Prepared by MERRILL CORPORATION

INTEGRATED DEVICE TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)

DELAWARE (State or other jurisdiction of incorporation or organization)		94-2669985 (I.R.S. Employer Identification No.)
2975 STENDER WAY, SANTA CLARA, CALIFORNIA (Address of principal executive offices)		95054 (Zip Code)

NONE
Former name, former address and former fiscal year (if changed since last report)

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 /x/ No / /

The number of outstanding shares of the registrant's Common Stock, $.001 par value, as of July 25, 2001, was approximately 105,035,700.

The accompanying notes are an integral part of these condensed consolidated financial statements.

The accompanying unaudited condensed consolidated financial statements of Integrated Device Technology, Inc. ("IDT" or the "Company") contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial information included therein.

These financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 10-K for the year ended April 1, 2001. The results of operations for the three-month period ended July 1, 2001 are not necessarily indicative of the results to be expected for the full year.

Certain reclassifications have been made to prior-period balances, none of which affected the Company's financial position or results of operations, to present the financial statements on a consistent basis.

Basic and diluted net income per share are computed using weighted-average common shares outstanding in accordance with Statements of Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share." Diluted net income per share also includes the effect of stock options.

Diluted loss per share for the three months ended July 1, 2001 is based only on weighted-average common shares outstanding, as the inclusion of 4,010 (thousand) common stock equivalents would have been antidilutive. The computation of diluted net income per share for the three months ended July 2, 2000 includes 7,257 (thousand) incremental shares related to stock options.

Total stock options outstanding, including antidilutive options, were 15.3 million and 15.9 million at July 1, 2001 and July 2, 2000, respectively.

	Three months ended
	Jul. 1, 2001			Jul. 2, 2000
	(in thousands)
Net income (loss)	$	(21,489	)	$	62,391
Currency translation adjustments		(62	)		2,211
Unrealized gain on foreign exchange contracts		114			—
Unrealized gain (loss) on available-for-sale investments		21,250			(63,425	)

Comprehensive income (loss)	$	(187	)	$	1,177

The components of accumulated other comprehensive income (loss) were as follows:

	Jul. 1, 2001			Apr. 1, 2001
	(in thousands)
Cumulative translation adjustments	$	(2,333	)	$	(2,271	)
Unrealized gain on foreign exchange contracts		114			—
Unrealized gain on available-for-sale investments		22,442			1,192

	$	20,223		$	(1,079	)

In July 2001, the Financial Accounting Standards Board issued SFAS No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets". Under SFAS No. 141, all business combinations initiated after June 30, 2001 must be accounted for using the purchase method. Under SFAS No. 142, goodwill and intangible assets with indefinite lives are no longer amortized but are reviewed annually for impairment (or more frequently if indicators of impairment arise). Separable intangible assets that are not deemed to have indefinite lives will continue to be amortized over their useful lives (but with no maximum life). The amortization provisions of SFAS No. 142 apply to goodwill and intangible assets acquired after June 30, 2001. With respect to goodwill and intangible assets acquired prior to July 1, 2001, IDT is required to adopt SFAS No. 142 effective April 1, 2002. The Company is currently evaluating the effect that adoption of the provisions of SFAS No. 142 will have on its results of operations and financial position.

On April 18, 2001, the Company acquired Newave Semiconductor Corp. ("Newave"), a privately held designer and marketer of integrated circuits for the telecommunications market. Newave was based in Santa Clara, Calif., with design operations in Shanghai, China. The acquisition is expected to provide technology expertise that supports IDT's communications IC strategy, and to provide additional telecommunications products to extend the Company's offerings in the telecommunications marketplace.

The Company paid approximately $73.2 million in cash and issued options to purchase approximately 0.47 million shares of IDT stock in exchange for outstanding employee options to acquire Newave stock.

The Newave combination was accounted for as a purchase. Accordingly, the Company's consolidated condensed financial statements include the estimated fair values of assets acquired and liabilities assumed from Newave as of April 18, 2001, the effective date of the purchase, and Newave's results of operations for the period April 18, 2001 through July 1, 2001. There were no significant differences between the accounting policies of the Company and Newave.

The total purchase price for Newave was $75.5 million. The components of purchase price are as follows:

	(in thousands)
Cash price	$	73,235
Less: contingent consideration		(2,422	)
Fair value of options assumed		13,214
Deferred stock compensation		(10,257	)
Direct costs of acquisition		1,685

Total purchase price	$	75,455

On July 1, 2000, the Company adopted FASB Interpretation No. 44 (FIN 44), "Accounting For Certain Transactions Involving Stock Compensation—an Interpretation of APB 25." In accordance with FIN No. 44, the intrinsic value of the options assumed as part of the Newave transaction and not vested as of the closing date have been recorded as deferred compensation to be amortized over the respective vesting periods of the options.

