10-K

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 10-K

/x/ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the fiscal year ended December 31, 2000 or

/ / Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the transition period from                to                

Commission file number: 0-22660

TRIQUINT SEMICONDUCTOR, INC.
(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	95-3654013 (I. R. S. Employer Identification Number)
2300 N. E. Brookwood Parkway Hillsboro, Oregon 97124 (Address of principal executive office)

Registrant's Telephone number, including area code: (503) 615-9000

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $.001 par value
(Title of Class)

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

    Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. / /

    The aggregate market value of the voting stock held by non-affiliates of the registrant, based upon the closing sale price of the Common Stock on December 31, 2000 reported on the Nasdaq Stock Market's National Market, was approximately $3,053,992,425. Shares of Common Stock held by each executive officer and director and by each person who owns 5% or more of the outstanding Common Stock have been excluded in that such persons may be deemed affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

    As of December 31, 2000, the registrant had outstanding 80,098,508 shares of Common Stock.

    The Index to Exhibits appears on page 22 of this document.

DOCUMENTS INCORPORATED BY REFERENCE

    The registrant has incorporated into Part II of Form 10-K by reference portions of its Annual Report to Stockholders for the fiscal year ended December 31, 2000 and has incorporated into Part III of Form 10-K by reference portions of its Proxy Statement for its 2001 Annual Meeting of Stockholders.

TRIQUINT SEMICONDUCTOR, INC.
2000 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS

		Page
PART I
ITEM 1.	BUSINESS	3
ITEM 2.	PROPERTIES	19
ITEM 3.	LEGAL PROCEEDINGS	20
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	20
PART II
ITEM 5.	MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS	20
ITEM 6.	SELECTED CONSOLIDATED FINANCIAL DATA	21
ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	21
ITEM 7(a).	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	21
ITEM 8.	CONSOLIDATED FINANCIAL STATEMENTS AND CONSOLIDATED SUPPLEMENTARY FINANCIAL DATA	21
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	22
PART III
ITEM 10.	DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT	22
ITEM 11.	EXECUTIVE COMPENSATION	22
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	22
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	22
PART IV
ITEM 14.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K	22

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PART I

FORWARD-LOOKING STATEMENTS

    This Annual Report on Form 10-K, including the sections entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business" contains forward-looking statements about TriQuint Semiconductor, Inc. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks and other factors include, among other things, those listed under "Risk Factors" and elsewhere in this Annual Report on Form 10-K. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should", expects," "believes," "estimates," "predicts," "potential," "continue," "our future success depends," "seek to continue" or the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. In evaluating these statements, you should specifically consider various factors, including the risks outlined under "Management's Discussion and Analysis of Financial Condition and Results of Operations-Factors Affecting Future Operating Results." These factors may cause our actual results to differ materially from any forward-looking statement.

    Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of these statements. We are under no duty to update any of the forward-looking statements after the date of this Annual Report on Form 10-K to conform these statements to actual results.

ITEM 1. BUSINESS

Overview

    We design, develop, manufacture and market a broad range of high-performance analog and mixed-signal integrated circuits for communications markets. Our integrated circuits are incorporated into a variety of communications products, including cellular phones and pagers, fiber optic telecommunications equipment, satellite communications systems, high-performance data networking products and aerospace applications. We use our proprietary gallium arsenide technology to enable our products to overcome the performance barriers of silicon devices in a variety of applications. Gallium arsenide has inherent physical properties that allow its electrons to move up to five times faster than those of silicon. This higher electron mobility permits the manufacture of gallium arsenide integrated circuits that operate at much higher speeds than silicon devices, or operate at the same speeds with reduced power consumption. We sell our products worldwide to end-user customers, including Alcatel, Ericsson Inc., Finisar Corp., Hittite Microwave Corp., Hughes Electronics Corp., Lucent Technologies, Inc., Marconi P.L.C., Mini-Circuits, Inc., Motorola, Inc., Nokia Corporation, Nortel Networks Corp., Raytheon Company and Schlumberger Limited.

    We own and operate advanced wafer fabrication facilities and utilize proprietary processes designed to enable us to cost-effectively produce analog and mixed-signal integrated circuits in high volumes. We believe that control of wafer fabrication assures a reliable source of supply and provides greater opportunities to enhance quality and reliability and achieve manufacturing efficiency. In addition, this control can facilitate new process and product development and enables us to be more responsive to customer requirements. Our wafer fabrication capabilities have allowed us to establish a strategic foundry business serving leading communications companies. Our foundry business leverages our extensive library of proprietary analog and mixed-signal cells and our advanced integrated circuit manufacturing processes.

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    We are incorporated under the laws of the state of Delaware. Our principal executive offices are located at 2300 N. E. Brookwood Parkway, Hillsboro, Oregon 97124, and our telephone number is (503) 615-9000.

Industry Background

    Market demands for higher levels of performance in electronic communications systems have produced an increasing number of varied, complex applications. The increased capabilities of these new systems, in turn, are spawning new markets and a further proliferation of new, sophisticated applications. Many of these new applications have emerged in the wireless communications, telecommunications, optical networking, computing and aerospace industries.

    The wireless communications industry has experienced rapid growth with the advent of new applications such as digital cellular telephones, personal communication systems ("PCS"), handheld navigation products based on the global positioning satellite ("GPS") standard, satellite communications, wireless local area networks ("WLANs"), wireless internet and cable television/cable modem. In addition, many of these new applications require battery-powered portability. The proliferation of some of these new applications has led to increased communication traffic resulting in congestion of the historically assigned frequency bands. As a consequence, wireless communications are moving to higher, less congested frequency bands. We believe the increasing demand for wireless communications at higher frequencies will lead to entirely new high volume applications.

    The telecommunications industry is encountering increasing demand for higher transmission rates and increased capacity to accommodate the growth of traditional voice traffic and higher levels of data traffic arising from widely-used applications such as facsimile communications, computer networking and online and Internet services. Today's advanced telecommunications systems employ high speed switching networks and fiber optic cable operating in accordance with high frequency standards such as synchronous optical network ("SONET"), Synchronous Digital Hierarchy ("SDH"), integrated services digital network ("ISDN") and the asynchronous transfer mode ("ATM") standard. For example, high-performance SONET telecommunications systems can operate at frequencies of 10 Gbits/sec or higher. The advent of video communications and multimedia (combinations of voice, video and data) are placing further demands on these systems for even higher data transmission rates.

    In the data communications industry, data processing speeds have increased rapidly, bringing enormous computing power to individual users. The demand to share data and peripheral equipment among these users has led to the widespread use of networking systems operating at increasing speeds. Today's advanced data communication systems, based on standards such as Fibre Channel and Gigabit Ethernet as well as proprietary links, are used to transmit data at rates up to 2.5 Gbits/sec.

    The microwave and millimeter wave communications industry utilizes advanced gallium arsenide monolithic microwave integrated circuit products for aerospace, defense and commercial applications. Aerospace and defense applications include high power amplifiers, low noise amplifiers, switches and attenuators for use in a variety of advanced requirements such as active array radar, missiles, electronic warfare systems and space communications systems. Commercial applications for products and services in this frequency range include wireless telephone applications, optical fiber links and switching networks, Local Multipoint Distribution System ("LMDS") systems, phased-array radar and satellite earthstation transmitters.

    To address the market demands for higher performance, electronic communications system manufacturers have relied heavily on advances in semiconductor technology. In recent years, the predominant semiconductor technologies used in advanced electronic systems have been silicon-based complementary metal oxide semiconductor, bipolar complementary metal oxide semiconductor and emitter coupled logic process technologies. However, the newest generation of high-performance electronic systems requires further advances in semiconductor performance. One way to improve

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performance is to combine analog and digital circuitry on the same device. This combination, known as mixed-signal technology, can provide higher levels of integration (smaller size and increased functionality), reduced power consumption and higher operating frequencies. Notwithstanding the benefits of mixed-signal technology, the performance requirements of certain critical system functions generally cannot be achieved using silicon-based components. As a result, system manufacturers are seeking semiconductor products, which can overcome the performance limitations of silicon devices in a variety of applications. Gallium arsenide semiconductor technology has become an effective alternative or complement to silicon solutions in many high-performance applications. Gallium arsenide has inherent physical properties, which allow its electrons to move up to five times faster than those of silicon. This higher electron mobility permits the manufacture of gallium arsenide integrated circuits, which operate at much higher speeds than silicon devices, or operate at the same speeds with lower power consumption. The process technologies utilized in gallium arsenide semiconductor fabrication include metal semiconductor field effect transistor ("MESFET"), psuedomorphic high electron mobility transistor ("pHEMT"), heterojunction bipolar transistor ("HBT") and heterostructure field effect transistor ("HFET"). In many new applications, gallium arsenide integrated circuits enable high-performance systems to process data more quickly, increasing system-operating rates.

    In addition to enabling high-performance systems to process data more quickly, the use of gallium arsenide integrated circuits can reduce system power requirements, which is particularly important in battery powered portable applications. The high-performance characteristics of gallium arsenide, combined with the system requirements of the communications industry, have led to the use of gallium arsenide components in high volumes to complement silicon devices in a wide range of commercial and aerospace systems.

    We believe that the continuation and acceleration of these trends will result in increasing demand for gallium arsenide integrated circuits, thereby creating substantial opportunities for market-focused manufacturers who can provide a broad range of cost-effective gallium arsenide integrated circuits in high volume.

Wireless Communications

    Gallium arsenide design and manufacturing technologies are being applied to commercial communications in satellites, satellite receivers for TV broadcast, wireless transceivers for internet access, handheld navigation systems based on the GPS system, WLANs cellular and PCS telephones.

    Frequency bands are allocated to the various wireless communications applications by government regulatory bodies throughout the world. The allocation is based, among other factors, upon the availability of unallocated frequency bands and the ability of equipment to operate effectively in these bands. As the lower frequency bands become fully allocated and congested, and the volume and rate of communications increases, the trend is toward the allocation and use of higher frequency bands. The speed of gallium arsenide technology makes it well suited for applications at these higher frequencies.

    The superior ability of gallium arsenide to operate at higher frequencies also makes it well suited for use in defense applications. In addition, other key performance advantages of gallium arsenide over silicon in key wireless communications system functions for both commercial and defense applications are improved signal reception, better signal processing in congested bands and greater power efficiency for longer battery life in portable applications.

