Earnings call transcript: Power Integrations beats Q1 2024 EPS estimates

Power Integrations Inc. reported better-than-expected earnings for the first quarter of 2024, with an EPS of $0.31, surpassing the forecast of $0.28. The company’s revenue reached $106 million, marking a 15% increase year-over-year. Despite a 9.06% surge in stock price during regular trading hours, the aftermarket session saw a 4.3% decline, closing at $56.47. According to InvestingPro analysis, the company currently trades above its Fair Value, with a robust financial health score of 2.35 out of 4, reflecting strong cash flow management and profitability metrics.

Key Takeaways

• Power Integrations exceeded EPS estimates by $0.03, reflecting strong financial performance.
• Revenue grew by 15% YoY, driven by innovations in high-voltage semiconductors.
• Stock price experienced volatility, with a 9.06% increase followed by a 4.3% decline in aftermarket trading.

Company Performance

Power Integrations demonstrated robust performance in Q1 2024, with significant revenue growth and strategic advancements in its product portfolio. The company capitalized on high-demand sectors such as automotive and renewable energy, reinforcing its leadership in high-voltage semiconductor innovation. InvestingPro data reveals the company maintains a strong balance sheet with more cash than debt and an impressive current ratio of 9.29x, indicating excellent liquidity. Subscribers can access 12 additional ProTips and comprehensive financial metrics through the Pro Research Report.

Financial Highlights

• Revenue: $106 million, up 15% YoY.
• Earnings per share: $0.31, exceeding forecast by $0.03.
• Gross margin: 55.9%, up 80 basis points from the previous quarter.
• Cash flow from operations: $26 million.

Earnings vs. Forecast

Power Integrations’ actual EPS of $0.31 surpassed the forecasted $0.28 by approximately 10.7%, indicating effective cost management and operational efficiency. This performance aligns with the company’s historical trend of meeting or exceeding market expectations.

Market Reaction

The company’s stock rose by 9.06% to $59.01 during regular trading hours, reflecting investor optimism. However, the aftermarket session saw a 4.3% decline, suggesting profit-taking or concerns over future guidance.

Outlook & Guidance

For Q2 2024, Power Integrations forecasts revenue of $115 million ± $5 million, anticipating continued growth in the industrial sector. The company remains confident in achieving mid-teens annual growth, supported by its expanding product portfolio and strategic market positioning. InvestingPro analysts maintain a bullish consensus with a target range of $60-80, suggesting potential upside. The company’s EPS is forecast to reach $1.57 in FY2025, indicating strong growth prospects.

Executive Commentary

CEO Balu Balakrishnan highlighted the ongoing demand for energy-efficient technologies, stating, "The big picture trends of energy efficiency, artificial intelligence, electrification, and a cleaner, more modern power grid continue to create demand for innovative high voltage semiconductors." He also expressed confidence in reaching $100 million in automotive revenue by 2029.

Risks and Challenges

• Currency fluctuations, particularly USD/JPY, could impact gross margins.
• Macroeconomic uncertainties may affect consumer spending and industrial investments.
• Potential supply chain disruptions could hinder production capabilities.

Q&A

During the earnings call, analysts inquired about the impact of trade policies and tariffs, to which the company responded that no significant effects had been observed. Additionally, questions about currency impacts were addressed, with management acknowledging the potential influence on margins.

Full transcript - Power Integrations Inc (POWI) Q1 2025:

Conference Operator: Good afternoon, ladies and gentlemen, and welcome to the Power Integrations Inc. First Quarter Earnings Call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. I would now like to turn the conference call over to Joe Schiffler, Director of Investor Relations.

Please go ahead.

Joe Schiffler, Director of Investor Relations, Power Integrations: Thank you, Jenny. Good afternoon, everyone. Thanks for joining us. With me on the call are Balu Balakrishnan, Chairman and CEO of Power Integrations and Sandeep Nair, our Chief Financial Officer. During this call, we will refer to financial measures not calculated according to GAAP.

Non GAAP measures exclude stock based compensation expenses, amortization of acquisition related intangible assets and the tax effects of these items. A reconciliation of non GAAP measures to our GAAP results is included in today’s press release. Our discussion today, including the Q and A session, will include forward looking statements denoted by words like will, would, could, should, expect, outlook, plan, forecast, estimate, anticipate and similar expressions that look toward future events or performance. Such statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected or implied. Such risks are discussed in today’s press release and in our most recent Form 10 ks filed with the SEC on 02/07/2025.

