10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 26, 2004

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 No. 0-12695

INTEGRATED DEVICE TECHNOLOGY, INC.

(Exact Name of Registrant as Specified in Its Charter)

DELAWARE	94-2669985
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
2975 STENDER WAY, SANTA CLARA, CALIFORNIA	95054
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s Telephone Number, Including Area Code: (408) 727-6116

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 ý No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act) Yes ý No o

The number of outstanding shares of the registrant’s Common Stock, $.001 par value, as of October 22, 2004, was approximately 106,752,000.

PART I    FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS

INTEGRATED DEVICE TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED; IN THOUSANDS, EXCEPT PER SHARE DATA)

	Three months ended						Six months ended
	Sep. 26, 2004			Sep. 28, 2003			Sep. 26, 2004			Sep. 28, 2003
Revenues	$	96,671		$	80,777		$	197,978		$	163,822
Cost of revenues	48,247			42,201			96,608			90,925
Asset impairment	(1,585		)	—			(1,794		)	—
Gross profit	50,009			38,576			103,164			72,897
Operating expenses:
Research and development	25,449			25,716			51,450			51,082
Selling, general and administrative	17,801			18,320			37,188			36,645
Acquired in-process research and development	—			264			1,736			264
Total operating expenses	43,250			44,300			90,374			87,991
Operating income (loss)	6,759			(5,724		)	12,790			(15,094		)
Gain (loss) on equity investments	—			3,151			(12,831		)	3,151
Interest expense	(26		)	(118		)	(73		)	(210		)
Interest income and other, net	2,824			3,142			5,329			7,366
Income (loss) before income taxes	9,557			451			5,215			(4,787		)
Provision for (benefit from) income taxes	704			(699		)	1,409			(1,185		)
Net income (loss)	$	8,853		$	1,150		$	3,806		$	(3,602	)
Basic net income (loss) per share	$	0.08		$	0.01		$	0.04		$	(0.03	)
Diluted net income (loss) per share	$	0.08		$	0.01		$	0.03		$	(0.03	)
Weighted average shares:
Basic	106,144			104,210			106,085			104,041
Diluted	107,661			106,148			109,117			104,041

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

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INTEGRATED DEVICE TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED; IN THOUSANDS)

	Sep. 26, 2004			Mar. 28, 2004
Assets
Current assets:
Cash and cash equivalents	$	265,398		$	223,360
Short-term investments	334,380			384,854
Accounts receivable, net	56,908			53,091
Inventories, net	44,136			32,745
Prepayments and other current assets	9,897			12,101
Total current assets	710,719			706,151
Property, plant and equipment, net	109,765			108,424
Goodwill and other intangibles, net	87,663			52,784
Other assets	8,823			38,194
Total assets	$	916,970		$	905,553
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	21,758		$	20,190
Accrued compensation and related expenses	14,769			11,560
Deferred income on shipments to distributors	24,891			21,411
Income taxes payable	33,089			33,267
Other accrued liabilities	18,055			19,250
Total current liabilities	112,562			105,678
Long-term obligations	13,169			15,651
Total liabilities	125,731			121,329
Stockholders’ equity:
Common stock and additional paid-in capital	831,124			825,483
Deferred stock-based compensation	(228		)	(1,140		)
Treasury stock	(180,751		)	(180,751		)
Retained earnings	140,965			137,159
Accumulated other comprehensive income	129			3,473
Total stockholders’ equity	791,239			784,224
Total liabilities and stockholders’ equity	$	916,970		$	905,553

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

3

INTEGRATED DEVICE TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED; IN THOUSANDS)

	Six months ended
	Sep. 26, 2004			Sep. 28, 2003
Operating activities
Net income (loss)	$	3,806		$	(3,602	)
Adjustments:
Depreciation	25,782			24,356
Amortization of intangible assets	2,862			802
Acquired in-process research and development	1,736			264
Merger-related stock-based compensation	367			721
Other-than-temporary impairment loss on equity investments	12,831			—
Non-cash restructuring and other	—			164
Changes in assets and liabilities:
Accounts receivable	(3,639		)	(839		)
Inventories	(10,756		)	7,775
Prepayments and other assets	1,302			9,873
Accounts payable	1,133			(1,191		)
Accrued compensation and related expenses	2,885			865
Deferred income on shipments to distributors	3,247			(1,829		)
Income taxes payable	(178		)	815
Other accrued liabilities	(940		)	(1,319		)
Net cash provided by operating activities	40,438			36,855
Investing activities
Purchases of property, plant and equipment	(27,010		)	(17,120		)
Cash paid for acquisition of ZettaCom, net of cash acquired	(34,375		)	—
Purchases of marketable securities	(221,813		)	(230,846		)
Proceeds from sales and maturities of marketable securities	286,263			247,272
Purchases of technology and other investments, net	(2,100		)	(8,078		)
Net cash provided by (used for) for investing activities	965			(8,772		)
Financing activities
Issuance of common stock	6,186			6,107
Payments on capital leases and other debt	(5,551		)	(2,071		)
Net cash provided by financing activities	635			4,036
Net increase in cash and cash equivalents	42,038			32,119
Cash and cash equivalents at beginning of period	223,360			144,400
Cash and cash equivalents at end of period	$	265,398		$	176,159

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

4

INTEGRATED DEVICE TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note 1

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Integrated Device Technology, Inc. (IDT or the Company) contain all adjustments which are, in the opinion of management, necessary to present fairly the interim financial information included therein.  Certain prior period balances have been reclassified to conform with the current period presentation. All references are to our fiscal quarters ended September 26, 2004 (Q2 2005), June 27, 2004 (Q1 2005), March 28, 2004 (Q4 2004) and September 28, 2003 (Q2 2004), unless otherwise indicated.

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 March 28, 2004.  The results of operations for the three and six-month periods ended September 26, 2004 are not necessarily indicative of the results to be expected for the full year.

Note 2

Net Income (Loss) Per Share

Net income (loss) per share has been computed using weighted-average common shares outstanding in accordance with Statement of Financial Accounting Standards (SFAS) No. 128, “Earnings Per Share.”

	Three months ended		Six months ended
(in thousands)	Sep. 26, 2004	Sep. 28, 2003	Sep. 26, 2004	Sep. 28, 2003
Weighted average common shares outstanding	106,144	104,210	106,085	104,041
Dilutive effect of employee stock options	1,517	1,938	3,032	—
Weighted average common shares outstanding, assuming dilution	107,661	106,148	109,117	104,041

Net loss per share for the six-month period ended September 28, 2003 is based only on weighted average shares outstanding.    Stock options based equivalent shares for this period of 1.2 million were excluded from the calculation of diluted earnings per share, as their effect would be antidilutive in a net loss period.  Employee stock options to purchase 7.0 million, 3.7 million, and 5.2 million shares for the three-month periods ended September 26, 2004, and September 28, 2003 and the six-month period ended September 26, 2004, respectively, were outstanding, but were excluded from the calculation of diluted earnings per share because the exercise price of the stock options was greater than the average share price of the common shares and therefore, the effect would be antidilutive.

5

Note 3

Stock-Based Employee Compensation

The Company accounts for its stock option plans and employee stock purchase plan in accordance with the intrinsic value method prescribed in the Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25).  In certain instances, primarily in connection with acquisitions, the Company records stock-based employee compensation cost in net income (loss). The following table illustrates the effect on net income (loss) and income (loss) per share if we had applied the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation” (SFAS 123), to stock-based employee compensation.

	Three months ended						Six months ended
(in thousands)	Sep. 26, 2004			Sep. 28, 2003			Sep. 26, 2004			Sep. 28, 2003
Reported net income (loss)	$	8,853		$	1,150		$	3,806		$	(3,602	)
Add: Stock-based compensation included in reported net income (loss)	88			359			367			721
Deduct: Stock-based employee compensation expense determined under a fair-value based method for all awards	(7,896		)	(11,061		)	(19,540		)	(25,150		)
Pro forma net income (loss)	$	1,045		$	(9,552	)	$	(15,367	)	$	(28,031	)
Pro forma net income (loss) per share:
Basic	$	0.01		$	(0.09	)	$	(0.14	)	$	(0.27	)
Diluted	$	0.01		$	(0.09	)	$	(0.14	)	$	(0.27	)
Reported net income (loss) per share:
Basic	$	0.08		$	0.01		$	0.04		$	(0.03	)
Diluted	$	0.08		$	0.01		$	0.03		$	(0.03	)

Note 4

Cash Equivalents and Investments

Cash equivalents are highly liquid investments with original maturities of three months or less at the time of purchase.  All of the Company’s investments are classified as available-for-sale at September 26, 2004 and March 28, 2004.  Available-for-sale investments are classified as short-term investments, as these investments generally consist of highly marketable securities that are intended to be available to meet current cash requirements.  Investment securities classified as available-for-sale are reported at market value, and net unrealized gains or losses are recorded in accumulated other comprehensive income, a separate component of stockholders’ equity, until realized.  Realized gains and losses on investments are computed based upon specific identification and are included in interest income and other, net.  Management evaluates investments on a regular basis to determine if an other-than-temporary impairment has occurred.

In Q1 2005, the Company recorded an impairment charge of $12.8 million related to our investment in NetLogic Microsystems.  On July 8, 2004, NetLogic completed an initial public offering at an initial offering price of $12 per share.  IDT was included in the offering as a selling shareholder. The IPO pricing, less related commissions, implied the investment was worth less than its carrying value.  Based in part on the relative magnitude of the decline in value, the Company concluded that there was an other-than-temporary impairment on the investment at June 27, 2004 and accordingly, recorded an impairment charge to adjust the carrying value down to its estimated net realizable value.  During Q2 2005, the Company sold its investment at the previously written down value.  At March 28, 2004, this investment, which was accounted for on the cost basis, was classified in Other Assets at a value of $30.0 million.

Note 5

Inventories, Net

Inventories are summarized as follows:

(in thousands)	Sep. 26, 2004		Mar. 28, 2004
Raw materials	$	4,883	$	3,537
Work-in-process	26,309		20,984
Finished goods	12,944		8,224
Total inventories, net	$	44,136	$	32,745

6

Note 6 Business Combinations

On May 7, 2004, the Company acquired ZettaCom, Inc., a privately held provider of switch fabric and traffic management solutions.   The Company paid $34.5 million in cash for ZettaCom.  ZettaCom’s results subsequent to May 7, 2004 are included in the Company’s consolidated results.

The acquisition was accounted for under the purchase method of accounting.   The total purchase price for ZettaCom is summarized below:

(in thousands)
Cash price	$	34,264
Direct costs of acquisition	252
Total purchase price	$	34,516

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

(in thousands)
Fair value of tangible net liabilities acquired	$	(2,798	)
In-process research and development	1,700
Existing technology	18,400
Non-compete agreements	1,200
Goodwill	16,014
Total purchase price	$	34,516

The Company valued the existing technology and in-process technology utilizing a discounted cash flow model which uses forecasts of future revenues and expenses related to the intangible asset.  The non-compete agreements were valued by estimating the affect on future revenues and cash flows if a non-compete were not in-place thereby allowing former employees of ZettaCom to re-enter the market.  IDT utilized a discount rate of 27% for existing technology, 31% for in-process technology, and 29% for the non-compete agreements.  The purchase price allocation depicted is preliminary and subject to change when the Company obtains additional information concerning certain contingencies of ZettaCom.

In-process technology acquired was expensed at the date of acquisition.  The existing technology is being amortized to cost of revenues over a seven year estimated life.  The non-compete agreements are being amortized to research and development expense over the three year term of the agreements.

Acquired in-process research and development.    In connection with the ZettaCom acquisition, the Company recorded a $1.7 million charge to in-process research and development (IPR&D).   This amount was determined by identifying a research project which was not yet proven to be technically feasible and did not have alternative future uses. Estimated future 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 projects was computed using a discount rate of 31%.  Present values were adjusted by factors representing the percentage of completion for the project, which was estimated at 73%.

Retention payments.    In connection with the ZettaCom acquisition, the Company entered into retention agreements with the former employees of ZettaCom who became IDT employees as part of the transaction.  The agreements include approximately $4.0 million which will be paid out over the 18-30 months following the close of the acquisition.  The retention payments are earned by the passage of time.  As such, the Company records these amounts as compensation expense as they are incurred.

Note 7 Asset Acquisitions

On April 22, 2004, the Company acquired a license to PCI-Express technology from Internet Machines Corporation (IMC) as well as certain other assets and liabilities, in a cash transaction, immaterial in value, that does not constitute a business combination.  As such, the Company allocated the amount paid to the assets acquired based on their estimated fair values.  The principal identifiable intangible assets acquired were existing technology and workforce in-place.  The fair values assigned are based on estimates, assumptions, and other information compiled by management.

During the first quarter of 2005, the Company made a $1.1 million follow-on payment in connection with the Q2 2004 acquisition of technologies from IBM as a milestone was met.  The amount of this payment was allocated consistent with the allocation of the initial purchase price. Per the agreement, the Company may pay an additional $2.9 million in the near future contingent upon IBM successfully achieving and IDT accepting two additional technology milestones.

7

Note 8

Goodwill and Other Intangible Assets

Goodwill is reviewed annually for impairment (or more frequently if indicators of impairment arise).   For purposes of this assessment, the Company uses two reporting units, (1) Communications and Timing Products and (2) SRAMs.  All Company goodwill relates to the Communications and Timing Products reporting unit.

