Q2 2025 Power Integrations Inc Earnings Call
Good afternoon, ladies and gentlemen, welcome to the power integration Incorporated, Q2 earnings call at this time. All lines are in listen-only mode.
Following the presentation, we will conduct a question and answer session.
If at any time during this call, you require an immediate assistance, please press star zero for the operator.
I would now like to turn the conference over to Joe shiffler director of investor relations. Please go ahead.
Thanks Aubrey. Good afternoon, everyone. Thanks for joining us.
With me on the call today are executive chairman Bali Bala, Krishna our CFO Sandeep, nyer and for the first time, Jen Lloyd who joined power Integrations last month as president and CEO.
After prepared remarks from Baloo, Jen, and Sandeep, we'll take your questions. But first, 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, other operating expenses stemming from an employment litigation matter.
And the tax effects of these items.
A Reconciliation of non-gaap measures to our Gap. Results is included. In today's press release.
Our discussion today, including the Q&A session will include forward-looking statements denoted by words like will would could should expect Outlook 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-K filed with the FCC on February 7, 2025.
This call is the property of power Integrations and any recording or rebroadcast is expressly prohibited without the written consent of power Integrations.
I'll turn it over to Bali.
Thanks Joe and good afternoon.
My role on today's call is simply to introduce Jen Lloyd who took over as CEO just a couple of weeks ago.
Where she ran multiple businesses with a billion plus in revenues.
Most recently, she ran analogs multi-market power business.
Responsible for strategy, products, p&l and a large Global team.
she also previously served on our board of directors,
Stepping down in 2022 when she was assigned to run the power business at Adi.
When the time came to search for a new CEO, Jen's name came to mind immediately.
while we consider considered a number of excellent candidates,
Jen was the Clear Choice.
And I'm delighted that she has joined us.
She has an outstanding track record of delivering, Innovative products to the market, attracting and motivating. Talented engineers.
And driving profitable growth.
She obviously knows the power semi space.
And from our time on our board, she is already well acquainted with our business model and our culture.
I have a great opportunity to serve as Executive Chairman of the Board until February 2026, working alongside Jen to ensure a seamless transition.
After this transition period, I will assume a non-executive board seat and take on a consulting role, assisting Jen and the board in any way they ask me to.
In particular, I expect to focus on Innovation initiatives, as well as IP matters, including any patent litigation that might arise reflecting my history with the company and my patent Holdings.
But while I plan to remain involved with the company for as long as I'm needed,
This will be my final earnings call.
So before I turn the call over to Jen, I would like to thank all of you in the investment Community, who have followed and supported power Integrations over the years.
Thank you to our stockholders for putting your trust in US.
As a fellow owner, it was of utmost importance to me to leave our company in good hands. And I'm confident, we have achieved that
To the analysts who have covered our stock for so many years, and some of you since our IPO, all the way back in 1997.
I have learned a great deal from you, about our industry and your industry, too.
And I will certainly miss working with all of you.
With that, I'll turn it over to Jeff.
Good afternoon everyone and thank you, Ballou.
It's really an honor to take the Reigns from you as CEO of power Integrations.
Since my time on the board, I've admired the franchise you've built in high voltage as well as the foundational technologies that will drive our future growth.
I'll have more to say in the months ahead about my plans to deliver that growth and get us on a path toward a billion dollars in Revenue.
In the brief time we have. Today, I'll share a few thoughts.
On the opportunities. I see ahead of us and discuss a few key developments since the last earnings call.
The core of our business. Almost 90% of sales is power conversion: ICs for appliances, consumer electronics, and a wide array of industrial applications.
We have a market leading portfolio of products for these markets with more in the pipeline.
For example, our Flagship in a switch platform, represents the state of the art in power supply architecture, building isolation into the package and eliminating Optical feedback to simplify the system and enhance reliability.
We're leveraging the technologies at the heart of InnoSwitch into our automotive efforts and into new disruptive products like our multi-output InnoMax Isis.
We're also refreshing Legacy product families, to support their annuity, like revenue streams.
Our new fifth-generation tiny switch extends the simplicity of that architecture to 175 watts of output—more than 6x the previous generation.
And provides a significant Improvement in efficiency and standby consumption.
In the coming months, we'll introduce a GaN version of our top switch products, giving longtime top switch customers a way to tap into the efficiency of GaN at extended power levels.