The fair value of the options assumed was determined using the Black-Scholes model with a volatility assumption of 83% and a stock price of $33.15, which represents the average IDT stock price three days before and after the signing of the merger. The fair value includes deferred stock compensation of $10.26 million which is associated with approximately 0.41 million unvested options assumed as part of the transaction. The value of the unvested options was determined using the closing IDT stock price of $36.88 on April 18, 2001, the date of the acquisition. The deferred compensation is presented as a component of stockholders' equity and will be amortized over the options' remaining vesting periods of one to four years.

Direct costs of acquisition consist primarily of investment banking, legal and accounting fees.

The total purchase price was allocated to the estimated fair value of assets acquired and liabilities assumed based on independent appraisals and management estimates as follows:

	(In thousands)
Fair value of tangible net assets acquired	$	2,291
In-process research and development		16,000
Existing technology		22,000
Other identified intangibles		3,150
Deferred taxes		(9,985	)
Excess of purchase price over net assets acquired		41,999

Total purchase price	$	75,455

The Company recorded a $16.0 million charge to in-process research and development during the first quarter of fiscal 2002. The amount was determined by identifying research projects which had not yet proven to be technically feasible, were developed to a point where they had future value associated with them and did not have alternative future uses. Estimated future revenues were allocated to in-process and existing technology, and appropriate estimated expenses were deducted and economic rents charged for the use of other assets. Based on this analysis, a present value calculation of estimated after-tax cash flows attributable to the technology was made.

The amount allocated to existing technology and goodwill is being amortized over estimated useful lives of seven years using the straight-line method. Other identified intangibles are being amortized over estimated useful lives of two to seven years, also using the straight-line method. As a result of adoption of SFAS No. 142 (see Note 4), the Company expects that amortization of certain intangibles, primarily goodwill, will cease on April 1, 2002.

Supplemental pro forma information for the first quarter of fiscal 2001, which assumes that Newave had been acquired at the beginning of fiscal 2001, appears below. The pro forma information includes amortization of goodwill and other intangibles from that date.

	(In thousands, except per share amounts)
Quarter ended July 2, 2000
Revenues	$	232,593
Net income		58,929
Diluted earnings per share		0.55

Pro forma information for fiscal 2002 is not presented, because the differences from reported amounts would not be significant.

In the first quarter of fiscal 2002, the Company repaid the mortgage payable related to its Salinas, Calif. wafer manufacturing facility. The Company paid approximately $5.7 million, including a 5% prepayment premium, to retire the debt.

During the first quarter of fiscal 2001, the Company called for redemption of its 5.5% Convertible Subordinated Notes ("Notes"). Substantially all holders elected to convert their Notes into IDT common stock. As a result of the conversion, shares outstanding increased by approximately 6.3 million and stockholders' equity increased by $183.4 million. The Company paid $0.4 million to holders who selected the cash option.

	Jul. 1, 2001		Apr. 1, 2001
	(in thousands)
Raw materials	$	7,999	$	9,586
Work-in-process		50,011		45,601
Finished goods		18,863		20,427

	$	76,873	$	75,614

The Company adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," effective April 2, 2001. SFAS No. 133 establishes accounting and reporting standards for derivative instruments and hedging activities and requires that all derivatives be recognized as either assets or liabilities at fair value. Derivatives that are not designated as hedges are adjusted to fair value through earnings. If the derivative is designated as a hedge, depending on the nature of the exposure being hedged, changes in fair value will either be offset against the change in fair value of the hedged asset, liability, or firm commitment through earnings, or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of the hedge is recognized in earnings immediately. The cumulative transition adjustment upon adoption of SFAS No. 133 was not material to the Company's financial position or results of operations.

As a result of its significant international operations, sales and purchase transactions, the Company is subject to risks associated with fluctuating exchange rates. The Company uses derivative financial instruments, principally foreign currency forward contracts, to attempt to minimize the impact of exchange rate movements on its operating results and on the cost of capital equipment purchases. The Company does not enter into derivative financial instruments for speculative or trading purposes. The Company's major foreign exchange exposures and related hedging programs are described below.