Telecommunications

    Gallium arsenide technologies are well suited for the growing markets and applications which require the transmission or manipulation of large amounts of information at high speeds with high data integrity. These applications, which typically require customer-specific solutions and include digital, analog and mixed-signal functions, are found primarily in the telecommunications industry, but also

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span other industries such as instrumentation, aerospace and defense. For many of these applications, gallium arsenide products provide better price/performance value than silicon. The intrinsic electrical properties of gallium arsenide result in higher speed, lower noise and less power consumption compared to silicon.

    We believe that the increasing use of fiber optic cable in telecommunications and data communications systems has created a significant growth opportunity for our gallium arsenide products. Because data transmission rates in fiber optic cable can be many times greater than those of copper line, a single fiber line can cost-effectively replace multiple copper lines. In order to take advantage of the potential cost advantages of fiber optic communications, information must be transmitted at higher rates generally achievable only through the use of gallium arsenide products.

    The telecommunications industry has established a series of standards, most notably SONET, ISDN and ATM, which define transmission rates, protocols, signal quality and reliability. Gallium arsenide-based products address the performance requirements of these standards, as well as higher speed communication links (2.48 Gbits/sec and above).

Data Communications

    Data communications equipment is typically used to interconnect mainframe computers, clients and servers, workstations, disk storage arrays and other peripheral devices. Other applications, which require transmission of large amounts of data at high speed include multimedia computing, supercomputing, multiprocessor systems, interactive computer aided design/computer aided manufacturing ("CAD/CAM"), medical imaging and high speed, high resolution printing. As new applications requiring higher volume data transfer have proliferated, and as microprocessor speeds have increased, a critical bottleneck has developed in these communications links. The computation speed of today's microprocessors is 10 to 100 times faster than currently available communications equipment based on communications standards such as Ethernet and Small Computer System Interface ("SCSI"). A solution to this problem is the use of high-speed serial data transmission by means of coaxial or fiber optic cable in combination with our mixed-signal transmitting and receiving devices. For example, leading computer manufacturers have acknowledged the need for high-speed serial data communications links by supporting the Fibre Channel standard, which can operate up to 10 Gbits/sec.

Millimeter Wave Communications

    A broad array of customers and applications are served by monolithic microwave integrated circuits ("MMICs"), including the development of MMICs for phased-array radar antenna modules. This advanced antenna/system technology finds application in military aircraft, ships and spacecraft. It is also emerging as a key technology in next-generation commercial spacecraft and mobile earth station platforms.

    Two important commercial applications served by gallium arsenide MMICs are point-to-point and point-to-multipoint digital radio markets. The point-to-point radio market is driven by expansion of the wireless telephone market, as these radios serve as the infrastructure to link the various remote towers to the switching centers. The point-to-multipoint radio market is being driven by both the LMDS auctions by the Federal Communications Commission for wireless distribution of phone, video and two-way data services and the growing demand for high-speed wireless networks not based on expensive or fixed-location fiber optic cable systems.

TriQuint Strategy

    We are a leading supplier of high-performance gallium arsenide integrated circuits for the wireless communications, telecommunications, data communications and aerospace markets. Our products incorporate our proprietary analog and mixed-signal designs and our advanced gallium arsenide

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manufacturing processes to address a broad range of applications and customers. Key elements of our strategy include:

    Focusing on Analog and Mixed-signal Design Excellence.  We have made substantial investments in our analog and mixed-signal circuit design capabilities. Our design staff has specialized expertise to address the needs of each of our target markets. The foundation of our design resources is an extensive library of digital and analog cells and associated software tools and databases necessary to develop new products rapidly and cost effectively. We believe that our analog and mixed-signal design capabilities provide us with a competitive advantage in designing and developing integrated circuits for standard or customer-specific products in our target markets.

    Continuing to Serve Customers Across a Broad Array of Applications in Communications Markets.  We offer a broad range of standard and customer-specific integrated circuits, as well as manufacturing and design services, which address numerous end-user applications in a variety of communications markets. The breadth of our offerings resulted in the direct delivery of products and services to more than 400 customers during 2000. In addition, we had 30 customers that each contributed $1.0 million or more to our revenues in 2000. We believe that our broad customer base and wide range of applications provide us with significant insights into future customer requirements, which facilitates the timely development of new products and services for our target markets. This enables us to participate in emerging communications markets.

    Targeting High Growth Markets with High-performance Solutions.  We use our advanced proprietary gallium arsenide technology to produce high-performance integrated circuits that are intended to overcome the performance limitations of silicon devices in the wireless communications, telecommunications, data communications and aerospace markets. We design and manufacture innovative analog and mixed- signal products that provide high-performance solutions for targeted applications within these growing markets. These applications require integrated circuits that have one or more attributes of gallium arsenide technology, such as low noise and high linearity for superior signal quality, high speed for operation at higher frequencies and low power consumption for battery powered portability.

    Offering Foundry Services.  We believe that our foundry capabilities are a key element in forming long-term partnerships with our customers and enable us to capitalize further on the growth in communications markets. We also believe many semiconductor companies are embracing a manufacturing outsourcing model and that, as a result, foundries will play an important role in the overall growth of the semiconductor industry. We believe our ability to offer both leading edge analog and mixed-signal devices, as well as state-of-the-art gallium arsenide processes, is a key competitive advantage. We seek to continue to expand our foundry capabilities, including our integrated circuit manufacturing, post-fabrication and product engineering services, in order to meet the rigorous demands of our customers. For example, we have entered into agreements with a number of design firms to offer design services to our customers. These agreements enable us to enhance the value of our services without significantly increasing overhead. We currently provide foundry services for, among others, Ericsson, Lucent, Motorola and QUALCOMM Incorporated.

    Capitalizing on Partnerships with Industry Leaders in our Target Markets.  We seek to continue to establish and maintain close working relationships with industry leaders in each of our target market segments. We also intend to establish strategic relationships with companies that provide access to new technologies, products and markets. We have relationships with leading manufacturers in our target markets such as Ericsson, Hughes, Lucent, Nokia, Nortel, Philips Semiconductor and QUALCOMM.

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Target Markets

    We focus on commercial and aerospace applications in the wireless communications, telecommunications, data communications and millimeter wave communication markets, which can benefit significantly from the performance of gallium arsenide and our analog and mixed-signal design expertise.

    Wireless Communications.  Gallium arsenide design and manufacturing technologies are being used in commercial communications applications such as satellites, satellite receivers, wireless transceivers for data networks, wireless local area networks, cellular telephones and pagers.

    Frequency bands are allocated to the various wireless communications applications by government regulatory bodies throughout the world. The allocation is based, among other factors, upon the availability of unallocated frequency bands and the ability of equipment to operate effectively in these bands. As the lower frequency bands become fully allocated and congested, and the volume and rate of communications increases, the trend is toward the allocation and use of higher frequency bands. The speed of gallium arsenide technology makes it well suited for applications at these higher frequencies.

    The ability of gallium arsenide to operate at higher frequencies also makes it well suited for use in aerospace applications. In addition, other key performance advantages of gallium arsenide over silicon in key wireless communications system functions for both commercial and aerospace applications are improved signal reception and transmission, better signal processing in congested bands and greater power efficiency for longer battery life in portable applications.

    Telecommunications.  Gallium arsenide technologies are well suited for the growing markets and applications that require the transmission or manipulation of large amounts of information at high speeds with high data integrity. These applications typically require customer-specific solutions. These applications include digital, analog and mixed-signal functions and are found primarily in the telecommunications industry, but also include other industries such as instrumentation and aerospace. For many of these applications, we believe our products enable these systems to achieve superior performance.

    We believe that the increasing use of fiber optic cable in telecommunications and data communications systems has created a significant growth opportunity for our gallium arsenide products. Because data transmission rates in fiber optic cable can be many times greater than those of copper lines, a single fiber line can cost-effectively replace multiple copper lines. In order to take advantage of the potential cost advantages of fiber optic communications, information must be transmitted at higher rates generally achievable by using gallium arsenide products such as those manufactured by us.

    The telecommunications industry has established a series of standards that define transmission rates, protocols, signal quality and reliability. These standards include synchronous optical network ("SONET"), integrated services digital network ("ISDN") and asynchronous transfer mode ("ATM"). Gallium arsenide integrated circuits address the performance requirements of these standards, as well as higher speed communication standards (40 Gbits/sec and above).

    Data Communications.  Data communications equipment is typically used to interconnect mainframe computers, clients and servers, workstations, disk storage arrays and other peripheral devices. Other applications that require transmission of large amounts of data at high speed include multimedia computing, supercomputing, multiprocessor systems, interactive computer aided design/computer aided manufacturing, medical imaging and high speed, high resolution printing. As new applications requiring higher volume data transfer have proliferated, the use of gallium arsenide technology has also increased. Using our mixed-signal technology, our products enable high-speed data transmission with high data integrity.

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    Millimeter Wave Communications.  Our Millimeter Wave Communications operation designs, develops, manufactures and markets advanced gallium arsenide integrated circuits that are used in commercial applications such as wireless and satellite communications as well as in aerospace systems.

    We provide products that are used in applications for the digital radio market. The point-to-point radio market is driven by expansion of the wireless telephone market, as these radios serve as the infrastructure to link the various remote towers to the switching centers. The point-to-multipoint radio market is being driven by local multipoint distribution systems for wireless distribution of phone, video and two-way data services and the growing demand for other high-speed wireless networks.

Products

    Our broad range of standard and customer-specific integrated circuits, combined with our manufacturing and design services, allow customers to select the specific integrated circuit solution which best fulfills their technical and time-to-market requirements.

Standard Products

    TriQuint offers families of standard products for each of our target markets.

    Wireless Communications.  Our standard products for this varied market are used as building blocks for multi-purpose applications in radio frequency and microwave systems. These systems include personal communications networks, cellular telephones, satellite communications and navigation systems and wireless computer networks. TriQuint's wireless communications standard products leverage the advantages of our proprietary gallium arsenide technology by addressing the needs of system designers for low noise, power efficient amplification, low loss switching and efficient and accurate frequency conversion.

    Telecommunications.  While most of our telecommunications products are customer-specific, we also offer standard telecommunications products, such as SONET and SDH multiplexers and demultiplexers to provide low bit-error-rate performance in standard transmission applications and SONET/SDH compatible transceivers that support clock and data recovery and ATM framing, as well as high-performance crosspoint switches.

    Data Communications.  For this market, TriQuint offers families of standard products which are targeted at high-speed data communication applications.

    Millimeter Wave Communications.  We offer a wide variety of standard millimeter wave communications and discrete devices covering the DC to 45 GHz frequency range. The devices are adapted for both general purpose and application-specific signal amplification or control purposes.

