Epson and X-FAB are contractual, some important aspects
of these relationships are not written in binding contracts and depend on the suppliers’ continued cooperation. We cannot
assure that we will continue to work successfully with Lapis, Epson or X-FAB in the future, that they will continue to
provide us with sufficient capacity at their foundries to meet our needs, or that any of them will not seek an early
termination of their wafer supply agreement with us. Our operating results could suffer in the event of a supply disruption
with one or more of our foundries if we were unable to quickly qualify alternative manufacturing sources for existing or
new products or if these sources were unable to produce wafers with acceptable manufacturing yields.
We typically receive shipments from our foundries approximately four to six weeks after placing orders, and lead
times for new products can be substantially longer. To provide sufficient time for assembly, testing and finishing, we
typically need to receive wafers four weeks before the desired ship date to our customers. As a result of these factors and
the fact that customers’ orders can be placed with little advance notice, we have only a limited ability to react to fluctuations
in demand for our products. 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.
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. Such controller chips are produced by a large
number of vendors, including those listed above as well as others including NXP Semiconductors, Diodes Inc., On-Bright
Electronics, MediaTek Inc., Renesas Electronics and, in recent years, an increasing number of Chinese suppliers such as
Southchip Semiconductor, Chipown Microelectronics and Hangzhou Silan Microelectronics Co. Our gate-driver products
compete with alternatives from such companies as Broadcom, Infineon, Mitsubishi Electric, Fuji Electric, Semikron and
Hangzhou Firstack Technology Co., as well as driver circuits made up of discrete devices. Our motor-driver ICs compete
with power modules from such companies as ON Semiconductor, Infineon, STMicroelectronics, Mitsubishi and Sanken
as well as discrete designs from a wide range of other suppliers. In general, we expect competition from Chinese
semiconductor vendors to intensify over time reflecting China’s stated aim to develop its domestic semiconductor industry.
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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.
While we vary the pricing of our ICs in response to fluctuations in prices of alternative solutions, we also compete
based on a variety of other factors. Most importantly, the highly integrated nature of our products enables designs that
utilize fewer total components than comparable discrete designs or designs using other integrated or hybrid products. This
enables power converters to be designed more quickly and manufactured more efficiently and reliably than competing
designs. We also compete on the basis of product functionality such as safety features and energy-efficiency features and
on the basis of the technical support we provide to our customers. This support includes hands-on design assistance as
well as a range of design tools and documentation such as software and reference designs. We also believe that our record
of product quality and history of delivering products to our customers on a timely basis serve as additional competitive
advantages.
Warranty
We generally warrant that our products will substantially conform to the published specifications for 12 months
from the date of shipment. Under the terms and conditions of sale, our liability is limited generally to either a credit equal
to the purchase price or replacement of the defective part.
Government Regulation
We are subject to a variety of federal, state and local governmental laws and regulations worldwide, including,
but not limited to, laws, rules and regulations related to anti-corruption, antitrust, data privacy requirements, employment,
environmental, foreign exchange controls, health and safety requirements, immigration, import/export requirements, IP
and tax. Any failure to comply with laws and regulations may subject us to a range of consequences including fines,
suspension of certain of our business activities, limitations on our ability to sell our products, obligations to remediate in
the case of environmental contamination, and criminal and civil liabilities or other sanctions. Changes in environmental
laws and regulations could require us to alter our manufacturing processes or use substitute materials. Our failure to comply
with laws, rules and regulations could subject us to future liabilities.
See also our risk factors under Part 1. Item 1A. 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. 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. 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). 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. 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. 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.
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
local, state or federal laws. Our employees are encouraged to engage with company leadership and raise concerns and
questions in person, via e-mail (anonymously if desired), or at our quarterly employee communications meeting with the
CEO and senior management team. All employees receive training in the prevention of sexual harassment and abusive
conduct in the workplace.
We value our employees, giving them the tools and training to grow as individuals, and the freedom to take risks
in the service of innovation. We offer tuition reimbursement for job-related education and provide live and online classes
covering topics such as communication, leadership and management, software, and time management. We also offer
catered lunch-time workshops on a range of personal-development topics such as financial planning, nutrition and stress
management.
Additional information regarding our commitment to our people can be found on our website at
https://www.power.com/company/sustainability-citizenship/.
Investor Information
We make available, free of charge, copies of our annual report on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended, or the Exchange Act as soon as reasonably practicable after filing this
material electronically or otherwise furnishing it to the SEC. Investors may obtain free electronic copies or request paper
copies of these reports via the “For Investors” section of our website, www.power.com. Our website address is provided
solely for informational purposes. We do not intend, by this reference, that our website should be deemed to be part of this
Annual Report. The reports we file with the SEC are also available at www.sec.gov.
Our corporate governance guidelines, the charters of our board committees, and our code of business conduct and
ethics, including ethics provisions that apply to our principal executive officer, principal financial officer, controller and
senior financial officers, are also available via the investor website listed above. These items are also available in print to
any stockholder who requests them by calling (408) 414-9200. We intend to satisfy the disclosure requirements of
Form 8-K regarding an amendment to, or a waiver from, a provision of our code of business conduct and ethics that applies
to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons
performing similar functions by posting such information on our investor website listed above.
Power Integrations, Inc. was incorporated in California on March 25, 1988, and reincorporated in Delaware in
December 1997.
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
Balu Balakrishnan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Douglas Bailey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Radu Barsan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sunil Gupta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
David “Mike” Matthews . . . . . . . . . . . . . . . . . . . . . . . . .
Sandeep Nayyar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Clifford Walker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Yang Chiah Yee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Position With Power Integrations
President, Chief Executive Officer and Director
Vice President, Marketing
Vice President, Technology
Vice President, Operations
Chief Technical Officer
Vice President, Finance and Chief Financial Officer
Vice President, Corporate Development
Vice President, Worldwide Sales
Age
69
57
71
51
59
64
72
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. He served as president and chief operating
officer from April 2001 to January 2002. From January 2000 to April 2001, he was vice president of engineering and
strategic marketing. From September 1997 to January 2000, he was vice president of engineering and new business
development. From September 1994 to September 1997, Mr. Balakrishnan served as vice president of engineering and
marketing. Prior to joining Power Integrations in 1989, Mr. Balakrishnan was employed by National Semiconductor
Corporation.
Douglas Bailey has served as our vice president of marketing since November 2004. From March 2001 to
April 2004, he served as vice president of marketing at ChipX, a structured ASIC company. 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.
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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. Previously, he served in a succession of engineering-management and technology development roles
at Phaethon Communications, Inc., a photonics technology company, Cirrus Logic, Inc., a high-precision analog and
digital signal processing company, Advanced Micro Devices, a semiconductor company, Cypress Semiconductor, Inc., a
semiconductor company and Microelectronica a semiconductor company. Dr. 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. Gupta was vice president of operations at Renesas Electronics Corporation, a provider of electronics solutions, from
July 2017 until August 2020, in which position he was responsible for global operations for Intersil and IDT products as
well as the integration into the operations of Renesas. Prior to joining Renesas he was Senior Vice President, Global
Operations at Intersil Corporation, a developer of power management and precision analog integrated circuits, from
June 2016 to July 2017, in which position he led the global operations and technology teams, and was Vice President,
Quality and Technology Development at Intersil was from September 2013 to June 2016, in which position he led the
quality, reliability, yield, process technology and package technology teams. 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. 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. 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. 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. 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 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. 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. Yee served as senior vice president of worldwide sales at NeoPhotonics Corporation, a supplier of
optoelectronic modules and subsystems for high-speed communication networks, where he was responsible for managing
the worldwide sales and customer service organization, meeting with major clients, designing effective sales strategies
and negotiating major contracts. From August 2016 to February 2017, Mr. Yee served as senior vice president of
worldwide sales at IDEX Biometrics ASA, a supplier of fingerprint sensor solutions for payment cards, digital wallets and
cyber authentication. From March 2008 to March 2016, Mr. Yee served in various senior sales roles at Atmel Corporation,
a semiconductor designer and manufacturer of microcontroller and memory chips before its acquisition by Microchip
Technology, Inc. Mr. Yee’s earlier experience includes senior sales roles at Xilinx Inc. and Memec LLC focusing on the
Asia-Pacific region. Mr. 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.
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Item 1A. Risk Factors.
The following are important factors that could cause actual results or events to differ materially from those
contained in any forward-looking statements made by us or on our behalf. The risks and uncertainties described below
are not the only ones we face. Additional risks and uncertainties not presently known to us or that we deem immaterial
also may impair our business operations. If any of the following risks or such other risks actually occurs, our business
could be harmed.
Risks Related to Ownership of Our Common Stock
Our operating results are volatile and difficult to predict. If we fail to meet the expectations of public market
analysts or investors, the market price of our common stock may decrease significantly. Our net revenues and operating
results have varied significantly in the past, are difficult to forecast, are subject to numerous factors both within and outside
of our control, and may fluctuate significantly in the future. As a result, our operating results could fall below the
expectations of public market analysts or investors. If that occurs, the price of our stock may decline.
Some of the factors that could affect our operating results include the following:
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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;
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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;
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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.
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. 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. Demand for end products incorporating our products has been highly cyclical over time and
has been impacted by economic downturns; our recent results have been impacted by economic conditions including
inflation and the effects of anti-COVID measures in China. Any further economic slowdown in the end markets that we
serve could cause a further slowdown in demand for our ICs, causing our net revenues to decline further and potentially
result in write-offs of excess or obsolete inventory, which could cause the price of our stock to fall.
Our international sales activities account for a substantial portion of our net revenues, which subjects us to
substantial risks. 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. If our international sales declined and we were unable to increase
domestic sales, our revenues would decline and our operating results would be harmed. International sales involve a
number of risks to us, including:
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tariffs, protectionist measures and other trade barriers and restrictions;
potential insolvency of international distributors and representatives;
reduced protection for intellectual property rights in some countries;
the impact of recessionary environments and inflation in the United States and other economies where
we do business;
global, regional, and local economic and political conditions, including, but not limited to, social,
economic, political, and supply chain instability related to the uncertainty regarding relationships among
the international community as a whole including potential risks stemming from tensions between China
and Taiwan and between China and Western countries, as well as related to armed conflicts that exist,
or in the future could exist, in various parts of the world;
the burdens of complying with a variety of foreign and applicable U.S. 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. Furthermore, because substantially all of our foreign sales are denominated in U.S. dollars,
increases in the value of the dollar cause the price of our products in foreign markets to rise, making our products more
expensive relative to competing products priced in local currencies.
We do not have long-term contracts with any of our customers and if they fail to place, or if they cancel or
reschedule orders for our products, our operating results and our business may suffer. Our business is characterized by
short-term customer orders and shipment schedules, and the ordering patterns of some of our large customers have been
unpredictable in the past and will likely remain unpredictable in the future. 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
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orders can be canceled or rescheduled without significant penalty to the customer. In the past, we have experienced
customer cancellations of substantial orders for reasons beyond our control, and significant cancellations could occur again
at any time. Also, a relatively small number of distributors, OEMs and merchant power supply manufacturers account for
a significant portion of our revenues. 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.
These distributors sell our products to a broad, diverse range of end users, including OEMs and merchant power supply
manufacturers, which mitigates the risk of customer concentration to a large degree.
Our products are sold through distributors, which limits our direct interaction with our end customers, therefore
reducing our ability to forecast sales and increasing the complexity of our business. Sales to distributors accounted for
approximately 69%, 70% and 75% of net revenues in the years ended December 31, 2023, 2022 and 2021, respectively.
Selling through distributors reduces our ability to forecast sales and increases the complexity of our business, requiring us
to:
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manage a more complex supply chain;
monitor the level of inventory of our products at each distributor, and
monitor the financial condition and credit-worthiness of our distributors, many of which are located
outside of the United States and are not publicly traded.
Since we have limited ability to forecast inventory levels at our end customers, it is possible that there may be
significant build-up of inventories in the distributor channel, with the OEM or the OEM’s contract manufacturer. Such a
buildup could result in a slowdown in orders, requests for returns from customers, or requests to move out planned
shipments. This could adversely impact our revenues and profits. Any failure to manage these complexities could disrupt
or reduce sales of our products and unfavorably impact our financial results.
If our products do not penetrate additional markets, our business will not grow as we expect. We believe that our
future success depends in part upon our ability to penetrate additional markets for our products. We cannot assure that we
will be able to overcome the marketing or technological challenges necessary to penetrate additional markets. To the extent
that a competitor penetrates additional markets before we do, or takes market share from us in our existing markets, our
net revenues and financial condition could be materially adversely affected.
If our efforts to enhance existing products and introduce new products are not successful, we may not be able to
generate demand for our products. Our success depends in significant part upon our ability to develop new ICs for high-
voltage power conversion for existing and new markets, to introduce these products in a timely manner and to have these
products selected for design into products of leading manufacturers. New product introduction schedules are subject to the
risks and uncertainties that typically accompany development and delivery of complex technologies to the market place,
including product development delays and defects. If we fail to develop and sell new products in a timely manner, then
our net revenues could decline.
In addition, we cannot be sure that we will be able to adjust to changing market demands as quickly and cost-
effectively as necessary to compete successfully. Furthermore, we cannot assure that we will be able to introduce new
products in a timely and cost-effective manner or in sufficient quantities to meet customer demand or that these products
will achieve market acceptance. Our failure, or our customers’ failure, to develop and introduce new products successfully
and in a timely manner would harm our business. 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.
Any failure, disruption or security breach or incident otherwise impacting our information technology
infrastructure or information management systems could have an adverse impact on our business and operations. Cyber-
attacks have become increasingly more prevalent and much harder to detect, defend against or prevent. 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 techniques used to obtain unauthorized access or to sabotage systems change frequently and are
often not recognized until launched against a target, we may be unable to anticipate these techniques or to implement
adequate preventive measures. 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
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adverse effect on our financial position and value of our stock. We cannot guarantee that our implemented processes for
IT and risk mitigation measures will be effective for IT systems under our control.
Furthermore, we rely on products and services provided by third-party suppliers to operate certain critical
business systems. We cannot guarantee that third parties and infrastructure in our supply chain or our partners’ supply
chains have not been or will not be compromised or that they do not or will not in the future contain exploitable defects or
bugs that could result in a breach of or disruption to our IT infrastructure, including our products and services, or the third-
party information technology systems that support our services.
We have limited insight into the data privacy or security practices of third-party service providers. Our ability to
monitor these third parties’ information security practices is limited, and they may not have adequate information security
measures in place. If one of our third-party suppliers suffers a security breach, our response may be limited or more difficult
because we may not have direct access to their systems, logs and other information related to the security breach.
Interruptions in our information technology systems could adversely affect our business. 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.
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.
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. 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. In addition, as our patents expire, our competitors could
legally begin using the technology covered by the expired patents in their products, potentially increasing the performance
of their products and/or decreasing the cost of their products, which may enable our competitors to compete more
effectively. 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. We cannot assure that our products will continue to
compete favorably or that we will be successful in the face of increasing competition from new products and enhancements
introduced by existing competitors or new companies entering this market. 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 face risks related to global health crises, such as the COVID-19 pandemic, which have 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. Our
business as well as the business of our suppliers, customers and distributors was impacted by the COVID-19 pandemic
and may in the future be adversely impacted by the world-wide response to any further global health crises. Such impacts
include public health measures, travel restrictions, business shutdowns, border closures, delivery and freight delays and
other disruptions. These disruptions may adversely affect not only our sales and marketing activities, product development,
manufacturing and product shipments which could negatively impact our ability to meet customer commitments but also
our customers’ ability to manufacture their products, which could reduce their demand for our products. The COVID-19
pandemic caused a significant economic downturn in local and global economies and in financial markets. Any future
global health crisis could have similar economic consequences which may result in reduced demand for our products and
have a material adverse effect on our revenues, customer relationships, operating results, cash flows, financial condition
and stock price.
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. 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. 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.
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Additionally, one or more of these wafer foundries could seek an early termination of our wafer supply agreements. Any
serious disruption in the supply of wafers from Epson, Lapis and X-FAB could harm our business. We estimate that it
would take 12 to 24 months from the time we identified an alternate manufacturing source to produce wafers with
acceptable manufacturing yields in sufficient quantities to meet our needs.
Although we provide our foundries with rolling forecasts of our production requirements, their ability to provide
wafers to us is ultimately limited by the available capacity of the wafer foundry. Any reduction in wafer foundry capacity
available to us could require us to pay amounts in excess of contracted or anticipated amounts for wafer deliveries or
require us to make other concessions to meet our customers’ requirements, or may limit our ability to meet demand for
our products. Further, to the extent demand for our products exceeds wafer foundry capacity, this could inhibit us from
expanding our business and harm relationships with our customers. Any of these concessions or limitations could harm
our business.
If our third-party suppliers and independent subcontractors do not produce our wafers and assemble our finished
products at acceptable yields, our net revenues may decline. We depend on independent foundries to produce wafers, and
independent subcontractors to assemble and test finished products, at acceptable yields and to deliver them to us in a timely
manner. The failure of the foundries to supply us wafers at acceptable yields could prevent us from selling our products to
our customers and would likely cause a decline in our net revenues and gross margin. In addition, our IC assembly process
requires our manufacturers to use a high-voltage molding compound that has been available from only a few suppliers.
These compounds and their specified processing conditions require a more exacting level of process control than normally
required for standard IC packages. Unavailability of assembly materials or problems with the assembly process can
materially and adversely affect yields, timely delivery and cost to manufacture. We may not be able to maintain acceptable
yields in the future.
In addition, if prices for commodities used in our products increase significantly, raw material costs would
increase for our suppliers which could result in an increase in the prices our suppliers charge us. To the extent we are not
able to pass these costs on to our customers; this would have an adverse effect on our gross margins.
We must attract and retain qualified personnel to be successful and competition for qualified personnel is intense
in our market. Our success depends to a significant extent upon the continued service of our executive officers and other
key management and technical personnel, and on our ability to continue to attract, retain and motivate qualified personnel,
such as experienced analog design engineers and systems applications engineers. The competition for these employees is
intense, particularly in Silicon Valley. 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. We do not have long-term employment contracts with, and we do not have in place
key person life insurance policies on, any of our employees.
