Power Integrations (NASDAQ:POWI) reported second-quarter revenue of $118.9 million, up 10% sequentially and 3% from a year earlier, as all four of its end-market categories improved from the prior quarter. The company also expanded non-GAAP operating margin to 17.1% and generated $22 million in operating cash flow.
President and CEO Jen Lloyd said the results reflected progress in the company’s effort to produce near-term profitable growth while directing more investment toward longer-term opportunities in data centers, energy infrastructure, rail, automotive and high-power industrial markets.
Second-Quarter Financial Results
Non-GAAP operating expenses were $45.2 million, slightly below the prior quarter and below the company’s outlook range. Erba said Power Integrations continued to align spending with revenue following a first-quarter restructuring and other efficiency initiatives, while maintaining investments in strategic growth markets.
Non-GAAP net income was $20.9 million, or $0.37 per diluted share, compared with $0.25 per diluted share in the prior quarter. Free cash flow totaled $18 million, reflecting $22 million in operating cash flow and $4 million in capital expenditures.
Inventory on the company’s balance sheet declined by $5 million, while days on hand fell by 27 days to 265 days at quarter-end. Channel inventory also improved, with weeks on hand declining by more than one-and-a-half weeks to 7.3 weeks. Erba said the company views seven to eight weeks as an appropriate range for channel inventory and expects further reductions in inventory days during the second half of 2026.
Industrial Growth and Product Activity
Industrial revenue increased 14% during the quarter, led by home and building automation, power tools and broader industrial applications. For the first half of 2026, industrial revenue rose 16% year over year, following 15% growth in 2025, according to Erba.
Consumer revenue rose 5% sequentially, with seasonal air-conditioning demand offsetting continued softness in major appliances. Communications revenue increased 16% sequentially and computer revenue grew 5%, both recovering from seasonal lows in the first quarter.
Lloyd said the company’s appliance and low-power industrial markets will remain key contributors to revenue and cash flow as it shifts additional research, development and go-to-market resources to higher-power markets. She cited TOPSwitch-GaN and TinySwitch-5 as recent releases designed to build on existing customer familiarity and product architectures.
TinySwitch-5 has entered production designs and is expected to make a meaningful revenue contribution in the second half of 2026, particularly among appliance customers, Lloyd said. The company also said it has a healthy appliance-design pipeline, supported largely by TinySwitch-5 and TOPSwitch-GaN.
Automotive revenue, which Power Integrations includes within industrial, is on track to double in 2026, according to Lloyd. During the second quarter, the company won a design at a major tier-one supplier for a gallium-nitride-based micro DC-DC converter scheduled to enter production next year. Lloyd said the company continues to target $100 million in automotive revenue in the 2029-to-2030 timeframe, subject to electric-vehicle market conditions.
High-Voltage GaN Roadmap and Data Centers
Power Integrations demonstrated its 2,200-volt PowiGaN technology, extending its high-voltage gallium-nitride roadmap beyond prior 750-volt, 900-volt, 1,250-volt and 1,700-volt platforms. Lloyd said the technology is currently a demonstration rather than a commercial product and that meaningful revenue is likely several years away.
The company sees potential applications for the 2,200-volt technology in data centers and automotive systems. Lloyd said the roadmap could help customers planning for future 1,500-volt power architectures, while the company’s current products address opportunities associated with 800-volt data-center systems.
Power Integrations is pursuing two data-center opportunity tracks: auxiliary power applications that can use products available today, and the main power path to graphics processing units. Lloyd said auxiliary-power revenue could begin in 2028, while the main power-path opportunity remains earlier in development and is further out in time.
In June, the company published two reference designs for NVIDIA 800-volt racks using its 1,700-volt InnoMux products. Lloyd said the auxiliary power supplies would sit on compute trays in native 800-volt systems and could provide about 30% space savings relative to discrete silicon-carbide designs.
The company also said it is shipping gate drivers into battery-storage systems used alongside renewable-energy installations. During the second quarter, it won a utility-scale design at a supplier of batteries for energy-storage systems and electric vehicles.
Third-Quarter Outlook
For the third quarter, Power Integrations forecast revenue of $122 million to $130 million, representing a 6% sequential increase at the midpoint. The company expects consumer revenue to decline seasonally, while communications, computer and industrial revenue continue to increase.
- Non-GAAP gross margin is expected to be 54% to 55%.
- Non-GAAP operating expenses are projected at $45 million to $46 million.
- Non-GAAP operating margin is expected to range from 17% to 19%.
Erba said the company now expects a low-single-digit decline in non-GAAP operating expenses for the full year, compared with its prior expectation for low-single-digit growth, while continuing investments in data center, industrial, energy, automotive and rail initiatives.
About Power Integrations (NASDAQ:POWI)
Power Integrations, Inc, based in Hillsboro, Oregon, specializes in the design and development of high-performance analog and mixed-signal integrated circuits for energy-efficient power conversion. The company’s products are used to convert and regulate electrical power in a wide range of applications, from consumer electronics and industrial systems to communications equipment and electric vehicle charging. By providing compact, reliable, and highly integrated solutions, Power Integrations aims to reduce system size, improve efficiency, and simplify thermal management for its customers.
The firm’s product portfolio encompasses isolated and non-isolated switching controllers for both AC-DC and DC-DC power conversion.