Customer-Specific Products and Services

    We offer our customers a variety of product options and services for the development of customer-specific products. Services offered by us include design, wafer fabrication, test engineering, package engineering, assembly and test. Customer-specific products and services generally provide revenue at two stages: first when the design is developed and engineered, and second when we manufacture the device. We focus the development of our customer-specific products on our target markets in applications involving volume production requirements. As is typical in the semiconductor industry, customer-specific products are developed for specific applications. As a result, we expect to generate production revenues only from those customer-specific products that are subsequently produced in high volume.

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    Customer-specific designs are generally implemented by one of two methods. Under the first method, the customer supplies us with detailed performance specifications and we perform the complete design, development and subsequent manufacturing of the integrated circuits. These designs are generated using either our in-house design engineering group or independent third-party design organizations qualified by us. Under the second method, we supply circuit design and process rules to our customer and the customer's internal engineering staff designs products, which TriQuint then manufactures.

    Our foundry services support markets such as cellular and PCS handset and infrastructure, including GSM, TDMA and CDMA; wireless data networks, including ISM bands at 900 MHz, 2.4 GHz and 5.8 GHz; and telecomm and cable television infrastructures with these types of products and services.

    A substantial portion of our products is designed to address the needs of individual customers. Frequent product introductions by systems manufacturers make our future success dependent on our ability to select customer-specific development projects which will result in sufficient production volume to enable us to achieve manufacturing efficiencies. Because customer-specific products are developed for unique applications, we expect that some of our current and future customer-specific products may never be produced in high volume. In addition, in the event of significant delays in completing designs or our failure to obtain development contracts from customers whose systems achieve and sustain commercial market success, our results of operations could be materially adversely affected.

Design and Process Technology

    In order to develop and introduce new products rapidly and cost-effectively which address the needs of our target markets, we have made substantial investments in building our capabilities in digital, analog and mixed-signal circuit design. We have developed an extensive library of digital and analog cells and associated software tools and databases which we use to facilitate the design of our integrated circuits. We have also developed and documented process and design rules which allow customers to design proprietary circuits themselves. Mixed-signal products, which generally involve varied and complex functions operating at high frequencies, generally present design and testing challenges. We believe that our extensive cell library, optimized mixed-signal process technology and design and test engineering expertise in high-performance mixed-signal integrated circuits address these challenges and provide a significant competitive advantage.

    Our manufacturing strategy is primarily to use high volume process technologies, which enables us to provide cost-effective, stable, uniform and repeatable solutions for our customers. We provide advanced wafer manufacturing processes. Unlike our gallium arsenide competitors who have typically concentrated on either digital or analog products, we have intentionally pursued process technologies that are cost-effective for digital, analog and mixed-signal applications. As a result of the ability to primarily utilize core processes in the manufacture of our products, we are able to enjoy the cost advantages associated with standard high volume semiconductor manufacturing practices. The core process technology in our Oregon wafer fabrication operation employs all implanted structures, 4 micron metal pitch and 0.5 to 0.7 micron geometries, involves 10 to 18 mask steps, has a cutoff frequency of up to 21 GHz and is scalable. This scalability facilitates further cost reduction and performance improvement. The process technology employed in our Texas wafer fabrication operation includes six advanced performance production processes: 0.5 micron gate length MESFET for amplifier applications; 0.25 and 0.5 micron gate length pHEMT for high power and high frequency applications; HBT for high voltage, high linearity, and high power density; 0.5 micron gate length HFET for high voltage, high power amplifiers and switches; and Vertical P-I-N diode ("VPIN") for signal control devices such as switches, limiters and attenuators.

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    We apply the technological advances within the silicon and related support industries to our design and manufacturing processes. TriQuint utilizes popular computer-aided design and process control tools and test equipment. We primarily use standard silicon industry packages and subcontract our product assembly operations.

Customers

    We have a broad customer base of leading systems manufacturers. We shipped products or provided manufacturing services to more than 400 end-user customers and distributors in 2000. Our largest customers include Nokia, which accounted for approximately 12.0%, Nortel, which accounted for approximately 10% and Raytheon, which accounted for approximately 11.7%, of our total revenues in 1998. In 1999, Nokia accounted for approximately 21.0% of our total revenues and Nortel accounted for approximately 17.3% of our total revenues. In 2000, Ericsson accounted for approximately 19.9% of our total revenues, Nokia accounted for approximately 18.3% of our total revenues and Nortel accounted for approximately 17.3% of our total revenues. No other single customer accounted for greater than 10% of total revenues during these periods.

    The following is a list of our customers that contributed $1.0 million or more to our revenues in 2000:

Alcatel	Novatel Wireless, Inc.
The Boeing Company	Nokia
Finisar	Nortel
Ericsson	Northrop Grumman Corporation
Harris Corp.	Panasonic Industrial Co.
Hittite	QUALCOMM
Hughes	Raytheon
Hyundai Corporation	RF Micro Devices Inc.
Intel Corporation	Schlumberger
Lockheed Martin Corporation	Siemens Corporation
Lucent	Stanford Microdevices, Inc.
LG Group	Stellex Microwave Systems, Inc.
Marconi	Tektronix, Inc.
Mini-Circuits	Tellabs, Inc.
Motorola	Toshiba Corporation

Manufacturing

    Our Oregon wafer manufacturing facility is located in Hillsboro. The Hillsboro wafer fabrication facility consists of 68,000 square feet. In 2000, we completed an expansion of our Hillsboro manufacturing facility increasing the square footage of our Class 10 performance clean room to 23,000 square feet. This expansion was necessary to convert our four-inch manufacturing process to a six-inch manufacturing process.

    We have two facilities in Texas, our Dallas facility and our newly acquired Richardson facility. The Dallas facility comprises approximately 100,000 square feet, of which 17,000 square feet are operated as a Class 10 performance clean room. We lease the Dallas facility from Raytheon under a sublease, which expires on July 10, 2002. Raytheon leases the premises from Texas Instruments. We have the right to renew our sublease of this facility for up to three additional five-year periods if Raytheon exercises its rights to renew its lease from Texas Instruments.

    In August 2000, we completed the purchase of a 420,000 square foot fabrication facility in Richardson, Texas from Micron Technology Texas, LLC. The facility, located on a thirty-eight acre

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campus, is configured as 48,500 square feet of Class 1 clean room, 10,000 square feet of Class 100 clean room, and approximately 84,000 square feet of office space. This facility will provide the capacity needed to meet future demand for office and manufacturing space. We plan to continue to operate our Dallas facility during the configuration, setup and testing of our new Richardson facility. The purchase was financed through a synthetic lease transaction consisting of a participation agreement and master lease agreement. The lease provides for the purchase and expansion of our wafer fabrication facility in Richardson under a five-year operating lease. At the end of the lease term, we may (i) renew our lease for two additional two-year terms, (ii) exercise its purchase option or (iii) cause the facility to be sold to a third party whereby we guarantee residual value to the lessor. A portion of the loan is collateralized by pledged investment securities. Additionally, we participated as a lender in the synthetic lease.

    The fabrication of semiconductor products is highly complex and sensitive to dust and other contaminants, requiring production in a highly controlled, clean environment. Minute impurities, difficulties in the fabrication process or defects in the masks used to print circuits on the wafers can cause a substantial percentage of the wafers to be rejected or numerous die on each wafer to be nonfunctional. As compared to silicon technology, the less mature stage of gallium arsenide technology leads to somewhat greater difficulty in circuit design and in controlling parametric variations, thereby yielding fewer good die per wafer. The more brittle nature of gallium arsenide wafers can lead to higher processing losses than experienced with silicon wafers. To maximize wafer yield and quality, we test our products in various stages in the fabrication process, maintain continuous reliability monitoring and conduct numerous quality control inspections throughout the entire production flow using analytical manufacturing controls. A sustained failure to maintain acceptable yields would have a material adverse effect on our operating results.

    Our operation of our own manufacturing facilities entails a high level of fixed costs. Such fixed costs consist primarily of facility occupancy costs, investment in manufacturing equipment, repair, maintenance and depreciation costs related to equipment and fixed labor costs related to manufacturing and process engineering. Our manufacturing yields vary significantly among our products, depending upon a given product's complexity and our experience in manufacturing such product. We have in the past and may in the future experience substantial delays in product shipments due to lower than expected production yields. In addition, during periods of low demand, high fixed wafer fabrication costs could have a material adverse effect on our operating results.

    Our employees have performed studies of the reliability of our processes and have published more than 30 technical papers in the field. In October 1994, we received the ISO 9001 Quality System Certification with respect to our operations in Hillsboro, Oregon. We have successfully fabricated devices for "High Reliability" applications in commercial and military spacecraft since 1988. Through accelerated test techniques, we have demonstrated expected device failure rates of less than 100 FITs (100 failures in 1 billion device-hours of operation) in the first twenty years of operation at maximum junction temperatures of 150 degrees Celsius. The reliability of our processes may be inadvertently reduced by future engineering changes and the reliability of any given integrated circuit may be strongly influenced by design details, and there can be no assurance that circuits designed and manufactured in the future will achieve this level of reliability.

    We use wafer fabrication equipment that is generally the same as that used in a submicron silicon metal oxide semiconductor facility. While many of the process steps are also similar to those commonly used in silicon wafer manufacturing, TriQuint's gallium arsenide manufacturing process has important differences. The gallium arsenide process requires fewer steps and may be conducted at lower temperatures than those typically required in high-performance silicon processes. Furthermore, gallium arsenide wafers require more rigorous handling procedures than do silicon wafers.

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    The raw materials and equipment used in the production of our integrated circuits are available from several suppliers. We currently have approximately seven fully qualified wafer vendors, at least two of which are located in the United States, and three fully qualified mask set vendors, all of which are located in the United States.

    We assemble our products using outside assembly contractors. Outside assembly and tape and reel services for volume production are contracted to eleven vendors, five of which are located in the United States. We purchase high-performance, multilayer ceramic packages from two vendors not located in the United States. We believe we were the first supplier of gallium arsenide integrated circuits to introduce plastic packages in volume production. We currently purchase plastic packaging services from seven suppliers, one of which is located in the United States. A reduction or interruption in the performance of assembly services by subcontractors or a significant increase in the price changed for such services could adversely affect our operating results.