Not withstanding, the near-term uncertainty. Our Core Business is back on a growth trajectory after the long post, pandemic down cycle.
Cell phones. Last year, the mix of our business is stickier with a higher margin profile.
In India, we have a major role in the ongoing 5G. Fixed Wireless rollout as well as the planned installation of 250 million smart meters.
We're also growing our metering business in other geographies with 3, new design, wins in Japan and Q2 and 1 in Europe using a gan-based Enos switch.
overall metering revenues are on track to grow 20% plus this year and our higher voltage, Gan products offer a path to ASP expansion in that market as customers upgrade, existing silicon designs,
Gan is already driving growth in notebooks, TVs gaming and many more applications in fact, revenues from Gann products are up more than 50% for the first half of the year.
While our core consumer appliance business faces short-term headwinds due to tariffs and stagnant housing markets, we remain bullish on the long-term opportunity.
Rising wealth and Emerging Markets is making appliances affordable for more people every day and Tighter efficiency, standards are driving, adoption of Gan, and brushless DC motors, all of which should benefit us as short-term headwinds subside.
while I'm pleased that our Core Business is growing again, what's really exciting about the power integration story is the opportunity to level up our business into higher power, higher value systems,
Advanced high voltage semiconductors are essential in EVS, AI data centers, electric Rail and in modern power grid. Centered on renewable energy battery storage and long-distance DC transmission.
It's early days for me here, but it's already clear to me that we have the technology and the system level, know how to win in these markets.
On the high end of the power scale. We have the world's Premier gate driver technology for igbt and silicon carbide modules.
Since entering the gate driver business, more than a decade ago, we have invested in products and design support capabilities to prepare for the expanding opportunity and clean energy electrification and modern power infrastructure.
These Investments are paying off with customers driving more than 40% growth in high power revenues in the first half of 2025.
High power design wins in Q2 included an attraction inverter for a major U.S. heavy equipment manufacturer, solar and battery storage inverters for a Spanish OEM, and silicon carbide drivers for an electric bus at a European EV OEM.
The other critical asset enabling the pivot to higher power is our proprietary Gan technology.
Power Integrations was first to Market with high voltage, Gan in 2019 and his executed in aggressive roadmap on multiple Dimensions cost voltage and Power.
Volcan is already driving growth in our core power supply business. It is also the key to our Sam expansion plans and ultimately our path to a billion dollars in Revenue
Two important developments have occurred in the GaN space since the Q1 earnings call. First is the decision by TSMC to exit the GaN foundry business in 2027.
While this creates challenges for competitors relying on tsmc, the real significance from our perspective is that it validates, a core tenant of our strategy.
That for power transistors process technology, and device designer, interdependent and controlling both to optimize system performance is the best path to success whether in Silicon silicon carbide or gan.
So it's no surprise that idms are moving into the Gan space and we are well positioned to compete with our fabulous. IDM model and well over a decade of Gan development, experience and know-how.
Owning the process and the device Technologies used in our products allows us to differentiate at the transistor level on factors such as cost and voltage rating.
Control over manufacturing parameters, yields, performance and quality gives us maximum flexibility to develop system. Level products for the markets and applications. We target
Our system level expertise allows us to extract the maximum performance from our proprietary Gan, technology and provide system level reliability. And ruggedness
this relates to the other recent development in Gan which is nvidia's announcement, that it will support an 800 volt DC architecture in the Next Generation, AI data centers.
By enabling lower current.
Power density is the name of the game here and the 854 volt conversion. At the server board will likely require Gan to achieve the kind of densities needed in Next Generation data centers.
Our 1,250-volt GaN can support an 800-volt rail and a conventional architecture, whereas lower voltage technologies like 650 volts will require stacking of multiple devices.
Compromising power density and adding complexity.
And while silicon carbide is capable of handling 800 volts Ganz higher switching speed.
Enables a smaller Transformer and higher higher efficiency again, resulting in higher power density.
We are the only company shipping 1250 volt Gan today and we designed our technology with the higher voltage. Applications in mind data center architectures will continue to evolve beyond the 800 volts and we're ahead of the curve with 1700 volt technology already in the market and higher voltages still to come.
We've taken the right technology steps to be well positioned to offer system. Level Solutions and my focus will be to make sure that our product development efforts are aligned with the markets we're going after
At ADI. I oversaw the introduction of many, many products including system level ic's and modules.
