Q4 2022 Power Integrations Inc Earnings Call
Speaker 2: Our discussion today, including the Q&A session, will include forward-looking statements denoted by words like will, would, believe, should, expect, outlook, plan, forecast, anticipate, prospects, and similar expressions that look toward future events or performance.
Speaker 3: Such statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected or implied. Such risks and uncertainties are discussed in today's press release and in our most recent Form 10-K filed with the SEC on February 7th of last year.
Speaker 4: Finally, this call is the property of power integrations, and any recording or re-broadcast is expressly prohibited without the written consent of power integrations. Now I'll turn the caller to Bollow.
Speaker 5: Thanks Joe and good afternoon. Fourth quarter revenues were $125 million in line with our guidance and down 22% sequentially reflecting the downturn in the semiconductor industry.
Speaker 6: We expect a further sequential decline in the March quarter as end demand continues to be soft and distribution inventories remain elevated.
Speaker 7: For those less familiar with our history, we are typically among the first chemical companies to see a downturn because our products are used in power supplies which are often built in advance of end products.
Speaker 8: This dynamic can also result in large cyclical fluctuations than our peers because many of our customers are suppliers to OEMs creating an additional layer of inventory between us and the end market.
Speaker 9: Of course these dynamics apply to both ends of the cycle and while we tend to under perform our peers at the front end of the down cycle we tend to outperform on the other side.
Speaker 10: For example, we underperformed the analog industry in 2018 as we were early into the down cycle felt across the industry the following year.
Speaker 11: We went on to outperform analog by a wide margin, not only in 2019, but in each of the next two years as well.
Speaker 12: We are now into our third quarter of sequentially lower revenues and channel inventories are declining after peaking in the September quarter.
Speaker 13: While the slope of the recovery will of course depend on the strength of the end market demand, we do expect revenues to bottom in the March quarter followed by a sequential growth in the June quarter.
Speaker 14: Looking at the fourth quarter from an end market perspective,
Speaker 15: Appliances which dominate the consumer category have weakened considerably in recent months driven by the softer housing market inflation and the over stimulation of demand for appliances during the pandemic.
Speaker 16: Sell-through for the consumer category in the fourth quarter was down about 40% year-over-year, affecting all subcategories including major and small appliances and air conditioners.
Speaker 17: Despite the short-term headwinds, we remain as bullish as ever on the opportunity in appliances where we have gained significant shares over the past couple of years.
Speaker 18: Dollar content continues to rise driven by increased penetration of features like Wi-Fi connectivity, the adoption of GaN products, and the ongoing transition to brushless DC filters, which we are addressing with our grid switch products.
Speaker 19: In the industrial category, reported revenues were down more than 25% sequentially, reflecting elevated channel inventories, while sell-through fell by only about 10%.
Speaker 20: Broad-based industrial applications are down significantly, but we are seeing offsetting strength in home and building automation and high power, particularly in renewable energy and energy exploration.
Speaker 21: In the communications category dominated by smartphone chargers, tell-through has stabilized and channel inventories are approaching normal levels, suggesting that end customer inventories have improved significantly.
Speaker 22: Revenues for communications were up double digits in Q4 compared to Q3. And while we expect Q1 to be seasonally lower, we do anticipate sequential improvement in the June quarter. And while we expect Q1 to be seasonally lower, we expect Q3 to be seasonally lower.
Speaker 23: Having said all this, we are looking past the short-term macro and cyclical gyrations.
Speaker 24: and staying focused on the long-term and profitability.
Speaker 25: Long-term growth and profitability.
Speaker 26: The fundamentals of the business are strong, and we continue to gain share across a broad range of end markets and geographies, such as Japan and India, where our combined revenues grew more than 30% last year.
Speaker 27: Most importantly, we are executing on the opportunities we laid out in our recent analyst day including our plan to double our stamp over the next several years.
Speaker 28: We will also do so by expanding our portfolio of GaN products to address a wider range of applications while growing our presence in brushless DC motors and EVs, each of which we expect to be a billion dollar opportunity by 2027.