Sales and Distribution

    We sell our products through independent manufacturers' representatives and distributors and through a direct sales staff. As of December 31, 2000, we had twenty-two independent manufacturers' representative firms and two distributors in North America. Our eight-person direct sales management staff provides sales direction and support to the manufacturers' representatives and distributors. Domestic sales management offices are located in the metropolitan areas of Los Angeles, California; Atlanta, Georgia; Boston, Massachusetts; Portland, Oregon; San Jose, California and Raleigh, North Carolina. Our international business is supported by a network of eighteen manufacturers' representatives and distributors in Europe and the Pacific Rim. We have also established foreign sales and marketing offices in Germany, France, Japan and Korea. We had sales outside of the United States of $134.0 million, $62.8 million and $26.8 million in 2000, 1999 and 1998, respectively. All international sales of our products are denominated in U. S. dollars in order to reduce the exchange rate risks. Sales outside of the United States involve a number of inherent risks, including reduced protection for intellectual property rights in some countries, the impact of recessionary environments in economies outside of the United States and generally longer receivables collection periods, as well as tariffs and other trade barriers. In addition, due to the technological advantage provided by gallium arsenide in military applications, all export sales must be licensed by the Office of Export Administration of the U. S. Department of Commerce. Although we have experienced no difficulty in obtaining these licenses, failure to obtain these licenses in the future could have a material adverse effect on our results of operations.

    We include in our backlog all purchase orders and contracts for products requested by the customer for delivery within twelve months. We do not have long-term agreements with any of our customers. Customers generally purchase our products pursuant to cancelable short-term purchase orders. Our customers have canceled these purchase orders or rescheduled delivery dates in the past, and we expect that these events may also occur in the future. We also produce standard products, which frequently can be shipped from inventory within a short time after receipt of an order, and therefore such orders may not be reflected in backlog. Accordingly, backlog as of any particular date may not necessarily be representative of actual sales for any future period.

Research and Development

    Our research and development efforts are focused on the design of new integrated circuits, improvement of existing device performance, development of new processes, cost reductions in the manufacturing process and improvements in device packaging. New product developments include standard and customer-specific devices for satellite communications, cellular and PCS telephones, wireless local area networks, wireless modems, high-performance switching, transmission and data conversion products and data communications chipsets.

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    Our research, development and engineering expenses in 1998, 1999 and 2000 were approximately $19.0 million, $22.0 million and $31.2 million, respectively. As of December 31, 2000, approximately 351 of our employees were engaged in activities related to process and product research and development. We expect that we will continue to spend substantial funds on research and development.

    We are continually in the process of designing new and improved products to maintain our competitive position. While we have patented a number of aspects of our process technology, the market for our products is characterized by rapid changes in both gallium arsenide and competing silicon process technologies. Because of continual improvements in these technologies, we believe that our future success will depend on our ability to continue to improve our products and processes and develop new technologies in order to remain competitive. Additionally, our future success will depend on our ability to develop and introduce new products for our target markets in a timely manner. The success of new product introductions is dependent upon several factors, including timely completion and introduction of new product designs, achievement of acceptable fabrication yields and market acceptance. The development of new products by us and their design into customers' systems can take as long as three years, depending upon the complexity of the device and the application. Accordingly, new product development requires a long-term forecast of market trends and customer needs. Furthermore, the successful introduction of our ongoing products may be adversely affected by the competing products or technologies serving markets addressed by our products. In addition, new product introductions frequently depend on our development and implementation of new process technologies. If we are unable to design, develop, manufacture and market new products successfully, our future operating results will be adversely affected. No assurance can be given that our product and process development efforts will be successful or that our new products will be available on a timely basis or achieve market acceptance. In addition, as is characteristic of the semiconductor industry, the average selling prices of our products have historically decreased over the products' lives and are expected to continue to do so. To offset such decreases, we rely primarily on obtaining yield improvements and corresponding cost reductions in the manufacture of existing products and on introducing new products which incorporate advanced features and which therefore can be sold at higher average selling prices. To the extent that such cost reductions and new product introductions do not occur in a timely manner or our or our customers' products do not achieve market acceptance, our operating results could be adversely affected.

Competition

    The market for high-performance semiconductors is highly competitive and subject to rapid technological change. Due to the increasing requirements for high-speed components, we expect intensified competition from existing silicon device suppliers and the entry of new competition producing either silicon or gallium arsenide components or components incorporating new technologies such as silicon germanium. Currently, we compete primarily with manufacturers of high-performance silicon integrated circuits such as Applied Micro Circuits Corporation, Maxim Integrated Products Inc., Motorola, Philips and STMicroelectronics N.V. and with manufacturers of gallium arsenide integrated circuits such as Alpha Industries Inc., Anadigics Inc., Conexant Systems Inc., Fujitsu Microelectronics, Inc., Infineon Technologies AG, Raytheon, RF Micro Devices and Vitesse Semiconductor Corp. We also face competition from the internal semiconductor operations of some of our current and potential customers. We expect increased competition from existing competitors and from a number of companies that have entered and may enter the gallium arsenide integrated circuits market, such as Network Devices, Inc., Global Communications, Inc. and WIN Semiconductor, as well as future competition from companies that may offer new or emerging technologies such as silicon germanium. In general, most of our current and potential competitors have significantly greater financial, technical, manufacturing and marketing resources than we do.

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    Gallium arsenide integrated circuits have been used in the wireless communications market on a production basis for products or subsystems operating below 2.5 GHz, such as spread spectrum and cellular telephone applications. As the lower frequency bands become more crowded, more applications will utilize frequencies above 2.5 GHz. At such higher frequencies, gallium arsenide integrated circuit solutions generally provide superior performance as compared to silicon alternatives. We compete with both gallium arsenide and silicon suppliers in the telecommunications market. In the data communications and fiber optics communications markets, we supply standard products to a variety of systems manufacturers. Our competition comes from established silicon semiconductor companies and gallium arsenide suppliers, and is generally based on performance elements such as speed, power dissipation, price, product quality and service. In the microwave and millimeter wave markets, our competition is primarily from a limited number of military and aerospace based suppliers who are in the process of expanding their products to cover commercial opportunities as well.

    Our prospective customers are typically systems designers and manufacturers who are considering the use of gallium arsenide semiconductors in their next-generation high-performance systems. Competition is primarily based on performance elements such as speed, complexity and power dissipation, as well as price, product quality and ability to deliver products in a timely fashion. We believe that we currently compete favorably with respect to these factors. Due to the proprietary nature of our products, competition occurs almost exclusively at the system design stage. As a result, a design win by us or our competitors typically limits further competition with respect to manufacturing a given design. Some potential customers may be reluctant to adopt our products because of perceived risks relating to gallium arsenide technology generally, including perceived risks related to manufacturing costs, novel design and unfamiliar manufacturing processes. In addition, potential customers may have questions about the relative performance advantages of our products compared to more familiar silicon semiconductors, or concerns about risks associated with reliance on a smaller, less well-capitalized company for a critical component. While gallium arsenide integrated circuits have inherent speed advantages over silicon devices, the speed of products based upon silicon processes is continually improving. Our products are generally sole sourced to our customers, and our operating results could be adversely affected if our customers were to develop other sources for our products.

    The production of gallium arsenide integrated circuits has been and continues to be more costly than the production of silicon devices. This cost differential relates primarily to higher costs of the raw wafer material, lower production yields associated with the relatively immature gallium arsenide technology and higher unit costs associated with lower production volumes. Although we have reduced production costs through decreasing raw wafer costs, increasing fabrication yields and achieving higher volumes, there can be no assurance that we will be able to continue to decrease production costs. In addition, we believe our costs of producing gallium arsenide integrated circuits will continue to exceed the costs associated with the production of silicon devices. As a result, we must offer devices which provide superior performance to that of silicon such that the perceived price/performance of our products is competitive with silicon devices. There can be no assurance that we can continue to identify markets which require performance superior to that offered by silicon solutions or that we will continue to offer products which provide sufficiently superior performance to offset the cost differentials.

Patents and Licenses

    We aggressively seek the issuance of patents to protect inventions and technology which are important to our business. We have been awarded numerous patents for circuit design and wafer processing which have various expiration dates, but none earlier than April 2005. These include both U.S. and foreign patents. As part of the acquisition of the Millimeter Wave Communications operation in January 1998, we acquired certain patents and also received licenses and sublicenses for certain additional patents. In addition, we have both U.S. and foreign registered trademarks. We also routinely protect our numerous original mask sets under the copyright laws. There can be no assurance that our

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pending patent or trademark applications will be allowed or that the issued or pending patents will not be challenged or circumvented by competitors.

    Notwithstanding our active pursuit of patent protection, we believe that our future success will depend primarily upon the technical expertise, creative skills and management abilities of our officers and key employees rather than on patent ownership. We also rely substantially on trade secrets and proprietary technology to protect our technology and manufacturing know-how, and work actively to foster continuing technological innovation to maintain and protect our competitive position. There can be no assurance that our competitors will not independently develop or patent substantially equivalent or superior technologies.

    On February 26, 1999, a lawsuit was filed against 88 firms, several of which are still in litigation, including us, in the United States District Court for the District of Arizona. The suit alleges that the defendants, including us, infringe upon certain patents held by The Lemelson Medical, Education and Research Foundation, Limited Partnership. Although we believe the suit is without merit and intend to vigorously defend ourselves against the charges, we cannot be certain that we will be successful. Moreover, this litigation may require us to spend a substantial amount of time and money and could distract management from our day to day operations.

    Our involvement in any patent dispute or other intellectual property dispute or action to protect trade secrets and know-how could have a material adverse effect on our business. Adverse determinations in any litigation could subject us to significant liabilities to third parties, require us to seek licenses from third parties and prevent us from manufacturing and selling our products. Any of these situations could have a material adverse effect on our business.

Environmental Matters

    Federal, state and local regulations impose various environmental controls on the storage, handling, discharge and disposal of chemicals and gases used in TriQuint's manufacturing process. For the manufacturing facilities located in Hillsboro, Oregon, we are providing for our own manufacturing waste treatment and disposal. We are required by the State of Oregon Department of Environmental Quality to report usage of environmentally hazardous materials and have retained the appropriate personnel to help ensure compliance with all applicable environmental regulations.

    At our Dallas facility, we utilize Texas Instrument's industrial wastewater treatment facilities and services for the pre-treatment and discharge of wastewater generated by us. Our wastewater streams are commingled with those of Texas Instruments and are covered by the Texas Instruments wastewater permit.

    At our Richardson facility, we provide our own wastewater treatment and contract for disposal of some materials.

    We believe that our activities conform to present environmental regulations. Increasing public attention has, however, been focused on the environmental impact of semiconductor operations. While we have not experienced any materially adverse effects on our operations from environmental regulations, there can be no assurance that changes in such regulations will not impose the need for additional capital equipment or other requirements. Any failure by us or by Texas Instruments with respect to the Dallas facility to adequately restrict the discharge of hazardous substances could subject us to future liabilities or could cause our manufacturing operations to be suspended.