Goodwill and identified intangible assets relate to the Company’s acquisitions of ZettaCom and IMC assets in Q1 2005, the technologies from IBM in Q2 2004, Solidum Systems (Solidum) in Q3 2003, and Newave Semiconductor Corp. (Newave) in Q1 2002.   Balances as of September 26, 2004 and March 28, 2004 are summarized as follows:

	Sep. 26, 2004
(in thousands)	Gross assets		Accumulated amortization			Net assets
Goodwill	$	56,232	$	—		$	56,232
Identified intangible assets:
Existing technology	28,837		(3,523		)	25,314
Trademark	2,240		(1,090		)	1,150
Customer relationship	3,922		(796		)	3,126
Non-compete agreement	2,958		(1,173		)	1,785
Other	136		(80		)	56
Subtotal, identified intangible assets	38,093		(6,662		)	31,431
Total goodwill and identified intangible assets	$	94,325	$	(6,662	)	$	87,663

	Mar. 28, 2004
(in thousands)	Gross assets		Accumulated amortization			Net assets
Goodwill	$	40,218	$	—		$	40,218
Identified intangible assets:
Existing technology	8,986		(1,570		)	7,416
Trademark	2,240		(930		)	1,310
Customer relationship	3,452		(403		)	3,049
Non-compete agreements	1,625		(834		)	791
Other	63		(63		)	—
Subtotal, identified intangible assets	16,366		(3,800		)	12,566
Total goodwill and identified intangible assets	$	56,584	$	(3,800	)	$	52,784

Amortization expense for identified intangibles is summarized below:

	Three months ended		Six months ended
(in thousands)	Sep. 26, 2004	Sep. 28, 2003	Sep. 26, 2004	Sep. 28, 2003
Existing technology	1,116	289	1,953	523
Customer relationship	197	58	394	58
Trademark	80	80	160	162
Non-compete agreements	190	—	339	—
Other identified intangibles	6	59	16	59
Total	1,589	486	2,862	802

8

Based on the identified intangible assets recorded at September 26, 2004, the future amortization expense of identified intangibles for the next five fiscal years and thereafter is as follows (in thousands):

Year ending March,
Remainder of FY 2005	$	3,172
2006	6,347
2007	6,189
2008	5,612
2009	4,033
Thereafter	6,078
Total	$	31,431

Note 9

Comprehensive Income (Loss)

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

	Three months ended					Six months ended
(in thousands)	Sep. 26, 2004		Sep. 28, 2003			Sep. 26, 2004			Sep. 28, 2003
Net income (loss)	$	8,853	$	1,150		$	3,806		$	(3,602	)
Currency translation adjustments	49		388			180			809
Change in unrealized gain (loss) on derivatives, net of taxes	—		—			—			(31		)
Change in net unrealized gain (loss) on investments, net of taxes	1,106		(4,109		)	(3,524		)	(2,570		)
Comprehensive income (loss)	$	10,008	$	(2,571	)	$	462		$	(5,394	)

The components of accumulated other comprehensive income were as follows:

(in thousands)	Sep. 26, 2004			Mar. 28, 2004
Cumulative translation adjustments	$	962		$	782
Unrealized gain (loss) on investments	(833		)	2,691
Total accumulated other comprehensive income	$	129		$	3,473

Note 10

Asset Impairment

During Q2 and Q1 2005, the Company recorded gains of $1.6 million and $0.2 million, respectively, related to the sales of land and equipment related to its closed Salinas facility, which had been impaired and reclassified as assets held for sale during Q3 2002.  As the impairment charge in fiscal 2002 was included in the Cost of Goods Sold section, the gains on the sales of the related land and equipment are also included in that section in accordance with FAS 144.

Note 11

Derivative Instruments

As a result of its significant international operations, sales and purchase transactions, the Company is subject to risks associated with fluctuating currency exchange rates. The Company generally uses derivative financial instruments to hedge these risks when instruments are available and cost effective in an attempt to minimize the impact of currency 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 significant foreign currency exchange exposures and related hedging programs are described below.

Forecasted transactions.    Historically, the Company has had foreign currency exposure related to its revenues in Japan, which were generally yen-denominated.  With few exceptions, all other revenue was (and continues to be) US dollar-based.  In fiscal 2003, the Company began offering its products in Japan denominated in US dollars and in yen.  By the end of fiscal 2004, the Company had significantly transitioned its revenue in Japan from yen-based to US dollar-based, and had reduced its yen-based revenue exposure to a level that approximates its local yen-denominated operating expenses.   As a result, the Company changed its functional currency in Japan to US Dollars.  Thus, the Company has essentially eliminated the need for revenue hedging.  There were no forecasted hedges executed during Q2 2005 and Q2 2004 or the six months then ended.

9

The Company reviews all of its currency exposures from time to time and may decide to enter into 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 effectiveness is measured on at least a quarterly basis with the effective portion of the contracts’ gains and losses recorded as other comprehensive income until the forecasted transactions occur.

Firm commitments.    The Company uses currency forward contracts to hedge certain foreign currency purchase commitments, primarily denominated 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. There were no fair value hedges executed during Q2 2005 and Q2 2004 or the six months then ended.

Balance sheet exposures.    The Company also utilizes currency forward contracts to hedge currency 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. An immaterial amount of net gains and losses were included in earnings during Q2 2005 and Q2 2004 and the six months then ended.

Besides foreign exchange rate exposure, the Company’s cash and investment portfolio are subject to the risks associated with fluctuations in interest rates and equity market prices, respectively.  While the Company’s policies allow for the use of derivative financial instruments to hedge the fair values of such investments, the Company has yet to enter into this type of hedge.

Note 12

Industry Segments

The Company operates in two segments: (1) Communications and Timing Products and (2) SRAMs.  The Communications and Timing Products segment includes network search engines, content inspection engines, integrated communications processors, FIFOs, multi-ports, flow control management devices, telecommunications products, clock management products and high-performance logic.  The SRAMs segment consists of high-speed SRAMs.

The tables below provide information about these segments for the three and six month periods ended September 26, 2004 and September 28, 2003:

Revenues by segment

	Three months ended				Six months ended
(in thousands)	Sep. 26, 2004		Sep. 28, 2003		Sep. 26, 2004		Sep. 28, 2003
Communications and Timing Products	$	79,321	$	68,183	$	164,868	$	140,043
SRAMs	17,350		12,594		33,110		23,779
Total consolidated revenues	$	96,671	$	80,777	$	197,978	$	163,822

Income (Loss) by segment

	Three months ended						Six months ended
(in thousands)	Sep. 26, 2004			Sep. 28, 2003			Sep. 26, 2004			Sep. 28, 2003
Communications and Timing Products	$	10,222		$	3,999		$	24,392		$	5,484
SRAMs	(2,833		)	(7,579		)	(6,447		)	(16,881		)
Restructuring and asset impairment	—			(752		)	(677		)	(1,333		)
Amortization of intangible assets	(1,589		)	(486		)	(2,862		)	(802		)
Amortization of deferred stock-based compensation	(88		)	(359		)	(367		)	(721		)
Facility closure costs and other	1,541			(283		)	1,555			(577		)
Acquired in-process research and development	—			(264		)	(1,736		)	(264		)
Acquisition related costs	(494		)	—			(1,068		)	—
Gain (loss) on equity investments	—			3,151			(12,831		)	3,151
Interest income and other	2,824			3,142			5,329			7,366
Interest expense	(26		)	(118		)	(73		)	(210		)
Income (loss) before income taxes	$	9,557		$	451		$	5,215		$	(4,787	)

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Note 13

Guarantees

The Company indemnifies certain customers, distributors, and subcontractors for attorney fees and damages awarded against these parties in certain circumstances in which the Company’s products are alleged to infringe third party intellectual property rights, including patents, registered trademarks, or copyrights. The terms of the Company’s indemnification obligations are generally perpetual from the effective date of the agreement. In certain cases, there are limits on and exceptions to the Company’s potential liability for indemnification relating to intellectual property infringement claims. The Company cannot estimate the amount of potential future payments, if any, that we might be required to make as a result of these agreements. The Company has not paid any claim or been required to defend any claim related to our indemnification obligations, and accordingly, the Company has not accrued any amounts for our indemnification obligations. However, there can be no assurances that the Company will not have any future financial exposure under these indemnification obligations.

The Company maintains a reserve for obligations it incurs under its product warranty program. The standard warranty period offered is one year, though in certain instances the warranty period may be extended, mostly to two years.  Management estimates the fair value of its warranty liability based on actual past warranty claims experience, its policies regarding customer warranty returns and other estimates about the timing and disposition of product returned under the program.  The related reserve was $1.0 million and $0.5 million, as of September 26, 2004 and March 28, 2004, respectively.

Note 14

Subsequent Event

The Company announced in October 2004 that its Board of Directors has approved a stock repurchase program for the repurchase of up to $50 million of its Common Stock. Repurchases under the Company’s stock repurchase program may be made from time to time in the open market and in negotiated transactions, including block transactions or accelerated stock repurchase transactions, at times and at prices considered appropriate by the Company. The repurchase program is effective immediately and may be discontinued at any time.

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

All references are to our fiscal quarters ended September 26, 2004 (Q2 2005), June 27, 2004 (Q1 2005), March 28, 2004 (Q4 2004) and September 28, 2003 (Q2 2004), 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; intellectual property matters; 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.  Unless otherwise required by law, we undertake no obligation to publicly revise these statements for future events or new information after the date of this Report on Form 10-Q.

Forward-looking statements, which are generally identified by words such as “anticipates,” “expects,” “plans,” and similar terms, include statements related to revenues and gross profit, research and development activities, selling, general, and administrative expenses, intangible expenses, 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.

Critical Accounting Policies and Estimates

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.  The preparation of such statements requires us to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period and the reported amounts of assets and liabilities as of the date of the financial statements.  Our estimates are based on historical experience and other assumptions that we consider to be appropriate in the circumstances.  However, actual future results may vary from our estimates.

We believe that the following accounting policies are “critical” as defined by the Securities and Exchange Commission, in that they are both highly important to the portrayal of our financial condition and results, and require difficult management judgments and assumptions about matters that are inherently uncertain.  We also have other important policies, including those related to revenue recognition and concentration of credit risk. However, these policies do not meet the definition of critical accounting policies because they do not generally require us to make estimates or judgments that are difficult or subjective.  These policies are discussed in the Notes to the Consolidated Financial Statements, which are included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 28, 2004.

Income Taxes.    We account for income taxes under an asset and liability approach that requires the expected future tax consequences of temporary differences between book and tax bases of assets and liabilities be recognized as deferred tax assets and liabilities. Generally accepted accounting principles require us to evaluate the realizability of our net deferred tax assets on an ongoing basis. A valuation allowance is recorded to reduce the net deferred tax assets to an amount that will more likely than not be realized. Accordingly, we consider various tax planning strategies, forecasts of future taxable income and our most recent operating results in assessing the need for a valuation allowance. In the consideration of the realizability of net deferred tax assets, recent results must be given substantially more weight than any projections of future profitability.  In the fourth quarter of fiscal 2003, under applicable accounting principles, we could not conclude that it was more likely than not that we would realize value for our net deferred tax assets.  Accordingly, we established a valuation allowance equal to 100% of the amount of these assets.    We reassess the requirement for the valuation allowance on an ongoing basis.

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In addition, we record liabilities related to income tax contingencies.  Determining these liabilities requires us to make significant estimates and judgments as to whether, and to what extent, additional taxes will be due based on potential tax audit issues in the U.S. and other tax jurisdictions throughout the world.   Our estimates are based on the outcomes of our previous audits, as well as the precedents set in cases in which others have taken similar tax positions to those taken by the Company.   If we later determine that our exposure is lower or that the liability is not sufficient to cover our revised expectations, we adjust the liability and affect a related change in our tax provision during the period in which we make such determination.

Inventories.    Inventories are recorded at the lower of standard cost (which generally approximates actual cost on a first-in, first-out basis) or market value.  We record reserves for obsolete and excess inventory based on our forecasts of demand over specific future time horizons. We also record reserves to value our inventory at the lower of cost or market value, which rely on forecasts of average selling prices (ASPs) in future periods.  Actual market conditions, demand, and pricing levels in the volatile semiconductor markets that we serve may vary from our forecasts, potentially impacting our inventory reserves and resulting in material impacts on our gross margin.

Valuation of Long-Lived Assets and Goodwill.    We own and operate our own manufacturing facilities, as further described in Part I of our Annual Report on Form 10-K for the fiscal year ended March 28, 2004.  We have also acquired certain businesses and product portfolios in recent years.   As a result we have significant property, plant and equipment, goodwill and other intangible assets.    We evaluate these items for impairment on an annual basis, or sooner, if events or changes in circumstances indicate that carrying values may not be recoverable.   Triggering events for impairment reviews may include adverse industry or economic trends, restructuring actions, lowered projections of profitability, or a sustained decline in our market capitalization to below book value.   Evaluations of possible impairment and, if applicable, adjustments to carrying values, require us to estimate, among other factors, future cash flows, useful lives and fair market values of our reporting units and assets. Actual results may vary from our expectations.  We recorded asset impairment charges of $121.4 million and $17.4 million in fiscal 2003 and 2002, respectively.

RESULTS OF OPERATIONS

Revenues (Q2 2005 compared to Q2 2004).    Our revenues for Q2 2005 were $96.7 million, an increase of $15.9 million or 19.7% compared to the corresponding quarter of the previous year, as demand improved in the wireless communications and enterprise networking markets that we serve.   Overall units sold were down slightly, from 52.0 million units in Q2 2004 to 50.3 million units in Q2 2005.  In addition, as a result of favorable changes in the mix of product sold and price increases in certain product categories such as SRAM, our average selling price per unit (ASP) for our products increased by approximately 24% when compared to Q2 2004.

Revenues for our Communications and Timing Products segment (which includes network search engines (NSEs), FIFOs, multiports, and flow control management devices; communications applications-specific standard products (ASSPs); and high-performance logic and timing products) increased by $11.1 million or 16.3%, while revenues for our SRAM segment increased by $4.8 million or 37.8% as compared to Q2 2004.   Units sold were flat in the Communications and Timing Products segment, while units sold were down by 19.6% in the SRAM segment as compared to Q2 2004.  Overall ASPs in each of our two product segments increased, as we generally experienced a more favorable mix shift to higher performance and/or higher density products within our product divisions, as well as realizing the effects of higher market price levels within our SRAM segment.

When compared to the same quarter one year ago:

•Revenues in the Americas increased at the highest year-over-year rate, rising 40.4%;

•Revenues in Europe also showed strong growth in Q2 2005, growing 34.9%;

•Revenues in Japan increased by 21.9% in Q2 2005; and

•Revenues within the APAC region decreased by 2.0%.