Because the sales cycle for our products can be lengthy, we may incur substantial expenses before we generate
significant revenues, if any. Our products are generally incorporated into a customer’s products at the design stage.
However, customer decisions to use our products, commonly referred to as design wins, can often require us to expend
significant research and development and sales and marketing resources without any assurance of success. These
significant research and development and sales and marketing resources often precede volume sales, if any, by a year or
more. The value of any design win will largely depend upon the commercial success of the customer’s product. We cannot
assure that we will continue to achieve design wins or that any design win will result in future revenues. If a customer
decides at the design stage not to incorporate our products into its product, we may not have another opportunity for a
design win with respect to that product for many months or years.
In the event of an earthquake, fire, other pandemics, natural or other disasters, including with respect to climate
change, our operations may be interrupted and our business would be harmed. Our principal executive offices and
operating facilities are situated near San Francisco, California, and most of our major suppliers, which are wafer foundries
and assembly houses, are located in areas that have been subject to severe earthquakes, such as Japan. Many of our
suppliers are also susceptible to other disasters such as tropical storms, typhoons, tsunamis or other catastrophic events,
including those caused by climate change. In the event of a disaster, we or one or more of our major suppliers may be
temporarily unable to continue operations and may suffer significant property damage. 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.
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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. Our customers generally establish
demanding specifications for quality, performance and reliability, and our products must meet these specifications. ICs as
complex as those we sell often encounter development delays and may contain undetected defects or failures when first
introduced or after commencement of commercial shipments. We have from time to time in the past experienced product
quality, performance or reliability problems. If defects and failures occur in our products, we could experience lost revenue,
increased costs, including product warranty or liability claims and costs associated with customer support and product
recalls, delays in or cancellations or rescheduling of orders or shipments and product returns or discounts. While we
specifically exclude consequential damages in our standard terms and conditions, certain of our contracts may not exclude
such liabilities. Our liability insurance which covers certain damages arising out of product defects may not cover all
claims or be of a sufficient amount to fully protect against such claims. 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. Our exchange rate risk related to the Japanese yen
includes two of our major suppliers, Epson and Lapis, with which we have wafer supply agreements based in U.S. dollars;
however, these agreements also allow for mutual sharing of the impact of the exchange rate fluctuation between Japanese
yen and the U.S. dollar. Each year, our management and these suppliers review and negotiate pricing; the negotiated
pricing is denominated in U.S. dollars but is subject to contractual exchange rate provisions. The fluctuation in the
exchange rate is shared equally between Power Integrations and each of these suppliers. We maintain cash denominated
in Swiss francs and euros to fund the operations of our Swiss subsidiary. The functional currency of our Swiss subsidiary
is the U.S. dollar; gains and losses arising from the remeasurement of non-functional currency balances are recorded in
other income in our consolidated statements of income, and material unfavorable exchange-rate fluctuations with the Swiss
franc could negatively impact our net income.
Risks Related to Our Intellectual Property
If we are unable to adequately protect or enforce our intellectual property rights, we could lose market share,
incur costly litigation expenses, suffer incremental price erosion or lose valuable assets, any of which could harm our
operations and negatively impact our profitability. Our success depends upon our ability to continue our technological
innovation and protect our intellectual property, including patents, trade secrets, copyrights and know-how. We are
currently engaged in litigation to enforce our intellectual property rights, and associated expenses have been, and are
expected to remain, material and have adversely affected our operating results. 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. 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.
Additionally, the laws of some foreign countries in which our technology is or may in the future be licensed may not
protect our intellectual property rights to the same extent as the laws of the United States, thus limiting the protections
applicable to our technology.
If we do not prevail in our litigation, we will have expended significant financial resources, potentially without
any benefit, and may also suffer the loss of rights to use some technologies. We are currently involved in a number of
patent litigation matters and the outcome of the litigation is uncertain. 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. Should we ultimately be determined to be infringing another party’s
patents, or if an injunction is issued against us while litigation is pending on those claims, such result could have an adverse
impact on our ability to sell products found to be infringing, either directly or indirectly. In the event of an adverse outcome,
we may be required to pay substantial damages, stop our manufacture, use, sale, or importation of infringing products, or
obtain licenses to the intellectual property we are found to have infringed. We have also incurred, and expect to continue
to incur, significant legal costs in conducting these lawsuits, including the appeal of the case we won, and our involvement
in this litigation and any future intellectual property litigation could adversely affect sales and divert the efforts and
attention of our technical and management personnel, whether or not such litigation is resolved in our favor. Thus, even if
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we are successful in these lawsuits, the benefits of this success may fail to outweigh the significant legal costs we will
have incurred.
Risks Related to Laws and Regulations
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. Our operations are subject to income
and transaction taxes in the United States and in multiple foreign jurisdictions and to review or audit by the U.S. Internal
Revenue Service (“IRS”) and state, local and foreign tax authorities. In addition, the United States, countries in Asia and
other countries where we do business have recently enacted or are considering changes in relevant tax, accounting and
other laws, regulations and interpretations, including changes to tax laws applicable to multinational companies. These
potential changes could adversely affect our effective tax rates or result in other costs to us.
The European Union (“EU”) member states formally adopted the EU’s Pillar Two Directive, which was
established by the Organization for Economic Cooperation and Development, and which generally provides for a 15 per
cent minimum effective tax rate for multinational corporations, in all jurisdictions in which they 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.
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.
Changes in environmental laws and regulations, including with respect to energy consumption and climate
change, may have a negative impact on our business. Changing environmental regulations and the timetable to implement
them continue to impact our customers’ demand for our products. Currently we have limited visibility into our customers’
strategies to implement these changing environmental regulations into their business. The inability to accurately determine
our customers’ strategies could increase our inventory costs related to obsolescence.
The semiconductor industry is subject to environmental regulations, particularly those that control and restrict
the sourcing, use, transportation, storage, and disposal of certain mineral, chemicals, and materials used in the
semiconductor manufacturing process. We expect the heightened worldwide awareness regarding climate change and the
environmental impact to continue, which may result in new environmental laws and regulations that could affect us, our
suppliers and/or our customers. 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. Like other U.S. companies, our business
and operating results are subject to uncertainties arising out of economic consequences of current and potential military
actions or terrorist activities and associated political instability, and the impact of heightened security concerns on domestic
and international travel and commerce. These uncertainties could also lead to delays or cancellations of customer orders,
a general decrease in corporate spending or our inability to effectively market and sell our products. Any of these results
could substantially harm our business and results of operations, causing a decrease in our revenues.
We are exposed to risks associated with acquisitions and strategic investments. We have made, and in the future
intend to make, acquisitions of, and investments in, companies, technologies or products in existing, related or new
markets. Acquisitions involve numerous risks, including but not limited to:
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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
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. 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. 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 success of the
acquisitions could depend, in part, on our ability to realize the anticipated benefits and cost savings (if any) from combining
the businesses of the acquired companies and our business, which may take longer to realize than expected.
Securities laws and regulations, including potential risk resulting from our evaluation of internal controls over
financial reporting, will continue to impact our results. Complying with the requirements of the federal securities laws
and Nasdaq’s conditions for continued listing have imposed significant legal and financial compliance costs, and are
expected to continue to impose significant costs and management burden on us. These rules and regulations also may make
it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced
coverage or incur substantially higher costs to obtain coverage. These rules and regulations could also make it more
difficult for us to attract and retain qualified executive officers and members of our board of directors, particularly qualified
members to serve on our audit committee. Further, the rules and regulations under the Dodd-Frank Wall Street Reform
and Consumer Protection Act, which became effective in 2011, may impose significant costs and management burden on
us.
Additionally, because these laws, regulations and standards are expected to be subject to varying interpretations,
their application in practice may evolve over time as new guidance becomes available. 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.
Item 1C. Cybersecurity.
Cybersecurity Risk Assessment, Identification and Management
We are committed to protecting our information technology (“IT”) infrastructure, including computers, systems,
corporate networks and sensitive data, from unauthorized access or attack. 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.
•
•
•
•
These policies and controls procedures discussed in more detail below, are an integrated component of our
enterprise risk management assessment processes. We routinely review and assess our business groups and systems to
identify and prioritize areas of risk, including cybersecurity risk. The results of these assessments and progress against
prioritized goals are presented to the board of directors each quarter.
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. We deploy technical safeguards that are designed
to protect our systems from cybersecurity threats, including firewalls, intrusion prevention, and intrusion detection
systems. 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
We have partnered with third parties to support our information security systems and processes, and to help
design, build, test, implement and maintain them. Annual risk assessments are conducted by third party consultants to help
ensure that risks to our IT infrastructure are minimized or eliminated.
We rely on products and services provided by third parties for portions of our IT infrastructure, including business
management, operations and finance systems. These providers may also experience breaches and attacks on their products
which may impact our systems. Further we may also face additional cybersecurity risk due to error or intentional
misconduct by contractors and other third-party service providers related to the use of these systems as part of our IT
infrastructure.
We have a third-party security policy in place to identify, manage and oversee the potential material risks from
threats associated with the use of third-party service providers. We evaluate vendors and consider amongst other factors
the criticality of services and sensitivity of information that is within the scope of the services to be provided and manage
risk accordingly. Our internal legal department reviews all IT Service Agreements with input from the IT department to
ensure that services, terms and conditions in the agreement are suitable. Our IT department performs regular monitoring
of vendor services as part of its’ on-going review and monitoring of vendors. As part of our policy, we monitor termination
of agreements with vendors designed to ensure that access to Company information is appropriately terminated in a timely
manner. Unauthorized network intrusions or other significant information security incidents against third-party systems
used by the Company internally are handled in the same manner as internal systems. However as described in Part 1. Item
1A. Risk Factors of this Annual Report on Form 10-K under “Risks Related to the Operation and Growth of Our Business”,
we have limited insight into the data privacy or security of third-party service providers and our response may be limited
or more difficult because we may not have direct access to their systems.
Although we believe we have adequate resources and sufficient policies, procedures, and oversight in place to
identify and manage IT security risks related to our business operations, there can be no guarantee that our policies and
procedures will be properly followed in every instance or that those policies and procedures will be effective. For a
description of the risks from cybersecurity threats that may materially affect the Company and how they may do so, see
our risk factors under Part 1. Item 1A. 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”). Our CISO’s additional responsibilities include hiring appropriate
personnel, helping to integrate cybersecurity risks into the Company’s overall risk management strategy, and
communicating updates regarding IT/Information security key priorities to relevant personnel including management and
the board.
Our CISO has served in that position since 2018. Our 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.
We have in place an Incident Response Procedure policy to define our response to unauthorized network
intrusions or other significant information security incidents, collectively cybersecurity incidents. The policy defines the
standard operational process to determine if an event observed on a system could have caused a breach of the system or a
compromise of sensitive data. 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.
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. This cross-functional
group allows us to address the operational impacts of cybersecurity incidents as and when they occur and to guide decisions
related to materiality and, if applicable, disclosure. The Cybersecurity Incident Response Team is responsible for
extrapolating cybersecurity incident event information into quantitative and qualitative impacts as they relate to our
financial condition and operations. In addition, the Company’s Incident Response Procedure policy includes reporting to
the board of directors for certain cybersecurity incidents.
22
Board Governance
Our full board of directors oversees our risk management including but not limited to IT and cybersecurity
policies, procedures, and risk assessments. Our management reports to our board of directors on information security
matters on a quarterly basis, or more frequently as needed.
One of the key functions of our board of directors is informed oversight of our various processes for managing
risk. An overall review of risk is inherent in our board of directors ongoing consideration of our long-term strategies,
transactions and other matters presented to and discussed by the board of directors. This includes a discussion of the
likelihood and potential magnitude of various risks, including cybersecurity risks, and any actions management has taken
to limit, monitor or control those risks.
At each quarterly board meeting, the full board receives the quarterly cybersecurity board update that is prepared
by our CISO. 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.
Item 2. Properties.
We own our principal executive, administrative, manufacturing and technical offices which are located in San
Jose, California. We also own an R&D facility in New Jersey, a design center in Germany and a multipurpose office
building in Switzerland. We 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.
Item 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
PART II
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. Because brokers and other
institutions hold many of our shares on behalf of stockholders, we are unable to estimate the total number of stockholders
represented by these record holders.
Issuer Purchases of Equity Securities
From time to time our board of directors has authorized the use of funds to repurchase shares of our common
stock. 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.
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.
The following table summarizes repurchases of our common stock during the fourth quarter of fiscal 2023:
Period
October 1, 2023 to October 31, 2023 . . . . . . . . .
November 1, 2023 to November 30, 2023 . . . . .
December 1, 2023 to December 31, 2023 . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Number of
Shares Purchased
as Part of
Approximate Dollar Value
that May Yet be
Repurchased Under the
Total
Number of
Average
Price Paid Publicly Announced
Shares Purchased Per Share Plans or Programs
69.83
69.63
—
464,903 $
215,080 $
— $
$
$
464,903
215,080
—
679,983
679,983
Plans or Program
(In millions)
41.0
26.0
26.0
24
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 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.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Power Integrations, Inc., the NASDAQ Composite Index
and the PHLX Semiconductor Index
$450
$400
$350
$300
$250
$200
$150
$100
$50
$0
12/18
12/19
12/20
12/21
12/22
12/23
NASDAQ Composite
PHLX Semiconductor
Power Integrations, Inc.
*$100 invested on 12/31/18 in stock or index, including reinvestment of dividends.
Fiscal year ending December 31.
Company/Index
Power Integrations, Inc. . . . . . . . . . . . . . . . . . . . . .
Nasdaq Composite . . . . . . . . . . . . . . . . . . . . . . . . .
PHLX Semiconductor (SOX) . . . . . . . . . . . . . . . .
12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023
280.41
236.17
389.74
311.49
242.03
358.37
242.66
163.28
233.37
163.64
136.69
163.26
100.00
100.00
100.00
272.93
198.10
250.87
(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
Item 7. 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. 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. The following discussion and analysis has been prepared as an aid to understanding our financial
condition and results of our operations. It should be read in conjunction with the consolidated financial statements and
the notes to those statements included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-
looking statements that involve risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements”
at the beginning of this Form 10-K. Our actual results could differ materially from those contained in these forward-
looking statements due to a number of factors, including those discussed in Part I, Item 1A “Risk Factors” and elsewhere
in this Annual Report on Form 10-K.
Business Overview
We design, develop and market analog and mixed-signal integrated circuits (“ICs”) and other electronic
components and circuitry used in high-voltage power conversion. Our products are used in power converters that convert
electricity from a high-voltage source to the type of power required for a specified downstream use. In most cases, this
conversion entails, among other functions, converting alternating current (“AC”) to direct current (“DC”) or vice versa,
reducing or increasing the voltage, and regulating the output voltage and/or current according to the customer’s
specifications.
A large percentage of our products are ICs used in AC-DC power supplies, which convert the high-voltage AC
from a wall outlet to the low-voltage DC required by most electronic devices. Power supplies incorporating our products
are used with all manner of electronic products including mobile phones, computing and networking equipment,
appliances, electronic utility meters, battery-powered tools, industrial controls, and “home-automation,” or “internet of
things” applications such as networked thermostats, power strips and security devices. Variations of our power-supply ICs
are used for high-voltage power conversion in electric vehicles (“EVs”). We also supply high-voltage LED drivers, which
are AC-DC ICs specifically designed for lighting applications that utilize light-emitting diodes, and motor-driver ICs for
brushless DC (“BLDC”) motors used in consumer appliances, HVAC systems, ceiling fans and a variety of industrial
applications.
We also offer high-voltage gate drivers—either standalone ICs or circuit boards containing ICs, electrical
isolation components and other circuitry—used to operate high-voltage switches such as insulated-gate bipolar transistors
(“IGBTs”) and silicon-carbide (“SiC”) MOSFETs. These combinations of switches and drivers are used for power
conversion in high-power applications (i.e., power levels ranging from 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. Revenues from all four
end-market categories decreased in 2023 compared to the prior year. 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 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.
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. 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.
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
and customer mix can also cause our gross margin to fluctuate. Also, because we purchase a large percentage of our silicon
wafers from foundries located in Japan, our gross margin is influenced by fluctuations in the exchange rate between the
U.S. dollar and the Japanese yen. 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. Also,
although our wafer fabrication and assembly operations are outsourced, as are most of our test operations, a portion of our
production costs are fixed in nature. As a result, our unit costs and gross profit margin are impacted by the volume of units
we produce.
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 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.
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.
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity with accounting principles generally
accepted in the United States of America, or U.S. GAAP, requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis,
we evaluate our estimates, including those listed below. 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.
Our critical accounting policies are important to the portrayal of our financial condition and results of operations,
and require us to make judgments and estimates about matters that are inherently uncertain. A brief description of our
critical accounting policies and material estimates is set forth below. For more information regarding our accounting
policies, see Note 2, Summary of Significant Accounting Policies and Recent Accounting Pronouncements, in our Notes to
Consolidated Financial Statements in this Annual Report on Form 10-K.
Revenue recognition
Product revenues consist of sales to original equipment manufacturers, or OEMs, merchant power supply
manufacturers and distributors. We apply the provisions of Accounting Standards Codification (ASC) 606-10, Revenue
from Contracts with Customers, and all related appropriate guidance. We recognize revenue under the core principle to
depict the transfer of control to our customers in an amount reflecting the consideration we expect to be entitled. In order
to achieve that core principle, we apply the following five-step approach: (1) identify the contract with a customer,
(2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction
price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied.
Sales to most distributors are made under terms allowing certain price adjustments and limited rights of return
(known as “stock rotation”) of our products held in their inventory or upon sale to their end customers. We recognize
revenue from sales to distributors upon the transfer of control to the distributor. 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. After we verify that the claim was pre-approved, we issue a credit
memo to the distributor for the ship-and-debit claim. In determining the transaction price, we consider ship-and-debit price
adjustments to be variable consideration. At the time revenue is recognized on sales to distributors, future ship-and-debit
price adjustments are unknown and therefore subject to uncertainty. Such price adjustments are estimated using the
expected-value method based on an analysis of actual ship-and-debit claims, at the distributor and product level, over a
period of time considered adequate to account for current pricing and business trends. The reserve for ship-and-debit
27
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. To the extent future ship-and-debit claims significantly
exceed amounts estimated, there could be a material impact on our revenues and results of operations.
