MaxLinear, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Concentration of Credit Risk, Significant Customers and Geographic Information

Concentration of Credit Risk, Significant Customers and Geographic Information

9 Months Ended

Sep. 30, 2019

Concentration of Credit Risk, Significant Customers and Geographic Information

Concentration of Credit Risk, Significant Customers and Revenue by Geographic Region

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents and accounts receivable. Collateral is generally not required for customer receivables. The Company limits its exposure to credit loss by placing its cash with high credit quality financial institutions. At times, such deposits may be in excess of insured limits. The Company has not experienced any losses on its deposits of cash and cash equivalents.

Significant Customers

The Company markets its products and services to manufacturers of a wide range of electronic devices (Note 1). The Company sells its products both directly to customers and through third-party distributors, both of which are referred to as the Company’s customers (Note 11). The Company makes periodic evaluations of the credit worthiness of its customers.

Customers comprising greater than 10% of net revenues for each of the periods presented are as follows:



	Three Months Ended September 30,			Nine Months Ended September 30,
	2019		2018	2019		2018
Percentage of total net revenue
Customer A (distributor)	18	%	*	*		*
Customer B (direct)	15	%	*	13	%	21	%

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*	Represents less than 10% of total net revenue for the respective period.

Balances that are 10% or greater of accounts receivable, based on the Company's billings to the contract manufacturer customers, are as follows:



	September 30,		December 31,
	2019		2018
Percentage of gross accounts receivable
Customer A	16	%	*
Customer C	*		10	%

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*	Represents less than 10% of the gross accounts receivable as of the respective period end.

Significant Suppliers

Suppliers comprising greater than 10% of total inventory purchases are as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Vendor A	16	%	11	%	18	%	12	%
Vendor B	23	%	12	%	16	%	19	%
Vendor C	15	%	24	%	14	%	19	%
Vendor D	10	%	13	%	12	%	15	%

Geographic Information

The Company's consolidated net revenues by geographic area based on ship-to location are as follows (in thousands):



	Three Months Ended September 30,								Nine Months Ended September 30,
	2019				2018				2019				2018
	Amount		% of total net revenue		Amount		% of total net revenue		Amount		% of total net revenue		Amount		% of total net revenue
Asia	$	67,794	85	%	$	68,750	81	%	$	207,661	84	%	$	240,853	81	%
United States	2,724		3	%	4,474		5	%	10,851		4	%	14,305		5	%
Rest of world	9,502		12	%	11,786		14	%	28,650		12	%	42,212		14	%
Total	$	80,020	100	%	$	85,010	100	%	$	247,162	100	%	$	297,370	100	%

The products shipped to individual countries representing greater than 10% of net revenue for each of the periods presented are as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Percentage of total net revenue
China	52	%	61	%	60	%	62	%

The determination of which country a particular sale is allocated to is based on the destination of the product shipment. No other individual country accounted for more than 10% of net revenue during these periods. Although a large percentage of the Company’s products is shipped to Asia, and in particular, China, the Company believes that a significant number of the systems designed by customers and incorporating the Company’s semiconductor products are subsequently sold outside Asia to Europe, Middle East, and Africa, or EMEA markets and North American markets.

Long-lived assets, which consists of property and equipment, net, leased right-of-use assets, intangible assets, net, and goodwill by geographic area are as follows (in thousands):



	September 30,				December 31,
	2019				2018⁽¹⁾
	Amount		% of total		Amount		% of total
United States	$	403,133	85	%	$	426,321	85	%
Singapore	65,765		14	%	71,945		14	%
Rest of world	5,572		1	%	3,368		1	%
Total	$	474,470	100	%	$	501,634	100	%

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(1) Amounts do not include leased right-of-use assets in the prior period due to the adoption of ASC 842 under the modified retrospective method with a cumulative effect adjustment to accumulated deficit as of January 1, 2019.