As a result, the Americas and Europe grew to represent notably higher percentages of overall revenue, while the APAC region correspondingly declined.  In part, these shifts in geographic share reflect changes in either mix of product sold, or the supply chain decisions being made by certain of our key customers.

Revenues (Q2 2005 compared to Q1 2005).   Our revenues for Q2 2005 were sequentially lower by $4.6 million or 4.6%, as units sold declined by 6.4%.  We experienced somewhat weaker demand conditions across most of our product families, resulting in lower unit sales for each of our product divisions.   In part, we attribute these weak business conditions and order rates to excess inventory levels at our customers serving the enterprise networking and wireless infrastructure equipment markets.  The lower unit sales were slightly offset by a small improvement in ASPs, due to better SRAM pricing and a favorable shift in our mix of products sold within each product division.

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Revenues for our Communications and Timing Products segment decreased sequentially by $6.2 million or 7.3%, driven mainly by a 5.6% decrease in units sold as ASPs were virtually flat.  Revenues from the SRAM segment increased sequentially by $1.6 million or 10.1%, as a significant increase in ASPs offset a moderate decrease in units sold.

During Q2 2005, consistent with the year-over-year discussion above, revenues shifted away from the APAC region, which fell to represent only about one-third of our total revenue for the first time since early fiscal 2004.

Revenues (First six months of fiscal 2005 compared to first six months of fiscal 2004).   Our revenues year-to-date for fiscal 2005 were $198.0 million compared with $163.8 million for the first six months of fiscal 2004, an increase of $34.2 million, or 20.8%.

Within our Communications and Timing Products segment, revenues increased by $24.8 million or 17.7%, on increases in both unit sales and ASPs which were higher mostly due to product mix.  Within our SRAM segment, revenues increased by $9.3 million or 39.2% as a slight decrease in units sales was more than offset by a significant increase in ASPs both at the device level and due to product mix.

Revenues (recent trends and outlook).  During the second fiscal quarter of 2005, we began to see a weakening in customer order patterns, after signs of strength over the past few quarters in the communications markets that we serve.  These weaker bookings translated into lower levels of backlog entering Q3 2005.  In addition, during Q2 2005, it gradually became apparent that market prices for SRAM products had peaked, and by the end of the quarter we were forecasting that much of the recent strength in SRAM prices would reverse during Q3 2005.  Considering this recent weakness in bookings, backlog, and expected near-term pricing, we are taking a cautious view on the prospects for sequential revenue growth from Q2 2005 to Q3 2005.

Gross profit (Q2 2005 compared to Q2 2004).  Gross profit for Q2 2005 was $50.0 million, an increase of $11.4 million compared to the $38.6 million recorded in Q2 2004.  Our gross profit margin percentage for Q2 2005 was 51.7% compared to 47.8% for Q2 2004.   The improvement in gross margin is due primarily to:

•The incremental gross margin associated with higher revenues and better utilization of our manufacturing infrastructure (as production output at our Hillsboro Fab increased to 27.1 thousand wafers in Q2 2005, up from 20.8 thousand wafers in Q2 2004);

•The improved pricing environment for SRAM products.  Adjusting for changes in mix, we estimate that SRAM prices increased by almost 25% year-over-year;

•Cost benefits associated with transitioning a higher proportion (58% in Q2 2005 versus 31% in Q2 2004) of our internal wafer production to 0.18 micron and finer-geometry wafers; and

•A $1.6 million gain on the sale of land and equipment related to our closed Salinas, California water fabrication facility, which was impaired during Q3 2002

These beneficial impacts on gross margin were only partially offset by higher inventory reserves in Q2 2005 vs. Q2 2004 (primarily lower of cost or market (LCM) reserves related to expected SRAM price declines in Q3 2005).  Finally, gross margins did not benefit by selling inventory previously reserved as excess in either Q2 2005 or Q2 2004.

Gross profit (Q2 2005 compared to Q1 2005). Gross profit for Q2 2005 was down sequentially by $3.2 million, from $53.2 million in Q1 2005 to $50.0 million in Q2 2005. Our gross profit margin percentage also decreased from 52.5% in Q1 2005 to 51.7% in Q2 2005.   The largest drivers of the decrease in gross profit in Q2 2005 were the decrease in revenues and the additional inventory reserves required (primarily LCM reserves associated with SRAM, as described above, as compared to a decrease in reserve requirements in Q1 2005, causing an overall $3.0 million difference).  Overall manufacturing spending was essentially flat with the prior quarter, primarily as a result of the gain on the sale of the Salinas land and equipment described above.  Partially offsetting the downward margin pressures were improved pricing on SRAM products sold in Q2 2005 and continued high utilization of our manufacturing facilities. Production output at our Hillsboro Fab increased 6.6% to 27.1 thousand wafers in Q2 2005, up from 25.4 thousand in Q1 2005.

Gross Profit (first six months of 2005 compared to the first six months of 2004). Gross profit for the first six months of 2005 increased to $103.2 million from $72.9 million in the first six months of 2004.  Similarly, gross profit margin increased to 52.1% for the first six months of 2005 versus 44.5% for the first six months of 2004.  As discussed above, the increase in gross profit in the first six months of 2005 was primarily driven by the significant increase in revenues, improved manufacturing utilization, higher proportion of 0.18 micron and finer geometry wafers, increased SRAM pricing, and lower LCM inventory reserve requirements.   In the first six months of 2004, gross profit benefited from the sale of approximately $2.0 million of previously reserved inventory versus no related benefit in the first six months of 2005.

Considering the weaker business conditions that appear to have developed throughout the industry in Q2 2005, and the increased uncertainty in the near-term outlook, we are planning to lower production levels in Q3 2005 so as to better align our inventory position with the current level of demand.  The resulting lower manufacturing utilization, combined with anticipated pricing declines (particularly for SRAM products), is expected to result in lower gross profit margin in Q3 2005.

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Research and development.    For Q2 2005, research and development (R&D) expenses were $25.4 million, a $0.3 million or 1.0% decrease from Q2 2004.  Labor related spending was higher, primarily due to increased headcount and retention costs in connection with the ZettaCom and Internet Machines Corporation (IMC) transactions, higher performance-tied personnel costs, and salary increases implemented early in fiscal 2005.  These amounts were more than offset by lower spending on outside design services and lower photomask and equipment related expenses.

R&D expenses decreased by $0.6 million in Q2 2005 from $26.0 million in Q1 2005.  The sequential decrease is primarily attributable to lower personnel related costs, which were partially offset by higher allocations of manufacturing costs to development activities.

For the first six months of fiscal 2005, R&D spending increased by $0.4 million compared to the same period in fiscal 2004, mostly due to higher labor-related spending as noted above in the quarterly comparison of Q2 2005 to Q2 2004.

We currently expect that R&D spending in Q3 2005 will increase slightly in comparison to Q2 2005.

Selling, general and administrative.   For Q2 2005, selling, general, and administrative (SG&A) expenses were $17.8 million, a $0.5 million or 2.8% decrease from Q2 2004.  The decrease was primarily due to lower equipment depreciation costs and lower bad debt reserve requirements.  Salary increases implemented in early fiscal 2005 and higher performance-tied personnel costs were offset by lower severance costs leaving labor costs essentially flat.

SG&A expenses decreased by $1.6 million in Q2 2005 from $19.4 million in Q1 2005.  The decrease is primarily attributable to seasonably lower labor-related costs, lower labor-related benefits, lower spending on outside services and lower bad debt reserve requirements.

For the first six months of fiscal 2005, SG&A spending increased by $0.5 million compared to the same period in fiscal 2004.  The increase is primarily related to salary increases implemented in early fiscal 2005, higher performance-tied personnel costs  recorded in relation to the improved financial results in the current fiscal year partially offset by lower equipment depreciation costs and lower bad debt reserve requirements.

We currently expect that SG&A spending in Q3 2005 will increase slightly in comparison to Q2 2005.

Acquired in-process research and development.    During Q1 2005, in connection with our acquisition of ZettaCom, we recorded a $1.7 million charge for acquired in-process research and development (IPR&D).  The allocation of the purchase price to IPR&D was determined by identifying technologies that had not attained technological feasibility and that did not have future alternative uses.

Gain (loss) on equity investments.    During Q1 2005, we recorded an impairment of $12.8 million related to our investment in NetLogic Microsystems (NetLogic).   Shortly after the end of Q1 2005, NetLogic completed its initial public offering (IPO) at an offering price of $12 per share.  We were included as a selling stockholder in connection with the offering. The IPO pricing, less related commissions, implied that the investment was worth less than its carrying value.  Based on the relative magnitude of the decline in value, we concluded that there was an other-than-temporary impairment of the investment at June 27, 2004. Accordingly,  we recorded an impairment charge to adjust the carrying value down to its estimated net realizable value.  During Q2 2005, we completed the sale of our investment and realized essentially the same proceeds utilized to calculate the initial impairment charge. During Q2 2004, the Company sold its remaining shares of PMC Sierra (PMC).  In connection with the sale, the Company recorded a net gain of $3.2 million.

Interest income and other, net.    In Q2 2005, interest income and other, net, was $2.8 million, a decrease of $0.3 million compared to Q2 2004.  The decrease was primarily due to lower capital gains in Q2 2005 along with lower interest income in Q2 2005 related to lower average interest rates in our investment portfolio, as the proceeds of maturing investments were reinvested in a lower interest rate environment.

Provision/Benefit for income taxes.   The tax provision of $0.7 million for Q2 2005 was recorded to cover projected current worldwide income tax expense.   The tax provision recorded does not reflect any projected change in net deferred taxes, as we continue to maintain the position that we cannot conclude that it is more likely than not that we will be able to utilize our deferred tax assets in the foreseeable future.

Liquidity and Capital Resources

Our cash and marketable securities were $599.8 million at September 26, 2004, a decrease of $8.4 million compared to March 28, 2004. There was no debt outstanding as of September 26, 2004.

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Net cash provided by operating activities was $40.4 million for the first six months of fiscal 2005, compared to $36.9 million for the same period of fiscal 2004.   During the first six months of fiscal 2005, we recorded net income of $3.8 million as compared to a net loss of $3.6 million in the same period of the prior year.    Non-cash adjustments were significantly higher in the first six months of fiscal 2005, including those related to:

•Our other-than-temporary equity investment impairment charge of $12.8 million;

•Acquisition related costs, which were higher by $3.5 million primarily as a result of higher in-process R&D charges by $1.5 million and higher acquisition related intangible amortization; and

•Depreciation, which was higher by $1.4 million as a result of capital expenditures over the past year to ramp manufacturing capacity.

Net sources of cash related to working capital related items decreased by $21.1 million in the first six months of 2005 as compared to the same period of fiscal 2004.  Working capital items consuming relatively more cash the first six months of fiscal 2005 included:

•An increase in inventories of $10.8 million as compared to a reduction of $7.8 million in the year ago period as we selectively grew our inventory levels to meet anticipated customer demand;

•Relatively higher increases in accounts receivable by $2.8 million as our revenues were higher during the first half of fiscal 2005 compared to 2004; and

•Relatively lower decreases in prepayments and other assets by $8.6 million, primarily as a result of the repayment of approximately $5.5 million related to a distributor financing arrangement in Q1 2004 which did not recur in 2005.

The above factors were partially offset by other working capital items that provided relatively more cash in the first six months of fiscal 2005, including:

•An increase in  deferred income on shipments to distributors during fiscal 2005 of $3.2 million compared to a decrease of $1.8 million in fiscal 2004 generated $5.1 million more cash as distributors added more inventory in 2005 compared to the same period in 2004;

•Relatively higher (by $2.0 million) increases in accrued compensation and related expenses in the current period in connection with the higher performance-related compensation from improved financial results; and

•An increase in accounts payable during fiscal 2005 compared to a decrease in fiscal 2004, generating $2.3 million more net cash, as business volumes were relatively higher in the current period.

Our investing activities provided $1.0 million of cash in the first six months of fiscal 2005 as compared to a use of cash of $8.8 million in the first six months of fiscal 2004.  In the first six months of fiscal 2005, our sales of short-term investments, net of purchases, were $48.0 million higher than in the comparable period of fiscal 2004.  In the first six months of fiscal 2005, our acquisition related expenditures were significantly higher as we paid $34.4 million in connection with the acquisition of ZettaCom.  Other than the ZettaCom transaction, technology acquisitions consumed $2.1 million in cash in the first half of 2005, down from $8.1 million in 2004.  Finally, capital expenditures in the first six months of fiscal 2005 were higher by $9.9 million as we purchased new equipment to increase our manufacturing capacity.

Our financing activities provided $0.6 million of cash in the first six months of fiscal 2005 as compared to $4.0 million in the comparable period of fiscal 2004.   Proceeds from issuances of common stock were essentially flat; however, payments on capital leases increased by $3.5 million in connection with early buyout options which were exercised in the period.

We anticipate capital expenditures of approximately $45-50 million during fiscal 2005, to be financed through cash generated from operations and existing cash and investments.   This estimate includes $27.0 million in capital expenditures during the first six months of fiscal 2005.  In addition, we announced in October 2004 that the Board of Directors has approved a stock repurchase program for the repurchase of up to $50 million of its Common Stock. Repurchases under the Company’s stock repurchase program may be made from time to time in the open market and in negotiated transactions, including block transactions or accelerated stock repurchase transactions, at times and at prices considered appropriate by the Company. The repurchase program is effective immediately and may be discontinued at any time.

We believe that existing cash and investment balances, together with cash flows from operations, will be sufficient to meet our working capital, capital expenditure, and common stock repurchase needs through remainder of fiscal 2005 and 2006. We may choose to investigate other financing alternatives; however, we cannot be certain that additional financing will be available on satisfactory terms.