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Employees

    As of December 31, 2000, we employed a total of 1,073 persons, including 589 in manufacturing, 25 in quality and reliability, 351 in process, product and development engineering, 33 in marketing and sales and 75 in finance and administration. None of our employees are represented by a collective bargaining agreement, nor have we experienced any work stoppage. We consider our relations with employees to be good.

Executive Officers

    The names, ages and positions of our current executive officers are as follows:

Name	Age	Current Position(s)	Position Held Since
Steven J. Sharp	59	Chairman of the Board of Directors, President and Chief Executive Officer	1991
Thomas V. Cordner	56	Vice President and General Manager, Millimeter Wave Communications	1998
Bruce R. Fournier	44	Vice President and General Manager, Foundry Services	1998
Lehman H. Johnson III	58	Vice President and General Manager, Telecommunications	2001
Paul Kollar	55	Vice President, Sales	1998
David N. McQuiddy, Jr.	62	Vice President, Research and Development	2000
Donald H. Mohn	48	Vice President, Strategic Marketing and Business Development	2001
J. David Pye	50	Vice President, Manufacturing	1996
Ronald R. Ruebusch	51	Vice President and General Manager, Wireless Communications	1996
Stephanie J. Welty	45	Vice President, Finance and Assistant Secretary	1999
Edson H. Whitehurst, Jr.	63	Vice President, Finance and Administration, Chief Financial Officer and Secretary	1999

    Mr. Sharp joined TriQuint in September 1991 as Director, President and Chief Executive Officer. In May 1992 he became Chairman of TriQuint's Board of Directors. For the prior eight years he had served in various roles associated with venture capital financed semiconductor companies. From April 1988 to June 1989, Mr. Sharp was the founder and served as Chief Executive Officer of Power Integrations, Inc., a semiconductor manufacturing company. Previously, Mr. Sharp was employed for fourteen years by Signetics Corporation (since acquired by Philips Electronics N.V.), a semiconductor manufacturer, and for nine years by Texas Instruments, a semiconductor manufacturer. Mr. Sharp also serves as a director of Power Integrations, Inc., Gemfire Corporation and Vitronyx. He received a B.S. degree in Mechanical Engineering from Southern Methodist University, a M.S. degree in Engineering Science from California Institute of Technology and a M.B.A from Stanford University.

    Mr. Cordner joined TriQuint in January 1998 as Vice President and General Manager, Millimeter Wave Communications, as a result of TriQuint's acquisition of Raytheon Company's Monolithic Microwave Integrated Circuit ("MMIC") operations. From July 1997 to January 1998, Mr. Cordner

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served as Operations Manager for Raytheon, heading its GaAs MMIC operations. Prior to such time, Mr. Cordner was an employee of Texas Instruments, Incorporated for thirty-two years, most recently as the Operations Manager for its GaAs Operations Group from January 1991 to July 1997. Mr. Cordner graduated from the University of Texas at Arlington in 1969 with a B.S. degree in Mathematics.

    Mr. Fournier has held the position of Vice President and General Manager, Foundry Services, since June 1998. From September 1994 to June 1998, he was Vice President, Worldwide Sales. He joined TriQuint in June 1987 as Eastern Area Sales Manager, was promoted to National Sales Manager, Wireless Products in 1991 and Director of Worldwide Sales in early 1994. Prior to joining TriQuint, Mr. Fournier held semiconductor sales and marketing management positions with Fairchild Semiconductor International, Inc., Weitek Corporation and Honeywell, Inc. Mr. Fournier received an A.S. degree in Electrical Engineering and a B.S. degree in Business Administration from the University of Maine and a M.B.A. from the University of Southern Maine.

    Mr. Johnson has held the position of Vice President and General Manager, Telecommunications since 2001. He joined TriQuint in January 2000 as Vice President, Strategic Marketing and Business Development. Mr. Johnson had been Vice President, System Marketing, for Scientific-Atlanta, Inc.'s Transmission Division since 1997. Prior to such time he spent 5 years with GTE, most recently as Vice President, Technology, for GTE Government Systems Corporation. Mr. Johnson has also held senior marketing and product development positions in the communications industry with DSC Communications, Inc. and ITT Corporation (both of which were acquired by Alcatel). Mr. Johnson holds a B.S. degree in Electrical Engineering from Citadel and a M.B.A. from Duke University's Fuqua School.

    Mr. Kollar joined TriQuint in June 1998 as Vice President, Sales. From November 1985 until March 1998, Mr. Kollar was Vice President, Sales, for Lattice Semiconductor, Inc. where he was responsible for worldwide sales. From March 1969 to November 1985, Mr. Kollar held various sales and marketing positions with Signetics Corp. (which was acquired by Philips Electronics). Mr. Kollar received a B.S. degree in Engineering from Harvey Mudd College and a M.S. degree in Electrical Engineering from the University of Southern California.

    Dr. McQuiddy joined TriQuint in January 2000 as Vice President, Research and Development. Most recently, he worked with Raytheon where he was a Senior Principal Fellow working in the field of RF/Microwave/Millimeter Wave. Dr. McQuiddy joined Texas Instruments, Incorporated in 1968 and remained there until Raytheon purchased its Defense Business Unit in July 1997. At Texas Instruments, Dr. McQuiddy was responsible for directing internal research and development investments in electro-optics, microwave/millimeter-wave and micro-electronic technologies. He is an IEEE Fellow and presently serves on the IEEE USA R&D Policy Committee. Dr. McQuiddy holds a B.S. degree from Vanderbilt University and a M.S. Degree and Ph.D. in Electrical Engineering from the University of Alabama.

    Mr. Mohn has held the position of Vice President, Strategic Marketing and Business Development since 2001. He joined TriQuint in June 1995 as Vice President and General Manager, Telecommunications and Computing. From July 1993 until June 1995, Mr. Mohn was Vice President, Marketing, for IC Works, Inc., where he was responsible for product strategy development, tactical marketing, marketing communications and public relations. From 1989 until July 1993, Mr. Mohn held various positions at the Microelectronics division of AT&T, most recently as Director/General Manager of the Application Specific Standard Products. Mr. Mohn received a B.S. degree in Electrical Engineering from the University of Minnesota and a M.B.A. from the University of Dallas, Texas.

    Mr. Pye joined TriQuint in May 1996 as Vice President, Manufacturing. From 1983 until 1996, Mr. Pye was Vice President and General Manager at VLSI Technology, Inc., where he served in various capacities. From 1973 to 1983, Mr. Pye worked at Texas Instruments, Incorporated, involved in process

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engineering and process development. Mr. Pye received a B.A. degree from Napier College of Science and Technology in Edinburgh, Scotland.

    Mr. Ruebusch joined TriQuint in May 1996 as Vice President and General Manager, Wireless Communications. From 1993 to 1996, Mr. Ruebusch was Vice President, Semiconductor Product Development, at Celeritek, Inc. From 1991 to 1993, Mr. Ruebusch held management positions at Pacific Monolithics, Inc. (which was acquired by Richardson Electronics, Ltd.). Prior to such time, Mr. Ruebusch spent thirteen years in various management positions at Advanced Micro Devices, Inc. and Signetics Corporation (which was acquired by Philips Electronics). Mr. Ruebusch received a B.S. degree in Electrical Engineering, a M.S. degree in Electrical Engineering and a M.B.A., all from the University of Santa Clara.

    Ms. Welty has been TriQuint's Vice President, Finance, since September 1999. Ms. Welty joined TriQuint in 1994 as Accounting Manager, and since 1996 has served as Director of Information Systems. Previously she held accounting and controller positions at other high technology firms. Ms. Welty is a graduate of the University of Washington and is a Certified Public Accountant.

    Mr. Whitehurst has been TriQuint's Vice President, Finance and Administration, Chief Financial Officer and Secretary since November 1999. Mr. Whitehurst previously served as the Chief Financial Officer of Programart Corporation from October 1996 to October 1999, and the Chief Financial Officer of Cadre Technologies, Inc. from 1984 to October 1996. He has also held senior financial and operational positions with Tektronix Inc., Signetics Corporation (which was acquired by Philips Electronics) and Corning Glass Works (now Corning Incorporated). Mr. Whitehurst received a B.S. degree in Accounting from Northeastern University.

ITEM 2. PROPERTIES

    Our executive, administrative, test and technical offices are located in a 124,000 square foot leased facility in Hillsboro, Oregon. The Hillsboro wafer fabrication facility consists of 68,000 square feet, of which 23,000 is operated as a Class 10 performance clean room.

    On September 11, 2000, we began the expansion of our engineering and administrative building in Hillsboro, Oregon. This expansion will add approximately 65,000 square feet to our existing building and provide for an additional 62,200 square feet of office space to be completed at a later date. The additional space will be used for marketing, engineering and light manufacturing activities. This expansion will enable us to keep pace with the future needs of our customers and markets and will provide the needed resources to grow our research and development activities in Oregon. When both expansions are complete, our Hillsboro facility will be in excess of 300,000 square feet.

    In May 1996, we entered into a five-year synthetic lease through a Participation Agreement (the "Agreement") with Wolverine Leasing Corp. ("Wolverine"), Matisse Holding Company ("Matisse") and U.S. Bank National Association, formerly known as United States National Bank of Oregon ("USNB"). The lease provides for the construction and occupancy of our Hillsboro facility under an operating lease from Wolverine. At the end of the lease term, we may (i) renew our lease for an additional five years, (ii) exercise its purchase option or (iii) cause the facility to be sold to a third party whereby we guarantee residual value to the lessor. Pursuant to the terms of the Agreement, the USNB and Matisse made loans to Wolverine who in turn advanced the funds to us for the construction of the Hillsboro facility and other costs and expenses associated therewith. The loan from USNB is collateralized by investment securities pledged by us. Such investment securities are classified on our balance sheet as restricted long-term assets. In addition, restrictive covenants in the Agreement require us to maintain (i) a total liability to tangible net worth ratio of not more than 1.50 to 1.00, (ii) minimum tangible net worth greater than $50.0 million and (iii) cash and liquid investment securities, including restricted securities, greater than $45.0 million. As of December 31, 2000, we were in compliance with the covenants described above. However, there can be no assurance that we will continue to be in

19

compliance with these covenants in the future. We expect to exercise the purchase option on this lease when it expires in May 2001.

    In November 1997, we entered into a $1.5 million lease agreement for additional land adjacent to our Hillsboro facility. Pursuant to the terms of that agreement, USNB provided loans to Matisse to purchase the land, who in turn leased it to us under a renewable one-year lease agreement. The loan from USNB was partially collateralized by a guarantee from us. In June 2000, we exercised our purchase option, retired this loan and no longer have any obligation under the agreement.