Forecasted transactions. The Company uses foreign currency forward contracts to hedge exposures related to forecasted sales denominated in Japanese yen. These contracts are designated as cash flow hedges when the transactions are forecasted and in general closely match the underlying forecasted transactions in duration. The contracts are carried on the balance sheet at fair value and the effective portion of the contracts' gains and losses is recorded as other comprehensive income until the forecasted transaction occurs. For the first three months of fiscal 2002, the Company recorded

$0.11 million as part of other comprehensive income and expects to reclassify this amount to earnings during the next twelve months as the underlying sales transactions occur.

If the underlying forecasted transactions do not occur, or it becomes probable that they will not occur, the gain or loss on the related cash flow hedge is recognized immediately, in other income. During the first three months of fiscal 2002, the Company did not record any gains or losses related to forecasted transactions which did not occur or became improbable.

The Company measures the effectiveness of hedges of forecasted transactions on at least a quarterly basis by comparing the fair values of the designated foreign currency forward contracts with the fair values of the forecasted transactions. No ineffectiveness was recognized in earnings during the first three months of fiscal 2002.

Firm commitments. The Company uses foreign currency forward contracts to hedge certain foreign currency purchase commitments, primarily in Japanese yen and the euro. These contracts are designated as fair value hedges, and changes in the fair value of the contracts are offset against changes in the fair value of the commitment being hedged, through earnings. For the first three months of fiscal 2002, the Company recorded gains of $0.25 million on hedged foreign-currency purchase commitments and losses of $0.34 million on the related derivative instruments.

For firm commitment hedges, the Company excludes the time value of foreign currency forward contracts from effectiveness testing, as permitted under SFAS No. 133. For the first three months of fiscal 2002, the time value of these contracts was recorded as other income and was not significant.

Balance sheet. The Company also utilizes foreign currency forward contracts to hedge exchange rate fluctuations related to certain foreign currency assets and liabilities. Gains and losses on these undesignated derivatives offset gains and losses on the assets and liabilities being hedged and the net amount is included in earnings. For the first three months of fiscal 2002, net losses generated by hedged assets and liabilities totaled $0.19 million, which were offset by gains on the related derivative instruments of $0.25 million.

Equity investments. The Company's policies allow for the use of derivative financial instruments to hedge the fair values of investments in publicly traded equity securities. As of July 1, 2001, the Company had not entered into this type of hedge.

The Company operates in two segments: (1) Communications and High-Performance Logic and (2) SRAMs and Other. The Communications and High-Performance Logic segment includes FIFOs and multi-ports, communications applications-specific standard products (ASSPs) and high-performance logic and clock management devices. The SRAMs and Other segment consists mainly of high-speed SRAMs.

The tables below provide information about these segments for the three-month periods ended July 1, 2001 and July 2, 2000:

	Three months ended
	Jul. 1, 2001		Jul. 2, 2000
	(in thousands)
Communications and High-Performance Logic	$	97,081	$	162,578
SRAMs and Other		18,827		68,677

Total consolidated revenues	$	115,908	$	231,255

	Three months ended
	Jul. 1, 2001			Jul. 2, 2000
	(in thousands)
Communications and High-Performance Logic	$	11,853		$	59,328
SRAMs and Other		(22,836	)		12,290
Amortization of intangible assets		(2,467	)		—
Acquired in-process R&D		(16,000	)		—
Other operating expenses		(3,598	)		—
Interest income and other		11,729			7,950
Interest expense		(655	)		(1,579	)

Income (loss) before income taxes	$	(21,974	)	$	77,989

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

All references are to our fiscal quarters ended July 1, 2001 ("Q1 2002"), July 2, 2000 ("Q1 2001"), and April 1, 2001 ("Q4 2001"), unless otherwise indicated. Quarterly financial results may not be indicative of the financial results of future periods.

This report contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements involve a number of risks and uncertainties. These include, but are not limited to: operating results; new product introductions and sales; competitive conditions; capital expenditures and resources; manufacturing capacity utilization; customer demand and inventory levels; protection of intellectual property; and the risk factors set forth in the section "Factors Affecting Future Results." As a result of these risks and uncertainties, actual results could differ from those anticipated in the forward-looking statements. We undertake no obligation to publicly revise these statements for future events or new information after the date of this Quarterly Report on Form 10-Q.

Forward-looking statements, which are generally identified by words such as "anticipate," "expect," "plan," and similar terms, include the statements related to revenues and gross profit, research and development ("R&D") activities, selling, general, and administrative ("SG&A") expenses, interest expense, interest income and other, taxes, capital spending and financing transactions, as well as statements regarding successful development and market acceptance of new products, industry and overall economic conditions and demand, and capacity utilization.

Revenues for Q1 2002 were $115.9 million, a decrease of $97.0 million and $115.3 million compared to Q4 2001 and Q1 2001, respectively. In percentage terms, revenues for Q1 2002 declined by 46% and 50% compared to Q4 2001 and Q1 2001, respectively.