Stock rotation rights grant the distributor the ability to return certain specified amounts of inventory. Stock
rotation returns are an additional form of variable consideration and are also estimated using the expected value method
based on historical return rates. Historically, these distributor stock rotation returns have not been material.
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. When evaluating the adequacy of our provision for excess and obsolete
inventory, we identify excess and obsolete products and also analyze historical usage, forecasted demand, current
economic trends and historical write-offs. This write-down is reflected as a reduction to inventory in the consolidated
balance sheets and an increase in cost of revenues in our consolidated statements of income. If actual market conditions
are less favorable than our assumptions, we may be required to take additional write-downs, which could adversely impact
our cost of revenues and operating results. Historically, these write-downs have not been material.
Results of Operations
The following table sets forth statement of income data as a percentage of net revenues for the periods indicated:
Net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses:
Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expenses, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision (benefit) for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comparison of Years Ended December 31, 2023 and 2022
Year Ended December 31,
2022
100.0 %
43.7
56.3
2023
100.0 %
48.5
51.5
2021
100.0 %
48.7
51.3
21.6
14.5
7.5
—
43.6
7.9
2.4
10.3
(2.2)
12.5 %
14.4
9.6
4.4
0.2
28.6
27.7
0.5
28.2
2.0
26.2 %
12.1
8.6
5.7
—
26.4
24.9
0.2
25.1
1.7
23.4 %
Net revenues. 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. 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 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.
Our approximate net revenue mix by end-markets served in 2023, 2022 and 2021 is as follows:
End Market
Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Computer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Industrial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
2022
2021
29 %
12 %
27 %
32 %
21 %
10 %
33 %
36 %
30 %
10 %
32 %
28 %
28
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. 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. 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.
The following customers represented 10% or more of our net revenues for the respective years:
Customer
Avnet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Honestar Technologies Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Salcomp Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
2022
2021
27 %
18 %
10 %
31 %
11 %
*
30 %
16 %
*
* Total customer revenue was less than 10% of net revenues.
No other customers accounted for 10% or more of net revenues during these years.
Gross profit. Gross profit is net revenues less cost of revenues. Our cost of revenues consists primarily of the
purchase of wafers from our contracted foundries, the assembly, packaging and testing of our products by sub-contractors,
product testing performed in our own facility, overhead associated with the management of our supply chain and the
amortization of acquired intangible assets. Gross margin is gross profit divided by net revenues. The following table
compares gross profit and gross margin for the years ended December 31, 2023, 2022 and 2021:
(dollars in millions)
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
$ 229.0
Change
2022
(37.6)% $ 366.9
Change
2021
1.7 % $ 360.6
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.
Research and development expenses. Research and development (“R&D”) expenses consist primarily of
employee-related expenses including salaries and stock-based compensation, as well as expensed material and facility
costs associated with the development of new processes and products. We also record R&D expenses for prototype wafers
related to new products until the products are released to production. The following table compares R&D expenses for
the years ended years ended December 31, 2023, 2022 and 2021:
(dollars in millions)
R&D expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Headcount (at period end) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
2023
96.1
282
Change
2022
Change
2.3 % $
93.9
310
10.6 % $
2021
84.9
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.
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 following table compares sales and marketing expenses for the years ended December 31, 2023,
2022 and 2021:
(dollars in millions)
Sales and marketing expenses . . . . . . . . . . . . . . . . . . . . . . . . .
Headcount (at period end) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
2023
64.6
317
Change
2022
Change
3.2 % $
62.6
320
2.9 % $
2021
60.8
280
29
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. 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. The table
below compares G&A expenses for the years ended December 31, 2023, 2022 and 2021:
(dollars in millions)
G&A expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Headcount (at period end) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
2023
33.2
79
Change
2022
Change
15.0 % $
28.9
72
(27.5)% $
2021
39.8
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. 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. 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.
Other income. Other income consists primarily of interest income earned on cash and cash equivalents,
marketable securities and other investments, and the impact of foreign exchange gains or losses. The following table
compares other income for the years ended December 31, 2023, 2022 and 2021:
(dollars in millions)
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
10.8
$
Change
259.9 % $
2022
Change
3.0
179.9 % $
2021
1.1
Other income increased in 2023 due primarily to an increase in interest income resulting from higher yields earned
on our investments.
Provision (benefit) for income taxes. Provision for income taxes represents federal, state and foreign taxes. The
following table compares the provision for income taxes for the years ended December 31, 2023, 2022 and 2021:
(dollars in millions)
Provision (benefit) for income taxes . . . . . . . . . . . . . . . . . . . .
Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
2023
(9.8)
(21.4)%
Change
(178.2)% $
2022
12.6
6.9 %
Change
7.3 % $
2021
11.7
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. 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. 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. 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. 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. 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.
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 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
June 7, 2026, with all other terms remaining the same. The Credit Agreement was amended with an effective date of
June 28, 2023 to include the Secured Overnight Financing Rates (“SOFR”) as interest rate benchmark rates, with all other
terms remaining the same. Our ability to borrow under the revolving line of credit is conditioned upon our compliance
with specified covenants, including reporting and financial covenants, primarily a minimum liquidity measure and a debt
to earnings ratio, with which we are currently in compliance. 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.
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.
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. These sources of cash were
partially offset by a $27.7 million increase in inventories due to softening demand during the year, a $18.2 million decrease
in taxes payable and accrued liabilities, a $5.4 million decrease in accounts payable (excluding payables related to property
and equipment) due to timing of payments and a $1.2 million increase in prepaid expenses and other assets.
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. 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. 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.
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, 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 Financing Activities
Our financing activities in the year ended December 31, 2023, resulted in a $93.0 million net use of cash.
Financing activities consisted primarily of $55.3 million for the repurchase of our common stock and $44.0 million for the
payment of dividends to stockholders, partially offset by proceeds of $6.2 million from the issuance of common stock
through our employee stock purchase plan.
Our financing activities in the year ended December 31, 2022, resulted in a $346.4 million net use of cash.
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.
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.
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.
31
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.
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. 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.
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. 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.
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. The
Tax Act signed into law on December 22, 2017 generally allows companies to repatriate accumulated foreign earnings
without
taxes beginning after December 31, 2017. 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.
incurring additional U.S.
federal
If our operating results deteriorate in future periods, either as a result of a decrease in customer demand or pricing
pressures from our customers or our competitors, or for other reasons, our ability to generate positive cash flow from
operations may be jeopardized. In that case, we may be forced to use our cash, cash equivalents and short-term investments,
use our current financing or seek additional financing from third parties to fund our operations. We believe that cash
generated from operations, together with existing sources of liquidity, will satisfy our projected working capital and other
cash requirements for at least the next 12 months. 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.
Off-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
Contractual Obligations
As of December 31, 2023, we had the following non-cancelable contractual obligations:
Payments Due by Period
(In thousands)
Operating lease obligations(1) . . . . . . . . . . . . . . . . . . . .
Purchase obligations(2) . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
11,239
41,585
$
$
Less than 1
Year
$
$
3,168
41,585
1 - 3 Years 4 - 5 Years Over 5 Years
243
—
2,211 $
— $
5,617 $
— $
$
$
(1) Operating lease obligations represent undiscounted non-cancelable remaining lease payments.
(2) Purchase obligations represent commitments to our suppliers and other parties for the purchases of goods and services, which
primarily consist of wafer and other inventory purchases, assembly and other manufacturing services, and purchases of property
and equipment.
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. 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. We believe that cash generated from operations, together with existing sources of liquidity, will satisfy the
cash requirements for these contractual obligations.
Recently Issued Accounting Pronouncements
For recently issued accounting announcements, see “Recently Issued Accounting Pronouncements” in Note 2,
Significant Accounting Policies and Recent Accounting Pronouncements, in our Notes to Consolidated Financial
Statements included in this Annual Report on Form 10-K.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Interest Rate Risk. Our exposure to market risk for changes in interest rates relates primarily to our investment
portfolio. We consider cash invested in highly liquid financial instruments with a remaining maturity of three months or
less at the date of purchase to be cash equivalents. Investments in highly liquid financial instruments with maturities greater
than three months are classified as short-term investments. We generally hold securities until maturity; however, they may
be sold under certain circumstances, including, but not limited to, when necessary for the funding of acquisitions and other
strategic investments. As a result of this policy, we classify our investment portfolio as available-for-sale. We invest in
high-credit quality issuers and, by policy, limit the amount of credit exposure to any one issuer. As stated in our policy,
we seek to ensure the safety and preservation of our invested principal funds by limiting default risk, market risk and
reinvestment risk. We mitigate default risk by investing in safe and high-credit quality securities and by constantly
positioning our portfolio to respond appropriately to a significant reduction in a credit rating of any investment issuer,
guarantor or depository. The portfolio includes only marketable securities with active secondary or resale markets to
facilitate portfolio liquidity. 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. 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. We monitor our investments for impairment on a periodic basis. Refer to Note 5,
Marketable Securities, in our Notes to Consolidated Financial Statements in this Annual Report on Form 10-K, for a
tabular presentation of our available-for-sale investments and the expected maturity dates.
Foreign Currency Exchange Risk. 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. The following represents the potential impact on our pretax income from a change in the value of the U.S.
33
dollar compared to the Swiss franc and euro as of December 31, 2023. This sensitivity analysis applies a change in the
U.S. dollar value of 5% and 10%.
(in thousands of USD)
Swiss franc and euro foreign exchange impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31, 2023
10%
5%
$
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.
We have R&D and sales offices in various other foreign countries in which our expenses are denominated in the
local currency, primary Asia and Western Europe. From time to time we may enter into foreign currency hedging contracts
to hedge certain foreign currency transactions. 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.
(“Lapis”) we have wafer supply agreements based in U.S. dollars; however, our agreements with Epson and Lapis also
allow for mutual sharing of the impact of the exchange rate fluctuation between Japanese yen and the U.S. dollar.
Each year, our management and these suppliers review and negotiate pricing; the negotiated pricing is denominated in
U.S. dollars but is subject to contractual exchange rate provisions. The fluctuation in the exchange rate is shared equally
between us and each of these suppliers.
Nevertheless, as a result of our above-mentioned supplier agreements, our gross margin is influenced by
fluctuations in the exchange rate between the U.S. dollar and the Japanese yen. 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
Item 8. Financial Statements and Supplementary Data.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of Power Integrations, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Power Integrations, Inc. and subsidiaries (the
"Company") as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income,
stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related
notes and schedules listed in the Index at Item 8 (collectively referred to as the "financial statements"). In our opinion, the
financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023
and 2022, and the results of its operations and its cash flows for each of the three years in the period ended
December 31, 2023, in conformity with the accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2023, based on criteria
established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of
the Treadway Commission and our report dated February 12, 2024, expressed an unqualified opinion on the Company's
internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion
on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of
the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for
our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements
that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or
disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex
judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements,
taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the
critical audit matter or on the accounts or disclosures to which it relates.
Inventories – Provision for Excess and Obsolete Inventory – Refer to Notes 2 and 3 to the financial statements
Critical Audit Matter Description
The Company's inventories are recorded at standard cost, which approximates actual cost on a first-in, first-out basis, not
in excess of net realizable value. The Company routinely evaluates quantities and values of inventories and records a
provision for excess and obsolete inventories to reduce its recorded inventory balance to its estimated net realizable value.
Management’s assumptions regarding the inventory quantities considered to be excess and obsolete are determined by
analyzing historical usage, demand forecasts, current economic trends, and historical write-offs.
We identified the determination of excess and obsolete inventory within work-in-process and finished goods inventory as
a critical audit matter due to the significant assumptions made by management when determining the excess and obsolete
inventory quantities and the resulting provision. This required a high degree of auditor judgement and an increased extent
35
of effort when performing audit procedures to evaluate the reasonableness of management’s excess and obsolete provision
for work-in-process and finished goods inventory.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to management’s assumptions used in determining the excess and obsolete provision for
work-in-process and finished goods inventory included the following, among others:
•
•
•
•
We tested the effectiveness of the control over the determination of the provision for excess and obsolete
inventories, including work-in-process and finished goods inventory.
We selected a sample of products from work-in-process and finished goods inventory as of
December 31, 2022, and evaluated management's ability to accurately estimate forecasted demand by
comparing the respective products usage for the year ended December 31, 2023, to estimates made in
the prior year.
We selected a sample of products from work-in-process and finished goods inventory and evaluated the
reasonableness of management's provision for work-in-process and finished goods inventory by
considering recent usage, historical usage, contracts and communications with customers, expected
product lifecycles, macroeconomic conditions, and inquiries with sales personnel.
We considered the existence of contradictory evidence based on reading of internal communications to
management and the board of directors, Company press releases, and analyst reports, as well as our
observations and inquiries as to changes within the business.
/s/ DELOITTE & TOUCHE LLP
San Jose, California
February 12, 2024
We have served as the Company’s auditor since 2005.
36
POWER INTEGRATIONS, INC.
CONSOLIDATED BALANCE SHEETS
December 31,
2023
December 31,
2022
(in thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROPERTY AND EQUIPMENT, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INTANGIBLE ASSETS, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GOODWILL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DEFERRED TAX ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued payroll and related expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LONG-TERM INCOME TAXES PAYABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OTHER LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
COMMITMENTS AND CONTINGENCIES (Notes 11, 12 and 13)
STOCKHOLDERS’ EQUITY:
Common stock, $0.001 par value
Authorized - 140,000 shares
Outstanding - 56,738 and 56,961 shares in 2023 and 2022, respectively . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
$
63,929 $
247,640
14,674
163,164
22,193
511,600
164,213
4,424
91,849
28,325
19,457
819,868 $
26,390 $
13,551
1,016
7,910
48,867
6,244
12,516
67,627
105,372
248,441
20,836
135,420
15,004
525,073
176,681
6,597
91,849
19,034
20,862
840,096
30,088
14,778
938
12,572
58,376
15,757
10,747
84,880
23
—
(1,462)
753,680
752,241
819,868 $
24
—
(7,344)
762,536
755,216
840,096
The accompanying notes are an integral part of these consolidated financial statements.
37
POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
NET REVENUES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
COST OF REVENUES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GROSS PROFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OPERATING EXPENSES:
Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expenses, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INCOME FROM OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OTHER INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INCOME BEFORE INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROVISION (BENEFIT) FOR INCOME TAXES . . . . . . . . . . . . . . . . . . . .
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EARNINGS PER SHARE:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
$ 444,538
215,582
228,956
Year Ended December 31,
2022
2021
$ 651,138 $ 703,277
342,638
360,639
284,231
366,907
—
96,067
64,598
33,232
193,897
35,059
10,848
45,907
(9,828)
55,735
93,894
62,574
28,897
1,130
186,495
180,412
3,014
183,426
12,575
84,933
60,808
39,840
—
185,581
175,058
1,077
176,135
11,722
$ 170,851 $ 164,413
0.97
0.97
$
$
2.96 $
2.93 $
2.73
2.67
$
$
$
SHARES USED IN PER SHARE CALCULATION:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57,195
57,622
57,801
58,371
60,327
61,467
The accompanying notes are an integral part of these consolidated financial statements.
38
POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net of $0 tax in 2023, 2022 and
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized gain (loss) on marketable securities, net of $0 tax in 2023, 2022
and 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized actuarial gain on pension benefits, net of tax of ($130), ($271)
Year Ended December 31,
2022
2023
$ 55,735 $ 170,851
2021
$ 164,413
(420)
(985)
(486)
5,579
(4,158)
(2,055)
and ($334) in 2023, 2022 and 2021, respectively . . . . . . . . . . . . . . . . . . . . . .
Total other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL COMPREHENSIVE INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
723
5,882
1,536
(3,607)
$ 61,617 $ 167,244
967
(1,574)
$ 162,839
The accompanying notes are an integral part of these consolidated financial statements.
39
POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
BALANCE AT JANUARY 1, 2021 . . . . . . . . . . . . .
Issuance of common stock under employee stock
option and stock award plans . . . . . . . . . . . . . . . . .
Repurchase of common stock . . . . . . . . . . . . . . . . . .
Issuance of common stock under employee stock
purchase plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense related to
employee stock awards . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense related to
employee stock purchases . . . . . . . . . . . . . . . . . . .
Payment of dividends to stockholders . . . . . . . . . . . .
Unrealized actuarial gain on pension benefits . . . . . .
Unrealized loss on marketable securities . . . . . . . . . .
Foreign currency translation adjustment . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BALANCE AT DECEMBER 31, 2021 . . . . . . . . . . .
Issuance of common stock under employee stock
option and stock award plans . . . . . . . . . . . . . . . . .
Repurchase of common stock . . . . . . . . . . . . . . . . . .
Issuance of common stock under employee stock
purchase plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense related to
employee stock awards . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense related to
employee stock purchases . . . . . . . . . . . . . . . . . . .
Payment of dividends to stockholders . . . . . . . . . . . .
Unrealized actuarial gain on pension benefits . . . . . .
Unrealized loss on marketable securities . . . . . . . . . .
Foreign currency translation adjustment . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BALANCE AT DECEMBER 31, 2022 . . . . . . . . . . .
Issuance of common stock under employee stock
option and stock award plans . . . . . . . . . . . . . . . . .
Repurchase of common stock . . . . . . . . . . . . . . . . . .
Issuance of common stock under employee stock
purchase plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense related to
employee stock awards . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense related to
employee stock purchases . . . . . . . . . . . . . . . . . . .
Payment of dividends to stockholders . . . . . . . . . . . .
Unrealized actuarial gain on pension benefits . . . . . .
Unrealized gain on marketable securities . . . . . . . . .
Foreign currency translation adjustment . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BALANCE AT DECEMBER 31, 2023 . . . . . . . . . . .