    In January 1998, we acquired the Millimeter Wave Communications operations of the former Texas Instruments' Defense Systems & Electronics Group from Raytheon. The Millimeter Wave Communications facilities are located in Dallas, Texas. The Dallas facility comprises approximately 100,000 square feet, of which 17,000 square feet is operated as a Class 10 performance clean room. We lease the Dallas facility from Raytheon under a sublease, which expires on July 10, 2002. Raytheon leases the premises from Texas Instruments. We have the right to renew our sublease of the Dallas facility for up to three additional five-year periods in the event that Raytheon exercises its rights to renew its lease from Texas Instruments. There can be no assurance, however, that Raytheon will extend its lease beyond July 10, 2002.

    In December 1999, we announced the acquisition of approximately seventeen acres adjacent to our current thirty-two acre Dawson Creek Business Park campus in Hillsboro, Oregon. The additional acreage was acquired at a cost of approximately $4 million in cash.

    In August 2000, we completed the purchase of a 420,000 square foot wafer fabrication facility in Richardson, Texas from Micron Technology Texas, LLC for aggregate consideration of $87.0 million. The purchase was financed through a synthetic lease transaction consisting of a participation agreement and master lease agreement. The lease provides for the purchase and expansion of our wafer fabrication facility in Richardson, Texas under an operating lease. At the end of the lease term, we may (i) renew our lease for two additional two-year terms, (ii) exercise its purchase option or (iii) cause the facility to be sold to a third party whereby we guarantee residual value to the lessor. A portion of the loan is collateralized by pledged investment securities. Additionally, we participated as a lender in the synthetic lease transaction. Restrictive covenants included in the synthetic lease require us to maintain (a) a debt service coverage ratio of not more than 3.00 to 1.00 until June, 2001 and not more than 2.50 to 1.00 thereafter, (b) a quick ratio of not less than 1.25 to 1.00, (c) a fixed charge coverage ratio of not less than 1.50 to 1.00 beginning first quarter of 2001 and not less than 2.00 to 1.00 beginning first quarter of 2002 and thereafter and (d) tangible net worth not less than 90% of tangible net worth as of December 31, 1999 plus 75% of net income and net equity additions without deductions for losses. As of December 31, 2000, we were in compliance with the restrictive covenants contained in this synthetic lease.

ITEM 3. LEGAL PROCEEDINGS

    On February 26, 1999, a lawsuit was filed against 88 firms, several of which are still in litigation, including the Company, in the United States District Court for the District of Arizona. The suit alleges that the defendants, including the Company, infringe upon certain patents held by The Lemelson Medical, Education and Research Foundation, Limited Partnership. Although the Company believes the suit is without merit and intends to vigorously defend itself against the charges, it cannot be certain that it will be successful. Moreover, this litigation may require the Company to spend a substantial amount of time and money and could distract management from its day to day operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    None.

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PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

    Certain of the information required by this item is included under the caption Common Stock Prices and Market for Company's Common Equity and Related Stockholder Matters contained in our Annual Report to Stockholders for fiscal year ended December 31, 2000 and is incorporated herein by reference.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

    The information required by this item is included under the caption Selected Consolidated Financial Data contained in our Annual Report to Stockholders for fiscal year ended December 31, 2000 and is incorporated herein by reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    The information required by this item is included under the caption Management's Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report to Stockholders for fiscal year ended December 31, 2000 and is incorporated herein by reference.

ITEM 7(a). QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Qualitative and Quantitative Disclosures About Market and Interest Rate Risk

    We are exposed to minimal market risks. We manage the sensitivity of our results of operations to these risks by maintaining a conservative investment portfolio. Our investments, both restricted and unrestricted, are classified as available-for-sale and held-to-maturity securities and are comprised solely of highly rated, short and medium-term investments, such as corporate notes, commercial paper and other such low risk investments. Although we manage investments under a conservative investment policy, economic, market and other events may occur to our investees, which we cannot control. We do not hold or issue derivative, derivative commodity instruments or other financial instruments for trading purposes. We are exposed to currency exchange fluctuations, as we sell our products internationally. We manage the sensitivity of our international sales by denominating all transactions in U.S. dollars.

    Our 4% convertible subordinated notes due 2007 have a fixed interest rate of 4%. Consequently, we do not have significant cash flow exposure on our long-term debt. However, the fair value of the convertible subordinated notes is subject to significant fluctuations due to their convertibility into shares of our stock and other market conditions.

    The following table shows the fair values of our investments and convertible subordinated notes as of December 31, 2000 (in thousands):

	Carrying Value	Fair Value
Cash and cash equivalents	94,211	94,211
Available-for-sale investments (including unrealized gains of $79)	219,582	219,582
Held-to-maturity investments	146,836	146,969
Convertible subordinated notes	345,000	301,444

    We are exposed to interest rate risk, as we use additional financing periodically to fund capital expenditures. The interest rate that we may be able to obtain on financings will depend on market

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conditions at that time and may differ from the rates we have secured in the past. Sensitivity of results of operations to market and interest rate risks is managed by maintaining a conservative investment portfolio.

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND CONSOLIDATED SUPPLEMENTARY FINANCIAL DATA

    The information required by this item is listed in Item 14 of Part IV of this report and includes the caption Consolidated Supplementary Unaudited Financial Data contained in our Annual Report to Stockholders for fiscal year ended December 31, 2000 and is incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

    Not applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    The information required by this item is included under the captions Election of Directors, Executive Officers of the Registrant and Section 16(a) Beneficial Ownership Reporting Compliance contained in our Proxy Statement for our 2001 Annual Meeting of Stockholders, to be held May 23, 2001, to be filed with the Securities and Exchange Commission within 120 days of the end of our fiscal year pursuant to General Instructions G(3) of Form 10-K and is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

    Information required by this item will be included under the caption Executive Compensation and Other Matters contained in our Proxy Statement for our 2001 Annual Meeting of Stockholders and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    Information required by this item is included under the caption Security Ownership of Certain Beneficial Owners and Management contained in our Proxy Statement for our 2001 Annual Meeting of Stockholders and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    Information required by this item is included under the caption Certain Relationships and Related Transactions contained in our Proxy Statement for our 2001 Annual Meeting of Stockholders and is incorporated herein by reference.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K

    (a)(1)Consolidated Financial Statements

    The Consolidated Financial Statements, together with the report thereon of KPMG LLP are included in the Company's Annual Report to Stockholders are incorporated herein by reference.

    TriQuint Semiconductor, Inc.:

    Independent Auditors' Report

    Consolidated Balance Sheets as of December 31, 2000 and 1999

22

    Consolidated Statements of Operations for the years ended December 31, 2000, 1999 and 1998

    Consolidated Statements of Stockholders' Equity December 31, 2000, 1999 and 1998

    Consolidated Statements of Cash Flows for the years ended December 31, 2000, 1999 and 1998

    Notes to Consolidated Financial Statements

    (a)(2)Consolidated Financial Statement Schedule

    The following schedule is filed herewith:

	Page No.
Schedule II Valuation and Qualifying Accounts	F1
Independent Auditors' Report on Consolidated Financial Statement Schedule	F2

    Schedules not listed above have been omitted because the information required to be set forth therein is not applicable or is included in the Consolidated Financial Statements or notes thereto.

(a)(3) Exhibits
3.1(1)	Certificate Incorporation of Registrant
3.1.1(2)	Certificate of Amendment to Certificate of Incorporation
3.2(1)	Bylaws of Registrant
4.1(3)	Preferred Shares Rights Agreement, dated as of June 30, 1998 between Registrant and ChaseMellon Shareholder Services, L.L.C., including the Certificate of Determination, the form of Rights Certificate and the Summary of Rights attached thereto as Exhibits A, B and C, respectively
10.1	Reserved
10.2(4)	1987 Stock Incentive Program, as amended, and forms of agreements thereunder
10.3(5)	1992 Employee Stock Purchase Plan, as amended, and forms of agreement thereunder
10.4(6)	Letter Agreement dated November 22, 1991 between Registrant and Steven J. Sharp
10.5	Reserved
10.6(6)	Letter Agreement dated March 1, 1992 between Registrant and Edward C.V. Winn, as amended to date
10.7(6)	Registration Rights Agreement dated May 17, 1991 between Registrant and certain of its stockholders and warrant holders, as amended September 5, 1991, September 3, 1992, July 1, 1993 and September 24, 1993
10.8(6)	Supply Agreement dated October 11, 1990 by and between DuPont Photomasks, Inc. and Registrant
10.9(6)	Amended and Restated Exclusive Distributor Agreement dated September 20, 1991, as amended between Registrant and Giga A/S
10.10	Reserved
10.11	Reserved
10.12	Reserved
10.13(6)	Asset Purchase Agreement dated August 31, 1993 by and between American Telephone and Telegraph Company ("AT&T") and Registrant
10.13.2(6*)	Joint Development and Technology Transfer Agreement dated August 31, 1993 between AT&T and Registrant

