10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended April 2, 2006
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from           to          .

Commission File Number: 001-15181

FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Delaware	04-3363001
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

82 Running Hill Road

South Portland, Maine 04106

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code:

(207) 775-8100

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ     No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Large Accelerated filer þ     Accelerated filer o     Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o     No þ

The number of shares outstanding of each of the issuer’s classes of common stock as of the close of business on April 2, 2006:

Title of Each Class	Number of Shares
Common Stock	121,598,139

FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES

INDEX

			Page
PART I. FINANCIAL INFORMATION
	Item 1.	Financial Statements (Unaudited)
Consolidated Balance Sheets as of April 2, 2006 and December 25, 2005				3
Consolidated Statements of Operations for the Three Months Ended April 2, 2006 and March 27, 2005				4
Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended April 2, 2006 and March 27, 2005				5
Consolidated Statements of Cash Flows for the Three Months Ended April 2, 2006 and March 27, 2005				6
Notes to Consolidated Financial Statements (Unaudited)				7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		27
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk		36
	Item 4.	Controls and Procedures		36
PART II. OTHER INFORMATION
	Item 1.	Legal Proceedings		37
	Item 1A.	Business Risks		38
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		48
	Item 6.	Exhibits		49
Signature				50
EX-10.01 Employment Agreement - Mark S. Frey
EX-10.02 Restricted Stock Unit Agreement - Mark S. Frey
EX-10.03 Restricted Stock Unit Agreement - Mark S. Thompson
EX-10.04 Form of Restricted Stock Unit Agreement
EX-31.01 Section 302 Certification of CEO
EX-31.02 Section 302 Certification of CFO
EX-32.01 Section 906 Certification of CEO
EX-32.02 Section 906 Certification of CFO

2

PART I. FINANCIAL INFORMATION

Item 1.   Financial Statements

FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	April 2,			December 25,
	2006			2005
	(In millions)
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	335.6		$	330.7
Short-term marketable securities		186.3			182.5
Accounts receivable, net of allowances of $38.1 and $37.8 at April 2, 2006 and December 25, 2005, respectively		148.5			128.6
Inventories		213.6			200.5
Deferred income taxes, net of allowances of $36.2 and $35.8 at April 2, 2006 and December 25, 2005, respectively		4.9			3.3
Other current assets		33.3			28.9
Total current assets		922.2			874.5
Property, plant and equipment, net		630.1			635.0
Deferred income taxes, net of allowances of $178.7 and $178.3 at April 2, 2006 and December 25, 2005, respectively		1.0			—
Intangible assets, net		120.2			126.1
Goodwill		229.9			229.9
Long-term marketable securities		13.7			32.7
Other assets		29.9			30.1
Total assets	$	1,947.0		$	1,928.3
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	3.4		$	5.6
Accounts payable		103.3			95.2
Accrued expenses and other current liabilities		105.4			128.9
Total current liabilities		212.1			229.7
Long-term debt, less current portion		641.0			641.0
Deferred income taxes		31.4			33.5
Other liabilities		16.3			15.6
Total liabilities		900.8			919.8
Commitments and contingencies
Temporary equity — deferred stock units		2.2			—
Stockholders’ equity:
Common stock		1.2			1.2
Additional paid-in capital		1,284.2			1,274.1
Accumulated deficit		(239.3	)		(265.9	)
Accumulated other comprehensive income		2.9			3.9
Less treasury stock (at cost)		(5.0	)		(4.8	)
Total stockholders’ equity		1,044.0			1,008.5
Total liabilities, temporary equity and stockholders’ equity	$	1,947.0		$	1,928.3

See accompanying notes to unaudited consolidated financial statements.

3

FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended
	April 2,			March 27,
	2006			2005
	(In millions, except per share data)
	(Unaudited)
Total revenue	$	409.5		$	362.8
Cost of sales		287.0			279.0
Gross profit		122.5			83.8
Operating expenses:
Research and development		26.2			19.0
Selling, general and administrative		60.0			47.4
Amortization of acquisition-related intangibles		5.9			6.1
Restructuring and impairments		—			4.1
Gain on sale of product line, net		(3.2	)		—
Total operating expenses		88.9			76.6
Operating income		33.6			7.2
Interest expense		11.3			13.3
Interest income		(5.4	)		(3.2	)
Other expense		—			23.9
Income (loss) before income taxes		27.7			(26.8	)
Provision (benefit) for income taxes		1.1			(16.4	)
Net income (loss)	$	26.6		$	(10.4	)
Net income (loss) per common share:
Basic	$	0.22		$	(0.09	)
Diluted	$	0.21		$	(0.09	)
Weighted average common shares:
Basic		121.4			119.6
Diluted		123.9			119.6

See accompanying notes to unaudited consolidated financial statements.

4

FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

	Three Months Ended
	April 2,			March 27,
	2006			2005
	(In millions)
	(Unaudited)
Net income (loss)	$	26.6		$	(10.4	)
Other comprehensive income (loss), net of tax:
Net change associated with hedging transactions		0.3			1.2
Net amount reclassified to earnings for hedging		(0.5	)		0.4
Net change associated with unrealized holding gain (loss) on marketable securities and investments		(0.8	)		(0.7	)
Net amount reclassified to earnings for marketable securities		—			0.1
Comprehensive income (loss)	$	25.6		$	(9.4	)

See accompanying notes to unaudited consolidated financial statements.

5

FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended
	April 2,			March 27,
	2006			2005
	(In millions)
	(Unaudited)
Cash flows from operating activities:
Net income (loss)	$	26.6		$	(10.4	)
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
Depreciation and amortization		28.3			43.7
Amortization of deferred compensation		—			0.8
Non-cash stock-based compensation expense		5.3			—
Loss on disposal of property, plant, and equipment		0.5			0.1
Non-cash vesting of equity awards		—			3.8
Non-cash financing expense		0.6			0.8
Deferred income taxes, net		0.8			(13.1	)
Non-cash write off of deferred financing fees		—			5.4
Gain on sale of product line		(3.2	)		—
Changes in operating assets and liabilities:
Accounts receivable, net		(19.9	)		(8.7	)
Inventories		(12.3	)		(3.0	)
Other current assets		(4.9	)		11.0
Current liabilities		(18.8	)		(64.1	)
Other assets and liabilities, net		—			0.7
Cash provided by (used in) operating activities		3.0			(33.0	)
Cash flows from investing activities:
Purchase of marketable securities		(61.9	)		(192.9	)
Sale of marketable securities		67.8			484.8
Maturity of marketable securities		9.1			—
Capital expenditures		(23.0	)		(29.5	)
Purchase of molds and tooling		(0.5	)		(0.3	)
Net proceeds from sale of product line		6.6			—
Cash provided by (used in) investing activities		(1.9	)		262.1
Cash flows from financing activities:
Repayment of long-term debt		(2.2	)		(350.8	)
Issuance of long-term debt		—			154.5
Proceeds from issuance of common stock and from exercise of stock options, net		8.0			3.4
Purchase of treasury stock		(2.0	)		(2.0	)
Debt issuance costs		—			(1.0	)
Cash provided by (used in) financing activities		3.8			(195.9	)
Net change in cash and cash equivalents		4.9			33.2
Cash and cash equivalents at beginning of period		330.7			146.3
Cash and cash equivalents at end of period	$	335.6		$	179.5

See accompanying notes to unaudited consolidated financial statements.

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FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 — Basis of Presentation

The accompanying interim consolidated financial statements of Fairchild Semiconductor International, Inc. (the company) have been prepared in conformity with accounting principles generally accepted in the United States of America, consistent in all material respects with those applied in the company’s Annual Report on Form 10-K for the year ended December 25, 2005. The interim financial information is unaudited, but reflects all normal adjustments, which are, in the opinion of management, necessary to provide a fair statement of results for the interim periods presented. The financial statements should be read in conjunction with the financial statements in the company’s Annual Report on Form 10-K for the year ended December 25, 2005. Certain amounts for prior periods have been reclassified to conform to the current presentation. The company’s results for the quarters ended April 2, 2006 and March 27, 2005 consists of 14 weeks and 13 weeks, respectively.

Note 2 — Stock-based Compensation

In December 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) 123 (revised 2004), Share-Based Payment (SFAS 123(R)). SFAS 123(R) supersedes Accounting Principal Board (APB) Opinion 25, Accounting for Stock Issued to Employees (APB 25), and amends SFAS 95, Statement of Cash Flows. SFAS 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values at the date of grant. Pro forma disclosure is no longer an alternative.

Previously, the company accounted for stock-based compensation awards using the intrinsic value method in accordance with APB 25. Under the intrinsic value method, no stock-based compensation expense was recognized when the exercise price of the company’s stock options equaled the fair market value of the underlying stock at the date of grant. Instead, the company disclosed in a footnote the effect on net income (loss) and net income (loss) per share as if the company had applied the fair value based method of SFAS 123, Accounting for Stock-Based Compensation (SFAS 123), to record the expense. Under SFAS 123, this included expense for deferred stock units, restricted stock units and performance units.

On December 26, 2005 (first day of fiscal 2006), the company adopted SFAS 123(R) using the modified prospective method. Under this transition method, stock-based compensation cost recognized in the first quarter of 2006 includes: (a) compensation cost for all share-based awards granted prior to but not yet vested as of December 25, 2005, based on the grant-date fair value estimated in accordance with SFAS 123, and (b) compensation cost for all share-based awards granted subsequent to December 25, 2005, based on the grant-date fair value estimated in accordance with SFAS 123(R). In accordance with the modified prospective method of adoption, the company’s results of operations and financial position for prior periods have not been restated.

The company currently grants equity awards under two equity compensation plans — the Fairchild Semiconductor Stock Plan and the 2000 Executive Stock Option Plan. The company also maintains an employee stock purchase plan. In addition, the company has occasionally granted equity awards outside its equity compensation plans when necessary.

Fairchild Semiconductor Stock Plan.  Under this plan, executives, key employees, non-employee directors and certain consultants may be granted stock options, stock appreciation rights, restricted stock including restricted stock units (RSUs), performance units (PUs), deferred stock units (DSUs), and other stock-based awards. A total of 35,189,731 shares have been authorized for issuance under the plan. Of this number of shares, 3,500,000 may be granted in the form of “full-value awards,” namely awards that are other than stock options and stock appreciation rights, such as restricted stock, DSUs, RSUs and PUs. The maximum term of any option is ten years from the date of grant for incentive stock options and non-qualified stock options. Actual terms for outstanding non-qualified stock options range from six and one half years to ten years and one day. Options granted under the plan are exercisable at the determination of the compensation committee, generally vesting ratably over four years. PUs are contingently

7

FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

granted depending on the achievement of certain predetermined performance goals. DSUs, RSUs and PUs entitle executives to receive one share of common stock for each DSU, RSU or PU issued. For RSUs and PUs, the settlement date is the vesting date. For DSUs, the settlement date is selected by the participant at the time of the grant. Grants of PUs generally vest under the plan over a period of three years, and DSUs and RSUs generally vest over a period of three or four years.

The 2000 Executive Stock Option Plan.  The 2000 Executive Plan authorizes up to 1,671,669 shares of common stock to be issued upon the exercise of options under the plan. Individuals receiving options under the 2000 Executive Plan may not receive in any one year options to purchase more than 1,500,000 shares of common stock. Options generally vest over four years with a maximum term of ten years.

Employee Stock Purchase Plan (ESPP).  The company has maintained the Fairchild Semiconductor International, Inc. Employee Stock Purchase Plan since April 1, 2000. The ESPP has not been approved by stockholders. The ESPP authorizes the issuance of up to 4,000,000 shares of common stock in quarterly offerings to eligible employees at a price that is equal to 85 percent of the lower of the common stock’s market price at the beginning or the end of a quarterly calendar period. A participating employee may withdraw from a quarterly offering any time before the purchase date at the end of the quarter, and obtain a refund of the amounts withheld through the employee’s payroll deductions.

Equity Awards Made Outside Stockholder-Approved Plans.  The company has granted equity awards representing a total of 690,000 shares outside its equity compensation plans. In 2006, the company granted 75,000 options, 20,000 RSUs and 20,000 PUs to Mark S. Frey, its Chief Financial Officer, all of which remain outstanding. In 2004, the company granted 200,000 stock options and 50,000 DSUs to Mark S. Thompson, its President and CEO, of which 37,500 DSUs and all options remain outstanding. In 2003, the company granted 325,000 DSUs to Kirk P. Pond, its former Chairman, President and CEO, none of which remain outstanding.

On February 18, 2005, the company announced the acceleration of certain unvested and “out-of-the-money” stock options previously awarded to employees and officers that had exercise prices per share of $19.50 or higher. Options to purchase approximately 6 million shares of the company’s common stock became exercisable as a result of the vesting acceleration. Based upon the company’s closing stock price of $16.15 on February 18, 2005, none of these options had economic value on the date of acceleration. In connection with the modification of the terms of these options to accelerate their vesting, approximately $33.1 million, on a pre-tax basis, was included in the pro forma net income (loss) table for 2005, representing the remaining unamortized value of the impacted, unvested options just prior to the acceleration. Because the exercise price of all the modified options was greater than the market price of the company’s underlying common stock on the date of their modification, no compensation expense was recorded in the statement of operations in accordance with APB Opinion 25. The primary purpose for modifying the terms of these options to accelerate their vesting was to eliminate the need to recognize remaining unrecognized non-cash compensation expense as measured under SFAS 123(R) as the future expense associated with these options would have been disproportionately high compared to the economic value of the options as of the date of modification. As a result of the acceleration, we estimate that non-cash stock option expense in accordance with SFAS 123(R), was reduced by approximately $12 million in 2006, $4 million in 2007 and $1 million in 2008 on a pre-tax basis.

8

FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table presents a summary of the company’s stock plans and non-plan awards as of April 2, 2006.

	Three Months Ended
	April 2,
	2006
						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
				Exercise		Contractual		Intrinsic
	Shares			Price		Life		Value
	(000’s)					(In years)		(In millions)
Outstanding at December 25, 2005		24,014		$	19.29
Granted		1,747			18.44
Exercised		(593	)		11.94
Forfeited		(161	)		13.94
Expired		(356	)		24.30
Outstanding at April 2, 2006		24,651		$	19.38		5.6	$	59.8
Exercisable at end of period		18,836		$	20.53		5.2	$	39.8

The weighted average grant-date fair value for options granted in the first quarter of 2006 and 2005 was $8.34 and $9.43, respectively.

The following table presents a summary of the company’s DSUs as of April 2, 2006.

	Three Months Ended
	April 2,
	2006
				Weighted
				Average
				Grant-Date
	Shares			Fair Value
Nonvested at December 25, 2005		799,190		$	14.24
Granted		11,458			17.96
Vested		(464,334	)		12.59
Forfeited		(10,654	)		14.54
Nonvested at April 2, 2006		335,660		$	16.57

The weighted average grant-date fair value for DSUs granted in the first quarter of 2006 and 2005 was $17.96 and $14.47, respectively. The total fair value of DSUs vested in the first quarter of 2006 and 2005 was $8.1 million and zero, respectively.

The company’s plan documents governing DSUs contain contingent cash settlement provisions upon a change of control. Accordingly, in conjunction with the adoption of SFAS 123(R) the company now presents previously recorded expense associated with unvested and unsettled DSUs under the balance sheet caption of “Temporary equity-deferred stock units” as required by Securities and Exchange Commission (SEC) Accounting Series Release No. 268 and Emerging Issues Task Force (EITF) Topic D-98.

9

FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table presents a summary of the company’s RSUs as of April 2, 2006.

	Three Months Ended
	April 2,
	2006
			Weighted
			Average
			Grant-Date
	Shares		Fair Value
Nonvested at December 25, 2005		34,700	$	16.41
Granted		218,998		18.36
Vested		—		—
Forfeited		—		—
Nonvested at April 2, 2006		253,698	$	18.09

The weighted average grant-date fair value for RSUs granted in the first quarter of 2006 was $18.36. There were no RSUs outstanding as of March 27, 2005.

The following table presents a summary of the company’s PUs as of April 2, 2006.

	Three Months Ended
	April 2,
	2006
			Weighted
			Average
			Grant-Date
	Shares		Fair Value
Nonvested at December 25, 2005		—	$	—
Granted(1)		826,714		18.51
Increase (decrease) for performance factors		—		—
Vested		—		—
Forfeited		—		—
Nonvested at April 2, 2006		826,714	$	18.51

(1) Represents the maximum potential award based on the 2006 fiscal year performance metric.

The following table summarizes the total intrinsic value of awards exercised (i.e. the difference between the market price at exercise and the price paid by employees to exercise the award) for the first quarter of 2006 and 2005, respectively.

	Three Months Ended
	April 2,		March 27,
	2006		2005
	Total Intrinsic		Total Intrinsic
	Value of Awards		Value of Awards
	Exercised		Exercised
	(In millions)
Options	$	4.2	$	1.2
DSUs	$	8.1	$	—
RSUs	$	—	$	—

The company’s practice is to issue shares of common stock upon exercise or settlement of options, DSUs, RSUs and PUs from previously unissued shares and to issue shares in connection with the stock purchase plan from treasury shares. The company expects to repurchase approximately 550,000 shares in 2006 to satisfy stock purchase

10

FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

plan participation. For the first quarter of 2006, $6.5 million of cash was received from the exercises of stock-based awards.

Valuation and Expense Information under SFAS 123(R)

The following table summarizes stock-based compensation expense under SFAS 123(R) by financial statement line, for the first quarter of 2006.

	Three Months Ended
	April 2,
	2006
	(In millions)
Cost of Sales	$	0.7
Research and Development		1.0
Selling, General and Administrative		3.6
	$	5.3

The company also capitalized $0.8 million of stock-based compensation into inventory for the first quarter of 2006. In addition, due to the U.S. income tax valuation allowance recorded by the company in the second quarter of 2005, the company did not recognize any tax benefit on U.S. based stock compensation expense in the first quarter of 2006. The income tax benefits from foreign tax jurisdictions was approximately $0.1 million.

Total stock-based compensation of $6.1 million includes $1.9 million of cost related to DSUs, RSUs and PUs that would have been included in expense under SFAS 123 even if the company had not adopted SFAS 123(R) in the first quarter of 2006.

Prior to SFAS 123(R), the company calculated stock-based compensation expense (primarily deferred stock units and restricted stock units) for retirement eligible equity award recipients over the stated vesting period. Upon adoption of SFAS 123(R), the company changed its policy and now follows the requisite service period guidance for all new awards, which requires that compensation cost attributable to equity awards be recognized over the requisite service period, which is defined as the period during which an employee is required to provide service in exchange for an award. The impact of this change in policy was immaterial for the first quarter of 2006.

The following table summarizes total compensation cost related to nonvested awards not yet recognized and the weighted average period over which it is expected to be recognized at April 2, 2006.

	Three Months Ended
	April 2,
	2006
	Unrecognized		Weighted
	Compensation		Average
	Cost for		Remaining
	Unvested		Recognition
	Awards		Period
	(In millions)		(In years)
Options	$	19.6		1.7
DSUs	$	3.9		1.3
RSUs	$	4.3		2.3
PUs	$	13.8		2.9

The fair value of each option grant for the company’s plans is estimated on the date of the grant using the Black-Scholes option pricing model with the following weighted average assumptions, utilizing the guidance provided in SFAS 123(R) as well as SEC Staff Accounting Bulletin (SAB) 107.

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FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Three Months Ended
	April 2,
	2006
Expected volatility		53.2	%
Dividend yield		—
Risk-free interest rate		4.5	%
Expected term, in years		3.9
Forfeiture rate		5.6	%

Expected volatility.  The company estimates expected volatility using historical volatility. Options in the company’s stock are not actively traded. As a result, the company determined that utilizing an implied volatility factor would not be appropriate. The company is calculating historical volatility for the period that is commensurate with the option’s expected term assumption.

Dividend yield.  The company does not pay a dividend, therefore this input is not applicable.

Risk-free interest rate.  The company estimated the risk-free interest rate based on zero-coupon U.S. Treasury securities for a period that is commensurate with the expected term assumption.

Expected term.  The company has evaluated terms based on history and exercise patterns across its demographic population. The company believes that this historical data is the best estimate of the expected term of a new option, and that generally all groups of our employees exhibit similar exercise behavior.

Forfeiture rate.  The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest as SFAS 123(R) requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The term “forfeitures” is distinguished from “cancellations” or “expirations” and represents only the unvested portion of the surrendered option. The company has applied an annual forfeiture rate of 5.6% to all unvested options and 1.5% to all unvested units as of April 2, 2006. This analysis will be re-evaluated at least annually and the forfeiture rate will be adjusted as necessary.

Prior to the adoption of SFAS 123(R), the company used the expense recognition method in FASB Interpretation (FIN) 28: Accounting for Stock Appreciation Rights and Other Variable Stock Option or Award Plans to recognize expense. The company switched to a straight-line attribution method on December 26, 2005 for all grants that include only a service condition. Due to the performance criteria, the company’s performance units will be expensed over the service period for each separately vesting tranche. The expense associated with the unvested portion of the pre-adoption grants will continue to be expensed over the service period for each separately vesting tranche.

12

FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As discussed above, previous to December 26, 2005, the company accounted for stock-based compensation under APB 25 and related Interpretations. The following table illustrates the effect on net loss and net loss per common share for the first quarter of 2005 as if the company had applied the fair value based method of SFAS 123 to record stock-based compensation expense.

	Three Months Ended
	March 27,
	2005
	(In millions,
	except per share data)
Net loss, as reported	$	(10.4	)
Add: Stock compensation charge included in net loss determined under the intrinsic value method, net of tax		2.9
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		(37.1	)
Pro forma net loss	$	(44.6	)
Loss per share:
Basic — as reported	$	(0.09	)
Basic — pro forma	$	(0.37	)
Diluted — as reported	$	(0.09	)
Diluted — pro forma	$	(0.37	)

The fair values of options granted in the first quarter of 2005 were estimated on the date of grant using the Black-Scholes option pricing model, with the following weighted average assumptions.

	Three Months Ended
	March 27,
	2005
Expected volatility		65.0	%
Dividend yield		—
Risk-free interest rate		4.0	%
Expected life, in years		6.0

13

FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 3 — Financial Statement Details

	April 2,		December 25,
	2006		2005
	(In millions)
Inventories
Raw materials	$	26.8	$	25.3
Work in process		134.7		126.4
Finished goods		52.1		48.8
	$	213.6	$	200.5
Property, plant and equipment
Land and improvements	$	26.5	$	32.0
Buildings and improvements		314.5		307.2
Machinery and equipment		1,367.1		1,341.8
Construction in progress		57.7		75.4
Total property, plant and equipment		1,765.8		1,756.4
Less accumulated depreciation		1,135.7		1,121.4
	$	630.1	$	635.0
Accrued expenses and other current liabilities
Payroll and employee related accruals	$	54.8	$	42.9
Accrued interest		4.4		7.6
Income taxes payable		15.3		30.2
Restructuring		2.3		4.9
Reserve for potential settlement losses		5.8		17.2
Other		22.8		26.1
	$	105.4	$	128.9

14

FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 4 — Computation of Net Income (Loss) Per Share

Basic net income (loss) per share is computed using the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share is computed using the weighted-average number of common shares outstanding during the period, plus the dilutive effect of potential future issuances of common stock relating to stock option programs and other potentially dilutive securities. Potentially dilutive common equivalent shares consist of stock options, shares represented by outstanding and unvested PUs, DSUs and RSUs, and shares obtainable upon the conversion of the Convertible Senior Subordinated Notes, due November 1, 2008. In calculating diluted earnings per share, the dilutive effect of stock options is computed using the average market price for the respective period. Potential shares related to certain of the company’s outstanding stock options were excluded because they were anti-dilutive, but could be dilutive in the future. The following table sets forth the computation of basic and diluted earnings per share.

	Three Months Ended
	April 2,		March 27,
	2006		2005
	(In millions, except per share data)
Basic:
Net income (loss)	$	26.6	$	(10.4	)
Weighted average shares outstanding		121.4		119.6
Net income (loss) per share	$	0.22	$	(0.09	)
Diluted:
Net income (loss)	$	26.6	$	(10.4	)
Weighted average shares outstanding		121.4		119.6
Assumed exercise of common stock equivalents		2.5		—
Weighted-average common and common equivalent shares		123.9		119.6
Net income (loss) per share	$	0.21	$	(0.09	)
Anti-dilutive common stock equivalents, non-vested stock, DSUs and RSUs		16.6		3.4

In addition, the computation of diluted earnings per share did not include the assumed conversion of the senior subordinated notes because the effect would have been anti-dilutive. As a result, $1.7 million of interest expense was not added back to the numerator for the period presented. In addition, potential common shares of 6.7 million were not included in the denominator for all periods presented.

Note 5 — Supplemental Cash Flow Information

	Three Months Ended
	April 2,		March 27,
	2006		2005
	(In millions)
Cash paid, net for:
Income taxes	$	15.2	$	2.1
Interest	$	13.4	$	24.2

Note 6 — Marketable Securities

The company invests excess cash in marketable securities consisting primarily of commercial paper, corporate notes and bonds, and U.S. Government securities with maturities of no greater than 36 months. The company also

15

FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

invests in auction rate securities. These securities have long-term underlying maturities, however, the market is highly liquid and the interest rates reset based on an auction process every 7, 28 or 35 days. The company’s intent is not to hold these securities to maturity, but rather to use the interest rate reset feature and active auction process to sell securities to provide liquidity as needed. The company’s practice is to invest in these securities for higher yields compared to cash equivalents.

All of the company’s marketable securities are classified as available-for-sale. In accordance with SFAS 115, Accounting for Certain Investments in Debt and Equity Securities, available-for-sale securities are carried at fair value with unrealized gains and losses included as a component of other comprehensive income within stockholders’ equity, net of any related tax effect. Realized gains and losses and declines in value judged by management to be other than temporary on these investments are included in interest income and expense. For the purpose of computing realized gains and losses, cost is identified on a specific identification basis.

The following table presents the amortized cost and estimated fair value of available-for-sale securities by contractual maturity at April 2, 2006.

	Amortized		Market
	Cost		Value
	(In millions)
Due in one year or less	$	91.7	$	90.6
Due after one year through three years		14.0		13.7
Due after three years through ten years		—		—
Due after ten years		95.7		95.7
	$	201.4	$	200.0

Note 7 — Goodwill and Intangible Assets

The following table presents a summary of acquired intangible assets.