Common Stock
Shares Amount
59,910
$
28
Additional
Paid-In
Capital
$ 190,920
Accumulated
Other
Comprehensive Retained
Loss
Earnings
$
(2,163) $ 621,626 $
Total
Stockholders’
Equity
810,411
780
(878)
101
—
—
—
—
—
—
—
59,913
—
(1)
1,644
(73,937)
1
—
—
—
—
—
—
—
28
6,065
35,647
1,962
—
—
—
—
—
162,301
—
—
—
—
—
—
—
—
—
—
967
(2,055)
(486)
—
(3,737)
—
(32,599)
—
—
—
164,413
753,440
1,644
(73,938)
6,066
35,647
1,962
(32,599)
967
(2,055)
(486)
164,413
912,032
731
(3,770)
—
(4)
257
(190,827)
—
—
—
(120,263)
257
(311,094)
87
—
—
—
—
—
—
—
56,961
—
—
—
—
—
—
—
—
24
5,905
20,494
1,870
—
—
—
—
—
—
476
(784)
—
(1)
—
(34,765)
85
—
—
—
—
—
—
—
56,738
$
—
—
—
—
—
—
—
—
23
6,237
26,624
1,904
—
—
—
—
—
— $
$
—
—
—
—
—
—
1,536
(4,158)
(985)
—
(7,344)
—
(41,492)
—
—
—
170,851
762,536
—
—
—
—
—
—
723
5,579
(420)
—
—
(20,583)
—
—
—
(44,008)
—
—
—
55,735
(1,462) $ 753,680 $
5,905
20,494
1,870
(41,492)
1,536
(4,158)
(985)
170,851
755,216
—
(55,349)
6,237
26,624
1,904
(44,008)
723
5,579
(420)
55,735
752,241
The accompanying notes are an integral part of these consolidated financial statements.
40
POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on disposal of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of premium (accretion of discount) on marketable securities . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (decrease) in accounts receivable allowance for credit losses. . . . . . . . . . . .
Change in operating assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes payable and accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales and maturities of marketable securities . . . . . . . . . . . . . . . . . . .
Net cash provided by (used in) investing activities . . . . . . . . . . . . . . . . . . . . . . . .
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock under employee stock plans . . . . . . . . . . . . . . . . . . . . . . .
Repurchase of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments of dividends to stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NET DECREASE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . . .
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD . . . . . . . . . . . .
CASH AND CASH EQUIVALENTS AT END OF PERIOD . . . . . . . . . . . . . . . . . . .
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:
Unpaid property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31,
2022
2021
2023
$
55,735 $
170,851 $
164,413
35,203
2,173
100
28,528
(351)
(9,247)
(454)
6,616
(27,744)
(1,183)
(5,435)
(18,182)
65,759
(20,884)
—
(191,211)
197,942
(14,153)
6,237
(55,278)
(44,008)
(93,049)
(41,443)
105,372
$
63,929 $
34,930
2,415
1,371
22,364
3,292
(2,566)
690
19,867
(36,154)
7,343
(3,836)
(5,224)
215,343
(39,211)
1,202
(55,820)
172,165
78,336
6,162
(311,094)
(41,492)
(346,424)
31,454
3,494
3,105
37,609
1,590
(13,240)
18
(5,501)
3,612
4,326
4,067
(4,079)
230,868
(47,272)
35
(554,018)
368,457
(232,798)
7,710
(73,938)
(32,599)
(98,827)
(52,745)
158,117
105,372 $
(100,757)
258,874
158,117
$
$
2,747 $
1,082 $
10,879
13,769 $
17,880 $
25,644
The accompanying notes are an integral part of these consolidated financial statements.
41
POWER INTEGRATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. THE COMPANY:
Power Integrations, Inc. (“Power Integrations” or the “Company”), incorporated in California on March 25, 1988,
and reincorporated in Delaware in December 1997, designs, develops, manufactures and markets analog and mixed-signal
integrated circuits (“ICs”) and other electronic components and circuitry used in high-voltage power conversion. The
Company’s products are used in power converters that convert electricity from a high-voltage source to the type of power
required for a specified downstream use. In most cases, this conversion entails, among other functions, converting
alternating current (“AC”) to direct current (“DC”) or vice versa, reducing or increasing the voltage, and regulating the
output voltage and/or current according to the customer’s specifications.
A large percentage of the Company’s products are ICs used in AC-DC power supplies, which convert the high-
voltage AC from a wall outlet to the low-voltage DC required by most electronic devices. Power supplies incorporating
the Company’s 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 other building-
automation and security devices. The Company also supplies high-voltage LED drivers, which are AC-DC ICs specifically
designed for lighting applications that utilize light-emitting diodes, and motor-drivers ICs for brushless DC (“BLDC”)
motors used in consumer appliances, HVAC systems, ceiling fans and a variety of industrial applications. The Company
also offers high-voltage gate drivers—either standalone ICs or circuit boards containing ICs, electrical isolation
components and other circuitry—used to operate high-voltage switches such as insulated-gate bipolar transistors
(“IGBTs”) and silicon-carbide (“SiC”) MOSFETs. These combinations of switches and drivers are used for power
conversion in high-power applications (i.e., power levels ranging from approximately 100 kilowatts up to gigawatts) such
as industrial motors, solar- and wind-power systems, electric vehicles and high-voltage DC transmission systems.
2. SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS:
Significant Accounting Policies and Estimates
Segment Reporting
The Company is organized and operates as one reportable segment, the design, development, manufacture and
marketing of integrated circuits and related components for use primarily in the high-voltage power conversion markets.
The Company’s chief operating decision maker, the Chief Executive Officer, reviews financial information presented on
a consolidated basis for purposes of making operating decisions and assessing financial performance.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries
after elimination of all intercompany transactions and balances.
Estimates
The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles
(“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing
basis, the Company evaluates its estimates, including those related to revenue recognition, allowances for receivables,
inventories, litigation and income taxes. These estimates are based on historical facts and various other factors, which the
Company believes to be reasonable at the time the estimates are made. However, as the effects of future events cannot be
determined with precision, actual results could differ significantly from management’s estimates.
Revenue Recognition
The Company applies the provisions of Accounting Standards Codification (“ASC”) 606-10, Revenue from
Contracts with Customers, and all related appropriate guidance. The Company recognizes revenue under the core principle
to depict the transfer of control to the Company’s customers in an amount reflecting the consideration the Company expects
to be entitled. In order to achieve that core principle, the Company applies the following five-step approach: (1) identify
the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price,
42
(4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a
performance obligation is satisfied.
Product revenues consist of sales to original equipment manufacturers, or OEMs, merchant power supply
manufacturers and distributors. The Company considers customer purchase orders, which in some cases are governed by
master sales agreements, to be the contracts with a customer. In situations where sales are to a distributor, the Company
has concluded that its contracts are with the distributor as the Company holds a contract bearing enforceable rights and
obligations only with the distributor. As part of its consideration of the contract, the Company evaluates certain factors
including the customer’s ability to pay (or credit risk). For each contract, the Company considers the promise to transfer
products, each of which is distinct, to be the identified performance obligations. In determining the transaction price the
Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the
Company expects to be entitled. As the Company’s standard payment terms are less than one year, the Company has
elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing
component. The Company allocates the transaction price to each distinct product based on their relative standalone selling
price. The product price as specified on the purchase order is considered the standalone selling price as it is an observable
input which depicts the price as if sold to a similar customer in similar circumstances. Revenue is recognized when control
of the product is transferred to the customer (i.e., when the Company’s performance obligation is satisfied), which typically
occurs at shipment. Further, in determining whether control has transferred, the Company considers if there is a present
right to payment and legal title, along with risks and rewards of ownership having transferred to the customer.
Frequently, the Company receives orders for products to be delivered over multiple dates that may extend across
several reporting periods. The Company invoices for each delivery upon shipment and recognizes revenues for each
distinct product delivered, assuming transfer of control has occurred. As scheduled delivery dates are within one year,
under the optional exemption provided by ASC 606-10-50-14 revenues allocated to future shipments of partially completed
contracts are not disclosed. The Company has also elected the practical expedient under ASC 340-40-25-4 to expense
commissions when incurred as the amortization period of the commission asset the Company would have otherwise
recognized is less than one year.
Sales to international customers that are shipped from the Company’s facility outside of the United States are
pursuant to EX Works, or EXW, shipping terms, meaning that control of the product transfers to the customer upon
shipment from the Company’s foreign warehouse. Sales to international customers that are shipped from the Company’s
facility in California are pursuant to Delivered at Frontier, or DAF, shipping terms. As such, control of the product passes
to the customer when the shipment reaches the destination country and revenue is recognized upon the arrival of the
product in that country. Shipments to customers in the Americas are pursuant to Free on Board, or FOB, point of origin
shipping terms meaning that control is passed to the customer upon shipment.
Sales to most distributors are made under terms allowing certain price adjustments and limited rights of return
(known as “stock rotation”) of the Company’s products held in their inventory or upon sale to their end customers. Revenue
from sales to distributors is recognized upon the transfer of control to the distributor. 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 the Company to adjust the
distributor’s cost from the standard price to the pre-approved lower price. After the Company verifies that the claim was
pre-approved, a credit memo is issued to the distributor for the ship-and-debit claim. In determining the transaction price,
the Company considers ship-and-debit price adjustments to be variable consideration. Such price adjustments are estimated
using the expected value method based on an analysis of actual ship-and-debit claims, at the distributor and product level,
over a period of time considered adequate to account for current pricing and business trends. Historically, actual price
adjustments for ship-and-debit claims have not materially differed from those estimated and included when determining
the transaction price. Stock rotation rights grant the distributor the ability to return certain specified amounts of inventory.
Stock rotation adjustments are an additional form of variable consideration and are also estimated using the expected value
method based on historical return rates. Historically, distributor stock rotation adjustments have not been material.
Sales to certain distributors are made under terms that do not include rights of return or price concessions after
the product is shipped to the distributor. Accordingly, upon application of steps one through five above, product revenue
is recognized upon shipment and transfer of control.
The Company generally provides an assurance warranty that its products will substantially conform to the
published specifications for twelve months from the date of shipment. The Company’s liability is limited to either a credit
equal to the purchase price or replacement of the defective part. Returns under warranty have historically been immaterial.
As such, the Company does not record a specific warranty reserve or consider activities related to such warranty, if any,
to be a separate performance obligation.
43
Inventories
Inventories (which consist of costs associated with the purchases of wafers from domestic and offshore foundries
and of packaged components from offshore assembly manufacturers, as well as internal labor and overhead associated
with the testing of both wafers and packaged components).
Inventory is recorded at standard cost, which approximates actual cost computed on a first-in, first-out basis, not
in excess of net realizable value. The Company routinely evaluates quantities and values of inventories and records a
provision for excess and obsolete inventories to reduce its recorded inventory balance to its estimated net realizable value.
In order to determine the provision management considers historical usage, forecasted demand, current economic trends
and historical write-offs.
Income Taxes
Income-tax expense is an estimate of current income taxes payable or refundable in the current fiscal year based
on reported income before income taxes. Deferred income taxes reflect the effect of temporary differences and carry-
forwards that are recognized for financial reporting and income tax purposes.
The Company accounts for income taxes under the provisions of ASC 740, Income Taxes. Under the provisions
of ASC 740, deferred tax assets and liabilities are recognized based on the differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax bases, utilizing the tax rates that are expected to
apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The
Company limits the deferred tax assets recognized related to certain officers’ compensation to amounts that it estimates
will be deductible in future periods based upon Internal Revenue Code Section 162(m). The Company also recognizes
valuation allowances to reduce any deferred tax assets to the amount that it estimates will more likely than not be realized
based on available evidence and management’s judgment. In the event that the Company determines, based on available
evidence and management judgment, that all or part of the net deferred tax assets will not be realized in the future, it would
record a valuation allowance in the period the determination is made. In addition, the calculation of tax liabilities involves
significant judgment in estimating the impact of uncertainties in the application of complex tax laws. Resolution of these
uncertainties in a manner inconsistent with the Company’s expectations could have a material impact on the Company’s
results of operations and financial position. The Company recognizes interest and penalties related to income tax matters
as income tax expense.
The U.S. tax rules require U.S. tax on foreign earnings, known as global intangible low taxed income. Under U.S.
GAAP, we are allowed to make an accounting policy choice of either (1) treating taxes due on future U.S. inclusions as a
current-period expense when incurred (the “period cost method”) or (2) factoring such amounts into a company’s
measurement of its deferred taxes (the “deferred method”). We selected the deferred method of accounting and recorded
the associated basis differences anticipated to influence prospective income inclusion calculations.
Goodwill and Intangible Assets
Goodwill and the Company’s domain name are evaluated in accordance with ASC 350-10, Goodwill and Other
Intangible Assets, and an impairment analysis is conducted on an annual basis, or sooner if indicators exist for a potential
impairment.
In accordance with ASC 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets, long-lived
assets, such as property and equipment and intangible assets, are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held
and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows
expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an
impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the
asset.
Cash and Cash Equivalents
The Company considers cash invested in highly liquid financial instruments with maturities of three months or
less at the date of purchase to be cash equivalents.
44
Marketable Securities
The Company generally holds securities until maturity; however, they may be sold under certain circumstances
including, but not limited to, when necessary for the funding of acquisitions and other strategic investments. As a result,
the Company classifies its investment portfolio as available-for-sale. The Company classifies all investments with a
maturity date greater than three months at the date of purchase as short-term marketable securities in its consolidated
balance sheet. As of December 31, 2023 and 2022, the Company’s marketable securities consisted primarily of commercial
paper, corporate bonds, government securities and/or other high-quality commercial securities.
Employee Benefits Plan
The Company sponsors a 401(k) tax-deferred savings plan for all employees in the United States who meet certain
eligibility requirements. Participants may contribute up to the amount allowable as a deduction for federal income tax
purposes. The Company is not required to contribute; however, the Company contributes a certain percentage of employee
annual salaries on a discretionary basis, not to exceed an established threshold. The Company provided for a contribution
of approximately $2.1 million, $2.0 million and $1.9 million in 2023, 2022 and 2021, respectively.
Retirement Benefit Obligations (Pension)
The Company recognizes the over-funded or under-funded status of a defined benefit pension or post-retirement
plan as an asset or liability in the accompanying consolidated balance sheets. Actuarial gains and losses are recorded in
accumulated other comprehensive loss, a component of stockholders’ equity, and are amortized as a component of net
periodic cost over the remaining estimated service period of participants.
Foreign Currency Risk and Foreign Currency Translation
As of December 31, 2023, the Company’s primary transactional currency was U.S. dollars; in addition, the
Company holds cash in Swiss francs and euros to fund the operations of the Company’s Swiss subsidiary. The foreign
exchange rate fluctuation between the U.S. dollar versus the Swiss franc and euro is recorded in other income in the
consolidated statements of income.
Gains and losses arising from the remeasurement of non-functional currency balances are recorded in other
income in the accompanying consolidated statements of income. The Company recognized a loss of $0.4 million in 2023,
an immaterial foreign exchange loss in 2022 and a loss of $0.6 million in 2021.
The functional currencies of the Company’s other subsidiaries are the local currencies. Accordingly, all assets
and liabilities are translated into U.S. dollars at the current exchange rates as of the applicable balance sheet date. Revenues
and expenses are translated at the average exchange rate prevailing during the period. Cumulative gains and losses from
the translation of the foreign subsidiaries’ financial statements have been included accumulated other comprehensive loss
in stockholders’ equity.
Warranty
The Company generally warrants that its products will substantially conform to the published specifications for
12 months from the date of shipment. The Company’s liability is limited to either a credit equal to the purchase price or
replacement of the defective part. Returns under warranty have historically been immaterial, and as a result, the Company
does not record a specific warranty reserve.
Advertising
Advertising costs are expensed as incurred and amounted to $1.3 million, $1.4 million and $1.3 million in 2023,
2022 and 2021, respectively.
Research and Development
Research and development costs are expensed as incurred.
Indemnifications
The Company sells products to its distributors under contracts, collectively referred to as Distributor Sales
Agreements (“DSA”). Each DSA contains the relevant terms of the contractual arrangement with the distributor, and
45
generally includes certain provisions for indemnifying the distributor against losses, expenses, and liabilities from damages
that may be awarded against the distributor in the event the Company’s products are found to infringe upon a patent,
copyright, trademark, or other proprietary right of a third party (Customer Indemnification). The DSA generally limits the
scope of and remedies for the Customer Indemnification obligations in a variety of industry-standard respects, including,
but not limited to, limitations based on time and geography, and a right to replace an infringing product. The Company
also, from time to time, has granted a specific indemnification right to individual customers.
The Company believes its internal development processes and other policies and practices limit its exposure
related to such indemnifications. In addition, the Company requires its employees to sign a proprietary information and
inventions agreement, which assigns the rights to its employees’ development work to the Company. To date, the Company
has not had to reimburse any of its distributors or customers for any losses related to these indemnifications and no material
claims were outstanding as of December 31, 2023. For several reasons, including the lack of prior indemnification claims
and the lack of a monetary liability limit for certain infringement cases, the Company cannot determine the maximum
amount of potential future payments, if any, related to such indemnifications.
Recently Issued Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable
Segment Disclosures (“ASU 2023-07”), which is intended to improve reportable segment disclosure requirements and
expand public entities’ segment disclosures in the annual and interim financial statements. The amendment will require
disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and within
each reported measure of segment profit or loss, an amount and description of its composition for other segment items and
interim disclosures of a reportable segment’s profit or loss and assets. All disclosure requirements of ASU 2023-07 are
required for entities with a single reportable segment. The Company is required to adopt the amendments in fiscal year
2024 for annual and retrospective reporting periods and in the first quarter of fiscal year 2025 for all interim and
retrospective reporting periods; with early adoption permitted. The Company is currently evaluating the effect of adopting
these amendments on its consolidated financial statements. The Company does not expect the amendment to have a
material impact on its consolidated financial statements upon adoption.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax
Disclosures (“ASU 2023-09”), which modifies the rules on income tax disclosures to require entities to disclose
(1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax
expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing
operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax
payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual
periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet
been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, but retrospective
application is permitted. The Company is currently evaluating the potential impact of adopting this new guidance on its
consolidated financial statements.
