Power Integrations(POWI)2020-08-01 16:28Financial Data and Key Metrics Changes - Q2 revenues were 0.66 per diluted share, with cash and investments increasing by about $23 million during the quarter [28][34] Business Line Data and Key Metrics Changes - Industrial revenues accounted for 35% of sales, growing high single digits year-over-year, driven by broad-based industrial applications [8][26] - Communications revenues grew more than 20% year-over-year, primarily due to the adoption of fast chargers for mobile devices [13][25] - Consumer revenues declined at a double-digit rate year-over-year, significantly impacted by the pandemic and inventory corrections [18][24] Market Data and Key Metrics Changes - The consumer market is expected to remain flat sequentially in Q3, with air conditioning sales particularly affected by seasonality [19][61] - The company anticipates a gradual recovery in the consumer market post-pandemic, driven by increasing electronic content in appliances and energy efficiency requirements [19][63] - The company maintains an elevated level of inventory to prepare for a potential recovery in demand [21][65] Company Strategy and Development Direction - The company is aggressively pursuing low power opportunities in electric vehicles and has qualified several products for automotive use [12][18] - The focus on GaN technology is expected to drive growth in the fast-charging market, with significant design wins anticipated [17][75] - The company is maintaining a cautious outlook on the demand environment due to the pandemic but is preparing for a potential recovery [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about long-term growth prospects in the industrial and communications sectors, despite short-term challenges [10][63] - The company expects revenues to increase sequentially in Q3, driven by growth in fast-charging and communication categories [22][31] - Management noted that the high-power market is expected to recover in the long run, despite current softness due to pandemic-related delays [10][41] Other Important Information - The Board approved a two-for-one stock split, with the additional shares to be distributed on August 18 [34][35] - The company plans to maintain a minimum level of activity at foundries to help sustain capacity, despite slowing wafer starts [30][65] Q&A Session Summary Question: Automotive revenue expectations - Management indicated that some revenue from low power products is expected next year, but significant revenue won't materialize until 2023 or 2024 [39] Question: Communications design wins - The majority of new inbox designs are in the 20 to 30-watt range, with fast charging being adopted across various phone segments, including mid and low-end models [40] Question: Industrial business outlook - Industrial revenues are expected to remain flat in Q3, with no significant changes anticipated [48] Question: Gross margin sustainability - Management expects gross margins to remain in the range of 50.5% to 51% for Q3, supported by cost improvements [54][55] Question: Consumer market seasonality - The consumer market is projected to recover slightly in the second half of the year, but air conditioning seasonality may offset this [61] Question: Inventory levels - Internal inventory levels are primarily in wafer form, and the company plans to adjust wafer purchases gradually to maintain capacity [65] Question: 5G handsets and power levels - The company noted that 5G phones are likely to require higher power fast chargers, with power levels increasing from 20 watts to 30 watts [70] Question: GaN-based product revenue trends - Revenue from GaN-based products is expected to double this year and potentially increase even more next year based on design wins [77]