Power Integrations' Q1 2025: Navigating Contradictions in Automotive Growth, Tariffs, and China Demand

Automotive market growth forecasts, impact of tariffs on revenue, growth expectations in the automotive segment, automotive demand and revenue projections, and China demand and market conditions are the key contradictions discussed in Power Integrations' latest 2025Q1 earnings call.



Revenue Growth and Market Diversification:
- Power Integrations reported Q1 2025 revenues of $106 million, a 15% increase year-over-year and flat sequentially.
- Growth was driven by strong performance in Consumer (20% increase), Computer, and Communication categories, with particular contributions from GaN products and design wins in AI server power supplies and non-Chinese cell phone accessories.

Industrial Market Leadership:
- The Industrial segment is expected to be the fastest growing market this year, with revenues growing 7% year-over-year in Q1.
- Growth is attributed to high-power design wins in high-voltage DC transmission, renewables, and locomotives, along with a strong position in India's locomotive market and a healthy share of the metering opportunity.

Automotive Expansion and New Design Wins:
- Automotive category is on track to reach $100 million in revenue by 2029, with Power Integrations winning its first GaN design in automotive for drivetrain emergency power supplies at a U.S. EV customer.
- Growth in automotive is supported by expanding the customer base beyond China and new design wins, notably a 900-volt InnoSwitch product for an American EV customer.

Gross Margin and Currency Exchange Impact:
- Non-GAAP gross margin for Q1 was 55.9%, up 80 basis points from the prior quarter, driven by a favorable dollar-yen exchange rate and mix.
- Currency exchange impacts gross margin, with a 10% change in yen affecting margins by 100-120 basis points and current benefits of about 200 basis points due to yen depreciation.

Share Repurchase and Strong Balance Sheet:
- Power Integrations' strong cash flow and balance sheet allowed for share buybacks, with 964,000 shares purchased year-to-date and an authorized additional $50 million for repurchases.
- This strategy is part of a proactive approach to utilizing available cash and maintaining a solid financial position despite macroeconomic uncertainties.