3. COMPONENTS OF THE COMPANY’S CONSOLIDATED BALANCE SHEETS:
Accounts Receivable
(In thousands)
Accounts receivable trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for ship-and-debit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for stock rotation and rebate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
December 31,
2023
2022
$
$
53,147 $
(36,017)
(1,775)
(681)
14,674 $
78,914
(53,184)
(3,759)
(1,135)
20,836
The Company maintains an allowance for estimated credit losses resulting from the inability of customers to
make required payments. This allowance is established using estimates formulated by the Company’s management based
upon factors such as the composition of the accounts receivable aging, historical losses, changes in payments patterns,
46
customer creditworthiness, and current economic trends. Receivables determined to be uncollectible are written off and
deducted from the allowance.
(In thousands)
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for credit loss expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables written off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recoveries collected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
Inventories
Allowance for Credit Losses
Year Ended
December 31,
2023
2022
(1,135)
(619)
—
1,073
(681)
$
$
(445)
(1,859)
49
1,120
(1,135)
(In thousands)
Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Work-in-process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
December 31,
2023
2022
$
$
96,467
24,727
41,970
163,164
$
$
75,355
15,440
44,625
135,420
Property and Equipment
(In thousands)
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction-in-progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Building and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Computer software and hardware and office furniture and fixtures. . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
December 31,
2023
2022
$
$
22,178
17,022
92,049
267,941
67,450
466,640
(302,427)
164,213
$
$
22,166
19,195
89,704
253,308
62,574
446,947
(270,266)
176,681
Depreciation expense for property and equipment for fiscal years ended December 31, 2023, 2022 and 2021, was
approximately $35.2 million, $34.9 million and $31.5 million, respectively, and was determined using the straight-line
method over the following useful lives:
Building and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 - 40 years
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2 - 8 years
4 - 7 years
Computer software and hardware and office furniture and fixtures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total property and equipment (excluding accumulated depreciation) located in the United States at
December 31, 2023, 2022 and 2021, was approximately $203.6 million, $190.3 million and $174.6 million, respectively.
In 2023, 2022 and 2021, approximately 11%, 12% and 14%, respectively, of total property and equipment (excluding
accumulated depreciation) was held in Thailand by one of the Company’s subcontractors. In 2023, 2022 and 2021,
approximately 15% of total property and equipment (excluding accumulated depreciation was held by one of the
Company’s subcontractors in Malaysia. No other country held 10% or more of total property and equipment in the periods
presented.
47
Accumulated Other Comprehensive Loss
Changes in accumulated other comprehensive loss for the three years ended December 31, 2023:
Unrealized Gains
and Losses on
Foreign
Available-for-Sale Defined Benefit Currency
(In thousands)
Balance at January 1, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss) before reclassifications . . . . . . .
Amounts reclassified from accumulated other comprehensive loss. .
Other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss) before reclassifications . . . . . . .
Amounts reclassified from accumulated other comprehensive loss. .
Other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss) before reclassifications . . . . . . .
Amounts reclassified from accumulated other comprehensive loss. .
Other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at December 31, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
Securities
890
(2,055)
—
(2,055)
(1,165)
(4,158)
—
(4,158)
(5,323)
5,579
—
5,579
256
$
Pension Items
(1,641)
$
800
167 (1)
967
(674)
1,459
Items
Total
$ (1,412) $ (2,163)
(1,741)
167
(1,574)
(3,737)
(3,684)
77
(3,607)
(7,344)
5,970
(88)
5,882
$ (3,303) $ (1,462)
(486)
—
(486)
(1,898)
(985)
—
(985)
(2,883)
(420)
—
(420)
77 (1)
1,536
862
811
(88) (1)
723
1,585
(1) This component of accumulated other comprehensive loss is included in the computation of net periodic pension cost for the years
ended December 31, 2023, 2022 and 2021.
4. FAIR VALUE MEASUREMENTS:
ASC 820-10, Fair Value Measurements, clarifies that fair value is an exit price, representing the amount that
would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As
such, fair value is a market-based measurement that should be determined based on assumptions that market participants
would use in pricing an asset or liability. As a basis for considering such assumptions, ASC 820-10 establishes a three-tier
value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as
quoted prices for identical assets in active markets; (Level 2) inputs other than the quoted prices in active markets that are
observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which
requires the Company to develop its own assumptions. This hierarchy requires the Company to use observable market
data, when available, and to minimize the use of unobservable inputs when determining fair value.
The Company’s cash equivalents and investment instruments are classified within Level 1 or Level 2 of the fair-
value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing
sources with reasonable levels of price transparency. The type of instrument valued based on quoted market prices in
active markets primarily includes money market securities. This type of instrument is generally classified within Level 1
of the fair-value hierarchy. The types of instruments valued based on other observable inputs (Level 2 of the fair-value
hierarchy) include investment-grade corporate bonds and commercial paper. Such types of investments are valued by using
a multi-dimensional relational model, the inputs are primarily benchmark yields, reported trades, broker/dealer quotes,
issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research
publications. The Company does not hold any instruments that would be classified within Level 3 of the fair-value
hierarchy.
The fair value hierarchy of the Company’s cash equivalents and marketable securities at December 31, 2023 and
2022, was as follows:
Fair Value Measurement at
December 31, 2023
Quoted Prices in
Active Markets for Significant Other
Observable Inputs
(Level 2)
Identical Assets
(Level 1)
Total Fair Value
$
20,275
246,922
491
267,688
$
$
— $
—
491
491 $
20,275
246,922
—
267,197
$
(In thousands)
Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Money market funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
48
(In thousands)
Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Money market funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Total Fair Value
$
58,683
248,441
363
307,487
$
$
— $
—
363
363 $
58,683
248,441
—
307,124
Fair Value Measurement at
December 31, 2022
Quoted Prices in
Active Markets for Significant Other
Observable Inputs
(Level 2)
Identical Assets
(Level 1)
The Company did not transfer any investments between level 1 and level 2 of the fair value hierarchy in the years
ended December 31, 2023 and 2022.
5. MARKETABLE SECURITIES:
Amortized cost and estimated fair market value of marketable securities classified as available-for-sale (excluding
cash equivalents) at December 31, 2023, were as follows:
(In thousands)
Investments due in 3 months or less:
Amortized Gross Unrealized
Losses
Gains
Cost
Estimated Fair
Market Value
Corporate securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 10,688
10,688
$
— $
—
$
(42)
(42)
Investments due in 4-12 months:
Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
718
48,680
49,398
—
15
15
Investments due in 12 months or greater:
Corporate securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
187,298
187,298
$ 247,384
$
952
952
967
$
—
(347)
(347)
(322)
(322)
(711)
$
10,646
10,646
718
48,348
49,066
187,928
187,928
247,640
Accrued interest receivable was $2.3 million at December 31, 2023 and was recorded within prepaid expenses
and other current assets on the consolidated balance sheet.
Amortized cost and estimated fair market value of marketable securities classified as available-for-sale (excluding
cash equivalents) at December 31, 2022, were as follows:
(In thousands)
Investments due in 3 months or less:
Amortized
Cost
Gross Unrealized
Losses
Gains
Estimated Fair
Market Value
Corporate securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 21,803
21,803
$
— $
—
(135)
(135)
$
Investments due in 4-12 months:
Corporate securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
173,833
173,833
—
—
(4,019)
(4,019)
Investments due in 12 months or greater:
Corporate securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
58,128
58,128
$ 253,764
$
71
71
71
(1,240)
(1,240)
(5,394)
$
$
21,668
21,668
169,814
169,814
56,959
56,959
248,441
Accrued interest receivable was $1.2 million at December 31, 2022 and was recorded within prepaid expenses
and other current assets on the consolidated balance sheet.
As of December 31, 2023 and 2022 the Company had no marketable securities classified as available-for-sale
(excluding cash equivalents) in a continuous unrealized loss position for which an allowance for credit losses was
recorded. The following table summarizes marketable securities classified as available-for-sale (excluding cash
equivalents) in a continuous unrealized loss position for which an allowance for credit losses was not recorded at
December 31, 2023:
49
Less Than 12 Months
12 Months or Longer
Estimated Gross
Estimated Gross
Fair Market Unrealized Fair Market Unrealized Fair Market Unrealized
Estimated Gross
Total
(In thousands)
December 31, 2023
Value
Losses
Value
Losses
Value
Losses
Corporate securities . . . . . . . . . . . . . . . . $
Total marketable securities . . . . . . . . . . $
102,729
102,729
$
$
(371) $
(371) $
25,401
25,401
$
$
(340) $
(340) $
128,130
128,130
$
$
(711)
(711)
Less Than 12 Months
Estimated Gross
Fair Market Unrealized Fair Market Unrealized Fair Market Unrealized
12 Months or Longer
Estimated Gross
Estimated Gross
Total
(In thousands)
December 31, 2022
Value
Losses
Value
Losses
Value
Losses
Corporate securities . . . . . . . . . . . . . . . . $
Total marketable securities . . . . . . . . . . $
45,047
45,047
$
$
(662)
(662)
$
$
191,443
191,443
$
$
(4,732) $
(4,732) $
236,490
236,490
$
$
(5,394)
(5,394)
The weighted average interest rate of investments at December 31, 2023 and 2022, was approximately 4.87% and
2.08%, respectively. In the years ended December 31, 2023 and 2022, no unrealized losses on marketable securities were
recognized in income.
6. GOODWILL AND INTANGIBLE ASSETS:
The carrying amount of goodwill as of December 31, 2023 and 2022 was $91.8 million; there were no changes
to goodwill in either of the respective fiscal years.
Intangible assets consist primarily of developed technology, acquired licenses, and domain name and are reported
net of accumulated amortization.
The Company amortizes the cost of all intangible assets over the estimated useful life of the developed technology
and technology licenses, which range from two to twelve years, with the exception of $1.3 million paid to acquire an
internet domain name. The Company acquired the rights to the internet domain name www.power.com, the Company’s
primary domain name; the cost to acquire the domain name has been recorded as an intangible asset and will not be
amortized as it has an indefinite useful life.
Amortization of acquired intangible assets was approximately $2.2 million, $2.4 million and $3.5 million in the
years ended December 31, 2023, 2022 and 2021, respectively. The Company does not believe there is any significant
residual value associated with the following intangible assets:
(In thousands)
Domain name . . . . . . . . . . . . . . . . . . . . . . . . . $
Developed technology . . . . . . . . . . . . . . . . . . .
Technology licenses . . . . . . . . . . . . . . . . . . . .
Gross
1,261
37,960
1,926
Total intangible assets . . . . . . . . . . . . . . . . . . $ 41,147
$
December 31, 2023
Accumulated
Amortization
$
Net
Gross
December 31, 2022
Accumulated
Amortization
Net
— $ 1,261
2,501
(35,459)
(1,264)
662
(36,723) $ 4,424
$
1,261 $
37,960
1,926
$ 41,147 $
— $ 1,261
4,429
907
$ 6,597
(33,531)
(1,019)
(34,550)
The estimated future amortization expense related to definite-lived intangible assets at December 31, 2023, is as
follows:
Fiscal Year
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
Estimated
Amortization
(In thousands)
1,279
832
687
365
3,163
50
7. STOCK PLANS AND SHARE BASED COMPENSATION:
Stock Plans
As of December 31, 2023, the Company had three stock-based compensation plans (the “Plans”) which are
described below.
2007 Equity Incentive Plan
The 2007 Equity Incentive Plan (“2007 Plan”) was adopted by the board of directors on September 10, 2007, and
approved by the stockholders on November 7, 2007, as an amendment and restatement of the 1997 Stock Option Plan
(“1997 Plan”). The 2007 Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock
awards, restricted stock unit (“RSU”) awards, stock appreciation rights, performance-based (“PSU”) awards, long-term
performance based (“PRSU”) awards and other stock awards to employees, directors and consultants. The 2007 Plan
expired in September 2017 with no further grants to be made under this plan; however previous grants under this plan shall
remain outstanding until they are exercised, vest, forfeited or expire.
2016 Incentive Award Plan
The 2016 Incentive Award Plan (“2016 Plan”) was adopted by the board of directors on March 17, 2016 and
approved by the stockholders on May 13, 2016. The 2016 Plan provides for the grant of RSU awards, PSU awards and
PRSU awards. No other forms of equity-based awards, including stock options and stock appreciation rights, may be
granted under the 2016 Plan. As of December 31, 2023, 3.4 million awards have been issued, net of forfeitures or
cancellations, and approximately 3.6 million shares of common stock remain available for future grant under the 2016
Plan.
1997 Employee Stock Purchase Plan
Under the 1997 Employee Stock Purchase Plan (Purchase Plan), eligible employees may apply accumulated
payroll deductions, which may not exceed 15% of an employee’s compensation, to the purchase of shares of the
Company’s common stock at periodic intervals. The purchase price of stock under the Purchase Plan is equal to 85% of
the lower of (i) the fair market value of the Company’s common stock on the first day of each offering period, or (ii) the
fair market value of the Company’s common stock on the purchase date (as defined in the Purchase Plan). Each offering
period consists of one purchase period of approximately six months duration. An aggregate of 7.5 million shares of
common stock were reserved for issuance to employees under the Purchase Plan. As of December 31, 2023, of the shares
reserved for issuance, 6.9 million shares had been purchased and 0.6 million shares were reserved for future issuance under
the Purchase Plan.
Shares Reserved
As of December 31, 2023, the Company had approximately 4.4 million shares of common stock reserved for
future grant under all stock plans.
Stock-Based Compensation
The Company applies the provisions of ASC 718-10, Stock Compensation. Under the provisions of ASC 718-10,
the Company recognizes the fair value of stock-based compensation in its financial statements over the requisite service
period of the individual grants, which generally equals a four-year vesting period. The Company uses estimates of
volatility, expected term, risk-free interest rate, dividend yield and forfeitures in determining the fair value of these awards
and the amount of compensation expense to recognize. The Company uses the straight-line method to amortize all stock
awards granted over the requisite service period of the award.
The following table summarizes the stock-based compensation expense recognized in accordance with
ASC 718-10 for the years ended December 31, 2023, 2022 and 2021:
(In thousands)
Cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
Year Ended December 31,
2022
2021
2023
1,692
10,939
6,888
9,009
28,528
$
$
1,132
10,428
6,035
4,769
22,364
$
$
2,359
12,127
7,630
15,493
37,609
51
The following table summarizes total compensation expense related to unvested awards not yet recognized, net
of expected forfeitures, and the weighted average period over which it is expected to be recognized as of
December 31, 2023:
Unrecognized Compensation Weighted Average
Expense for Unvested
Awards
(In thousands)
Remaining Recognition
Period
(In years)
Long-term performance-based awards . . . . . . . . . . . . . . . . . . . . . . . .
Restricted stock units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total unrecognized compensation expense . . . . . . . . . . . . . . . . . . . . .
$
$
—
46,856
155
47,011
—
2.66
0.08
Stock-based compensation expense in the year ended December 31, 2023, was approximately $28.5 million,
comprising approximately $23.4 million related to restricted stock units, $3.2 million related to performance-based awards
and long-term performance-based awards and $1.9 million related to the Company’s Purchase Plan.
Stock-based compensation expense in the year ended December 31, 2022, was approximately $22.4 million,
comprising approximately $23.2 million related to restricted stock units, $1.9 million related to the Company’s Purchase
Plan and a $2.7 million credit related to performance-based awards and long-term performance-based awards.
Stock-based compensation expense in the year ended December 31, 2021, was approximately $37.6 million,
comprising approximately $19.9 million related to restricted stock units, $15.7 million related to performance-based
awards and $2.0 million related to the Company’s Purchase Plan.
The fair value of employees’ stock purchase rights under the Purchase Plan was estimated using the Black-
Scholes model with the following weighted-average assumptions used during the three years ended December 31, 2023,
2022 and 2021:
Risk-free interest rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected volatility rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected term of purchase rights (in years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average estimated fair value of purchase rights . . . . . . . . . . . . . . . . . .
$
Year Ended December 31,
2023
5.15 %
37 %
0.90 %
0.49
23.75
$
2022
1.71 %
41 %
0.89 %
0.50
21.63
$
2021
0.07 %
41 %
0.57 %
0.50
23.92
No options were granted or remain outstanding as of December 31, 2023. There were no options exercised during
the year ended December 31, 2023 while total intrinsic value of options exercised during the years ended December 31,
2022 and December 31, 2021 were $0.8 million and $4.9 million, respectively.
PSU Awards
Under the performance-based awards program, the Company grants awards in the performance year in an amount
equal to twice the target number of shares to be issued if the maximum performance metrics are met. The number of shares
that are released at the end of the performance year can range from zero to 200% of the target number depending on the
Company’s performance. The performance metrics of this program are annual targets consisting of a combination of net
revenue, non-GAAP operating earnings and strategic goals.
As the net revenue, non-GAAP operating income and strategic goals are considered performance conditions,
expense associated with these awards, net of estimated forfeitures, is recognized over the service period based on an
assessment of the achievement of the performance targets. The fair value of these PSUs is determined using the fair value
of the Company’s common stock on the date of the grant, reduced by the discounted present value of dividends expected
to be declared before the awards vest. If the performance conditions are not achieved, no compensation cost is recognized
and any previously recognized compensation is reversed.
52
A summary of PSU awards outstanding as of December 31, 2023, and activity during the three years then ended,
is presented below:
Weighted-Average
Weighted-
Average
Remaining
Aggregate
Shares
(In thousands) Value Per Share
Grant Date Fair Contractual Term Intrinsic Value
(In thousands)
(In years)
Outstanding at January 1, 2021 . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited or canceled . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at December 31, 2021 . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited or canceled . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at December 31, 2022 . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited or canceled . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at December 31, 2023 . . . . . . . . . . . . . . . . .
Outstanding and expected to vest at December 31, 2023 .
$
150
105
$
(150) $
(1) $
$
104
119
$
(104) $
(85) $
$
34
131
$
(34) $
(93) $
$
38
38
46.27
84.48
46.27
85.01
84.47
79.91
84.48
79.89
79.94
82.96
79.94
82.96
82.95
— $
— $
3,131
3,131
In February 2023, it was determined that approximately 34,000 shares subject to the PSUs granted in 2022 vested
in aggregate; the shares were released to the Company’s employees and executives in the first quarter of 2023. The grant-
date fair value of PSU awards released, which were fully vested, in the years ended December 31, 2023, 2022 and 2021,
was approximately $2.7 million, $8.8 million and $6.9 million, respectively.
