SIGNIFICANT CUSTOMERS AND GEOGRAPHIC NET REVENUES

9 Months Ended

Sep. 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 56% and 55% of net revenues in the three and nine months ended September 30, 2017, respectively, and approximately 60% and 61% of net revenues, respectively, in the 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 nine months ended September 30, 2017 were $83.2 million and $249.3 million, respectively, and $75.6 million and $215.9 million, respectively, for the corresponding periods of 2016. Direct sales to OEMs and power-supply manufacturers accounted for the remainder.

In each of the three and nine months ended September 30, 2017 and September 30, 2016, one customer, a distributor of the Company's products, accounted for more than 10% of the Company’s net revenues. A second customer, also a distributor, accounted for more than 10% of net revenues in the nine month period ended September 30, 2016. The following table discloses these customers’ percentage of revenues for the respective periods:



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
Customer	2017		2016		2017		2016
Avnet	15	%	18	%	16	%	20	%
Powertech Distribution Ltd.	*		*		*		11	%

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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, 2017, and December 31, 2016, 66% 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	September 30, 2017		December 31, 2016
Avnet	17	%	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 nine months ended September 30, 2017, and September 30, 2016, were as follows:



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2017		2016		2017		2016
United States of America	$	4,775	$	4,153	$	13,078	$	11,372
Hong Kong/China	59,328		53,324		170,720		146,021
Taiwan	12,424		12,067		36,220		36,486
Korea	9,343		11,363		28,527		30,923
Western Europe (excluding Germany)	12,963		9,850		37,685		30,400
Japan	4,853		5,208		15,338		15,552
Germany	2,817		1,939		8,528		5,789
Other	4,752		3,721		13,410		10,689
Total net revenues	$	111,255	$	101,625	$	323,506	$	287,232