			As of April 2, 2006					As of December 25, 2005
	Period of		Gross Carrying		Accumulated			Gross Carrying		Accumulated
	Amortization		Amount		Amortization			Amount		Amortization
			(In millions)
Identifiable intangible assets:
Developed technology		5 - 15 years	$	225.6	$	(112.3	)	$	225.6	$	(108.1	)
Customer base		8 years		55.8		(49.2	)		55.8		(47.5	)
Covenant not to compete		5 years		30.4		(30.4	)		30.4		(30.4	)
Trademarks and tradenames		4 years		24.9		(24.9	)		24.9		(24.9	)
Patents		4 years		5.4		(5.1	)		5.4		(5.1	)
Subtotal				342.1		(221.9	)		342.1		(216.0	)
Goodwill				229.9		—			229.9		—
Total			$	572.0	$	(221.9	)	$	572.0	$	(216.0	)

The titles of our segments changed at the beginning of fiscal 2006. As a result, our newly-titled reporting units that carry goodwill include Functional Power, Analog Products and Standard Products (see Note 8 below for further information). No amounts were reclassified as a result of the change. The following table presents the carrying amount of goodwill by reporting unit.

	Analog		Functional		Standard
	Products		Power		Products		Total
	(In millions)
Balance as of April 2, 2006 and December 25, 2005	$	15.5	$	159.9	$	54.5	$	229.9

16

FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

During the three months ended April 2, 2006, there were no changes to the carrying amount of goodwill due to acquisitions or divestitures.

The following table presents the estimated amortization expense for intangible assets for the remainder of 2006 and for each of the five succeeding fiscal years.

	(In millions)
Estimated Amortization Expense:
Remainder of 2006	$	17.5
2007		18.3
2008		16.5
2009		16.5
2010		16.4
2011		12.3

Note 8 — Segment Information

Effective December 26, 2005 (first day of fiscal year 2006), the company changed the titles of its operating segments to align the segment presentation with the way management runs the business. This change had no impact on the historical financial results of the segments presented in this report. The company is currently organized into three reportable segments: Functional Power, Analog Products, previously known as Power Discrete and Power Analog, respectively, and Standard Products. Functional Power includes high voltage, low voltage, automotive and radio frequency (RF) products. Analog Products includes system power, power conversion, signal conditioning, switches and interface products. Standard Products includes optoelectronics lighting, standard linear, logic, standard diode and transistors (SDT) and foundry products.

The following table presents selected operating segment financial information for the three months ended April 2, 2006 and March 27, 2005.

	Three Months Ended
	April 2,			March 27,
	2006			2005
	(In millions)
Revenue and Operating Income (Loss):
Functional Power
Total revenue	$	235.8		$	204.6
Operating income		26.6			15.3
Analog Products
Total revenue		82.1			70.3
Operating income (loss)		3.5			(6.3	)
Standard Products
Total revenue		91.6			87.9
Operating income		5.6			2.3
Other
Operating loss(1)		(2.1	)		(4.1	)
Total Consolidated
Total revenue	$	409.5		$	362.8
Operating income	$	33.6		$	7.2

(1) Includes $5.3 million of stock-based compensation expense and a $3.2 million gain on the sale of a product line for the first quarter of 2006. Includes $4.1 million of restructuring in the first quarter of 2005.

17

FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 9 — Restructuring and Impairments

During the three months ended April 2, 2006, the company recorded no restructuring and impairment charges.

During the three months ended March 27, 2005, the company recorded a restructuring charge of $4.1 million. This charge included $3.9 million in employee separation costs, $0.5 million in office closure costs, and a $0.3 million reserve release associated with the 2004 Infrastructure Realignment Program due to new estimates in restructuring expenses.

The following table summarizes the activity in the company’s accrual for restructuring and impairment costs for the three months ended April 2, 2006 (in millions).

	Accrual											Accrual
	Balance at		New		Cash			Reserve		Non-Cash		Balance at
	12/25/2005		Charges		Paid			Release		Items		4/2/2006
2004 Infrastructure Realignment Program:
Employee Separation Costs	$	0.8	$	—	$	(0.2	)	$	—	$	—	$	0.6
2005 Infrastructure Realignment Program:
Employee Separation Costs		4.1		—		(2.4	)		—		—		1.7
	$	4.9	$	—	$	(2.6	)	$	—	$	—	$	2.3

The company expects to complete payment of the above restructuring accruals by the third quarter of 2006.

Note 10 — Derivatives

The company uses derivative instruments to manage exposures to foreign currencies. In accordance with SFAS 133, Accounting for Certain Derivative Instruments and Certain Hedging Activities, the fair value of these hedges is recorded on the balance sheet. Certain forecasted transactions are exposed to foreign currency risks. The company monitors its foreign currency exposures to maximize the overall effectiveness of its foreign currency hedge positions. Currencies hedged include the euro, Japanese yen, Malaysian ringgit and Korean won. The company’s objectives for holding derivatives are to minimize the risks using the most effective methods to eliminate or reduce the impacts of these exposures.

Changes in the fair value of derivative instruments related to time value are included in the assessment of hedge effectiveness. Hedge ineffectiveness, determined in accordance with SFAS 133 and SFAS 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities — an amendment of FASB Statement 133, did not have a material impact on earnings for the three months ended April 2, 2006. No cash flow hedges were discontinued for the three months ended April 2, 2006. One cash flow hedge was discontinued for the three months ended March 27, 2005. The immaterial favorable impact of terminating the hedge was recorded in earnings in accordance with SFAS 133.

Derivative gains and losses included in other comprehensive income (OCI) are reclassified into earnings at the time the forecasted transaction revenue is recognized. The company estimates that the entire $0.3 million of net unrealized derivative gains included in OCI will be reclassified into earnings within the next twelve months.

Note 11 — Contingencies

From time to time since late 2001, the company has received claims from a number of customers seeking damages resulting from certain products manufactured with a phosphorus-containing mold compound. Mold compound is the plastic resin used to encapsulate semiconductor chips. This particular mold compound causes some chips to short in some situations, resulting in chip failure. The company has been named in lawsuits relating to these mold compound claims. In January 2005, the company was named as a defendant in a lawsuit filed by Lucent Technologies Inc. in the Superior Court of New Jersey. The Lucent lawsuit alleges breach of contract and breach of

18

FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

warranty claims and seeks unspecified damages allegedly caused by the company’s products. The company believes it has strong defenses against Lucent’s claims and intends to vigorously defend the lawsuit.

Several other customers have made claims for damages or threatened to begin litigation as a result of the mold compound issue if their claims are not resolved according to their demands, and the company may face additional lawsuits as a result. On December 29, 2005, the company settled a lawsuit filed against the company and three of its distributors by Alcatel Canada Inc. in the Ontario Superior Court of Justice, alleging breach of contract, negligence and other claims and claiming damages allegedly caused by the company’s products containing the mold compound. The company has also resolved similar claims with several of its leading customers. The company has exhausted insurance coverage for such customer claims. While the exact amount of these losses is not known, the company recorded a reserve for estimated potential settlement losses of $11.0 million in the Consolidated Statement of Operations during the second quarter of 2004 and an additional $6.9 million in the fourth quarter of 2005. These estimates were based upon assessments of the potential liability using an analysis of the claims and historical experience. At April 2, 2006 and December 25, 2005, the reserve for estimated potential settlement losses was $5.8 million and $17.2 million, respectively. The decrease in the reserve is due to settlement payments made during the first quarter of 2006. If the company continues to receive additional claims for damages from customers beyond the period of time normally observed for such claims, if more of these claims proceed to litigation, or if the company chooses to settle claims in settlement of or to avoid litigation, then the company may incur a liability in excess of the current reserve.

On October 20, 2004, the company and its wholly owned subsidiary, Fairchild Semiconductor Corporation, were sued by Power Integrations, Inc. (POWI) in the United States District Court for the District of Delaware. The complaint filed by POWI alleges that certain of the company’s pulse width modulation (PWM) integrated circuit products infringe four of POWI’s U.S. patents, and seeks a permanent injunction preventing the company from manufacturing, selling, offering for sale or importing the allegedly infringing products as well as money damages for the alleged past infringement. The company has analyzed the POWI patents in light of our products and, based on that analysis, does not believe its products violate POWI’s patents and, accordingly, is vigorously contesting this lawsuit. The company expects the case to go to trial in 2006 or early 2007. Should the company lose the lawsuit, the company expects the monetary damages would be immaterial. However, it could adversely impact the company’s ability to sell products found to be infringing, either directly or indirectly in the U.S.

In a separate action, the company filed a lawsuit on April 11, 2006, against POWI in the United States District Court for the Eastern District of Texas. The lawsuit asserts that POWI’s PWM products infringe U.S. Patent No. 5,264,719. Intersil Corporation owns U.S. Patent No. 5,264,719, for High Voltage Lateral Semiconductor Devices, and is a co-plantiff with the company in the lawsuit. The company has held license rights under the patent since 2001 and more recently secured exclusive rights to assert the patent against Power Integrations. The company intends to take all possible steps to seek a court order to stop POWI from making, using, selling, offering for sale or importing the infringing products into the U.S. and to obtain monetary damages for POWI’s infringing activities.

On December 30, 2004, the company’s wholly owned subsidiary, Fairchild Semiconductor Corporation, was sued by ZTE Corporation, a communications equipment manufacturer, in Guangdong Higher People’s Court in Guangzhou, People’s Republic of China. The complaint filed by ZTE alleges that certain of the company’s products were defective and caused personal injury and/or property loss to ZTE. ZTE claims 65,733,478 CNY as damages (equivalent to approximately $8.2 million USD based on exchange rates at April 2, 2006). The company contested the lawsuit in a trial held on October 20, 2005. The court’s decision is pending and the company is unable to predict when a decision will be reached. The company continues to deny the allegations in the lawsuit.

From time to time the company is involved in legal proceedings in the ordinary course of business. The company believes that there is no such ordinary-course litigation pending that could have, individually or in the aggregate, a material adverse effect on its business, financial condition, results of operations or cash flows.

19

FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 12 — Divestitures

On January 3, 2006, Fairchild announced the sale of the LED lamps and displays product line to Everlight International Corporation, a U.S. subsidiary of Everlight Electronics Company, Ltd., of Taiwan. The company decided to sell the LED lamps and displays product line as it does not fit the strategic direction of the company. Fairchild will retain the optocoupler and infared product lines, as these products are closer to and complement the company’s core strategy. The company intends to grow these product lines through focused research and development.

As part of the sale agreement, Fairchild Semiconductor will assist Everlight with transitioning the product line by continuing to directly support the sale of LED lamps and displays products to its customers for an appropriate period of time. As a result of the sale, the company recorded a net gain on the sale of $3.2 million in the first quarter of 2006, and net cash proceeds of $6.6 million. The divestiture is considered immaterial and therefore no pro forma results of operations have been presented.

Note 13 — Condensed Consolidating Financial Statements

The company operates through its wholly owned subsidiary Fairchild Semiconductor Corporation and other indirect wholly owned subsidiaries. Fairchild Semiconductor International, Inc. and certain of Fairchild Semiconductor Corporation’s subsidiaries are guarantors under Fairchild Semiconductor Corporation’s 5% Convertible Senior Subordinated Notes. These guarantees are joint and several. Accordingly, presented below are condensed consolidating balance sheets of Fairchild Semiconductor International, Inc. as of April 2, 2006 and December 25, 2005 and related condensed consolidating statements of operations for the three months ended April 2, 2006 and March 27, 2005 and condensed consolidating statements of cash flows for the three months ended April 2, 2006 and March 27, 2005.

20

FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

CONDENSED CONSOLIDATING BALANCE SHEET

	April 2, 2006
	Unconsolidated			Unconsolidated										Consolidated
	Fairchild			Fairchild					Non-					Fairchild
	Semiconductor			Semiconductor		Guarantor			Guarantor					Semiconductor
	International, Inc.			Corporation		Subsidiaries			Subsidiaries		Eliminations			International, Inc.
	(In millions)
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	—		$	167.2	$	—		$	168.4	$	—		$	335.6
Short-term marketable securities		—			186.3		—			—		—			186.3
Accounts receivable, net		—			16.0		3.7			128.8		—			148.5
Inventories		—			110.1		1.5			102.0		—			213.6
Deferred income taxes, net		—			—		—			4.9		—			4.9
Other current assets		—			23.3		—			10.0		—			33.3
Total current assets		—			502.9		5.2			414.1		—			922.2
Property, plant and equipment, net		—			278.9		1.3			349.9		—			630.1
Deferred income taxes		—			—		—			1.0		—			1.0
Intangible assets, net		—			29.1		13.2			77.9		—			120.2
Goodwill		—			167.7		61.8			0.4		—			229.9
Long-term marketable securities		—			13.7		—			—		—			13.7
Investment in subsidiary		1,043.3			932.3		259.0			92.3		(2,326.9	)		—
Other assets		—			13.9		2.1			13.9		—			29.9
Total assets	$	1,043.3		$	1,938.5	$	342.6		$	949.5	$	(2,326.9	)	$	1,947.0
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	—		$	3.4	$	—		$	—	$	—		$	3.4
Accounts payable		—			64.3		7.0			32.0		—			103.3
Accrued expenses and other current liabilities		—			59.0		1.4			45.0		—			105.4
Total current liabilities		—			126.7		8.4			77.0		—			212.1
Long-term debt, less current portion		—			641.0		—			—		—			641.0
Net intercompany (receivable) payable		—			101.8		(253.1	)		151.3		—			—
Deferred income taxes		—			22.3		—			9.1		—			31.4
Other liabilities		—			0.5		—			15.8		—			16.3
Total liabilities		—			892.3		(244.7	)		253.2		—			900.8
Commitments and contingencies
Temporary equity — deferred stock units		2.2			—		—			—		—			2.2
Stockholders’ equity:
Common stock		1.2			—		—			—		—			1.2
Additional paid-in capital		1,284.2			—		—			—		—			1,284.2
Retained earnings (accumulated deficit)		(239.3	)		1,043.3		587.3			696.3		(2,326.9	)		(239.3	)
Accumulated other comprehensive income		—			2.9		—			—		—			2.9
Less treasury stock (at cost)		(5.0	)		—		—			—		—			(5.0	)
Total stockholders’ equity		1,041.1			1,046.2		587.3			696.3		(2,326.9	)		1,044.0
Total liabilities, temporary equity and stockholders’ equity	$	1,043.3		$	1,938.5	$	342.6		$	949.5	$	(2,326.9	)	$	1,947.0

21

FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

	Three Months Ended April 2, 2006
	Unconsolidated			Unconsolidated												Consolidated
	Fairchild			Fairchild						Non-						Fairchild
	Semiconductor			Semiconductor			Guarantor			Guarantor						Semiconductor
	International, Inc.			Corporation			Subsidiaries			Subsidiaries			Eliminations			International, Inc.
	(In millions)
	(Unaudited)
Total revenue	$	—		$	50.3		$	—		$	359.2		$	—		$	409.5
Cost of sales		—			15.3			(0.2	)		271.9			—			287.0
Gross profit		—			35.0			0.2			87.3			—			122.5
Operating expenses:
Research and development		—			15.4			3.6			7.2			—			26.2
Selling, general and administrative		—			39.2			1.8			19.0			—			60.0
Amortization of acquisition-related intangibles		—			1.3			0.6			4.0			—			5.9
Gain on sale of product line, net		—			—			(3.0	)		(0.2	)		—			(3.2	)
Total operating expenses		—			55.9			3.0			30.0			—			88.9
Operating income (loss)		—			(20.9	)		(2.8	)		57.3			—			33.6
Interest expense		—			11.3			—			—			—			11.3
Interest income		—			(3.5	)		—			(1.9	)		—			(5.4	)
Equity in subsidiary (income) loss		(26.6	)		(50.9	)		(3.4	)		—			80.9			—
Income (loss) before income taxes		26.6			22.2			0.6			59.2			(80.9	)		27.7
Provision (benefit) for income taxes		—			(4.4	)		—			5.5			—			1.1
Net income	$	26.6		$	26.6		$	0.6		$	53.7		$	(80.9	)	$	26.6

22

FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

	Three Months Ended April 2, 2006
	Unconsolidated			Unconsolidated								Consolidated
	Fairchild			Fairchild					Non-			Fairchild
	Semiconductor			Semiconductor			Guarantor		Guarantor			Semiconductor
	International, Inc.			Corporation			Subsidiaries		Subsidiaries			International, Inc.
	(In millions)
	(Unaudited)
Cash flows provided by (used in) operating activities:	$	—		$	(31.6	)	$	—	$	34.6		$	3.0
Investing activities:
Purchase of marketable securities		—			(61.9	)		—		—			(61.9	)
Sale of marketable securities		—			67.8			—		—			67.8
Maturity of marketable securities		—			9.1			—		—			9.1
Capital expenditures		—			(7.5	)		—		(15.5	)		(23.0	)
Purchase of molds and tooling		—			—			—		(0.5	)		(0.5	)
Net proceeds from sale of product line		—			6.6			—		—			6.6
Investment (in) from affiliate		(6.0	)		6.0			—		—			—
Cash provided by (used in) investing activities		(6.0	)		20.1			—		(16.0	)		(1.9	)
Financing activities:
Repayment of long-term debt		—			(2.2	)		—		—			(2.2	)
Proceeds from issuance of common stock and from exercise of stock options, net		8.0			—			—		—			8.0
Purchase of treasury stock		(2.0	)		—			—		—			(2.0	)
Cash provided by (used in) financing activities		6.0			(2.2	)		—		—			3.8
Net change in cash and cash equivalents		—			(13.7	)		—		18.6			4.9
Cash and cash equivalents at beginning of period		—			180.9			—		149.8			330.7
Cash and cash equivalents at end of period	$	—		$	167.2		$	—	$	168.4		$	335.6
Supplemental Cash Flow Information:
Cash paid during the period for:
Income taxes	$	—		$	12.3		$	—	$	2.9		$	15.2
Interest	$	—		$	13.4		$	—	$	—		$	13.4

23

FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

CONDENSED CONSOLIDATING BALANCE SHEET

	December 25, 2005
	Unconsolidated			Unconsolidated										Consolidated
	Fairchild			Fairchild					Non-					Fairchild
	Semiconductor			Semiconductor		Guarantor			Guarantor					Semiconductor
	International, Inc.			Corporation		Subsidiaries			Subsidiaries		Eliminations			International, Inc.
	(In millions)
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	—		$	180.9	$	—		$	149.8	$	—		$	330.7
Short-term marketable securities		—			182.5		—			—		—			182.5
Accounts receivable, net		—			16.5		—			112.1		—			128.6
Inventories		—			101.9		1.3			97.3		—			200.5
Deferred income taxes, net		—			—		—			3.3		—			3.3
Other current assets		—			18.7		—			10.2		—			28.9
Total current assets		—			500.5		1.3			372.7		—			874.5
Property, plant and equipment, net		—			281.5		1.4			352.1		—			635.0
Intangible assets, net		—			30.6		13.8			81.7		—			126.1
Goodwill		—			167.7		61.8			0.4		—			229.9
Long-term marketable securities		—			32.7		—			—		—			32.7
Investment in subsidiary		1,004.6			906.6		263.2			92.3		(2,266.7	)		—
Other assets		—			14.1		1.8			14.2		—			30.1
Total assets	$	1,004.6		$	1,933.7	$	343.3		$	913.4	$	(2,266.7	)	$	1,928.3
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	—		$	5.6	$	—		$	—	$	—		$	5.6
Accounts payable		—			56.5		0.5			38.2		—			95.2
Accrued expenses and other current liabilities		—			87.3		0.6			41.0		—			128.9
Total current liabilities		—			149.4		1.1			79.2		—			229.7
Long-term debt, less current portion		—			641.0		—			—		—			641.0
Net intercompany (receivable) payable		—			112.0		(247.7	)		135.7		—			—
Deferred income taxes		—			22.3		—			11.2		—			33.5
Other liabilities		—			0.5		—			15.1		—			15.6
Total liabilities		—			925.2		(246.6	)		241.2		—			919.8
Commitments and contingencies
Stockholders’ equity:
Common stock		1.2			—		—			—		—			1.2
Additional paid-in capital		1,274.1			—		—			—		—			1,274.1
Retained earnings (accumulated deficit)		(265.9	)		1,004.6		589.9			672.2		(2,266.7	)		(265.9	)
Accumulated other comprehensive income		—			3.9		—			—		—			3.9
Less treasury stock (at cost)		(4.8	)		—		—			—		—			(4.8	)
Total stockholders’ equity		1,004.6			1,008.5		589.9			672.2		(2,266.7	)		1,008.5
Total liabilities and stockholders’ equity	$	1,004.6		$	1,933.7	$	343.3		$	913.4	$	(2,266.7	)	$	1,928.3

24

FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

	Three Months Ended March 27, 2005
	Unconsolidated			Unconsolidated												Consolidated
	Fairchild			Fairchild						Non-						Fairchild
	Semiconductor			Semiconductor			Guarantor			Guarantor						Semiconductor
	International, Inc.			Corporation			Subsidiaries			Subsidiaries			Eliminations			International, Inc.
	(In millions)
	(Unaudited)
Total revenue	$	—		$	356.6		$	1.7		$	448.8		$	(444.3	)	$	362.8
Cost of sales		—			329.3			2.0			392.0			(444.3	)		279.0
Gross profit (loss)		—			27.3			(0.3	)		56.8			—			83.8
Operating expenses:
Research and development		—			10.5			2.6			5.9			—			19.0
Selling, general and administrative		—			32.5			1.0			13.9			—			47.4
Amortization of acquisition-related intangibles		—			1.4			0.7			4.0			—			6.1
Restructuring and impairments		—			3.3			—			0.8			—			4.1
Total operating expenses		—			47.7			4.3			24.6			—			76.6
Operating income (loss)		—			(20.4	)		(4.6	)		32.2			—			7.2
Interest expense		—			13.3			—			—			—			13.3
Interest income		—			(3.1	)		—			(0.1	)		—			(3.2	)
Other expense		—			23.9			—			—			—			23.9
Equity in subsidiary (income) loss		10.4			(26.9	)		(8.5	)		—			25.0			—
Income (loss) before income taxes		(10.4	)		(27.6	)		3.9			32.3			(25.0	)		(26.8	)
Provision (benefit) for income taxes		—			(17.2	)		—			0.8			—			(16.4	)
Net income (loss)	$	(10.4	)	$	(10.4	)	$	3.9		$	31.5		$	(25.0	)	$	(10.4	)

25

FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

	Three Months Ended March 27, 2005
	Unconsolidated			Unconsolidated								Consolidated
	Fairchild			Fairchild					Non-			Fairchild
	Semiconductor			Semiconductor			Guarantor		Guarantor			Semiconductor
	International, Inc.			Corporation			Subsidiaries		Subsidiaries			International, Inc.
	(In millions)
	(Unaudited)
Cash flows provided by (used in) operating activities:	$	—		$	(45.0	)	$	—	$	12.0		$	(33.0	)
Investing activities:
Purchase of marketable securities		—			(192.9	)		—		—			(192.9	)
Sale of marketable securities		—			484.8			—		—			484.8
Capital expenditures		—			(7.2	)		—		(22.3	)		(29.5	)
Purchase of molds and tooling		—			—			—		(0.3	)		(0.3	)
Investment (in) from affiliate		(1.4	)		1.4			—		—			—
Cash provided by (used in) financing activities		(1.4	)		286.1			—		(22.6	)		262.1
Financing activities:
Repayment of long-term debt		—			(350.8	)		—		—			(350.8	)
Issuance of long-term debt		—			154.5			—		—			154.5
Proceeds from issuance of common stock and from exercise of stock options, net		3.4			—			—		—			3.4
Purchase of treasury stock		(2.0	)		—			—		—			(2.0	)
Other		—			(1.0	)		—		—			(1.0	)
Cash provided by (used in) financing activities		1.4			(197.3	)		—		—			(195.9	)
Net change in cash and cash equivalents		—			43.8			—		(10.6	)		33.2
Cash and cash equivalents at beginning of period		—			96.6			—		49.7			146.3
Cash and cash equivalents at end of period	$	—		$	140.4		$	—	$	39.1		$	179.5
Supplemental Cash Flow Information:
Cash paid during the period for:
Income taxes	$	—		$	—		$	—	$	2.1		$	2.1
Interest	$	—		$	24.2		$	—	$	—		$	24.2

26

Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

Except as otherwise indicated in this Quarterly Report on Form 10-Q, the terms “we,” “our,” the “company,” “Fairchild” and “Fairchild International” refer to Fairchild Semiconductor International, Inc. and its consolidated subsidiaries, including Fairchild Semiconductor Corporation, our principal operating subsidiary. We refer to individual corporations where appropriate.

Overview

During 2006, we will continue to focus on power products. Our power product revenue has grown from just 15% of total sales in fiscal year 1997 to 78% of total sales in the first quarter of fiscal year 2006, making us the top supplier of power semiconductors in the world. We have a wide portfolio of products that leverage expertise in both analog and discrete power technologies, as well as products that provide our customers with an integrated total power management solution in a single, multi-chip module package.

At the beginning of 2006, we changed the titles of our operating segments to align them with the way management runs the company. The new segment titles are Functional Power and Analog Products, which management previously referred to as Power Discrete and Power Analog, respectively, and Standard Products, which did not change. These title changes had no impact on our segment reporting.

Our primary business goal for 2006 is to improve the value of our product mix to drive higher margins and improve our profitability and return on investment. During 2006, we will focus on improving the quality of our business and raising gross margins by managing product mix more selectively and increasing the mix of our more proprietary, higher margin new products, while also discontinuing outdated and low margin products. One element of this approach is to hold annual capital expenditures to 6 to 8% of sales. Our percentage of capital expenditures to sales for the first quarter of 2006 was 5.6% compared to 8.1% in the first quarter of 2005. By limiting our capital spending for additional capacity, we are forced to aggressively manage product mix in order to free up capacity for higher margin, faster growing products and drive discipline into our production.

During 2005, we focused primarily on distribution resale rather than sales into the distribution channel. During 2006, we will continue to actively manage both our internal and distribution inventories by continuing our focus on channel sell through, or end-market demand, while constraining our factory output and shipments. As a result of our efforts, we maintained distribution inventory on hand at approximately 11 weeks in the first quarter of 2006 as compared to more than 16 weeks in the first quarter of 2005. In the first quarter of 2006, our internal inventory increased $13.1 million from the fourth quarter of 2005 and inventory turns decreased to 5.0 times, but decreased by $43.3 million compared to the first quarter of 2005, when turns were 4.3 times.