Speaker 29: Our high-power products are winning in renewable energy, power grid, and industrial motor applications, and we have new gate driver products in the pipeline that will strengthen our long-term competitive position in high power.
Speaker 30: We also continue to press our advantage in energy efficiency, helping customers meet tighter specs like those implemented recently in China for air conditioners and India for ceiling fans.
Speaker 31: In fact, several of our largest designments in Q4 were for air conditioning customers in China, while a major Indian customer is now among the largest users of our bridge switch motor drive products.
Speaker 32: In all, BridgeSwitch is now in production with more than a dozen customers, and we expect that number to grow significantly after tripling the size of our design funnel in 2022.
We also tripled our opportunity pipeline last year in the EV market.
where our silicon carbide inner switch products.
are an exceptional fit for power supplies in electric passenger cars and commercial vehicles.
As EV architectures evolve, customers are increasingly using the main battery voltage for such systems that today are still powered by standard 12 volt batteries.
This trend is creating new sockets for InnoSwitch and our other automotive-qualified power conversion chips which are superior to discrete solutions in terms of reliability, efficiency, and footprint.
We won five new automotive designs in Q4 and now have more than three dozen designs in production at about 15 end customers.
Both of these figures are on track to rise significantly with as many as 20 new programs already scheduled to enter production this year and many more in the pipeline.
Our high-power business rebounded nicely in 2022 from the pandemic-induced slowdown of the prior two years, growing more than 20 percent and contributing to high teams growth in our industrial category.
We expect strong growth again in 2023 driven primarily by renewable energy and power grid projects.
In summary, the fundamentals of our business are sound, the opportunities in front of us are as exciting as ever and we continue to invest for long term growth.
We also continue to return cash to stockholders through a combination of price-conscious buyback as well as dividends.
As noted in the press release today, our Board has increased the quarterly dividends by 6% beginning with the March payout.
Before I turn it over to Sandeep, I'd like to highlight two very well-com additions to our Board of Directors, starting with Nancy Joyer, who joined the Board on January 1st. Nancy had a distinguished career in the automotive industry, surprising 33 years of service.
Ford Motor Company including executive roles in product development, manufacturing, strategy and planning.
She has extensive experience in the EV space having served in the later part of her career as Ford's Director of Global Electrification and she currently serves on the Board of Lucid Group, a leading EV manufacturer.
Joining our board on April 1st will be Ravi Vig.
who was CEO of Allegro Microsystems until last year, concluding a 38-year career at Allegro and its parent company, Sykes in North America.
In addition to leading their IPO several years ago, Ravi helped Allegro navigate the transition to the EV market after decades supplying sensors and power chips for internal combustion vehicles.
In speaking out, these highly accomplished automotive executives, one from the industry and one from the semiconductor side.
We are underscoring our commitment to the EV market and adding highly relevant expertise to support our efforts.
Just as importantly, I believe their willingness to join us in this effort says a lot about their factiveness of the EV opportunity for power integrations.
Finally, I will note that in December , we received Great Place to Work certification following an anonymous survey in which 82% of our employees stated that Power Integration is a Great Place to Work.
That is 25 points higher than the average US company.
I believe this award reflects our culture of innovation, the consistency and focus of our strategy, the fact that our products contribute to the health of our planet, and that we value employees regardless of semiconductor cycles and macroeconomic turbulence.
With that, I will turn it over to Sandeep for a review of the financials.
Thanks, Valu and good afternoon. I will start by reiterating what I said on the last quarter call, which is that we are well positioned to weather the current downturn thanks to our balance sheet and our lean expense righteous
While we are taking prudent steps to moderate spending and production levels, we will not deviate from the long-term focus that was an important theme of our recent analyst day.
That includes looking beyond the downturn and continuing to invest in people and products as well as maintaining production capacity to be ready for an upturn in demand.
While internal inventories are above our target, this is consistent with how we have managed through past downturns, an approach that has served us well throughout our history.
Our products are largely fungible across customers and end-markers and have minimal obsolescence risk, especially when kept in wafer form.
We also continue to hire around the world while working hard to develop and retain current employees.