23

10.13.3(6*)	Foundry Agreement dated August 31, 1993 between AT&T and Registrant
10.13.4(6*)	Patent License Agreement dated August 31, 1993 between AT&T and Registrant
10.13.5(6)	Letter Agreement dated August 31, 1993 between AT&T and Registrant
10.13.6(6)	Warrant to Purchase Shares of Series D Convertible Preferred Stock of Registrant dated August 31, 1993 issued to AT&T
10.14(6*)	Agreement dated May 6, 1993 between Comlinear Corporation and Registrant
10.15(6*)	Agreement of Purchase and Sale for Semiconductor Products between Northern Telecom Canada Limited and Registrant dated July 8, 1993
10.16(7)	Participation Agreement dated May 17, 1996 among Registrant, Wolverine Leasing Corp., Matisse Holding Company and United States National Bank of Oregon
10.16.1	Amendment dated November 1, 2000 to Participation Agreement dated May 17, 1996 among Registrant, Wolverine Leasing Corp., Matisse Holding Company and U.S. Bank National Association, formerly known as United States National Bank of Oregon
10.17(7)	Lease dated May 17, 1996 between Registrant and Wolverine Leasing Corp.
10.18(8)	1996 Stock Incentive Program and forms of agreement thereunder
10.19(1)	Form of Indemnification Agreement executed by Registrant and its officers and directors pursuant to Delaware reincorporation
10.20(9)	Master Lease Agreement between Registrant and General Electric Capital Corporation dated June 27, 1997 and Equipment Schedules G-1, G-2, and G-3, each dated January 13, 1998
10.21(9)	Asset Purchase Agreement, dated as of January 8, 1998, by and between Raytheon TI Systems, Inc. and Registrant, and related exhibits
10.22(10)	1998 Nonstatutory Stock Option Plan and forms of agreement thereunder
10.23(11)	1998 Employee Stock Purchase Plan and forms of agreement thereunder
10.24(12)	Participation Agreement dated as of August 30, 2000 among TriQuint Semiconductor Texas, LP, Registrant, TriQuint Texas General Holding Company, Lease Plan North America, Inc, ABN AMRO Bank N.V. and the other banks and financial institutions that are listed on the signature pages thereto as participants
10.24.1(12)	Appendix 1 to Participation Agreement, Master Lease and Deed of Trust, Security Agreement and Financing Statement each dated as of August 30, 2000 among TriQuint Semiconductor Texas, LP, Registrant, TriQuint Texas General Holding Company, Lease Plan North America, Inc., ABN AMRO Bank N.V. and the other banks and financial institutions that are listed on the signature pages thereto as participants
10.25(12)	Master Lease Agreement dated August 30, 2000 between Lease Plan North America, Inc. and TriQuint Semiconductor Texas, LP for the Richardson Texas facility
10.25.1(12)	Appendix 1 to Participation Agreement, Master Lease and Deed of Trust, Security Agreement and Financing Statement each dated as of August 30, 2000 among TriQuint Semiconductor Texas, LP, Registrant, TriQuint Texas General Holding Company, Lease Plan North America, Inc., ABN AMRO Bank N.V. and other banks and financial institutions that are listed on the signature pages thereto as participants
10.26(13)	Loan Agreement dated September 28, 2000 between U.S. Bank National Association and Registrant
13.1	Excerpts from Annual Report to Stockholders for the fiscal year ended December 31, 2001
21.1	Subsidiaries

24

23.1 Independent Auditors' Consent

(*)

Confidential treatment has been granted with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission.

(1)

Incorporated by reference to Registrant's Registration Statement on Form 8-B (File No. 000-22660) as declared effective by the Securities and Exchange Commission on February 18, 1997.

(2)

Incorporated by reference to Registrant's Quarterly Report on Form 10-Q (File No. 000-22660) for the period ended September 30, 2000 filed with the Securities and Exchange Commission on November 13, 2000.

(3)

Incorporated by reference to Registrant's Report on Form 8-A (File No. 000-22660) as declared effective by the Securities and Exchange Commission on July 24, 1998.

(4)

Incorporated by reference to Registrant's Annual Report on Form 10-K (File No. 000-22660) for the fiscal year ended December 31, 1994 filed with the Securities and Exchange Commission on March 29, 1995.

(5)

Incorporated by reference to Registrant's Registration Statement on Form S-8 (File No. 333-08891) as declared effective by the Securities and Exchange Commission on August 14, 1996.

(6)

Incorporated by reference to Registrant's Registration Statement on Form S-1 (File No. 333-70594) as declared effective by the Securities and Exchange Commission on December 13, 1993.

(7)

Incorporated by reference to the exhibits filed with Registrant's Report on Form 8-K (File No. 000-22660) filed with the Securities and Exchange Commission on June 14, 1996.

(8)

Incorporated by reference to Registrant's Registration Statement on Form S-8 (File No. 333-81273) as declared effective by the Securities and Exchange Commission on June 22, 1999, as amended by Registrant's Registration Statement on Form S-8 (File No. 333-39730) as declared effective by the Securities and Exchange Commission on June 20, 2000.

(9)

Incorporated by reference to Registrant's Registration Statement on Form 8-K (File No. 000-22660) filed with the Securities and Exchange Commission on January 27, 1998.

(10)

Incorporated by reference to Registrant's Registration Statement on Form S-8 (File No. 333-48883) as declared effective by Securities and Exchange Commission on March 30, 1998, as amended by Registrant's Registration Statement on Form S-8 (File No. 333-66707) as declared effective by the Securities and Exchange Commission on November 3, 1998.

(11)

Incorporated by reference to Registrant's Registration Statement on Form S-8 (File No. 333-66707) as declared effective by the Securities and Exchange Commission on November 3, 1998, as amended by Registrant's Registration Statement on Form S-8 (File No. 333-39732) as declared effective by the Securities and Exchange Commission on June 20, 2000.

(12)

Incorporated by reference to the exhibits filed with Registrant's Report on Form 8-K (File No.000-22660) filed with the Securities and Exchange Commission on September 14, 2000.

(13)

Incorporated by reference to Registrant's Annual Report on Form 10-K (File No. 000-22660) for the fiscal year ended December 31, 1999 filed with the Securities and Exchange Commission on February 15, 2000.

(b) Reports on Form 8-K

None.

(c) Exhibits

See Item 14(a)(3) above.

25

(d) Financial Statement Schedules

See Item 14(a)(2) above.

26

SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

TRIQUINT SEMICONDUCTOR, INC.
By:	/s/ STEVEN J. SHARP Steven J. Sharp President, Chief Executive Officer and Chairman of the Board of Directors

Date: March 28, 2001

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POWER OF ATTORNEY

    KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Steven J. Sharp and Edson H. Whitehurst, Jr., and each of them, his true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, to sign any and all amendments (including post-effective amendments) to this Annual Report on Form 10-K and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, or any of them, shall do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/ STEVEN J. SHARP (Steven J. Sharp)	President, Chief Executive Officer and Chairman (Principal Executive Officer)	March 28, 2001
/s/ EDSON H. WHITEHURST, JR. (Edson H. Whitehurst, Jr.)	Vice President, Finance and Administration, Chief Financial Officer and Secretary (Principal Financial and Accounting Officer)	March 28, 2001
/s/ FRANCISCO ALVAREZ (Francisco Alvarez)	Director	March 28, 2001
/s/ PAUL A. GARY (Paul A. Gary)	Director	March 28, 2001
/s/ CHARLES SCOTT GIBSON (Charles Scott Gibson)	Director	March 28, 2001
/s/ WALDEN C. RHINES (Walden C. Rhines)	Director	March 28, 2001
/s/ EDWARD F. TUCK (Edward F. Tuck)	Director	March 28, 2001
/s/ NICOLAS KAUSER (Nicolas Kauser)	Director	March 28, 2001

27

TRIQUINT SEMICONDUCTOR, INC.
Schedule II—Valuation and Qualifying Accounts
(in thousands)

		Balance at beginning of period	Additions charged to costs and expenses	Deductions	Balance at end of period
Year ended December 31, 1998:
	Allowance for doubtful accounts	196	99	33	262
	Inventory valuation reserve	1,324	7,429	6,331	2,422
Year ended December 31, 1999:
	Allowance for doubtful accounts	262	861	280	843
	Inventory valuation reserve	2,422	4,071	1,337	5,156
Year ended December 31, 2000:
	Allowance for doubtful accounts	843	601	379	1,065
	Inventory valuation reserve	5,156	3,181	1,118	7,219

F1

Independent Auditors' Report
on Consolidated Financial Statement Schedule

The Board of Directors
TriQuint Semiconductor, Inc.:

    Under date of January 31, 2001, we reported on the consolidated balance sheets of TriQuint Semiconductor, Inc. and subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2000, as contained in the 2000 annual report to stockholders. These consolidated financial statements and our report thereon are incorporated by reference in the annual report on Form 10-K for the year ended December 31, 2000. In connection with our audit of the aforementioned consolidated financial statements, we also audited the related consolidated financial statement schedule as listed in Item 14(a)(2) of this Form 10-K. This consolidated financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on this consolidated financial statement schedule based on our audits. In our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

/s/ KPMG LLP

Portland, Oregon
March 28, 2001

F2

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TRIQUINT SEMICONDUCTOR, INC. 2000 ANNUAL REPORT ON FORM 10-K TABLE OF CONTENTS
PART I
ITEM 1. BUSINESS
ITEM 2. PROPERTIES
ITEM 3. LEGAL PROCEEDINGS
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 7(a). QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND CONSOLIDATED SUPPLEMENTARY FINANCIAL DATA
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K

EX-10.16-1

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Exhibit 10.16.1

AMENDMENT NO. 1 TO
PARTICIPATION AGREEMENT

    THIS AMENDMENT NO. 1 TO PARTICIPATION AGREEMENT ("First Amendment"), dated as of November 1, 2000, is entered into by and among TRIQUINT SEMICONDUCTOR, INC., a Delaware corporation, as Lessee (together with its permitted successors and assigns, the "Lessee"), WOLVERINE LEASING CORP., a Texas corporation (together with its permitted successors and assigns, "Wolverine"), MATISSE HOLDING COMPANY, a Texas corporation (together with its permitted successors and assigns, "Matisse") and U.S. BANK NATIONAL ASSOCIATION, formerly known as UNITED STATES NATIONAL BANK OF OREGON (together with its successors and assigns, the "Bank").

PRELIMINARY STATEMENTS

    A.  Lessee, Wolverine, Matisse and the Bank are parties to that Participation Agreement, dated as of May 17, 1996 (the "Participation Agreement"). Capitalized terms used but not defined herein have the meanings set forth in the Participation Agreement.

    B.  The Lessee has requested Matisse and Bank to agree to certain changes in the terms governing the facilities provided pursuant to the Participation Agreement. The parties are willing to enter into such changes upon the terms and subject to the conditions set forth herein.

AGREEMENT

    NOW, THEREFORE, in consideration of the mutual agreements contained in this First Amendment and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

SECTION 1.
DEFINITIONS; INTERPRETATION

    1.1  The following definitions are hereby added to the definitions in Appendix 1 of the Participation Agreement:

"CD Rate" means, with respect to each Interest Period or Rental Period, an annual rate equal to the interest rate (if any) which accrues on the certificates of deposit which have been pledged to Bank for such Interest Period or Rental Period to satisfy the CD Rate Funding Condition for such Interest Period or Rental Period.

"CD Rate Advance" means a Loan Advance or Lease Advance which bears interest or rent, respectively, at the CD Rate.

"CD Rate Conversion/Continuation Request" shall have the meaning set forth in Section 3.4(f)(i) of the Participation Agreement as such section is added in Section 2.1 of the First Amendment.