Compared with Q4 2001, revenues declined across all geographies, although the decline was steepest in North America. Revenues for the Communications and High-Performance Logic segment for Q1 2002 declined by 38% and 40% compared to Q4 2001 and Q1 2001, respectively. Revenues for the SRAMs and Other segment in Q1 2002 declined by 66% and 73% over these periods. These decreases are due primarily to lower unit volumes, reflecting both excess inventories in our distributor, CEM and OEM direct sales channels, and lower levels of end-demand in the communications infrastructure equipment markets served by our customers.

We expect that excess sales channel inventories and slower customer end-market conditions will continue to have an adverse impact on our revenues in Q2 2002. It is extremely difficult, however, to determine exactly how much excess inventory remains, the time required for our customers to consume or otherwise dispose of excess inventory and the magnitude of the adverse impact of both slower end-market conditions and excess sales channel inventories on our operating results. Our best estimate, based on limited order and sales channel inventory-related data and substantial judgment, is that revenues will decline approximately 10% in Q2 2002 compared to Q1 2002. However, this estimate is subject to the many factors which may affect our future results, as detailed below.

Gross profit for Q1 2002 was $41.7 million, compared to $117.6 million and $133.4 million in Q4 2001 and Q1 2001, respectively. Gross margin for Q1 2002 was 36.0%, compared to 55.2% and 57.7% for Q4 2001 and Q1 2001, respectively.

During Q1 2002, as a result of weak business conditions, IDT announced cost control measures and a reduction in workforce of approximately 900 employees. We recorded related costs of $2.5 million, including $2.3 million in cost of goods sold, principally related to severance and other costs. The reduction in force was completed during Q1 2002 and we expect to begin realizing cost savings of approximately $3 million per quarter in Q2 2002.

The declines in gross margin in Q1 2002 compared to Q4 2001 and Q1 2001 are due primarily to lower levels of utilization of our fixed manufacturing infrastructure, and writedowns of excess inventories recorded during the period, consistent with the current weaker overall business environment for semiconductor products. In addition, Q1 2002 gross margin was adversely affected by the $2.3 million reduction-in-force charge and $0.79 million in intangibles amortization related to our acquisition of Newave Semiconductor ("Newave").

For Q1 2002, research and development ("R&D") expenses were essentially unchanged compared to Q4 2001 and $3.4 million higher than in Q1 2001. Increases in R&D payroll spending (mostly related to new IDT Newave employees), stock compensation expense related to the Newave acquisition, and manufacturing costs allocated to R&D activities were offset by lower profit-sharing and other performance-related costs, and by lower spending on indirect materials.

We expect that R&D expenses will be essentially flat in Q2 2002 compared with Q1 2002.

For Q1 2002, selling, general and administrative ("SG&A") expenses decreased by $4.0 million and $8.1 million compared to Q4 2001 and Q1 2001, respectively. The decreases are due mainly to lower revenue- and profit-dependent personnel and other expenses.

Following the decrease in SG&A spending that occurred in Q1 2002, we expect that SG&A expenses may increase slightly in Q2 2002.

In connection with our acquisition of Newave (see Note 5 of the Notes to the Condensed Consolidated Financial Statements), we recorded a $16.0 million charge for acquired IPR&D in Q1 2002. The $16.0 million allocation of the purchase price to IPR&D was determined by identifying technologies that (1) had not been proved to be technologically feasible, (2) had been developed to a point where future value could be associated with them and (3) did not have future alternative uses.

Residual goodwill related to the Newave transaction is being amortized over an estimated useful life of seven years using the straight-line method. Other identified intangibles are being amortized over estimated useful lives of two to seven years, also using the straight-line method.

We expect to record $2.5 million in quarterly amortization during the remainder of fiscal 2002, including $0.8 million of acquired existing technology which is being amortized to cost of goods sold.

During Q1 2001, we converted substantially all of our 5.5% Convertible Subordinated Notes ("Notes") to common stock (see Note 6 of the Notes to Condensed Consolidated Financial Statements). The Notes were outstanding for a portion of Q1 2001, and as a result, interest expense was $0.9 million lower in Q1 2002 compared to Q1 2001. The slight increase in interest expense in Q1

2002 compared to Q4 2001 is primarily due to an early payment penalty on the payoff of a mortgage (see Note 6 of the Notes to Condensed Consolidated Financial Statements). Our remaining interest-bearing liabilities consist mainly of secured equipment financing agreements, which amortize over the terms of the agreements.

