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Power Integrations, Inc.Nasdaq: POWI
February 2014
© Copyright 2014 Power Integrations 2
Forward-Looking Statements/Non-GAAP Metrics
These slides accompany an oral presentation by Power Integrations, Inc., whichcontains forward-looking statements. Each statement relating to events that will ormay occur in the future is a forward-looking statement. The Company’s actualresults may differ materially from those suggested in the presentation. Informationconcerning factors that could cause such a difference is contained in theCompany’s most recent reports on Form 10-K and 10-Q.
This presentation may also contain certain non-GAAP financial information. Reconciliations of non-GAAP financial metrics to GAAP results are available at the end of this presentation and/or on the investor page of the Power Integrations website, http://investors.powerint.com (see “Historical Financials” data file).
© Copyright 2014 Power Integrations 3
Secular Growth Story in Analog Semis Focused on energy-efficient high-voltage power conversion
Clean-tech enabler: efficient appliances, LED lighting, DC motor drives, renewable energy, electric transportation
Expanding market opportunity with higher-power products, rapid-charging for mobile devices
Double-digit revenue CAGR since 2001
© Copyright 2014 Power Integrations 4
Ultra-simple power converters• Fewer components
• Shorter design cycles
• Easier to manufacture
• Higher reliability
BOM cost similar to discrete designs
Highly energy-efficient
Comprehensive Expertise in High-Voltage
© Copyright 2014 Power Integrations 5
Highly Integrated Power Converters Replacing Legacy Technologies
Discrete power supply: 70 components
Equivalent power supply with POWI:36 components, smaller board
Linear transformer: weighs 12 oz.
Adapter with POWI: weighs 2 oz.
© Copyright 2014 Power Integrations 6
0
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700
U.S
. Pat
ents
Gra
nted
Relentless Innovation
609 U.S. Patents492 Non-U.S. Patents
at 12/31/2013
© Copyright 2014 Power Integrations 7
Vast Addressable Market –Power Conversion Is Needed Everywhere
© Copyright 2014 Power Integrations 8
Long-Term Secular Growth Drivers
1. Ongoing transition to IC-based power supplies• Integration saves labor and materials, improves reliability
© Copyright 2014 Power Integrations 9
Leading Transition to IC-Based Power Supplies
Linear Transformers
1970 1994
Discretes
1994 Today1970
Integrated•Fairchild•Sanken•ST Micro•ON Semi• Infineon POWI
• iWatt/Dialog•BCD/Diodes•Active•Leadtrend•OnBright
•Fairchild• Infineon•ON Semi•ST Micro•NXPPo
wer
Sup
ply
Uni
t Vol
ume
© Copyright 2014 Power Integrations 10
Long-Term Secular Growth Drivers
1. Ongoing transition to IC-based power supplies• Integration saves labor and materials, improves reliability
2. Energy-efficient electronics & appliances• Driven by standards and consumer awareness
© Copyright 2014 Power Integrations 11
Recognized Leader in Clean Technology
Member of clean-tech stock indices• The Cleantech Index (CTIUS)• Nasdaq Clean Edge Green Energy (CELS)• Ardour Global Index (AGIGL)
Twice named a top 20 sustainable stock by SustainableBusiness.com
ENERGY STAR® award recipient
Star of Energy Efficiency award recipient
© Copyright 2014 Power Integrations 12
Energy Specs Continue to Tighten
ENERGY STAR® “Most Efficient” label rewards top performers
U.S. to tighten federal standards for external power supplies
New battery-charger standards in California in 2013
European standby power limitation tightened to 0.5 W in 2013
Traditional 40 W and 60 W light bulbs banned in U.S. starting 2014
© Copyright 2014 Power Integrations 13
“Zero” Series Zeroes Out Standby Waste
CAPZero™ eliminates waste from X-cap bleed resistors
SENZero™ disconnects sense resistors in main power supply
LinkZero™ cuts waste to 0.00 W in chargers and auxiliary power supplies
© Copyright 2014 Power Integrations 14
Energy Vampire vs. LinkZero™
© Copyright 2014 Power Integrations 15
Long-Term Secular Growth Drivers
1. Ongoing transition to IC-based power supplies• Integration saves labor and materials, improves reliability
2. Energy-efficient electronics & appliances• Driven by standards and consumer awareness
3. LED lighting• Requires low-cost, efficient, reliable power supplies
© Copyright 2014 Power Integrations 16
Well-Positioned in LED Lighting
Traditional bulbs phasing out
LEDs need efficient, reliable drivers
Integration brings reliability, efficiency, size advantage
2007 2008 2009 2010 2011 2012 2013
LED Lighting Revenue>20% Growth in 2013
© Copyright 2014 Power Integrations 17
Long-Term Secular Growth Drivers
1. Ongoing transition to IC-based power supplies• Integration saves labor and materials, improves reliability