Gross margins, operating margins and inventory turns continue to be key indices that both senior management and our investors utilize to measure our financial performance. Another key performance indicator we use is days sales outstanding (DSO). In the first quarter of 2006, DSO was 35 days compared to 41 days in the first quarter of 2005 and 32 days in the fourth quarter of 2005.

In the first quarter of 2006, we recorded $5.3 million in stock-based compensation expense. Approximately $0.7 million, $1.0 million and $3.6 million were included in cost of goods sold, research and development, and selling, general and administrative expense, respectively. We also capitalized $0.8 million into inventory. Included in the total $6.1 million of stock-based compensation in the first quarter of 2006 is $1.9 million that would have been recorded under SFAS 123 even if SFAS 123(R) had not been adopted.

We continue to follow our “asset-light” investment strategy for many of our standard products, which typically have lower gross margins and lower or negative long-term sales growth potential. Through this strategy we are gradually transferring the manufacturing for these mature products to third party subcontractors, where appropriate, thereby allowing our own manufacturing facilities to focus on building higher-growth, higher-margin and more proprietary products. We believe that by following this long term “asset-light” approach for mature products, we will improve our return on invested capital and lessen our exposure to falling prices on commodity products during industry downturns.

27

While our expanding power product portfolio serves a wide variety of end markets, our sales tend to follow a seasonal pattern which is affected by consumer and corporate purchasing patterns, and regional lifestyle issues such as vacation periods and holidays. Typically, our strongest shipping quarter is the fourth quarter, which is driven by sales into products that are purchased by consumers for the Christmas holiday season. First quarter sales are generally weaker than the fourth quarter, as our production lines are constrained by the celebration of Lunar New Year holidays in Asia. Second quarter sales are generally stronger than the first quarter, often driven by stronger corporate spending. Third quarter sales are generally weaker than the second quarter as customer summer vacation schedules slow business activity. These are general seasonal trends that we have observed over many years, however, specific conditions in any given year, such as channel inventory builds or corrections, customer demand increases or decreases, new end market product cycles, or macroeconomic or political events may override these cyclical patterns.

The first quarter of 2006 included 14 weeks compared to 13 weeks for all other quarters presented.

Results of Operations

The following table summarizes certain information relating to our operating results as derived from our unaudited consolidated financial statements.

	Three Months Ended
	April 2,					March 27,
	2006					2005
	(Dollars in millions)
Total revenues	$	409.5		100	%	$	362.8		100	%
Gross profit		122.5		30	%		83.8		23	%
Operating expenses:
Research and development		26.2		6	%		19.0		5	%
Selling, general and administrative		60.0		15	%		47.4		13	%
Amortization of acquisition-related intangibles		5.9		1	%		6.1		2	%
Restructuring and impairments		—		0	%		4.1		1	%
Gain on sale of product line, net		(3.2	)	(1	)%		—		0	%
Reserve for potential settlement losses		—		0	%		—		0	%
Total operating expenses		88.9		22	%		76.6		21	%
Operating income		33.6		8	%		7.2		2	%
Interest expense		11.3		3	%		13.3		4	%
Interest income		(5.4	)	(1	)%		(3.2	)	(1	)%
Other (income) expense		—		0	%		23.9		7	%
Income (loss) before income taxes		27.7		7	%		(26.8	)	(7	)%
Provision (benefit) for income taxes		1.1		0	%		(16.4	)	(5	)%
Net income (loss)	$	26.6		6	%	$	(10.4	)	(3	)%

Total Revenues.  Total revenues for the first three months of 2006 increased $46.7 million, or 13%, as compared to the same period in 2005. The increase was seen across all segments, particularly Functional Power, which accounted for more than half the increase (or $31.2 million). Included in revenue during the first quarter of 2006 was an additional week as compared to 2005. Overall, increases in unit volumes contributed 27% of the increase, offset by decreases in average selling prices of 14%.

28

Geographic revenue information is based on the customer location within the indicated geographic region. The following table presents, as a percentage of sales, geographic sales for the United States, Other Americas, Europe, China, Taiwan, Korea and Other Asia/Pacific (which for our geographic reporting purposes includes Japan and Singapore and excludes Korea) for the three months ended April 2, 2006 and March 27, 2005.

	Three Months Ended
	April 2,			March 27,
	2006			2005
United States		10	%		10	%
Other Americas		3			2
Europe		12			11
China		24			23
Taiwan		21			21
Korea		15			18
Other Asia/Pacific		15			15
Total		100	%		100	%

The decrease in our Korean percentage of sales is due to slower than expected sales, which we anticipate will begin to increase in future quarters as we shift our strategic focus away from traditional color televisions to ultra portable handsets and other high power products.

Gross Profit.  The increase in gross profit for the first quarter of 2006 as compared to 2005 was driven by 31% higher unit volumes, increased factory utilization, improved product mix and approximately $15 million lower depreciation expense partially offset by higher bonus expense. Gross profit as a percentage of sales for the first quarter of 2006 was 29.9%. Included in gross profit in the first quarter of 2006 is $0.7 million of stock-based compensation expense, which is included in our “Other” reportable segment.

Stock-Based Compensation Expense.  On December 26, 2005 (first day of fiscal 2006), we adopted SFAS 123(R) using the modified prospective application method. SFAS 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values at the date of grant. Pro forma disclosure is no longer an alternative. Under the modified prospective application method, stock-based compensation cost recognized in the first quarter of 2006 includes: (a) compensation cost for all share-based awards granted prior to but not yet vested as of December 25, 2005, based on the grant-date fair value estimated in accordance with SFAS 123, and (b) compensation cost for all share-based awards granted subsequent to December 25, 2005, based on the grant-date fair value estimated in accordance with SFAS 123(R). In accordance with the modified prospective method of adoption, the company’s results of operations and financial position for prior periods have not been restated.

Compensation cost for options is calculated on the date of grant using the fair value of the options as determined by the Black-Scholes valuation model. The Black-Scholes valuation model requires us to make several assumptions, two of which are expected volatility and expected life. In light of SFAS 123(R), we have reevaluated the assumptions used in estimating the fair value of employee options granted. Based on this reevaluation, we have revised our methodology for estimating volatility and expected life effective beginning in the third quarter of 2005. For expected volatility, we evaluated historical volatility and determined that using historical volatility is the most appropriate approach. As options in our stock are not actively traded, we determined that utilizing an implied volatility factor would not be appropriate. We calculated historical volatility for the period that is commensurate with the option’s expected term assumption. For expected term, we evaluated terms based on history and exercise patterns across our demographic population to determine a reasonable assumption. We estimated these assumptions considering the guidance in SFAS 123(R) and SAB 107 and determined that the assumptions used effective in the third quarter of 2005 are appropriate estimates of our expected volatility and expected life.

In the first quarter of 2006, we recognized $5.3 million of stock-based compensation expense. We also capitalized $0.8 million of stock-based compensation expense into inventory for the first quarter of 2006. Included in total stock-based compensation costs of $6.1 million is $1.9 million relating to DSUs, RSUs and PUs that would

29

have been recorded under SFAS 123 even if SFAS 123(R) had not been adopted. The adoption of SFAS 123(R) impacted diluted earnings per share for the first quarter of fiscal 2006 by $0.03. We expect stock-based compensation expense to be between $6.0 million and $7.0 million per quarter for the remainder of 2006.

As of April 2, 2006, the total stock-based compensation cost related to unvested awards not yet recognized in the statement of operations was $19.6 million for options, $3.9 million for DSUs, $4.3 million for RSUs and $13.8 million for PUs. The related weighted average remaining recognition period (in years) was 1.7 for options, 1.3 for DSUs, 2.3 for RSUs and 2.9 for PUs.

Prior to the adoption of SFAS 123(R), we accounted for stock-based compensation awards using the intrinsic value method in accordance with APB 25. Under the intrinsic value method, no stock-based compensation expense was recognized when the exercise price of the company’s stock options equaled the fair market value of the underlying stock at the date of grant. Instead, we disclosed in a footnote the effect on net income (loss) and net income (loss) per share as if the company had applied the fair value based method of SFAS 123, to record the expense.

Prior to the adoption of SFAS 123(R), we recognized expense over the service period for each separately vesting tranche for the pro forma footnote disclosures required by SFAS 123. The company switched to a straight-line attribution method on December 26, 2005 for all grants that include only service conditions. Due to the performance criteria associated with our performance units, our performance units will be expensed over the service period for each separately vesting tranche. The expense associated with the unvested portion of the pre-adoption PU grants will continue to be expensed over the service period for each separately vesting tranche.

In recent years we have shifted our equity compensation program to one that is more performance-based, and have moved from using primarily stock option awards to a combination of stock options, RSUs and PUs. By making this shift we are able to strengthen our “pay for performance” philosophy by linking equity and variable cash compensation to visible, corporate financial goals, while at the same time reducing our future equity compensation expense.

On February 18, 2005, we announced the acceleration of certain unvested and “out-of-the-money” stock options previously awarded to employees and officers that had exercise prices per share of $19.50 or higher. Options to purchase approximately 6 million shares of our common stock became exercisable as a result of the vesting acceleration. Based on our closing stock price of $16.15 on February 18, 2005, none of these options had economic value on the date of acceleration. In connection with the modification of the terms of these options to accelerate their vesting, approximately $33.1 million, on a pre-tax basis, was included in the pro forma net income (loss) table for 2005, representing the remaining unamortized value of the impacted, unvested options just prior to the acceleration. Because the exercise price of all the modified options was greater than the market price of the company’s underlying common stock on the date of their modification, no compensation expense was recorded in the statement of operations in accordance with APB Opinion 25. The primary purpose for modifying the terms of these options to accelerate their vesting was to eliminate the need to recognize remaining unrecognized non-cash compensation expense as measured under SFAS 123(R) as the future expense associated with these options would have been disproportionately high compared to the economic value of the options as of the date of modification. As a result of the acceleration, we estimate that non-cash stock option expense in accordance with SFAS 123(R), was reduced by approximately $12 million in 2006, $4 million in 2007 and $1 million in 2008 on a pre-tax basis.

See Note 2 to our Consolidated Financial Statements contained in Item 1 of this Quarterly Report for further information regarding our adoption of SFAS 123(R).

Operating Expenses.  Research and development (R&D) expenses were slightly higher as a percentage of sales for the first quarter of 2006, as compared to 2005, which is in line with our strategic decision to increase our focus on R&D as we develop new products. Included in R&D in the first quarter of 2006 is $1.0 million of stock-based compensation expense. Selling, general and administrative (SG&A) expenses increased as a percentage of sales for the first quarter of 2006, as compared to 2005. The increase in SG&A was the result of increased bonus accruals of approximately $2.3 million, increased legal costs of approximately $2.0 million associated with on-going litigation, and increased stock-based compensation expense of $3.6 million as discussed in the Stock-Based Compensation Expense section above.

30

The decrease in amortization of acquisition-related intangibles is due to certain intangibles becoming fully amortized during the second quarter of 2005. In addition, amortization decreased due to the $1.6 million developed technology impairment loss recorded in the third quarter of 2005.

The first quarter of 2006 included a net gain of $3.2 million on the sale of the LED lamps and displays product lines.

In order to better align our cost structure with our revenues, we continually consider the rationalization of both our manufacturing operations and our workforce levels. There were no restructuring and impairment charges in the first quarter of 2006. Related restructuring and impairment charges were recorded in the first quarter of 2005.

In the first quarter of 2005, we recorded restructuring charges of $4.1 million related to our 2005 Infrastructure Realignment Program. This charge includes $3.9 million in employee separation costs, $0.5 million in office closure costs, and a $0.3 million reserve release associated with the 2004 Infrastructure Realignment Program.

The 2005 Infrastructure Realignment Program actions announced in 2005 impacted both manufacturing and non-manufacturing personnel, primarily in the United States, and are expected to be completed in the third quarter of 2006. As a result of the $16.9 million charged, net of releases, including salary and benefits associated with the termination of approximately 180 employees, we anticipate cost savings of approximately $12.8 million in manufacturing and non-manufacturing costs on an annualized basis beginning in 2006. In addition, we expect annualized cost savings of $1.2 million associated with depreciation savings related to 2005 asset impairment charges.

Interest Expense.  Interest expense decreased $2.0 million in the first quarter of 2006, as compared to 2005. We had gross interest expense savings of $4.8 million related to the paydown of our 101/2% Notes on February 13, 2005. These savings were offset by an increase in interest paid on our term loan resulting from the $150 million increase in the variable rate term loan, which was used to paydown the 101/2% Notes, as well as rising interest rates on the variable rate loan during 2006. In addition, there was $0.9 million of additional interest expense due to the extra week in the first quarter of 2006.

Interest Income.  The increase in interest income in the first quarter of 2006, as compared to 2005, is due to improved rates of return earned on cash and short-term marketable securities. In addition, there was approximately $0.4 million of additional interest income due to the extra week in the first quarter of 2006.

Other Expense.  The first quarter of 2005 included $23.9 million for costs associated with the redemption of our 101/2% Notes. These costs included $18.5 million for the call premium and other transaction fees and a $5.4 million non-cash write off of deferred financing fees.

Income Taxes.  Income tax provision (benefit) for the first three months of 2006 was $1.1 million of tax expense on income before taxes of $27.7 million, as compared to $(16.4) million of a tax benefit on loss before taxes of $26.8 million, for the comparable period of 2005.

The effective tax rate for the first quarter of 2006 was 3.8% which includes an underlying effective tax rate of 16.6% coupled with net tax benefits of $3.5 million as a result of finalization of certain tax filing and audit outcomes. The effective tax rate for the first quarter of 2005 was (61)% which includes an underlying effective tax rate of 10.2% in foreign jurisdictions coupled with net tax benefits associated with approximately $49 million of U.S. based losses. Because a full valuation allowance was established during the second quarter of 2005 for U.S. taxes and continues to be maintained, no tax benefit or expense is reflected in the tax rates for the first quarter of 2006. Additionally, beginning in the first quarter of 2006, we began to record taxes based on a reduced rate of 6.1% for operating results in Korea, whereas this rate was 0% for 2005 due to the phase out of our tax holiday in this country.

Changes in the location of taxable income and losses could result in significant changes in the effective tax rate.

31

Reportable Segments.

The following table presents comparative disclosures of revenue and gross profit of our reportable segments.

	Three Months Ended
	April 2,											March 27,
	2006											2005
						Gross			Operating								Gross			Operating
	Revenue		% of Total			Profit %			Income (Loss)			Revenue		% of Total			Profit %			Income (Loss)
	(Dollars in millions)
Functional Power	$	235.8		57.6	%		30.3	%	$	26.6		$	204.6		56.4	%		25.6	%	$	15.3
Analog Products		82.1		20.0	%		40.3	%		3.5			70.3		19.4	%		22.3	%		(6.3	)
Standard Products		91.6		22.4	%		20.4	%		5.6			87.9		24.2	%		17.9	%		2.3
Other(1)		—		0.0	%		(0.2	)%		(2.1	)		—		0.0	%		0.0	%		(4.1	)
Total	$	409.5		100.0	%		29.9	%	$	33.6		$	362.8		100.0	%		23.1	%	$	7.2

(1) Gross profit as a percent of sales includes $0.7 of stock-based compensation expense. Operating loss includes $5.3 million of stock-based compensation expense and a $(3.2) million gain on the sale of a product line for the first quarter of 2006. Operating loss includes $4.1 million of restructuring expense in the first quarter of 2005.

Functional Power

Functional Power revenues increased approximately 15% in the first three months of 2006, compared to the same period of 2005. The first quarter of 2006 includes 14 weeks compared to 13 weeks in the first quarter of 2005. An increase in unit volumes grew revenues 25%, offset by a decline in average selling prices of 10%. The increased unit volumes were primarily due to an increase in sales of our low voltage products, with unit volumes growing 28%. Revenue increases in low voltage unit volumes were partially offset by decreases in low voltage average selling prices due to price erosion and mix changes. We also saw continued growth relating to the technology in our PowerTrench^® III, PowerTrench^® IV and SPM^tm products and expect this trend to continue throughout fiscal 2006. Gross profits increased due to higher unit volumes, improved factory utilization, and lower depreciation expenses, offset by the unfavorable impact of price erosion, inventory adjustments and higher freight expenses.

Functional Power had operating income of $26.6 million in the first three months of 2006, compared to $15.3 million for the comparable period of 2005. The increase in operating income was due to higher gross profits partially offset by higher R&D and SG&A expenses. R&D expenses increased as a percentage of sales as we continue our focus on new products. SG&A expenses increased mainly due to increased bonus accruals and spending to support our continued growth in fiscal 2006. Acquisition amortization decreased due to certain intangibles becoming fully amortized in the second quarter of 2005 and the impairment of developed technology in the third quarter of 2005.

Analog Products

Analog Products revenues increased approximately 17% in the first three months of 2006, as compared to the same period of 2005. The first quarter of 2006 includes 14 weeks compared to 13 weeks in the first quarter of 2005. Unit volumes increased revenues 25%, while decreases in average selling prices reduced revenue by 8%. The increase in unit volumes was due to continued strength in analog switches and the ramp up of our uSerDes and our low cost video filter families. System power revenue also increased, driven largely by the computing segment. Lastly, strong performance by our Green FPS^tm products was offset by declining motor revenues as we exit this low margin business. The decrease in average selling prices was driven by some price erosion. Gross profit increased due to higher volumes, improved inventory management, better product mix of higher margin products, lower depreciation expenses and higher factory utilization rates.

Analog products had operating income (loss) of $3.5 million in the first three months of 2006, compared to $(6.3) million for the comparable period in 2005. The increase in operating income was due to higher gross profit, partially offset by higher R&D and SG&A expenses. R&D expenses increased due to continued investment in developing differentiated, high value products leveraging our expertise across product, process and package

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development. In addition, higher bonus accruals contributed to the increase. SG&A expenses increased primarily due to higher bonus accruals. Acquisition amortization decreased due to certain intangibles becoming fully amortized the second quarter of 2005.

Standard Products

Standard Products revenues increased approximately 4% in the first three months of 2006, compared to the same period of 2005. The first quarter of 2006 includes 14 weeks compared to 13 weeks in the first quarter of 2005. Increases in unit volumes grew revenues by 35%, while decreases in average selling prices reduced revenue 31%. The increase in unit volumes was driven by stronger demand, specifically for our SDT and logic products, offset by declines in optoelectronics and foundry products. The decrease in average selling prices was due to pricing pressures. In addition, during the first quarter of 2006 we sold our LED lamps and displays product line, which resulted in a decrease of $6.7 million in the first quarter of 2006, as compared to the first quarter of 2005. We anticipate that Standard Products as a percentage of total revenue will continue to decrease, as our strategic focus shifts to the Analog Products and Functional Power segments. While we anticipate revenues will continue to decline as a percentage of our total revenues, our strategy is to manage Standard Products more selectively, while maintaining or increasing our margins in this business. Gross profits, excluding the effect of the sale of the LED product line, which was approximately $0.9 million, increased due to lower costs, lower depreciation expense and improved factory utilization.

Standard Products had operating income of $5.6 million in the first three months of 2006, compared to $2.3 million for the comparable period of 2005. The increase in operating income was primarily due to higher gross profit. R&D expenses decreased slightly due to the elimination of the LED lamps and displays product line sale. SG&A expenses were roughly flat due to increased bonus accruals offset by decreases in costs due to the LED lamps and displays divestiture. Acquisition amortization decreased due to certain intangibles becoming fully amortized in the second quarter of 2005.

Liquidity and Capital Resources

We have a borrowing capacity of $180.0 million on a revolving basis for working capital and general corporate purposes, including acquisitions, under our senior credit facility. At April 2, 2006, after adjusting for outstanding letters of credit we had up to $179.1 million available under this senior credit facility. We had additional outstanding letters of credit of $1.1 million that do not fall under the senior credit facility. We also had $18.4 million of undrawn credit facilities at certain of our foreign subsidiaries. These amounts outstanding do not impact available borrowings under the senior credit facility.

Our senior credit facility, which includes the $450 million term loan and the $180 million revolving line of credit, the indenture governing our 5% Convertible Senior Subordinated Notes, and other debt instruments we may enter into in the future, impose various restrictions and contain various covenants which could limit our ability to respond to market conditions, to provide for unanticipated capital investments or to take advantage of business opportunities. The restrictive covenants include limitations on consolidations, mergers and acquisitions, creating liens, paying dividends or making other similar restricted payments, asset sales, capital expenditures and incurring indebtedness, among other restrictions. The covenants in the senior credit facility also include financial measures such as a minimum interest coverage ratio, a maximum senior leverage ratio and a minimum EBITDA (earnings before interest, taxes, depreciation and amortization) less capital expenditures measure. At April 2, 2006, we were in compliance with these covenants. The senior credit facility also limits our ability to modify our certificate of incorporation and bylaws, or enter into shareholder agreements, voting trusts or similar arrangements. Under our debt instruments, the subsidiaries of Fairchild Semiconductor Corporation cannot be restricted, except to a limited extent, from paying dividends or making advances to Fairchild Semiconductor Corporation. We believe that funds to be generated from operations, together with existing cash, will be sufficient to meet our debt obligations over the next twelve months. We expect that existing cash and available funds from our senior credit facility and funds generated from operations will be sufficient to meet our anticipated operating requirements and to fund our research and development and planned capital expenditures over the next twelve months. We had capital expenditures of $23.0 million in the first three months of 2006.

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We frequently evaluate opportunities to sell additional equity or debt securities, obtain credit facilities from lenders or restructure our long-term debt to further strengthen our financial position. The sale of additional equity or convertible securities could result in additional dilution to our stockholders. Additional borrowing or equity investment may be required to fund future acquisitions.

As of April 2, 2006, our cash and cash equivalents were $335.6 million, an increase of $4.9 million from December 25, 2005. As of April 2, 2006, our short-term and long-term marketable securities totaled $186.3 million and $13.7 million, respectively, an increase of $3.8 million and a decrease of $19.0 million, respectively, as compared to December 25, 2005. Included in the short-term marketable securities are auction rate securities in which we invest to help maintain liquidity. These securities have long-term underlying maturities, but are sold in a market which is highly liquid with interest rates reset through an auction process every 7, 28, or 35 days. Our intent is to not hold these underlying securities to maturity but to take advantage of this interest rate reset feature and active auction process to provide short-term liquidity for the company at advantageous yields when compared to cash equivalents. As of April 2, 2006, we held $95.7 million of auction rate securities, a decrease of $5.9 million from December 25, 2005.

During the first three months of 2006, our cash provided by (used in) operations was $3.0 million compared to $(33.0) million in the comparable period of 2005. The following table presents a summary of net cash provided by (used in) operating activities during the first quarter of 2006 and 2005, respectively.

	Three Months Ended
	April 2,			March 27,
	2006			2005
	(In millions)
Net income (loss)	$	26.6		$	(10.4	)
Depreciation and amortization		28.3			43.7
Non-cash stock-based compensation		5.3			4.6
Deferred income taxes, net		0.8			(13.1	)
Other, net		(2.1	)		6.3
Change in other working capital accounts		(55.9	)		(64.1	)
Cash provided by (used in) operating activities	$	3.0		$	(33.0	)

The change in cash provided by operating activities was primarily due to an increase in net income of $37.0 million. The changes in the working capital accounts were primarily driven by a reduction of payments made on operating accruals during the first quarter of 2006 as compared to the first quarter of 2005. This was partially offset by payments made in the first quarter of 2006 on accruals relating to litigation settlements.

Cash provided by (used in) investing activities during the first three months of 2006 totaled $(1.9) million compared to cash provided of $262.1 million for the comparable period of 2005. The decrease primarily results from reduced purchases of marketable securities, offset by reduced sales of marketable securities.

Cash provided by financing activities of $3.8 million for the first three months of 2006 was primarily due to the increase of proceeds from the exercise of stock options. Cash used in financing activities of $195.9 million for the first three months of 2005 was primarily due to the repayment of the company’s 101/2% Notes, net of the issuance of long-term debt.

Liquidity and Capital Resources of Fairchild International, Excluding Subsidiaries

Fairchild Semiconductor International, Inc. is a holding company, the principal asset of which is the stock of its sole subsidiary, Fairchild Semiconductor Corporation. Fairchild Semiconductor International, Inc. on a stand-alone basis had no cash flow from operations and has no cash requirements for the next twelve months.

Forward Looking Statements

This quarterly report includes “forward-looking statements” as that term is defined in Section 21E of the Securities Exchange Act of 1934. Forward-looking statements can be identified by the use of forward-looking terminology such as “we believe,” “we expect,” “we intend,” “may,” “will,” “should,” “seeks,” “approximately,”

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“plans,” “estimates,” “anticipates,” or “hopeful,” or the negative of those terms or other comparable terms, or by discussions of our strategy, plans or future performance. For example, the Outlook section below contains numerous forward-looking statements. All forward-looking statements in this report are made based on management’s current expectations and estimates, which involve risks and uncertainties, including those described below and more specifically in the Business Risks section. Among these factors are the following: changes in regional or global economic or political conditions (including as a result of terrorist attacks and responses to them); changes in demand for our products; changes in inventories at our customers and distributors; technological and product development risks; availability of manufacturing capacity; availability of raw materials; competitors’ actions; loss of key customers, including but not limited to distributors; order cancellations or reduced bookings; changes in manufacturing yields or output; and significant litigation. Factors that may affect our operating results are described in the Business Risks section in the quarterly and annual reports we file with the Securities and Exchange Commission. Such risks and uncertainties could cause actual results to be materially different from those expressed in forward-looking statements. Readers are cautioned not to place undue reliance on the forward-looking statements.

Policy on Business Outlook Disclosure and Quiet Periods

It is our current policy to update our business outlook at least twice each quarter. The first update is near the beginning of each quarter, within the press release that announces the previous quarter’s results. The business outlook below is consistent with the business outlook included in our April 20, 2006 press release announcing first quarter results. The second update is within a press release issued approximately two months into each quarter. The current business outlook is accessible at the Investor Relations section of our website at http://investor.fairchildsemi.com. Toward the end of each quarter, and until that quarter’s results are publicly announced, we observe a “quiet period,” when the business outlook is not updated to reflect management’s current expectations. The quiet period for the second quarter of 2006 will be from June 17, 2006 until July 20, 2006 when we plan to release our second quarter 2006 results. Except during quiet periods, the business outlook posted on our website reflects current guidance unless and until updated through a press release, SEC filing or other public announcement. During quiet periods, our business outlook, as posted on our website, announced in press releases and provided in quarterly, annual and special reports or other filings with the SEC, should be considered to be historical, speaking as of prior to the quiet period only and not subject to update by the company. During quiet periods, Fairchild Semiconductor representatives will not comment about the business outlook of the company’s financial results or expectations for the quarter in question.