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Factors Affecting Future Results

Our operating results can fluctuate dramatically.    We recorded net income of $6.4 million in fiscal 2004 after recording losses of $277.9 million and $46.2 million in fiscal 2003 and 2002, respectively. Fluctuations in operating results can result from a wide variety of factors, including:

•The cyclicality of the semiconductor industry and industry-wide wafer processing capacity;

•Changes in demand for our products and in the markets we and our customers serve;

•The success and timing of new product and process technology announcements and introductions from us or our competitors;

•Potential loss of market share among a concentrated group of customers;

•Competitive pricing pressures;

•Changes in the demand for and mix of products sold;

•Complex manufacturing and logistics operations;

•Availability and costs of raw materials, and of foundry and other manufacturing services;

•Costs associated with other events, such as intellectual property disputes, or other litigation; and

•Political and economic conditions in various geographic areas.

In addition, many of these factors also impact the recoverability of the carrying value of certain manufacturing, tax, goodwill, and other tangible and intangible assets. As business conditions change, future write-downs or abandonment of these assets may occur.   For example, in Q1 2005, we recorded an impairment charge of $12.8 million for our investment in NetLogic.

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 could be harmed.

The cyclicality of the semiconductor industry exacerbates the volatility of our operating results.  The semiconductor industry is highly cyclical. Substantial changes in demand for our products have occurred rapidly and suddenly in the past. In addition, market conditions characterized by excess supply relative to demand and resulting pricing declines have also occurred in the past. Significant shifts in demand for our products and pricing declines resulting from excess supply may occur in the future. Large and rapid swings in demand and pricing for our products can result in significantly lower revenues and underutilization of our fixed cost infrastructure, both of which would cause material fluctuations in our gross margins and our operating results.

Demand for our products depends primarily on demand in the communications markets.    The majority of our products are incorporated into customers’ systems in enterprise/carrier class network, wireless infrastructure and access network applications. A smaller percentage of our products also 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, as most recently evidenced by conditions in fiscal 2003 and 2002.

Our results are dependent on the success of new products.    New products and wafer processing technology will continue to require significant R&D expenditures. If we are unable to develop, produce and successfully market 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. In addition, our future revenue growth is also partially dependent on our ability to penetrate new markets, where we have limited experience and where competitors are already entrenched. Even if we are able to develop, produce and successfully market new products in a timely manner, such new products may not achieve market acceptance.

We are dependent on a concentrated group of customers for a significant part of our revenues.    We are dependent on a limited number of original equipment manufacturers (OEMs) as our end-customers, and our future results depend significantly on the strategic relationships we have formed with them. If these relationships were to diminish, and if these customers were to develop their own solutions or adopt a competitor’s solution instead of buying our products, our results could be adversely affected. For example, any diminished relationship with Cisco or other key customers could adversely affect our results. While direct sales to Cisco are not significant, we estimate that when all channels of distribution are considered, Cisco represented approximately 20-25% of our total revenues for fiscal 2004.

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Many of our end-customer OEMs have outsourced their manufacturing to a concentrated group of global electronic manufacturing service providers (EMSs) who then buy product directly from us on behalf of the OEM. EMSs have achieved greater autonomy in the design win, product qualification and product purchasing decisions, especially for commodity products. Furthermore, these EMSs have generally been centralizing their global procurement processes. This has had the effect of concentrating a significant percentage of our revenue with a small number of companies. Competition for the business of these EMSs is intense and there is no assurance we can remain competitive and retain our existing market share with these customers. If these companies were to allocate a higher share of commodity or second-source business to our competitors instead of buying our products, our results would be adversely affected. Furthermore, as these EMSs represent a growing percentage of our overall business, our concentration of credit and other business risks with these customers has increased. Competition among global EMSs is intense, they operate on extremely thin margins, and their financial condition, on average, declined significantly during the industry downturn in fiscal 2001- 2002.  If any one or more of these global EMSs were to file for bankruptcy or otherwise experience significantly adverse financial conditions, our business would be adversely impacted as well.  During fiscal 2004, one EMS, Celestica, accounted for approximately 14% of our revenue and represented approximately 21% of our accounts receivable as of March 28, 2004.

Finally, we utilize a relatively small number of global and regional distributors around the world, who also buy product directly from us on behalf of their customers. If our business relationships were to diminish or any one or more of these global distributors were to file for bankruptcy or otherwise experience significantly adverse financial conditions, our business could be adversely impacted. One distributor, Avnet represented 11% of revenues for fiscal 2004.

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, quality problems, and possibly lost revenue opportunities. While 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 transfers to other facilities and die size reduction efforts), and ramping production and installing new equipment at our facilities.

Substantially all of our revenues are derived from products manufactured at facilities which are exposed to the risk of natural disasters. We have a wafer fabrication facility in Hillsboro, Oregon, and assembly and test facilities in the Philippines and Malaysia. If we were unable to use our facilities, as a result of a natural disaster or otherwise, our operations would be materially adversely affected.  While we maintain certain levels of insurance against selected risks of business interruption, not all risks can be insured at a reasonable cost.  Even if we have purchased insurance, the adverse impact on our business, including both costs and lost revenue opportunities, could greatly exceed the amounts, if any, that we might recover from our insurers.

We are dependent upon electric power generated by public utilities where we operate our manufacturing facilities and we have periodically experienced electrical power interruptions. We maintain limited backup generating capability, but the amount of electric power that we can generate on our own is insufficient to fully operate these facilities, and prolonged power interruptions could have a significant adverse impact on our business.

Much of our manufacturing capability is relatively fixed in nature.   Much of our manufacturing cost structure remains fixed in nature and large and rapid swings in demand for our products can make it difficult to efficiently utilize this capacity on a consistent basis. Significant downturns, as we have most recently experienced in fiscal 2002-2003, will result in material under utilization of our manufacturing facilities while sudden upturns could leave us short of capacity and unable to capitalize on incremental revenue opportunities. These swings and the resulting under utilization of our manufacturing capacity or inability to procure sufficient capacity to meet end customer demand for our products will cause material fluctuations in the gross margins we report, and could have a material adverse affect thereon.

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We build most of our products based on estimated demand forecasts.   Demand for our products can change rapidly and without advance notice. Demand can also be affected by changes in our customers’ levels of inventory and differences in the timing and pattern of orders between them and their end customers.  If demand forecasts are inaccurate or change suddenly, we may me be left with large amounts of unsold products, may not be able to fill all orders in the short term and may not be able to accurately forecast capacity utilization or make optimal investment and other business decisions. This can leave us holding excess and obsolete inventory or unable to meet customer short-term demands, either of which can have an adverse impact on our operating results.

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 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 materially adversely affected if we were unable to obtain adequate supplies of raw materials in a timely manner or if they were only available at uncompetitive prices.

Although we currently fabricate most of our wafers internally, we are dependent on outside foundries for a small but growing portion of our wafer requirements.   Similarly, while we currently conduct most assembly and test operations internally, we also rely upon subcontractors for our incremental assembly requirements which can be significant. We expect to continue utilizing outside foundries and subcontractors to supplement our own production capacity. If there were significant increases in the costs of these services, or if foundry or back-end subcontractor capacity was not available or only available on long lead times due to capacity constraints or any failure on our part to adequately forecast the mix of product demand, our results would adversely affected.

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

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. 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 broad patent portfolios. Claims alleging infringement of intellectual property rights have been asserted against us and could be asserted against us in the future. These claims could result in our having to discontinue the use of certain processes; cease the manufacture, use and sale of infringing products; incur significant litigation costs and damages; and develop non-infringing technology.  Further, the inability to obtain a key license, or the failure to renew or renegotiate an existing license on favorable terms, could materially adversely affect our business.   As of September 26, 2004, we were in discussions to renegotiate one such existing license.

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

(percentage of total revenues)	First 6 months of Fiscal 2005		Twelve months of Fiscal 2004		Twelve months of Fiscal 2003
Americas	32	%	29	%	37	%
Asia Pacific	35	%	39	%	30	%
Japan	15	%	16	%	14	%
Europe	18	%	16	%	19	%
Total	100	%	100	%	100	%

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In addition, our assembly and test facilities in Malaysia and the Philippines, our design centers in Canada, China and Australia, and our foreign sales offices incur payroll, facility and other expenses in local currencies. Accordingly, movements in foreign currency exchange rates can impact our revenues and costs of goods sold, as well as both pricing and demand for our products. Our offshore sites and export sales are also subject to risks associated with foreign operations, including:

•political instability and acts of war or terrorism, which could disrupt our manufacturing and logistical activities;

•currency controls and fluctuations;

•changes in local economic conditions; and

•changes in tax laws, import and export controls, tariffs and freight rates.

Contract pricing for raw materials and equipment used in the fabrication and assembly processes, as well as for foundry and subcontract assembly services, can also be impacted by currency exchange rate fluctuations.

Finally, in support of our international operations, a portion of our cash and investment portfolio resides offshore.  At September 26, 2004, we had cash and investments of approximately $49 million invested overseas in accounts belonging to various IDT foreign operating entities.  While these amounts are primarily invested in US dollars, a portion is held in foreign currencies, and all offshore balances are exposed to local political, banking, currency control and other risks.

We depend on the ability of our personnel, raw materials, equipment and products to move reasonably unimpeded around the world.  Any political, military, world health or other issue which hinders this movement or restricts the import or export of materials could lead to significant business disruptions. Furthermore, any strike, economic failure, or other material disruption on the part of major airlines or other transportation companies could also adversely affect our ability to conduct business. If such disruptions result in cancellations of customer orders or contribute to a general decrease in economic activity or corporate spending on information technology, or directly or indirectly impact our marketing, manufacturing, financial and logistics functions our results of operations and financial condition could be materially adversely affected.

We are exposed to potential impairment charges on investments.     From time to time, we have made strategic investments in other companies, both public and private.  If the companies that we invest in are unable to execute their plans and succeed in their respective markets, we may not benefit from such investments, and we could potentially lose up to all of the amounts we invest.  In addition, we evaluate our portfolio, including non-marketable equity securities, on a regular basis to determine if impairments have occurred.  Impairment charges could have a material impact on our results of operations in any period.   For example, in Q1 2005, we recorded a $12.8 million other-than-temporary impairment charge in connection with our investment in NetLogic.

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 IDT, other semiconductor companies, or our customers. Stock price volatility may also result from product announcements by us or our competitors, or from changes in perceptions about the various types of products we manufacture and sell.   In addition, our stock price may fluctuate due to price and volume fluctuations in the stock market, especially in the technology sector.

We are dependent on key personnel.   Our performance is substantially dependent on the performance of our executive officers and key employees. The loss of the services of any of our executive officers, technical personnel or other key employees could adversely affect our business. In addition, our future success depends on our ability to successfully compete with other technology firms in attracting and retaining key technical and management personnel. If we are unable to identify and hire highly qualified technical and managerial personnel, our business could be harmed.

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We may have difficulty integrating acquired companies and technologies.    We acquired ZettaCom and certain assets from IMC in Q1 2005.  In addition, we acquired certain technologies from IBM in fiscal 2004.  We also acquired Newave and Solidum in fiscal 2002 and 2003, respectively, and we may pursue other acquisitions in the future. Failure to successfully integrate acquired companies and technologies into our business could adversely affect our results of operations. Integration risks and issues may include, but are not limited to, key personnel retention and assimilation, management distraction, technology development, and unexpected costs and liabilities, including goodwill, technology or other related intangible asset impairment charges.

Changes in generally accepted accounting principles regarding stock option accounting may adversely impact our reported operating results, our stock price and our competitiveness in the employee marketplace. Technology companies like ours have a history of using broad-based employee stock option programs to recruit, incentivize and retain their workforces in what can be a highly competitive employee marketplace. Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (SFAS 123) allows companies the choice of either using a fair value method of accounting for options, which would result in expense recognition for all options granted, or using an intrinsic value method, as prescribed by Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25), with a pro forma disclosure of the impact on net income (loss) of using the fair value option expense recognition method. We have elected to apply APB 25 and accordingly we generally do not recognize any expense with respect to employee stock options as long as such options are granted at exercise prices equal to the fair value of our common stock on the date of grant.

During March 2004, the FASB issued a proposed Statement, “Share-Based Payment, an amendment of FASB Statements No. 123 and 95”.  The statement proposes to eliminate the treatment for share-based transactions using APB 25 and generally would require share-based payments to employees be accounted for using a fair-value-based method and recognized as expenses in our statements of operations.  The proposed standard would require the modified prospective method be used, which would require that the fair value of new awards granted from the beginning of the year of adoption plus unvested awards at the date of adoption be expensed over the vesting term. In addition, the proposed statement encourages companies to use the “binomial” approach to value stock options, as opposed to the Black-Scholes option pricing model that we currently use for the fair value of our options under SFAS 123 disclosure provisions.

In October 2004, the FASB delayed the effective date of the proposed standard to apply for fiscal years beginning after June 15, 2005.  Should this proposed statement be finalized, it will have a significant adverse impact on our consolidated statement of operations, as we will be required to expense the fair value of our stock options rather than disclosing their impact on our consolidated results of operations within our footnotes in accordance with the disclosure provisions of SFAS 123. This will result in lower reported earnings per share which could negatively impact our future stock price, our access to the capital markets, and the effectiveness of current outstanding stock options in retaining key personnel. In addition, should the proposal be finalized, this could impact our ability or future practice of utilizing broad-based employee stock plans to attract, reward, and retain employees, which could also adversely impact our operations.

Our business is subject to changing regulation of corporate governance and public disclosure that has increased both our costs and the risk of noncompliance. Because our common stock is publicly traded, we are subject to certain rules and regulations of federal, state and financial market exchange entities charged with the protection of investors and the oversight of companies whose securities are publicly traded. These entities, including the Public Company Accounting Oversight Board, the SEC and NASDAQ, have recently issued new requirements and regulations and continue developing additional regulations and requirements in response to recent corporate scandals and laws enacted by Congress, most notably the Sarbanes-Oxley Act of 2002. Our efforts to comply with these new regulations have resulted in, and are likely to continue resulting in, increased general and administrative expenses and diversion of management time and attention from revenue-generating activities to compliance activities.