This includes normal salary increases despite the economic downturn and continuing to pay an above average portion of the cost of benefits despite rapidly rising in Schorens
I will now discuss the Q4 numbers and the outlook before we begin the Q&A session.
Revenues for the quarter were $125 million in the middle of our guidance range and down 22% from the prior quarter.
The consumer category, which is dominated by appliances, was down more than 30%, with weakness across all categories of appliances.
While domestic demand in China continues to be stopped,
The slowdown in appliances has broadened geographically.
The industrial category was done more than 25% sequentially.
primarily reflecting elevated channel and inventory.
As Balu noted, sell-through was lowered by only 10% sequentially in the industrial category.
Computer revenues fell by high teens percentage sequentially reflecting ongoing softness in that end market.
Revenues from the communication category, which is dominated by smartphone chargers, increase sequentially by a low teens percentage of a low prior quarter low level.
While smartphones demand continues to be weak, channel inventory has fallen to near normal levels, indicating that end customer inventories are healthier than they have been in some time.
Overall, channel and stories stood at 13.5 weeks at Kaurarayan just below slightly from the pride quarter, so the decrease was more significant in dollar terms.
with sell-through exceeding sell-in by about $8 million.
Revenue mix for the fourth quarter was 39% industrial, 26% consumer, 23% communications, and 12% computer.
Collectively, the communication in computer markets increased by 8 percentage points from the prior quarter, a less favorable mix than we anticipated, resulting in lower than expected gross margins. I believe this discussion will begin slowly when Saimat Stefanik has addressed ledger
Specifically, non-gab gross margin were 50.7% compared to a guide of 56 to 56.5%.
Relative to the prior quarter, gross margin was down about 3% driven primarily by mix and the impact of lower production volume.
non-GAAP operating expenses for the quarter were $40.2 million down slightly from the prior quarter and about $2 million below our guidance, primarily reflecting the timing of hit count additions and other spending.
Non-Gap operating margin for the quarter was 22.5% and non-Gap earnings the 48 cents per due been included and which are the regularly
The non-gap effective tax rate for the quota was 3.3%, reflecting a catch-up to bring a polar tax rate to 8.27%.
Weighted average deluged share count for the quarter was 57.5 million, down about 100,000 from the prior quarter.
We utilized $19 million for repurchases during the quarter, buying back 266,000 shares at an average price of just over $70.
We had $81 million remaining on our authorization entering the March quarter.
Cash flow from operations for the quarter was $24 million. We used $6 million during the quarter for CapEx and paid out over $10 million in dividends.
As Balu noted, our board has increased the quarterly dividend to $0.19 per share, an increase of 6%.
For all of 2022, we return $353 million to stockholders through buybacks and dividends.
That's about two-thousand of the cash and investments we had at the start of the year and about 200% of last year's free cash flow.
Nevertheless, our balance sheet remains extremely strong with $354 million in cash and investments at year end.
Inventories on the balance sheet rose to 215 days at quarter end.
As noted earlier, the nature of our products allows us to build wafer inventory during downturns to ensure continued access to foundry capacity and to be ready in the event of a sudden recovery in demand.
I expect inventory days to speak in the March quarter and then to tap down gradually through the remainder of the year.
Turning to the Outlook, we expect revenues for the March quarter to be $105 million plus or minus 5 million dollars.
We expect sell-through to once again be meaningfully higher than reported revenues as channel inventories continue to come down.
I expect non-GAAP gross margin for Q1 to be approximately 53.5%.
With the sequential decrease driven again by lower back-end manufacturing volumes,
and a less favorable end market mix.
Gross margins should rebound after the March quarter as volume and mix related headbands are made.
And we realize the benefit of the week again that prevailed in the second half of 2022.
For the full year, non-gap gross margin should be around the high end of our target range of 50-55%.
non-GAAP operating expenses for the first quarter should be between $42 and $42.5 million up from the fourth quarter, reflecting our hiring plan as well as the resumption of FICA taxes.
and the comparative impact of the year and shutdown in the prior quarter.
I expect non-gap effective tax rate for March quarter and for the year to be between 8.5% and 9%.
And now operator let's begin the Q&A.
