What Power Integrations, Inc. told the SEC could break it.

Power Integrations' revenue is concentrated in a small set of customers, predominantly distributors. Its top ten customers accounted for approximately 81% of revenue in 2025 (79% in 2024, 80% in 2023), with a significant portion attributable to sales through distributors of electronic components (distributors were ~69-70% of net revenue; direct OEM/power-supply sales the remainder). While distributors resell to a broad base, the loss, financial distress, destocking, or design-out by one or more top distributor/OEM accounts — many of which carry return privileges and price protection — would meaningfully affect revenue. Customers are not individually named, so this registers as a high-severity concentration risk.

“The Company's top ten customers accounted for approximately 81 %, 79 % and 80 % of revenue in 2025, 2024 and 2023, respectively.”

Power Integrations' demand is geographically concentrated: international sales were 98% of net revenue, and because most power converters incorporating its chips are manufactured in Asia, sales to that region were approximately 84% of net revenue in both 2025 and 2024. This concentrates its end-demand in Asian manufacturing hubs and exposes it to the region's economic cycles, currency moves, and geopolitical/trade frictions (including China-Taiwan tensions and intensifying competition from Chinese domestic semiconductor vendors). A downturn or disruption in Asian electronics manufacturing would directly reduce orders. A single-region demand concentration distinct from its foundry-supply geography.

“sales to this region represented approximately 84% of our net revenue in both 2025 and 2024.”

Power Integrations is exposed to U.S.–China trade policy primarily on the demand side. It flags escalating trade tensions and tariffs — the U.S. increasing tariffs on China-origin goods and China retaliating on U.S.-origin goods — and warns that heightened tariffs or trade barriers could decrease international demand because many of its customers sell finished products (incorporating POWI's chips) into international markets, and that tariffs on customers' products may pressure its gross margin. It is also exposed to China-Taiwan and China-West geopolitical tension and intensifying Chinese domestic semiconductor competition. A concrete trade-policy exposure transmitted through its customers' end-market demand.

“Trade tensions between the U.S. and China have escalated and may continue to escalate, including the U.S. increasing tariffs on goods originating in China and China increasing tariffs on goods originating in the U.S.”

As a fabless company, Power Integrations depends on third-party foundries for all of its silicon wafers and warns its business would be harmed if they fail to supply sufficient quantities. The vast majority of wafers come from just three named foundries — Lapis Semiconductor and Seiko Epson (Japan) and X-FAB (Germany/U.S.) (captured as edges) — that manufacture using POWI's proprietary high-voltage process technologies, which makes them hard to substitute. A large percentage of wafers come from Japan, exposing supply to that region's earthquake/disaster risk, and its ICs are assembled, packaged and tested by independent subcontractors concentrated in China, Malaysia, Thailand and the Philippines. A disruption at a single proprietary-process foundry or a Japan/SE-Asia disaster would interrupt wafer or finished-IC supply. A concentrated, proprietary-process foundry/OSAT dependence.

“We depend on third-party suppliers to provide us with wafers for our products and if they fail to provide us sufficient quantities of wafers, our business may suffer”