Concentration of Risk and Segment Information

12 Months Ended

Jan. 01, 2012

Concentrations of Risk and Segment Information [Abstract]

Concentration Risk Disclosure [Text Block]

Concentrations of Risk and Segment Information

Geographic Information and Major Customers. The Company markets and sells flash memory products in the U.S. and in foreign countries through its sales personnel, dealers, distributors, retailers and subsidiaries. The Company’s Chief Operating Decision Maker, its President and Chief Executive Officer, evaluates performance of the Company and makes decisions regarding allocation of resources based on total Company results. Since the Company operates in one segment, all financial segment information can be found in the accompanying Consolidated Financial Statements.

Other than sales in the U.S.; South Korea; Taiwan; Europe, Middle East and Africa (“EMEA”); and Other Asia-Pacific, which includes Japan, international sales were not material individually in any other international locality. Intercompany sales between geographic areas have been eliminated.

Revenue by geographic areas for fiscal years 2011, 2010 and 2009 are as follows (in thousands):

	Fiscal years ended
	January 1, 2012		January 2, 2011		January 3, 2010
United States	$	853,830	$	809,037	$	940,596
South Korea	374,662		334,173		428,411
Taiwan	1,419,836		993,787		397,338
Other Asia-Pacific	2,101,967		1,822,853		1,010,125
Europe, Middle East and Africa	688,538		714,378		707,758
Other foreign countries	223,312		152,579		82,578
Total	$	5,662,145	$	4,826,807	$	3,566,806

Product revenues from customers are based on the geographic location where the product is delivered. License and royalty revenue is attributed to countries based upon the headquarters of the licensee.

Long-lived assets by geographic area as of the end of fiscal years 2011 and 2010 are as follows (in thousands):

	January 1, 2012		January 2, 2011
United States	$	100,414	$	111,733
Japan	673,898		518,912
China	187,773		112,133
Other foreign countries	28,971		27,131
Total	$	991,056	$	769,909

Long-lived assets are attributed to the geographic location in which they are located. The Company includes in long-lived assets property and equipment, long-term equity investments in Flash Ventures and equity investments, and attributes those investments to the location of the investee’s primary operations.

Customer and Supplier Concentrations. A limited number of customers or licensees have accounted for a substantial portion of the Company’s revenues. Revenues from the Company’s top 10 customers or licensees accounted for approximately 48%, 44% and 42% of the Company’s revenues for fiscal years 2011, 2010 and 2009, respectively. In fiscal year 2011, Samsung Electronics Co., Ltd. accounted for 10% of the Company’s total revenues through a combination of product, license and royalty revenues. All customers were individually less than 10% of the Company’s total revenues in fiscal years 2010 and 2009.

All of the Company’s flash memory system products require silicon wafers for the memory and controller components. The Company’s memory wafers or components are currently supplied almost entirely from Flash Ventures and the controller wafers are primarily manufactured by third-party subcontractors. The failure of any of these sources to deliver silicon wafers could have a material adverse effect on the Company’s business, financial condition and results of operations. Moreover, the employees of Toshiba Corporation (“Toshiba”) that produce Flash Ventures’ products are covered by collective bargaining agreements and any strike or other job action by those employees could interrupt the Company’s wafer supply from Toshiba’s Yokkaichi, Japan operations.

In addition, key components are purchased from single source vendors for which alternative sources are currently not available. Shortages could occur in these essential materials due to an interruption of supply or increased demand in the industry. If the Company were unable to procure certain of such materials, it would be required to reduce its manufacturing operations, which could have a material adverse effect upon its results of operations. The Company also relies on third-party subcontractors to assemble and test a portion of its products. The Company has no long-term contracts with some of these subcontractors and cannot directly control product delivery schedules or manufacturing processes. This could lead to product shortages or quality assurance problems that could increase the manufacturing costs of its products and have material adverse effects on the Company’s operating results.

Concentration of Credit Risk. The Company’s concentration of credit risk consists principally of cash, cash equivalents, short and long-term marketable securities and trade receivables. The Company’s investment policy restricts investments to high-credit quality investments and limits the amounts invested with any one issuer. The Company sells to OEMs, retailers and distributors in the U.S., EMEA and Asia-Pacific, performs ongoing credit evaluations of its customers’ financial condition, and generally requires no collateral.

Off-Balance Sheet Risk. The Company has off-balance sheet financial obligations. See Note 12, “Commitments, Contingencies and Guarantees.”