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In particular, our efforts to prepare to comply with Section 404 of the Sarbanes-Oxley Act and related regulations regarding our management’s required assessment of our internal control over financial reporting and our independent auditors’ attestation of that assessment has required, and continues to require, the commitment of significant financial and managerial resources.  Although management believes that ongoing efforts to improve our internal control over financial reporting will enable management to provide the required report, and our independent auditors to provide the required attestation, under Section 404 as of April 3, 2005, we can give no assurance that such efforts will be completed on a timely and successful basis to enable our management and independent auditors to provide the required report and attestation.

Moreover, because the new and modified laws, regulations and standards are subject to varying interpretations in many cases due to their lack of specificity, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions to our disclosure and governance practices.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our interest rate risk relates primarily to our investment portfolio, which consisted of $265.4 million in cash and cash equivalents and $334.4 million in short-term investments as of September 26, 2004.  By policy, we limit our exposure to longer-term investments, and a substantial majority of our investment portfolio has maturities of less than two years.  As a result of the relatively short duration of our portfolio, a hypothetical 10% change in interest rates would have an insignificant effect on our financial position, results of operations or cash flows.  We do not currently use derivative financial instruments in our investment portfolio.

By policy, we mitigate the credit risk to our investment portfolio through diversification and for, debt securities, adherence to high credit-rating standards.

At September 26, 2004, we had no outstanding debt.

We are exposed to foreign currency exchange rate risk as a result of international sales, assets and liabilities of foreign subsidiaries, local operating expenses of our foreign entities and capital purchases denominated in foreign currencies.  We use derivative financial instruments to help manage our foreign currency exchange exposures.  We do not enter in derivatives for trading purposes. We performed a sensitivity analysis for Q2 2005 and determined that a 10% change in the value of the U.S. dollar would have an insignificant near-term impact on our financial position, results of operations or cash flows.

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ITEM 4.   CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

At September 26, 2004, the end of the quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and the Company’s Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, the chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level.  There have been no significant changes in our internal controls over financial reporting during the Company’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II    OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On September 16, 2004, we held our 2004 Annual Meeting of Stockholders. On the record date, 106,118,610 shares of our Common Stock were outstanding and entitled to be voted. Tabulated proxies at the meeting represented 101,874,427 shares, or 96% of the total eligible. Voting results are summarized below:

Proposal I:  Election of one director;

Name	Votes For	Withheld
John C. Bolger	97,770,338	4,104,089

Proposal II:   To approve the adoption of the 2004 Equity Plan.

Votes For	Against	Abstained
55,449,101	28,046,955	18,378,371

Proposal III:   To ratify the selection of PricewaterhouseCoopers LLP as the Company’s independent accountants for the fiscal year ended April 3, 2005.

Votes For	Against	Abstained
100,048,945	1,765,203	60,279

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

(a)The following exhibits are filed herewith:

Exhibit number		Description
	10.25	2004 Equity Plan
	31.1	Certification of Chief Executive Officer as required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, dated November 3, 2004.
	31.2	Certification of Chief Financial Officer as required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, dated November 3, 2004.
	32.1	Certification of Chief Executive Officer as required by Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, dated November 3, 2004.
	32.2	Certification of Chief Financial Officer as required by Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, dated November 3, 2004.

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(b)Reports on Form 8-K:

Date Filed	Description
7/22/04	Financial Information for Integrated Device Technology, Inc. for the first quarter ended June 27, 2004, and forward looking statements relating to fiscal year 2005 as presented in a press release of July 22, 2004.
9/2/04	Financial Information for Integrated Device Technology, Inc. pertaining to the second quarter ending on September 26, 2004, as presented in a press release of September 2, 2004.

SIGNATURES

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.

	INTEGRATED DEVICE TECHNOLOGY, INC.
Date: November 3, 2004	/s/ GREGORY S. LANG
	Gregory S. Lang
	President and Chief Executive Officer (duly authorized officer)
Date: November 3, 2004	/s/ CLYDE R. HOSEIN
	Clyde R. Hosein
	Vice President, Chief Financial Officer (Principal Financial and Accounting Officer)

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EX-10.25

Exhibit 10.25

INTEGRATED DEVICE TECHNOLOGY, INC.
2004 EQUITY PLAN

ARTICLE 1

PURPOSE

The purpose of the Integrated Device Technology, Inc. 2004 Equity Plan (the “Plan”) is to promote the success and enhance the value of Integrated Device Technology, Inc. (the “Company”) by linking the personal interests of the members of the Board, Employees, and Consultants to those of Company stockholders and by providing such individuals with an incentive for outstanding performance to generate superior returns to Company stockholders.  The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of members of the Board, Employees, and Consultants upon whose judgment, interest, and special effort the successful conduct of the Company’s operation is largely dependent.

ARTICLE 2

DEFINITIONS AND CONSTRUCTION

Wherever the following terms are used in the Plan they shall have the meanings specified below, unless the context clearly indicates otherwise.  The singular pronoun shall include the plural where the context so indicates.

2.1“Award” means an Option, a Restricted Stock award, a Stock Appreciation Right award, a Performance Share award, a Performance Stock Unit award, a Restricted Stock Unit award, an Other Stock-Based Award, or a Performance-Based Award granted to a Participant pursuant to the Plan.

2.2“Award Agreement” means any written or electronic agreement, contract, or other instrument or document evidencing an Award.

2.3“Board” means the Board of Directors of the Company.

2.4“Change in Control” means and includes each of the following:

(a)The acquisition, directly or indirectly, by any “person” or “group” (as those terms are defined in Sections 3(a)(9), 13(d) and 14(d) of the Exchange Act and the rules thereunder) of “beneficial ownership” (as determined pursuant to Rule 13d-3 under the Exchange Act) of securities entitled to vote generally in the election of directors (“voting securities”) of the Company that represent 50% or more of the combined voting power of the Company’s then outstanding voting securities, other than

(i)An acquisition by a trustee or other fiduciary holding securities under any employee benefit plan (or related trust) sponsored or maintained by the Company or any person controlled by the Company or by any employee benefit plan (or related trust) sponsored or maintained by the Company or any person controlled by the Company, or

(ii)An acquisition of voting securities by the Company or a corporation owned, directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the stock of the Company, or

(iii)An acquisition of voting securities pursuant to a transaction described in Section 2.4(b) below that would not be a Change in Control under Section 2.4(b);

Notwithstanding the foregoing, the following event shall not constitute an “acquisition” by any person or group for purposes of this Section 2.4: an acquisition of the Company’s securities by the Company which causes the Company’s voting securities beneficially owned by a person or group to represent 50% or more of the combined voting power of the Company’s then outstanding voting securities; provided, however, that if a person or group shall become the beneficial owner of 50% or more of the combined voting power of the Company’s then outstanding voting securities by reason of share acquisitions by the Company as described above and shall, after such share acquisitions by the Company, become the beneficial owner of any additional voting securities of the Company, then such acquisition shall constitute a Change in Control; or

(b)The consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of the Company’s assets or (z) the acquisition of assets or stock of another entity, in each case other than a transaction:

(i)Which results in the Company’s voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the Company or the person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Company’s assets or otherwise succeeds to the business of the Company (the Company or such person, the “Successor Entity”)) directly or indirectly, at least a majority of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction, and

(ii)After which no person or group beneficially owns voting securities representing 50% or more of the combined voting power of the Successor Entity; provided, however, that no person or group shall be treated for purposes of this Section 2.4(b)(ii) as beneficially owning 50% or more of combined voting power of the Successor Entity solely as a result of the voting power held in the Company prior to the consummation of the transaction; or

(c)The Company’s stockholders approve a liquidation or dissolution of the Company.

The Committee shall have full and final authority, which shall be exercised in its discretion, to determine conclusively whether a Change in Control of the Company has occurred pursuant to the above definition, and the date of the occurrence of such Change in Control and any incidental matters relating thereto.

2.5“Code” means the Internal Revenue Code of 1986, as amended.

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2.6“Committee” means the committee of the Board described in Article 12.

2.7“Consultant” means any consultant, adviser or director if:

(a)The consultant, adviser or director renders bona fide services to the Company or any Subsidiary, including, without limitation service as a member of the board of directors of a Subsidiary;

(b)The services rendered by the consultant, adviser or director are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company’s securities; and

(c)The consultant, adviser or director is a natural person who has contracted directly with the Company to render such services.

2.8“Covered Employee” means an Employee who is, or could be, a “covered employee” within the meaning of Section 162(m) of the Code.

2.9“Disability”means that the Participant qualifies to receive long-term disability payments under the Company’s long-term disability insurance program, as it may be amended from time to time.

2.10“Effective Date” shall have the meaning set forth in Section 13.1.

2.11“Employee” means any officer or other employee (as defined in accordance with Section 3401(c) of the Code) of the Company or any Subsidiary.

2.12“Exchange Act” means the Securities Exchange Act of 1934, as amended.

2.13“Fair Market Value” means, as of any given date, the fair market value of a share of Stock on the immediately preceding date determined by such methods or procedures as may be established from time to time by the Committee.  Unless otherwise determined by the Committee, the Fair Market Value of a share of Stock as of any date shall be the closing trading price for a share of Stock as reported on the national securities exchange on which the Stock is then listed for the immediately preceding date or, if no such price is reported for that date, the closing trading price on the next preceding date for which a trading price was reported.

2.14“Full Value Award” means any Award other than an Option, SAR or other Award for which the Participant pays the intrinsic value (whether directly or by forgoing a right to receive a cash payment from the Company).

2.15“Hostile Takeover” means and includes each of the following:

(a)a transaction or series of related transactions pursuant to which a person or related group of persons, other than the Company or a person that directly or indirectly controls, is controlled by or is under common control with the Company, becomes the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of 25% or more of the Company’s

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outstanding voting stock pursuant to a tender or exchange offer that the Board does not recommend and that the stockholders of the Company accept; or

(b)during any period of two consecutive years, individuals who, at the beginning of such period, constitute the Board together with any new director(s) (other than a director designated by a person who shall have entered into an agreement with the Company to effect a transaction described in Section 2.4(a) or Section 2.4(b)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the two year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof.

2.16“Incentive Stock Option” means an Option that is intended to meet the requirements of Section 422 of the Code or any successor provision thereto.

2.17“Independent Director” means a member of the Board who is not an Employee of the Company.

2.18“Non-Employee Director” means a member of the Board who qualifies as a “Non-Employee Director” as defined in Rule 16b-3(b)(3) of the Exchange Act, or any successor definition adopted by the Board.

2.19“Non-Qualified Stock Option” means an Option that is not intended to be an Incentive Stock Option.

2.20“Option” means a right granted to a Participant pursuant to Article 5 of the Plan to purchase a specified number of shares of Stock at a specified price during specified time periods.  An Option may be either an Incentive Stock Option or a Non-Qualified Stock Option.

2.21“Other Stock-Based Award” means an Award granted or denominated in Stock or units of Stock pursuant to Section 8.4 of the Plan.

2.22“Participant” means any member of  the Board, Consultant or Employee.

2.23“Performance-Based Award” means an Award granted to selected Covered Employees pursuant to Articles 6 and 8, but which is subject to the terms and conditions set forth in Article 9.  All Performance-Based Awards are intended to qualify as Qualified Performance-Based Compensation.

2.24“Performance Bonus Award” has the meaning set forth in Section 8.5.

2.25“Performance Criteria” means the criteria that the Committee selects for purposes of establishing the Performance Goal or Performance Goals for a Participant for a Performance Period.  The Performance Criteria that will be used to establish Performance Goals are limited to the following: net earnings (either before or after interest, taxes, depreciation and amortization), economic value-added (as determined by the Committee), sales or revenue, net income (either before or after taxes), operating earnings, cash flow (including, but not limited to, operating cash flow and free cash flow), cash flow return on capital, return on net assets, return on stockholders’

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equity, return on assets, return on capital, stockholder returns, return on sales, gross or net profit margin, productivity, expense, margins, operating efficiency, customer satisfaction, working capital, earnings per share, price per share of Stock, and market share, any of which may be measured either in absolute terms or as compared to any incremental increase or as compared to results of a peer group.  The Committee shall, within the time prescribed by Section 162(m) of the Code, define in an objective fashion the manner of calculating the Performance Criteria it selects to use for such Performance Period for such Participant.

2.26“Performance Goals” means, for a Performance Period, the goals established in writing by the Committee for the Performance Period based upon the Performance Criteria.  Depending on the Performance Criteria used to establish such Performance Goals, the Performance Goals may be expressed in terms of overall Company performance or the performance of a division, business unit, or an individual.  The Committee, in its discretion, may, within the time prescribed by Section 162(m) of the Code, adjust or modify the calculation of Performance Goals for such Performance Period in order to prevent the dilution or enlargement of the rights of Participants (i) in the event of, or in anticipation of, any unusual or extraordinary corporate item, transaction, event, or development, or (ii) in recognition of, or in anticipation of, any other unusual or nonrecurring events affecting the Company, or the financial statements of the Company, or in response to, or in anticipation of, changes in applicable laws, regulations, accounting principles, or business conditions.

2.27“Performance Period” means the one or more periods of time, which may be of varying and overlapping durations, as the Committee may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to, and the payment of, a Performance-Based Award.

2.28“Performance Share” means a right granted to a Participant pursuant to Article 8, to receive Stock, the payment of which is contingent upon achieving certain performance goals established by the Committee.

2.29“Performance Stock Unit” means a right granted to a Participant pursuant to Article 8, to receive Stock, the payment of which is contingent upon achieving certain performance goals established by the Committee.

2.30“Plan” means this Integrated Device Technology, Inc. 2004 Equity Plan, as it may be amended from time to time.

2.31“Qualified Performance-Based Compensation” means any compensation that is intended to qualify as “qualified performance-based compensation” as described in Section 162(m)(4)(C) of the Code.

2.32“Restricted Stock” means Stock awarded to a Participant pursuant to Article 6 that is subject to certain restrictions and may be subject to risk of forfeiture.

2.33“Restricted Stock Unit” means an Award granted pursuant to Section 8.3.

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2.34“Stock” means the common stock of the Company, par value $0.001 per share, and such other securities of the Company that may be substituted for Stock pursuant to Article 11.