Interest income and other, net, was $11.7 million in Q1 2002, a decrease of $1.7 million and an increase of $3.8 million compared to Q4 2001 and Q1 2001, respectively.

	Q1 2002		Q4 2001		Q1 2001
	000s
Interest income	$	11,453	$	13,209	$	7,241
Other income, net		276		221		709

Total	$	11,729	$	13,430	$	7,950

Interest income declined by $1.8 million in Q1 2002 compared to Q4 2001 due to lower average interest rates and, to a lesser extent, decreased investment balances. We expect interest income to decline further in Q2 2002, as existing investments mature and proceeds are reinvested in a lower interest-rate environment. Interest income was $4.2 million higher in Q1 2002 than in Q1 2001, mainly due to higher average investment balances.

In Q4 2001, we recorded a $141.9 million impairment charge for certain equity investments, principally our investment in PMC-Sierra, Inc. ("PMC), that we judged to have experienced an other than temporary decline in value. There were no realized gains or losses on equity investments in Q1 2002 or Q1 2001.

For Q1 2002, we applied a rate of 20% to pretax income, exclusive of non-cash, merger-related costs. Our estimate is based on existing tax laws and our current projections of income and distributions of income among different entities and tax jurisdictions, and is subject to change, based primarily on varying levels of profitability.

Total cash and cash equivalents and short- and long-term investments, excluding IDT's equity investments in PMC and Monolithic System Technology, Inc. ("MoSys"), decreased from $821.1 million at the end of Q4 2001 to $713.9 million at the end of Q1 2002.

We used $5.0 million in cash for operating activities during Q1 2002; operating activities provided $108.9 million in Q1 2001. In addition to sharply lower net income in Q1 2002, major factors in the year-to-year change in cash flows related to operating activities included the following:

The above factors were partially offset by the effects of lower accounts receivable balances due to collections and lower sales, and non-cash merger-related costs included in net income.

During Q1 2002, we used $171.7 million in net cash for investing activities, primarily for the Newave cash acquisition and purchases of longer-term investments. We have curtailed capital spending, and purchases of property, plant and equipment were only $9.6 million in Q1 2002, compared to $25.4 million in Q1 2001.

We used $20.1 million in net cash for financing activities during Q1 2002. Primary uses of cash during the quarter included $19.0 million for repurchases of our common stock.

We anticipate capital expenditures of approximately $70 million during fiscal 2002, which may vary depending on business conditions, to be financed primarily through cash generated from operations and existing cash and investments balances.

We believe that existing cash and cash equivalents, together with cash flows from operations, will be sufficient to meet our working capital and capital expenditure needs through fiscal 2002 and 2003. We may also investigate other financing alternatives; however, we cannot be certain that additional financing will be available on satisfactory terms.

Our operating results can fluctuate dramatically. For example, we had net income of $415.2 million and $130.6 million for fiscal 2001 and 2000, respectively, compared to a net loss of $298.9 million for fiscal 1999. In the first quarter of fiscal 2002, we had a net loss of $21.5 million. Fluctuations in operating results can result from a wide variety of factors, including:

In addition, many of these factors also impact the recoverability of the cost of manufacturing, tax, goodwill and other intangibles and other assets. As business conditions change, future writedowns or abandonment of these assets may occur. Also, we ship a substantial portion of our products throughout each quarter. If anticipated shipments in any month do not occur, our operating results for that quarter would be harmed. Further, we may be unable to compete successfully in the future against existing or potential competitors, and our operating results could be harmed by increased competition. Our operating results are also impacted by changes in overall economic conditions, both domestically and abroad. Should economic conditions deteriorate, domestically or overseas, our sales and business results would be harmed.

The cyclicality of the semiconductor industry exacerbates the volatility of our operating results. The semiconductor industry is highly cyclical. Market conditions characterized by excess supply relative to demand and resultant pricing declines have occurred in the past and may occur in the future. Such

pricing declines adversely affect our operating results and force us and our competitors to modify capacity expansion programs. As an example, in prior years, a significant increase in manufacturing capacity allocated to industry standard SRAM components caused significant downward trends in pricing, which adversely affected our gross margins and operating results. We are unable to accurately estimate the amount of worldwide production capacity dedicated to or planned for the industry-standard products, such as SRAM, that we produce. Our operating results can be adversely affected by such factors in the semiconductor industry as: a material increase in industry-wide production capacity; a shift in industry capacity toward products competitive with our products; and reduced demand or other factors that may result in material declines in product pricing.

Although we are continuing to try to reduce our dependence on revenue derived from the sale of industry-standard products, and while we carefully manage costs, these efforts may not be sufficient to offset the adverse effect the above or other industry related factors can have on our results.