So I know what it takes to Define and develop complex products. That anticipate and meet customers needs and are delivered on time markets, like Data Center and Automotive have different requirements than the broad-based. Low power markets that comprise our Core Business.
And I will be adapting our teams and our processes to those needs.
Before I turn it over to Sandeep, I'll comment on the near-term Outlook.
Orders have slowed in recent weeks, likely reflecting customer caution around constantly changing tariffs and headlines.
Our third quarter Revenue Outlook of 1, 18 million dollars, plus or minus 5 million. Reflects continued strength in the industrial category and in Gan products, tempered by softness and appliances, which make up most of our consumer category.
Steel tariffs.
And tariffs on finished goods. Tend to be meaningful in this market given the high dollar value and steal content of most appliances.
A large US. Appliance customer reported recently that Asian oems have continued to load inventory into the US to take advantage of delays in tariff implementation
Which is likely to affect demand from our Asian customers in the second half.
However, Channel inventory of our products remains healthy which should enable our business to re-accelerate as excess finished goods, inventory clears.
Meanwhile, we continue to see growth in our industrial business, led by high power and metering, as well as new designs. Ramping in automotive, as that business builds towards a material revenue contribution in 2026.
Next Sunday will cover the details of the second quarter results, Sunday.
Thanks Jen and good afternoon. On second quarter of our second quarter results were on target with revenues up 9%, year-over-year, 216 million, and non-gaap, EPS of 35 cents.
We generated $29 million in cash from operations and repurchased more than 1% of our outstanding shares during the quarter at an average price of about $46.
Looking at the revenue details sales were up 10% sequentially.
As expected industrial was the primary driver of the increase Rising nearly 30% from the prior quarter on strength and metering, home and building automation broad-based, industrial and high power where we saw growth in solar energy and high voltage DC transmission.
Communication revenues increase more than 20% sequentially driven. Mainly by seasonal Trends and cell phone.
Similarly, seasonal Trends and tablets drove a high single digit increase in the computer category.
As we previewed on last quarter's call consumer revenues were sequentially lower down mid single digits. After an unusually strong first quarter that benefited from front-ending of tariffs,
Revenue mix for the quarter was 40% industrial, 37% consumer, 12%, computer and 11% Communications.
Non-gaap gross margin for the second quarter worth 55.8% down 10 basis points from the prior quarter, as a slightly more favorable. Mix was offset by higher input costs flowing through our inventory.
Non-gaap operating expenses, will 46.7 million subsequently due, mainly to annual salary increases, which took effect early in the quarter, and also driven by executive transition costs and litigation expenses.
The non-gaap effective tax rate for was 4%, resulting, in non-gaap earnings of 19.9 million or 35 cents per diluted share.
Diluted share count was 56.4 million, down about 700,000 from the prior quarter, driven by repurchases.
Our Gap results included, 1 unusual item in the second quarter.
That was a charge of 9 million related to an employment litigation case in California.
We are contesting the outcome in post-trial motion, seeking reversal of the damages award and potentially a new trial and plan to appeal if necessary.
The cash impact, if any.
Would occur only at the completion of that process.
Inventories on the balance sheet, fell by 30 days to 296 days.
Channel inventory, fell by 3/10 of a week to 7.6 weeks well, within what we consider to be a normal range.
Cash flow from operations was 29 million for the quarter. While capex was $6 million.
We returned 44 million to stockholders during the quarter including 32.6 million in the form of BuyBacks.
And 11.8 million, in dividends.
We repurchased just over 700,000 shares during the quarter with an average price of about 46 as noted earlier.
at quarter end, we had 42 million remaining on our repurchase authorization,
Turning to the Q3 Outlook as Jen noted. Our Revenue expectation reflect limited near-term visibility with customer caution around tariffs. Offsetting company specific growth drivers,
We expect revenues to be in the range of 118 million plus or minus 5 million.
I expect non-gaap growth margin to be between 55 and 55, and a half percent down slightly from the prior quarter. On higher. Input costs flowing through our inventory, as well, as a slightly smaller benefit from the dollar yen exchange rate.
Non-gaap operating expenses for Q3 should be around, 47 and a half million dollars of modestly from Q2 driven, mainly by legal costs, and R&D activity.