Thank you. Once again everyone that is star one to ask a question. We will take our first question from Ross Seymour with Deutsche Bank.
Hi guys, thanks for letting me ask a question. Just wanted to see during the course of the fourth quarter and heading into the first quarter, you guys had thought a quarter ago that the March quarter might be flattish sequentially. Obviously that didn't happen. Is it just that the demand weakened? It sounds like the channel inventory directionally headed like you expected, but just wanted to get some of the data back in place. Excellent.
go down as far as it did and it clearly reflects not only slowdown in demand but also inventory in our channel and at the OEE.
I think they were as surprised as we are in terms of the sudden reduction in demand.
And Ross, we started seeing this after the earnings call somewhere in November timeframe in December and they attended a couple of conferences and there we actually publicly did indicate that we expected March to be the quarter where it will be lower than Q4.
and that will be probably where we'll bottom out before we start moving upward again.
Thanks for the color on that. And I guess as my follow-up, you talked, and this will kind of be a revenue and a gross margin question, but you talked about the mix headwinds in the corridor and the guide, and then you talked about those lessening and then the kind of the shape of the upturn coming out the other side.
What are the mixed dynamics that you expect to normalize if you talk by segment within the March quarter and the gross margin side of things?
How do you affect the linearity of that to work for the year? As I know, Sandeep, you said it would be close to the high end of your 50 to 55 percent range as the year progresses.
correct so if you look at it you know even in q4
Even though the consumer came in weaker, we were able to kind of make up that.
by the cell phone and computer being a little better. And that's why you saw we came in at like 23% with the communication in Q4. We expect communication to be still strong even though every category will decline in Q1, but as a percentage, communication and computer will remain smaller.
The healthier and the decline is more in the consumer and industrial side a little bit. And as a result, we are giving the guidance plus the volumes are lower, which is really having an impact for us.
And as the year progresses, you know, we will start seeing the benefit of Yen.
And basically the volumes, you know, the headwind that we had will start going away. If you remember, the yen had really moved very well in the back half of 2022, which will because of the inventory start flowing in Q2 and Q3. And now you know the dollar is weakening and so...
that reversal will actually go the other direction in Q1 of 2024. So if you look at the rest of the year, I think after the first quarter, we will start moving towards the 55% give and take for the rest of each of the quarters.
And if you look a little long term, I had talked about
on the analyst's day that even though we are moving on the higher end towards the mix,
But I had talked about that my gross margin would remain on the higher end of the model and primarily was because I was antipses fading the end to start moving back and it's exactly what's happening.
Okay, thank you.
We'll take our next question from Tori Spanberg with STPL.
Yes, thank you. Let me start with the internal inventories and deep. So I think 215, that's probably the highest number I've seen from Paui. And I think I do understand why. But what I wanted to sort of get more color on is, how much of that is cyclical meaning? You obviously buy.
I mean, you build inventory during a downturn because of the shelf life. But how much of that was also your opportunity?
opportunistically taking advantage of the Japanese.
Well, we weren't trying to just dive the Japanese here, I'll be honest. I think it's more looking at the planning and working with our Foundry partners. This is really a partnership and we have to look at the economics from their end too. But I think if you really look...
in dollar terms it has gone to about 135 million. Even if you look in Q1, looking ahead, the days will peak, but the dollar value probably from this 135 million is not going to move more than 4 or 5 million. And I think what's going to happen is, as we come back in the second half,
I expect the days to start tapering down each quarter in Q3 and Q4, though even in Q4 it'll be above our model. Because if you look, Toray, historically, as we had talked about in 2018, when we were out of sync with the analog, we always see the downturn first. And when we come back, we come back always strong.
So, if we believe, and I think I've talked about that, the second half being stronger, you know, we have got hopefully the full end of demand on the consumer side and appliances anniversary in Q2, because, you know, if you said you had a full end of demand of a year.
I really think if we believe the second half, which we do, it should bode very well for 2024. And that's why we feel very good at keeping the inventory where we are, because historically it has really helped us in the long run when the rebound happens.