This call is the property of Power Integrations and any recording or rebroadcast is expressly prohibited without the written consent of Power Integrations. Now I’ll turn it over to Balu.

Balu Balakrishnan, Chairman and CEO, Power Integrations: Thanks, Joe, and good afternoon. Our Q1 results were on target with revenues in the middle of our guidance range, gross margin at the top end of the range, and non GAAP EPS of $0.31 Cash flow in the quarter was healthy, and we are putting our strong balance sheet to work, buying back shares during recent market volatility. Since last month’s tariff announcement, we have not seen any significant changes in business trends. Bookings have been stable with no abnormal pull ins, push outs, or cancellation of orders. The proportion of short term orders relative to revenue is in line with historical norms and distribution inventory is healthy after declining again in the March.

All of the factors we typically consider when developing our revenue guidance point towards a seasonally higher second quarter with some nuances among the end market categories, which I will discuss in a moment. Revenues for the first quarter were hundred and $6,000,000, up 15% year over year. All four end markets were up from a year ago, led by the consumer and computer categories with growth of better than 20% each. In consumer, we saw growth in TVs and game consoles, reflecting recent design wins in those applications with our GaN based InnoSwitch and InnoMux two products. That includes a follow on TV design win in q one with InnoMux two adding to three design wins at the same customer in the previous quarter.

But the primary drivers, up growth in consumer were appliances and air conditioning, which account for the bulk of our consumer category. We had a better than seasonal quarter in appliances, reflecting the softer fourth quarter, below normal channel inventories, and perhaps some benefit from incentive programs in China. Also likely contributing to the strength in consumer was front loading of appliance shipments to The US from Asia ahead of tariffs. While this effect is difficult to observe directly, commentary by one of our appliance customers on the recent earnings call suggests that it contributed to the upside in Q1. Our revenue guidance for the second quarter incorporates a correspondingly below seasonal outlook for consumer.

In the computer category, year over year growth was driven by server axillary power where our GaN products are helping meet the higher power density requirements of artificial artificial intelligence server power supplies. We also saw growth in notebooks as well as higher tablet revenues reflecting the inventory correction that was underway in q one a year ago. The communications category grew slightly year over year following our exit from China cell phones last year. Our cell phone business is now dominated by non Chinese OEM branded accessory chargers and to a lesser extent, non OEM aftermarket brands. These customers value the innovation and dependable power supply dependable supply that Power Integrations is known for.

They also have road maps calling for higher power and wider use of GaN, which in turn increases the need and the opportunity, for our products. In the first quarter, we won one of our largest GaN designs yet, a next generation accessory charger at a major consumer device OEM scheduled to begin production later this year. Finally, industrial revenues grew 7% year over year. We expect industrial to be our fastest growing market this year, driven largely by high power design wins in high voltage DC transmission, renewables and locomotives. We added our strong position added to our strong position in India’s locomotive market in Q1 with a new design win for our scale two gate drivers in a 6,000 horsepower electric locomotive.

We also have a healthy share of the metering opportunity in India where the government plans to deploy 250,000,000 meters as part of its efforts to modernize the country’s infrastructure. We expect GaN to play an increasing role there over time, not just for its higher efficiency, but also its ability to withstand variations in grid voltage, which are common in India. Not only do our seven fifty volt GaN transistors accommodate voltage spikes better than equivalent rated silicon MOSFETs. But as the only GaN supplier with devices rated at 900 volts, twelve fifty, and 1,700 volts, we also offer products with even greater safety margin for our customers in metering and three phase industrial applications. Automotive will also contribute to our industrial category this year as we expand our customer base beyond China, where we now have more than two dozen designs on the road.

Our first production shipments for a Japanese customer are scheduled to begin this quarter, followed later in the year by designs at two European automakers. In the March, we won our first GaN design in automotive, a drivetrain emergency power supply at a US EV customer using a 900 volt InnoSwitch product. We believe this design, which is scheduled to go into production later this year, will be the first ever use of high voltage GaN technology in automotive, and we are seeing increasing interest in GaN as customers looking for higher voltage capabilities, efficiency, and space savings. Looking ahead, our q two outlook is for revenues of a hundred and $15,000,000 plus or minus $5,000,000. At the midpoint of the range, that would be up 8% year over year and 9% sequentially.