I expect the non-gaap tax rate to be around 5% while other income should be similar to the second quarter levels.
And now, operator, let's begin the Q&A session.
Thank you, ladies and gentlemen, we will now begin the question and answer session.
Should you have a question, please? Press the star, followed by the number 1 on your touchtone phone. You will hear a prompt that your hand has been raised.
Should you wish to decline from the polling process, please press the star followed by the number 2. If you're using a speakerphone, please lift the handset. Before pressing any keys, please wait one moment for your first question.
Our first question comes from David Williams of The Benchmark Company. Please go ahead.
Hey, good afternoon, everyone. Thanks for taking my questions, uh, and first off, a different thing or congratulations on the the CEO appointment. There were certainly looking forward to working with you, although it is unfortunate. That Bali will be. Uh, we will certainly miss him.
Well, thank you. Thanks. David.
So, um, I guess with that, um, it sounds like there's a lot of different Dynamics going on in the market, in terms of the tariffs, and maybe some of the cautious that pull through, um, and what we've seen through the first half of the year, I guess, how do you think about, uh, the, the guidance in terms of being de-risked, based on on, kind of, uh, all of these different, uh, undercurrents. And can you maybe talk a little bit about where your bookings are kind of exiting the quarter? Thanks.
Yeah, David thanks. Uh, so
Slow down and bookings, where our bookings in July, were nearly 20% below the normal, run rate of the prior months.
And seeing that.
And basically hearing what the others have talked about about the Q4 quarter in their calls, it clearly, you know, as you know, we see things much earlier than them at at least by a quarter. That's why you're seeing us guide, the way we are, uh, based on the bookings and based on what we are hearing and as you because of the terrorists, clearly, we are seeing the impact in an appliance business.
Especially if you look at our major appliances, they grew, you know, nearly 15% in the first half. And that clearly shows, which is well above our, you know, normal growth rate in that business as well as designs which led to us to believe there was clearly some front-ending that happened there. And when you hear people like the big uh us company talking about how the Chinese oems have been putting in a lot of finished goods in the US prior to the tariffs, it leads us to believe that it'll have an impact in the second half.
Putting all that together.
That's why we have guided to, to the level, we have guided.
Great color there. Thanks, uh, for that and and then maybe uh just kind of thinking about the strategy going forward. And for you there's a couple of things that you had mentioned in terms of uh, your prior experience and how you feel. Um, like your strategy will be deployed here at at Power integration. Just wondering, can you kind of talk through some of the higher level things that you're thinking about? Obviously, uh, you know, we've we've always thought power of Grace and ran very efficiently and very well, but coming in, I think you might have a different view. So could you get kind of, give us, maybe a, a level set of where your your head is in terms of thinking of the strategy? Thank you.
Sure. Absolutely. I mean, you know again I'll just repeat, you know, power Integrations has a great Foundation, you know, great technology here, uh, high voltage, expertise system, expertise and so on, I think, you know what, I, what I see is, uh, a gap or where we can improve is on the R&D efficiency and driving them improvements there. And I think, you know, we you know, I the the end goal is really to invigorate the growth um to achieve the model that we set out the double digit growth model. And so, you know, I think the, uh, applications that we're looking at, those are great applications that fit very well with the technology, uh, that we have. Uh, but we have to have the products out there to, uh, meet the needs of the customers and those application areas. So,
You know, areas like data center automotive and um leveraging the capabilities in high voltage and um is what what we want to do. But we got to make the engine efficient
Thanks so much. I'll jump back in with you.
Thank you. Our next question comes from Tori Steinberg of stiffel. Please go ahead.
Hi, sorry. If you're speaking, we can't hear you.
Okay. Aubrey why don't we why don't we move on to the next and we'll come back to Tori.
Get it. Our next question comes from Ross Seymour of the CH Bank. Please, go ahead.
Hi, everybody. Can you hear me? Okay?
Yes. Hi Ross. All right, perfect, just making sure. Uh, so first, Blue, congrats, and, uh, sad to see you go as well, even though you're around for a little bit longer. And Jen, congrats on the new leadership role. So, I guess my question for the third quarter guide, uh, you talked in the prior question a little bit about some of the dynamics you're seeing in aggregate. Could you talk a little bit about how you're seeing them by segment? I know you said industrial is still strong. Consumer has the appliance issues, but uh...