Outlook

We expect second quarter revenues to be flat to down 3% sequentially as we return to a 13 week second quarter from the 14 week first quarter of 2006. We enter the second quarter with a stronger backlog position than a quarter ago which, coupled with continuing capacity additions, should allow us to sequentially increase our daily ship rates from less than $4.2 million per day in the first quarter to more than $4.4 million per day in the second quarter of 2006. We forecast gross margins to increase about 50 — 100 basis points sequentially due to expected improvements in our product mix and slightly better utilization.

Looking forward to the rest of 2006 and 2007, we expect to continue growing sales for our analog and power discrete products at or above the market rate while maintaining our right control of channel and internal inventories. We believe the combination of profitable sales growth and improved product mix through more new products and less low margin commodity business will allow us to make continued steady progress towards our next goal of mid-30% gross margins. We expect operating expenses to remain flat with the first quarter as we selectively fund new product development opportunities while rigorously controlling infrastructure costs. Our underlying effective tax rate for 2006 is expected to remain at approximately the same level as the first quarter 2006. It is important to note that effective tax rates can vary as the regional distribution of income shifts during the year. We are forecasting our stock based compensation expense to be in the $6 — 7 million per quarter range for the rest of 2006.

Recently Issued Financial Accounting Standards

In February 2006, the FASB issued SFAS 155, Accounting for Certain Hybrid Financial Instruments — An Amendment of FASB Statements 133, Accounting for Derivative Instruments and Hedging Activities, and 140,

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Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. This statement is intended to improve the financial reporting of certain hybrid financial instruments by requiring more consistent accounting that eliminates exemptions and provides a means to simplify the accounting for these instruments. This statement is effective for all financial instruments acquired or issued after the beginning of fiscal years that begin after September 15, 2006. We do not expect the adoption of SFAS 155 to have a material impact on our consolidated financial statements.

In May 2005, the FASB issued SFAS 154, Accounting Changes and Error Corrections. This statement replaces APB Opinion 20, Accounting Changes, and SFAS 3, Reporting Accounting Changes in Interim Financial Statements — an Amendment of APB Opinion 28, and changes the requirements for the accounting for and reporting of a change in accounting principle. SFAS 154 requires the retrospective application to prior periods’ financial statements of changes in accounting principle, unless it is impracticable to determine either the period specific effects or the cumulative effect of the change. This statement is effective for fiscal years beginning after December 15, 2005. The adoption of SFAS 154 did not have a material impact on our consolidated financial statements.

In November 2004, the FASB issued SFAS 151, Inventory Costs. This statement amends the guidance in Accounting Research Bulletin (ARB) 43, Chapter 4, Inventory Pricing, to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). This statement is effective for fiscal years beginning after June 15, 2005. The adoption of SFAS 151 did not have a material affect on our consolidated financial statements.

Item 3.   Quantitative and Qualitative Disclosures about Market Risk

Reference is made to Part II, Item 7A, Quantitative and Qualitative Disclosure about Market Risk, in Fairchild Semiconductor International’s annual report on Form 10-K for the year ended December 25, 2005 and under the subheading “Quantitative and Qualitative Disclosures about Market Risk” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on page 44 of the Form 10-K. There were no material changes in the information we provided in our Form 10-K during the period covered by this Quarterly Report.

Item 4.   Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to assure, as much as is reasonably possible, that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is communicated to management and recorded, processed, summarized and disclosed within the specified time periods. As of the end of the period covered by this report, our chief executive officer (CEO) and chief financial officer (CFO) have evaluated, with the participation of our management, the effectiveness of our disclosure controls and procedures. Based on the evaluation, our CEO and CFO concluded that as of April 2, 2006, our disclosure controls and procedures are effective.

Inherent Limitations on Effectiveness of Controls

The company’s management, including the CEO and CFO, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that the breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections

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of any evaluation of a control effectiveness in future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or a deterioration in the degree of compliance with policies or procedures.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the first quarter of 2006 that have materially affected, or are reasonably likely to materially affect, our own internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.   Legal Proceedings

From time to time since late 2001, we have received claims from a number of customers seeking damages resulting from certain products manufactured with a phosphorus-containing mold compound. Mold compound is the plastic resin used to encapsulate semiconductor chips. This particular mold compound causes some chips to short in some situations, resulting in chip failure. We have been named in lawsuits relating to these mold compound claims. In January 2005, we were named as a defendant in a lawsuit filed by Lucent Technologies Inc. in the Superior Court of New Jersey. The Lucent lawsuit alleges breach of contract and breach of warranty claims and seeks unspecified damages allegedly caused by our products. We believe we have strong defenses against Lucent’s claims and intend to vigorously defend the lawsuit.

Several other customers have made claims for damages or threatened to begin litigation as a result of the mold compound issue if their claims are not resolved according to their demands, and we may face additional lawsuits as a result. On December 29, 2005, we settled a lawsuit filed against us and three of our distributors by Alcatel Canada Inc. in the Ontario Superior Court of Justice, alleging breach of contract, negligence and other claims and claiming damages allegedly caused by our products containing the mold compound. We have also resolved similar claims with several of our leading customers. We have exhausted insurance coverage for such customer claims. While the exact amount of these losses is not known, we recorded a reserve for estimated potential settlement losses of $11.0 million in the Consolidated Statement of Operations during the second quarter of 2004 and $6.9 million in the fourth quarter of 2005. These estimates were based upon current assessments of the potential liability using an analysis of the claims and our historical experience in defending and/or resolving these claims. At April 2, 2006 and December 25, 2005, the reserve for estimated potential settlement losses was $5.8 million and $17.2 million, respectively. If we continue to receive additional claims for damages from customers beyond the period of time normally observed for such claims, if more of these claims proceed to litigation, or if we choose to settle claims in settlement of or to avoid litigation, then we may incur a liability in excess of the current reserve.

On October 20, 2004, we and our wholly owned subsidiary, Fairchild Semiconductor Corporation, were sued by Power Integrations, Inc. (POWI) in the United States District Court for the District of Delaware. The complaint filed by POWI alleges that certain of our pulse width modulation (PWM) integrated circuit products infringe four of POWI’s U.S. patents, and seeks a permanent injunction preventing us from manufacturing, selling, offering for sale or importing the allegedly infringing products as well as money damages for the alleged past infringement. We have analyzed the POWI patents in light of our products and, based on that analysis, we do not believe our products violate POWI’s patents and, accordingly, are vigorously contesting this lawsuit. We expect the case to go to trial in 2006 or early 2007. Should we lose the lawsuit, we expect the monetary damages would be immaterial to our consolidated statement of operations. However, it could adversely impact our ability to sell products found to be infringing, either directly or indirectly in the U.S.

In a separate action, we filed a lawsuit on April 11, 2006, against POWI in the United States District Court for the Eastern District of Texas. The lawsuit asserts that POWI’s PWM products infringe U.S. Patent No. 5,264,719. Intersil Corporation owns U.S. Patent No. 5,264,719, for High Voltage Lateral Semiconductor Devices, and is a co-plantiff with us in the lawsuit. We have held license rights under the patent since 2001 and more recently secured exclusive rights to assert the patent against Power Integrations. We intend to take all possible steps to seek a court order to stop POWI from making, using, selling, offering for sale or importing the infringing products into the U.S and to obtain monetary damages for POWI’s infringing activities.

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On December 30, 2004, our wholly owned subsidiary, Fairchild Semiconductor Corporation, was sued by ZTE Corporation, a communications equipment manufacturer, in Guangdong Higher People’s Court in Guangzhou, People’s Republic of China. The complaint filed by ZTE alleges that certain of our products were defective and caused personal injury and/or property loss to ZTE. ZTE claims 65,733,478 CNY as damages (equivalent to approximately $8.2 million USD based on exchange rates at April 2, 2006). We contested the lawsuit in a trial held on October 20, 2005. The court’s decision is pending and we are unable to predict when a decision will be reached. We continue to deny the allegations in the lawsuit.

From time to time we are involved in legal proceedings in the ordinary course of business. We believe that there is no such ordinary-course litigation pending that could have, individually or in the aggregate, a material adverse effect on our business, financial condition, results of operations or cash flows.

Item 1A.   Business Risks

A description of the risk factors associated with our business is set forth below. We review and update our risk factors each quarter. This description includes any changes to and supersedes the description of the risk factors associated with our business previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 25, 2005. The risks described below are not the only ones facing us. Additional risks not currently known to us or that we currently believe are immaterial also may impair our business operations and financial condition.

The price of our common stock has fluctuated widely in the past and may fluctuate widely in the future.

Our common stock, which is traded on The New York Stock Exchange, has experienced and may continue to experience significant price and volume fluctuations that could adversely affect the market price of our common stock without regard to our operating performance. In addition, we believe that factors such as quarterly fluctuations in financial results, earnings below analysts’ estimates and financial performance and other activities of other publicly traded companies in the semiconductor industry could cause the price of our common stock to fluctuate substantially. In addition, in recent periods, our common stock, the stock market in general and the market for shares of semiconductor industry-related stocks in particular have experienced extreme price fluctuations which have often been unrelated to the operating performance of the affected companies. Any similar fluctuations in the future could adversely affect the market price of our common stock.

We maintain a backlog of customer orders that is subject to cancellation, reduction or delay in delivery schedules, which may result in lower than expected revenues.

We manufacture products primarily pursuant to purchase orders for current delivery or to forecast, rather than pursuant to long-term supply contracts. The semiconductor industry is subject to rapid changes in customer outlooks or unexpected build ups of inventory in the supply channel as a result of shifts in end market demand. Accordingly, many of these purchase orders or forecasts may be revised or canceled without penalty. As a result, we must commit resources to the production of products without any advance purchase commitments from customers. Even in cases where our standard terms and conditions of sale or other contractual arrangements do not permit a customer to cancel an order without penalty, we may from time to time accept cancellations because of industry practice or custom or other factors. Our inability to sell products after we devote significant resources to them could have a material adverse effect on both our levels of inventory and revenues.

Downturns in the highly cyclical semiconductor industry or changes in end user market demands could reduce the profitability and overall value of our business, which could cause the trading price of our stock to decline or have other adverse effects on our financial position.

The semiconductor industry is highly cyclical, and the value of our business may decline during the “down” portion of these cycles. Beginning in the fourth quarter of 2000 and continuing into 2003, we and the rest of the semiconductor industry experienced backlog cancellations and reduced demand for our products, resulting in significant revenue declines, due to excess inventories at computer and telecommunications equipment manufacturers and general economic conditions, especially in the technology sector. Although we believe the low point of

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this most recent cycle occurred in the third quarter of 2001, the semiconductor industry did not experience a recovery in orders until 2003. We may experience renewed, possibly more severe and prolonged, downturns in the future as a result of such cyclical changes. Even as demand increases following such downturns, our profitability may not increase because of price competition that historically accompanies recoveries in demand. For example, in 2002, we sold approximately 7% more units than in 2001, yet our revenues were essentially unchanged. And, in 2003 we sold approximately the same number of units as in 2002, while at the same time experiencing revenue declines due to price decreases. In addition, we may experience significant changes in our profitability as a result of variations in sales, changes in product mix, changes in end user markets and the costs associated with the introduction of new products, and our efforts to reduce excess inventories that may have built up as a result of any of these factors. The markets for our products depend on continued demand for consumer electronics such as personal computers, cellular telephones, and digital cameras, and automotive, household and industrial goods. These end user markets may experience changes in demand that could adversely affect our prospects.

We may not be able to develop new products to satisfy changing demands from customers.

Our failure to develop new technologies, or react to changes in existing technologies, could materially delay development of new products, which could result in decreased revenues and a loss of market share to our competitors. The semiconductor industry is characterized by rapidly changing technologies and industry standards, together with frequent new product introductions. Our financial performance depends on our ability to design, develop, manufacture, assemble, test, market and support new products and enhancements on a timely and cost-effective basis. New products often command higher prices and, as a result, higher profit margins. We may not successfully identify new product opportunities and develop and bring new products to market or succeed in selling them into new customer applications in a timely and cost-effective manner. Products or technologies developed by other companies may render our products or technologies obsolete or noncompetitive. Many of our competitors are larger, older and well established international companies with greater engineering and research and development resources than us. A fundamental shift in technologies in our product markets that we fail to identify correctly or adequately, or that we fail to capitalize on, in each case relative to our competitors, could have material adverse effects on our competitive position within the industry. In addition, to remain competitive, we must continue to reduce die sizes, develop new packages and improve manufacturing yields. We cannot assure you that we can accomplish these goals.

If some original equipment manufacturers do not design our products into their equipment, our revenue may be adversely affected.

The success of our products often depends on whether original equipment manufacturers (OEMs), or their contract manufacturers, choose to incorporate or “design in” our products, or identify our products, with those from a limited number of other vendors, as approved for use in particular OEM applications. Even receiving “design wins” from a customer does not guarantee future sales to that customer. We may be unable to achieve these “design wins” due to competition over the subject product’s functionality, size, electrical characteristics or other aspect of its design, price, or due to our inability to service expected demand from the customer or other factors. Without design wins, we would only be able to sell our products to customers as a second source, if at all. If an OEM designs another supplier’s product into one of its applications, it is more difficult for us to achieve future design wins with that application because, for the customer, changing suppliers involves significant cost, time, effort and risk. In addition, achieving a design win with a customer does not ensure that we will receive significant revenue from that customer and we may be unable to convert design into actual sales.

We depend on demand from the consumer, original equipment manufacturer, contract manufacturing, industrial, automotive and other markets we serve for the end market applications which incorporate our products. Reduced consumer or corporate spending due to increased oil prices or other economic factors could affect our revenues.

Our revenue and gross margin guidance are based on certain levels of consumer and corporate spending. If our projections of these expenditures fail to materialize, due to reduced consumer or corporate spending from increased oil prices or otherwise, our revenues and gross margins could be adversely affected.

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Our failure to protect our intellectual property rights could adversely affect our future performance and growth.

Failure to protect our existing intellectual property rights may result in the loss of valuable technologies. We rely on patent, trade secret, trademark and copyright law to protect such technologies. Some of our technologies are not covered by any patent or patent application, and we cannot assure you that:

•  the patents owned by us or numerous other patents which third parties license to us will not be invalidated, circumvented, challenged or licensed to other companies; or

•  any of our pending or future patent applications will be issued within the scope of the claims sought by us, if at all.

In addition, effective patent, trademark, copyright and trade secret protection may be unavailable, limited or not applied for in some countries.

We also seek to protect our proprietary technologies, including technologies that may not be patented or patentable, in part by confidentiality agreements and, if applicable, inventors’ rights agreements with our collaborators, advisors, employees and consultants. We cannot assure you that these agreements will not be breached, that we will have adequate remedies for any breach or that such persons or institutions will not assert rights to intellectual property arising out of such research. Some of our technologies have been licensed on a non-exclusive basis from National Semiconductor, Samsung Electronics and other companies which may license such technologies to others, including our competitors. In addition, under a technology licensing and transfer agreement, National Semiconductor has limited royalty-free, worldwide license rights (without right to sublicense) to some of our technologies. If necessary or desirable, we may seek licenses under patents or intellectual property rights claimed by others. However, we cannot assure you that we will obtain such licenses or that the terms of any offered licenses will be acceptable to us. The failure to obtain a license from a third party for technologies we use could cause us to incur substantial liabilities and to suspend the manufacture or shipment of products or our use of processes requiring the technologies.

Our failure to obtain or maintain the right to use some technologies may negatively affect our financial results.

Our future success and competitive position depend in part upon our ability to obtain or maintain proprietary technologies used in our principal products, which is achieved in part by defending claims by competitors and others of intellectual property infringement. The semiconductor industry is characterized by claims of intellectual property infringement and litigation regarding patent and other intellectual property rights. From time to time, we may be notified of claims (often implicit in offers to sell us a license to another company’s patents) that we may be infringing patents issued to other companies, and we may subsequently engage in license negotiations regarding these claims. Such claims relate both to products and manufacturing processes. Even though we maintain procedures to avoid infringing others’ rights as part of our product and process development efforts, it is impossible to be aware of every possible patent which our products may infringe, and we cannot assure you that we will be successful. Furthermore, even if we conclude our products do not infringe another’s patents, others may not agree. We have been and are involved in lawsuits, and could become subject to other lawsuits, in which it is alleged that we have infringed upon the patent or other intellectual property rights of other companies. For example, since October 2004, we have been in litigation with POWI in the United States District Court for the District of Delaware. POWI alleges that some of our PWM integrated circuit products infringe four of POWI’s U.S. patents. We do not believe our products violate POWI’s patents and are vigorously contesting the lawsuit. See “Legal Proceedings”. Our involvement in this lawsuit and future intellectual property litigation, or the costs of avoiding or settling litigation by purchasing licenses rights or by other means, could result in significant expense to our company, adversely affecting sales of the challenged products or technologies and diverting the efforts and attention of our technical and management personnel, whether or not such litigation is resolved in our favor. We may decide to settle patent infringement claims or litigation by purchasing license rights from the claimant, even if we believe we are not infringing, in order to reduce the expense of continuing the dispute or because we are not sufficiently confident that

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we would eventually prevail. In the event of an adverse outcome as a defendant in any such litigation, we may be required to:

•  pay substantial damages;

•  indemnify our customers for damages they might suffer if the products they purchase from us violate the intellectual property rights of others;

•  stop our manufacture, use, sale or importation of infringing products;

•  expend significant resources to develop or acquire non-infringing technologies;

•  discontinue manufacturing processes; or

•  obtain licenses to the intellectual property we are found to have infringed.

We cannot assure you that we would be successful in such development or acquisition or that such licenses would be available under reasonable terms. Any such development, acquisition or license could require the expenditure of substantial time and other resources.

We may not be able to consummate future acquisitions or successfully integrate acquisitions into our business.

We have made eleven acquisitions of various sizes since we became an independent company in 1997, and we plan to pursue additional acquisitions of related businesses. The costs of acquiring and integrating related businesses, or our failure to integrate them successfully into our existing businesses, could result in our company incurring unanticipated expenses and losses. In addition, we may not be able to identify or finance additional acquisitions or realize any anticipated benefits from acquisitions we do complete.

We are constantly pursuing acquisition opportunities and consolidation possibilities and are frequently conducting due diligence or holding preliminary discussions with respect to possible acquisition transactions, some of which could be significant. No material potential acquisition transactions are subject to a letter of intent or otherwise so far advanced as to make the transaction reasonably certain.

If we acquire another business, the process of integrating acquired operations into our existing operations may result in unforeseen operating difficulties and may require significant financial resources that would otherwise be available for the ongoing development or expansion of existing operations. Some of the risks associated with acquisitions include:

•  unexpected losses of key employees, customers or suppliers of the acquired company;

•  conforming the acquired company’s standards, processes, procedures and controls with our operations;

•  coordinating new product and process development;

•  hiring additional management and other critical personnel;

•  negotiating with labor unions; and

•  increasing the scope, geographic diversity and complexity of our operations.

In addition, we may encounter unforeseen obstacles or costs in the integration of other businesses we acquire.

Possible future acquisitions could result in the incurrence of additional debt, contingent liabilities and amortization expenses related to intangible assets, all of which could have a material adverse effect on our financial condition and operating results.

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We depend on suppliers for timely deliveries of raw materials of acceptable quality. Production time and product costs could increase if we were to lose a primary supplier or if a primary supplier increased the prices of raw materials. Product performance could be affected and quality issues could develop as a result of a significant degradation in the quality of raw materials we use in our products.

Our manufacturing operations depend upon obtaining adequate supplies of raw materials on a timely basis. Our results of operations could be adversely affected if we were unable to obtain adequate supplies of raw materials in a timely manner or if the costs of raw materials increased significantly. Results could also be adversely affected if there is a significant degradation in the quality of raw materials used in our products, or if the raw materials give rise to compatibility or performance issues in our products, any of which could lead to an increase in customer returns or product warranty claims. Although we maintain rigorous quality control systems, errors or defects may arise from a supplied raw material and be beyond our detection or control. For example, some phosphorus-containing mold compound received from one supplier and incorporated into our products has resulted in a number of claims for damages from customers. We purchase raw materials such as silicon wafers, lead frames, mold compound, ceramic packages and chemicals and gases from a limited number of suppliers on a just-in-time basis. From time to time, suppliers may extend lead times, limit supplies or increase prices due to capacity constraints or other factors. We subcontract a minority of our wafer fabrication needs, primarily to Advanced Semiconductor Manufacturing Corporation, Phenitec Semiconductor, Taiwan Semiconductor Manufacturing Company, Central Semiconductor Manufacturing Corporation, UMC, WIN Semiconductor, Jilin Magic Semiconductor, More Power Electric Corporation and New Japan Radio Corporation. In order to maximize our production capacity, some of our back-end assembly and testing operations are also subcontracted. Primary back-end subcontractors include Amkor, AUK, Enoch, Wooseok, SP Semiconductor, NS Electronics (Bangkok) Ltd., Liteon, GEM Services, and STATS ChipPAC.

Our operations and ability to satisfy customer obligations could be adversely affected if our relationships with these subcontractors were disrupted or terminated.

Delays in beginning production at new facilities, expanding capacity at existing facilities, implementing new production techniques, or incurring problems associated with technical equipment malfunctions, all could adversely affect our manufacturing efficiencies.

Our manufacturing efficiency is an important factor in our profitability, and we cannot assure you that we will be able to maintain our manufacturing efficiency or increase manufacturing efficiency to the same extent as our competitors. Our manufacturing processes are highly complex, require advanced and costly equipment and are continuously being modified in an effort to improve yields and product performance. Impurities or other difficulties in the manufacturing process can lower yields. In 2003, we began initial production at a new assembly and test facility in Suzhou, China. We are transferring some production from subcontractors to this new facility. Delays or technical problems in completing these transfers could lead to order cancellations and lost revenue. In addition, we are currently engaged in an effort to expand capacity at some of our manufacturing facilities. As is common in the semiconductor industry, we have from time to time experienced difficulty in beginning production at new facilities or in completing transitions to new manufacturing processes at existing facilities. As a consequence, we have suffered delays in product deliveries or reduced yields.

We may experience delays or problems in bringing our new factory in Suzhou, China or other new manufacturing capacity to full production. Such delays, as well as possible problems in achieving acceptable yields, or product delivery delays relating to existing or planned new capacity could result from, among other things, capacity constraints, construction delays, upgrading or expanding existing facilities or changing our process technologies, any of which could result in a loss of future revenues. Our operating results could also be adversely affected by the increase in fixed costs and operating expenses related to increases in production capacity if revenues do not increase proportionately.

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Approximately 66% of our sales are made to distributors who can terminate their relationships with us with little or no notice. The termination of a distributor could reduce sales and result in inventory returns.

Distributors accounted for 66% of our net sales for the quarter ended April 2, 2006. Our top five distributors worldwide accounted for 18% of our net sales for the quarter ended April 2, 2006. As a general rule, we do not have long-term agreements with our distributors, and they may terminate their relationships with us with little or no advance notice. Distributors generally offer competing products. The loss of one or more of our distributors, or the decision by one or more of them to reduce the number of our products they offer or to carry the product lines of our competitors, could have a material adverse effect on our business, financial condition and results of operations. The termination of a significant distributor, whether at our or the distributor’s initiative, or a disruption in the operations of one or more of our distributors, could reduce our net sales in a given quarter and could result in an increase in inventory returns.

The semiconductor business is very competitive, especially in the markets we serve, and increased competition could reduce the value of an investment in our company.

The semiconductor industry is, and the standard component or “multi-market” semiconductor product markets in particular are, highly competitive. Competitors offer equivalent or similar versions of many of our products, and customers may switch from our products to competitors’ products on the basis of price, delivery terms, product performance, quality, reliability and customer service or a combination of any of these factors. Competition is especially intense in the multi-market semiconductor segment because it is relatively easier for customers to switch suppliers of more standardized, multi-market products like ours, compared to switching suppliers of more highly integrated or customized semiconductor products such as processors or system-on-a-chip products, which we do not manufacture. Even in strong markets, price pressures may emerge as competitors attempt to gain a greater market share by lowering prices. Competition in the various markets in which we participate comes from companies of various sizes, many of which are larger and have greater financial and other resources than we have and thus are better able to pursue acquisition candidates and can better withstand adverse economic or market conditions. In addition, companies not currently in direct competition with us may introduce competing products in the future.

We may not be able to attract or retain the technical or management employees necessary to remain competitive in our industry.

Our continued success depends on the retention and recruitment of skilled personnel, including technical, marketing, management and staff personnel. In the semiconductor industry, the competition for qualified personnel, particularly experienced design engineers and other technical employees, is intense, particularly in the “up” portions of our business cycle, when competitors may try to recruit our most valuable technical employees. There can be no assurance that we will be able to retain our current personnel or recruit the key personnel we require.

If we must reduce our use of options and other equity awards, our competitiveness in the employee marketplace could be adversely affected. Our results of operations could vary as a result of the methods, estimates and judgments we use to value our stock-based compensation.

Like most technology companies, we have a history of using broad-based employee stock option programs to recruit and retain our workforce in a competitive employment marketplace. Although we have reduced our use of traditional stock options in the past several years in favor of deferred stock units, restricted stock units and performance-based equity awards, we still use stock options and expect to continue to use them as one component of our stock-based compensation program. As a result, our success will depend in part upon the continued use of stock options as a compensation tool. We plan to seek stockholder approval for increases in the number of shares available for grant under the Fairchild Semiconductor Stock Plan as well as other amendments that may be adopted from time to time which require stockholder approval. If these proposals do not receive stockholder approval, we may not be able to grant stock options and other equity awards to employees at the same levels as in the past, which could adversely affect our ability to attract, retain and motivate qualified personnel, and we may need to increase cash compensation in order to attract, retain and motivate employees, which could adversely affect our results of operations.

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In addition, we implemented SFAS 123(R) in our first quarter of 2006. This resulted in $0.03 lower reported earnings per share, which could negatively affect our future stock price. The impact of SFAS 123(R) could also negatively affect our ability to utilize broad-based employee stock plans to reward employees and could result in a competitive disadvantage to us in the employee marketplace.

The calculation of stock-based compensation expense under SFAS 123(R) requires us to use valuation methodologies and a number of estimates, assumptions and conclusions regarding matters such as the expected volatility of our share price, the expected life of our options, the expected dividend rate with respect to our common stock, expected forfeitures and the exercise behavior of our employees. See the Stock-Based Compensation Expense section of Item 2 of this report for further information. There are no means, under applicable accounting principles, to compare and adjust this expense if and when we learn of additional information that may affect the estimates that we previously made, with the exception of changes in expected forfeitures of stock-based awards. Certain factors may arise over time that lead us to change our estimates and assumptions with respect to future stock-based compensation, resulting in variability in our stock-based compensation expense over time. Changes in forecasted stock-based compensation expense could impact our gross margin percentage, research and development expenses, marketing, general and administrative expenses and our tax rate.

