Release Date: August 05, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Q2 revenue of $119 million grew 10% sequentially, with improvement across all four end markets and non-GAAP operating margin expanding by over 5 percentage points to 17.1%.
- Demonstrated 2200-volt POWI GaN technology, extending leadership in high-voltage GaN and providing a roadmap for future data center and automotive applications.
- Won a utility-scale battery storage design at a top supplier, expanding presence in the growing energy storage market.
- Secured a GaN-based micro DC-to-DC converter design win at a major Tier 1 automotive supplier, marking a significant BOM expansion in EVs.
- Industrial revenue grew 16% year-to-date, driven by broad-based strength in renewable energy, home and building automation, and tools.
- Channel inventory normalized to 7.3 weeks, within the target range, and inventory days on hand fell by 27 days to 265, improving supply chain health.
- Q3 revenue outlook of $122-130 million implies 6% sequential growth, with expectations for continued growth in communications, computer, and industrial categories.
Negative Points
- Consumer revenue is expected to decline in Q3 due to normal seasonality, with continued softness in major appliances.
- The 2200-volt GaN technology is only a demonstration, with products expected several years out, limiting near-term revenue contribution.
- Data center revenue from main power path to GPU is still early-stage and dependent on 800-volt system deployments, with material revenue not expected until 2028 or later.
- Gross margin is expected to face a slight headwind in Q3 due to yen/dollar exchange rate fluctuations, with volatility causing ripples through 2026.
- Operating expenses, while reduced, remain a focus as the company balances cost discipline with investments in strategic growth markets.
- The company is still working through inventory reduction, with further reductions expected in the second half, indicating ongoing channel adjustments.
Q & A Highlights
Q: Can you provide color on the timeline for the newly demonstrated 2200-volt GaN technology, and when it might contribute to revenue or design wins?
A: Jennifer Lloyd (CEO) stated that the 2200-volt GaN is currently a technology demonstration, not a launched product. Customers in data center, auto, and other markets are interested in the roadmap, but products based on this platform, particularly for the 1,500-volt data center roadmap, are several years away from meaningful revenue contribution.
Q: Are the timelines for data center and automotive revenue still on track, and what are the expectations for 2027?
A: Jennifer Lloyd (CEO) confirmed that automotive revenue is on track to double this year, with a $100 million target in the 2029-2030 timeframe still attainable. For data centers, auxiliary power designs using current products could generate revenue in 2028, while the main power path to the GPU is further out and dependent on the deployment of 800-volt systems.
Q: Does the 2200-volt GaN technology improve your position in securing 800-volt designs, given customers want a clear roadmap to higher voltages?
A: Jennifer Lloyd (CEO) affirmed that the technology roadmap is a significant advantage. Customers consistently cite power as a critical challenge, and having a track record of high-voltage innovation, including the 2200-volt demonstration, helps Power Integrations partner with customers to solve challenges at 800 volts today and as architectures evolve.
Q: Can you discuss your supply chain capacity and whether competitors are facing supply issues that could open doors for market share gains?
A: Nancy Erba (CFO) noted that Power Integrations has a unique supply chain structure that allows them to maintain competitive lead times. A hyperscaler customer recently highlighted this as a differentiator. The company believes its ability to supply consistently, combined with its technology roadmap, presents an opportunity to gain share as competitors may face supply constraints.
Q: Given the new 2.2kV GaN announcement, have you explored solid-state transformers (SSTs), and what new applications does this technology open up?
A: Jennifer Lloyd (CEO) stated that discussions on SSTs have primarily focused on existing gate driver products, but GaN is being discussed for these applications. For 2,200-volt GaN, customer interest is currently centered on data center and automotive applications, though new applications are likely to emerge as the technology evolves.
Q: Can you provide more detail on the channel inventory levels and the current order velocity versus consumption?
A: Nancy Erba (CFO) confirmed that channel inventory has improved significantly, dropping from over 9 weeks at the start of the year to 7.3 weeks, which is within the healthy 7-8 week target range. The company feels good about the health of inventory by partner, product type, and region, and expects some level of sell-in during Q3 while aiming to stay in that healthy range.
Q: What is driving the strong performance in the industrial segment, and is this momentum sustainable?
A: Nancy Erba (CFO) reported that industrial revenue grew 14% in Q2 and 16% year-to-date, driven by broad-based growth across home and building automation, power tools, and metering. This follows 15% growth in 2025, demonstrating sustained momentum in the company's largest end market.
Q: Can you elaborate on the new design win for a GaN-based micro DC-to-DC converter in the automotive market?
A: Jennifer Lloyd (CEO) highlighted a Q2 design win at a major Tier 1 supplier for a GaN-based micro DC-to-DC converter scheduled for production next year. This win represents an important endorsement of POWI GaN in the auto market, where other high-voltage GaN offerings have struggled, and marks a significant step in expanding the bill of materials beyond emergency power supplies.
Q: What is the outlook for gross margin and operating expenses in the third quarter?
A: Nancy Erba (CFO) guided Q3 non-GAAP gross margin to be in the range of 54-55%, near the top end of the target range. Non-GAAP operating expenses are expected to be between $45 million and $46 million, a slight increase from Q2 but meaningfully below the prior year. The company now expects a low single-digit decrease in OpEx for the full year, versus prior expectations of low single-digit growth.
Q: How is the company balancing investments in long-term growth markets with expense discipline?
A: Nancy Erba (CFO) explained that the company is aligning expenses more closely with revenue through the restructuring completed in Q1 and broader efficiency initiatives. While protecting investments in strategic growth markets like data center, industrial, energy, automotive, and rail, the company is achieving operating leverage, with Q2 non-GAAP operating margin expanding 540 basis points sequentially to 17.1%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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