Beyond the GPU: Allegro and Power Integrations Supply the Power and Cooling Behind AI

Allegro MicroSystems and Power Integrations do not make AI processors, but both are working on something increasingly important: moving power through data centers without wasting it.

The AI buildout has created an unusual problem for the semiconductor industry. The chips doing the computing get most of the attention, but feeding those chips enough electricity and removing the heat they generate has become an engineering challenge of its own, and it is pulling a different group of chipmakers into the AI supply chain.

Allegro MicroSystems (NASDAQ: ALGM) and Power Integrations (NASDAQ: POWI) both have long histories outside artificial intelligence, yet their technologies are increasingly finding a place inside AI infrastructure. For Allegro, that shift is already visible in the numbers.

Data Centers Reach a Record 17% of Allegro’s Sales

Allegro reported quarterly revenue up 27% to $259 million to open fiscal 2027, and data centers reached a record 17% of company sales. For a business still closely associated with automotive semiconductors, that is a meaningful change in mix.

The connection runs through cooling. As AI racks become more power-dense, they require more sophisticated thermal management, and Allegro’s motor-control chips help run the fans and pumps that move air and liquid through those systems.

The company expects the opportunity to grow as data centers shift toward higher-voltage architectures. Allegro has estimated its semiconductor content per rack could rise from roughly $150 in fiscal 2025 to $425 by fiscal 2028.

Automotive remains Allegro’s largest business, with EVs and advanced driver-assistance systems continuing to drive demand. Data centers give the company a second growth engine at a time when automotive volumes have been uneven.

Power Integrations Brings 2,200-Volt GaN to the Electricity Side

Power Integrations approaches AI infrastructure from the electricity side. The company specializes in high-voltage power conversion, the technology that moves electricity efficiently from one voltage or form to another, and that capability matters more as data centers consume vastly more power.

Its newest 2,200-volt PowiGaN technology targets high-voltage applications including AI data centers, renewable energy and EV infrastructure. When the company reported second-quarter results in August, management pointed directly to investment in AI data centers and grid infrastructure as a source of demand. Revenue reached $118.9 million, up 10% sequentially, and operating cash flow was $22 million.

Power Integrations is also pushing efficiency at the low end of the spectrum. Its new CAPZero-4 chips consume less than 1 milliwatt while helping power supplies reduce standby losses, part of a portfolio that runs from tiny power supplies to high-voltage infrastructure.

AI Infrastructure Depends on More Than the GPU

Neither company is likely to be mistaken for Nvidia, and that is the point. AI infrastructure increasingly depends on technologies several layers removed from the processors themselves: electricity has to be converted, motors have to run and cooling systems have to move enormous amounts of heat. When a facility consumes power on the scale of a small city, every percentage point of efficiency matters.

Allegro and Power Integrations approach that problem from different directions. Allegro is finding more semiconductor content inside the systems that cool and control dense computing equipment, while Power Integrations is working to make the electricity feeding that equipment more efficient. The AI boom began with compute, and the next constraint may be everything required to keep that compute running.