Push towards Higher Efficiency

By Balu Balakrishnan, CEO, Power Integrations
Push towards Higher Efficiency

Power Integrations Inc (NASDAQ:POWI) designs, develops, manufactures and markets high-voltage, analog and mixed-signal integrated-circuit (IC) products and high-voltage silicon diodes. Founded in 1998 and headquartered in San Jose, CA, the company has a market cap of $1.80 billion.

On a macro level, the biggest change in the present age is the push towards higher efficiency. Since 2007, there is a huge awareness of the amount of power being wasted and therefore governments are putting into place mandatory efficiency requirements on products and power supplies. This is probably the biggest trend that we see in the future as standards get tighter overtime. Another component of is that the consumer has become more conscious about efficiency, thanks to the publicity done by media on carbon emissions. 

For the first time in history, there is a lot of marketing to sell efficiency to customers. For instance, customers are willing to pay $5000 more for a hybrid car over a gasoline powered car because they believe that is good for the environment, which was something unheard of five years ago. OEMs are pushing for even higher efficiency than today’s standards because they think they can sell that to the customer. The government standards or the non-government standards and the awareness of the consumer is driving energy efficiency which affects all of our products, whether it is industrial or communications, consumer or computer market. 

On a Granular Level

Going deeper, we are witnessing other developments that are also very important for the growth of our company and also other companies in this field. LED lighting is one of them, which is driven by efficiency and other factors such as long life, better color, amongst other factors. LED lighting appears to be almost ideal general lighting technology that will replace incandescent lamps and also the compact fluorescent lamps. It is six times more efficient than incandescent lamps and lasts about 50 times as long. 

The other area we are seeing significant trend and growth is in rapid charging. There is a tremendous push to charge batteries faster and we have other products that allow OEMs to charge the batteries faster by having chargers (which are actually power supplies) that can respond to the phone’s requirement for higher power when necessary. Current standards are 30MW maximum. 

In terms of efficiency there is more room to innovate, but in terms of no load consumption, not all power supplies can get to zero consumption even if it is more innovation at that area for higher power supplies. At the lowest power levels at 5W or so, we can go to zero power consumption, but doing that at 100w or 200w is more challenging. We have come up with radically new ideas that improve cost and efficiency every time we think of the next generation product. 

The Semiconductor Industry

When you are in a leading position you always want to grow faster to become a bigger company so that you are less susceptible to your competitors. Our bigger challenge is that how do we grow faster given that we are in a market leading position. 

If you are in hardware it is incredibly difficult to get the funding, most of the VCs are putting their money into the social media; cloud computing, big data etc. There is hardly anybody willing to put money in the semi-conductor space or any hardware company. 

There is so much global competition in the semiconductor industry specifically from Asia. Asia has become a not so attractive market for VCs, where as social media, cloud have all become very US centric and there are not many countries outside of US that are strong in those areas for the time being. That’s where the money goes, but that does not mean that there is a lack of innovation or no opportunities for growth, it’s just that the VCs are not focusing, but we are focusing. We are a large enough company where not only we can fund ourselves but also fund other companies by purchasing them and investing in them. 

(As told to Durgesh Prakash)