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Investments in Companies | 9 Months Ended
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Sep. 30, 2013
Investments in Companies [Abstract] |
Investments in Companies | Note 6. Investments in Companies We have made strategic investments in private companies located in China in order to gain access to raw materials that are critical to our substrate business at a competitive cost. The investments are summarized below (in thousands):
|  | Investment Balance as of |  |  |  |  |
|  | September 30, |  |  | December 31, |  | Accounting |  | Ownership |
Company |  | 2013 |  |  | 2012 |  | Method |  | Percentage |
Beijing JiYa Semiconductor Material Co., Ltd |  | $ | 3,331 |  |  | $ | 3,331 |  | Consolidated |  |  | 46 | %
Nanjing Jin Mei Gallium Co., Ltd |  |  | 592 |  |  |  | 592 |  | Consolidated |  |  | 83 | %
Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd |  |  | 410 |  |  |  | 410 |  | Consolidated |  |  | 70 | %
|  | $ | 4,333 |  |  | $ | 4,333 |  |  |  |  |  |
Donghai County Dongfang High Purity Electronic Materials Co., Ltd. |  | $ | 1,950 |  |  | $ | 2,038 |  | Equity |  |  | 46 | %
Xilingol Tongli Germanium Co. Ltd |  |  | 4,618 |  |  |  | 4,246 |  | Equity |  |  | 25 | %
Emeishan Jia Mei High Purity Metals Co., Ltd |  |  | 942 |  |  |  | 1,042 |  | Equity |  |  | 25 | %
|  | $ | 7,510 |  |  | $ | 7,326 |  |  |  |  |  |
Our ownership of Beijing JiYa Semiconductor Material Co., Ltd. (JiYa) is 46%. We continue to consolidate JiYa as we have significant influence in management and have majority control of the board. Our Chief Executive Officer is chairman of the JiYa board, while our president of China operations and our vice president of China administration and our vice president of wafer production are also members of the board. Our ownership of Nanjing Jin Mei Gallium Co., Ltd. (Jin Mei) is 83%. We continue to consolidate Jin Mei as we have significant influence in management and have majority control of the board. Our Chief Executive Officer is chairman of the Jin Mei board, while our president of China operations and our vice president of China administration are also members of the board. Our ownership of Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd (BoYu) is 70%. We continue to consolidate BoYu as we have a significant influence in management and have majority control of the board. Our Chief Executive Officer is chairman of the BoYu board, while our president of China operations and our vice president of China administration are also members of the board. Although we have representation on the boards of directors of each of these companies, the daily operations of each of these companies are managed by local management and not by us. Decisions concerning their respective short term strategy and operations, any capacity expansion and annual capital expenditures, and decisions concerning sales of finished product, are made by local management with some input from us. During the three months ended September 30, 2013 and 2012, the three consolidated joint ventures generated $565,000 and $1.8 million of income, respectively, of which $230,000 and $512,000, respectively, were allocated to minority interests, resulting in $335,000 and $1.2 million of income, respectively, included in our net income (loss). During the nine months ended September 30, 2013 and 2012, the three consolidated joint ventures generated $3.3 million and $7.0 million of income, respectively, of which $1.1 million and $3.0 million, respectively, was allocated to minority interests, resulting in $2.2 million and $4.0 million of income, respectively, included in our net income (loss). For the three minority investment entities that are not consolidated, the investment balances are included in “other assets” in our condensed consolidated balance sheets and totaled $7.5 million and $7.3 million as of September 30, 2013 and December 31, 2012, respectively. We own 46% of the ownership interests in one of these companies and 25% in each of the other two companies. These three companies are not considered variable interest entities because:
| · | all three companies have sustainable businesses of their own;
| · | our voting power is proportionate to our ownership interests;
| · | we only recognize our respective share of the losses and/or residual returns generated by the companies if they occur; and
| · | we do not have controlling financial interest in, do not maintain operational or management control of, do not control the board of directors of, and are not required to provide additional investment or financial support to, any of these companies.
We also maintain minority investments in privately-held companies made indirectly through our consolidated joint ventures. These minority investments are accounted for under the equity method in the books of our consolidated joint ventures. As of September 30, 2013 and December 31, 2012, our consolidated joint ventures included these minority investments in “other assets” in the condensed consolidated balance sheets with a carrying value of $3.1 million and $2.0 million, respectively. During the three months ended September 30, 2013, our consolidated joint venture JiYa invested $460,000 (Rmb 2.8 million) for a 20% equity investment in Shanxi Jia Hua Galaxy Electronic Materials Co., Ltd, a gallium producer. All of the minority investment entities that are not consolidated and accounted for under the equity method had the following summarized income information (in thousands) for the three and nine months ended September 30, 2013 and 2012.
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |
Net revenue |  | $ | 11,024 |  |  | $ | 9,394 |  |  | $ | 29,938 |  |  | $ | 23,676 |
Gross profit |  | $ | 3,628 |  |  | $ | 3,377 |  |  | $ | 10,516 |  |  | $ | 8,137 |
Operating income |  | $ | 2,393 |  |  | $ | 2,018 |  |  | $ | 6,566 |  |  | $ | 4,542 |
Net income |  | $ | 1,631 |  |  | $ | 1,897 |  |  | $ | 4,960 |  |  | $ | 3,915 |
Our gross entity earnings from all the minority investment entities that are not consolidated and accounted for under the equity method were $346,000 and $348,000 for the three months ended September 30, 2013 and 2012, respectively, and $1.1 million and $786,000 for the nine months ended September 30, 2013 and 2012, respectively. We also maintain minority investments directly in two other companies accounted for under the cost method and we do not have the ability to exercise significant influence over their operations. As of September 30, 2013 and December 31, 2012, our investments in these two unconsolidated companies had a carrying value of $325,000 and $392,000, respectively, and were included in “other assets” in the condensed consolidated balance sheets.

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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.12) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6382943&loc=d3e33918-111571 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=7658923&loc=d3e32847-111569 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=7658923&loc=d3e32787-111569 + Details
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