| The high-voltage power supply industry is intensely competitive and
characterized by extreme price sensitivity. Accordingly, the most significant
competitive factor in the target markets for the Company's products is cost
effectiveness. The Company's products face competition from alternative
technologies,primarily discrete switchers. The Company believes that at current pricing,
the TOPSwitch families of products offer favorable cost performance benefits
compared to discrete switchers in many high-volume applications over the power
range of approximately 0.5 watts to 150 watts. However, any significant
erosion in the price of discrete components, such as high-voltage Bipolar and
MOSFET transistors and PWM controller ICs, could adversely affect the cost
effectiveness of the TOPSwitch products. Also older alternative technologies
to switchers are more cost-effective than switchers that use the Company's
TOPSwitch products in certain power ranges for certain applications. If power
requirements for certain applications in which the Company's products are
currently utilized, such as battery chargers for cellular telephones, drop
below certain power levels, these older alternative technologies can be used
more cost effectively than TOPSwitch-based switchers. The Company is
continuing its efforts to use its extensive system level expertise to enhance
the cost effectiveness of TOPSwitch-based switchers in the lower power ranges.
There can be no assurance that the Company will be successful in these
efforts.
Recently, the Company's TOPSwitch product families have begun to meet
additional competition from hybrid and single high-voltage ICs similar to
TOPSwitch. These competing products are being developed or have been developed
and are being produced by companies such as Motorola, SGS, Samsung and Sanken.
The Company expects competition to increase as Motorola, SGS, Samsung, Sanken
and possibly other companies develop and introduce new products. To the extent
these competitors' products are lower in cost than the Company's products, the
Company's business, financial condition and results of operations could be
materially and adversely affected. Many of the Company's emerging competitors,
including Motorola, SGS, Samsung and Sanken, have significantly greater
financial, technical, manufacturing and marketing resources than the Company.
In the context of a market where a high-voltage IC is designed into a
customer's product and the provider of such ICs is therefore the sole source
of the IC for that product, greater resources and, in particular, greater
manufacturing resources, may be a significant factor in the customer's choice
of the IC because of the customer's perception of greater certainty in its
source of supply. The Company's ability to compete in its target markets also depends on such
factors as the timing and success of new product introductions by the Company
and its competitors, the pace at which the Company's customers incorporate the
Company's products into their end user products, availability of wafer
fabrication and finished good manufacturing capability, the availability of
adequate sources of raw materials, protection of Company products by effective
utilization of intellectual property laws and general economic conditions.
There can be no assurance that the Company's products will continue to compete
favorably or that the Company will be successful in the face of increasing
competition from new products and enhancements introduced by existing
competitors or new companies entering this market. Failure of the Company to
compete successfully in the high-voltage power supply business would
materially and adversely affect the Company's business, financial condition
and results of operations. |