We expect sequential growth in the industrial, computer, and communications categories in q two. While we anticipate seasonal strength in air conditioning, we expect overall consumer revenues to be sequentially lower following the unusually strong first quarter in appliances. Obviously, the outlook for the second half of the year is highly dependent on the course of trade policy, and we would not expect to be immune from any reduction in end demand related to tariffs. Fortunately, channel inventories are at normal levels in terms of weeks and multiyear lows in terms of dollars. At a minimum, low channel inventories should cushion the effects of a trade related downturn.

In the event of a benign outcome to the trade situation, replenishment of inventories could become a priority for the supply chain. Most importantly though, the big picture trends of energy efficiency, artificial intelligence, electrification, and a cleaner, more modern power grid continues to create demand for innovative high voltage semiconductors regardless of the macro and political turbulence. We are meeting that need with current and future products as the leader leading innovator in the high voltage space. And now I’ll turn it over to Sandeep for a review of the financials.

Sandeep Nair, Chief Financial Officer, Power Integrations: Thanks, Balu, and good afternoon. I will quickly recap the numbers and the outlook, and then we will take questions. As usual, I will focus on non GAAP results, which are reconciled to GAAP in our press release. First quarter revenues were $106,000,000 up 15% year over year and flat sequentially. I will speak to the sequential changes in each category.

Consumer revenues increased about 20% sequentially, driven by appliances, air conditioning and TV. As Balu noted, the sequential growth partly reflects a rebound from the softer fourth quarter as well as low channel inventory, but also some apparent front running of tariffs in appliances. The upside in consumer was offset by industrial with a sequential decrease of 3%. That was below our expectation driven by more pronounced seasonality in tools and home automation as well as the timing of high volume program in High Power, which we had expected to contribute in Q1, but is now beginning to ramp in Q2. Revenues from Computer and Communication category were down mid teens and mid-20s respectively, largely driven by seasonality in tablets and cell phone chargers.

We expect both categories to be up sequentially in Q2. Total channel inventory fell by half a week to seven point nine weeks as distribution sell through exceeded sell in by about $2,000,000 The drawdown was primarily related to the industrial market, while consumer inventory held steady remaining below normal in terms of weeks. Revenue mix for the quarter was 44% consumer, 34% industrial, 12% computer and 10% communication. Non GAAP gross margin for the first quarter was 55.9%, up 80 basis points from the prior quarter driven by the dollar yen exchange rate and more favorable mix driven by the strength in appliances. Non GAAP operating expenses were $43,500,000 coming in below our guidance driven by the timing of headcount additions and R and D spending.

The non GAAP effective tax rate was 5%, resulting in non GAAP earnings of $0.31 per diluted share. Inventories on the balance sheet remain elevated at three twenty six days. Assuming a relatively benign demand environment, our expectation continues to be that inventories will start tapering down in the second half of the year. Cash flow from operations was $26,000,000 for the quarter, while CapEx was $6,000,000 Major uses of cash during the quarter included $12,000,000 for dividends and $23,000,000 for share repurchases. Dollars 25,000,000 remain on our repurchase authorization at the March and we utilized all of that in April.

Year to date, including April, we have bought back 964,000 shares or nearly 2% of our outstanding shares for $48,000,000 Our Board has authorized another $50,000,000 for repurchases subject to price volume thresholds specified by the Board. Turning to the Q2 outlook, we expect revenues of $115,000,000 plus or minus $5,000,000 I expect non GAAP gross margin to be approximately 55.5%, down slightly from the first quarter, reflecting a less favorable end market mix as well as higher input costs now flowing through our inventory. Non GAAP operating expenses for Q2 should be around $46,000,000 up from $43,500,000 in Q1, driven mainly by annual salary increases, which took effect around the start of the second quarter as well as headcount additions deferred from the prior quarter. Other income will decline compared to the first quarter driven by lower interest income. Cash and investments in the balance sheet fell to $289,000,000 at quarter end from 300,000,000 the prior quarter and has come down further after the April buyback activity.

A reasonable estimate for other income would be a sequential decline of about $05,000,000 Weighted average share count will also decline as a result of buyback. While the pace of buyback activity through the balance of the quarter will have some impact, I would estimate a sequential decrease of around 700,000 shares from Q1 to Q2. Finally, I expect our non GAAP effective tax rate for the second quarter to be around 5%. And now operator, let’s begin the Q and A.

Conference Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer Your first question is from Ross Seema from Deutsche Bank. Your line is now open.