Demand for our products depends on demand in the communications, and to a lesser extent, computer markets. The majority of our products are incorporated into customers' systems in enterprise/carrier class network, wireless infrastructure and access network applications. A percentage of our products, including high-performance logic components, serve in customers' computer storage, computer-related, and other applications. Customer applications for our products have historically been characterized by rapid technological change and significant fluctuations in demand. Demand for most of our products, and therefore potential increases in revenue, depends upon growth in the communications market, particularly in the data networking and wireless telecommunications infrastructure markets and, to a lesser extent, the computer-related markets. Any slowdown in these communications or computer-related markets could materially adversely affect our operating results. In addition, when all channels of distribution are considered, one customer in the communications market, Cisco Systems, Inc., represents more than 10% of our total revenues.

Our product manufacturing operations are complex and subject to interruption. From time to time, we have experienced production difficulties, including reduced manufacturing yields or products that do not meet our or our customers' specifications, that have caused delivery delays and quality problems. While production delivery delays have been infrequent and generally short in duration, we could experience manufacturing problems, capacity constraints and/or product delivery delays in the future as a result of, among other things, complexity of manufacturing processes, changes to our process technologies (including die size reduction efforts), and ramping production and installing new equipment at our facilities.

We have wafer fabrication facilities in Hillsboro, Ore. and Salinas, Calif. Substantially all of our revenues are derived from products manufactured at facilities which are exposed to the risk of natural disasters. Approximately 60% of our total revenues are derived from products manufactured at our fabrication facility in Salinas, which is located near an active earthquake fault. If we were unable to use our facilities, as a result of a natural disaster or otherwise, our operations would be materially adversely affected until we were able to obtain other production capability. We do not carry earthquake insurance on our California facilities or related to our business operations, as we do not believe that adequate protection is available at economically justifiable rates.

The primary energy source for our manufacturing facilities is electric power. While we do maintain limited backup generating capability, the amount of electric power that we can generate on our own is insufficient to fully operate these facilities.

We are dependent upon electric power generated by public utilities where we operate our manufacturing facilities. Utility power interruptions can occur at any time in any location. We have periodically experienced electrical power interruptions in the Philippines and California because utilities in these geographies have failed to provide adequate power infrastructure. While to date we have successfully mitigated the impact of these interruptions, prolonged power interruptions at any of our

locations could have a significant adverse impact on our business. We do not maintain insurance coverage that would help protect against the impact of power interruptions, because we do not believe that such coverage is available on cost-effective terms.

Historically, we have utilized subcontractors for the majority of our incremental assembly requirements, typically at higher costs than at our own Malaysian and Philippines assembly and test operations. We expect to continue utilizing subcontractors extensively to supplement our own production volume capacity. Due to production lead times and potential subcontractor capacity constraints, any failure on our part to adequately forecast the mix of product demand could adversely affect our operating results.

Our results are dependent on the success of new products. New products and process technology associated with the Hillsboro fabrication facility will continue to require significant R&D expenditures.

However, we may not be able to develop and introduce new products in a timely manner, our new products may not gain market acceptance, and we may not be successful in implementing new process technologies. If we are unable to develop new products in a timely manner, and to sell them at gross margins comparable to or better than our current products, our future results of operations could be adversely impacted.

We are dependent on a limited number of suppliers. Our manufacturing operations depend upon obtaining adequate raw materials on a timely basis. The number of vendors of certain raw materials, such as silicon wafers, ultra-pure metals and certain chemicals and gases, is very limited. In addition, certain packages used by us require long lead times and are available from only a few suppliers. From time to time, vendors have extended lead times or limited supply to us due to capacity constraints. Our results of operations would be adversely affected if we were unable to obtain adequate supplies of raw materials in a timely manner or if there were significant increases in the costs of raw materials.

We may require additional capital on satisfactory terms to remain competitive. The semiconductor industry is extremely capital intensive. To remain competitive, we continue to invest in advanced manufacturing and test equipment. We could be required to seek financing to satisfy our cash and capital needs, and such financing might not be available on terms satisfactory to us. If such financing is required but unavailable on satisfactory terms, our operations could be adversely affected.

