Inventories and Deferred Cost of Sales

Inventories consisted of the following (in thousands):



	December 31, 2016			December 31, 2015
Raw materials	$	24,805		$	14,546
Work-in-process	12			98
Finished goods	5,005			7,485
	29,822			22,129
Less: inventory valuation allowance	(9,801		)	(5,317		)
Inventories, net	$	20,021		$	16,812

Consigned inventory is held at third-party locations, including the Company's contract manufacturing partner and customers. The Company retains title to the inventory until purchased by the third-party. Consigned inventory, consisting of raw materials and finished goods, was $11.8 million and $11.5 million at December 31, 2016 and 2015.

The Company’s consignment inventory with its contract manufacturer consists of inventory transferred from the Company’s prior contract manufacturer as well as inventory that has been purchased by the contract manufacturer as a result of the Company's forecasted demand. The Company is contractually obligated to purchase inventory transferred from the Company's prior contract manufacturer after the inventory ages for 365 days which was substantially complete as of December 31, 2016. The Company is also contractually obligated to purchase inventory that has been purchased by the contract manufacturer as a result of the Company's forecasted demand when the inventory ages beyond 180 days and has no forecasted demand. The Company’s consignment inventory at its contract manufacturing partner was $11.8 million and $8.7 million as of December 30, 2016 and December 31, 2015. The Company records a liability for adverse purchase commitments of inventory owned by its contract manufacturing partner. See Note 13 - Commitments and Contingencies for additional information regarding the Company's adverse purchase commitment liability.

The Company recorded the following charges associated with the valuation of inventory, inventory deposit and the adverse purchase commitment liability for the years ended December 31 (in thousands):



	2016			2015		2014
Inventory, net	$	6,120		$	1,447	$	2,539
Adverse purchase commitments	(1,908		)	1,831		323
Net charges	$	4,212		$	3,278	$	2,862

The following is a summary of the change in the Company’s inventory valuation allowance for the years ended December 31 (in thousands):



	2016			2015
Inventory valuation allowance, beginning of the year	$	5,317		$	2,701
Usage:
Inventory scrapped	(1,636		)	(151		)
Inventory utilized	(954		)	(856		)
Subtotal—usage	(2,590		)	(1,007		)
Write-downs of inventory valuation and transfers from other liabilities ^(A)	7,074			3,623
Inventory valuation allowance, end of the year	$	9,801		$	5,317


(A)	Transfer from other liabilities is related to obsolete inventory purchased from contract manufacturers during the year which was previously reserved for as an adverse purchase commitment. (Note 9—Other Accrued and Other Long-Term Liabilities and Note 13—Commitments and Contingencies.)

Deferred cost of sales are related to deferred revenue on shipments to customers and was $0.0 million and $14.1 million at December 31, 2016 and 2015.