Ross Seema, Analyst, Deutsche Bank: Hi guys. Thanks for letting me ask a question. Baloo, I just wanted to

Balu Balakrishnan, Chairman and CEO, Power Integrations: get into a little bit

Ross Seema, Analyst, Deutsche Bank: of the stuff that you can control, some of the design wins that you have. You mentioned, I think, in Industrial, there was a slight push out of some ramp. But taking all the tariff side out of the equation as best as possible, are you seeing any changes in the ramp timing or volume for some of the incremental design wins that gave you such confidence in areas like high power within industrial, etcetera?

Balu Balakrishnan, Chairman and CEO, Power Integrations: The high power delay is totally unrelated to, any of the policies or, or even in general. This was very specific to a particular program, and it’s going to ramp nicely in q two. It’s just a one, quarter delay. So it it has nothing to do with anything else. It is very specific to this particular customer.

Overall, we have not seen any indication or any anything that related to either tariffs or otherwise, other than normal business. So it’s actually surprisingly straightforward. Our bookings in both the q four and q one are book to bill ratio is more than one, and it’s very consistent with the guidance we are giving you for q two. So so far, we haven’t seen any trends that would stand out.

Ross Seema, Analyst, Deutsche Bank: Gotcha. Thank you for that. I guess, Sandeep, you always do a good job, and I know crystal balls are difficult to look into, especially these days. But as far as the trends for your margins, whether it be gross margin or OpEx for the rest of the year, any big changes from where you had us looking from last quarter?

Sandeep Nair, Chief Financial Officer, Power Integrations: No. I think for the year, I think I’ve been guiding this for about two quarters that about that we should for the year, be 55 and a half percent approximately give and take for for non GAAP gross margin, and I think it’s playing out pretty well. So it’s kind of gonna be steady from here. Obviously, as the revenue increases, especially towards Q3 and Q4, the operating margin gets the benefit, as you know, with the leverage we have in our model. So, I think you’ll see the benefit of the operating margin going up towards the Q3, Q4 time period.

Got you. Thank you.

Balu Balakrishnan, Chairman and CEO, Power Integrations: Thanks, Ross.

Conference Operator: Thank you. Your next question is from David Williams from The Benchmark Company. Your line is now open.

David Williams, Analyst, Benchmark Company: Hey, good afternoon. Thanks for taking my question. I guess maybe first on the Industrial segment, Olivia, you talked about the strength in automotive and some really nice design wins that are ramping there. Can you talk a little bit about just how you’re getting those design wins, how they ramp? And maybe, just is that is that performing as well as you would have anticipated, just kinda given your your latter entrance in the automotive market generally?

Balu Balakrishnan, Chairman and CEO, Power Integrations: Thanks, David. In terms of design wins, we are doing better than anticipated. But in terms of the demand forecast from the customers, as you know, they all come down since, you know, a year ago, definitely two years ago, because the projection for EV cars have come down. Now it doesn’t affect us immediately because we are still in the early stages. But if you look at forecast for next year and the following year, has come down.

Having said that, we are still feeling good that we’ll be at a a kind of a hundred million kind of revenue by about 2029 for automotive.

David Williams, Analyst, Benchmark Company: That’s, certainly great to hear. Are you I guess, in in terms of just industrial overall, you talked about it being that the pack is growing this year. Can you talk maybe just a little bit about those drivers? You you mentioned locomotives and a few other things, but just, what gives you the confidence in industrial just kind of given that weakness more broadly? And and it sounds like it’s very specific to your business.

Is that, is that fair?

Balu Balakrishnan, Chairman and CEO, Power Integrations: It is it is fair. You know, automotive, last year, we did the low single digit millions. This year, we’ll do high single digit millions. Next year, we’ll be in the low tens of millions, and that’s still on track. And in terms of the high power revenue, we have won a number of designs.

We talked about some of them already. Even the one that gets now delayed to q two will not impact our overall revenue for the year. They’re just going to consume it between, you know, in q two, q ’3, and q four. So it really doesn’t change our total revenue for the year. So that’s for a high voltage DC transmission system.

These are systems that are that will be installed in the North Sea, the Baltic Sea, and also in Japan. So the high power HVDC is doing very well. The other area that’s doing really well is locomotives. We have one number of designs, in India specifically for electric local locomotives, that will generate revenue, this year. And renewables, of course, is doing very well, the wind and solar.

So that’s what gives us the confidence. Now the the some of the areas that were, seasonally down in q one should come back. These are things like tools and HPA or home and building automation. They should come back. I think overall, industrial is gonna be the strongest growth this year.