Intellectual property claims could adversely affect our business and operations. The semiconductor industry is characterized by vigorous protection and pursuit of intellectual property rights, which have resulted in significant and often protracted and expensive litigation. In recent years, there has been a growing trend by companies to resort to litigation to protect their semiconductor technology from unauthorized use by others. We have been involved in patent litigation in the past, which adversely affected our operating results. Although we have obtained patent licenses from certain semiconductor manufacturers, we do not have licenses from a number of semiconductor manufacturers that have a broad portfolio of patents. Claims alleging infringement of intellectual property rights could be asserted in the future and could require us to discontinue the use of certain processes or cease the manufacture, use and sale of infringing products, to incur significant litigation costs and damages and to develop non-infringing technology. We might not be able to obtain such licenses on acceptable terms or to develop non-infringing technology. Further, the failure to renew or renegotiate existing licenses on favorable terms, or the inability to obtain a key license, could adversely affect us.

International operations add increased volatility to our operating results. A substantial percentage of our revenues are derived from non-U.S. sales, as summarized below:

Percentage of total revenues	First three months of fiscal 2002		Twelve months of fiscal 2001		Twelve months of fiscal 2000
North America	44	%	58	%	62	%
Asia Pacific	14	%	11	%	10	%
Japan	18	%	12	%	11	%
Europe	24	%	19	%	17	%

Total	100	%	100	%	100	%

In addition, our offshore assembly and test operations incur payroll, facility and other expenses in local currencies. Accordingly, movements in foreign currency exchange rates can impact our cost of goods sold, as well as both pricing and demand for our products. Our offshore operations and export sales are also subject to risks associated with foreign operations, including:

Contract pricing for raw materials used in the fabrication and assembly processes, as well as for subcontract assembly services, can also be impacted by currency exchange rate fluctuations. We also purchase certain semiconductor manufacturing tools, such as photolithography equipment, from overseas vendors. Such tools are typically quoted at a foreign-currency price, often equivalent to several million U.S. dollars per unit. Although we seek to mitigate currency risks through the use of hedge instruments, currency exchange rate fluctuations can have a substantial impact on our net U.S.-dollar cost for these tools.

We are subject to a variety of environmental and other regulations related to hazardous materials used in our manufacturing process. Any failure by us to control the use or discharge of hazardous materials under present or future regulations could subject us to substantial liability or cause our manufacturing operations to be suspended.

Our common stock has experienced substantial price volatility. Such volatility may occur in the future, particularly as a result of quarter-to-quarter variations in the actual or anticipated financial results of our company, other semiconductor companies, or customers. Announcements by us or by our competitors regarding new product introductions may also lead to volatility. In addition, our stock price can fluctuate due to price and volume fluctuations in the stock market, especially in the technology sector. Our product portfolio includes a mix of proprietary or limited-source products, and industry-standard or multiple-source products. Our products also employ a variety of semiconductor design technologies. Stock price volatility may also result from changes in perceptions about the various types of products we manufacture and sell.

We are exposed to fluctuations in the market price of our investments in Monolithic System Technology, Inc. and PMC-Sierra, Inc. In fiscal 2000, PMC completed a merger with Quantum Effect Devices ("QED"). As a result of the merger, we exchanged our QED ownership interest for PMC common stock, which is highly volatile. In connection with the merger, as required under generally accepted accounting principles, we recorded a pretax, unrealized gain of $240.9 million during the second quarter of fiscal 2001. During the third quarter of fiscal 2001, we sold a portion of our PMC

holdings, resulting in a realized, pretax loss of $11.9 million. In the fourth quarter of fiscal 2001, we recorded a $141.9 million impairment charge for certain equity investments, principally our investment in PMC, that we judged to have experienced an other than temporary decline in value. The amount of income and cash flow that we ultimately realize from this investment in future periods may vary materially from the previously recognized gain and the current unrealized amount.

In June 2001, Monolithic System Technology ("MoSys") completed an initial public offering at approximately $10 per share. Our carrying value for the 2.6 million MoSys shares held in our investment portfolio was previously zero. We are restricted from selling or hedging our MoSys shares for six months, and the shares may be subject to significant market volatility.

We are continuing to monitor and evaluate the impact of the introduction of the Single European Currency (Euro). During the transition period ending December 31, 2001, public and private parties may pay for goods and services using either the Euro or the legacy currency of the participating country. Beginning January 1, 2002, Euro denominated bills and coins will be issued, with the legacy currencies being completely withdrawn from circulation on June 30, 2002.

We are in the process of evaluating the impact of the Euro's introduction on our pricing policies, foreign currency hedging tactics, and administrative systems and costs. Based on our evaluation, we do not currently expect the cost of any system modifications to be material and do not expect that the Euro will have a material adverse impact on our business activities, financial condition or overall trends in results of operations.

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.