2. Energy-efficient electronics & appliances• Driven by standards and consumer awareness
3. LED lighting• Requires low-cost, efficient, reliable power supplies
4. Expanding market opportunity• Rapid charging for mobile-device market
• Higher-power products add ~$1B to addressable market
© Copyright 2014 Power Integrations 18
Rapid Charging: Emerging Trend in Mobility
Larger batteries causing extended downtime for charging Qualcomm Quick Charge 2.0 cuts charge time up to 75% POWI is lead strategic partner on the charger side Higher dollar content than a standard charger
ConventionalCharging
Quick Charge 2.0
Quick Charge 2.0 PMIC
Charger Interface Chip + Power Conversion Chip
© Copyright 2014 Power Integrations 19
Expanding Market with Mid-Power Products
0W 500W5W 50W2W 20W 200W
CAPZero™/SENZero™/Qspeed™
Hiper™ Family
TOPSwitch™
TinySwitch™
LinkSwitch™ / LinkZero™
LinkSwitch-PL/PH / LYTSwitch™
LED Products
LOW-POWER MID-POWER
© Copyright 2014 Power Integrations 20
Radically Simplifying Mid-Power Converters
HiperPFS™ and HiperTFS™ replace up to 100 components
HiperTFS + HiperPFS
© Copyright 2014 Power Integrations 21
More Silicon Content at Higher Power Levels
EMI Filter PFC Stage Main and Standby Stage
Main & Standby Controller
Boost Inductor
PFC Controller
EMI Filter StandbyOutput
ACGate Drive
SR
Main Output
TNY
Before: Single IC for standby power supply
© Copyright 2014 Power Integrations 22
More Silicon Content at Higher Power Levels EMI Filter PFC Stage Main and Standby Stage
Main & Standby Controller
Boost Inductor
PFC Controller
EMI Filter StandbyOutput
AC
HiperPFS
HiperTFS
CpZ
Gate Drive
SnZ
QSpeed
SR
Main Output
HiperTFS™ main + standbyCapZero™ HiperPFS™ SenZero™ Qspeed™
Now: Up to five components, potential dollar content >5x higher
© Copyright 2014 Power Integrations 23
Concept Deal Extends High-Voltage Leadership
CONCEPT drivers reduce component count, enhance efficiency, reliability
Acquired CT-Concept in 2012
IGBT drivers for industrial motors, renewables, locomotives, DC transmission
Addressable market ~$500M; now ~10% of POWI revenue
Broadens POWI opportunity in clean-power applications
© Copyright 2014 Power Integrations 24
Spanning the Clean-Power EcosystemEnergy
Ecosystem
Energy Generation
Energy Transmission
Energy Consumption
Wind TurbinesSolar Power
HVDC Transmission
Motor ControlHybrid Vehicles
LocomotiveMedical
End Markets
Power Semiconductors
IGBT module: Transistors arranged in parallel to increase switching
capacity at very high currents and high voltages
Driver optimizes efficiency, operating performance and lifespan of the IGBT module
IGBT ModuleDriver
© Copyright 2014 Power Integrations 25
Higher-Power Products Expand SAM to $2.5B
● Mobile phone chargers● Cordless phone adapters● Broadband modems● VoIP phones● Wireless routers● Desktop/server standby
● Desktop main● Notebook adapters● LCD monitors● Printers
● White goods● Air conditioners● TV standby / TV main● Small appliances● Set-top boxes● DVD players● Game consoles
● LED general lighting● LED street lights● Smart meters ● Industrial control● UPS● Industrial motor drives● Wind/solar inverters● Electric trains/cars● DC transmission
Consumer
Comms
Computer
Industrial
Mid-power applications in orange
High-power applications in green
© Copyright 2014 Power Integrations 26
Consistent Track Record of Growth
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2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Revenues ($M)
© Copyright 2014 Power Integrations 27
Outperforming the Peer Group
-10%
0%
10%
20%
30%
40%
2007 2008 2009 2010 2011 2012 2013 CAGR
Annual Revenue Growth POWIAnalog Semis (SIA)
© Copyright 2014 Power Integrations 28
Well-Diversified Revenue Mix
25%Consumer
23%Computer
43%Comms
20022013
21%Comms
35%Consumer
34% Industrial
10%Computer
Higher-margin industrial & consumer markets now >2/3 of revenues; cellphone chargers down from 40% to ~10%
© Copyright 2014 Power Integrations 29
Growing Cash Flow
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2008 2009 2010 2011 2012 2013
Cash Flow from Operations ($M)
One-time tax payment
© Copyright 2014 Power Integrations 30
Strong Balance Sheet
$202M cash and investments• Used $116M for Concept acquisition
No debt
Quarterly dividend increased to $0.10 in Q1 2014
$260M of repurchases since 2004• Average price of $23
• Diluted share count down 5% since 2008
0
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100
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Q3'08 Q2'10 Q1'12 Q4'13
Cash and Investments ($M)
10
15
20
25
30
35
Q3'08 Q2'10 Q1'12 Q4'13
Diluted Shares Outstanding (M)
At December 31, 2013
Power Integrations, Inc.Nasdaq: POWI