We may face product warranty or product liability claims that are disproportionately higher than the value of the products involved.

Our products are typically sold at prices that are significantly lower than the cost of the equipment or other goods in which they are incorporated. For example, our products that are incorporated into a personal computer may be sold for several dollars, whereas the personal computer might be sold by the computer maker for several hundred dollars. Although we maintain rigorous quality control systems, we manufacture and sell approximately 16 billion individual semiconductor devices per year to customers around the world, and in the ordinary course of our business we receive warranty claims for some of these products that are defective or that do not perform to published specifications. Since a defect or failure in our product could give rise to failures in the goods that incorporate them (and consequential claims for damages against our customers from their customers), we may face claims for damages that are disproportionate to the revenues and profits we receive from the products involved. We attempt, through our standard terms and conditions of sale and other customer contracts, to limit our liability by agreeing only to replace the defective goods or refund the purchase price. Nevertheless, we have received claims for other charges, such as for labor and other costs of replacing defective parts or repairing the products into which the defective products are incorporated, lost profits and other damages. In addition, our ability to reduce such liabilities, whether by contracts or otherwise, may be limited by the laws or the customary business practices of the countries where we do business. And, even in cases where we do not believe we have legal liability for such claims, we may choose to pay for them to retain a customer’s business or goodwill or to settle claims to avoid protracted litigation. Our results of operations and business could be adversely affected as a result of a significant quality or performance issue in our products, if we are required or choose to pay for the damages that result.

For example, from time to time since late 2001, we have received claims from a number of customers seeking damages resulting from certain products manufactured with a phosphorus-containing mold compound. Mold compound is the plastic resin used to encapsulate semiconductor chips. This particular mold compound causes some chips to short in some situations, resulting in chip failure. We have been named in lawsuits relating to these mold compound claims. In January 2005, we were named as a defendant in a lawsuit filed by Lucent Technologies Inc. in the Superior Court of New Jersey. The Lucent lawsuit alleges breach of contract and breach of warranty claims and seeks unspecified damages allegedly caused by our products. We believe we have strong defenses against Lucent’s claims and intend to vigorously defend the lawsuit.

Several other customers have made claims for damages or threatened to begin litigation as a result of the mold compound issue if their claims are not resolved according to their demands, and we may face additional lawsuits as a result. On December 29, 2005, we settled a lawsuit filed against us and three of our distributors by Alcatel Canada Inc. in the Ontario Superior Court of Justice, alleging breach of contract, negligence and other claims and claiming damages allegedly caused by our products containing the mold compound. We have also resolved similar claims with several of our leading customers. We have exhausted insurance coverage for such customer claims. While the exact amount of these losses is not known, we recorded a reserve for estimated potential settlement losses of

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$11.0 million in the Consolidated Statement of Operations during the second quarter of 2004 and $6.9 million the fourth quarter of 2005. These estimates were based upon assessments of the potential liability using an analysis of the claims and historical experience. At April 2, 2006 and December 25, 2005, the reserve for estimated potential settlement losses was $5.8 million and $17.2 million, respectively. If we continue to receive additional claims for damages from customers beyond the period of time normally observed for such claims, if more of these claims proceed to litigation, or if we choose to settle claims in settlement of or to avoid litigation, then we may incur a liability in excess of the current reserve.

In a related action, we filed a lawsuit in August 2002 against the mold compound supplier, Sumitomo Bakelite Co., Ltd. and other related parties in California Superior Court for Santa Clara County, alleging claims for breach of contract, misrepresentation, negligence and other claims and seeking unspecified damages, including damages caused to our customers as a result of mold compound supplied by Sumitomo. Other manufacturers also filed lawsuits against Sumitomo relating to the same mold compound issue. On September 30, 2005, we agreed to settle the lawsuit against Sumitomo. We previously agreed to settle litigation against Amkor Technology, Inc., a co-defendant with Sumitomo.

Our international operations subject our company to risks not faced by domestic competitors.

Through our subsidiaries we maintain significant operations and facilities in the Philippines, Malaysia, China, South Korea and Singapore. We have sales offices and customers around world. Approximately 76% of our revenues in the first quarter of 2006 were from Asia. The following are some of the risks inherent in doing business on an international level:

•  economic and political instability;

•  foreign currency fluctuations;

•  transportation delays;

•  trade restrictions;

•  work stoppages; and

•  the laws of, including tax laws, and the policies of the United States toward, countries in which we manufacture our products.

We acquired significant operations and revenues when we acquired a business from Samsung Electronics and, as a result, are subject to risks inherent in doing business in Korea, including political risk, labor risk and currency risk.

As a result of the acquisition of the power device business from Samsung Electronics in 1999, we have significant operations and sales in South Korea and are subject to risks associated with doing business there. Korea accounted for 15% of our revenue for quarter ended April 2, 2006.

Relations between South Korea and North Korea have been tense over most of South Korea’s history, and more recent concerns over North Korea’s nuclear capability, and relations between the United States and North Korea, have created a global security issue that may adversely affect Korean business and economic conditions. We cannot assure you as to whether or when this situation will be resolved or change abruptly as a result of current or future events. An adverse change in economic or political conditions in South Korea or in its relations with North Korea could have a material adverse effect on our Korean subsidiary and our company. In addition to other risks disclosed relating to international operations, some businesses in South Korea are subject to labor unrest.

Our Korean sales are increasingly denominated primarily in U.S. dollars while a significant portion of our Korean operations’ costs of goods sold and operating expenses are denominated in South Korean won. Although we have taken steps to fix the costs subject to currency fluctuations and to balance won revenues and won costs as much as possible, a significant change in this balance, coupled with a significant change in the value of the won relative to the dollar, could have a material adverse effect on our financial performance and results of operations (see Item 3, Quantitative and Qualitative Disclosures about Market Risk).

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A change in foreign tax laws or a difference in the construction of current foreign tax laws by relevant foreign authorities could result in us not recognizing the benefits we anticipated in connection with the transaction structure used to consummate the acquisition of the power device business.

The transaction structure we used for the acquisition of the power device business is based on assumptions about the various tax laws, including income and withholding tax, and other relevant laws of foreign jurisdictions. In addition, our Korean subsidiary was granted a ten-year tax holiday under Korean law in 1999. The first seven years are tax-free, followed by three years of income taxes at 50% of the statutory rate. In 2000, the tax holiday was extended such that the exemption amounts were increased to 78% in the eighth year and a 28% exemption was added to the eleventh year. If our assumptions about tax and other relevant laws are incorrect, or if foreign taxing jurisdictions were to change or modify the relevant laws, or if our Korean subsidiary were to lose its tax holiday, we could suffer adverse tax and other financial consequences or lose the benefits anticipated from the transaction structure we used to acquire that business.

We have significantly expanded our manufacturing operations in China and, as a result, will be increasingly subject to risks inherent in doing business in China, which may adversely affect our financial performance.

In 2003, we completed the first phase of construction of an 800,000 square foot assembly and test facility in Suzhou, China, and in 2004 began implementing the second phase. The factory began production in July 2003 and is steadily increasing its output. Although we expect a significant portion of our production from this new facility will be exported out of China, especially initially, we are hopeful that a significant portion of our future revenue will result from the Chinese markets in which our products are sold, and from demand in China for goods that include our products. Our ability to operate in China may be adversely affected by changes in that country’s laws and regulations, including those relating to taxation, import and export tariffs, environmental regulations, land use rights, property and other matters. In addition, our results of operations in China are subject to the economic and political situation there. We believe that our operations in China are in compliance with all applicable legal and regulatory requirements. However, there can be no assurance that China’s central or local governments will not impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures. Changes in the political environment or government policies could result in revisions to laws or regulations or their interpretation and enforcement, increased taxation, restrictions on imports, import duties or currency revaluations. In addition, a significant destabilization of relations between China and the United States could result in restrictions or prohibitions on our operations or the sale of our products in China. The legal system of China relating to foreign trade is relatively new and continues to evolve. There can be no certainty as to the application of its laws and regulations in particular instances. Enforcement of existing laws or agreements may be sporadic and implementation and interpretation of laws inconsistent. Moreover, there is a high degree of fragmentation among regulatory authorities resulting in uncertainties as to which authorities have jurisdiction over particular parties or transactions.

We are subject to many environmental laws and regulations that could affect our operations or result in significant expenses.

Increasingly stringent environmental regulations restrict the amount and types of pollutants that can be released from our operations into the environment. While the cost of compliance with environmental laws has not had a material adverse effect on our results of operations historically, compliance with these and any future regulations could require significant capital investments in pollution control equipment or changes in the way we make our products. In addition, because we use hazardous and other regulated materials in our manufacturing processes, we are subject to risks of liabilities and claims, regardless of fault, resulting from our use, transportation, emission, discharge, storage, recycling or disposal of hazardous materials, including personal injury claims and civil and criminal fines, any of which could be material to our cash flow or earnings. For example:

•  we currently are remediating contamination at some of our operating plant sites;

•  we have been identified as a potentially responsible party at a number of Superfund sites where we (or our predecessors) disposed of wastes in the past; and

•  significant regulatory and public attention on the impact of semiconductor operations on the environment may result in more stringent regulations, further increasing our costs.

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Although most of our known environmental liabilities are covered by indemnification agreements with Raytheon Company, National Semiconductor, Samsung Electronics and Intersil Corporation, these indemnities are limited to conditions that occurred prior to the consummation of the transactions through which we acquired facilities from those companies. Moreover, we cannot assure you that their indemnity obligations to us for the covered liabilities will be available, or, if available, adequate to protect us.

We are a leveraged company with a ratio of debt to equity at April 2, 2006 of approximately 0.6 to 1, which could adversely affect our financial health and limit our ability to grow and compete.

At April 2, 2006, we had total debt of $644.4 million, and the ratio of this debt to equity was approximately 0.6 to 1. In June 2003, we entered into a new senior credit facility that included a $300 million term loan, the proceeds of which were used to redeem our 103/8% Senior Subordinated Notes due 2007, and a $180 million revolving line of credit. In January 2005, we increased the senior credit facility to $630 million, consisting of a term loan of $450 million replacing the previous $300 million term loan, and a $180 million revolving line of credit, of which $179.1 million remained undrawn as of April 2, 2006, adjusted for outstanding letters of credit. The proceeds from the increased senior credit facility were used, together with approximately $216 million in cash, to redeem all our outstanding 101/2% Senior Subordinated Notes due 2009. Despite reducing some of our long-term debt, we continue to carry substantial indebtedness which could have important consequences. For example, it could:

•  require us to dedicate a portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, research and development efforts and other general corporate purposes;

•  increase the amount of our interest expense, because certain of our borrowings (namely borrowings under our senior credit facility) are at variable rates of interest, which, if interest rates increase, could result in higher interest expense;

•  increase our vulnerability to general adverse economic and industry conditions;

•  limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

•  restrict us from making strategic acquisitions, introducing new technologies or exploiting business opportunities;

•  make it more difficult for us to satisfy our obligations with respect to the instruments governing our indebtedness;

•  place us at a competitive disadvantage compared to our competitors that have less indebtedness; or

•  limit, along with the financial and other restrictive covenants in our debt instruments, among other things, our ability to borrow additional funds, dispose of assets, repurchase stock or pay cash dividends. Failing to comply with those covenants could result in an event of default which, if not cured or waived, could have a material adverse effect on our business, financial condition and results of operations.

Despite current indebtedness levels, we may still be able to incur substantially more indebtedness. Incurring more indebtedness could exacerbate the risks described above.

We may be able to incur substantial additional indebtedness in the future. The indenture governing Fairchild Semiconductor Corporation’s outstanding 5% Convertible Senior Subordinated Notes Due 2008 does not limit the amount of additional debt that we may incur. Although the terms of the credit agreement relating to the senior credit facility contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions and, under certain circumstances, additional indebtedness incurred in compliance with these restrictions or upon further amendment of the credit facility could be substantial. The senior credit facility, as amended in January 2005, permits borrowings of up to $180.0 million in revolving loans under the line of credit, in addition to the outstanding $450 million term loan that is currently outstanding under that facility. As of April 2, 2006, adjusted for outstanding letters of credit, we had up to $179.1 million available under the revolving

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loan portion of the senior credit facility. If new debt is added to our subsidiaries’ current debt levels, the substantial risks described above would intensify.

We may not be able to generate the necessary amount of cash to service our indebtedness, which may require us to refinance our indebtedness or default on our scheduled debt payments. Our ability to generate cash depends on many factors beyond our control.

Our historical financial results have been, and our future financial results are anticipated to be, subject to substantial fluctuations. We cannot assure you that our business will generate sufficient cash flow from operations, that currently anticipated cost savings and operating improvements will be realized on schedule or at all, or that future borrowings will be available to us under our senior credit facility in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. In addition, because our senior credit facility has variable interest rates, the cost of those borrowings will increase if market interest rates increase. If we are unable to meet our expenses and debt obligations, we may need to refinance all or a portion of our indebtedness on or before maturity, sell assets or raise equity. We cannot assure you that we would be able to refinance any of our indebtedness, sell assets or raise equity on commercially reasonable terms or at all, which could cause us to default on our obligations and impair our liquidity. Restrictions imposed by the credit agreement relating to our senior credit facility restrict or prohibit our ability to engage in or enter into some business operating and financing arrangements, which could adversely affect our ability to take advantage of potentially profitable business opportunities.

The operating and financial restrictions and covenants in the credit agreement relating to our senior credit facility may limit our ability to finance our future operations or capital needs or engage in other business activities that may be in our interests. The credit agreement imposes significant operating and financial restrictions that affect our ability to incur additional indebtedness or create liens on our assets, pay dividends, sell assets, engage in mergers or acquisitions, make investments or engage in other business activities. These restrictions could place us at a disadvantage relative to competitors not subject to such limitations.

In addition, the senior credit facility also requires us to maintain specified financial ratios. Our ability to meet those financial ratios can be affected by events beyond our control, and we cannot assure you that we will meet those ratios. As of April 2, 2006, we were in compliance with these ratios. A breach of any of these covenants, ratios or restrictions could result in an event of default under the senior credit facility. Upon the occurrence of an event of default under the senior credit facility, the lenders could elect to declare all amounts outstanding under the senior credit facility, together with accrued interest, to be immediately due and payable. If we were unable to repay those amounts, the lenders could proceed against our assets, including any collateral granted to them to secure the indebtedness. If the lenders under the senior credit facility accelerate the payment of the indebtedness, we cannot assure you that our assets would be sufficient to repay in full that indebtedness and our other indebtedness.

Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds

There were no sales of unregistered equity securities in the first quarter of 2006. The following table provides information with respect to purchases made by the company of its own common stock.

					Total Number of		Maximum Number (or
					Shares Purchased		Approximate Dollar Value)
	Total Number of		Average		as Part of Publicly		of Shares That May yet be
	Shares (or Units)		Price Paid		Announced Plans		Purchased Under the Plans
Period	Purchased(1)		per Share		or Programs		or Programs
December 26, 2005 - January 29, 2006		—	$	—		—		—
January 30, 2006 - February 26, 2006		110,000		18.12		—		—
February 27, 2006 - April 2, 2006		—		—		—		—
Total		110,000	$	18.12		—		—

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(1) All of these shares were purchased by the company in open-market transactions to satisfy its obligations to deliver shares under the company’s employee stock purchase plan. The purchase of these shares satisfied the conditions of the safe harbor provided by the Securities Exchange Act of 1934.

Item 6.   Exhibits

Exhibit
No.			Description
	10	.01	Employment Agreement, dated February 27, 2006, between Fairchild Semiconductor Corporation and Mark S. Frey.
	10	.02	Restricted Stock Unit Agreement under the Fairchild Semiconductor Stock Plan dated February 27, 2006, between Fairchild Semiconductor International, Inc. and Mark S. Frey.
	10	.03	Restricted Stock Unit Agreement under the Fairchild Semiconductor Stock Plan dated February 10, 2006, between Fairchild Semiconductor International, Inc. and Mark S. Thompson.
	10	.04	Form of Restricted Stock Unit Agreement under the Fairchild Semiconductor Stock Plan.
	14	.01	Code of Business Conduct and Ethics (incorporated by reference from our current report on Form 8-K filed on January 31, 2006).
	31	.01	Section 302 Certification of the Chief Executive Officer.
	31	.02	Section 302 Certification of the Chief Financial Officer.
	32	.01	Certification, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Mark S. Thompson.
	32	.02	Certification, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Mark S. Frey.

Items 3, 4, and 5 are not applicable and have been omitted.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Fairchild Semiconductor International, Inc.

Date: May 12, 2006 By: /s/  Robin A. Sawyer
        Robin A. Sawyer
Vice President, Corporate Controller
(Principal Accounting Officer)

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EX-10.01

                                                                   Exhibit 10.01

                                                                  EXECUTION COPY

                              EMPLOYMENT AGREEMENT

            THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is entered into as of
February 27, 2006 (the "EFFECTIVE DATE") between Mark S. Frey (the "EXECUTIVE")
and Fairchild Semiconductor Corporation (the "COMPANY"), a Delaware corporation.

            For ease of reference, this Agreement is divided into the following
parts:

PART 1 --         DUTIES AND SCOPE, COMPENSATION AND BENEFITS DURING EMPLOYMENT
                  (Sections 1-4)

                        -     Position and Duties

                        -     Salary

                        -     EFIP Bonus

                        -     Equity Awards

                        -     Other

PART 2 --         COMPENSATION AND BENEFITS IN CASE OF ACTUAL OR CONSTRUCTIVE
                  TERMINATION (Sections 5-6)

                        -     Termination

PART 3 --         COMPENSATION AND BENEFITS IN CASE OF A CHANGE IN CONTROL
                  (Section 7)

PART 4 --         CONFIDENTIALITY AND NON-DISCLOSURE, FORFEITURE, INTELLECTUAL
                  PROPERTY, NON-SOLICITATION, REMEDIES, SUCCESSORS,
                  MISCELLANEOUS PROVISIONS, SIGNATURE PAGE (Sections 8-14)

                        -     Confidentiality and Non-Disclosure

                        -     Forfeiture in Case of Certain Events

                        -     Non-Solicitation

                        -     Miscellaneous



                                      TERMS

      For good and valuable consideration, the adequacy and receipt of which are
hereby acknowledged, the Company and the Executive, intending to be legally
bound, agree as follows:

PART 1      DUTIES AND SCOPE, COMPENSATION AND BENEFITS DURING EMPLOYMENT

SECTION 1. TERM OF AGREEMENT; TERMINATION OF EMPLOYMENT

(a)   Unless sooner terminated as provided in this Agreement, the term of this
      Agreement will begin on the Effective Date and will end on the first
      anniversary of the Start Date defined in Section 2(a) below (the "INITIAL
      TERM"). At the end of the Initial Term or any Renewal Term, this Agreement
      shall be automatically renewed for additional, successive terms of one
      year (each a "RENEWAL TERM") unless either the Company or the Executive
      gives the other written notice of non-renewal at least 180 days before the
      end of the Initial Term or Renewal Term, as the case may be. Such notice
      of non-renewal given by the Company shall be treated as a termination
      without Cause hereunder effective as of the termination date specified by
      the Company in such notice (or, if no date is specified, the date notice
      is given), which date must be on or after the giving of such notice and on
      or before the last day of the Term. The Initial Term and any Renewal Terms
      are collectively referred to as the "TERM".

(b)   Subject to the other terms of this Agreement, including those in Part 2,
      on or following the Start Date either the Company or the Executive may
      terminate the Executive's employment with the Company at any time and for
      any reason or no reason upon written notice to the other party, with
      effect as of a subsequent date specified in such notice. Prior to the
      Start Date either the Company or the Executive may terminate this
      Agreement for any reason or no reason upon written notice to the other
      party, provided that any such termination shall be deemed a termination of
      employment for all purposes under this Agreement, and will be subject to
      the other terms of this Agreement, including those in Part 2.

SECTION 2. DUTIES AND SCOPE OF EMPLOYMENT

(a)   Position. Beginning on March 20, 2006, or such other date which is agreed
      in writing by the Executive and the Company and which falls within 30 days
      after the Effective Date (the "START DATE"), and for the remainder of the
      Term, the Company will employ the Executive in the position of Executive
      Vice President, Chief Financial Officer, based in the Company's San Jose,
      California, office, reporting directly to the President and Chief
      Executive Officer. For the avoidance of doubt, the parties agree that this
      Agreement shall be effective as of and following the Effective Date, but
      that the Executive will not become an employee of the Company until the
      Start Date.

(b)   Obligations. From and after the Start Date and while employed hereunder,
      the Executive shall have such duties, responsibilities and authority as
      customarily held or exercised by a chief financial officer of a public
      corporation, including but not limited to general supervision over all of
      the global finance organization of the Company. During the Term,

                                       2



      the Executive shall devote the Executive's full business efforts and time
      to the business and affairs of the Company as needed to carry out his
      duties and responsibilities hereunder. The foregoing shall not preclude
      the Executive from engaging in appropriate civic, charitable, religious or
      other non-profit activities or from devoting a reasonable amount of time
      to private investments or from serving on the boards of directors of other
      entities, provided that those activities do not interfere or conflict with
      the Executive's duties or responsibilities to the Company.

SECTION 3. BASE COMPENSATION

From and after the Start Date and while employed hereunder, the Company shall
pay the Executive, as compensation for services, a base salary of at least
$325,000 per year. Salary increases will be considered after the first
anniversary of the Effective Date, or sooner in the discretion of President and
CEO and consistent with Company policies.

SECTION 4. OTHER COMPENSATION

(a)   EFIP. While employed hereunder, the Executive will be enrolled in the
      Enhanced Fairchild Incentive Plan (EFIP), at a participation level of at
      least 90%. By way of example only, if an EFIP bonus is paid at the 100%
      target level, the Executive would receive a bonus equal to 90% of his
      qualified earnings under EFIP during the measurement period. Payments are
      subject to the terms and conditions of the EFIP.

(b)   Equity Awards.

      (1)   Grants. The Executive shall receive a grant of 20,000 Fairchild
            Semiconductor International, Inc. ("FSII") restricted stock units
            ("RSUS"), a grant of 20,000 FSII performance units ("PERFORMANCE
            UNITS") and a grant of options to purchase 75,000 shares of FSII
            common stock ("OPTIONS"), subject to the following terms
            (collectively, the "EQUITY GRANTS"). The Equity Grants will not be
            made under any stock or option plan of the Company or FSII, but will
            be granted, administered and interpreted as if such grants had been
            made under, and subject to, the Fairchild Semiconductor Stock Plan
            and standard forms of executive agreements (the "EQUITY AWARD
            AGREEMENTS") as in effect on the date hereof and as such plan may be
            amended from time to time (the "PLAN"). The Plan and Equity Award
            Agreements are hereby incorporated in this Agreement as if fully set
            forth herein. The grant date for the Equity Grants will be the Start
            Date. The RSUs and Options will vest in 25% increments on each of
            the first four anniversaries of the grant date, if in each case the
            Executive remains employed by the Company on such anniversary. The
            actual number of shares of stock issued under the Performance Units,
            and the vesting provisions relating to those units and shares
            received thereunder, will be determined in accordance with the Plan
            and terms generally applicable to 2006 performance unit grants to
            executive officers of the Company. The Executive will be solely
            responsible for any taxes associated with the receipt, vesting,
            exercise or delivery of shares or cash under the Equity Grants, and
            the Company will make appropriate withholdings from any
            distributions of shares or cash thereunder.

                                       3



      (2)   No Eligibility for Other Grants in 2006. The Equity Grants are made
            in lieu of any that would otherwise be made to the Executive as part
            of the Company's annual grant program for 2006, and, accordingly,
            the Executive shall not receive any grants of RSUs, performance
            units or options under such program in 2006, other than the Equity
            Grants. The Executive will be eligible to receive additional awards
            that the Company may undertake under any other program, with respect
            to the Executive or otherwise, in 2006.

      (3)   Additional Grants After 2006. So long as he is employed by the
            Company after 2006, the Executive shall receive grants of stock
            options, performance shares and other equity-based awards, subject
            to the applicable Company plans governing such awards, and covering
            a number of shares determined consistent with Company policies and
            practices for executive officers. Since the Equity Grants are made
            in connection with the Executive's recruitment, future annual awards
            may be smaller than the Equity Grants.

(c)   Recruitment Bonus. The Company will pay the Executive a one-time
      recruitment bonus of $80,000, on a tax-assisted or fully grossed-up basis,
      within 10 days after the Start Date. If the Executive terminates his
      employment with the Company for any reason other than Good Reason (or his
      death or disability) within one year after the Start Date, the Executive
      will repay the foregoing recruitment bonus to the Company on a prorated
      basis reflecting the portion of such one-year period that the Executive is
      not employed by the Company. Such repayment will include amounts paid by
      the Company in respect of tax assistance that are not recovered by the
      Company as a result of such repayment.

(d)   Tax and Financial Planning Assistance. The Executive will be entitled to
      receive up to $8,000 per year in personal tax and financial planning
      services at the Company's expense and on a tax-assisted (or "fully
      grossed-up") basis.

(e)   Other Benefits. While employed hereunder, the Executive will be entitled
      to participate in Company-paid executive long-term disability insurance,
      Company-paid executive long-term care insurance, and Company-paid basic
      life insurance programs, and to participate in the Company's health
      insurance, dental insurance, vision care, short-term disability and
      personal savings (including 401(k) and 401(k) benefit restoration) plans,
      as well as other benefit plans and fringe benefits and perquisites
      available to senior executives of the Company.

(f)   Paid Vacation. While employed hereunder, the Executive shall be entitled
      to a minimum of four weeks paid vacation per calendar year, such vacation
      to extend for such periods and to be taken at such intervals as shall be
      appropriate and consistent with Company policies and the proper
      performance of the Executive's duties hereunder.

(g)   Business Expenses and Travel. While employed hereunder, the Executive
      shall be authorized to incur and shall be reimbursed for all necessary and
      reasonable travel, entertainment and other business expenses in connection
      with the Executive's duties hereunder.

                                       4



(h)   Legal Fee Reimbursement. The Company agrees to directly pay Executive's
      reasonable advisory and legal fees associated with entering into this
      Agreement, up to $5,000, upon receiving invoices for such services. Such
      amounts will be paid on a tax-assisted or "fully grossed-up" basis, to the
      extent such payments are taxable to the Executive for U.S. federal or
      state income tax purposes.

