Concentration 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, and as such, the Company operates in one segment.

Other than sales in the U.S., China, Hong Kong and Taiwan, no individual country represented more than 10% of the Company’s revenue. Intercompany sales between geographic areas have been eliminated.

Revenue by geographic areas for 2015, 2014 and 2013 were as follows:



	Years ended
	January 3, 2016		December 28, 2014		December 29, 2013
	(In thousands)
United States	$	1,136,284	$	1,136,284	$	877,759
China	1,322,031		2,026,122		1,887,207
Hong Kong	629,242		444,129		145,510
Taiwan	354,527		864,461		958,705
Other Asia-Pacific	1,044,056		1,020,591		1,218,417
Europe, Middle East and Africa	824,508		814,817		780,079
Other foreign countries	254,224		321,297		302,326
Total	$	5,564,872	$	6,627,701	$	6,170,003

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

Long-lived assets by geographic area were as follows:



	January 3, 2016		December 28, 2014
	(In thousands)
United States	$	288,115	$	314,578
Japan	508,380		503,234
China	322,137		283,533
Malaysia	145,835		71,390
Other foreign countries	98,629		79,528
Total	$	1,363,096	$	1,252,263

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 other 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 revenue. Revenue from the Company’s top 10 customers or licensees accounted for approximately 44%, 48% and 49% of the Company’s revenue for 2015, 2014 and 2013, respectively. In 2015, 2014 and 2013, Apple Inc. (“Apple”) accounted for 14%, 19% and 20% of the Company’s revenue, respectively.

All of the Company’s flash memory system products require silicon wafers for the memory and controller components. The Company’s memory wafers are currently supplied almost entirely from Flash Ventures and the controller wafers are all 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, some 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 could reduce sales, 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 does not have 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 the Company’s 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 Commercial and Retail customers in the Americas; Europe, Middle East and Africa (“EMEA”); and Asia-Pacific. The Company performs ongoing credit evaluations of its customers’ financial condition and generally requires no collateral. As of January 3, 2016 and December 28, 2014, the Company’s top 10 customers or licensees accounted for approximately 66% and 68% of the Company’s net accounts receivable, respectively. As of January 3, 2016, Best Buy Co., Inc. (“Best Buy”), HP Inc., Apple and Hewlett Packard Enterprise Company accounted for 13%, 13%, 12% and 10% of the Company’s net accounts receivable, respectively. As of December 28, 2014, Apple and Best Buy accounted for 34% and 10% of the Company’s net accounts receivable, respectively.

Off-balance Sheet Risk. The Company has off-balance sheet financial obligations. See Note 14, “Commitments, Contingencies and Guarantees.”