PRSU Awards (Long-term Performance Based)
The Company’s PRSU program provides for the issuance of PRSUs which will vest based on the Company’s
performance measured against the PRSU program’s established performance targets. PRSUs are granted in an amount
equal to twice the target number of shares to be issued if the maximum performance metrics are met. The actual number
of shares the recipient receives is determined at the end of a three-year performance period based on results achieved
versus the Company’s performance goals, and may range from zero to 200% of the target number. The performance goals
for PRSUs granted in fiscal 2021, 2022 and 2023 were based on the Company’s compound annual growth rate (“CAGR”)
of revenue as measured against the revenue CAGR of the analog semiconductor industry (“Relative Measure”), in each
case over the respective three-year performance period. In addition, the PRSUs granted in 2023 (“2023 PRSUs”) also
include a performance goal related to the Company’s revenue growth over the respective three-year performance period
as compared to defined targets (“Absolute Measure”) with the actual vesting of the 2023 PRSUs calculated based on higher
achievement under the Relative Measure or the Absolute Measure. Expense associated with these awards, net of estimated
forfeitures, is recorded throughout the year based on an assessment of the expected achievement of the performance targets.
If the performance conditions are not achieved, no compensation cost is recognized and any previously recognized
compensation is reversed.
Expense associated with these awards, net of estimated forfeitures, is recorded throughout the year based on an
assessment of the expected achievement of the performance targets. If the performance conditions are not achieved, no
compensation cost is recognized and any previously recognized compensation is reversed.
53
A summary of PRSU awards outstanding as of December 31, 2023, and activity during the three years then ended,
is presented below:
Weighted-Average
Shares
Grant Date Fair Contractual Term
Remaining
Weighted-Average Aggregate
Intrinsic
Value
(In thousands)
(In years)
(In thousands) Value Per Share
Outstanding at January 1, 2021 . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited or canceled . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at December 31, 2021 . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited or canceled . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at December 31, 2022 . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited or canceled . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at December 31, 2023 . . . . . . . . . . . . . . . . .
Outstanding and expected to vest at December 31, 2023 .
301 $
103 $
(6) $
(15) $
383 $
110 $
(135) $
(122) $
236 $
146 $
(23) $
(103) $
256 $
—
41.90
82.92
29.94
40.05
53.14
78.96
34.09
49.68
77.82
80.92
49.68
82.92
80.08
1.57 $
— $
20,987
—
In February 2023 it was determined that approximately 23,000 shares subject to the PRSUs granted in 2020 vested
in aggregate; the shares were released to the Company’s executives in the first quarter of 2023. The grant-date fair value
of PRSU awards released, which were fully vested, in the years ended December 31, 2023, 2022 and 2021 was
approximately $1.1 million, $4.6 million and $0.2 million, respectively.
RSU Awards
RSUs granted to employees typically vest ratably over a four-year period and are converted into shares of the
Company’s common stock upon vesting on a one-for-one basis subject to the employee’s continued service to the
Company over that period. The fair value of RSUs is determined using the fair value of the Company’s common stock on
the date of the grant, reduced by the discounted present value of dividends expected to be declared before the awards vest.
Compensation expense is recognized on a straight-line basis over the requisite service period of each grant adjusted for
estimated forfeitures.
A summary of RSU awards outstanding as of December 31, 2023, and activity during the three years then ended,
is presented below:
Weighted-Average
Shares
Grant Date Fair Contractual Term
Remaining
Weighted-Average Aggregate
Intrinsic
Value
(In thousands)
(In years)
(In thousands) Value Per Share
Outstanding at January 1, 2021 . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at December 31, 2021 . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at December 31, 2022 . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at December 31, 2023 . . . . . . . . . . . . . . . . .
Outstanding and expected to vest at December 31, 2023 .
1,518 $
271 $
(546) $
(99) $
1,144 $
519 $
(481) $
(86) $
1,096 $
335 $
(418) $
(32) $
981 $
918
35.51
83.79
35.03
39.85
46.81
76.01
44.70
60.02
60.52
80.97
53.08
73.29
70.27
The grant-date fair value of RSUs vested in the years ended December 31, 2023, 2022 and 2021, was
approximately $22.2 million, $21.5 million and $19.1 million, respectively.
54
1.48 $
1.39 $
80,585
75,384
8. SIGNIFICANT CUSTOMERS AND GEOGRAPHIC NET REVENUES:
Customer Concentration
The Company’s top ten customers accounted for approximately 80%, 76% and 78% of revenues in 2023, 2022
and 2021, respectively. A significant portion of these revenues are attributable to sales of the Company’s products to
distributors of electronic components. These distributors sell the Company’s products to a broad, diverse range of end
users, including OEMs and merchant power supply manufacturers. Sales to distributors in 2023, 2022 and 2021 were
$307.4 million, $457.7 million and $525.7 million, respectively. Direct sales to OEMs and power-supply manufacturers
accounted for the remainder.
The following customers represented 10% or more of the Company’s net revenues for the respective years:
Customer
Avnet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Honestar Technologies Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Salcomp Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
* Total customer revenue was less than 10% of net revenues.
Year Ended December 31,
2022
2023
2021
27 %
18 %
10 %
31 %
11 %
*
30 %
16 %
*
No other customers accounted for 10% or more of the Company’s net revenues in the periods presented.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consisted principally
of cash investments and trade receivables. The Company does not have any off-balance-sheet credit exposure related to
its customers. As of December 31, 2023 and 2022, 86% and 87% of accounts receivable were concentrated with the
Company’s top ten customers, respectively.
The following customers represented 10% or more of accounts receivable:
Customer
Avnet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Honestar Technologies Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Salcomp Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Flextronics Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
* Total customer accounts receivable was less than 10% of accounts receivable.
December 31,
2023
December 31,
2022
39 %
20 %
10 %
*
42 %
*
13 %
11 %
No other customers accounted for 10% or more of the Company’s accounts receivable in the periods presented.
Geographic Net Revenues
The Company markets its products globally through its sales personnel and a worldwide network of independent
sales representatives and distributors. Geographic net revenues based on “bill to” customer locations were as follows:
(In thousands)
United States of America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hong Kong/China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taiwan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Western Europe (excluding Germany) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
55
Year Ended December 31,
2022
25,500 $
$
356,865
33,159
19,789
52,074
32,429
34,924
52,876
43,522
651,138 $
$
2021
17,238
446,980
25,961
25,991
59,501
35,835
25,101
32,664
34,006
703,277
2023
8,676
265,936
34,558
15,774
24,956
27,819
16,177
23,041
27,601
444,538
9. COMMON STOCK REPURCHASES AND CASH DIVIDENDS:
Common Stock Repurchases
From time to time the Company’s board of directors has authorized the use of funds to repurchase shares of the
Company’s common stock. In October 2018, the Company’s board of director’s authorized the use of $80.0 million for
the repurchase of the Company’s common stock, and in each of April 2021 and October 2021, the Company’s board of
directors authorized the use of an additional $50.0 million for the repurchase of the Company’s common stock. In January,
February, April and October 2022, the Company’s board of directors authorized the use of an additional $100.0 million,
$50.0 million, $75.0 million and $100.0 million, respectively, for the repurchase of the Company’s common stock, with
repurchases to be executed according to pre-defined price/volume guidelines.
In 2023, 2022 and 2021 the Company purchased approximately 0.8 million shares, 3.8 million shares and 0.9
million shares, respectively, for approximately $55.3 million, $311.1 million and $73.9 million, respectively. As of
December 31, 2023, the Company had $26.0 million available for future stock repurchases.
Authorization of future stock repurchase programs is at the discretion of the Company’s board of directors and
will depend on the Company’s financial condition, results of operations, capital requirements and business conditions as
well as other factors.
Common Stock Dividend
The following table presents the quarterly dividends declared per share of the Company’s common stock for the
periods indicated:
Year Ended December 31,
2022
2021
2023
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
$
0.19
0.19
0.19
0.20
$
$
$
$
0.18 $
0.18 $
0.18 $
0.18 $
0.13
0.13
0.13
0.15
The Company paid approximately $44.0 million, $41.5 million and $32.6 million in cash dividends during 2023,
2022 and 2021, respectively.
In January 2021, the Company’s board of directors declared dividends of $0.13 per share to be paid to
stockholders of record at the end of each quarter in 2021. In October 2021, the Company’s board of directors raised the
quarterly cash dividend with the declaration of five cash dividends of $0.15 per share (the first in lieu of the $0.13 per
share announced in January 2021) to be paid to stockholders of record at the end of the fourth quarter in 2021 and at the
end of each quarter in 2022.
In January 2022, the Company’s board of directors raised the quarterly cash dividend by an additional $0.03 per
share with the declaration of four cash dividends of $0.18 per share (in lieu of the $0.15 per share announced in
October 2021) to be paid to stockholders of record at the end of each quarter in 2022.
In February 2023, the Company’s 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. In October 2023, the Company’s board of directors raised the
cash dividend with the declaration of four 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.
10. EARNINGS PER SHARE:
Basic earnings per share are calculated by dividing net income by the weighted-average shares of common stock
outstanding during the period. Diluted earnings per share are calculated by dividing net income by the weighted-average
shares of common stock and dilutive common equivalent shares outstanding during the period. Dilutive common
equivalent shares included in this calculation consist of dilutive shares issuable upon the assumed exercise of outstanding
common stock options, the assumed vesting of outstanding restricted stock units, the assumed issuance of awards under
56
the stock purchase plan and contingently issuable performance-based awards, as computed using the treasury stock
method.
A summary of the earnings per share calculation is as follows:
(In thousands, except per share amounts)
Basic earnings per share:
Year Ended December 31,
2022
2021
2023
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average common shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share: (1)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average common shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of dilutive awards:
Employee stock plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted weighted-average common shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
$
55,735
57,195
0.97
55,735
57,195
427
57,622
0.97
$
$
$
170,851 $
57,801
2.96 $
164,413
60,327
2.73
170,851 $
57,801
164,413
60,327
570
58,371
$
2.93 $
1,140
61,467
2.67
(1) The Company includes the shares underlying performance-based awards in the calculation of diluted earnings per share if the
performance conditions have been satisfied as of the end of the reporting period and excludes such shares when the necessary
conditions have not been met. The Company has included in the 2023, 2022 and 2021 calculations those shares that were
contingently issuable upon the satisfaction of the performance conditions as of the end of the respective periods.
In the years ended December 31, 2023, 2022 and 2021, no outstanding stock awards were determined to be anti-
dilutive and therefore were excluded from the computation of diluted earnings per share.
11. PROVISION (BENEFIT) FOR INCOME TAXES:
Income Taxes
The Company accounts for income taxes under the provisions of ASC 740, Income Taxes. Under the provisions
of ASC 740, deferred tax assets and liabilities are recognized based on the differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax bases, utilizing the tax rates that are expected to
apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
U.S. and foreign components of income before income taxes were:
(In thousands)
U.S. operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
2023
Year Ended December 31,
2022
17,250 $
166,176
183,426 $
2,995
42,912
45,907
$
$
2021
241
175,894
176,135
The components of the provision (benefit) for income taxes are as follows:
(In thousands)
Current provision (benefit):
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Deferred provision (benefit):
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Year Ended December 31,
2022
2023
2021
$
(1,193)
3
1,331
141
(9,178)
—
(791)
(9,969)
(9,828)
$
19,740 $
2
1,079
20,821
(7,962)
—
(284)
(8,246)
12,575 $
23,648
2
1,608
25,258
(11,449)
—
(2,087)
(13,536)
11,722
57
The provision (benefit) for income taxes differs from the amount that would result by applying the applicable
federal income tax rate to income before income taxes, as follows:
Provision (benefit) computed at Federal statutory rate . . . . . . . . . . . . . . . . . . . . .
Business tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign income taxed at different rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GILTI inclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Uncertain tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31,
2022
21.0 %
(3.7)
(1.6)
(18.5)
8.5
(0.1)
1.3
—
6.9 %
2023
21.0 %
(12.2)
(0.1)
(17.6)
4.1
(18.6)
4.3
(2.3)
(21.4)%
2021
21.0 %
(3.6)
(0.6)
(23.8)
13.1
(0.6)
1.3
(0.1)
6.7 %
The Company’s effective tax rate is impacted by the geographic distribution of the Company’s world-wide
earnings in lower-tax jurisdictions, federal research tax credits and the recognition of excess tax benefits related to share-
based payments. In 2023, the rate was further favorably impacted by 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 foreign income subject to U.S. tax, known as global intangible low-taxed income. The Company’s primary
jurisdiction where foreign earnings are derived is the Cayman Islands, which is a non-taxing jurisdiction. Income earned
in other foreign jurisdictions was not material. The Company has not been granted any incentivized tax rates and does not
operate under any tax holidays in any jurisdiction.
The components of the net deferred income tax assets (liabilities) were as follows:
(In thousands)
Deferred tax assets:
Capitalized R&D costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other reserves and accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax credit carry-forwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net operating loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Deferred tax liabilities:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
December 31,
2023
2022
$
30,886
861
28,223
1,543
141
2,269
465
(31,031)
33,357
(5,040)
(5,040)
28,317
$
20,666
2,516
26,154
1,559
150
2,217
439
(29,036)
24,665
(5,596)
(5,596)
19,069
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that
some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent
upon the generation of future taxable income during the periods in which those temporary differences become deductible.
Management considers the scheduled reversal of deferred tax liabilities and projected future taxable income. In the event
that the Company determines, based on available evidence and management judgment, that all or part of the net deferred
tax assets will not be realized in the future, the Company would record a valuation allowance in the period the
determination is made. In addition, the calculation of tax liabilities involves significant judgment in estimating the impact
of uncertainties in the application of complex tax laws. Resolution of these uncertainties in a manner inconsistent with the
Company’s expectations could have a material impact on its results of operations and financial position.
As of December 31, 2023, the Company continues to maintain a valuation allowance primarily as a result of its
California, New Jersey and Canada deferred tax assets as the Company believes that it is not more likely than not that the
deferred tax assets will be fully realized.
As of December 31, 2023, the Company had utilized all of its federal research and development tax credit
carryforwards. As of December 31, 2023, the Company had California research and development tax credit carryforwards
of approximately $40.7 million (there is no expiration of research and development tax credit carryforwards for the state
of California) and California net operating losses of $44.2 million which will begin to expire in 2032. As of
58
December 31, 2023, the Company had Canadian scientific research and experimental development tax credit
carryforwards of approximately $3.8 million and New Jersey research and experimental development tax credit
carryforwards of approximately $0.8 million, which will start to expire in 2030 and 2029, respectively.
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. Local foreign and
U.S. states taxes may still be incurred upon repatriation. The Company has not provided for U.S. taxes on its undistributed
earnings of foreign subsidiaries. The determination of the future tax consequences of the remittance of these earnings is
not practicable.
Unrecognized Tax Benefits
The Company applies the provisions of ASC 740-10, relating to accounting for uncertain income taxes.
Reconciliation of the beginning and ending amount of unrecognized tax benefits:
(In thousands)
Unrecognized tax benefits balance at January 1, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross increase for tax positions of current year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross decrease for tax positions of prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Statute of limitation release for tax positions of prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrecognized tax benefits balance at December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross increase for tax positions of current year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross decrease for tax positions of prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Statute of limitation release for tax positions of prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrecognized tax benefits balance at December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross increase for tax positions of current year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross decrease for tax positions of prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Statute of limitation release for tax positions of prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrecognized tax benefits balance at December 31, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Unrecognized
Tax Benefits
21,051
2,068
—
(1,756)
21,363
2,188
—
(165)
23,386
605
—
(7,602)
16,389
$
The Company’s total unrecognized tax benefits as of December 31, 2023, 2022 and 2021, were $16.4 million,
$23.4 million and $21.4 million, respectively. An income tax benefit of $4.5 million, net of valuation allowance
adjustments, would be recorded if fiscal year 2023 unrecognized tax benefits are recognized. The Company cannot
reasonably estimate the amount of the unrecognized tax benefit that could be adjusted in the next twelve months.
The Company’s continuing practice is to recognize interest and/or penalties related to income tax matters in
income tax expense. The Company had accrued interest and penalties of $0.3 million and $1.2 million as of
December 31, 2023 and 2022, respectively, which have been recorded in long-term income taxes payable in the
accompanying consolidated balance sheets.
As of December 31, 2023, the Company has concluded all U.S. federal income tax matters for the years
through 2019. However, due to tax attributes, the IRS may calculate tax adjustments for the 2017 transition tax calculation
for positions taken prior to 2017 since it has an extended statute of limitations period totaling six years. The California
Franchise Tax Board has started an audit for the Company’s tax years 2018 and 2019, it is currently ongoing.
12. LEASES AND COMMITMENTS:
Facilities and Leases
The Company owns its main executive, administrative, manufacturing and technical offices in San Jose,
California. The Company also owns a research and development facility in New Jersey, a design center in Germany and a
multipurpose office building in Switzerland. The Company’s leases consist of operating leases for administrative office
spaces, research-and-development facilities and sales offices in various countries around the world. The Company
determines whether an arrangement is a lease at inception. Some lease agreements contain lease and non-lease components,
which are accounted for as a single lease component. Total lease expense was $3.6 million for the year ended
December 31, 2023, and $3.3 million in both the years ended December 31, 2022 and 2021; short-term and variable lease
expenses were not material during these periods.
59
Balance sheet information related to leases was as follows:
(In thousands)
Right-of-use assets
Operating lease assets . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease liabilities
Current operating lease liabilities . . . . . . . . . . . . . . . . .
Non-current operating lease liabilities . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance Sheet Classification
2023
2022
December 31, December 31,
Other assets
Other accrued liabilities
Other liabilities
$
$
$
10,398 $
9,153
2,626 $
7,354
9,980 $
2,895
5,831
8,726
Initial lease terms are determined at commencement and may include options to extend or terminate the lease
when it is reasonably certain the Company will exercise the option. Remaining lease terms range from one to six years,
some of which include options to extend for up to five years, and some of which include options to terminate within
one year. Leases with an initial term of twelve months or less are not recorded on the balance sheet. As the Company’s
leases do not provide an implicit rate, the present value of future lease payments is determined using the Company’s
incremental borrowing rate based on information available at commencement date.