(i)   Indemnification. Executive shall receive indemnification as a corporate
      officer and director of the Company to the maximum extent extended to the
      other officers and directors of the Company. Following the termination of
      Executive's employment or directorship for any reason, the Company agrees
      to honor the indemnification agreement previously entered into with
      Executive.

PART 2  COMPENSATION AND BENEFITS IN CASE OF TERMINATION WITHOUT CAUSE OR FOR
        GOOD REASON OUTSIDE OF A CHANGE OF CONTROL

SECTION 5.        TERMINATIONS AND RELATED DEFINITIONS

Part 2 of the Agreement, consisting of Sections 5 and 6, describes the benefits
and compensation, if any, payable in case of certain terminations of employment
prior to six months before a Change in Control and more than twelve months after
a Change in Control.

In this Agreement,

(a)   "CAUSE" means (1) a willful failure by the Executive to substantially
      perform the Executive's duties under this Agreement, other than a failure
      resulting from the Executive's complete or partial incapacity due to
      physical or mental illness or impairment, (2) a willful act by the
      Executive that constitutes gross misconduct and that is materially
      injurious to the Company, (3) a willful breach by the Executive of a
      material provision of this Agreement (including Sections 8 or 10) or (4) a
      material and willful violation of a federal, state or foreign law or
      regulation applicable to the business of the Company that is materially
      and demonstrably injurious to the Company, provided that no act, or
      failure to act, by the Executive shall be considered "willful" unless
      committed without good faith and without a reasonable belief that the act
      or omission was in the Company's best interest; and provided, further,
      that, if the failure, act, breach or other basis for finding Cause under
      this Agreement is capable of being cured without material injury to the
      Company, then no finding of Cause shall be made unless the Executive has
      failed to cure such failure, act, breach or other basis within 30 days
      after receiving written notice thereof from the Company, and

(b)   "DISABILITY" means that the Executive, at the time the notice is given,
      has been unable to perform the Executive's duties under this Agreement for
      a period of not less than six consecutive months as a result of the
      Executive's incapacity due to physical or mental illness, and

                                       5



(c)   "GOOD REASON" means any of the following or as otherwise provided in this
      Agreement: (1) a reduction in the Executive's base salary other than as
      part of a broader executive pay reduction, (2) a reduction in the
      Executive's incentive compensation (EFIP) participation level other than
      as part of a broader executive reduction, (3) a material change in the
      employment benefits available to the Executive, if such change does not
      similarly affect all employees of the Company eligible for such benefits,
      (4) a material reduction in Executive's duties, responsibilities or
      authority as then in effect or (5) a requirement to relocate, except for
      office relocations that would not increase the Executive's one-way
      commuting distance by more than 35 miles.

SECTION 6. TERMINATION BY COMPANY WITHOUT CAUSE OR BY EXECUTIVE FOR GOOD REASON

(a)   Severance. If, during the Term, the Company terminates the Executive's
      employment for any reason other than Cause (including as a result of the
      Executive's death or Disability), or if the Executive terminates his
      employment for Good Reason, then, provided the Executive (or his legal
      representative, if applicable) executes the release of claims described in
      Section 6(b), and subject to Section 6(c), the Company will promptly pay
      the Executive, in a lump sum, an amount equal to the sum of (i) the
      Executive's base annual salary in effect on such termination date and (ii)
      the amount of the bonus the Executive would receive under the Company's
      Enhanced Fairchild Incentive Program (EFIP), assuming a 100% payout based
      on the Executive's base salary and EFIP incentive level in effect
      immediately prior to such termination (whether or not such a bonus has
      been or is expected to be paid to other executives or employees of the
      Company for the fiscal period in which such termination occurs). If EFIP
      bonuses are later paid to EFIP participants at a level higher than 100% in
      respect of the last fiscal period during which the Executive had been
      employed by the Company, then the Company shall pay the Executive the
      difference between the amount that would have been paid to the Executive
      had the Executive remained employed by the Company, and been entitled to
      receive such bonus, and the amount determined under clause (ii) above. If
      at the time of such a termination the EFIP program has been discontinued
      or replaced, then the amount payable under clause (ii) above shall be the
      target or actual amount that the Executive is entitled to receive under
      any incentive bonus program in which he is then participating. The
      Executive will be responsible for all taxes relating to such payments and
      the Company will make all required withholdings of all such taxes. At the
      time of such termination, the Company shall pay the Executive in cash for
      all accrued and unused vacation time.

(b)   Release of Claims. As a condition to the receipt of the payments described
      in Section 6(a), the Executive (or his legal representative, if
      applicable) shall be required to execute a release of all claims arising
      out of the Executive's employment or the termination thereof, including
      any claim of discrimination under U.S. state or federal law or any
      non-U.S. law, but excluding claims for indemnification from the Company
      under any indemnification agreement with the Company, its certificate of
      incorporation or bylaws, claims under applicable directors' and officers'
      insurance policies, or claims for indemnification under Section 2802 of
      the California Labor Code or similar statutes.

                                       6



(c)   Conditions to Receipt of Payments. Without limiting the Company's other
      rights or remedies in the event of the Executive's breach of any provision
      of this Agreement, the obligation of the Company to provide the payments
      described in this Section 6 is subject to the Executive's continuing
      compliance with Sections 8 and 10 during and after the Term, and also is
      subject to the related provisions of Section 11.

(d)   No Mitigation. The Executive shall not be required to mitigate the amount
      of any payment or benefit contemplated by this Section 6, nor shall any
      such payment or benefit be reduced by any earnings or benefits that the
      Executive may receive from any other source.

PART 3 COMPENSATION AND BENEFITS IN CASE OF A CHANGE IN CONTROL

SECTION 7. CHANGE IN CONTROL

(a)   Payment; Vesting of Equity Awards. If the Executive's employment is
      terminated by the Company other than for Cause (including as a result of
      the Executive's death or Disability), or by the Executive for Good Reason,
      in either case within the time period beginning six months before the
      Change in Control and ending 12 months after the Change in Control, then

      (1)   the Company will promptly pay the Executive, in a lump sum, an
            amount equal to the sum of (i) the Executive's base salary in effect
            on such termination date and (ii) the amount of the bonus the
            Executive would receive under the Company's Enhanced Fairchild
            Incentive Program (EFIP), assuming a 100% payout based on the
            Executive's base salary and EFIP incentive level in effect
            immediately prior to such termination (whether or not such a bonus
            has been or is expected to be paid to other executives or employees
            of the Company for the fiscal period in which such termination
            occurs). If EFIP bonuses are later paid to EFIP participants at a
            level higher than 100% in respect of the last fiscal period during
            which the Executive had been employed by the Company, then the
            Company shall pay the Executive the difference between the amount
            that would have been paid to the Executive had the Executive
            remained employed by the Company, and been entitled to receive such
            bonus, and the amount determined under clause (ii) above. If at the
            time of such a termination the EFIP program has been discontinued or
            replaced, then the amounts payable under clause (ii) above and the
            preceding sentence shall be the maximum amounts that the Executive
            is entitled to receive under any incentive bonus program in which he
            is then participating; and

      (2)   any stock options and stock appreciation rights granted to the
            Executive that are outstanding as of the date of such termination,
            and which are not then vested, shall become fully vested, and all
            stock options of the Executive shall remain vested and exercisable
            for the full remaining term or terms thereof; and any restrictions
            and deferral limitations applicable to any performance shares or
            other restricted stock awards granted to the Executive that are
            outstanding as of the date of such termination shall lapse, and such
            awards shall become free of all

                                       7



            restrictions and become fully vested and transferable; and all
            deferred stock units granted to the Executive that are outstanding
            as of the date such termination shall be considered to be earned and
            payable in full, and any deferral or other restrictions shall lapse
            and such deferred stock units shall be settled as promptly as is
            practicable following such termination. The Executive will be
            responsible for all taxes relating to such payments and vesting and
            the Company will make all required withholdings of all such taxes.

(b)   Definition. A "CHANGE IN CONTROL" means the happening of any of the
      following events (for purposes of this Section 7 only, the "COMPANY" means
      FSII, and not any of its subsidiaries) in one or a series of related
      transactions:

      (1)   An acquisition by any individual, entity or group (within the
            meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
            Act of 1934, as amended (the "EXCHANGE ACT")) (any of which, a
            "PERSON") resulting in such Person having beneficial ownership
            (within the meaning of Rule 13d-3 promulgated under the Exchange
            Act) of 20% or more of either (i) the then-outstanding shares of
            common stock of the Company (the "OUTSTANDING COMPANY COMMON STOCK")
            or (ii) the combined voting power of the then-outstanding voting
            securities of the Company entitled to vote generally in the election
            of directors (the "OUTSTANDING COMPANY VOTING SECURITIES");
            excluding, however, the following: (A) Any acquisition directly from
            the Company, other than an acquisition by virtue of the exercise of
            a conversion privilege unless the security being so converted was
            itself acquired directly from the Company, (B) Any acquisition by
            the Company, (C) Any acquisition by any employee benefit plan (or
            related trust) sponsored or maintained by the Company or any entity
            controlled by the Company, or (D) Any acquisition pursuant to a
            transaction which complies with clauses (i), (ii) and (ii) of
            Section 7(b)(3); or

      (2)   A change in the composition of the board of directors of the Company
            (the "BOARD") such that the individuals who, as of the Effective
            Date, constitute the Board (such Board shall be hereinafter referred
            to as the "INCUMBENT BOARD") cease for any reason to constitute at
            least a majority of the Board; provided, however, for purposes of
            this definition, that any individual who becomes a member of the
            Board subsequent to the Effective Date, whose election, or
            nomination for election by the Company's stockholders, was approved
            by a vote of at least a majority of those individuals who are
            members of the Board and who were also members of the Incumbent
            Board (or deemed to be such pursuant to this proviso) shall be
            considered as though such individual were a member of the Incumbent
            Board; but, provided further, that any such individual whose initial
            assumption of office occurs as a result of either an actual or
            threatened election contest (as such terms are used in Rule 14a-11
            of Regulation 14A promulgated under the Exchange Act) or other
            actual or threatened solicitation of proxies or consents by or on
            behalf of a Person other than the Board shall not be so considered
            as a member of the Incumbent Board; or

                                       8



      (3)   Consummation of a reorganization, merger or consolidation or sale or
            other disposition of all or substantially all of the assets of the
            Company or the acquisition of shares or assets of another company
            ("CORPORATE TRANSACTION"); excluding, however, such a Corporate
            Transaction pursuant to which (i) all or substantially all of the
            individuals and entities who are the beneficial owners,
            respectively, of the Outstanding Company Common Stock and
            Outstanding Company Voting Securities immediately prior to such
            Corporate Transaction will beneficially own, directly or indirectly,
            more than 50% of, respectively, the outstanding shares of common
            stock (or equity interests), and the combined voting power of the
            then outstanding voting securities entitled to vote generally in the
            election of directors (or equivalent governing body, if applicable),
            as the case may be, of the entity resulting from such Corporate
            Transaction (including an entity which as a result of such
            transaction owns the Company or all or substantially all of the
            Company's assets either directly or through one or more
            subsidiaries) in substantially the same proportions as their
            ownership, immediately prior to such Corporate Transaction, of the
            Outstanding Company Common Stock and Outstanding Company Voting
            Securities, as the case may be, (ii) no Person (other than the
            Company, any employee benefit plan (or related trust) of the Company
            or such entity resulting from such Corporate Transaction) will
            beneficially own, directly or indirectly, 20% or more of,
            respectively, the outstanding shares of common stock (or equity
            interests) of the entity resulting from such Corporate Transaction
            or the combined voting power of the outstanding voting securities of
            such corporation entitled to vote generally in the election of
            directors (or equivalent governing body, if applicable) except to
            the extent that such ownership existed prior to the Corporate
            Transaction, and (iii) individuals who were members of the Incumbent
            Board will constitute at least a majority of the members of the
            board of directors (or equivalent governing body, if applicable) of
            the entity resulting from such Corporate Transaction; or

      (4)   The approval by the stockholders of the Company of a complete
            liquidation or dissolution of the Company.

(d)   Any obligation of the Company under this Section 7 will survive any
      termination of this Agreement.

PART 4   CONFIDENTIALITY AND NON-DISCLOSURE, FORFEITURE, INTELLECTUAL PROPERTY,
         NON-SOLICITATION, REMEDIES, SUCCESSORS, MISCELLANEOUS PROVISIONS,
         SIGNATURE PAGE

SECTION 8. CONFIDENTIAL INFORMATION

(a)   Acknowledgement. The Company and the Executive acknowledge that the
      services to be performed by the Executive under this Agreement are unique
      and extraordinary and that, as a result of the Executive's employment, the
      Executive will be in a relationship of

                                       9



      confidence and trust with the Company and will come into possession of
      Confidential Information (as defined below) that is (1) owned or
      controlled by the Company, (2) in the possession of the Company and
      belonging to third parties or (3) conceived, originated, discovered or
      developed, in whole or in part, by the Executive. "CONFIDENTIAL
      INFORMATION" means trade secrets and other confidential or proprietary
      business, technical, personnel or financial information, whether or not
      the Executive's work product, in written, graphic, oral or other tangible
      or intangible forms, including specifications, samples, records, data,
      computer programs, drawings, diagrams, models, customer names, ID's or
      e-mail addresses, business or marketing plans, studies, analyses,
      projections and reports, communications by or to attorneys (including
      attorney-client privileged communications), memos and other materials
      prepared by attorneys or under their direction (including attorney work
      product), and software systems and processes. Any Confidential Information
      that is not readily available to the public shall be considered to be a
      trade secret and confidential and proprietary, even if it is not
      specifically marked as such, unless the Company advises the Executive
      otherwise in writing.

(b)   Nondisclosure. The Executive agrees that the Executive will not, without
      the prior written consent of the Company, directly or indirectly, use or
      disclose Confidential Information to any person, during or after the
      Executive's employment, except as may be necessary in the ordinary course
      of performing the Executive's duties under this Agreement. The Executive
      will keep the Confidential Information in strictest confidence and trust.
      This Section 8(b) shall apply indefinitely, both during and after the
      Term.

(c)   Surrender Upon Termination. The Executive agrees that in the event of the
      termination of the Executive's employment for any reason, at any time, the
      Executive will immediately deliver to the Company all property belonging
      to the Company, including documents and materials of any nature pertaining
      to the Executive's work with the Company, and will not take with the
      Executive any documents or materials of any description, or any
      reproduction thereof of any description, containing or pertaining to any
      Confidential Information. It is understood that the Executive is free to
      use information that is in the public domain, but not as a result of a
      breach of this Agreement

(d)   Forfeiture in Certain Events. The Company may, in its sole discretion, in
      the event of (i) any termination of employment of the Executive for Cause,
      (ii) any material breach by the Executive of Section 10 following his
      termination of employment for any reason or (iii) following a material
      breach of Section 10 and any finding of the invalidity or unenforceability
      of Section 10 as further provided in Section 11, (A) cancel any
      outstanding award of stock options, restricted stock, deferred stock units
      or other award granted to the Executive under a Company plan or otherwise
      (an "AWARD"), in whole or in part, whether or not vested or deferred, such
      cancellation to be effective as of a date specified in written notice to
      the Executive, which date shall be no earlier than the date such notice is
      given, or (B) following the exercise or payment of an Award, the Company
      may require the Executive to repay to the Company any gain realized or
      payment received upon the exercise or payment of such Award (with such
      gain or payment valued as of the date of exercise or payment). Such
      repayment obligation shall be effective upon notice of demand thereof to
      Executive, and repayment shall be due and payable to the

                                       10



      Company as of a date which is at least 30 days after the Executive
      receives such notice, which notice may provide for an offset to any future
      payments owed by the Company or any subsidiary to the Executive if
      necessary to satisfy the repayment obligation. Any determinations under
      this paragraph will be made by the Company in good faith and in its sole
      discretion. This Section 8(d) shall apply during and following the Term of
      this Agreement, but shall have no application following a Change in
      Control.

SECTION 9. ASSIGNMENT OF RIGHTS OF INTELLECTUAL PROPERTY

The Executive will promptly and fully disclose all Intellectual Property to the
Company. The Executive hereby assigns and agrees to assign to the Company (or as
otherwise directed by the Company) the Executive's full right, title and
interest in and to all Intellectual Property. The Executive will execute any and
all applications for domestic and foreign patents, copyrights or other
proprietary rights and to do such other acts (including the execution and
delivery of instruments of further assurance or confirmation) requested by the
Company to assign the Intellectual Property to the Company and to permit the
Company and its affiliates to enforce any patents, copyrights or other
proprietary rights to the Intellectual Property. "INTELLECTUAL PROPERTY" means
inventions, discoveries, developments, methods, processes, compositions, works,
concepts and ideas (whether or not patentable or copyrightable or constituting
trade secrets) conceived, made, created, developed or reduced to practice by the
Executive (whether alone or with others, whether or not during normal businesses
hours or on or off Company premises) during the Executive's employment with the
Company that relate to any business, venture or activity being conducted or
proposed to be conducted by the Company or its subsidiaries at any time during
the term of the Executive's employment with the Company.

SECTION 10. RESTRICTIONS ON ACTIVITIES OF THE EXECUTIVE

(a)   Acknowledgments. The Executive agrees that he is being employed under this
      Agreement in a key management capacity with the Company, that the Company
      is engaged in a highly competitive business and that the success of the
      Company's business in the marketplace depends upon its goodwill and
      reputation for quality and dependability. The Executive further agrees
      that reasonable limits may be placed on his ability to compete against the
      Company and its affiliates as provided in this Agreement so as to protect
      and preserve their legitimate business interests and goodwill.

(b)   Agreement Not to Solicit.

      (1)   During the Non-Solicitation Period, the Executive will not, directly
            or indirectly, through any other entity, solicit for employment,
            hire or to provide services, any officer, director, consultant,
            executive or employee of the Company or any of its affiliates during
            his or her engagement with the Company or such affiliate.

      (2)   The "NON-SOLICITATION PERIOD" means the period during which
            Executive is employed by the Company and the following 12 months.

                                       11



SECTION 11. REMEDIES

It is specifically understood and agreed that any breach of the provisions of
Section 8 or 10 of this Agreement would likely result in irreparable injury to
the Company and that the remedy at law alone would be an inadequate remedy for
such breach, and that in addition to any other remedy it may have, the Company
shall be entitled to enforce the specific performance of this Agreement by the
Executive and to obtain both temporary and permanent injunctive relief without
the necessity of proving actual damages. Without limiting the generality of the
foregoing provisions of this Section 11, it is understood and agreed that the
Equity Grants under Section 4(b) and the Company's promise to provide the
severance payments described in Section 6(a) are made subject to the condition
that (i) the Executive's obligations under Section 10 are and will remain
specifically enforceable against the Executive in accordance with those sections
and (ii) if, in an action by the Company against the Executive for the breach or
alleged breach of Section 10, a court of competent jurisdiction finds that all
or any part of that section is invalid or unenforceable for any reason, then the
Company may, without limiting its other remedies at law or equity, enforce all
of the remedies available to it under this Agreement, including without
limitation the remedies described in Section 8(d).

SECTION 12. SEVERABLE PROVISIONS

The provisions of this Agreement are severable and the invalidity of any one or
more provisions shall not affect the validity of any other provision. In the
event that a court of competent jurisdiction shall determine that any provision
of this Agreement or the application thereof is unenforceable in whole or in
part because of the duration of scope thereof, the parties hereby agree that
such court, in making such determination, shall have the power to reduce the
duration and scope of such provision to the extent necessary to make it
enforceable and that this Agreement in its reduced form shall be valid and
enforceable to the fullest extent permitted by law.

SECTION 13. SUCCESSORS

(a)   Company's Successors. The Company will require any successor (whether
      direct or indirect and whether by purchase, lease, merger, consolidation,
      liquidation or otherwise) to all or substantially all of the Company's
      business or assets, by an agreement in substance and form satisfactory to
      the Executive, to assume this Agreement and to agree expressly to perform
      this Agreement in the same manner and to the same extent as the Company
      would be required to perform it in the absence of a succession. The
      Company's failure to obtain such agreement prior to the effectiveness of a
      succession shall be a breach of this Agreement and shall entitle the
      Executive to all of the compensation and benefits to which the Executive
      would have been entitled under this Agreement if the Company had
      terminated the Executive's employment for any reason other than Cause, on
      the date when such succession becomes effective. For all purposes under
      this Agreement, except as otherwise provided in this Agreement, the term
      "Company" shall include any successor to the Company's business or assets
      that executes and delivers the assumption agreement described in this
      Section 13(a), or that becomes bound by this Agreement by operation of
      law.

                                       12



(b)   Executive's Successors. This Agreement and all rights of the Executive
      under this Agreement shall inure to the benefit of, and be enforceable by,
      the Executive's personal or legal representatives, executors,
      administrators, successors, heirs, distributees, devisees and legatees.

SECTION 14. GENERAL PROVISIONS

(a)   Amendment; Waiver. No provision of this Agreement shall be modified,
      waived or discharged unless the modification, waiver or discharge is
      agreed to in writing and signed by the Executive and by an authorized
      officer of the Company (other than the Executive). No waiver by either
      party of any breach of, or of compliance with, any condition or provision
      of this Agreement by the other party shall be considered a waiver of any
      other condition or provision or of the same condition or provision at
      another time.

(b)   Whole Agreement; Interpretation. No agreements, representations or
      understandings (whether oral or written and whether express or implied)
      that are not expressly set forth in this Agreement have been made or
      entered into by either party with respect to the subject matter hereof.
      The reference table on the first page and the headings in this Agreement
      are for convenience of reference only and will not affect the construction
      or interpretation of this Agreement. The word "or" is used in its
      non-exclusive sense. Unless otherwise stated, the word "including" should
      be read to mean "including without limitation" and does not limit the
      preceding words or terms. All references to "Sections" or other provisions
      in this Agreement are to the corresponding Sections or provisions in this
      Agreement. All words in this Agreement will be construed to be of such
      gender or number as the circumstances require.

(c)   Notice. Notices and all other communications contemplated by this
      Agreement shall be in writing and shall be deemed to have been duly given
      when personally delivered, mailed by U.S. registered or certified mail,
      return receipt requested, or sent by a documented overnight courier
      service. In the case of the Executive, mailed notices shall be addressed
      to the Executive at the home address maintained in the Company's records.
      In the case of the Company, mailed notices shall be addressed to its
      corporate headquarters, and all notices shall be directed to the attention
      of the President and Chief Executive Officer, with a required copy to the
      attention of the Corporate Secretary.

(d)   Setoff. The Company may set off against any payments owed to the Executive
      under this Agreement any debt or obligation of the Executive owed to the
      Company.

(e)   Choice of Law. The validity, interpretation, construction and performance
      of this Agreement shall be governed by the laws of the State of Maine,
      irrespective of Maine's choice-of-law principles.

(f)   Arbitration. Except as otherwise provided with respect to the enforcement
      of Sections 8 and 10, any dispute or controversy arising out of the
      Executive's employment or the termination thereof, including any claim of
      discrimination under U.S. (state or federal) or non-U.S. law, shall be
      settled exclusively by arbitration in Santa Clara County, California, in
      accordance with the rules of the American Arbitration Association then in

                                       13



      effect. Judgment may be entered on the arbitrator's award in any court
      having jurisdiction.

(g)   No Assignment of Benefits. The rights of any person to payments or
      benefits under this Agreement shall not be made subject to option or
      assignment, either by voluntary or involuntary assignment or by operation
      of law, including bankruptcy, garnishment, attachment or other creditor's
      process, and any action in violation of this Section 14(g) shall be void.

(h)   Limitation of Remedies. If the Executive's employment terminates for any
      reason, the Executive shall not be entitled to any payments, benefits,
      damages, awards or compensation other than as provided by this Agreement,
      including under the severance policies of the Company or any subsidiary.

(i)   Taxes. Except where specified in this Agreement as "tax protected" or
      subject to tax assistance or "gross-up", all payments made pursuant to
      this Agreement shall be subject to withholding of applicable taxes. The
      Company shall have the authority to delay the payment of any amount
      payable under this Agreement to the extent it deems necessary or
      appropriate to comply with Section 409A(a)(2)(B)(i) of the Code (relating
      to payments made to certain "key employees" of certain publicly-traded
      companies) ("CODE SECTION 409A") or regulations promulgated thereunder and
      in such event, any such amounts to which Executive would otherwise be
      entitled during the six (6) month period immediately following Executive's
      separation from service will be paid on the first business day following
      the expiration of such six (6) month period. In the event that any
      additional taxes or interest are due and payable from Executive to the
      Internal Revenue Service under Code Section 409A as a result of any
      payments or benefits payable hereunder, the Company shall provide
      Executive with additional payments so that Executive is fully grossed-up
      with the respect to the Code Section 409A payments.

(j)   Discharge of Responsibility. The payments and other benefits under this
      Agreement, when made in accordance with the terms of this Agreement, shall
      fully discharge all responsibilities of the Company to the Executive that
      existed at the time of termination of the Executive's employment.

                                       14



      IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company, by its duly authorized officer, as of the day and year
first above written. The Executive has consulted, or has had the opportunity to
consult, with counsel (who is other than the Company's counsel) prior to
execution of this Agreement.

                                 EXECUTIVE

                                  /s/ Mark S. Frey
                                  --------------------------------------------
                                  Mark S. Frey

                                  FAIRCHILD SEMICONDUCTOR CORPORATION

                                  /s/ Mark S. Thompson
                                  --------------------------------------------
                                  By: Mark S. Thompson
                                      President and Chief Executive Officer

                                       15

EX-10.02

                                                                   Exhibit 10.02
                         [FAIRCHILD SEMICONDUCTOR LOGO]

                             FAIRCHILD SEMICONDUCTOR
                      RESTRICTED STOCK UNIT AWARD AGREEMENT

PARTICIPANT: Mark S. Frey    EMPLOYEE ID: ___________    GLOBAL ID: ____________

GRANT DATE:                                          March 20, 2006
NUMBER OF RESTRICTED STOCK UNITS GRANTED:            20,000 UNITS

THIS AGREEMENT, effective as of the Grant Date set forth above, is between
Fairchild Semiconductor International, Inc., a Delaware corporation (the
"Company", "we", "our" or "us") and the Participant named above ("you" or
"yours"), with respect to the award of the number of restricted stock units
("Restricted Stock Units") specified above. This award of Restricted Stock Units
is not made under any stock or option plan of the Company but shall be governed
as if made under, and subject to, the Fairchild Semiconductor Stock Plan, as
amended from time to time (the "Plan"). Capitalized terms used and not defined
in this Agreement shall have the meanings given to them in the Plan.