But when you think about the puts and takes versus the flat to slightly up guidance, how do the segments work out?
Yeah, I think you're not going to see much mix. So I think growing from 116 to 118, pretty much what you're seeing is uh you're going to see industrial and consumer to be kind of flattish and the growth little growth coming from the other 2 segments.
Uh, plus the tariffs, uh, Israeli but I think, uh, what really changed for us is the real slowdown on bookings that happened in July for us to give caution a little bit here.
Got it, thank you for that color Cindy and I guess for any of you, but maybe Jen, the longer term items that you talked about uh the material revenue and Automotive for next year Etc. I guess a 2-part question 1, are you seeing any changes in the road maps for those or the desire and uptake of those products given the uncertainty that you have uh in the near term and 2? What is material mean in Automotive
On, uh, the automotive road map, and maybe the progress that we're making. I mean, we're continuing to make really good progress with with Automotive with the roadmap that we, we have that we set out. Um, you know, we've got products in, I think about 30 cars on the road now, mainly in China but we also now have some models hitting the road soon in Europe, Japan. And and the US um, we're continuing to um, when designs I think last quarter you heard about our first Scan Design win for automotive and we had wins this quarter across a number of regions, we had a couple in China but also 1 in India and a couple in in in the US. So um in terms of the uptake, you know, we're we're still on track for high single digits.
in millions this year and uh, we're expecting that to continue ramping next year and and Beyond
Yeah. And and basically Ross, you know, we had talked about 2026 where the meaningful Revenue, where we get into the low tens of millions, we are actually tracking to that. And I think we talked about towards the end of the decade 2029, the hundred million dollar goal. We started with the emergency power supply as what I call the base. And now we are proliferating into different with micro dcdc with the, you know, but potential to eliminate 12-volt battery and as a result uh we've got a real poll. I think you heard that the emergency power supply, pulled us even a place like Japan you know where we were not initially going the beauty is we have we are getting really good traction and that's why we really feel good about the low double-digit tens of million in 2026 with all the design wins and the Run rate that we are starting to see starting in the fourth quarter.
Perfect, thank you.
Thank you.
May we go back to Taurus. Sign word for his question.
Yes, thank you for that. So sorry, just managing a few calls here, and I believe, uh, congratulations again on your retirement. I really appreciate working with you over the years. Thanks for your wisdom. And, Jen, welcome on board. Um, I guess my first question on this sort of, you know, pull-in slash inventory adjustment. Um, first of all, is it mainly in consumer, or are you seeing it perhaps in a few other parts of the business? And since channel inventory is still quite lean, um, should we think of this as being sort of a fairly short-lived correction compared to what we've seen before?
Uh, it's a really good question. So, uh,
The way I look, I'm looking at it and I'm just trying to read the deal is here. I have never seen this adjustment to be less than 2 quarters. Sometimes lingers a little more and the reason I'm trying to do this is because all the other companies were talking about Q4 and do you see the quarter earlier?
For us. Mainly it was in appliances but our visibility, you know as you know it's low and basically I think the real drop
In orders, 20% decline, you know, from a nominal average over the last 6 months was meaningful. And uh, so that at least gave us some caution and appliances clearly, if you really look at the major appliances, which you know, is about 50% of the total consumer group, 15% year-over-year there, uh, in the first half, which is
Above the normal growth rate along with, you know, the normal design wins or the extra market share. We get. So clearly there was some front running that we can see. It could have been in little, in other areas, but the only place where it's visible to us is in appliances.
So taking what happened in, July the front running visibility low, and then hearing what all the others in the industry are talking about Q4.
And that we normally see these things a quarter earlier.
let us do this adjustment that we have talked about in our Gardens
From the commentary from Whirlpool on. This was was very clear and that's why we, uh, we were very confident in what's happening in the appliance space. You know, they they cited, uh, 20% increase first half of our first half in Asian Imports of appliances into the US. Um, you know, our Major Appliance business was up mid teens year-over-year, uh, in the first half, which is Sandeep. Said, earlier is, you know, is pretty far above what you would normally expect. So, you know, we can clearly see it in the appliance space. And, and again to send said, there may be some of that activity happening in other markets. Just, just not as visible to us.