2.35“Stock Appreciation Right” or “SAR” means a right granted pursuant to Article 7 to receive a payment equal to the excess of the Fair Market Value of a specified number of shares of Stock on the date the SAR is exercised over the Fair Market Value on the date the SAR was granted as set forth in the applicable Award Agreement.

2.36“Subsidiary” means any corporation or other entity of which a majority of the outstanding voting stock or voting power is beneficially owned directly or indirectly by the Company.

ARTICLE 3

SHARES SUBJECT TO THE PLAN

3.1Number of Shares.

(a)Subject to Article 11 and Sections 3.1(b) and 3.4, the aggregate number of shares of Stock which may be issued or transferred pursuant to Awards under the Plan shall be 2,500,000 shares.

(b)Notwithstanding Section 3.1(a): (i) the Committee may adopt reasonable counting procedures to ensure appropriate counting, avoid double counting (as, for example, in the case of tandem or substitute awards), and make adjustments if the number of shares of Stock actually delivered differs from the number of shares previously counted in connection with an Award; (ii) shares of Stock that are potentially deliverable under any Award that expires or is canceled, forfeited, settled in cash or otherwise terminated without a delivery of such shares to the Participant will not be counted as issued or delivered under the Plan; (iii) shares of Stock that have been issued in connection with any Award (e.g., Restricted Stock) that is canceled, forfeited, or settled in cash such that those shares are returned to the Company will again be available for Awards; and (iv) shares of Stock withheld in payment of the exercise price or taxes relating to any Award and shares equal to the number surrendered in payment of any exercise price or taxes relating to any Award shall be deemed to constitute shares not delivered to the Participant and shall be deemed to be available for Awards under the Plan.  In addition, in the case of any Award granted in substitution for an award of a company or business acquired by the Company or a subsidiary or affiliate, shares of Stock issued or issuable in connection with such substitute Award shall not be counted against the number of shares reserved under the Plan, but shall be available under the Plan by virtue of the Company’s assumption of the plan or arrangement of the acquired company or business.  This Section 3.1 shall apply to the share limit imposed to conform to the regulations promulgated under the Code with respect to Incentive Stock Options only to the extent consistent with applicable regulations relating to Incentive Stock Options under the Code and no shares of Stock may again be optioned, granted or awarded if such action would cause an Incentive Stock Option to fail to qualify as an Incentive Stock Option under Section 422 of the Code.  Because shares will count against the number reserved in Section 3.1 upon delivery, the Committee may, subject to the share counting rules under this

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Section 3.1, determine that Awards may be outstanding that relate to a greater number of shares than the aggregate remaining available under the Plan, so long as Awards will not result in delivery and vesting of shares in excess of the number then available under the Plan.

3.2Stock Distributed.  Any Stock distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Stock, treasury Stock or Stock purchased on the open market.

3.3Limitation on Number of Shares Subject to Awards.  Notwithstanding any provision in the Plan to the contrary, and subject to Article 11, the maximum number of shares of Stock with respect to one or more Awards that may be granted to any one Participant during any fiscal year (measured from the date of any grant) shall be 1,000,000.

3.4Limitation on Full Value Awards.  Notwithstanding any provision in the Plan to the contrary, and subject to Article 11, the maximum number of shares of Stock that may be issued or transferred pursuant to Full Value Awards shall be 1,000,000.

ARTICLE 4

ELIGIBILITY AND PARTICIPATION

4.1Eligibility.

(a)General.  Persons eligible to participate in this Plan include Employees, Consultants and all members of the Board, as determined by the Committee.

(b)Foreign Participants.  In order to assure the viability of Awards granted to Participants employed in foreign countries, the Committee may provide for such special terms as it may consider necessary or appropriate to accommodate differences in local law, tax policy, or custom.  Moreover, the Committee may approve such supplements to, or amendments, restatements, or alternative versions of, the Plan as it may consider necessary or appropriate for such purposes without thereby affecting the terms of the Plan as in effect for any other purpose; provided, however, that no such supplements, amendments, restatements, or alternative versions shall increase the share limitations contained in Sections 3.1 and 3.3 of the Plan.

4.2Participation.  Subject to the provisions of the Plan, the Committee may, from time to time, select from among all eligible individuals, those to whom Awards shall be granted and shall determine the nature and amount of each Award.  No individual shall have any right to be granted an Award pursuant to this Plan.

4.3Limitation on Independent Director Grants.  Notwithstanding anything herein to the contrary, the grant of any Award to an Independent Director shall be made by the Board pursuant to a written non-discretionary formula established by the Committee, or any successor committee thereto carrying out its responsibilities on the date of grant of any such Award (the “Non-Employee Director Equity Compensation Policy”).  The Non-Employee Director Equity Compensation Policy shall set forth the type of Award(s) to be granted to Independent Directors, the number of shares of Common Stock to be subject to Independent Director Awards, the conditions on which such Awards shall be granted, become exercisable and/or payable and

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expire, and such other terms and conditions as the Committee (or such other successor committee as described above).

ARTICLE 5

STOCK OPTIONS

5.1General.  The Committee is authorized to grant Options to Participants on the following terms and conditions:

(a)Exercise Price.  The exercise price per share of Stock subject to an Option shall be determined by the Committee and set forth in the Award Agreement; provided that the exercise price for any Option shall not be less than 100% of the Fair Market Value of a share of Stock on the date of grant.

(b)Time and Conditions of Exercise.  The Committee shall determine the time or times at which an Option may be exercised in whole or in part; provided that the term of any Option granted under the Plan shall not exceed ten years.  The Committee shall also determine the performance or other conditions, if any, that must be satisfied before all or part of an Option may be exercised.

(c)Payment.  The Committee shall determine the methods by which the exercise price of an Option may be paid, the form of payment, including, without limitation, cash; shares of Stock held for longer than 6 months having a Fair Market Value on the date of delivery equal to the aggregate exercise price of the Option or exercised portion thereof; or other property acceptable to the Committee (including through the delivery of a notice that the Participant has placed a market sell order with a broker with respect to shares of Stock then issuable upon exercise of the Option, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the Option exercise price; provided that payment of such proceeds is made to the Company upon settlement of such sale), and the methods by which shares of Stock shall be delivered or deemed to be delivered to Participants.  Notwithstanding any other provision of the Plan to the contrary, no Participant who is a member of the Board or an “executive officer” of the Company within the meaning of Section 13(k) of the Exchange Act shall be permitted to pay the exercise price of an Option in any method which would violate Section 13(k) of the Exchange Act.

(d)Evidence of Grant.  All Options shall be evidenced by a written or electronic Award Agreement between the Company and the Participant.  The Award Agreement shall include such additional provisions as may be specified by the Committee.

5.2Incentive Stock Options.  Incentive Stock Options may be granted only to Employees of the Company or any parent or subsidiary corporation of the Company (within the meaning of Code Sections 424 (e) and (f)) and the terms of any Incentive Stock Options granted pursuant to the Plan must comply with the following additional provisions of this Section 5.2:

(a)Exercise Price.  The exercise price per share of Stock shall be set by the Committee; provided that the exercise price for any Incentive Stock Option shall not be less than 100% of the Fair Market Value on the date of grant.

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(b)Expiration of Option.  An Incentive Stock Option may not be exercised to any extent by anyone after the first to occur of the following events:

(i)Ten years from the date it is granted, unless an earlier time is set in the Award Agreement.

(ii)One year after the date of the Participant’s termination of employment or service on account of Disability or death.  Upon the Participant’s Disability or death, any Incentive Stock Options exercisable at the Participant’s Disability or death may be exercised by the Participant’s legal representative or representatives, by the person or persons entitled to do so pursuant to the Participant’s last will and testament, or, if the Participant fails to make testamentary disposition of such Incentive Stock Option or dies intestate, by the person or persons entitled to receive the Incentive Stock Option pursuant to the applicable laws of descent and distribution.

(c)Individual Dollar Limitation.  The aggregate Fair Market Value (determined as of the time the Option is granted) of all shares of Stock with respect to which Incentive Stock Options are first exercisable by a Participant in any calendar year may not exceed $100,000 or such other limitation as imposed by Section 422(d) of the Code, or any successor provision.  To the extent that Incentive Stock Options are first exercisable by a Participant in excess of such limitation, the excess shall be considered Non-Qualified Stock Options.

(d)Ten Percent Owners.  An Incentive Stock Option shall be granted to any individual who, at the date of grant, owns stock possessing more than ten percent of the total combined voting power of all classes of Stock of the Company or any parent or subsidiary corporation of the Company (within the meaning of Code Sections 424(e) and (f)) only if such Option is granted at a price that is not less than 110% of Fair Market Value on the date of grant and the Option is exercisable for no more than five years from the date of grant.

(e)Transfer Restriction.  The Participant shall give the Company prompt notice of any disposition of shares of Stock acquired by exercise of an Incentive Stock Option within (i) two years from the date of grant of such Incentive Stock Option or (ii) one year after the transfer of such shares of Stock to the Participant.

(f)Expiration of Incentive Stock Options.  No Award of an Incentive Stock Option may be made pursuant to this Plan after the tenth anniversary of the Effective Date.

(g)Right to Exercise.  During a Participant’s lifetime, an Incentive Stock Option may be exercised only by the Participant.

5.3Substitution of Stock Appreciation Rights.  The Committee may provide in the Award Agreement evidencing the grant of an Option that the Committee, in its sole discretion, shall have to right to substitute a Stock Appreciation Right for such Option at any time prior to or upon exercise of such Option, subject to the provisions of Section 7.2 hereof; provided that such Stock Appreciation Right shall be exercisable for the same number of shares of Stock as such substituted Option would have been exercisable for.

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ARTICLE 6

RESTRICTED STOCK AWARDS

6.1Grant of Restricted Stock.  The Committee is authorized to make Awards of Restricted Stock to any Participant selected by the Committee in such amounts and subject to such terms and conditions as determined by the Committee.  All Awards of Restricted Stock shall be evidenced by a written or electronic Restricted Stock Award Agreement.

6.2Issuance and Restrictions.  Subject to Section 10.6, Restricted Stock shall be subject to such restrictions on transferability and other restrictions as the Committee may impose (including, without limitation, limitations on the right to vote Restricted Stock or the right to receive dividends on the Restricted Stock).  These restrictions may lapse separately or in combination at such times, pursuant to such circumstances, in such installments, or otherwise, as the Committee determines at the time of the grant of the Award or thereafter.

6.3Forfeiture.  Except as otherwise determined by the Committee at the time of the grant of the Award or thereafter, upon termination of employment or service during the applicable restriction period, Restricted Stock that is at that time subject to restrictions shall be forfeited; provided, however, that, except as otherwise provided by Section 10.6, the Committee may (a) provide in any Restricted Stock Award Agreement that restrictions or forfeiture conditions relating to Restricted Stock will be waived in whole or in part in the event of terminations resulting from specified causes, and (b) in other cases waive in whole or in part restrictions or forfeiture conditions relating to Restricted Stock.

6.4Certificates for Restricted Stock.  Restricted Stock granted pursuant to the Plan may be evidenced in such manner as the Committee shall determine.  If certificates representing shares of Restricted Stock are registered in the name of the Participant, certificates must bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock, and the Company may, at its discretion, retain physical possession of the certificate until such time as all applicable restrictions lapse.

ARTICLE 7

STOCK APPRECIATION RIGHTS

7.1Grant of Stock Appreciation Rights.  A Stock Appreciation Right may be granted to any Participant selected by the Committee.  A Stock Appreciation Right may be granted (a) in connection and simultaneously with the grant of an Option, (b) with respect to a previously granted Option, or (c) independent of an Option.  A Stock Appreciation Right shall be subject to such terms and conditions not inconsistent with the Plan as the Committee shall impose and shall be evidenced by an Award Agreement.

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7.2Terms of Stock Appreciation Rights.

(a)A Stock Appreciation Right may or may not be related to an Option and shall have a term set by the Committee.  A Stock Appreciation Right shall be exercisable in such installments as the Committee may determine.  A Stock Appreciation Right shall cover such number of shares of Stock as the Committee may determine.  The exercise price per share of Stock subject to each Stock Appreciation Right shall be set by the Committee; provided that the exercise price for any Stock Appreciation Right shall not be less than 100% of the Fair Market Value on the date of grant; and provided, further, that, the Committee in its sole and absolute discretion may provide that the Stock Appreciation Right may be exercised subsequent to a termination of employment or service, as applicable, or following a Change in Control of the Company, or because of the Participant’s retirement, death or disability, or otherwise.

(b)A Stock Appreciation Right shall entitle the Participant (or other person entitled to exercise the Stock Appreciation Right pursuant to the Plan) to exercise all or a specified portion of the Stock Appreciation Right (to the extent then exercisable pursuant to its terms) and to receive from the Company an amount determined by multiplying the difference obtained by subtracting the exercise price per share of the Stock Appreciation Right from the Fair Market Value of a share of Stock on the date of exercise of the Stock Appreciation Right by the number of shares of Stock with respect to which the Stock Appreciation Right shall have been exercised, subject to any limitations the Committee may impose.

7.3Payment and Limitations on Exercise.

(a)Payment of the amounts determined under Section 7.2 above shall be in cash, in Stock (based on its Fair Market Value as of the date the Stock Appreciation Right is exercised) or a combination of both, as determined by the Committee.

(b)To the extent any payment under Section 7.2 is effected in Stock it shall be made subject to satisfaction of all provisions of Article 5 above pertaining to Options.

ARTICLE 8

OTHER TYPES OF AWARDS

8.1Performance Share Awards.  Any Participant selected by the Committee may be granted one or more Performance Share awards which shall be denominated in a number of shares of Stock and which may be linked to any one or more of the Performance Criteria or other specific performance criteria determined appropriate by the Committee, in each case on a specified date or dates or over any period or periods determined by the Committee.  In making such determinations, the Committee shall consider (among such other factors as it deems relevant in light of the specific type of award) the contributions, responsibilities and other compensation of the particular Participant.

