Note 2. Cash, Cash Equivalents and Investments

Our cash, cash equivalents and investments are classified as follows (in thousands):

	December 31, 2011									December 31, 2010
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized (Loss)			Fair Value		Amortized Cost		Gross Unrealized Gain		Gross Unrealized (Loss)			Fair Value
Classified as:
Cash	$	25,299	$	-	$	-		$	25,299	$	22,736	$	-	$	-		$	22,736
Cash equivalents:
Money market fund		857		-		-			857		988		-		-			988
Total cash equivalents		857		-		-			857		988		-		-			988
Total cash and cash equivalents		26,156		-		-			26,156		23,724		-		-			23,724
Investments:
Certificates of Deposit		3,561		5		(3	)		3,563		3,360		11		-			3,371
US Treasury and agency securities		1,200		-		(1	)		1,199		4,903		8		(2	)		4,909
Corporate bonds		9,859		2		(137	)		9,724		8,961		10		-			8,971
Total investments		14,620		7		(141	)		14,486		17,224		29		(2	)		17,251
Total cash, cash equivalents and investments	$	40,776	$	7	$	(141	)	$	40,642	$	40,948	$	29	$	(2	)	$	40,975
Contractual maturities on investments:
Due within 1 year	$	5,521						$	5,505	$	10,074						$	10,079
Due after 1 through 5 years		9,099							8,981		7,150							7,172
	$	14,620						$	14,486	$	17,224						$	17,251

We manage our investments as a single portfolio of highly marketable securities that is intended to be available to meet our current cash requirements. We have no investments in auction rate securities. For the year ended December 31, 2011 and 2009, we had $8,000 and $164,000, respectively, of gross realized losses on sales of our available-for-sale securities. For the year ended December 31, 2010, we had $346,000 of gross realized gains on sales of our available-for-sale securities.

The gross unrealized losses related to our portfolio of available-for-sale securities were primarily due to changes in interest rates and market and credit conditions of the underlying securities. We have determined that the gross unrealized losses on some of our available-for-sale securities as of December 31, 2011 are temporary in nature. We periodically review our investment portfolio to identify and evaluate investments that have indications of possible impairment. Factors considered in determining whether a loss is temporary include the magnitude of the decline in market value, the length of time the market value has been below cost (or adjusted cost), credit quality, and our ability and intent to hold the securities for a period of time sufficient to allow for any anticipated recovery in market value.

The following table summarizes the fair value and gross unrealized losses related to available-for-sale securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2011 (in thousands):

	In Loss Position < 12 months							Total In Loss Position
				Gross							Gross
	Fair			Unrealized				Fair			Unrealized
	Value			(Loss)				Value			(Loss)
Investments:
Certificates of Deposit			678			(3	)			678			(3	)
US Treasury and agency securities			1,199			(1	)			1,199			(1	)
Corporate bonds		$	8,221		$	(137	)		$	8,221		$	(137	)
Total in loss position		$	10,098		$	(141	)		$	10,098		$	(141	)

Investments in Privately-held Companies

We have made strategic investments in private companies located in China in order to gain access at a competitive cost to raw materials that are critical to our substrate business (see Note 6). The investment balances for all the companies, including minority investments indirectly in privately-held companies through our consolidated joint ventures, accounted for under the equity method are included in “other assets” in the consolidated balance sheets and totaled $8.3 million and $4.8 million as of December 31, 2011 and 2010, respectively. We also maintain minority investments in other unconsolidated privately-held companies which are accounted for under the cost method. As of both December 31, 2011 and 2010, our investments in these unconsolidated privately-held companies had a carrying value of $392,000 and are also included in “other assets” in the consolidated balance sheets.

Fair Value Measurements

Our financial assets and liabilities are valued using market prices on both active markets (Level 1) and less active markets (Level 2). Level 1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets. Level 2 instrument valuations are obtained from readily-available pricing sources for comparable instruments. Level 3 instrument valuations are obtained from unobservable inputs in which there is little or no market data, which require us to develop our own assumptions. As of December 31, 2011, we did not have any Level 3 assets or liabilities. This hierarchy requires us to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. On a recurring basis, we measure certain financial assets and liabilities at fair value, primarily consisting of our short-term and long-term investments.

The type of instrument valued based on quoted market prices in active markets include our money market funds, which are generally classified within Level 1 of the fair value hierarchy. We classify all of our available-for-sale securities as having Level 2 inputs. The valuation techniques used to measure the fair value of these financial instruments having Level 2 inputs were derived from quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency.

The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis in accordance with ASC 820 as of December 31, 2011 (in thousands):

	Balance as of December 31, 2011		Quoted Prices in Active Markets of Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
Assets:
Cash equivalents and investments:
Money market fund – cash	$	857	$	857	$	-
Certificates of deposit		3,563		-		3,563
US Treasury and agency securities		1,199		-		1,199
Corporate bonds		9,724		-		9,724
Total	$	15,343	$	857	$	14,486
Liabilities	$	-	$	-	$	-

Items Measured at Fair Value on a Nonrecurring Basis

Certain assets that are subject to nonrecurring fair value measurements are not included in the table above. These assets include investments in privately-held companies accounted for by equity and cost method (See Note 6). We did not record other-than-temporary impairment charges for either of these investments during 2011.