No, that that's a great caller and and as my follow-up, I don't know if this is a question for Baloo or or you Jen, but you mentioned that the tsmc exit from from Gann. That's obviously a really big uh, industry uh, data point. Um, I'm just curious have you sort of seen any changes in the competitive landscape since then? Uh there's obviously a few players that, you know, have sort of tried to qualify other foundries. Uh but you know, whether it's your sort of Fab competitors or Fabs competitors, have you have you seen any any changes
well, you know, you're hearing other people talk about moving away from tsmc and going to, uh,
Other Alternatives. But the other Alternatives you know are not uh
As robust and then and try to move from 1 Farm to. The other, is not something that happens as quickly. The big distinction is for us.
Yes, you all had all these competitors at 650. Nobody has what we have at 1250 and 1700 and the advantage we have and specially, you know, you know, people are talking about the 800 volt and all we have products, you know, that will supply into the auxiliary to that supports the 800, we've been thinking about this way ahead. So, I think what we talked about in our analyst day that having the whole
Control on the process, the device and the model. And just that we have a very proprietary Technologies, really differentiating us and putting us ahead of of the pack.
Great, thank you for that.
Thank you.
Our next question comes from Christopher of Roland. Please go ahead.
Uh, thanks guys. And I want to also echo my congrats to Blue on your what sounds like, a semi-retirement. Uh, and and welcome Jen. Uh, I look forward to working with you. Um, uh, so my question, my first question is are really around Jen, uh, you know, it was nice to hear.
A chunk of your prepared. Remarks talk about, uh, Gan in AI data center, in particular.
Um, if I read that correctly, it sounds like you're signaling a, a commitment and a focus there. Um, and uh, and so that's of interest to me. Um, uh, that said, uh, you guys are not as of today, at least on the list of approved vendors at Nvidia. Uh, it does seem like a dynamic list and I think people are being added to that all the time. Um, but I guess my question is, when do you think you might get on that list? Um, and uh, additionally, uh, what are the Gan products you would be providing their, would they be at the rack level or the power supply? Or, or even, you know, the first or second stage? Um, and then opportunities beyond that for for Asic guys Beyond uh, Nvidia as well? Would would be great. Thank you.
Okay. Uh, thanks Chris for the question. That was a long question. Let me try to unpack that. Um, so I think just maybe I'll take a step back and just say, you know, we're playing in the data center ecosystem. So, you know, we're already shipping into auxiliary power supplies and that's an area where, um, we're gaining share with the Gan versions of the inner switch platform. Um, thanks,
To the rising power requirements. There
Um, next year, we're going to be sampling scan products for the main converters under the current architecture, you know, where you have AC to DC converters that the rack level, and you know, that architecture is going to be around for a while. Um,
And that product is a perfect fit for the ox power supplies for 800 volt, architectures. It requires both. Um, you know, 5 54 and 12 volts at at high power. And, you know, the 1700 volts is a a voltage level that you need for the flyback architecture for that 800 volt data center architecture. So um,
Gan is clearly a great and maybe the best choice for the 800 to 54 volts, um, in light of this uh, space constraints. And for that, um,
With 800 volts of input. Our 1250 volt is a really important technology. So both our 125050 and 1700 volt, Gan capabilities are going to serve 800 volts in both Data Center and automotive and um, maybe, um, Sandeep. You can jump in on the products that the timeline of some of the products. So I I, uh, we are already got the inbox which is already there. And we talked about, uh, next year, sampling the product, uh, which Jen talked about and that'll be followed up with uh, subsequently with the 800 volt in the main uh, when it goes to the new architecture in 2728. So we are engaged with everybody. Uh, as you know, we, you know, we don't do discrete, we do system level products. So, we are working with everyone and when our system level product comes out,
You'll, you'll hear a lot more announcement, but it doesn't mean because if you're not there, we're talking to everyone part of the reason why Gan has not been that adopted because discrete are not as reliable. But when we provide our product with the, uh, at a system level, the adoption is at a different level. So it's a matter of time, but we are very engaged with all the different people who are playing in this ecosystem.
Great. Uh, maybe just a follow-up to that. And then a, a quick other 1, um, just uh, you know, maybe if you could give us a a metric either dollars per accelerator or Rack, or something like that, and tell us who your main competitors are, uh, in in Ai and secondly, for Sandeep. Um, I I am I understanding this correct like will industrial continue to grow and outgrow the other segments because they don't have some of these, um, the these other pull ahead Dynamics. Um, and uh, you know, do you still think you can hit the double digit long-term kager next year? Or do you think you play this plays into next year as well?