By accepting this Grant, you irrevocably agree, on your own behalf and on behalf
of your heirs and any other person claiming rights under this Agreement, to all
of the terms and conditions of the Restricted Stock Unit Award as set forth in
or pursuant to this Agreement and the Plan (as such may be amended from time to
time). You and the Company agree as follows:

1. APPLICATION OF PLAN;       This Agreement and your rights under this
   ADMINISTRATION             Agreement are subject to all the terms and
                              conditions of the Plan, as it may be amended from
                              time to time, as well as to such rules and
                              regulations as the Committee may adopt. It is
                              expressly understood that the Committee that
                              administers the Plan is authorized to administer,
                              construe and make all determinations necessary or
                              appropriate to the administration of the Plan and
                              this Agreement, all of which shall be binding upon
                              you to the extent permitted by the Plan. Any
                              inconsistency between this Agreement and the Plan
                              shall be resolved in favor of the Plan.

2. VESTING                    The Restricted Stock Units will vest (becoming
                              "Vested Restricted Stock Units") on the following
                              Vesting Dates provided that you have remained in
                              the full time employment or service of the Company
                              or an Affiliate from the Grant Date set forth
                              above until the respective Vesting Date:



                                                              Percentage Vested
          Vesting Date                     (including portion that vested the preceding year)
                                        
First anniversary of the Grant Date                                  25%
Second anniversary of the Grant Date                                 50%
Third anniversary of the Grant Date                                  75%
Fourth anniversary of the Grant Date                                100%


                              The vesting period set forth above may be adjusted
                              by the Committee to reflect the decreased level of
                              employment or service during any period in which
                              you are on an approved leave of absence or are
                              employed on a less than full time basis.

3. TERMINATION OF EMPLOYMENT  Except as otherwise provided in Paragraph 7 of
                              this Agreement, the right to issuance of
                              Restricted Stock Units and the rights under any
                              Restricted Stock Units that have not become Vested
                              Restricted Stock Units at the time your employment
                              or service with the Company terminates for any
                              reason will be forfeited immediately without
                              consideration and without further notice as of the
                              date of termination.

4. SETTLEMENT OF VESTED       Each Vested Restricted Stock Unit will be settled
   RESTRICTED STOCK UNITS     by the delivery of one share of Common Stock
   AND ISSUANCE OF SHARES     (subject to adjustment under Section 3(c) of the
                              Plan, a "Share") to you or, in the event of your
                              death, to your designated beneficiary, promptly
                              following the Vesting Date with respect to such
                              Shares, subject to your satisfaction of any tax
                              withholding obligations as described in Paragraph
                              9 of this Agreement. You hereby authorize any
                              brokerage service provider determined acceptable
                              to the Company, to open a securities account for
                              you to be used for the settlement of Vested
                              Restricted Stock Units. The date on which Shares
                              are issued may include a delay in order to provide
                              the Company such time as it determines appropriate
                              to address tax withholding and other
                              administrative matters.


                                       1


5. RIGHTS AS STOCKHOLDER      Except as otherwise provided in this Agreement,
                              you will not be entitled to any privileges of
                              ownership of the shares of Common Stock underlying
                              your Restricted Stock Units unless and until
                              Shares are actually delivered to you under this
                              Agreement.

6. DIVIDENDS                  From and after the date that Restricted Stock
                              Units are issued to you under this Agreement, you
                              will be credited with additional Restricted Stock
                              Units having a value equal to declared dividends,
                              if any, with record dates that occur prior to the
                              settlement of any Restricted Stock Units as if
                              such Restricted Stock Units had been actual shares
                              of Common Stock, based on the Fair Market Value of
                              a share of Common Stock on the applicable dividend
                              payment date. Any such additional Restricted Stock
                              Units shall be considered Restricted Stock Units
                              under this Agreement and shall also be credited
                              with additional Restricted Stock Units as
                              dividends, if any, are declared, and shall be
                              subject to the same restrictions and conditions
                              (including the risk of forfeiture under Paragraph
                              3) as Restricted Stock Units with respect to which
                              they were credited. Notwithstanding the foregoing,
                              no such additional Restricted Stock Units will be
                              credited with respect to any dividend in
                              connection with which Restricted Stock Units are
                              adjusted pursuant to Section 3(c) of the Plan.

7. CHANGE IN CONTROL          Notwithstanding anything to the contrary in this
                              Agreement, the Restricted Stock Units shall be
                              subject to acceleration of vesting upon a Change
                              in Control as provided with respect to restricted
                              stock under Section 11(a)(ii) of the Plan, and
                              shall be settled as if pursuant to Paragraph 4 of
                              this Agreement.

8. TRANSFERABILITY            (a)   Your Restricted Stock Units are not
                                    transferable, whether voluntarily or
                                    involuntarily, by operation of law or
                                    otherwise, except as provided in the Plan.
                                    Any assignment, pledge, transfer, or other
                                    disposition, voluntary or involuntary, of
                                    your Restricted Stock Units made, or any
                                    attachment, execution, garnishment, or lien
                                    issued against or placed upon the Restricted
                                    Stock Units, other than as so permitted,
                                    shall be void.

                              (b)   You acknowledge that, from time to time, the
                                    Company may be in a "blackout period" and/or
                                    subject to applicable securities laws that
                                    could subject you to liability for engaging
                                    in any transaction involving the sale of the
                                    Company's shares. You further acknowledge
                                    and agree that, prior to the sale of any
                                    Shares, it is your responsibility to
                                    determine whether or not such sale of Shares
                                    will subject you to liability under insider
                                    trading rules or other applicable securities
                                    laws.

9. TAXES                      (a)   General. You are ultimately liable and
                                    responsible for all taxes owed by you in
                                    connection with your Restricted Stock Units,
                                    regardless of any action the Company takes
                                    or any transaction pursuant to this
                                    Paragraph 9 with respect to any tax
                                    withholding obligations that arise in
                                    connection with the Restricted Stock Units.
                                    As a condition and term of this award, no
                                    election under Section 83(b) of the United
                                    States Internal Revenue Code, as amended,
                                    may be made by you or any other person with
                                    respect to all or any portion of the
                                    Restricted Stock Units. The Company makes no
                                    representation or undertaking regarding the
                                    treatment of any tax withholding in
                                    connection with the grant, issuance, vesting
                                    or settlement of the Restricted Stock Units
                                    or the subsequent sale of any of the Shares
                                    underlying the Restricted Stock Units that
                                    vest. The Company does not commit and is
                                    under no obligation to structure this
                                    Agreement to reduce or eliminate your tax
                                    liability.

                              (b)   Taxes. You will be subject to federal and
                                    state income and other tax withholding
                                    requirements on a date (generally, the
                                    Vesting Date) determined by applicable law
                                    (any such date, the "Taxable Date"), based
                                    on the Fair Market Value of the Shares
                                    underlying the Restricted Stock Units that
                                    vest. YOU WILL BE SOLELY RESPONSIBLE FOR THE
                                    PAYMENT OF ALL U.S. FEDERAL INCOME AND OTHER
                                    TAXES, INCLUDING ANY STATE, LOCAL OR
                                    NON-U.S. INCOME OR EMPLOYMENT TAX OBLIGATION
                                    THAT MAY BE RELATED TO THE SHARES, INCLUDING
                                    ANY SUCH TAXES THAT ARE REQUIRED TO BE
                                    WITHHELD AND PAID OVER TO THE APPLICABLE TAX
                                    AUTHORITIES (THE "TAX WITHHOLDING
                                    OBLIGATION"). You will be responsible for
                                    the satisfaction of such Tax Withholding
                                    Obligation in a manner acceptable to the
                                    Company in its sole discretion, including
                                    through payroll withholding.

                                    (i) By Sale of Shares. Your acceptance of
                                    this Agreement constitutes your instruction
                                    and authorization to the Company and any
                                    brokerage firm determined acceptable to the
                                    Company for such purpose to sell on your
                                    behalf a whole number of shares from those
                                    Shares issuable to you as the Company
                                    determines to be appropriate to generate
                                    cash proceeds sufficient to satisfy the
                                    applicable Tax Withholding Obligation. Such
                                    shares will be sold on the Taxable Date or
                                    as soon thereafter as practicable. You will
                                    be responsible for all brokers' fees and
                                    other costs of sale, which fees and costs
                                    may be deducted from the proceeds of the
                                    foregoing sale of Shares, and you agree to


                                       2


                                    indemnify and hold the Company and any
                                    brokerage firm selling such Shares harmless
                                    from any losses, costs, damages, or expenses
                                    relating to any such sale. To the extent the
                                    proceeds of such sale exceed your Tax
                                    Withholding Obligation, such excess cash
                                    will be deposited into the securities
                                    account established with the brokerage
                                    service provider for the settlement of your
                                    Vested Restricted Stock Units. Such Shares
                                    will be sold through the broker at market
                                    prices; however the price you receive will
                                    reflect a weighted average sales price based
                                    on the sales price of Shares on behalf of
                                    you and others for whom the designated
                                    broker may be selling shares on the relevant
                                    day(s), and you acknowledge that the Company
                                    or its designee is under no obligation to
                                    arrange for such sale at any particular
                                    price, and that the proceeds of any such
                                    sale may not be sufficient to satisfy your
                                    Tax Withholding Obligation. Accordingly, you
                                    agree to pay to the Company as soon as
                                    practicable, including through additional
                                    payroll withholding, any amount of the Tax
                                    Withholding Obligation that is not satisfied
                                    by the sale of shares described above.
                                    UNLESS OTHERWISE AUTHORIZED BY THE COMMITTEE
                                    IN ITS SOLE DISCRETION, THE SALE OF SHARES
                                    WILL BE THE PRIMARY METHOD USED BY THE
                                    COMPANY TO SATISFY THE APPLICABLE TAX
                                    WITHHOLDING OBLIGATION, and accordingly you
                                    represent and warrant to the Company as
                                    follows:

                                    A.    You are accepting this Agreement
                                          during a permitted trading period, and
                                          at the time of accepting this
                                          Agreement you are not aware of any
                                          Material Nonpublic Information (as
                                          defined in the Company's Corporate
                                          Legal Insider Trading and Tipping
                                          Policy) concerning the Company.

                                    B.    You will not exercise any subsequent
                                          influence over the amount of Shares to
                                          be sold hereunder to generate funds
                                          for the Tax Withholding Obligation or
                                          the price, date or time of such sale.

                                    C.    You are entering into this Agreement
                                          in good faith and have a bona fide
                                          intention to carry out the terms of
                                          this Agreement, and you will not enter
                                          into or alter a corresponding or
                                          hedging transaction or position with
                                          respect to the Shares.

                                    (ii) By Share Withholding. If so elected in
                                    the sole discretion of the Committee, then
                                    in lieu of a market sale pursuant to
                                    Paragraph 9(b)(i) you authorize the Company
                                    to withhold from the Shares issuable to you
                                    the whole number of shares with a value
                                    equal to the Fair Market Value of the Shares
                                    on the Taxable Date or the first trading day
                                    before the Taxable Date, sufficient to
                                    satisfy the applicable Tax Withholding
                                    Obligation. You acknowledge that the
                                    withheld shares may not be sufficient to
                                    satisfy your Tax Withholding Obligation.
                                    Accordingly, you agree to pay to the Company
                                    as soon as practicable, including through
                                    additional payroll withholding, any amount
                                    of the Tax Withholding Obligation that is
                                    not satisfied by the withholding of Shares
                                    described above.

10. DATA PRIVACY

                              As an essential term of this Agreement, you
                              consent to the collection, use and transfer, in
                              electronic or other form, of personal data as
                              described in this Agreement for the exclusive
                              purpose of implementing, administering and
                              managing your participation in the Plan.

                              By entering into this Agreement and accepting the
                              Restricted Stock Units, you acknowledge that the
                              Company holds certain personal information about
                              you, including, but not limited to, your name,
                              home address and telephone number, date of birth,
                              social insurance number or other identification
                              number, salary, tax rates and amounts,
                              nationality, job title, any shares of stock or
                              directorships held in the Company, details of all
                              awards or any other entitlement to shares of stock
                              awarded, canceled, exercised, vested, unvested or
                              outstanding, for the purpose of implementing,
                              administering and managing the Plan ("Data"). You
                              acknowledge that Data may be transferred to any
                              third parties assisting in the implementation,
                              administration and management of the Plan, that
                              these recipients may be located in jurisdictions
                              that may have different data privacy laws and
                              protections, and you authorize the recipients to
                              receive, possess, use, retain and transfer the
                              Data, in electronic or other form, for the
                              purposes of implementing, administering and
                              managing the Plan, including any requisite
                              transfer of such Data as may be required to a
                              broker or other third party with whom you or the
                              Company may elect to deposit any shares of stock
                              acquired under this Agreement. You acknowledges
                              that Data may be held only as long as is necessary
                              to implement, administer and manage your
                              participation in the Plan as determined by the
                              Company, and that you may request additional
                              information about the storage and processing of
                              Data, require any necessary amendments to Data or
                              refuse or withdraw the consents herein, in any
                              case without cost, provided however, that refusing
                              or withdrawing your consent may adversely affect
                              your ability to participate in the Plan.


                                       3


11. ELECTRONIC DELIVERY       The Company may, in its sole discretion, decide to
                              deliver any documents related to any awards
                              granted under the Plan by electronic means or to
                              request your consent to participate in the Plan by
                              electronic means. You hereby consent to receive
                              such documents by electronic delivery and, if
                              requested, to agree to participate in the Plan
                              through an on-line or electronic system
                              established and maintained by the Company or
                              another third party designated by the Company, and
                              such consent shall remain in effect throughout
                              your term of employment or service with the
                              Company and thereafter until withdrawn in writing
                              by you.

12. MISCELLANEOUS

                              (a)   This Agreement shall not confer upon you any
                                    right to continue as an employee, or
                                    otherwise in the service of, the Company or
                                    any Affiliate, nor shall this Agreement
                                    interfere in any way with the Company's or
                                    such Affiliate's right to terminate your
                                    employment or service at any time.

                              (b)   Without limiting the generality of Paragraph
                                    12(a) above, this Agreement and the Plan may
                                    be amended without your consent to the
                                    extent provided in Section 14(b) of the
                                    Plan.

                              (c)   This Agreement will be subject to all
                                    applicable laws, rules, and regulations, and
                                    to such approvals by any governmental
                                    agencies or stock exchanges as may be
                                    required. The Company may impose such
                                    restrictions, conditions or limitations as
                                    it determines appropriate as to the timing
                                    and manner of any resales by you or other
                                    subsequent transfers by you of any shares of
                                    Common Stock issued as a result of or under
                                    this Agreement, including without limitation
                                    (i) restrictions under an insider trading
                                    policy, (ii) restrictions that may be
                                    necessary in the absence of an effective
                                    registration statement under the Securities
                                    Act of 1933, as amended, covering the
                                    Restricted Stock Units and (iii)
                                    restrictions as to the use of a specified
                                    brokerage firm or other agent for such
                                    resales or other transfers. Any sale of
                                    shares of Common Stock issued pursuant to
                                    this Agreement must also comply with other
                                    applicable laws and regulations governing
                                    the sale of such shares.

                              (d)   To the extent not preempted by U.S. federal
                                    law, this Agreement shall be governed by,
                                    and construed in accordance with, the laws
                                    of the State of Delaware.

                              (e)   Any question concerning the interpretation
                                    of this Agreement or the Plan, any
                                    adjustments required to be made under the
                                    Plan, and any controversy that may arise
                                    under the Plan or this Agreement shall be
                                    determined by the Committee (including any
                                    person(s) to whom the Committee has
                                    delegated its authority) in its sole and
                                    absolute discretion. Such decision by the
                                    Committee shall be final and binding.

13. SIGNATURES                By the signatures below, you and the authorized
                              representative of the Company acknowledge
                              agreement to this Restricted Stock Unit Award
                              Agreement as of the Grant Date specified above.

                              PARTICIPANT:            FAIRCHILD SEMICONDUCTOR
                                                      INTERNATIONAL, INC.

                              /s/ Mark S. Frey        /s/ Mark. S. Thompson
                              ----------------        -----------------------
                                                      Mark S. Thompson
                                                      President and CEO

TO ACCEPT YOUR RESTRICTED STOCK UNIT GRANT:

(a)   Sign BOTH copies of this Restricted Stock Unit Award Agreement;

(b)   Retain one copy of each for your records;

(c)   Return one copy of each in the enclosed envelope by WITHIN 30 DAYS OF THE
      GRANT DATE.


                                       4

EX-10.03

                                                                   Exhibit 10.03

                         [FAIRCHILD SEMICONDUCTOR LOGO]

                       FAIRCHILD SEMICONDUCTOR STOCK PLAN
                      RESTRICTED STOCK UNIT AWARD AGREEMENT

PARTICIPANT: Mark Thompson          EMPLOYEE ID:            GLOBAL ID:

                              GRANT DATE: FEBRUARY 10, 2006

NUMBER OF RESTRICTED STOCK UNITS GRANTED: 24,800 UNITS

THIS AGREEMENT, effective as of the Grant Date set forth above, is between
Fairchild Semiconductor International, Inc., a Delaware corporation (the
"Company", "we", "our" or "us") and the Participant named above ("you" or
"yours"), pursuant to the provisions of the Fairchild Semiconductor Stock Plan
(the "Plan") with respect to the award of the number of restricted stock units
("Restricted Stock Units") specified above. Capitalized terms used and not
defined in this Agreement shall have the meanings given to them in the Plan.

By accepting this Grant, you irrevocably agree, on your own behalf and on behalf
of your heirs and any other person claiming rights under this Agreement, to all
of the terms and conditions of the Restricted Stock Unit Award as set forth in
or pursuant to this Agreement and the Plan (as such may be amended from time to
time). You and the Company agree as follows:

1. APPLICATION OF PLAN;       This Agreement and your rights under this
   ADMINISTRATION             Agreement are subject to all the terms and
                              conditions of the Plan, as it may be amended from
                              time to time, as well as to such rules and
                              regulations as the Committee may adopt. It is
                              expressly understood that the Committee that
                              administers the Plan is authorized to administer,
                              construe and make all determinations necessary or
                              appropriate to the administration of the Plan and
                              this Agreement, all of which shall be binding upon
                              you to the extent permitted by the Plan. Any
                              inconsistency between this Agreement and the Plan
                              shall be resolved in favor of the Plan.

2. VESTING                    The Restricted Stock Units will vest (becoming
                              "Vested Restricted Stock Units") on the following
                              Vesting Dates provided that you have remained in
                              the full time employment or service of the Company
                              or an Affiliate from the Grant Date set forth
                              above until the respective Vesting Date:



                                                         Percentage Vested
            Vesting Date                 (including portion that vested the preceding year)
                                      
First anniversary of the Grant Date                             25%
Second anniversary of the Grant Date                            50%
Third anniversary of the Grant Date                             75%
Fourth anniversary of the Grant Date                           100%


                              The vesting period set forth above may be adjusted
                              by the Committee to reflect the decreased level of
                              employment or service during any period in which
                              you are on an approved leave of absence or are
                              employed on a less than full time basis.

3. TERMINATION OF             Except as otherwise provided in Paragraph 7 of
   EMPLOYMENT                 this Agreement, the right to issuance of
                              Restricted Stock Units and the rights under any
                              Restricted Stock Units that have not become Vested
                              Restricted Stock Units at the time your employment
                              or service with the Company terminates for any
                              reason will be forfeited immediately without
                              consideration and without further notice as of the
                              date of termination.

4. SETTLEMENT OF VESTED       Each Vested Restricted Stock Unit will be settled
   RESTRICTED STOCK           by the delivery of one share of Common Stock
   UNITS AND ISSUANCE OF      (subject to adjustment under Section 3(c) of the
   SHARES                     Plan, a "Share") to you or, in the event of your
                              death, to your designated beneficiary, promptly
                              following the Vesting Date with respect to such
                              Shares, subject to your satisfaction of any tax
                              withholding obligations as described in Paragraph
                              9 of this Agreement. You hereby authorize any
                              brokerage service provider determined acceptable
                              to the Company, to open a securities account for
                              you to be used for the settlement of Vested
                              Restricted Stock Units. The date on which Shares
                              are issued may include a delay in order to provide
                              the Company such time as it determines appropriate
                              to address tax withholding and other
                              administrative matters.

                                       1



5. RIGHTS AS STOCKHOLDER      Except as otherwise provided in this Agreement,
                              you will not be entitled to any privileges of
                              ownership of the shares of Common Stock underlying
                              your Restricted Stock Units unless and until
                              Shares are actually delivered to you under this
                              Agreement.

6. DIVIDENDS                  From and after the date that Restricted Stock
                              Units are issued to you under this Agreement, you
                              will be credited with additional Restricted Stock
                              Units having a value equal to declared dividends,
                              if any, with record dates that occur prior to the
                              settlement of any Restricted Stock Units as if
                              such Restricted Stock Units had been actual shares
                              of Common Stock, based on the Fair Market Value of
                              a share of Common Stock on the applicable dividend
                              payment date. Any such additional Restricted Stock
                              Units shall be considered Restricted Stock Units
                              under this Agreement and shall also be credited
                              with additional Restricted Stock Units as
                              dividends, if any, are declared, and shall be
                              subject to the same restrictions and conditions
                              (including the risk of forfeiture under Paragraph
                              3) as Restricted Stock Units with respect to which
                              they were credited. Notwithstanding the foregoing,
                              no such additional Restricted Stock Units will be
                              credited with respect to any dividend in
                              connection with which Restricted Stock Units are
                              adjusted pursuant to Section 3(c) of the Plan.

7. CHANGE IN CONTROL          Notwithstanding anything to the contrary in this
                              Agreement, the Restricted Stock Units shall be
                              subject to acceleration of vesting upon a Change
                              in Control as provided with respect to restricted
                              stock under Section 11(a)(ii) of the Plan, and
                              shall be settled as if pursuant to Paragraph 4 of
                              this Agreement.

8. TRANSFERABILITY            (a)  Your Restricted Stock Units are not
                                   transferable, whether voluntarily or
                                   involuntarily, by operation of law or
                                   otherwise, except as provided in the Plan.
                                   Any assignment, pledge, transfer, or other
                                   disposition, voluntary or involuntary, of
                                   your Restricted Stock Units made, or any
                                   attachment, execution, garnishment, or lien
                                   issued against or placed upon the Restricted
                                   Stock Units, other than as so permitted,
                                   shall be void.

                              (b)  You acknowledge that, from time to time, the
                                   Company may be in a "blackout period" and/or
                                   subject to applicable securities laws that
                                   could subject you to liability for engaging
                                   in any transaction involving the sale of the
                                   Company's shares. You further acknowledge and
                                   agree that, prior to the sale of any Shares,
                                   it is your responsibility to determine
                                   whether or not such sale of Shares will
                                   subject you to liability under insider
                                   trading rules or other applicable securities
                                   laws.

9. TAXES                      (a)  General. You are ultimately liable and
                                   responsible for all taxes owed by you in
                                   connection with your Restricted Stock Units,
                                   regardless of any action the Company takes or
                                   any transaction pursuant to this Paragraph 9
                                   with respect to any tax withholding
                                   obligations that arise in connection with the
                                   Restricted Stock Units. As a condition and
                                   term of this award, no election under Section
                                   83(b) of the United States Internal Revenue
                                   Code, as amended, may be made by you or any
                                   other person with respect to all or any
                                   portion of the Restricted Stock Units. The
                                   Company makes no representation or
                                   undertaking regarding the treatment of any
                                   tax withholding in connection with the grant,
                                   issuance, vesting or settlement of the
                                   Restricted Stock Units or the subsequent sale
                                   of any of the Shares underlying the
                                   Restricted Stock Units that vest. The Company
                                   does not commit and is under no obligation to
                                   structure this Agreement to reduce or
                                   eliminate your tax liability.

                              (b)  Taxes. You will be subject to federal and
                                   state income and other tax withholding
                                   requirements on a date (generally, the
                                   Vesting Date) determined by applicable law
                                   (any such date, the "Taxable Date"), based on
                                   the Fair Market Value of the Shares
                                   underlying the Restricted Stock Units that
                                   vest. YOU WILL BE SOLELY RESPONSIBLE FOR THE
                                   PAYMENT OF ALL U.S. FEDERAL INCOME AND OTHER
                                   TAXES, INCLUDING ANY STATE, LOCAL OR NON-U.S.
                                   INCOME OR EMPLOYMENT TAX OBLIGATION THAT MAY
                                   BE RELATED TO THE SHARES, INCLUDING ANY SUCH
                                   TAXES THAT ARE REQUIRED TO BE WITHHELD AND
                                   PAID OVER TO THE APPLICABLE TAX AUTHORITIES
                                   (THE "TAX WITHHOLDING OBLIGATION"). You will
                                   be responsible for the satisfaction of such
                                   Tax Withholding Obligation in a manner
                                   acceptable to the Company in its sole
                                   discretion, including through payroll
                                   withholding.

                                   (i) By Sale of Shares. Your acceptance of
                                   this Agreement constitutes your instruction
                                   and authorization to the Company and any
                                   brokerage firm determined acceptable to the
                                   Company for such purpose to sell on your
                                   behalf a whole number of shares from those
                                   Shares issuable to you as the Company
                                   determines to be appropriate to generate cash
                                   proceeds sufficient to satisfy the applicable
                                   Tax Withholding Obligation. Such shares will
                                   be sold on the Taxable Date or as soon
                                   thereafter as practicable. You will be
                                   responsible for all brokers' fees and other
                                   costs of sale, which fees and costs may be
                                   deducted from the proceeds of the foregoing
                                   sale of Shares, and you agree to

                                       2



                                   indemnify and hold the Company and any
                                   brokerage firm selling such Shares harmless
                                   from any losses, costs, damages, or expenses
                                   relating to any such sale. To the extent the
                                   proceeds of such sale exceed your Tax
                                   Withholding Obligation, such excess cash will
                                   be deposited into the securities account
                                   established with the brokerage service
                                   provider for the settlement of your Vested
                                   Restricted Stock Units. Such Shares will be
                                   sold through the broker at market prices;
                                   however the price you receive will reflect a
                                   weighted average sales price based on the
                                   sales price of Shares on behalf of you and
                                   others for whom the designated broker may be
                                   selling shares on the relevant day(s), and
                                   you acknowledge that the Company or its
                                   designee is under no obligation to arrange
                                   for such sale at any particular price, and
                                   that the proceeds of any such sale may not be
                                   sufficient to satisfy your Tax Withholding
                                   Obligation. Accordingly, you agree to pay to
                                   the Company as soon as practicable, including
                                   through additional payroll withholding, any
                                   amount of the Tax Withholding Obligation that
                                   is not satisfied by the sale of shares
                                   described above. UNLESS OTHERWISE AUTHORIZED
                                   BY THE COMMITTEE IN ITS SOLE DISCRETION, THE
                                   SALE OF SHARES WILL BE THE PRIMARY METHOD
                                   USED BY THE COMPANY TO SATISFY THE APPLICABLE
                                   TAX WITHHOLDING OBLIGATION, and accordingly
                                   you represent and warrant to the Company as
                                   follows:

                                   A.   You are accepting this Agreement during
                                        a permitted trading period, and at the
                                        time of accepting this Agreement you are
                                        not aware of any Material Nonpublic
                                        Information (as defined in the Company's
                                        Corporate Legal Insider Trading and
                                        Tipping Policy) concerning the Company.

