POWIinvestorPresentation

8/6/2019 POWIinvestorPresentation

1/55

Power IntegrationsNasdaq: POWI

November 2010


2/55

Copyright 2009 Power Integrations 2

Forward-Looking Statements/Non-GAAP MetricsOur presentation and responses to questions may contain forward-looking statements which

are based on current information that is, by its nature, subject to rapid and even abrupt

changes. Due to risks and uncertainties associated with the company's business, actual

results could differ materially from those projected or implied by management's forward-

looking statements. These risk factors are explained under the caption Risk Factors in thecompany's most recent reports on Form 10-K and Form 10-Q. The company is under no

obligation to update or alter its forward-looking statements.

This presentation may also contain certain non-GAAP financial information that excludes

expenses (and the related tax effects thereof) recorded under Statement of FinancialAccounting Standards No. 123R, Share-based Payment, which requires the recognition of

expenses relating to share-based payments such as stock options. Also excluded from non-

GAAP financial results in certain periods are charges for the write-off of purchased in-process

research and development as well as certain intangible assets. Reconciliations of non-GAAP

financial metrics to GAAP results are available on the investor page of the Power Integrationswebsite, http://investors.powerint.com.


3/55


Secular Growth Story in Analog Semis

Leading transition to highly integrated AC-DC powersupplies

Energy efficiency driving market penetration

Strong position in LED lighting, smart meters

High-power products expand SAM to $2B


4/55


Nine Consecutive Years of Revenue Growth

0

50

100

150

200

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

$MRevenue for first three quarters of 2010already exceeds 2009 total revenue

1st Nine

Months


5/55


Our Opportunity

Power supplies have

lagged the electronics

market in the adoption of

integrated circuits


6/55


Highly Integrated Power Supplies ReplacingLegacy Technologies

DVD power supply with 70discrete components

Equivalent power supply with POWI:36 components

Lineartransformer:weighs 12 oz.

Adapter with POWI:weighs 2 oz.


7/55


Relentless Innovation


8/55


Multi-Level Innovation

High-Voltage Silicon Process

Integrated Circuits/Topologies(LinkSwitch, TinySwitch, TOPSwitch)

IC Packaging

System Design(External IP)


9/55




Integrated Circuits/Topologies

IC Packaging

System Design

High-VoltageMOSFET Low-VoltageController


10/55





IC Packaging

System Design

Monolithic High-Voltage IC


11/55





IC Packaging

System Design


12/55




IC Packaging

System-Level Innovations


Advanced, feature-rich IC designs

minimize component count, complexityand system cost


13/55





IC Packaging

System-Level Innovations

New, proprietary eSIP package vs. standardTO-220 package


14/55





IC Packaging

System Design

C70

C63

33 uF

400 V

C64

120 uF400 V

-

+

D25

2KBP06M

600 V

2

1

3

4

Q4

FQP13N50

L1

12mHR65

2 MD26

DL4007

R73

3.9

R1

15 k

R2100 k R4

200 k

1%

R3

10 M

U12

LM431

FillSwitchCircuit

Examples:

SlimCoreTransformer


15/55


Multi-Level Innovation Delivers Value



IC Packaging

System Design

Ultra-simple power

supplies Fewer components

Shorter design cycles

Easy to manufacture Less raw materials

Highly energy-efficient

Equal in cost compared todiscrete solutions


16/55


Cost-Effective Integration

36-watt adapter with discretes:70 components


17/55


Cost-Effective Integration

36-watt adapter with POWI chip:25 components


18/55


Creating Value Through Integration

Slashes eBOM, labor costs, factory capital investment

Increases reliability of end product

Increases factory throughput, reduces inventory exposure


19/55


Leading the Transition to Highly IntegratedPower Supplies

Linear Transformers

1970 1994

Discretes

1994 Today1970

IntegratedFairchildSanken

ST MicroON Semi Infineon POWI

iWattBCDActiveLeadtrendOnBright

Fairchild InfineonON SemiST MicroNXP 80%

20%

PowerSupp

lyUnitVolume


20/55


Large, Diverse Markets All Electronic Products Need Power


21/55


$1.6 Billion Addressable Market (0 50 watts)