We absolutely get back. I, I think this is an adjustment that is happening. Uh, in small macro and tariff related, and I told you this, uh, if you really look at it industrial will be continued to be a very strong growth driver. Next year, we're going to grow in automotive. We're going to grow a very strongly in metering, in high power, uh, and Home Building automation. But in fact, I think all 4 segments will grow next year, uh, with communication having good strength. Uh, we talked about the, you know, the big Gan win that we had, we also, uh, on booking winning in networking there. So, I really think
Post. Now how long this adjustment loss is the 2 quarter or 3? That I don't know, not smart enough but it's at least 2 because you're hearing other people talk about, uh,
The the fourth quarter. So I think we'll be back to a double digit growth starting next year.
So,
To the extent that you talked about the content. I think we have talked about that in the uh, existing structure. We could get content with about thousand dollars a rack at best. And as Jen talked about, you know, we've got
A lot of opportunities because of our 1,250 and 1,700. Yeah, I can just follow on. I mean, I think in terms of competitors, I think what we compete with mostly is discrete designs using.
oets or silicon carbide and really like Sandeep said, and I said earlier, nobody else has the kind of the 1250 volt Gan. This is going to replace silicon carbide and silicon mosfets, uh, for the, for perform for performance reasons, uh, going forward. So, we're excited about that. And the most unique is, our proprietary Gan is extremely reliable. And obviously, it's very much more cost-effective than silicon carbide. So I think I think they've been talking about
Thank you very much, guys, and welcome, John.
Thank you. Thanks Chris.
Thank you. Our next question, comes from rosemary of the shank. Please go ahead.
Hey guys. Just wanted to sneak in 1-up uh, Cindy. What's the expectation for channel inventory? You guys are doing a good job of keeping it pretty tight. I know it's in your target range but uh, within your guidance and and maybe in the second half as a whole, since you're talking a little bit more about the fourth quarter, how are you expecting the channel to act?
I think this quarter, I'm expecting the selling and sell through to be kind of flattish.
Uh because we are running. You know, if you really look at it, we're running at 7.7, but if you look at within that consumer is running at 6 and I think part of the reason we are back to that Ross is we have a lot of inventory and we we have short lead times so people really don't want to, you know, load up.
And I think this caution because of tariff and quite honestly.
The appliances get impacted because the steel tariffs actually do affect the end product quite a bit. And that is another reason, uh, that is impacting. But as I said earlier, we had a pretty strong year-over-year in major appliances in the first half.
Got I guess speaking in a little bit on the, uh, the fourth quarter comment that you talked about this potentially being a two-quarter adjustment, etc. Is seasonality even a framework that matters? And, if so, how would you think seasonality occurs versus the cyclicality? Tariff issue as we get into the fourth quarter?
Yeah, that's an interesting hard for us. Seasonality in our business, really is in high power business typically in the first quarter, it's down. And, of course, a little bit in the communication where you have cell phone that is, as, you know, certain quarters that are stronger. But I think, uh, and the other thing is for us in the third quarter, typically Comfort appliances, uh, you know, tend to come down because of the cycle of the build, but I think with this whole front running things have gotten backed out a little in the appliance area. Now whether this will be 2 quarters or 3 quarters, you know? I'm not smart enough but I the reason I'm putting 2 quarters is because we see the slightly earlier. We saw it in July.
People are still seeing fourth quarter, so I think it's at least that now I have to see what happens in q1. A little too early. Uh, and I want to, I want to see if, if there's more clarity that comes on the startup that changes the whole equation.
Uh, you know, every day you turn and there is a different rate at different place so we don't know how that will play out.
Fair enough. Thank you.
And interest rates is the other thing. You know, if it, uh, the interest rates do tend to come down that helps the housing market. So, that's another thing. You know, we have to see wait and see what happens there.
All right. Aubry, do we have any further questions?
Thank you. As a reminder, if you wish to ask a question, please press *1.
There are no further questions at this time. I would now like to turn the call back over to Joe for his closing remarks, please go ahead.
Thanks everyone for listening.
there will be a replay of this call available on our website, the investor section of our website investors.pershing.com
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect
please wait the conference will begin shortly.