                                   B.   You will not exercise any subsequent
                                        influence over the amount of Shares to
                                        be sold hereunder to generate funds for
                                        the Tax Withholding Obligation or the
                                        price, date or time of such sale.

                                   C.   You are entering into this Agreement in
                                        good faith and have a bona fide
                                        intention to carry out the terms of this
                                        Agreement, and you will not enter into
                                        or alter a corresponding or hedging
                                        transaction or position with respect to
                                        the Shares.

                                   (ii)By Share Withholding. If so elected in
                                   the sole discretion of the Committee, then in
                                   lieu of a market sale pursuant to Paragraph
                                   9(b)(i) you authorize the Company to withhold
                                   from the Shares issuable to you the whole
                                   number of shares with a value equal to the
                                   Fair Market Value of the Shares on the
                                   Taxable Date or the first trading day before
                                   the Taxable Date, sufficient to satisfy the
                                   applicable Tax Withholding Obligation. You
                                   acknowledge that the withheld shares may not
                                   be sufficient to satisfy your Tax Withholding
                                   Obligation. Accordingly, you agree to pay to
                                   the Company as soon as practicable, including
                                   through additional payroll withholding, any
                                   amount of the Tax Withholding Obligation that
                                   is not satisfied by the withholding of Shares
                                   described above.

10. DATA PRIVACY              As an essential term of this Agreement, you
                              consent to the collection, use and transfer, in
                              electronic or other form, of personal data as
                              described in this Agreement for the exclusive
                              purpose of implementing, administering and
                              managing your participation in the Plan.

                              By entering into this Agreement and accepting the
                              Restricted Stock Units, you acknowledge that the
                              Company holds certain personal information about
                              you, including, but not limited to, your name,
                              home address and telephone number, date of birth,
                              social insurance number or other identification
                              number, salary, tax rates and amounts,
                              nationality, job title, any shares of stock or
                              directorships held in the Company, details of all
                              awards or any other entitlement to shares of stock
                              awarded, canceled, exercised, vested, unvested or
                              outstanding, for the purpose of implementing,
                              administering and managing the Plan ("Data"). You
                              acknowledge that Data may be transferred to any
                              third parties assisting in the implementation,
                              administration and management of the Plan, that
                              these recipients may be located in jurisdictions
                              that may have different data privacy laws and
                              protections, and you authorize the recipients to
                              receive, possess, use, retain and transfer the
                              Data, in electronic or other form, for the
                              purposes of implementing, administering and
                              managing the Plan, including any requisite
                              transfer of such Data as may be required to a
                              broker or other third party with whom you or the
                              Company may elect to deposit any shares of stock
                              acquired under this Agreement. You acknowledge
                              that Data may be held only as long as is necessary
                              to implement, administer and manage your
                              participation in the Plan as determined by the
                              Company, and that you may request additional
                              information about the storage and processing of
                              Data, require any necessary amendments to Data or
                              refuse or withdraw the consents herein, in any
                              case without cost, provided however, that refusing
                              or withdrawing your consent may adversely affect
                              your ability to participate in the Plan.

                                       3



11. ELECTRONIC DELIVERY       The Company may, in its sole discretion, decide to
                              deliver any documents related to any awards
                              granted under the Plan by electronic means or to
                              request your consent to participate in the Plan by
                              electronic means. You hereby consent to receive
                              such documents by electronic delivery and, if
                              requested, to agree to participate in the Plan
                              through an on-line or electronic system
                              established and maintained by the Company or
                              another third party designated by the Company, and
                              such consent shall remain in effect throughout
                              your term of employment or service with the
                              Company and thereafter until withdrawn in writing
                              by you.

12. MISCELLANEOUS             (a)  This Agreement shall not confer upon you any
                                   right to continue as an employee, or
                                   otherwise in the service of, the Company or
                                   any Affiliate, nor shall this Agreement
                                   interfere in any way with the Company's or
                                   such Affiliate's right to terminate your
                                   employment or service at any time.

                              (b)  Without limiting the generality of Paragraph
                                   12(a) above, this Agreement and the Plan may
                                   be amended without your consent to the extent
                                   provided in Section 14(b) of the Plan.

                              (c)  This Agreement will be subject to all
                                   applicable laws, rules, and regulations, and
                                   to such approvals by any governmental
                                   agencies or stock exchanges as may be
                                   required. The Company may impose such
                                   restrictions, conditions or limitations as it
                                   determines appropriate as to the timing and
                                   manner of any resales by you or other
                                   subsequent transfers by you of any shares of
                                   Common Stock issued as a result of or under
                                   this Agreement, including without limitation
                                   (i) restrictions under an insider trading
                                   policy, (ii) restrictions that may be
                                   necessary in the absence of an effective
                                   registration statement under the Securities
                                   Act of 1933, as amended, covering the
                                   Restricted Stock Units and (iii) restrictions
                                   as to the use of a specified brokerage firm
                                   or other agent for such resales or other
                                   transfers. Any sale of shares of Common Stock
                                   issued pursuant to this Agreement must also
                                   comply with other applicable laws and
                                   regulations governing the sale of such
                                   shares.

                              (d)  Notwithstanding anything to the contrary
                                   contained in this Agreement or the Plan, this
                                   Agreement shall be subject to the terms of
                                   any employment agreement between you and the
                                   Company, including without limitation any
                                   terms therein relating to the vesting,
                                   settlement or exercisability of equity
                                   awards, and any conflicts between any such
                                   employment agreement and this Agreement or
                                   the Plan shall be resolved in favor of your
                                   employment agreement.

                              (e)  To the extent not preempted by U.S. federal
                                   law, this Agreement shall be governed by, and
                                   construed in accordance with, the laws of the
                                   State of Delaware.

                              (f)  Any question concerning the interpretation of
                                   this Agreement or the Plan, any adjustments
                                   required to be made under the Plan, and any
                                   controversy that may arise under the Plan or
                                   this Agreement shall be determined by the
                                   Committee (including any person(s) to whom
                                   the Committee has delegated its authority) in
                                   its sole and absolute discretion. Such
                                   decision by the Committee shall be final and
                                   binding.

13. SIGNATURES                By the signatures below, you and the authorized
                              representative of the Company acknowledge
                              agreement to this Restricted Stock Unit Award
                              Agreement as of the Grant Date specified above.

                              PARTICIPANT:            FAIRCHILD SEMICONDUCTOR
                                                      INTERNATIONAL, INC.

                              /s/ Mark S. Thompson   /s/ Paul D. Delva
                              ____________________   __________________________
                              MARK THOMPSON          Paul D. Delva
                                                     Sr. V.P., General Counsel
                                                     and Corporate Secretary

TO ACCEPT YOUR RESTRICTED STOCK UNIT GRANT:

      (a)   Sign BOTH copies of this Restricted Stock Unit Award Agreement;

      (b)   Retain one copy of each for your records;

      (c)   Return one copy of each in the enclosed envelope WITHIN 30 DAYS OF
            THE GRANT DATE.

                                       4

EX-10.04

                                                                   Exhibit 10.04

On February 10, 2006, we granted Restricted Stock Units pursuant to our form of
Restricted Stock Unit Agreement included below, to the named executive officers
and in the amounts set forth below:

                                                      
Izak Bencuya .......................................     4,400
Thomas A. Beaver ...................................     4,400
Laurenz Schmidt ....................................     3,200
Robert J. Conrad ...................................     3,600



                         [FAIRCHILD SEMICONDUCTOR LOGO]

                       FAIRCHILD SEMICONDUCTOR STOCK PLAN
                      RESTRICTED STOCK UNIT AWARD AGREEMENT

PARTICIPANT: ________         EMPLOYEE ID: ________         GLOBAL ID: _________

GRANT DATE:

NUMBER OF RESTRICTED STOCK UNITS GRANTED: ____________ UNITS

THIS AGREEMENT, effective as of the Grant Date set forth above, is between
Fairchild Semiconductor International, Inc., a Delaware corporation (the
"Company", "we", "our" or "us") and the Participant named above ("you" or
"yours"), pursuant to the provisions of the Fairchild Semiconductor Stock Plan
(the "Plan") with respect to the award of the number of restricted stock units
("Restricted Stock Units") specified above. Capitalized terms used and not
defined in this Agreement shall have the meanings given to them in the Plan.

By accepting this Grant, you irrevocably agree, on your own behalf and on behalf
of your heirs and any other person claiming rights under this Agreement, to all
of the terms and conditions of the Restricted Stock Unit Award as set forth in
or pursuant to this Agreement and the Plan (as such may be amended from time to
time). You and the Company agree as follows:

1. APPLICATION OF PLAN;       This Agreement and your rights under this
   ADMINISTRATION             Agreement are subject to all the terms and
                              conditions of the Plan, as it may be amended from
                              time to time, as well as to such rules and
                              regulations as the Committee may adopt. It is
                              expressly understood that the Committee that
                              administers the Plan is authorized to administer,
                              construe and make all determinations necessary or
                              appropriate to the administration of the Plan and
                              this Agreement, all of which shall be binding upon
                              you to the extent permitted by the Plan. Any
                              inconsistency between this Agreement and the Plan
                              shall be resolved in favor of the Plan.

2. VESTING                    The Restricted Stock Units will vest (becoming
                              "Vested Restricted Stock Units") on the following
                              Vesting Dates provided that you have remained in
                              the full time employment or service of the Company
                              or an Affiliate from the Grant Date set forth
                              above until the respective Vesting Date:



                                                         Percentage Vested
    Vesting Date                        (including portion that vested the preceding year)
                                     
First anniversary of the Grant Date                             25%
Second anniversary of the Grant Date                            50%
Third anniversary of the Grant Date                             75%
Fourth anniversary of the Grant Date                           100%


                              The vesting period set forth above may be adjusted
                              by the Committee to reflect the decreased level of
                              employment or service during any period in which
                              you are on an approved leave of absence or are
                              employed on a less than full time basis.

3. TERMINATION OF             Except as otherwise provided in Paragraph 7 of
   EMPLOYMENT                 this Agreement, the right to issuance of
                              Restricted Stock Units and the rights under any
                              Restricted Stock Units that have not become Vested
                              Restricted Stock Units at the time your employment
                              or service with the Company terminates for any
                              reason will be

                                       1



                              forfeited immediately without consideration and
                              without further notice as of the date of
                              termination.

4. SETTLEMENT OF VESTED       Each Vested Restricted Stock Unit will be settled
   UNITS RESTRICTED           by the delivery of one share of Common Stock
   STOCK AND ISSUANCE OF      (subject to adjustment under Section 3(c) of the
   SHARES                     Plan, a "Share") to you or, in the event of your
                              death, to your designated beneficiary, promptly
                              following the Vesting Date with respect to such
                              Shares, subject to your satisfaction of any tax
                              withholding obligations as described in Paragraph
                              9 of this Agreement. You hereby authorize any
                              brokerage service provider determined acceptable
                              to the Company, to open a securities account for
                              you to be used for the settlement of Vested
                              Restricted Stock Units. The date on which Shares
                              are issued may include a delay in order to provide
                              the Company such time as it determines appropriate
                              to address tax withholding and other
                              administrative matters.

5. RIGHTS AS STOCKHOLDER      Except as otherwise provided in this Agreement,
                              you will not be entitled to any privileges of
                              ownership of the shares of Common Stock underlying
                              your Restricted Stock Units unless and until
                              Shares are actually delivered to you under this
                              Agreement.

6. DIVIDENDS                  From and after the date that Restricted Stock
                              Units are issued to you under this Agreement, you
                              will be credited with additional Restricted Stock
                              Units having a value equal to declared dividends,
                              if any, with record dates that occur prior to the
                              settlement of any Restricted Stock Units as if
                              such Restricted Stock Units had been actual shares
                              of Common Stock, based on the Fair Market Value of
                              a share of Common Stock on the applicable dividend
                              payment date. Any such additional Restricted Stock
                              Units shall be considered Restricted Stock Units
                              under this Agreement and shall also be credited
                              with additional Restricted Stock Units as
                              dividends, if any, are declared, and shall be
                              subject to the same restrictions and conditions
                              (including the risk of forfeiture under Paragraph
                              3) as Restricted Stock Units with respect to which
                              they were credited. Notwithstanding the foregoing,
                              no such additional Restricted Stock Units will be
                              credited with respect to any dividend in
                              connection with which Restricted Stock Units are
                              adjusted pursuant to Section 3(c) of the Plan.

7. CHANGE IN CONTROL          Notwithstanding anything to the contrary in this
                              Agreement, the Restricted Stock Units shall be
                              subject to acceleration of vesting upon a Change
                              in Control as provided with respect to restricted
                              stock under Section 11(a)(ii) of the Plan, and
                              shall be settled as if pursuant to Paragraph 4 of
                              this Agreement.

8. TRANSFERABILITY            (a)  Your Restricted Stock Units are not
                                   transferable, whether voluntarily or
                                   involuntarily, by operation of law or
                                   otherwise, except as provided in the Plan.
                                   Any assignment, pledge, transfer, or other
                                   disposition, voluntary or involuntary, of
                                   your Restricted Stock Units made, or any
                                   attachment, execution, garnishment, or lien
                                   issued against or placed upon the Restricted
                                   Stock Units, other than as so permitted,
                                   shall be void.

                              (b)  You acknowledge that, from time to time, the
                                   Company may be in a "blackout period" and/or
                                   subject to applicable securities laws that
                                   could subject you to liability for engaging
                                   in any transaction involving the sale of the
                                   Company's shares. You further acknowledge and
                                   agree that, prior to the sale of any Shares,
                                   it is your responsibility to determine
                                   whether or not such sale of Shares will
                                   subject you to liability under insider
                                   trading rules or other applicable securities
                                   laws.

9. TAXES                      (a)  General. You are ultimately liable and
                                   responsible for all taxes owed by you in
                                   connection with your Restricted Stock Units,
                                   regardless of any action the Company takes or
                                   any transaction pursuant to this Paragraph 9
                                   with respect to any tax withholding
                                   obligations that arise in connection with the
                                   Restricted Stock Units. As a condition and
                                   term of this award, no election under Section
                                   83(b) of the United States Internal Revenue
                                   Code, as amended, may be made by you or any
                                   other person with respect to all or any
                                   portion of the Restricted Stock Units. The
                                   Company makes no representation or
                                   undertaking regarding the treatment of any
                                   tax withholding in connection with the grant,
                                   issuance, vesting or settlement of the
                                   Restricted Stock Units or the subsequent sale
                                   of any of the Shares underlying the
                                   Restricted Stock Units that vest. The Company
                                   does not commit and is under no obligation to
                                   structure this Agreement to reduce or
                                   eliminate your tax liability.

                              (b)  Taxes. You will be subject to federal and
                                   state income and other tax withholding
                                   requirements on a date (generally, the
                                   Vesting Date) determined by applicable law
                                   (any such date, the "Taxable Date"), based on
                                   the Fair Market Value of the Shares
                                   underlying the Restricted Stock Units that
                                   vest. YOU WILL BE SOLELY RESPONSIBLE FOR THE
                                   PAYMENT OF ALL U.S. FEDERAL INCOME AND OTHER
                                   TAXES, INCLUDING ANY STATE, LOCAL OR NON-U.S.
                                   INCOME OR EMPLOYMENT TAX OBLIGATION THAT MAY
                                   BE RELATED TO THE SHARES, INCLUDING ANY SUCH
                                   TAXES THAT ARE REQUIRED TO BE WITHHELD AND
                                   PAID OVER

                                       2



                                   TO THE APPLICABLE TAX AUTHORITIES (THE "TAX
                                   WITHHOLDING OBLIGATION"). You will be
                                   responsible for the satisfaction of such Tax
                                   Withholding Obligation in a manner acceptable
                                   to the Company in its sole discretion,
                                   including through payroll withholding.

                                   (i) By Sale of Shares. Your acceptance of
                                   this Agreement constitutes your instruction
                                   and authorization to the Company and any
                                   brokerage firm determined acceptable to the
                                   Company for such purpose to sell on your
                                   behalf a whole number of shares from those
                                   Shares issuable to you as the Company
                                   determines to be appropriate to generate cash
                                   proceeds sufficient to satisfy the applicable
                                   Tax Withholding Obligation. Such shares will
                                   be sold on the Taxable Date or as soon
                                   thereafter as practicable. You will be
                                   responsible for all brokers' fees and other
                                   costs of sale, which fees and costs may be
                                   deducted from the proceeds of the foregoing
                                   sale of Shares, and you agree to indemnify
                                   and hold the Company and any brokerage firm
                                   selling such Shares harmless from any losses,
                                   costs, damages, or expenses relating to any
                                   such sale. To the extent the proceeds of such
                                   sale exceed your Tax Withholding Obligation,
                                   such excess cash will be deposited into the
                                   securities account established with the
                                   brokerage service provider for the settlement
                                   of your Vested Restricted Stock Units. Such
                                   Shares will be sold through the broker at
                                   market prices; however the price you receive
                                   will reflect a weighted average sales price
                                   based on the sales price of Shares on behalf
                                   of you and others for whom the designated
                                   broker may be selling shares on the relevant
                                   day(s), and you acknowledge that the Company
                                   or its designee is under no obligation to
                                   arrange for such sale at any particular
                                   price, and that the proceeds of any such sale
                                   may not be sufficient to satisfy your Tax
                                   Withholding Obligation. Accordingly, you
                                   agree to pay to the Company as soon as
                                   practicable, including through additional
                                   payroll withholding, any amount of the Tax
                                   Withholding Obligation that is not satisfied
                                   by the sale of shares described above. UNLESS
                                   OTHERWISE AUTHORIZED BY THE COMMITTEE IN ITS
                                   SOLE DISCRETION, THE SALE OF SHARES WILL BE
                                   THE PRIMARY METHOD USED BY THE COMPANY TO
                                   SATISFY THE APPLICABLE TAX WITHHOLDING
                                   OBLIGATION, and accordingly you represent and
                                   warrant to the Company as follows:

                                   A.   You are accepting this Agreement during
                                        a permitted trading period, and at the
                                        time of accepting this Agreement you are
                                        not aware of any Material Nonpublic
                                        Information (as defined in the Company's
                                        Corporate Legal Insider Trading and
                                        Tipping Policy) concerning the Company.

                                   B.   You will not exercise any subsequent
                                        influence over the amount of Shares to
                                        be sold hereunder to generate funds for
                                        the Tax Withholding Obligation or the
                                        price, date or time of such sale.

                                   C.   You are entering into this Agreement in
                                        good faith and have a bona fide
                                        intention to carry out the terms of this
                                        Agreement, and you will not enter into
                                        or alter a corresponding or hedging
                                        transaction or position with respect to
                                        the Shares.

                                   (ii)By Share Withholding. If so elected in
                                   the sole discretion of the Committee, then in
                                   lieu of a market sale pursuant to Paragraph
                                   9(b)(i) you authorize the Company to withhold
                                   from the Shares issuable to you the whole
                                   number of shares with a value equal to the
                                   Fair Market Value of the Shares on the
                                   Taxable Date or the first trading day before
                                   the Taxable Date, sufficient to satisfy the
                                   applicable Tax Withholding Obligation. You
                                   acknowledge that the withheld shares may not
                                   be sufficient to satisfy your Tax Withholding
                                   Obligation. Accordingly, you agree to pay to
                                   the Company as soon as practicable, including
                                   through additional payroll withholding, any
                                   amount of the Tax Withholding Obligation that
                                   is not satisfied by the withholding of Shares
                                   described above.

                                       3



10. DATA PRIVACY              As an essential term of this Agreement, you
                              consent to the collection, use and transfer, in
                              electronic or other form, of personal data as
                              described in this Agreement for the exclusive
                              purpose of implementing, administering and
                              managing your participation in the Plan.

                              By entering into this Agreement and accepting the
                              Restricted Stock Units, you acknowledge that the
                              Company holds certain personal information about
                              you, including, but not limited to, your name,
                              home address and telephone number, date of birth,
                              social insurance number or other identification
                              number, salary, tax rates and amounts,
                              nationality, job title, any shares of stock or
                              directorships held in the Company, details of all
                              awards or any other entitlement to shares of stock
                              awarded, canceled, exercised, vested, unvested or
                              outstanding, for the purpose of implementing,
                              administering and managing the Plan ("Data"). You
                              acknowledge that Data may be transferred to any
                              third parties assisting in the implementation,
                              administration and management of the Plan, that
                              these recipients may be located in jurisdictions
                              that may have different data privacy laws and
                              protections, and you authorize the recipients to
                              receive, possess, use, retain and transfer the
                              Data, in electronic or other form, for the
                              purposes of implementing, administering and
                              managing the Plan, including any requisite
                              transfer of such Data as may be required to a
                              broker or other third party with whom you or the
                              Company may elect to deposit any shares of stock
                              acquired under this Agreement. You acknowledges
                              that Data may be held only as long as is necessary
                              to implement, administer and manage your
                              participation in the Plan as determined by the
                              Company, and that you may request additional
                              information about the storage and processing of
                              Data, require any necessary amendments to Data or
                              refuse or withdraw the consents herein, in any
                              case without cost, provided however, that refusing
                              or withdrawing your consent may adversely affect
                              your ability to participate in the Plan.

11. ELECTRONIC DELIVERY       The Company may, in its sole discretion, decide to
                              deliver any documents related to any awards
                              granted under the Plan by electronic means or to
                              request your consent to participate in the Plan by
                              electronic means. You hereby consent to receive
                              such documents by electronic delivery and, if
                              requested, to agree to participate in the Plan
                              through an on-line or electronic system
                              established and maintained by the Company or
                              another third party designated by the Company, and
                              such consent shall remain in effect throughout
                              your term of employment or service with the
                              Company and thereafter until withdrawn in writing
                              by you.

12. MISCELLANEOUS             (a)  This Agreement shall not confer upon you any
                                   right to continue as an employee, or
                                   otherwise in the service of, the Company or
                                   any Affiliate, nor shall this Agreement
                                   interfere in any way with the Company's or
                                   such Affiliate's right to terminate your
                                   employment or service at any time.

                              (b)  Without limiting the generality of Paragraph
                                   12(a) above, this Agreement and the Plan may
                                   be amended without your consent to the extent
                                   provided in Section 14(b) of the Plan.

                              (c)  This Agreement will be subject to all
                                   applicable laws, rules, and regulations, and
                                   to such approvals by any governmental
                                   agencies or stock exchanges as may be
                                   required. The Company may impose such
                                   restrictions, conditions or limitations as it
                                   determines appropriate as to the timing and
                                   manner of any resales by you or other
                                   subsequent transfers by you of any shares of
                                   Common Stock issued as a result of or under
                                   this Agreement, including without limitation
                                   (i) restrictions under an insider trading
                                   policy, (ii) restrictions that may be
                                   necessary in the absence of an effective
                                   registration statement under the Securities
                                   Act of 1933, as amended, covering the
                                   Restricted Stock Units and (iii) restrictions
                                   as to the use of a specified brokerage firm
                                   or other agent for such resales or other
                                   transfers. Any sale of shares of Common Stock
                                   issued pursuant to this Agreement must also
                                   comply with other applicable laws and
                                   regulations governing the sale of such
                                   shares.

                              (d)  To the extent not preempted by U.S. federal
                                   law, this Agreement shall be governed by, and
                                   construed in accordance with, the laws of the
                                   State of Delaware.

                              (e)  Any question concerning the interpretation of
                                   this Agreement or the Plan, any adjustments
                                   required to be made under the Plan, and any
                                   controversy that may arise under the Plan or
                                   this Agreement shall be determined by the
                                   Committee (including any person(s) to whom
                                   the Committee has delegated its authority) in
                                   its sole and absolute discretion. Such
                                   decision by the Committee shall be final and
                                   binding.

13. SIGNATURES                By the signatures below, you and the authorized
                              representative of the Company acknowledge
                              agreement to this Restricted Stock Unit Award
                              Agreement as of the Grant Date specified above.

                                       4



                  PARTICIPANT:       FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC.

                  _________________  /s/ Mark S. Thompson
                                     ------------------------------------
                                     Mark S. Thompson
                                     President and CEO

TO ACCEPT YOUR RESTRICTED STOCK UNIT GRANT:

      (a)   Sign BOTH copies of this Restricted Stock Unit Award Agreement;

      (b)   Retain one copy of each for your records;

      (c)   Return one copy of each in the enclosed envelope by WITHIN 30 DAYS
            OF THE GRANT DATE.

                                       5

EX-31.01

Exhibit 31.01

CERTIFICATION

I, Mark S. Thompson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Fairchild Semiconductor International, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 12, 2006 By: /s/  Mark S. Thompson
Mark S. Thompson
President and Chief Executive Officer

EX-31.02

Exhibit 31.02

CERTIFICATION

I, Mark S. Frey, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Fairchild Semiconductor International, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 12, 2006 By: /s/  Mark S. Frey
Mark S. Frey
Executive Vice President and Chief Financial Officer

EX-32.01

Exhibit 32.01

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Fairchild Semiconductor International, Inc. (the “company”) on Form 10-Q for the period ended April 2, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark S. Thompson, Chief Executive Officer of the company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of the operations of the company.

/s/  Mark S. Thompson
Mark S. Thompson
Chief Executive Officer

May 12, 2006

EX-32.02

Exhibit 32.02

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Fairchild Semiconductor International, Inc. (the “company”) on Form 10-Q for the period ended April 2, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark S. Frey, Chief Financial Officer of the company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of the operations of the company.

/s/  Mark S. Frey
Mark S. Frey
Chief Financial Officer

May 12, 2006