Power Integrations, a leader in high-voltage power conversion technology, just held their Q1 2024 earnings call, and while the overall tone was cautiously optimistic about the market recovery, something else caught my eye – a subtle revelation that could signal a massive strategic shift with the potential to significantly disrupt the power supply industry.

Balu Balakrishnan, the company's Chairman and CEO, casually mentioned a seemingly innocuous "amazing invention" during the Q&A session – the InnoMux-2 chip. While initially launched for displays with the InnoMux-1, the InnoMux-2 has expanded to encompass a far wider range of applications. This unassuming chip, according to Balu, holds the potential to eliminate the need for downstream DC-to-DC converters in power supplies with multiple output voltages. That's a bold claim, and one that most analysts seem to have glossed over.

Why is this a big deal? Because nearly every electronic device with an embedded power supply – think appliances, industrial equipment, TVs, even data center servers – needs multiple output voltages. Traditionally, this has meant cascading power conversion stages, first from AC to DC and then from that single DC output to the various lower DC voltages needed by the system. Each conversion stage incurs energy losses, and these losses compound, significantly impacting overall system efficiency.

InnoMux-2, however, proposes a radical new architecture. By using a single high-voltage stage, it can deliver multiple regulated DC outputs directly, eliminating the need for those inefficient downstream DC-to-DC converters. This means fewer components, reduced complexity, and a dramatic improvement in overall system efficiency.

But how does this "amazing invention" actually work? Balu hints at two key enablers: a unique control scheme and Power Integrations' proprietary FluxLink technology. FluxLink, a critical differentiator for Power Integrations, allows for precise control of energy delivery to each output through a single transformer. This, coupled with their novel control scheme, appears to be the magic behind InnoMux-2's ability to revolutionize power supply architecture.

Here's where the hypothesis gets interesting. If InnoMux-2 delivers on its promise, we could be witnessing the beginning of a dramatic shift in the power supply landscape.

* **Efficiency gains:** By eliminating the compounding losses of multiple conversion stages, InnoMux-2 can potentially boost overall system efficiency by significant margins – perhaps even exceeding 90%. Consider a traditional architecture with an AC-to-DC stage followed by a DC-to-DC stage, both operating at 90% efficiency. The compounded losses result in a total system efficiency of only 81%. InnoMux-2 could potentially reduce these losses by almost half.

* **Cost reduction:** Fewer components mean lower manufacturing costs. This is particularly significant given the rising cost pressures on semiconductor manufacturers.

* **Market disruption:** InnoMux-2's potential to address such a broad range of applications makes it a potential game-changer. While the company hasn't explicitly quantified the market opportunity, given the ubiquity of multiple output voltage power supplies, it's safe to assume we're talking billions of dollars.

* **Competitive advantage:** Power Integrations’ proprietary FluxLink technology appears to be the crucial element enabling this architectural innovation, giving them a significant competitive advantage in this emerging market.

The company is already seeing strong design activity for InnoMux-2 across diverse markets, and the first production design, a desktop monitor, is set to ramp in Q3. While it's still early days, the potential of InnoMux-2, powered by FluxLink, to disrupt the power supply industry is undeniable. If this technology lives up to its promise, it could solidify Power Integrations’ position as a leader in high-efficiency power conversion and catapult them to even greater market dominance.

Revenue Trends and Projections

Based on the Q1 2024 earnings call transcript, Power Integrations expects sequential revenue growth for the remainder of the year. While specific figures were not provided for Q3 and Q4, we can visualize the projected growth based on their Q2 guidance and overall outlook.

Market Share Breakdown (Hypothetical)

Although specific market share figures were not discussed in the earnings call, it's plausible to assume Power Integrations holds significant shares in various power supply markets. The table below presents a hypothetical market share breakdown, emphasizing the potential for InnoMux-2 to expand their presence in markets requiring multiple output voltages.

Market Segment | Estimated Market Share (Hypothetical) | Potential Impact of InnoMux-2

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Appliance Power Supplies | 30% | Significant growth opportunity due to efficiency gains and cost reduction.

Industrial Power Supplies | 25% | Moderate growth opportunity, particularly in applications requiring high efficiency.

TV Power Supplies | 20% | Moderate growth opportunity due to increased efficiency and simplified design.

Data Center Server Power Supplies | 10% | Emerging opportunity for auxiliary and standby power supplies.

Other Applications | 15% | Varies depending on specific application requirements.

Some Fun Facts about Power Integrations:

* **Early innovator:** Power Integrations pioneered the fabless semiconductor business model, outsourcing its manufacturing to focus on design and innovation.

* **Patents galore:** The company holds over 1,500 patents, demonstrating their commitment to innovation and technological leadership.

* **Safety first:** Power Integrations is a leading advocate for power supply safety standards, playing a critical role in shaping industry regulations.

* **Green focus:** The company has a long-standing commitment to energy efficiency, with its products helping to reduce energy consumption worldwide.

It's worth keeping a close eye on Power Integrations as they continue to roll out InnoMux-2 and push the boundaries of high-voltage power conversion technology. Could this be the beginning of their reign as undisputed king of the power supply market? Only time will tell.

"Highlights:"

InnoMux-2 eliminates the need for downstream DC-to-DC converters, promising increased efficiency and cost savings in power supplies.

This innovation is enabled by Power Integrations' proprietary FluxLink technology, providing a key competitive advantage.

The company expects sequential revenue growth for the remainder of 2024, with a strong second half anticipated.

Power Integrations' long-term growth strategy emphasizes GaN technology, electric vehicles, motor drive, renewable energy, and the India market.