Fair enough. And moving on to the cell in versus cell through, and obviously I understand what you're trying to do there, get the channel inventory down and so forth. That's fair. But when I look at the Q1 guidance, that's 105 million, that's sort of back to early 2020. So, I mean, is it fair to say that, you know, you are going to be on the shipping
sell through was higher than selling by about 8 million.
I expect in Q1, you know, at least 15 million give and take, where sell through will be higher than the sell in. And then the balance will kind of adjust by Q2. And that's why the second half story.
That's very helpful. Just one last one for Baloo. Baloo, obviously, with the percentages coming down with some of the other segments, automotive now I think has a real chance to shine, right? Because obviously you're seeing growth there. Is it possible that automotive could become 10% of your revenues?
either this year or next year? Is that a possibility? No, it is a much slower market to develop. I would say that it'll grow very nicely. We are expecting it to go from low single-digit millions last year to mid single-digit millions and it'll continue to grow.
But the real growth will come really in 2026 onwards, because some of the designs will take much longer to develop.
But where we will come back very strongly, I believe, is in all other areas, especially consumer and industrial.
In consumer, the one thing I want to point out is we are continuing to gain shares significantly. It's just not showing up because of the inventories in the channel and the weakness in the market. And there will be a time when people will start buying appliances. Certainly they bought too much during the pandemic.
and the general weakness across the world has hurt a lot of people, not just us. But it looks like the GDP growth in China and worldwide
is going to be better than everybody anticipated if you look at what the IMF is saying right now. So we are optimistic that that will come back more importantly our share gains. You know that we are gaining share across many competitors in appliances and on top of that we are making a huge penetration with our.
BLDC motor chips, the bridge switch. The combination of those two should really give us a springboard to get back in the appliances. And in the industrial space, the high power is doing very well, the home and building automation is doing extremely well. So I'm also very optimistic. Computer, we have a lot more shared to grow into the notebook market.
And even in cell phones, even though at the moment there is kind of a lull because not only of the weakness in demand, but also because some of the Chinese companies have moved to lower-end chargers.
simply because that's what happens. When the demand is low, they focus on cost. Having said that, the same companies are working on some really high power charges, which tells me that it is temporary and they'll come back to higher power and higher performance type of product.
So I think we have a lot of growth ahead of us. I mean I am completely overlooking what's going on right now because it doesn't really reflect our long-term capability. I mean all of the shares wins will eventually turn into growth.
Great perspective. Thank you.
You're welcome.
We'll take our next question from David Williams with the Benchmark Company.
Good afternoon. Thanks for taking the question.
I guess just kind of from a high level, can you talk about where you are seeing areas of strength today, maybe areas that are a little stronger than you would have expected? What are the biggest bright spots that you see in the market currently?
Currently, we are seeing strong growth in home and building automation, the high power products. These are renewables like solar and wind and power grid products like high voltage DC transmission and also traction. Traction refers to electric locomotives.
Now we are also seeing very strong activity in EVs, electric vehicles, and also in appliances, but they won't turn into revenue overnight. We'll have to, they have longer design cycles, especially EVs.
But having said that, we have already gained significant share in the consumer market. So, when the inventory is depleted, we should see a rebound. Also, it's been as Sandeep mentioned, it's been almost a year since the pandemic driven demand for a long time
appliances as really overstimulated that area and that should eventually come back to some normal consumption and and we are looking forward to that as well. I don't know the exact timing, but I feel very good about those two markets and then in computers.
We are making inroads into notebooks and monitors. That should help us grow as you can see that's become, at least for now, a 12 percent of our revenue. But it has been growing consistently from five percent over the last three years, and I think that also will be a growth area.
Now cell phones I think will hold our own. The market itself has softened because people are not replenishing the phones as much. But we are seeing that market going more towards higher end which will benefit us in terms of ASP.