Lease term and discount rate
Weighted average remaining lease term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
3.8 years
6.1 %
2022
4.0 years
4.6 %
December 31,
December 31,
Supplemental cash flows information related to leases was as follow:
(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Year Ended December 31,
2023
2022
Operating cash flows from operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Right-of-use assets obtained in exchange for new operating lease obligations . . . . . . . . . . . . . . .
$
$
3,579
4,889
$
$
3,245
1,795
Future minimum lease payments under all non-cancelable lease agreements as of December 31, 2023, are as
follows:
(In thousands)
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total future minimum lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less imputed interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
2023
3,168
3,103
2,514
1,359
852
243
11,239
(1,259)
9,980
December 31,
Purchase Obligations
At December 31, 2023, the Company had no non-cancelable purchase obligations that were due beyond one year.
13. LEGAL PROCEEDINGS AND CONTINGENCIES:
From time to time in the ordinary course of business, the Company becomes involved in lawsuits, or customers
and distributors may make claims against the Company. In accordance with ASC 450 10, Contingencies, the Company
makes a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can
be reasonably estimated.
On January 6, 2020, the Company filed a complaint against CogniPower LLC in the United States District Court
for the District of Delaware for infringement of two of the Company’s patents and seeking a declaration of non-
infringement with respect to patents that CogniPower had charged the Company’s customers with infringing, based on
customer use of the Company’s products. In response, CogniPower filed a motion to dismiss the Company’s declaratory
judgment claims on the basis that CogniPower had not threatened the Company directly with suit. That motion was granted,
so CogniPower’s claims for infringement initially went forward separately in their lawsuit against the Company’s
60
customers in the District of Delaware, but the Company filed a motion to intervene in that lawsuit and received a ruling
allowing the Company to intervene in CogniPower’s customer lawsuit on February 1, 2021, and the parties thereafter
agreed to dismiss the Company’s separate lawsuit against CogniPower. The remaining case is currently stayed, but the
Company recently filed a motion to amend its claims against CogniPower to include three additional patents that are in
the same family as the two CogniPower patents that are already in the lawsuit, after CogniPower accused the Company’s
customers of infringing those three related patents in a lawsuit in the Eastern District of Texas. A ruling on the Company’s
motion is expected in the coming months, and the Company believes it has strong claims and defenses with respect to all
of CogniPower’s asserted patents and intends to vigorously defend itself against CogniPower’s claims against the
Company’s technology, with appeals to follow if necessary.
On October 31, 2022, Waverly Licensing LLC filed a complaint against the Company in the United States District
Court for the Western District of Texas. In its complaint, Waverly alleged that the Company was infringing one patent
pertaining to charging a battery-operated device. The Company believes it has strong claims and defenses, and intends to
vigorously defend itself against Waverly’s claims, with appeals to follow if necessary. Because the Company believed that
Waverly’s Texas complaint was improperly filed in the wrong court, the Company filed a motion to dismiss, and on
November 30, 2022, the Company filed a complaint against Waverly Licensing LLC and related entities IP Edge LLC,
Mavexar LLC, and Array IP LLC in the United States District Court for the District of Delaware seeking a declaration of
non-infringement with respect to a patent that Waverly charged the Company with infringing. The Texas court thereafter
dismissed Waverly’s Texas complaint. The Company’s Delaware lawsuit is in its earliest stages, but on April 6, 2023, the
Delaware defendants filed a motion to dismiss based on a series of covenants not to sue that the Delaware defendants filed
with the Court, with further proceedings on the Delaware defendants’ motion expected in the coming months.
The Company is unable to predict the outcome of legal proceedings with certainty, and there can be no assurance
that the Company will prevail in the above-mentioned unsettled litigations. These litigations, whether or not determined
in the Company’s favor or settled, will be costly and will divert the efforts and attention of the Company’s management
and technical personnel from normal business operations, potentially causing a material adverse effect on the business,
financial condition and operating results. Currently, the Company is not able to estimate a loss or a range of loss for the
ongoing litigations disclosed above, however adverse determinations in litigation could result in monetary losses, the loss
of proprietary rights, subject the Company to significant liabilities, require the Company to seek licenses from third parties
or prevent the Company from licensing the technology, any of which could have a material adverse effect on the
Company’s business, financial condition and operating results.
14. RETIREMENT PLANS:
The Company sponsors a defined benefit pension plan (Pension Plan) for its Swiss subsidiary in accordance with
the legal requirements of Switzerland. The plan assets, which provide benefits in the event of an employee’s retirement,
death or disability, are held in legally autonomous trustee-administered funds that are subject to Swiss law. Benefits are
based on the employee’s age, years of service and salary, and the plan is financed by contributions by both the employee
and the Company.
The net periodic benefit cost of the Pension Plan was not material to the Company’s financial statements during
the years ended December 31, 2023, 2022 and 2021. At December 31, 2023, the projected benefit obligation was
$11.4 million, the plan assets were $7.9 million and the net pension liability was $3.5 million. As of December 31, 2022,
the projected benefit obligation was $12.1 million, the plan assets were $8.2 million, and the net pension liability was
$3.9 million. The Company has recorded the unfunded amount as a liability in its consolidated balance sheet at
December 31, 2023 and 2022, under the other liabilities caption. The Company expects to make contributions to the
Pension Plan of approximately $0.4 million during 2024. The accumulated unrealized actuarial activity on pension
benefits, net of tax, at December 31, 2023, 2022 and 2021 was $1.6 million gain, $0.9 million gain and $0.7 million loss,
respectively. These amounts were reflected in Note 3 under the caption accumulated other comprehensive loss.
In accordance with the Compensation-Retirement Benefits Topic of ASC 715-20, Defined Benefits Plan, the
Company recognizes the over-funded or under-funded status of its defined post-retirement plan as an asset or liability in
its statement of financial position. The Company measured the plan assets and benefit obligations as of the date of the
fiscal year-end.
61
15. BANK LINE OF CREDIT:
On July 27, 2016, the Company entered into a credit agreement with Wells Fargo Bank, National Association
(the "Credit Agreement") that provides the Company 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 Credit
Agreement was amended on April 30, 2018, to extend the termination date from July 26, 2019, to April 30, 2022, 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 Credit Agreement was amended with an effective date of June 28, 2023 to include the Secured
Overnight Financing Rates (“SOFR”) as interest rate benchmark rates, with all other terms remaining the same.
The Company’s ability to borrow under the revolving line of credit is conditioned upon the Company’s
compliance with specified covenants, including reporting and financial covenants, primarily a minimum cash requirement
and a debt to earnings ratio. 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. The Company was compliant with all covenants
and had no advances outstanding under the Credit Agreement as of December 31, 2023.
62
Schedule II
Valuation and Qualifying Accounts
The Company maintains an allowance for the distributors’ ship-and-debit credits relating to the sell-through of
the Company’s products. This reserve is established using the Company’s historical ship-and-debit amounts and levels of
inventory in the distributor channels.
The following is a summary of the activity in the allowance for ship-and-debit credits:
(In thousands)
Allowance for ship-and-debit credits:
Year ended December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year ended December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year ended December 31, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at
Beginning
of Period Additions Deductions (1)
Balance at End
of Period
$
$
$
26,435
41,599
53,184
$ 311,443
$ 241,817
$ 202,159
$
$
$
(296,279) $
(230,232) $
(219,326) $
41,599
53,184
36,017
(1) Deductions relate to ship-and-debit credits issued which adjust the sales price from the standard distribution price to the pre-
approved lower price. Refer to Note 2, Significant Accounting Policies and Recent Accounting Pronouncements, for the Company’s
revenue recognition policy, including the Company’s accounting for ship-and-debit claims.
63
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Not applicable.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Management is required to evaluate our disclosure controls and procedures, as defined in Rule 13a-15(e) under
the Exchange Act. Disclosure controls and procedures are controls and other procedures designed to provide reasonable
assurance that information required to be disclosed in our reports filed under the Exchange Act, such as this Annual Report
on Form 10-K, is recorded, processed, summarized and reported within the time periods specified in the Securities and
Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to
provide reasonable assurance that such information is accumulated and communicated to our management, including our
Chief Executive Officer and Chief Financial Officer as appropriate to allow timely decisions regarding required disclosure.
Our disclosure controls and procedures include components of our internal control over financial reporting, which consists
of control processes designed to provide reasonable assurance regarding the reliability of our financial reporting and the
preparation of financial statements in accordance with generally accepted accounting principles in the U.S. To the extent
that components of our internal control over financial reporting are included within our disclosure controls and procedures,
they are included in the scope of our periodic controls evaluation. Based on our management’s evaluation (with the
participation of our principal executive officer and principal financial officer), our principal executive officer and principal
financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Exchange Act) were effective as of the end of the period covered by this Annual Report on Form 10-K.
Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting,
as defined in Rule 13a-15(f) under the Exchange Act. Internal control over financial reporting is designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
reporting purposes in accordance with generally accepted accounting principles. Internal control over financial reporting
includes those policies and procedures that:
•
•
•
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of our assets;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles and that receipts and
expenditures are being made only in accordance with authorizations of our management and
directors; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use
or disposition of our assets that could have a material effect on the financial statements.
Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting
objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human
diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Because of
such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal
control over financial reporting.
Management conducted an assessment of Power Integrations’ internal control over financial reporting as of
December 31, 2023, based on the framework established by the Committee of Sponsoring Organization (COSO) of the
Treadway Commission in Internal Control - Integrated Framework issued in 2013. Based on this assessment, management
concluded that, as of December 31, 2023, our internal control over financial reporting was effective.
The effectiveness of Power Integrations’ internal control over financial reporting as of December 31, 2023, has
been audited by Deloitte & Touche LLP (PCAOB ID No. 34), an independent registered public accounting firm, as stated
in their report which appears below.
Changes in Internal Control over Financial Reporting
There were no changes in our internal controls over financial reporting during the fourth quarter of 2023, which
were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under
the Exchange Act, that have materially affected or are reasonably likely to materially affect our internal control over
financial reporting.
64
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of Power Integrations, Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Power Integrations, Inc. and subsidiaries (the “Company”)
as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained,
in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria
established in Internal Control - Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2023, of the Company
and our report dated February 12, 2024, expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s
Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal
control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained
in all material respects. Our audit included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the company are being made only in accordance with authorizations of management
and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ DELOITTE & TOUCHE LLP
San Jose, California
February 12, 2024
65
Item 9B. Other Information.
Rule 10b5-1 Trading Plans
During the three months ended December 31, 2023, none of our directors or officers (as defined in Rule
16a-1(f) under the Exchange Act) adopted or terminated any contract, instruction or written plan for the purchase or sale
of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act
or any “non-Rule 10b5-1 trading arrangement” as defined in Item 408(c) of Regulation S-K.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
66
Item 10. Directors, Executive Officers and Corporate Governance.
PART III
The names of our executive officers and their ages, titles and biographies as of the date hereof are set forth under
the caption “Information About our Executive Officers” in Part I, Item 1, above.
The following information is included in our Notice of Annual Meeting of Stockholders and Proxy Statement to
be filed within 120 days after our fiscal year end of December 31, 2023, or the Proxy Statement, and is incorporated herein
by reference:
•
•
•
•
•
Information regarding our directors and any persons nominated to become a director is set forth under
the caption “Proposal 1 Election of Directors.”
Information regarding our audit committee and our designated “audit committee financial expert” is set
forth under the captions “Information Regarding the Board and its Committees” and “Audit Committee”
under “Proposal 1 Election of Directors” and “Report of the Audit Committee of the Board.”
Information on our code of business conduct and ethics for directors, officers and employees is set forth
under the caption “Code of Business Conduct and Ethics” under “Proposal 1 Election of Directors.”
Information regarding Section 16(a) beneficial ownership reporting compliance, if any, will be set forth
under the caption “Delinquent Section 16(a) Reports.”
Information regarding procedures by which stockholders may recommend nominees to our board of
directors is set forth under the caption “Nominating and Governance Committee” under “Proposal 1
Election of Directors.”
Item 11. Executive Compensation.
Information regarding compensation of our named executive officers is set forth under the caption “Compensation
of Executive Officers” in the Proxy Statement, which information is incorporated herein by reference.
Information regarding compensation of our directors is set forth under the caption “Compensation of Directors”
in the Proxy Statement, which information is incorporated herein by reference.
Information relating to compensation policies and practices as they relate to risk management is set forth under
the caption “Compensation Policies and Practices as They Relate to Risk Management” under “Proposal 1 Election of
Directors” in the Proxy Statement, which information is incorporated herein by reference.
Information regarding compensation committee interlocks is set forth under the caption "Compensation
Committee Interlocks and Insider Participation" in the Proxy Statement, which information is incorporated herein by
reference.
The Compensation Committee Report is set forth under the caption “Compensation Committee Report” in the
Proxy Statement, which report is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Information regarding security ownership of certain beneficial owners, directors and executive officers is set forth
under the caption “Security Ownership of Certain Beneficial Owners and Management” in the Proxy Statement, which
information is incorporated herein by reference.
Information regarding our equity compensation plans, including both stockholder approved plans and non-
stockholder approved plans, is set forth under the caption “Equity Compensation Plan Information” in the Proxy Statement,
which information is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Information regarding certain relationships and related transactions is set forth under the caption “Certain
Relationships and Related Transactions” in the Proxy Statement, which information is incorporated herein by reference.
Information regarding director independence is set forth under the caption “Proposal 1 - Election of Directors” in
the Proxy Statement, which information is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services.
Information regarding principal auditor fees and services is set forth under “Principal Accountant Fees and
Services” in the Proposal with the caption “Ratification of Selection of Independent Registered Public Accounting Firm”
in the Proxy Statement, which information is incorporated herein by reference.
67
Item 15. Exhibits and Financial Statement Schedules
(a)
PART IV
1. The financial statements required by Item 15(a) are included in Item 8 of this Annual Report on Form 10-K.
2. The financial statement schedule required by Item 15(a) (Schedule II, Valuation and Qualifying Accounts) is
included in Item 8 of this Annual Report on Form 10-K.
All other schedules are omitted because they are not applicable or the required information is shown in the
consolidated financial statements or notes thereto.
(b) Exhibits
Exhibit
Number
Exhibit Description
Form
Incorporation by Reference
Exhibit/Appendix
Reference
File
Number
Filing Date
Filed
Herewith
3.1 Restated Certificate of Incorporation
10-K
000-23441
3.2 Amended and Restated Bylaws
8-K
000-23441
4.1 Description of Power Integrations, Inc.
10-K
000-23441
Common Stock
3.1
3.1
4.1
2/29/2012
4/26/2013
2/6/2020
4.2 Reference is made to Exhibits 3.1 to 3.2
10.1* Form of Indemnity Agreement for directors
S-1
333-35421
10.1
9/11/1997
and officers
10.2* Power Integrations, Inc. Compliance Policy
10-K
000-23441
10.63
3/2/2009
Regarding IRC Section 409A
10.3* 1997 Employee Stock Purchase Plan, as
10-Q
000-23441
10.1
7/29/2021
amended
10.4* Forms of agreement under 1997 Employee
S-1
333-35421
10.5
9/11/1997
Stock Purchase Plan
10.5* 1997 Outside Directors Stock Option Plan
10-Q
000-23441
10.6* Forms of agreement under 1997 Outside
S-1
333-35421
Directors Stock Option Plan
10.2
10.4
10/29/2020
9/11/1997
10.7* Form of Director Option Grant Agreement.
10.8* Director Equity Compensation Program
10-Q
10-K
000-23441
10.9
5/6/2009
000-23441
10.10
2/7/2020
10.9* Forms of Stock Option Agreements to be
10-Q
000-23441
10.5
11/7/2008
used in Director Equity Compensation
Program
10.10* Outside Director Cash Compensation
10-K
000-23441
10.12
2/7/2020
Arrangements
10.11* 2007 Equity Incentive Plan, as amended and
10-Q
000-23441
10.3
10/29/2020
restated
10.12* Forms of Option Agreements under the 2007
Schedule TO 000-23441
99.(D)(4)
12/3/2008
Equity Incentive Plan
68
Exhibit
Number
Exhibit Description
Form
Incorporation by Reference
Exhibit/Appendix
Reference
File
Number
Filing Date
Filed
Herewith
10.13* Power Integrations, Inc. Amended and
10-Q
000-23441
10.2
7/29/2021
Restated 2016 Incentive Award Plan
10.14* Form of Restricted Stock Unit Grant Notice
10-K
000-23441
10.25
2/8/2017
and Agreement under the 2016 Incentive
Award Plan
10.15* Form of Performance Stock Unit Notice and
Agreement under the 2016 Equity Incentive
Plan
10.16* Form of Long Term Performance Stock Unit
Notice and Agreement under the 2016 Equity
Incentive Plan
10-K
000-23441
10.26
2/8/2017
10-K
000-23441
10.16
2/7/2022
10.17† Wafer Supply Agreement between us and
10-Q
000-23441
10.2
11/7/2023
ZMD Analog Mixed Signal Services
GmbH & Co. KG, dated as of May 23, 2003
10.18† Amended and Restated Wafer Supply
10-Q
000-23441
10.3
11/7/2023
Agreement between us and OKI Electric
Industry Co., Ltd., dated as of April 1, 2003
10.19† Amendment Number One to the Amended
10-Q
000-23441
10.1
11/7/2023
and Restated Wafer Supply Agreement
between us and OKI Electric Industry Co.,
Ltd., effective as of August 11, 2004
10.20 Amendment Number Two to the Amended
10-Q
000-23441
10.5
8/8/2008
and Restated Wafer Supply Agreement
between Power Integrations International,
Ltd. and OKI Electric Industry Co., Ltd.,
effective as of April 1, 2008
10.21 Amendment Number Three to the Amended
and Restated Wafer Supply Agreement
between Power Integrations International,
Ltd. and OKI Electric Industry Co., Ltd.,
effective as of June 9, 2008
10-Q
000-23441
10.6
8/8/2008
10.22† Amendment Number Four to the Amended
10-Q
000-23441
10.2
11/7/2008
and Restated Wafer Supply Agreement
between Power Integrations International,
Ltd. and OKI Electric Industry Co., Ltd.,
dated September 15, 2008
10.23† Amendment Number Five to the Amended
10-K
000-23441
10.61
3/2/2009
and Restated Wafer Supply Agreement
between Power Integrations International,
Ltd. and OKI Semiconductor Co., Ltd.,
effective as of November 14, 2008
10.24† Amendment Number Six to the Amended and
10-K
000-23441
10.32
2/11/2016
Restated Wafer Supply Agreement between
Power Integrations International, Ltd. and
OKI Semiconductor Co., Ltd., effective as of
November 1, 2015
69
Exhibit
Number
Exhibit Description
Form
Incorporation by Reference
Exhibit/Appendix
Reference
File
Number
Filing Date
Filed
Herewith
10.25† Amendment Number Seven to the Amended
10-Q
000-23441
10.1
11/1/2016
and Restated Wafer Supply Agreement
between Power Integrations International,
Ltd. and OKI Semiconductor Co., Ltd.,
effective as of August 8, 2016
10.26† Amendment Number Eight to the Amended
10-Q
000-23441
10.3
8/4/2022
and Restated Wafer Supply Agreement
between Power Integrations International,
Ltd. and OKI Semiconductor Co., Ltd.,
effective as of July 26, 2017
10.27†† Amendment Number Nine to the Amended
10-Q
000-23441
10.2
4/25/2019
and Restated Wafer Supply Agreement,
between Power Integrations International,
Ltd. and Lapis Semiconductor Co., Ltd.
