SIGNIFICANT CUSTOMERS AND INTERNATIONAL SALES

6 Months Ended

Jun. 30, 2017

SIGNIFICANT CUSTOMERS AND INTERNATIONAL SALES

SIGNIFICANT CUSTOMERS AND GEOGRAPHIC NET REVENUES:

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 57% of net revenues in each of the three and six months ended June 30, 2017, and approximately 62% of net revenues in each of the respective corresponding periods of 2016. 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. Sales to distributors for the three and six months ended June 30, 2017 were $85.5 million and $166.1 million, respectively, and $73.0 million and $140.3 million, respectively, for the corresponding periods of 2016. Direct sales to OEMs and power-supply manufacturers accounted for the remainder.

In the three and six months ended June 30, 2017, one customer, a distributor of the Company's products, accounted for more than 10% of the Company’s net revenues. In the three and six months ended June 30, 2016, two customers, also distributors, accounted for more than 10% of the Company’s net revenues.

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



	Three Months Ended				Six Months Ended
	June 30,				June 30,
Customer	2017		2016		2017		2016
Avnet	16	%	19	%	17	%	21	%
Powertech Distribution Ltd.	*		12	%	*		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 June 30, 2017, and December 31, 2016, 69% and 70%, respectively, of accounts receivable were concentrated with the Company’s top 10 customers.

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



Customer	June 30, 2017		December 31, 2016
Avnet	20	%	25	%
ATM Electronic Corporation	*		13	%

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

Geographic Net Revenues

The Company markets its products globally through its sales personnel and a worldwide network of independent sales representatives and distributors. Geographic net revenues, based on “bill to” customer locations, for the three and six months ended June 30, 2017, and June 30, 2016, were as follows:



	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In thousands)	2017		2016		2017		2016
United States of America	$	4,474	$	3,611	$	8,303	$	7,219
Hong Kong/China	56,547		49,355		111,392		92,697
Taiwan	10,762		14,021		23,796		24,420
Korea	9,678		9,887		19,184		19,560
Western Europe (excluding Germany)	12,751		9,839		24,722		20,550
Japan	5,837		5,535		10,485		10,343
Germany	2,915		1,751		5,711		3,850
Other	4,599		3,572		8,658		6,968
Total net revenues	$	107,563	$	97,571	$	212,251	$	185,607