Okay, fantastic. Thanks for the color there. And then maybe any thoughts on the channel inventories that are out there in terms of what level they're looking to burn those down to? Do you think it's back towards normal levels that we saw pre-pandemic? Or do you sense that maybe they're trying to get down to maybe a higher level than we were previously? Just trying to understand how much inventory is in the challenge if you burn that completely.
inventory and that's why if you remember sometime back we said that'll be the first market to come back. Now the other areas are definitely elevated and that's what I think will get normalized in Q1 and part of Q2 and that's why we start feeling very good about what will happen. If you look what happened in Q4 especially in the appliance areas than air conditioning
Q4 typically tends to be a quarter when after Q3 things started ramping. While in fact we had a significant decline. Which leads us to believe that they are clearing out their inventory and as they do that between Q4 and Q1, I think Q2 will start looking better for us and then somehowince moreDe members will start distorting back in the future blah blah blah
Typically, whenever this happens and we look, whenever we come out of a downturn, we come out stronger. And if you look historically, if the second hat bodes well as we are expecting it to, it will actually position us very, very well for 2024. And if you look at what happened in 2018, it's a very, very, very, very, very, very
to after 2018 when we saw the downturn first is exactly what happened very similar to what we are expecting this time.
after 2018 when we saw the downturn first is exactly what happened. Very similar to what we are expecting this time. Thanks for the color guys, certainly appreciate it.
Thanks, David. We'll take our next question from Christopher Rawland with Susquehanna. Hey, guys. Thanks for the question. So I assume we should assume all segments down next quarter or perhaps you can give us some color as the...
those could be out. I think in Q1, basically, industrial and consumer will be down more than the other two. But as a result, the percentage of revenue would be a guiding tool. You should see that.
communication and computer as a percentage of revenue will hold, which is why the mix we talked about. As far as for the year, I would say you should see more downturn on a full basis in the consumer and industrial, and that's why I talked about a little bit of a mix had been compared to the communication and computer segment.
Yeah, that's simply because it's corrected first. Yep, yep, exactly. And I would say at this point with revenue expected to be down, I think 40 plus percent into March, that this has all hit you guys a little harder than others, at least thus far.
so people built.
Or is it just the cyclicality of the end markets? If you were kind of to do a post-mortem on why the drop was so much more significant than others, what are all the kind of main culprits you could point to? That's a very good question. And there are several reasons why you're seeking us harder.
The first one is we always see the downturn before other people do. We talked about that. Also, because we have one more layer of inventory, that is we sell primarily to power supply manufacturers who then sell it to the OEM. So, our gyrations are much bigger.
automotive where we have at this point very little exposure. Hopefully that will change over time, but so it has differentially hurt us more than other analog peers who most of them have very good exposure to automotive market.
And the other thing is we did not implement non-cancellable, non-determinable orders or long-term agreements that many of our peers have done. And because we do value pricing,
We didn't have as much increase in prices as most of our large peers. In fact, if you look at the growth in 2022, large portion of the growth was simply changed in ASP.
So, you have to keep that in mind when you compare. And of course, the positive side of that is that we will recover first. And so, I think we will outperform the market when we recover. And if you go back to 2018, we have been talking about the positive side of that.
You can see the similarities. The second half was down for us in 2018, and we saw that before anybody else did. So we were down 4% in 2018, and the industry was up 11% that year. For the next three years, we have been down 4% in 2018, and we saw that before anybody else did.
We significantly outperformed the industry because we came out of it faster and that allowed us to and also we gained a lot of share during the downturn. So every downturn is an opportunity for us to gain share because we always invest for the future. In fact, we invest into the downturn.
So that's why I try to not to pay too much attention to the macro because I don't control the macro, but I pay attention to how much share gains we are getting. So those are the differences why we have seen a much larger change than our peers. Hopefully that's helpful.
I try to not pay too much attention to the macro because I don't control the macro, but I pay attention to how much share gains we are getting. So those are the differences why we have seen a much larger change than our peers. Hopefully that's helpful. That was very helpful.
We'll take our next question from Matt Ramsey with Calendon Company. Yeah, hi guys. This is actually Ethan Patasnik on from Matt. I know there have been a bunch of questions regarding inventory in the channel, but I kind of want to ask a similar question a little differently. I was wondering if you guys had any sense of what you are under.
but it looks like the inventories are normalizing there, and getting close to normal, at least at the Disney level, it's already normalized. We think that's because our OEMs also have brought down the inventory. But in consumer, we think that the
The demand slowdown came so quickly, our customers were surprised how quickly that happened. So they are stuck with inventory at various levels, at our distributors, at the ODMs, and then of course at the OEM and also at the retail level.