Thanks so much for the color, sir. I appreciate it. You’re welcome, David.

Conference Operator: Thank you. Your next question is from Tore Svanberg, Comms Stifel. Your line is now open.

Tore Svanberg, Analyst, Stifel: Yes. Thank you, Baloo, Sandeep, and great job on the buyback. So my first question is on that consumer segment. It sounds like that’s the only area where from an end product perspective, maybe there was some buy ahead of the tariffs. Could you just elaborate a little bit more on that?

I mean did customers actually suggest to you that, that was the case? Or is it sort of reflected in your orders you know, sort of between this q one and q two period?

Balu Balakrishnan, Chairman and CEO, Power Integrations: Sorry. This is Balu. Not not from the customer. The customers haven’t told us anything. We can clearly see the demand is better than we originally anticipated.

Our comments are based on earnings call comments made by Whirlpool, you know, in in in The US. They have made comments that they have seen a significant pull in of a large appliance and major appliances into The US before the tariffs. So that that’s where it comes from now. We don’t think it’s that’s a that’s a significant factor. There are other factors why I think they were stronger in q one.

But we are thinking it’s in the order of few million dollars additional, revenue in q one because of the pull in related to tariffs.

Sandeep Nair, Chief Financial Officer, Power Integrations: Yeah. Tore, it was slightly ahead of what we were anticipating, and that’s why what Balu is saying the few million dollars that, we saw better, and it was mainly in the major appliances. And when you hear commentary from the others, you just correlate that maybe that was the reason.

Balu Balakrishnan, Chairman and CEO, Power Integrations: And by the way, we have we have subtracted that from the q two numbers because we do anticipate, you know, or at least we’re projecting that it will be down by that amount. And so far, based on our backlog, that appears to be this case.

Tore Svanberg, Analyst, Stifel: Very good. No. That makes sense. My second question is, on automotive. So you talked about that design win with a North American company for auxiliary power supply, 900 volt.

First of all, is that an exclusive win, meaning your sole source there? And related to that question, are you starting to you know, now that that customer is committed to, you know, launching the technology, are you seeing other customers being interested in 900 volt GAN as well?

Balu Balakrishnan, Chairman and CEO, Power Integrations: Absolutely. So one of the reasons we introduced 900 volt GaN is because with the 400 volt battery, to do a power supply, you really need 900 volts. Seven fifty is not sufficient. And similarly, with the 800 volt battery, you know, 1,700 volt product, you know, switch product which we have, obviously. As far as this design goes, yes, we have a % of the design.

And also, there is a possibility that a European company will also adopt this design, because it’s really a kind of a standard design for inverters, a platform design, I should say. So we we will see, I believe, a significant penetration of the 900 volt in the 400 volt systems. And, of course, we already have a significant penetration penetration at the 1,700 with the 1,700 volt part for the 800 volt systems. So we we we expect this to, you know, broadly be accepted by worldwide OEMs in automotive.

Tore Svanberg, Analyst, Stifel: Sounds good. And congrats on that breakthrough. That’s great. Thank you.

Balu Balakrishnan, Chairman and CEO, Power Integrations: Thanks, Tony.

Conference Operator: Thank you. Your next question is from Christopher Rolland from Susquehanna. Your line is now open.

Christopher Rolland, Analyst, Susquehanna: Hey, guys. Thanks for the question. I guess, I certainly understand your comments around trade policy and it adds volatility for sure. But how are you thinking about the second half now? I think seasonality is up nicely in 3Q and then down in 4Q.

How’s the order book filling out? How are you thinking putting all the pieces together How things might actually trend in in March and April, the the the back half?

Balu Balakrishnan, Chairman and CEO, Power Integrations: Thanks, Christopher. Obviously, it is hard to predict how the, tariffs are going to, impact the second half. Having said that, so far, we haven’t seen anything unusual. We we haven’t seen the you you know, of course, it’s too early to tell for q three in terms of backlog. But for this time, in the quarter, it looks normal for q three in terms of backlog growth and so on.

So we haven’t seen any any, impact of tariffs so far. But, you know, who knows what’s gonna happen, over time? And as you know, the tariff situation changes every day. So it’s really hard to predict. But I would say that without the impact of tariffs, we should do quite nicely this year.

You know, we have been thinking that, we would have mid teens growth and that should still happen as long as tariffs doesn’t impact that.

