SIGNIFICANT CUSTOMERS AND INTERNATIONAL SALES

9 Months Ended

Sep. 30, 2016

SIGNIFICANT CUSTOMERS AND INTERNATIONAL SALES

SIGNIFICANT CUSTOMERS AND INTERNATIONAL SALES:

Segment Reporting

The Company is organized and operates as one reportable segment: the design, development, manufacture and marketing of integrated circuits and related components for use primarily in the high-voltage power-conversion market. The Company’s chief operating decision maker, the Chief Executive Officer, reviews financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance.

Customer Concentration

The Company's top ten customers accounted for approximately 60% and 61% of net revenues for the three and nine months ended September 30, 2016, respectively and approximately 64% and 61% of net revenues, respectively, in the corresponding periods of the previous year. A significant portion of these revenues are attributable to sales of the Company’s products to distributors of electronic components. These distributors sell the Company’s products to a broad, diverse range of end users, including original equipment manufacturers (OEMs) and merchant power supply manufacturers.

In the three and nine months ended September 30, 2016, two customers, both distributors of the Company's products, accounted for more than 10% of the Company’s net revenues. In the three and nine months ended September 30, 2015, one customer, also a distributor, accounted for more than 10% of net revenues. A second customer, also a distributor, accounted for more than 10% of net revenues in the three month period ended September 30, 2015.

The following table discloses these customers’ percentage of revenues for the respective periods:



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
Customer	2016		2015		2016		2015
Avnet	18	%	20	%	19	%	21	%
Powertech Distribution Ltd.	10	%	11	%	12	%	*

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*	Total customer percentage of revenues was less than 10%.

No other customers accounted for 10% or more of the Company’s net revenues in the periods presented.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash investments and trade receivables. The Company does not have any off-balance-sheet credit exposure related to its customers. As of September 30, 2016, and December 31, 2015, 68% and 66%, respectively, of accounts receivable were concentrated with the Company’s top 10 customers.

The following customers represented 10% or more of accounts receivable:



Customer	September 30, 2016		December 31, 2015
Avnet	23	%	20	%
ATM Electronic Corporation	*		10	%

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*	Total customer percentage of accounts receivable was less than 10%.

International Sales

The Company markets its products globally through its sales personnel and a worldwide network of independent sales representatives and distributors. As a percentage of total net revenues, international sales, which consist of sales to distributors and direct customers outside of the United States of America, based on “bill to” customer locations, comprise the following:



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
Hong Kong/China	53	%	49	%	51	%	49	%
Taiwan	11	%	15	%	12	%	14	%
Korea	11	%	10	%	11	%	10	%
Western Europe (excluding Germany)	10	%	11	%	11	%	11	%
Japan	5	%	4	%	5	%	5	%
Germany	2	%	3	%	2	%	3	%
Other	4	%	3	%	4	%	3	%
Total foreign revenue	96	%	95	%	96	%	95	%

The remainder of the Company’s sales is to customers within the United States of America.