8.2Performance Stock Units.Any Participant selected by the Committee may be granted one or more Performance Stock Unit awards which shall be denominated in units of value including dollar value of shares of Stock and which may be linked to any one or more of

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the Performance Criteria or other specific performance criteria determined appropriate by the Committee, in each case on a specified date or dates or over any period or periods determined by the Committee.  In making such determinations, the Committee shall consider (among such other factors as it deems relevant in light of the specific type of award) the contributions, responsibilities and other compensation of the particular Participant.

8.3Restricted Stock Units.  The Committee is authorized to make Awards of Restricted Stock Units to any Participant selected by the Committee in such amounts and subject to such terms and conditions as determined by the Committee.  At the time of grant, the Committee shall specify the date or dates on which the Restricted Stock Units shall become fully vested and nonforfeitable, and may specify such conditions to vesting as it deems appropriate subject to Section 10.6.  At the time of grant, the Committee shall specify the maturity date applicable to each grant of Restricted Stock Units which shall be no earlier than the vesting date or dates of the Award and may be determined at the election of the grantee.  On the maturity date, the Company shall transfer to the Participant one unrestricted, fully transferable share of Stock for each Restricted Stock Unit scheduled to be paid out on such date and not previously forfeited.  The Committee shall specify the purchase price, if any, to be paid by the grantee to the Company for such shares of Stock.

8.4Other Stock-Based Awards.  Any Participant selected by the Committee may be granted one or more Awards that provide Participants with shares of Stock or the right to purchase shares of Stock or that have a value derived from the value of, or an exercise or conversion privilege at a price related to, or that are otherwise payable in shares of Stock and which may be linked to any one or more of the Performance Criteria or other specific performance criteria determined appropriate by the Committee, in each case on a specified date or dates or over any period or periods determined by the Committee subject to Section 10.6.  In making such determinations, the Committee shall consider (among such other factors as it deems relevant in light of the specific type of Award) the contributions, responsibilities and other compensation of the particular Participant.

8.5Performance Bonus Awards.  Any Participant selected by the Committee may be granted one or more Performance-Based Awards in the form of a cash bonus (a “Performance Bonus Award”) payable upon the attainment of Performance Goals that are established by the Committee and relate to one or more of the Performance Criteria, in each case on a specified date or dates or over any period or periods determined by the Committee subject to Section 10.6.  Any such Performance Bonus Award paid to a Covered Employee shall be based upon objectively determinable bonus formulas established in accordance with Article 9.  The maximum amount of any Performance Bonus Award payable to a Covered Employee with respect to any calendar year shall not exceed $1,000,000.

8.6Term.  Except as otherwise provided herein, the term of any Award of  Performance Shares, Performance Stock Units, Restricted Stock Units or Other Stock-Based Award shall be set by the Committee in its discretion.

8.7Exercise or Purchase Price.  The Committee may establish the exercise or purchase price, if any, of any Award of Performance Shares, Performance Stock Units, Restricted Stock Units or Other Stock-Based Award; provided, however, that such price shall not

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be less than the par value of a share of Stock on the date of grant, unless otherwise permitted by applicable state law.

8.8Exercise Upon Termination of Employment or Service.  An Award of Performance Shares, Performance Stock Units, Restricted Stock Units and Other Stock-Based Award shall only be exercisable or payable while the Participant is an Employee, Consultant or a member of the Board, as applicable; provided, however, that the Committee in its sole and absolute discretion may provide that an Award of Performance Shares, Performance Stock Units, Restricted Stock Units or Other Stock-Based Award may be exercised or paid subsequent to a termination of employment or service, as applicable, or following a Change in Control of the Company, or because of the Participant’s retirement, death or disability, or otherwise; provided, however, that any such provision with respect to Performance Shares or Performance Stock Units shall be subject to the requirements of Section 162(m) of the Code that apply to Qualified Performance-Based Compensation.

8.9Form of Payment.  Payments with respect to any Awards granted under this Article 8 shall be made in cash, in Stock or a combination of both, as determined by the Committee.

8.10Award Agreement.  All Awards under this Article 8 shall be subject to such additional terms and conditions as determined by the Committee and shall be evidenced by a written or electronic Award Agreement.

ARTICLE 9

PERFORMANCE-BASED AWARDS

9.1Purpose.  The purpose of this Article 9 is to provide the Committee the ability to qualify Awards other than Options and SARs and that are granted pursuant to Articles 6 and 8 as Qualified Performance-Based Compensation.  If the Committee, in its discretion, decides to grant a Performance-Based Award to a Covered Employee, the provisions of this Article 9 shall control over any contrary provision contained in Articles 6 or 8; provided, however, that the Committee may in its discretion grant Awards to Covered Employees that are based on Performance Criteria or Performance Goals but that do not satisfy the requirements of this Article 9.

9.2Applicability.  This Article 9 shall apply only to those Covered Employees selected by the Committee to receive Performance-Based Awards.  The designation of a Covered Employee as a Participant for a Performance Period shall not in any manner entitle the Participant to receive an Award for the period.  Moreover, designation of a Covered Employee as a Participant for a particular Performance Period shall not require designation of such Covered Employee as a Participant in any subsequent Performance Period and designation of one Covered Employee as a Participant shall not require designation of any other Covered Employees as a Participant in such period or in any other period.

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9.3Procedures with Respect to Performance-Based Awards.  To the extent necessary to comply with the Qualified Performance-Based Compensation requirements of Section 162(m)(4)(C) of the Code, with respect to any Award granted under Articles 6 and 8 which may be granted to one or more Covered Employees, no later than ninety (90) days following the commencement of any fiscal year in question or any other designated fiscal period or period of service (or such other time as may be required or permitted by Section 162(m) of the Code), the Committee shall, in writing, (a) designate one or more Covered Employees, (b) select the Performance Criteria applicable to the Performance Period, (c) establish the Performance Goals, and amounts of such Awards, as applicable, which may be earned for such Performance Period, and (d) specify the relationship between Performance Criteria and the Performance Goals and the amounts of such Awards, as applicable, to be earned by each Covered Employee for such Performance Period.  Following the completion of each Performance Period, the Committee shall certify in writing whether the applicable Performance Goals have been achieved for such Performance Period.  In determining the amount earned by a Covered Employee, the Committee shall have the right to reduce or eliminate (but not to increase) the amount payable at a given level of performance to take into account additional factors that the Committee may deem relevant to the assessment of individual or corporate performance for the Performance Period.

9.4Payment of Performance-Based Awards.  Unless otherwise provided in the applicable Award Agreement, a Participant must be employed by the Company or a Subsidiary on the day a Performance-Based Award for such Performance Period is paid to the Participant.  Furthermore, a Participant shall be eligible to receive payment pursuant to a Performance-Based Award for a Performance Period only if the Performance Goals for such period are achieved.

9.5Additional Limitations.  Notwithstanding any other provision of the Plan, any Award which is granted to a Covered Employee and is intended to constitute Qualified Performance-Based Compensation shall be subject to any additional limitations set forth in Section 162(m) of the Code (including any amendment to Section 162(m) of the Code) or any regulations or rulings issued thereunder that are requirements for qualification as qualified performance-based compensation as described in Section 162(m)(4)(C) of the Code, and the Plan shall be deemed amended to the extent necessary to conform to such requirements.

ARTICLE 10

PROVISIONS APPLICABLE TO AWARDS

10.1Stand-Alone and Tandem Awards.  Awards granted pursuant to the Plan may, in the discretion of the Committee, be granted either alone, in addition to, or in tandem with, any other Award granted pursuant to the Plan. Awards granted in addition to or in tandem with other Awards may be granted either at the same time as or at a different time from the grant of such other Awards.

10.2Award Agreement.  Awards under the Plan shall be evidenced by Award Agreements that set forth the terms, conditions and limitations for each Award which may include the term of an Award, the provisions applicable in the event the Participant’s employment or service terminates, and the Company’s authority to unilaterally or bilaterally

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amend, modify, suspend, cancel or rescind an Award.

10.3Limits on Transfer.  No right or interest of a Participant in any Award may be pledged, encumbered, or hypothecated to or in favor of any party other than the Company or a Subsidiary, or shall be subject to any lien, obligation, or liability of such Participant to any other party other than the Company or a Subsidiary.  Except as otherwise provided by the Committee, no Award shall be assigned, transferred, or otherwise disposed of by a Participant other than by will or the laws of descent and distribution.  The Committee by express provision in the Award or an amendment thereto may permit an Award (other than an Incentive Stock Option) to be transferred to, exercised by and paid to certain persons or entities related to the Participant, including but not limited to members of the Participant’s family, charitable institutions, or trusts or other entities whose beneficiaries or beneficial owners are members of the Participant’s family and/or charitable institutions, or to such other persons or entities as may be expressly approved by the Committee, pursuant to such conditions and procedures as the Committee may establish.  Any permitted transfer shall be subject to the condition that the Committee receive evidence satisfactory to it that the transfer is being made for estate and/or tax planning purposes (or to a “blind trust” in connection with the Participant’s termination of employment or service with the Company or a Subsidiary to assume a position with a governmental, charitable, educational or similar non-profit institution) and on a basis consistent with the Company’s lawful issue of securities.

10.4Beneficiaries.  Notwithstanding Section 10.3, a Participant may, in the manner determined by the Committee, designate a beneficiary to exercise the rights of the Participant and to receive any distribution with respect to any Award upon the Participant’s death.  A beneficiary, legal guardian, legal representative, or other person claiming any rights pursuant to the Plan is subject to all terms and conditions of the Plan and any Award Agreement applicable to the Participant, except to the extent the Plan and Award Agreement otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Committee.  If the Participant is married and resides in a community property state, a designation of a person other than the Participant’s spouse as his or her beneficiary with respect to more than 50% of the Participant’s interest in the Award shall not be effective without the prior written consent of the Participant’s spouse.  If no beneficiary has been designated or survives the Participant, payment shall be made to the person entitled thereto pursuant to the Participant’s will or the laws of descent and distribution.  Subject to the foregoing, a beneficiary designation may be changed or revoked by a Participant at any time provided the change or revocation is filed with the Committee.

10.5Stock Certificates.  Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any certificates evidencing shares of Stock pursuant to the exercise of any Award, unless and until the Board has determined, with advice of counsel, that the issuance and delivery of such certificates is in compliance with all applicable laws, regulations of governmental authorities and, if applicable, the requirements of any exchange on which the shares of Stock are listed or traded.  All Stock certificates delivered pursuant to the Plan are subject to any stop-transfer orders and other restrictions as the Committee deems necessary or advisable to comply with federal, state, or foreign jurisdiction, securities or other laws, rules and regulations and the rules of any national securities exchange or automated quotation system on which the Stock is listed, quoted, or traded.  The Committee may place legends on any Stock certificate to reference restrictions applicable to the Stock.  In addition to

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the terms and conditions provided herein, the Board may require that a Participant make such reasonable covenants, agreements, and representations as the Board, in its discretion, deems advisable in order to comply with any such laws, regulations, or requirements. The Committee shall have the right to require any Participant to comply with any timing or other restrictions with respect to the settlement or exercise of any Award, including a window-period limitation, as may be imposed in the discretion of the Committee.

10.6Full Value Award Vesting Limitations.  Notwithstanding any other provision of this Plan to the contrary, Full Value Awards made to Employees or Consultants shall become vested over a period of not less than three years (or, in the case of vesting based upon the attainment of Performance Goals or other performance-based objectives, over a period of not less than one year) following the date the Award is made; provided, however, that, notwithstanding the foregoing, Full Value Awards that result in the issuance of an aggregate of up to 5% of the shares of Stock available pursuant to Section 3.1(a) may be granted to any one or more Participants without respect to such minimum vesting provisions.

ARTICLE 11

CHANGES IN CAPITAL STRUCTURE

11.1Adjustments.

(a)In the event of any stock dividend, stock split, combination or exchange of shares, merger, consolidation, spin-off, recapitalization or other distribution (other than normal cash dividends) of Company assets to stockholders, or any other change affecting the shares of Stock or the share price of the Stock, the Committee shall make such proportionate adjustments, if any, as the Committee in its discretion may deem appropriate to reflect such change with respect to (i) the aggregate number and type of shares that may be issued under the Plan (including, but not limited to, adjustments of the limitations in Sections 3.1 and 3.3); (ii) the terms and conditions of any outstanding Awards (including, without limitation, any applicable Performance Goals or Performance Criteria with respect thereto); and (iii) the grant or exercise price per share for any outstanding Awards under the Plan.  Any adjustment affecting an Award intended as Qualified Performance-Based Compensation shall be made consistent with the requirements of Section 162(m) of the Code.

(b)In the event of any transaction or event described in Section 11.1(a) or any unusual or nonrecurring transactions or events affecting the Company, any affiliate of the Company, or the financial statements of the Company or any affiliate (including without limitation any Change in Control), or of changes in applicable laws, regulations or accounting principles, the Committee, in its sole discretion and on such terms and conditions as it deems appropriate, either by the terms of the Award or by action taken prior to the occurrence of such transaction or event and either automatically or upon the Participant’s request, is hereby authorized to take any one or more of the following actions whenever the Committee determines that such action is appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to any Award under the Plan, to facilitate such transactions or events or to give effect to such changes in laws, regulations or principles:

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(i)To provide for either (A) termination of any such Award in exchange for an amount of cash, if any, equal to the amount that could have been attained upon the exercise of such Award or realization of the Participant’s rights had such Award been currently exercisable or payable or fully vested or (B) the replacement of such Award with other rights or property selected by the Committee in its sole discretion;

(ii)To provide that such Award be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar options, rights or awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices; and

(iii)To make adjustments in the number and type of shares of Common Stock (or other securities or property) subject to outstanding Awards and/or in the terms and conditions of (including the grant or exercise price), and the criteria included in, outstanding options, rights and Awards and options, rights and Awards which may be granted in the future.

