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 57% of net revenues for the three and nine months ended September 30, 2018, respectively, and approximately 56% and 55% of net revenues, respectively, in the corresponding periods of 2017. 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 OEMs and merchant power supply manufacturers. Sales to distributors were $83.3 million and $245.4 million for the three and nine months ended September 30, 2018, respectively, and $83.2 million and $249.3 million, respectively, for the corresponding periods of 2017. Direct sales to OEMs and power-supply manufacturers accounted for the remainder.

In each of the three and nine months ended September 30, 2018 and 2017, one customer, a distributor of the Company's products, accounted for more than 10% of the Company’s net revenues.

The following table discloses this customer’s percentage of revenues for the respective periods:



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
Customer	2018		2017		2018		2017
Avnet	14	%	15	%	14	%	16	%

No other customer 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, 2018, and December 31, 2017, 67% and 64%, respectively, of accounts receivable were concentrated with the Company’s top 10 customers. As of September 30, 2018, two customers, both distributors of the Company’s products, represented 10% or more of the Company’s accounts receivable. As of December 31, 2017, one of these customers represented 10% or more of the Company’s accounts receivable.

The following table discloses these customers’ percentage of accounts receivable as of the respective dates:



Customer	September 30, 2018		December 31, 2017
Avnet	20	%	18	%
Kei Kong Electronics	12	%	*

______________


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

No other customer represented 10% or more of the Company’s accounts receivable as of the dates presented.

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, 2018, and September 30, 2017, were as follows:



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2018		2017		2018		2017
United States of America	$	4,460	$	4,775	$	12,056	$	13,078
Hong Kong/China	59,178		59,328		169,149		170,720
Taiwan	11,210		12,424		36,010		36,220
Korea	8,087		9,343		25,965		28,527
Western Europe (excluding Germany)	12,842		12,963		37,910		37,685
Japan	5,040		4,853		15,238		15,338
Germany	3,873		2,817		10,882		8,528
Other	5,395		4,752		15,438		13,410
Total net revenues	$	110,085	$	111,255	$	322,648	$	323,506