And that's what is painful at this point, because the consumer is down so much. But it will come back. The question is when will those inventories normalize? Our best bet is sometime in Q2. It will normalize, so it will benefit us in the second half. We do expect Q2 to be better than Q1.
But the second half and of course 2024 is where we will see the significant growth. In terms of industrial, the broad-based industrial, clearly there is over-inventory, and there is a slowdown across the board.
It's not as bad as consumer, but there is the over inventory and because of that, you can see industrial is down and there is inventory buildup at the distribution. The good news is the cell through was only down 10% versus our cell in, so that is also improving as we speak. So that's why we feel comfortable saying Q1.
is where the bottom is likely to be. Okay, got it, got it. And then as my follow up, how should we think about the GAN outlook for 2023? What types of penetration rates are you guys seeing, I guess pre and post kind of this.
this inventory correction. Yeah, we think we'll grow GaN very nicely in 2023. In 2022, we didn't grow as much as we thought, primarily because most of our designs, GaN designs were in smartphone chargers.
And obviously that market didn't do very well. In spite of that, we grew some, we grew marginally. But in 2023, the design means have expanded to many other areas, including consumer and industrial, and of course, computer. As a result, we expect to see a significant growth in GAN going forward.
Okay, thank you. You're welcome. As a reminder everyone that is star one to ask a question. Our next question comes from Gus Richard with Northland.
Yes, thank you for letting me ask a question. Just looking back at 21, you know, you had very strong growth.
Yes, thank you for letting me ask a question. Just looking back at 21, you know, you had very strong growth. Could you parse out how much of that was...
Units versus ASP, typically you guys have 5% ASP decline annually, and I'm just wondering also what that looks like today. In 2021, unlike many of us,
I don't know the exact numbers, but as we said, we base it on the product, the components we replace. So I couldn't tell you the exact number, but all I can say is it's far less than most of our peers who did a very, very strong increase in price. And how is pricing today? Are you reverting back to, you know, with the
bit. But going forward I think things will normalize because supply situation is getting better. But one thing does the input cost
still have a very thick significant upward pressure, especially in the front end. So I think that's the tension that is going on right now and we do value pricing. So depending on how we see the value pricing, we will stay competitive. But I think the input costs are still having a price pricing pressure. Yeah, that will prevent us from, that will prevent the market, not just that.
I mean, it blinds us this 85%, 90% of consumers.
Okay, okay, very good. And it's broken into major, comfort, and small, three buckets.
Okay. Thank you so much. Thanks, Gus. We have a follow-up question from Torrey Sandberg with Stiple. Yes. Sandip, I was hoping you could just help me a little bit with the math here. So, I'm –
I'm just looking at revenue growth since 2019 and by adjusting for that $65 million that you called out kind of excess channel inventory, it looks like the revenue would be growing about 12% a year. It's kind of interesting if you do adjust for that $65 million, it's almost exactly 12% a year.
I mean, is that kind of how you should just look at the business going forward? I know that you're long-term target is obviously within that range, but it's just so interesting. Yeah, go ahead. It's a great observation. Low double-digit growth is the model. But whenever these chirations happen,
you know we have unfortunately whenever the downturn comes it seems to happen in the middle of the year and it affects two years of growth. But if you look what happens, so we for two years we'll be really bad in growth then we will do a couple of years better than our model. But if you look on the long term we come pretty close to the double digit growth.
we have unfortunately whenever the downturn comes it seems to happen in the middle of the year and it affects two years of growth but if you look what happens so we for two years we'll be really bad in growth then we will do couple of years better than our model but if you look on the long term we come pretty close to the double digit growth. Great, thank you.
And that concludes the question and answer session. I would like to turn the call back over to Joe Shiffler for any additional or closing remarks. All right. We'll leave it there. Thanks everyone for listening. There will be a replay of this call available on our investor website, investors.power.com. Thanks again and good afternoon. And that concludes today's presentation. Thank you for your participation. You may now disconnect.
And and.