Power Integrations has highlighted the challenges of the supply chain for power systems in the Covid-19 pandemic.
“Since mid-March, our San Jose headquarters has been subject to a shelter in place order, which will remain in effect until at least the end of May,” said Balu Balakrishnan, president and CEO. “Most other employees around the world also continue to work remotely, though our sales force in China has been back in office for some time now. And our applications engineering centre in the Philippines has partially reopened.”
The response of the supply chain in the Far East has been key. “With respect to the supply chain, our supply of wafers, which comes primarily from Japan and to a lesser extent from the US, has not been affected by the pandemic,” he said. “Our Chinese assembly and test vendors were affected by the extended shutdown following the Lunar New Year holiday, but have been back to essentially full speed since mid-February. One of our other assembly and test subcontracts in Malaysia was closed for two weeks in mid to late March due to a government-mandated shutdown and operated at reduced capacity through most of April, but is now fully supporting our capacity needs.”
The supply chain issues have also highlighted the need for more sources of production.
“The EMS subcontractor that assembled our high-power gate driver board was also closed for two weeks in March, followed by a period of reduced capacity but is expected to resume normal operations shortly. We’ve also ramped up a second supplier, which should enable us to satisfy high-power demand in Q2.
“While the supply chain disruptions have created short-term challenges, the impact on our customers and our results to date have been mitigated to a large extent by the diversification of our supplier base, multi-sourcing of high volume products, safety stocks of key inputs such as lead frames and maintaining an ample dye bank. Barring any further disruptions, we believe we have adequate supply to meet our revenue projections for the June quarter,” he said.
“We saw strong bookings in March after the extended shutdown in February across China. That was followed by a slowdown in bookings in April, though the average of March and April was consistent with our monthly run rate, which is $106 million, plus or minus $5 million.
The company saw first quarter revenues just under $110m , up 23 per cent. The year-over-year revenue growth was driven equally by the communications and consumer categories, reflecting growth in smartphone chargers and appliances. Industrial also turned to year-over-year growth for the first time in five quarters, completing the recovery from last year’s cyclical decline.
“While conditions have obviously changed since the end of the quarter, we think we are well positioned to weather the economic shock caused by the pandemic,” he said.
“The year-over-year revenue growth was driven equally by the communications and consumer categories, reflecting growth in smartphone chargers and appliances. Industrial also turned to year-over-year growth for the first time in five quarters, completing the recovery from last year’s cyclical decline. While conditions have obviously changed since the end of the quarter, we think we are well positioned to weather the economic shock caused by the pandemic,” he said.
“In terms of end markets, while appliance and industrial applications will likely exhibit softness in Q2, driven by the economic slowdown, we expect sequential growth in Communications category, reflecting further adoption of faster smartphone chargers. We expect the sequential growth to be driven primarily by Chinese OEMs, which continue to roll out faster chargers at an aggressive pace,” he added.
“We are seeing a growing numbers of OEM and aftermarket chargers with high power levels, innovative form factors and multiport charging. We believe these differentiated high end designs will become an increasingly important part of the mobile ecosystem going forward. OEMs are now thinking strategically about charging like never before, thanks to the higher power needs of 5G, advanced technologies like GaN switches and the emergence of USB-PD and programmable charges that can deliver whatever amount of power is demanded by a mobile device.
For a significant portion of the market, the days of the charger as a disposable commodity are clearly over, he says. “Some OEMs will offer fast in-box chargers to differentiate their handsets and win market share, while others may offer charges only as accessories, letting the consumer choose from a range of lower cost or higher performance options or multiport charges for consumers who own multiple devices.
There are significant changes coming in the market, he says.
“Fixed USB charging ports in homes and offices and hotels are also becoming an important part of the mobile ecosystem. Fast mobile chargers and fixed charging ports not only require higher reliability than standard charges, a particular advantage of our highly integrated products, but also bring higher dollar content. This is especially true of charges with multiple ports since we would typically sell one IC for each output. The use of GaN technology also brings a significant increase in our dollar content,” he said.
The consumer charger market has shielded the company from the fall in automotive.
“In March, we announced that our scale iDriver ICs for silicon carbide MOSFETs, which we introduced last year have achieved AEC-Q100 automotive qualification. This is our third gate driver IC to be qualified for automotive use, a particularly important step as EV market continues to move toward silicon carbide in place of traditional IGBTs,” he said. “While material revenues from EV drive train applications are still a few years away, we believe automotive has the potential to be our largest addressable market in the future, and we continue to work closely with carmakers while investing in products and infrastructure to support this market.”