Christopher Rolland, Analyst, Susquehanna: Excellent. Thank you, Baloo. And, just as we think about inventories across the four segments, where are they normalized now? I know you mentioned you thought industrial would grow the most. Some people are saying industrial inventories are lagging.

Where are you on inventories across the four segments? And are there any that might actually be ripe for replenishment?

Sandeep Nair, Chief Financial Officer, Power Integrations: If you look at it, our average in you know, inventory is at seven nine. So we’re pretty much, you know, what I would say normal. But within the different segments, the consumer segment is below the normal. And so that’s where I think, the continued, strength that we have seen there. And even if there is some adjustment, there would be more replenishment I would see in the consumer segment.

Excellent. Thank you, Sandeep. Thank you, guys.

Balu Balakrishnan, Chairman and CEO, Power Integrations: Thanks, Christopher.

Conference Operator: Thank you. Your next question is from Gus Rishore from Northland Capital Markets. Your line is now open.

Gus Rishore, Analyst, Northland Capital Markets: Yes. Thanks for taking the question. Just thinking about geographic demand, I was curious how the OEMs in China are behaving? And are you starting to see a shift in demand from India in particular and maybe the other Southeast Asian countries as well?

Balu Balakrishnan, Chairman and CEO, Power Integrations: Hi, guys. Gus, this is Balu. In terms of consumer behavior in China itself, you know, they are very pragmatic as you know. They they were pragmatic during the COVID times. They are still pragmatic with the tariffs.

They do what is right for their business. And and they continue to use our product. There are no tariffs on our product as as as you know because they’re first of all, they’re not manufactured in The US. They’re manufactured in in Japan as defined by China where the diffusion occurs. So there is no impact there.

In terms of the manufacturing getting transferred outside of China, that’s not something that can change dramatically in such a short time. Obviously, of our end OEMs are beginning to shift out of China. There is, certainly going to Vietnam and and India. And and a part of our growth in India is actually basically manufacturing shifting there. And I believe that will continue, you know, probably even more vigorously going forward given all these challenges we’ve had from a policy point of view.

Gus Rishore, Analyst, Northland Capital Markets: Got it. And then, just in terms of currency, there’s an impact of the dollar to the yen and the yen to the year I’m sorry, the dollar to the yen and the dollar to the euro, the impact on the gross margins. And I was just wondering if you could remind us what that impact is, 10% swing in either of those currencies, what does that do to your gross margins?

Sandeep Nair, Chief Financial Officer, Power Integrations: Yeah. So mainly, in gross margin, the impact really comes from the yen, because most of our papers come from there. A 10% change in yen, you know, pretty much impacts us about a hundred to a 20 basis points depending on the direction. And as you’ve seen that the movement that we have has been quite a bit, but considering the inventory that we have been carrying, you know, we’ve been getting the benefit of the yen and would have continued, and we would have start seeing the impact with the yen strengthening only after a year from now. But as you see what happened in the last few days, it’s kind of yen has weakened again.

So I think we’re getting, you know, about 200 basis points of benefit right now Because we normally think, you know, the end to be somewhere in the 01/20 to 01/25, and it’s been fluctuating anywhere between the January to January range.

Gus Rishore, Analyst, Northland Capital Markets: Got it. Thanks for the update. Alright. That’s it for me.

Balu Balakrishnan, Chairman and CEO, Power Integrations: Thanks, Chris.

Conference Operator: Thank you. Your next question is from Terence Van Berg from Stifel. Your line is now open.

Tore Svanberg, Analyst, Stifel: Yes. Thank you. Just a quick follow-up. Sandeep, channel inventory is seven point nine weeks. What should we assume for Q2?

Do you think it will hold around this level?

Sandeep Nair, Chief Financial Officer, Power Integrations: Yes. Right now, I think we are thinking sell in and sell through should equal.

Tore Svanberg, Analyst, Stifel: Got it. So seven point nine for q two as well. Thank you.

Balu Balakrishnan, Chairman and CEO, Power Integrations: Thanks, Tore.

Conference Operator: Thank you. There are no further questions at this time. I will now hand the call back over to Joe Schiffler for the closing remarks.

Joe Schiffler, Director of Investor Relations, Power Integrations: All right. Thanks everyone for listening. There will be a replay of this call available on our investor website, that’s investors.power.com. Thanks again, and good afternoon.

Conference Operator: Thank you. Ladies and gentlemen, that concludes our conference call for today. Thank you all for joining. You may now disconnect your lines.

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