(formerly OKI Semiconductor Co., Ltd.),
effective as of February 6, 2019
10.28† Wafer Supply Agreement, between Seiko
Epson Corporation and Power Integrations
International, Ltd. effective as of April 1,
2005
10-Q
000-23441
10.1
11/7/2008
10.29† Amendment Number One to the Wafer
10-Q
000-23441
10.1
5/6/2009
Supply Agreement between Power
Integrations International, Ltd. and Seiko
Epson Corporation, with an effective date of
December 19, 2008
10.30† Amendment Number Two to Wafer Supply
Agreement, between Seiko Epson
Corporation and Power Integrations
International, Ltd., entered into on January 5,
2011
10.31† Amendment Number Three to Wafer Supply
Agreement, effective as of February 1, 2012,
by Power Integrations International Ltd. and
Seiko Epson Corporation
10-K
000-23441
10.47
2/25/2011
10-K
000-23441
10.35
2/5/2021
10.32† Development Addendum to Wafer Supply
10-K
000-23441
10.36
2/5/2021
Agreement, dated September 22, 2013,
between Seiko Epson Corporation and Power
Integrations International Ltd
10.33† Amendment Number Four to Wafer Supply
Agreement, effective as of April 1, 2015, by
Power Integrations International Ltd. and
Seiko Epson Corporation
10-K
000-23441
10.37
2/5/2021
10.34† Amendment Number Five to Wafer Supply
10-K
000-23441
10.38
2/5/2021
Agreement, effective as of November 2,
2015, by Power Integrations International
Ltd. and Seiko Epson Corporation
10.35† Amendment Number Six to Wafer Supply
10-K
000-23441
10.39
2/5/2021
Agreement, effective as of December 8,
2015, by Power Integrations International
Ltd. and Seiko Epson Corporation
70
Exhibit
Number
Exhibit Description
Form
Incorporation by Reference
Exhibit/Appendix
Reference
File
Number
Filing Date
Filed
Herewith
10.36† Amendment Number Seven to Wafer Supply
Agreement, effective as of October 3, 2016,
by Power Integrations International Ltd. and
Seiko Epson Corporation
10-K
000-23441
10.46
2/8/2017
10.37† Amendment Number Eight to Wafer Supply
10-K
000-23441
10.47
2/8/2017
Agreement, effective as of November 8, 2016
by Power Integrations International Ltd. and
Seiko Epson Corporation
10.38† Amendment Number One to the Amended
10-Q
000-23441
10.4
11/7/2023
and Restated Wafer Supply Agreement
between Power Integrations International,
Ltd. and XFAB Dresden GmbH & Co. KG,
effective as of July 20, 2005
10.39† Wafer Supply Agreement, made and entered
10-Q
000-23441
10.2
5/8/2012
into as of October 1, 2010, by and between
Power Integrations International, Ltd., and X-
FAB Semiconductor Foundries AG
10.40† Amendment Number One to Wafer Supply
Agreement, effective as of January 1, 2014,
between Power Integrations International,
Ltd., and X-FAB Semiconductor Foundries
AG
10-Q/A
000-23441
10.2
9/19/2014
10.41† Amendment Number Two to the Wafer
10-K
000-23441
10.52
2/13/2019
Supply Agreement, effective as of
December 1, 2018, between Power
Integrations International, Ltd., and X-FAB
Semiconductor Foundries GmbH (formerly
X-FAB Semiconductor Foundries AG)
10.42 Amendment Number Three to the Amended
and Restated Wafer Supply Agreement
between Power Integrations International,
Ltd. And X-FAB Semiconductor Foundries
AG, effective as of April 21, 2021
10-Q
000-23441
10.4
7/29/2021
10.43 Credit Agreement, dated July 27, 2016, by
10-Q
000-23441
10.1
7/29/2016
and between Power Integrations Inc. and
Wells Fargo Bank, National Association
10.44 First Amendment to Credit Agreement, dated
April 30, 2018 by and between Power
Integrations, Inc. and Wells Fargo Bank,
National Association
10.45 Second Amendment to Credit Agreement,
dated June 7, 2021 by and between Power
Integrations, Inc. and Wells Fargo Bank,
National Association
10-Q
000-23441
10.1
7/26/2018
10-Q
000-23441
10.3
7/29/2021
10.46* 2019 Executive Officer Compensation
10-K
000-23441
Item 9B
2/13/2019
Arrangements and 2019 Performance Based
Incentive Plan
71
Exhibit
Number
Exhibit Description
Form
Incorporation by Reference
Exhibit/Appendix
Reference
File
Number
Filing Date
Filed
Herewith
10.47* 2018 Executive Officer Cash Compensation
Arrangements and 2018 Performance Based
Incentive Plan
10-K
000-23441
Item 9B
2/14/2018
10.48* Form of Restricted Stock Unit Grant Notice
10-Q
000-23441
10.6
8/6/2010
and Form of Restricted Stock Unit Award
Agreement for executive officers for use
prior to January 2013
10.49* Form of Restricted Stock Unit Grant Notice
10-K
000-23441
10.48
2/22/2013
and Form of Restricted Stock Unit Award
Agreement for executive officers for use after
January 2013
10.50* Amended and Restated Chief Executive
Officer Benefits Agreement, dated as of
May 1, 2014, between Power Integrations,
Inc. and Balu Balakrishnan
10-Q
000-23441
10.3
5/5/2014
10.51* Amended and Restated Executive Officer
10-Q
000-23441
10.5
5/5/2014
Benefits Agreement, dated as of May 1,
2014, between Power Integrations, Inc. and
Cliff Walker
10.52* Amended and Restated Executive Officer
10-Q
000-23441
10.6
5/5/2014
Benefits Agreement, dated as of May 1,
2014, between Power Integrations, Inc. and
Doug Bailey
10.53* Amended and Restated Executive Officer
10-Q
000-23441
10.8
5/5/2014
Benefits Agreement, dated as of May 1,
2014, between Power Integrations, Inc. and
Sandeep Nayyar
10.54* Amended and Restated Executive Officer
10-Q
000-23441
10.10
5/5/2014
Benefits Agreement, dated as of May 1,
2014, between Power Integrations, Inc. and
Mike Matthews
10.55* Amended and Restated Executive Officer
10-Q
000-23441
10.11
5/5/2014
Benefits Agreement, dated as of May 1,
2014, between Power Integrations, Inc. and
Radu Barsan
10.56†† ON Semiconductor Corporation Settlement
10-K
000-23441
10.61
2/7/2020
Agreement
10.57†† ON Semiconductor Corporation Term Sheet
10-K
000-23441
10.62
2/7/2020
10.58† Amendment Number Ten to the Amended
10-Q
000-23441
10.1
5/7/2020
and Restated Wafer Supply Agreement,
between Power Integrations International,
Ltd. and Lapis Semiconductor Co., Ltd.
(formerly OKI Semiconductor Co., Ltd.),
effective as of December 16, 2019
72
Exhibit
Number
Exhibit Description
Form
Incorporation by Reference
Exhibit/Appendix
Reference
File
Number
Filing Date
Filed
Herewith
10.59† Amendment Number Eleven to the Amended
and Restated Wafer Supply Agreement,
between Power Integrations International,
Ltd. and Lapis Semiconductor Co., Ltd.
(formerly OKI Semiconductor Co., Ltd.),
effective as of December 20, 2019
10-Q
000-23441
10.2
5/7/2020
10.60††† Amendment Number Twelve to the Amended
10-Q
000-23441
10.2
4/29/2021
and Restated Wafer Supply Agreement,
between Power Integrations International,
Ltd. and Lapis Semiconductor Co., Ltd.
(formerly OKI Semiconductor Co., Ltd.),
effective as of September 17, 2020
10.61††† Amendment Number Thirteen to the
Amended and Restated Wafer Supply
Agreement between Power Integrations, Ltd.
d.b.a. Power Integrations International, Ltd.
And Lapis Semiconductor Co., Ltd.
(formerly OKI Semiconductor Co., Ltd.),
effective as of February 17, 2022
10-Q
000-23441
10.1
4/28/2022
10.62† Amendment Number Nine to Wafer Supply
10-Q
000-23441
10.3
5/7/2020
Agreement, effective as of November 1, 2017
by Power Integrations International Ltd. and
Seiko Epson Corporation
10.63* 2020 Compensation Arrangements with
10-K
000-23441
Item 9B
2/7/2020
Named Executive Officers
10.64* Amendment to the Amended and Restated
10-Q
000-23441
10.2
7/30/2020
Executive Officer Benefits Agreement, dated
as of June 1, 2020, between Power
Integrations, Inc. and Balu Balakrishnan
10.65* Amendment to the Amended and Restated
10-Q
000-23441
10.3
7/30/2020
Executive Officer Benefits Agreement, dated
as of June 1, 2020, between Power
Integrations, Inc. and Douglas Bailey
10.66* Amendment to the Amended and Restated
10-Q
000-23441
10.4
7/30/2020
Executive Officer Benefits Agreement, dated
as of June 1, 2020, between Power
Integrations, Inc. and Radu Barsan
10.67* Amendment to the Amended and Restated
10-Q
000-23441
10.6
7/30/2020
Executive Officer Benefits Agreement, dated
as of June 1, 2020, between Power
Integrations, Inc. and Mike Matthews
10.68* Amendment to the Amended and Restated
10-Q
000-23441
10.7
7/30/2020
Executive Officer Benefits Agreement, dated
as of June 1, 2020, between Power
Integrations, Inc. and Sandeep Nayyar
10.69* Amendment to the Amended and Restated
10-Q
000-23441
10.9
7/30/2020
Executive Officer Benefits Agreement, dated
as of June 1, 2020, between Power
Integrations, Inc. and Clifford Walker
73
Exhibit
Number
Exhibit Description
Form
Incorporation by Reference
Exhibit/Appendix
Reference
File
Number
Filing Date
10.70* Executive Officer Benefits Agreement, dated
as of February 1, 2021, between Power
Integrations, Inc. and Sunil Gupta
10.71* Executive Officer Benefits Agreement, dated
as of June 14, 2021, between Power
Integrations, Inc. and Yang Chiah Yee
10.72* Executive Officer Benefits Agreement, dated
as of August 1, 2022, between Power
Integrations, Inc. and Sunil Gupta
10.73* Executive Officer Benefits Agreement, dated
as of August 1, 2022, between Power
Integrations, Inc. and Yang Chiah Yee
10.74 Amendment Number Ten to Wafer Supply
Agreement, effective as of August 26, 2020
by Power Integrations International Ltd. and
Seiko Epson Corporation
10-K
000-23441
10.73
2/5/2021
10-Q
000-23441
10.5
7/29/2021
10-Q
000-23441
10.1
8/4/2022
10-Q
000-23441
10.2
8/4/2022
10-Q
000-23441
10.5
10/29/2020
10.75††† Amendment Number Eleven to Wafer Supply
10-Q
000-23441
10.1
5/4/2023
Agreement, effective as of September 16,
2022 by Power Integrations International Ltd.
and Seiko Epson Corporation
10.76 Third Amendment to Credit Agreement,
dated June 28, 2023 between Power
Integrations, Inc. and Wells Fargo Bank,
National Association
10-Q
000-23441
10.1
8/3/2023
10.77††† Amendment Number Five to the Amended
10-Q
000-23441
10.5
11/7/2023
and Restated Wafer Supply Agreement
between Power Integrations International,
Ltd. and X-FAB Dresden GmbH & Co. KG,
dated December 23, 2009.
21.1 List of subsidiaries
10-K
000-23441
21.1
2/7/2022
23.1 Consent of Independent Registered Public
Accounting Firm
24.1 Power of Attorney (see signature page)
31.1 Certification of Chief Executive Officer
pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002
31.2 Certification of Chief Financial Officer
pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002
32.1** Certification of Chief Executive Officer
pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
74
Filed
Herewith
X
X
X
X
X
Exhibit
Number
Exhibit Description
Form
32.2** Certification of Chief Financial Officer
pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
97* Incentive Compensation Recoupment Policy
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema
Document
101.CAL XBRL Taxonomy Extension Calculation
Linkbase Document
101.DEF XBRL Taxonomy Extension Definition
Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase
Document
101.PRE XBRL Taxonomy Extension Presentation
Linkbase Document
104 The cover page from this Annual Report on
Form 10-K, formatted in Inline XBRL
Incorporation by Reference
Exhibit/Appendix
Reference
File
Number
Filing Date
Filed
Herewith
X
X
X
X
X
X
X
X
X
All references in the table above to previously filed documents or descriptions are incorporating those documents
and descriptions by reference thereto.
† This Exhibit has been filed separately with the Commission pursuant to an application for confidential treatment. The
confidential portions of this Exhibit have been omitted and are marked by an asterisk.
†† Portions of this exhibit have been omitted as being immaterial and would be competitively harmful if disclosed.
††† Portions of this exhibit have been omitted as being immaterial and is the type of information that Power
Integrations, Inc. treats as private or confidential.
*
Indicates a management contract or compensatory plan or arrangement.
** The certifications attached as Exhibits 32.1 and 32.2 accompanying this Form 10-K, are not deemed filed with the
SEC, and are not to be incorporated by reference into any filing of Power Integrations, Inc. under the Securities Act
of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of
this Form 10-K, irrespective of any general incorporation language contained in such filing.
Item 16. Form 10-K Summary
None.
75
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly authorized.
POWER INTEGRATIONS, INC.
SIGNATURES
Dated: February 12, 2024
By:
/s/ SANDEEP NAYYAR
Sandeep Nayyar
Chief Financial Officer (Duly Authorized Officer,
Principal Financial Officer and Chief Accounting
Officer)
76
d
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes
and appoints Balu Balakrishnan and Sandeep Nayyar his or her true and lawful attorney-in-fact and agent, with full power
of substitution and, for him or her and in his or her name, place and stead, in any and all capacities to sign any and all
amendments to this Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as
fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT
HAS BEEN SIGNED BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE
CAPACITIES INDICATED AS OF THE 12TH DAY OF FEBRUARY 2024.
By:
By:
By:
By:
By:
By:
By:
By:
/s/ BALU BALAKRISHNAN
Balu Balakrishnan
Chairman of the Board and
President, Chief Executive Officer
(Principal Executive Officer)
/s/ SANDEEP NAYYAR
Sandeep Nayyar
Chief Financial Officer
(Principal Financial and Principal Accounting
Officer)
/s/ BALAKRISHNAN S. IYER
Balakrishnan S. Iyer
Lead Independent Director
/s/ WENDY ARIENZO
Wendy Arienzo
Director
/s/ NICHOLAS E. BRATHWAITE
Nicholas E. Brathwaite
Director
/s/ ANITA GANTI
Anita Ganti
Director
/s/ NANCY GIOIA
Nancy Gioia
Director
/s/ RAVI VIG
Ravi Vig
Director
77
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Corporate Counsel
Cooley LLP
Palo Alto, CA
Transfer Agent
Computershare
c/o Shareholder Services
PO Box 43006
Providence RI 02940-3006
Independent Auditors
Deloitte & Touche LLP
San Jose, CA
Investor Information
For additional information about
Power Integrations, visit:
www.power.com
Investor Relations
Investor Relations Department
Power Integrations, Inc.
5245 Hellyer Avenue
San Jose, CA 95138
ir@power.com
Wendy A. Arienzo
Former Vice President, Operations
FUJIFILM Dimatix, Inc., Retired
Balu Balakrishnan
Chairman and Chief Executive Officer
Power Integrations, Inc.
Nicholas E. Brathwaite
Founding Managing Partner,
Celesta Capital
Anita Ganti
Former Senior Vice President,
Product Engineering Services
Wipro Limited
Nancy L. Gioia
Former Director of Electrification
and Connectivity,
Ford Motor Company, Retired
Balakrishnan S. Iyer
Former Senior Vice President
and Chief Financial Officer
Conexant Systems, Inc., Retired
Ravi Vig
Former President and CEO,
Allegro Microsystems, Inc., Retired
Balu Balakrishnan
Chairman and Chief Executive Officer
Doug Bailey
Vice President, Marketing
Vikram Balakrishnan
Vice President, High-Power
Gate Drivers & Automotive
Radu Barsan
Vice President, Technology
Sunny Gupta
Vice President, Operations
Mike Matthews
Vice President,
Chief Technical Officer
Sandeep Nayyar
Vice President, Finance
Chief Financial Officer
Roland Saint-Pierre
Vice President,
Product Development
Clifford J. Walker
Vice President,
Corporate Development
Yang Chiah Yee
Vice President, Worldwide Sales
Power Integrations, Inc. 5245 Hellyer Avenue, San Jose, CA 95138 www.power.com
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