Mobile phone chargers Cordless phone adapters

Broadband modems

VoIP phones

Desktop/server standby

LCD monitors

Printers

White goods

Air conditioners

TV standby

Small appliances

Set-top boxes DVD players

LED general lighting

Smart meters

Industrial control

Motor control

UPS

Consumer

Communications

Computer

Industrial


22/55


Well Diversified Revenue Mix

25%Consumer

23%Computer

43%Comms

9% Industrial

2002

2010 throughSeptember

30%Communications

38%Consumer

20% Industrial

12%Computer


23/55


Revenue Mix By Product Family

Other

Q1 Q32010

TinySwitchTOPSwitch

LinkSwitch

24%

37%

38%

1%

TinySwitch

52%

18%


24/55


Supply Chain for Power Supplies

OEMsincluding

Nokia, LG, Samsung

Dell, HP, Apple, Lenovo

Sony, Panasonic

Mitsubishi, Electrolux

Direct(~35%)

Power SupplyManufacturers

including

PhihongDeltaLiteonSunlinLeader

HiProAcBelTenPaoDongdoRF Tech

Distribution(~65%)


25/55


Fabless Manufacturing Model

WafersJapan: OKI, Epson

Germany: X-Fab

AssemblyMalaysia

PhilippinesChina

Thailand

TestMalaysia

ChinaThailand

San Jose (in-house)


26/55


UK

Japan

Korea

TaiwanIndia

Singapore

Germany

Italy

S. China

N. China

AtlantaSan Jose (HQ)

Chicago

Worldwide Technical Support

13 field labs with EMI test capability

Rated #1 by customers for technical support


27/55


Long-Term Secular Growth Drivers

1. Ongoing transition to IC-based power supplies Integration saves labor, materials, and design effort while improving

reliability and durability

2. Energy-efficiency Driven by standards and consumer awareness

3. LED lighting and smart meters Emerging applications for AC-DC power conversion

Both require efficient, reliable power supplies

4. Rollout of high-power products (>50 W) Significant expansion of addressable market


28/55


Energy Efficiency Becoming a Key Driver

Inefficient power supplies (energy vampires) waste energy during normaloperation and standby mode

Standby power is consumed when a product is in its lowest-power mode,e.g., a computer or printer in sleep mode, a TV turned off by remotecontrol, an appliance with electronic controls and LED displays, or acellphone charger left plugged into an outlet

According to Berkeley National Laboratory, as much as 10% of residentialelectricity is consumed by products in standby about $4B worth per yearin the U.S. alone


29/55


Tackling Standby Power Waste

Standby power accountsfor 5-10% of residential

electricity use

EcoSmart technologydrastically cuts standby

with no added cost

European Union adopted

mandatory standby limitson January 1, 2010


30/55


Importance of Standby Efficiency

Power supply Total input Loss in Power used bystandby efficiency power Power supply the product

33% 1.5 W 1.0 W 0.5W

Doubling standby efficiency cuts waste by factor of four

67% 0.75 W 0.25 W 0.5W


31/55


A Solution: EcoSmartTechnology

ON/OFF control skips cycles when less power needed(e.g. standby mode) Provides constant efficiency independent of load


32/55


Innovation For Energy-Efficiency

EcoSmarttechnology meets all energy efficiency standards

Practically constant efficiency across the load range

Recognized leader in green power supply solutions

EcoSmart


33/55


No-load Power Savings

Based on standard 5W Adapter


34/55


Making a Difference to the Environment

Sales of EcoSmart Chips(Cumulative units, in millions)

0

500

1000

1500

2000

2500

3000

3500

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

More than 3 billionEcoSmartICs shipped

Estimated standby power

savings of $4 billion between1998 and 2009


35/55


Recognized Leader in Energy Efficiency

Member of clean-tech stock indices The Cleantech Index (Ticker: 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 Efficiencyaward winner


36/55


Global Push for Tighter Efficiency Standards

EISA 2007

EC EcoDesign Directive

ENERGY STAR

EC Code of Conduct

Calif. EnergyCommission

Japan ECCJ /Top Runner

Korea KEMCO

China CECP

A wide range of governmental programs are addressing theefficiency of energy-using products


37/55


Tight Specs for External Power Supplies

Voluntary specifications in italics; all others are mandatory standards

CEC (2007)

EISA(July 2008)