		Three months ended
		Jul. 1, 2001			Jul. 2, 2000
Revenues		$	115,908		$	231,255
Cost of revenues			74,234			97,839

Gross profit			41,674			133,416

Operating expenses:
	Research and development		33,073			29,720
	Selling, general and administrative		23,968			32,078
	Acquired in-process research and development		16,000			—
	Amortization of intangibles		1,681			—

Total operating expenses			74,722			61,798

Operating income (loss)			(33,048	)		71,618
Interest expense			(655	)		(1,579	)
Interest income and other, net			11,729			7,950

Income (loss) before income taxes			(21,974	)		77,989
Provision (benefit) for income taxes			(485	)		15,598

Net income (loss)		$	(21,489	)	$	62,391

Basic net income (loss) per share		$	(0.20	)	$	0.62
Diluted net income (loss) per share		$	(0.20	)	$	0.58
Weighted average shares:
	Basic		104,944			100,269
	Diluted		104,944			107,526

		Jul. 1, 2001			Apr. 1, 2001
ASSETS
Current assets:
	Cash and cash equivalents	$	200,921		$	397,709
	Short-term investments—equity investments		50,743			17,510
	Other short-term investments		308,457			263,110
	Accounts receivable, net		44,611			94,362
	Inventories, net		76,873			75,614
	Deferred tax assets		70,865			81,370
	Prepayments and other current assets		18,035			25,542

Total current assets			770,505			955,217
Property, plant and equipment, net			269,702			284,702
Long-term investments			204,473			160,273
Goodwill and other intangibles			64,682			—
Other assets			77,997			70,209

TOTAL ASSETS		$	1,387,359		$	1,470,401

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable	$	27,880		$	45,915
	Accrued compensation and related expenses		24,739			53,543
	Deferred income on shipments to distributors		70,060			91,374
	Income taxes payable		19,419			24,122
	Other accrued liabilities		28,063			39,532

Total current liabilities			170,161			254,486
Other liabilities			85,195			76,018

Total liabilities			255,356			330,504
Stockholders' equity:
	Preferred stock		—			—
	Common stock and additional paid-in capital		779,019			759,341
	Deferred stock compensation		(8,350	)		—
	Treasury stock		(92,251	)		(73,216	)
	Retained earnings		433,362			454,851
	Accumulated other comprehensive income		20,223			(1,079	)

Total stockholders' equity			1,132,003			1,139,897

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	1,387,359		$	1,470,401

				Three Months Ended
				July 1, 2001			Jul. 2, 2000
OPERATING ACTIVITIES:
	Net income (loss)			$	(21,489	)	$	62,391
	Adjustments:
		Depreciation and amortization			23,961			22,664
		Amortization of intangible assets			2,467			—
		Acquired in-process research and development			16,000			—
		Merger-related stock compensation			1,082			—
		Gain on sale of property, plant and equipment			(212	)		(533	)
	Changes in assets and liabilities:
			Accounts receivable		49,751			(13,726	)
			Inventories		(1,259	)		(1,651	)
			Prepayments and other assets		(286	)		5,100
			Accounts payable		(18,035	)		8,587
			Accrued compensation and related expenses		(28,804	)		(956	)
			Deferred income on shipments to distributors		(21,314	)		14,879
			Income taxes payable		(4,703	)		13,350
			Other accrued liabilities		(2,154	)		(1,179	)

NET CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES					(4,995	)		108,926

INVESTING ACTIVITIES:
		Purchases of property, plant and equipment			(9,604	)		(25,437	)
		Proceeds from sales of property, plant and equipment			1,317			790
		Acquisition, net of acquired cash			(74,249	)		—
		Purchases of investments			(206,655	)		(84,511	)
		Proceeds from sales of investments			117,535			1,280

NET CASH USED FOR INVESTING ACTIVITIES					(171,656	)		(107,878	)

FINANCING ACTIVITIES:
		Issuance of common stock, net			7,288			11,232
		Redemption of convertible debt			—			(364	)
		Repurchases of common stock			(19,035	)		—
		Payments on capital leases and other debt			(8,390	)		(2,758	)

NET CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES					(20,137	)		8,110

Net (decrease) increase in cash and cash equivalents					(196,788	)		9,158
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD					397,709			372,606

CASH AND CASH EQUIVALENTS AT END OF PERIOD				$	200,921		$	381,764

Supplemental schedule of non-cash activities:
	Conversion of subordinated notes to equity				—		$	183,436

		INTEGRATED DEVICE TECHNOLOGY, INC.
Date: August 10, 2001		/s/ JERRY G. TAYLOR Jerry G. Taylor President and Chief Executive Officer (duly authorized officer)
Date: August 10, 2001		/s/ ALAN F. KROCK Alan F. Krock Vice President, Chief Financial Officer (principal accounting officer)