Concentration of Risk

6 Months Ended

Jul. 27, 2014

Risks and Uncertainties [Abstract]

Concentration of Risk

Concentration of Risk

Sales to the Company’s customers are generally made on open account, subject to credit limits the Company may impose, and the receivables are subject to the risk of being uncollectible.

The following significant customer accounted for at least 10% of net sales in all but one of the periods indicated:

	Three Months Ended				Six Months Ended
(percentage of net sales)	July 27, 2014		July 28, 2013		July 27, 2014		July 28, 2013
Samsung Electronics (and affiliates)	9	%	11	%	11	%	13	%

The following table shows the customer that has an outstanding receivable balance that represents at least 10% of total net receivables for the periods indicated:

	Balance as of
(percentage of net accounts receivable)	July 27, 2014		January 26, 2014
Samsung Electronics (and affiliates)	10	%	13	%

Outside Subcontractors and Suppliers

The Company relies on a limited number of outside subcontractors and suppliers for the production of silicon wafers, packaging and certain other tasks. Disruption or termination of supply sources or subcontractors, due to natural disasters such as an earthquake or other causes, could delay shipments and could have a material adverse effect on the Company. Although there are generally alternate sources for these materials and services, qualification of the alternate sources could cause delays sufficient to have a material adverse effect on the Company. Several of the Company’s outside subcontractors and suppliers, including third-party foundries that supply silicon wafers, are located in foreign countries, including China, Taiwan, Europe and Israel. The Company’s largest source of silicon wafers is an outside foundry located in China and a significant amount of the Company’s assembly and test operations are conducted by third-party contractors in China, Malaysia, Taiwan, Thailand, Korea and the Philippines. For the second quarter of fiscal years 2015 and 2014, respectively, approximately 43% and 35% of the Company’s silicon in terms of cost of wafers was supplied by a third-party foundry in China, and this percentage could be higher in future periods.

In the second quarter of fiscal year 2015, authorized distributors accounted for approximately 60% of the Company’s net sales compared to 44% in the second quarter of fiscal year 2014. Generally, the Company does not have long-term contracts with its distributors and most can terminate their agreement with little or no notice. For the second quarter of fiscal year 2015, the Company’s two largest distributors were based in Asia.