EcoDesignDirective (2010)

China CECPENERGY STAR2.0

(Nov. 2008)

Code ofConduct

(Jan. 2009)

Australia(Dec. 2008)

New Zealand(April 2009)

Linear power supplies are rapidly disappearing


38/55


Five-Star Efficiency for Cellphone Chargers

Two-thirds of cellphoneenergy use is no-load

consumption by chargers

Top 5 handset OEMs

introduced rating scale forno-load efficiency

EcoSmarteasily delivers

five-star performance


39/55


Energy Vampire vs. EcoSmart


40/55


Replacing Linears: POWI vs. Discretes

Charger With LinkSwitch-LP

Only 14 components Integrated protectionfeatures

Charger With Discretes

More than 50 components

Protection features require

external components


41/55


LED Lighting and Smart Meters

Incandescent lights becomingobsolete/illegal

Smart grid deployment gaining

momentum Both require efficient, durable

power supplies

0

6

12

18

2006 2007 2008 2009 2010 YTD

LED and Metering Combined Revenues($M)


42/55


New Products Add Lighting-Specific Features

Garnered strong share of marketto-date with standard products no lighting-specific features

LinkSwitch-PH and -PL are theonly integrated chips with dimmingand single-stage PFC

Eliminate optocoupler andelectrolytic capacitors - weak links

that limit power-supply lifetime

Dimmable PAR38 LED spotlight withLinkSwitch-PH


43/55


Fluorescent TubeReplacement

Mass-Production LED Design Wins

E27 Floodlight

GE accent light

OSRAMReplacement Bulb

GU-10 Floodlight


44/55


High-Power Products Expand SAM by $400M+

LinkSwitchTM-II

TinySwitchTM-III

CAPZero, SENZeroTM

Hiperfamily

TOPSwitchTM-JX

0W 500W5W 50W2W 20W 200W

LOW POWER HIGH POWER

LinkSwitch-PL LinkSwitch-PH

LED LIGHTING PRODUCTS

High-Power Products Expand Addressable


45/55


High Power Products Expand AddressableMarket to $2B (0 500 watts)

Mobile phone chargers

Cordless phone adapters

Broadband modems

VoIP phones

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

Motor control

UPS

Consumer

Communications

Computer

Industrial

High-power applications inorange


46/55


47/55

Power IntegrationsNasdaq: POWI

Financial Overview


48/55


Financial Overview

Revenue growth outpacing analog peer group

Target gross margin of 50%+

Significant earnings leverage

Fabless model enables strong free cash flow

Debt-free balance sheet

Track record of returning cash to stockholders


49/55


50/55


Outperforming the Analog Peer Group

-10%

0%

10%

20%

30%

40%

50%

2007 2008 2009 2010 YTD

Annual Revenue Growth

POWI Analog Semis (SIA)


51/55


Gross Profit Margin (GAAP)

0%

10%

20%

30%

40%

50%

60%

2004 2005 2006 2007 2008 2009 YTD 2010


52/55


Track Record of Profitability, Strong Cash Flow

0

25

50

75

2008 2009 2010 YTD

Cash Flow

Cash flow from operations CAPEX

$M

$0.00

$0.20

$0.40

$0.60

Q1

2008

Q3

2008

Q1

2009

Q3

2009

Q1

2010

Q3

2010

Earnings Per Share (Non-GAAP) Strong earnings leverage

derived from highly focusedbusiness model

Core power conversiontechnologies applicable acrossbroad addressable market enables highly efficient R&D effort

Fabless manufacturing modelenables high free cash flow

S B S


53/55


Strong Balance Sheet

At Sept. 30, 2010

$224M cash and investments

$7.65 per share

No debt

$125M used for repurchasessince 2008

Share count down 10%

Quarterly dividend of $0.05/share

50

100

150

200

250

Q3

2008

Q1

2009

Q3

2009

Q1

2010

Q3

2010

Cash and Investments ($M)

10

15

20

25

30

35

Q3

2008

Q1

2009

Q3

2009

Q1

2010

Q3

2010

Diluted Shares Outstanding (M)


54/55

Power Integrations

Nasdaq: POWI

R ili ti f N GAAP EPS


55/55


Reconciliation of Non-GAAP EPS

Documents

POWIinvestorPresentation