11.2Acceleration Upon Change in Control or Hostile Takeover.  Notwithstanding Section 11.1:

(a)If a Change in Control occurs and a Participant’s Awards are not converted, assumed, or replaced by a successor, such Awards shall become fully exercisable and all forfeiture restrictions on such Awards shall lapse not less than five (5) business days before the consummation of such Change in Control.  Upon, or in anticipation of, a Change in Control, the Committee may cause any and all Awards outstanding hereunder to terminate at a specific time in the future, including but not limited to the date of such Change in Control, and shall give each Participant the right to exercise such Awards during a period of time (not to be less than five (5) days) as the Committee, in its sole and absolute discretion, shall determine.  In the event that the terms of any agreement between the Company or any Company subsidiary or affiliate and a Participant contains provisions that conflict with and are more restrictive than the provisions of this Section 11.2, this Section 11.2 shall prevail and control and the more restrictive terms of such agreement (and only such terms) shall be of no force or effect.

(b)If a Hostile Takeover occurs, a Participant’s Awards shall become fully exercisable and all forfeiture restrictions on such Awards shall lapse not less than five (5) business days before the consummation of such Hostile Takeover.

(c)In the event that the terms of any agreement between the Company or any Company subsidiary or affiliate and a Participant contains provisions that conflict with and are more restrictive than the provisions of this Section 11.2, this Section 11.2 shall prevail and control and the more restrictive terms of such agreement (and only such terms) shall be of no force or effect.

11.3Outstanding Awards – Certain Mergers.  Subject to any required action by the stockholders of the Company, in the event that the Company shall be the surviving corporation in any merger or consolidation (except a merger or consolidation as a result of which the holders of shares of Stock receive securities of another corporation), each Award outstanding on the date of

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such merger or consolidation shall pertain to and apply to the securities that a holder of the number of shares of Stock subject to such Award would have received in such merger or consolidation.

11.4Outstanding Awards – Other Changes.  In the event of any other change in the capitalization of the Company or corporate change other than those specifically referred to in this Article 11, the Committee may, in its absolute discretion, make such adjustments in the number and kind of shares or other securities subject to Awards outstanding on the date on which such change occurs and in the per share grant or exercise price of each Award as the Committee may consider appropriate to prevent dilution or enlargement of rights.

11.5No Other Rights.  Except as expressly provided in the Plan, no Participant shall have any rights by reason of any subdivision or consolidation of shares of stock of any class, the payment of any dividend, any increase or decrease in the number of shares of stock of any class or any dissolution, liquidation, merger, or consolidation of the Company or any other corporation.  Except as expressly provided in the Plan or pursuant to action of the Committee under the Plan, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number of shares of Stock subject to an Award or the grant or exercise price of any Award.

ARTICLE 12

ADMINISTRATION

12.1Committee.  The Plan shall be administered by the Compensation Committee of the Board.  The Committee shall consist of at least two individuals, each of whom qualifies as (a) a Non-Employee Director, and (b) an “outside director” pursuant to Code Section 162(m) and the regulations issued thereunder.  Reference to the Committee shall refer to the Board if the Compensation Committee ceases to exist and the Board does not appoint a successor Committee.

12.2Action by the Committee.  A majority of the Committee shall constitute a quorum.  The acts of a majority of the members present at any meeting at which a quorum is present, and acts approved in writing by a majority of the Committee in lieu of a meeting, shall be deemed the acts of the Committee.  Each member of the Committee is entitled to, in good faith, rely or act upon any report or other information furnished to that member by any officer or other employee of the Company or any Subsidiary, the Company’s independent certified public accountants, or any executive compensation consultant or other professional retained by the Company to assist in the administration of the Plan.

12.3Authority of Committee.  Subject to any specific designation in the Plan, the Committee has the exclusive power, authority and discretion to:

(a)Designate Participants to receive Awards;

(b)Determine the type or types of Awards to be granted to each Participant;

(c)Determine the number of Awards to be granted and the number of shares

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of Stock to which an Award will relate;

(d)Determine the terms and conditions of any Award granted pursuant to the Plan, including, but not limited to, the exercise price, grant price, or purchase price, any reload provision, any restrictions or limitations on the Award, any schedule for lapse of forfeiture restrictions or restrictions on the exercisability of an Award, and accelerations or waivers thereof, any provisions related to non-competition and recapture of gain on an Award, based in each case on such considerations as the Committee in its sole discretion determines; provided, however, that the Committee shall not have the authority to accelerate the vesting or waive the forfeiture of any Performance-Based Awards;

(e)Determine whether, to what extent, and pursuant to what circumstances an Award may be settled in, or the exercise price of an Award may be paid in, cash, Stock, other Awards, or other property, or an Award may be canceled, forfeited, or surrendered;

(f)Prescribe the form of each Award Agreement, which need not be identical for each Participant;

(g)Decide all other matters that must be determined in connection with an Award;

(h)Establish, adopt, or revise any rules and regulations as it may deem necessary or advisable to administer the Plan;

(i)Interpret the terms of, and any matter arising pursuant to, the Plan or any Award Agreement; and

(j)Make all other decisions and determinations that may be required pursuant to the Plan or as the Committee deems necessary or advisable to administer the Plan.

12.4Decisions Binding.  The Committee’s interpretation of the Plan, any Awards granted pursuant to the Plan, any Award Agreement and all decisions and determinations by the Committee with respect to the Plan are final, binding, and conclusive on all parties.

12.5Delegation of Authority.  To the extent permitted by applicable law, the Committee may from time to time delegate to a committee of one or more members of the Board the authority to grant or amend Awards to Participants other than (a) senior executives of the Company who are subject to Section 16 of the Exchange Act, (b) Covered Employees, or (c) officers of the Company (or members of the Board) to whom authority to grant or amend Awards has been delegated hereunder.  Any delegation hereunder shall be subject to the restrictions and limits that the Committee specifies at the time of such delegation, and the Committee may at any time rescind the authority so delegated or appoint a new delegatee.  At all times, the delegatee appointed under this Section 12.5 shall serve in such capacity at the pleasure of the Committee.

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ARTICLE 13

EFFECTIVE AND EXPIRATION DATE

13.1Effective Date.  The Plan is effective as of the date the Plan is approved by the Company’s stockholders (the “Effective Date”).  The Plan will be deemed to be approved by the stockholders if it receives the affirmative vote of the holders of a majority of the shares of stock of the Company present or represented and entitled to vote at a meeting duly held in accordance with the applicable provisions of the Company’s Bylaws.

13.2Expiration Date.  The Plan will expire on, and no Award may be granted pursuant to the Plan after, the earlier of the tenth anniversary of (i) the Effective Date or (ii) the date this Plan is approved by the Board.  Any Awards that are outstanding on the tenth anniversary of the Effective Date shall remain in force according to the terms of the Plan and the applicable Award Agreement.

ARTICLE 14

AMENDMENT, MODIFICATION, AND TERMINATION

14.1Amendment, Modification, And Termination.  With the approval of the Board, at any time and from time to time, the Committee may terminate, amend or modify the Plan; provided, however, that (a) to the extent necessary and desirable to comply with any applicable law, regulation, or stock exchange rule, the Company shall obtain stockholder approval of any Plan amendment in such a manner and to such a degree as required, and (b) stockholder approval is required for any amendment to the Plan that (i) increases the number of shares available under the Plan (other than any adjustment as provided by Article 11), (ii) permits the Committee to grant Options with an exercise price that is below Fair Market Value on the date of grant, or (iii) permits the Committee to extend the exercise period for an Option beyond ten years from the date of grant or (iv) results in a material increase in benefits or a change in eligibility requirements.  Notwithstanding any provision in this Plan to the contrary, absent approval of the stockholders of the Company, no Option may be amended to reduce the per share exercise price of the shares subject to such Option below the per share exercise price as of the date the Option is granted and, except as permitted by Article 11, no Option may be granted in exchange for, or in connection with, the cancellation or surrender of an Option having a higher per share exercise price.

14.2Awards Previously Granted.  No termination, amendment, or modification of the Plan shall adversely affect in any material way any Award previously granted pursuant to the Plan without the prior written consent of the Participant.

ARTICLE 15

GENERAL PROVISIONS

15.1No Rights to Awards.  No Participant, employee, or other person shall have any claim to be granted any Award pursuant to the Plan, and neither the Company nor the Committee

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is obligated to treat Participants, employees, and other persons uniformly.

15.2No Stockholders Rights.  No Award gives the Participant any of the rights of a stockholder of the Company unless and until shares of Stock are in fact issued to such person in connection with such Award.

15.3Withholding.  The Company or any Subsidiary shall have the authority and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, local and foreign taxes (including the Participant’s FICA obligation) required by law to be withheld with respect to any taxable event concerning a Participant arising as a result of this Plan.  The Committee may in its discretion and in satisfaction of the foregoing requirement allow a Participant to elect to have the Company withhold shares of Stock otherwise issuable under an Award (or allow the return of shares of Stock) having a Fair Market Value equal to the sums required to be withheld.  Notwithstanding any other provision of the Plan, the number of shares of Stock which may be withheld with respect to the issuance, vesting, exercise or payment of any Award (or which may be repurchased from the Participant of such Award within six months after such shares of Stock were acquired by the Participant from the Company) in order to satisfy the Participant’s federal, state, local and foreign income and payroll tax liabilities with respect to the issuance, vesting, exercise or payment of the Award shall be limited to the number of shares which have a Fair Market Value on the date of withholding or repurchase equal to the aggregate amount of such liabilities based on the minimum statutory withholding rates for federal, state, local and foreign income tax and payroll tax purposes that are applicable to such supplemental taxable income.

15.4No Right to Employment or Services.  Nothing in the Plan or any Award Agreement shall interfere with or limit in any way the right of the Company or any Subsidiary to terminate any Participant’s employment or services at any time, nor confer upon any Participant any right to continue in the employ or service of the Company or any Subsidiary.

15.5Unfunded Status of Awards.  The Plan is intended to be an “unfunded” plan for incentive compensation.  With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award Agreement shall give the Participant any rights that are greater than those of a general creditor of the Company or any Subsidiary.

15.6Indemnification.  To the extent allowable pursuant to applicable law, each member of the Committee or of the Board shall be indemnified and held harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such member in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action or failure to act pursuant to the Plan and against and from any and all amounts paid by him or her in satisfaction of judgment in such action, suit, or proceeding against him or her; provided he or she gives the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf.  The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled pursuant to the Company’s Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

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15.7Relationship to other Benefits.  No payment pursuant to the Plan shall be taken into account in determining any benefits pursuant to any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any Subsidiary except to the extent otherwise expressly provided in writing in such other plan or an agreement thereunder.

15.8Expenses.  The expenses of administering the Plan shall be borne by the Company and its Subsidiaries.

15.9Titles and Headings.  The titles and headings of the Sections in the Plan are for convenience of reference only and, in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control.

15.10Fractional Shares.  No fractional shares of Stock shall be issued and the Committee shall determine, in its discretion, whether cash shall be given in lieu of fractional shares or whether such fractional shares shall be eliminated by rounding up or down as appropriate.

15.11Limitations Applicable to Section 16 Persons.  Notwithstanding any other provision of the Plan, the Plan, and any Award granted or awarded to any Participant who is then subject to Section 16 of the Exchange Act, shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule.  To the extent permitted by applicable law, the Plan and Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.

15.12Government and Other Regulations.  The obligation of the Company to make payment of awards in Stock or otherwise shall be subject to all applicable laws, rules, and regulations, and to such approvals by government agencies as may be required.  The Company shall be under no obligation to register pursuant to the Securities Act of 1933, as amended, any of the shares of Stock paid pursuant to the Plan.  If the shares paid pursuant to the Plan may in certain circumstances be exempt from registration pursuant to the Securities Act of 1933, as amended, the Company may restrict the transfer of such shares in such manner as it deems advisable to ensure the availability of any such exemption.

15.13Governing Law.  The Plan and all Award Agreements shall be construed in accordance with and governed by the laws of the State of Delaware.

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*  *  *  *  *

I hereby certify that the foregoing Plan was duly adopted by the Board of Directors of Integrated Device Technology, Inc. on July 15, 2004.

*  *  *  *  *

I hereby certify that the foregoing Plan was approved by the stockholders of Integrated Device Technology, Inc. on September 16, 2004.

Executed on this 16th day of September, 2004.

/s/ CLYDE R. HOSEIN

Corporate Secretary

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EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

I, Gregory S. Lang, Chief Executive Officer of Integrated Device Technology, Inc. (the “registrant”), certify that:

1.  I have reviewed this quarterly report on Form 10-Q of the registrant;

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)) 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)  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

c)  Disclosed in this report any change in the registrant’s internal controls over financial reporting that occurred during the registrant’s most recent fiscal quarter 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 (or persons performing the equivalent functions):

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: November 3, 2004
	/s/ GREGORY S. LANG
	Gregory S. Lang
	Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

I, Clyde R. Hosein, Chief Financial Officer of Integrated Device Technology, Inc. (the “registrant”), certify that:

1.  I have reviewed this quarterly report on Form 10-Q of the registrant;

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)) 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)  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

c)  Disclosed in this report any change in the registrant’s internal controls over financial reporting that occurred during the registrant’s most recent fiscal quarter 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 (or persons performing the equivalent functions):

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: November 3, 2004
	/s/ CLYDE R. HOSEIN
	Clyde R. Hosein
	Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer

I, Gregory S. Lang, Chief Executive Officer of Integrated Device Technology, Inc. (the “Company”), pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. § 1350, certify to my knowledge that:

(i)            the Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 26, 2004 (the “Report”) fully complies with the requirements of Section 13a of the Securities Exchange Act of 1934, as amended; and

(ii)           the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 3, 2004	/s/ GREGORY S. LANG
	Gregory S. Lang
	Chief Executive Officer

A signed original of this written statement required by Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. § 1350 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

EX-32.2

Exhibit 32.2

Certification of Chief Financial Officer

I, Clyde R. Hosein, Chief Financial Officer of Integrated Device Technology, Inc. (the “Company”), pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. § 1350, certify to my knowledge that:

(i)            the Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 26, 2004 (the “Report”) fully complies with the requirements of Section 13a of the Securities Exchange Act of 1934, as amended; and

(ii)           the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 3, 2004	/s/ CLYDE R. HOSEIN
	Clyde R. Hosein
	Chief Financial Officer

A signed original of this written statement required by Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. § 1350 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.