Power Integrations Inc (POWI) Q3 2025 Earnings Call Highlights: Navigating Growth in Industrial ...

This article first appeared on GuruFocus.

Release Date: November 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Power Integrations Inc (NASDAQ:POWI) reported a sequential revenue increase of 3% in Q3, reaching $119 million. The industrial segment showed strong performance with high single-digit growth, driven by traction in high voltage DC transmission and automotive sectors. The company has a robust pipeline of design activity in the automotive sector, with over 40 EV models using their products. Power Integrations Inc (NASDAQ:POWI) is collaborating with Nvidia on 800 volt DC power architecture, highlighting the potential for improved efficiency and reduced data center space. The company generated $30 million in cash from operations in Q3 and is on track for over $80 million in free cash flow for the year.

Negative Points

Power Integrations Inc (NASDAQ:POWI) experienced a significant slowdown in consumer orders, particularly in the appliance sector, with a 40% decline in Q3. The company expects Q4 revenues to decrease to $100-$105 million, driven by continued softness in the consumer category. Non-GAAP gross margin decreased by 70 basis points from the prior quarter due to higher input costs and less favorable exchange rates. Channel inventory increased to 9.8 weeks at the end of Q3, indicating slower sell-through and potential inventory challenges. The company faces uncertainties in the timing of consumer demand recovery, particularly in the major appliances segment, due to tariffs and housing market challenges.

Q & A Highlights

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Q: Can you elaborate on the consumer business outlook, especially regarding the inventory situation and expected recovery? A: We anticipated the decline in the appliance sector and expect Q4 to be sequentially lower. The inventory situation is primarily finished goods shipped to the US, with limited visibility. However, we are seeing channel inventory decrease in Q4, and we expect a recovery in 2026 as preloaded inventory clears. Whirlpool has indicated normalization in 2026, and we foresee moderate growth in appliances next year. (Jen Lloyd, CEO; Eric Verity, Interim CFO)

Q: With a focus on data center, automotive, and high power, will there be changes in your market approach or internal structure? A: Yes, we are focusing more on these markets, both in R&D investment and market approach. We've realigned project spending to accelerate developments in these areas while maintaining a strong core business. We are pivoting towards data center, automotive, and high power, but will continue investing in our core business. (Jen Lloyd, CEO)

Story Continues

Q: How do you see the market share between silicon carbide and high voltage GAN in data centers? A: The 800-volt DC architecture presents opportunities for GAN, particularly in auxiliary supplies and DC to DC conversion. While silicon carbide is an option, we believe GAN offers advantages in power density. We are engaged with Nvidia and others to develop products for this architecture, with releases expected in 2027. (Jen Lloyd, CEO)

Q: What is the TAM opportunity for Power Integrations in AI data centers, and what is the timeline for revenue generation? A: It's too early to estimate the TAM for the 800-volt DC market. Our content in AI server racks is around $1,000, higher in the 800-volt DC architecture. We expect meaningful revenue generation from 2027, with existing products serving current data center markets. (Jen Lloyd, CEO)

Q: Regarding the automotive sector, can you discuss the traction and potential opportunities? A: We have significant traction in the automotive sector, particularly with emergency power supplies in inverters. Our solutions are gaining approval from OEMs, and evolving EV architectures are favorable for us. The long-term SAM depends on EV adoption, but we see substantial opportunities in auxiliary power supplies and micro DC to DC converters. (Jen Lloyd, CEO; Eric Verity, Interim CFO)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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