"CD Rate Funding Condition" shall mean, with respect to any CD Rate Advance requested in a CD Rate Conversion/Continuation Request, the delivery to Bank of Pledged Collateral in full compliance with the Investment Collateral Security Agreement in the form of certificates of deposit issued by the Bank having an initial principal amount (as of the commencement of the Interest Period and Rent Period to which such CD Rate Conversion/Continuation Request relates) equal to the sum of 100% of the aggregate outstanding principal balance of the Matisse/Bank Loan and the Wolverine/Bank Loan, plus $1.00 and having a term equal to the applicable Interest

1

Period and Rental Period. If required by Bank, at the time of issuance thereof, Bank may require at least seven days advance notice or any withdrawal or transfer of funds from any such certificate of deposit or other account pledged to it, and may limit the number of withdrawals or transfers from such certificates of deposit or accounts to no more than six in any calendar month, so that such certificates of deposit or accounts may be structured as non-personal time deposits under 12 C.F.R., Part II, Chapter 204 (commonly known as Regulation "D").

"First Amendment" means this First Amendment to the Participation Agreement.

    1.2  The following definitions in Appendix 1 of the Participation Agreement are hereby modified as follows:

    (a) Clause (ii) of the definition of "Applicable Margin" is modified to read as follows:

   "(ii) for Loan Advances bearing interest determined with reference to the Alternate Base Rate or the CD Rate, 0.775% per annum."

    (b) The definition of "Basic Rent" is modified in its entirety to read as follows:

"Basic Rent" means an amount determined as of each Payment Date equal to the aggregate amount accrued on the outstanding Lease Advances from time to time during the period ending on such Payment Date and commencing on the next preceding Payment Date (or, if there is not preceding Payment Date, on the Closing Date) at an annual rate equal to the applicable Eurodollar Rate, Alternate Base Rate or CD Rate as designated for the applicable Loan Advance or continuation or conversion thereof through which such Lease Advances were funded, plus the Applicable Margin applicable to such Lease Advances."

    (c) The definition of "Interest Period" is modified to add, after the clause "Conversion/Continuation Request given with respect thereto" in the fourth line thereof, and before the clause "provided that the foregoing provisions relating to Interest Periods are subject to the following:" in the fifth line thereof, the following:

"and means with respect to any CD Rate Advance the period commencing on the Pricing Conversion Date for such CD Rate Advance and ending one month thereafter (or such shorter period as may commence on the last day of the previous Interest Period or Rental Period and end on the Maturity Date), as selected by the Lessee in its CD Rate Conversion/Continuation Request".

    (d) The definition of the term "Pricing Conversion Date" is hereby modified in its entirety to read as follows:

"Pricing Conversion Date" means any date on which the Lessee elects to (a) convert an Alternate Base Rate Advance to a Eurodollar Advance or CD Rate Advance, or to convert a Eurodollar Advance to an Alternate Base Rate Advance or CD Rate Advance or to convert a CD Rate Advance to an Alternate Base Rate Advance or Eurodollar Advance or (b) continue an existing Eurodollar Advance or CD Rate Advance for an additional Interest Period or Rental Period."

    (e) The definition of "Rental Period" is hereby modified to add after the term "Conversion/Continuation Request" in the fifth line thereof and before the clause "provided that the foregoing provisions relating to Interest Periods are subject to the following:" in the fifth line thereof, the following:

"and means, with respect to any Lease Advance funded, continued or converted through a CD Rate Advance the period commencing on the Pricing Conversion Date for such Lease Advance funded, continued or converted through CD Rate Advance and ending

2

one month thereafter, as selected by the Lessee in its CD Rate Conversion/Continuation Request".

    SECTION 1.3.  Certain Defined Terms.  All references in the Operative Documents to the Participation Agreement shall mean the Participation Agreement as amended by this First Amendment. This First Amendment is hereby included within the definition of "Operative Document."

SECTION 2.
AVAILABILITY OF CD-RATE ADVANCES

    SECTION 2.1.  Procedures for CD Rate Advances.  The following Section 3.4(f) is hereby added to the Participation Agreement:

    "(f) (i) CD Rate Requests. In addition to the procedures set forth in the other subsections of this Section 3.4, if Lessee has satisfied the CD Rate Funding Condition, Lessee shall have the right, in connection with the conversion or continuation of an outstanding Alternate Base Rate Advance, Eurodollar Advance or CD Rate Advance to deliver an irrevocable written notice to the Bank in the form of a request, substantially in the form of Exhibit A attached to the First Amendment (a "CD Rate Conversion/Continuation Request"), as follows:

    (A) Designation of Interest Rate. Lessee shall have the right:

    (I) to convert, on any Business Day, any Alternate Base Rate Advance into a CD Rate Advance; or

    (II) to convert, on the last day of any Interest or Rental Period with respect to a Eurodollar Advance (or, on any other day of any Interest or Rental Period, upon payment of any loss or expense incurred or sustained by the Bank with respect to the early termination of such Eurodollar Advance prior to the last day of the Interest or Rental Period as provided in Section  13.6), such Eurodollar Advance into a CD Rate Advance; or

   (III) to continue, on the last day of any Interest or Rental Period with respect to a CD Rate Advance, such CD Rate Advance for a subsequent Interest Period or Rental Period; or

provided in each such case, the CD Rate Funding Condition remains satisfied at all times during such Interest Period and Rent Period.

    (B) Timing of Notice. Each CD Rate Conversion/Continuation Request shall be submitted to and received by Bank prior to 12:00 noon (Portland, Oregon time) at least one (1) Business Day prior to the Pricing Conversion Date of any outstanding Loan Advance or Lease Advance to be converted into or continued as a CD Rate Advance.

    (C) Contents of Notice. The CD Rate Conversion/Continuation Request shall set forth the following information with respect to the Loan or Lease Advance subject thereto:

    (I) the Pricing Conversion Date, which shall be a Business Day;

    (II) the amount of the Eurodollar Advance, Alternate Base Rate Advance or CD Rate Advance to be converted or continued;

   (III) that such Loan or Lease Advance is to be converted into/continued as a CD Rate Advance; and

3

   (IV) The applicable Interest Period or Rental Period, which shall be a period equal to the lesser of (I) one month or (II) such shorter period as may commence on the last day of the previous Interest Period or Rental Period and end on the Maturity Date.

    (ii) Automatic Conversion—CD Rollover. If the Bank does not receive a timely CD Conversion/Continuation Request under Section 3.4(f)(i), any outstanding CD Rate Advance shall automatically continue for a subsequent Interest Period equal to one month (or such shorter period as may commence on the last day of the previous Interest Period or Rental Period and end on the Maturity Date), without notice to the Bank, effective on the last day of the applicable Interest Period or Rental Period provided that the CD Rate Funding Condition remains satisfied at such time."

    SECTION 2.2  CD Rate-based Interest Rates.

    (a) The following sentence is hereby added after the first sentence of Section 3.6(a) of the Participation Agreement:

"Subject to Section 3.6(b), each CD Rate Advance shall bear interest on the outstanding principal amount thereof from the date such CD Rate Advance is made until the date such Loan Advance becomes due (or, if earlier, the date such Loan Advance is repaid) at a rate per annum equal to the CD Rate applicable thereto, as designated in accordance with Section 3.4(f) hereof, plus the Applicable Margin. Any additional interest or other amounts required to be paid under the terms of the promissory note evidencing such loan shall be payable as provided therein."

    (b) Notwithstanding anything to the contrary contained in the Investment Collateral Security Agreement or any other Operative Documents, any certificate of deposit issued by Bank and pledged to Bank as required in order to satisfy the CD Rate Funding Condition with respect to any CD Rate Advance shall bear such rate of interest (if any) as may be agreed upon by Bank and Lessee at the time such certificate of deposit is pledged.

    SECTION 2.3.  Illegality.  The following paragraph is hereby added at the end of Section 13.9 of the Participation Agreement:

    If the adoption of any applicable law, rule or regulation, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by the Bank with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall make it unlawful or impossible for the Bank to purchase, maintain or fund Loan or Lease Advances in any CD Rate Advance and the Bank shall so notify the Lessee, whereupon until the circumstances giving rise to such suspension no longer exist, the obligation of the Bank to fund, convert or continue any Loan Advance or Lease Advance to such CD Rate Advance shall be suspended. Before giving any notice pursuant to this Section, the Bank shall, if practicable, with the consent of the Lessee (which consent shall not unreasonably be withheld), designate a different funding office (if one exists) if such designation will avoid the need for giving such notice and will not, in the judgment of the Bank, adversely affect the Bank. If such notice is given (i) the Lessee shall be entitled upon its request to a reasonable explanation of the factors underlying such notice and (ii) each CD Rate Advance then outstanding shall begin to bear interest or Basic Rent at the Alternate Base Rate either (a) on the last day of the then current Interest or Rental Period applicable to such Loan or Lease Advance if the Bank may lawfully continue to maintain and fund such to such day or (b) immediately if the Bank shall determine that it may not lawfully continue to maintain and fund such Eurodollar Advance to such day.

4

    SECTION 2.4.  Increased Cost and Reduced Return.  The following subsections (d), (e) and (f) are hereby added to Section 13.10 of the Participation Agreement:

    "(d) In the event that any applicable law, rule or regulation, any interpretation or application thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof or compliance by the Bank with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency in each case whether now or hereafter in effect:

     (i) does or shall subject the Bank to any additional tax of any kind whatsoever with respect to any CD Rate Advance, or change the basis or the applicable rate of taxation of payments due under the Operative Documents to the Bank or any other amount payable hereunder on account of any CD Rate Advance (except for the imposition of or change in any tax on or measured by the overall net income of the Bank (other than any such tax imposed by means of withholding) or otherwise excluded from the tax indemnification in Section 13.5);

    (ii) does or shall impose, modify or hold applicable any reserve, special deposit, insurance assessment, compulsory loan or similar requirement against assets held by, or deposits or other liabilities in or for the account of, advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of the Bank on account of any CD Rate Advance (including, without limitation, if the Pledged Collateral which has been pledged to the Bank for the purpose of satisfying the CD Rate Funding Condition is deemed a "transaction account" under Regulation "D" of the Board of Governors of the Federal Reserve System); or

    (iii) does or shall impose on the Bank any other condition with respect to any CD Rate Advances,

and the result of any of the foregoing is to increase the cost to the Bank of making, funding or maintaining any CD Rate Advance or to reduce any amount receivable hereunder with respect thereto, then in any such case, the Lessee shall promptly pay the Bank, upon its demand, any additional amounts necessary to compensate the Bank for such increased cost or reduced amount receivable which the Bank deems to be material.

    (e) If the Bank shall have determined that any applicable law, rule or regulation regarding capital adequacy, any interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency in each case whether now or hereafter in effect, has or would have the effect of reducing the rate of return on capital of the Bank (or any entity directly or indirectly controlling the Bank) as a consequence of the Bank's obligations under the Operative Documents on account of any CD Rate Advance to a level below that which the Bank (or any entity directly or indirectly controlling the Bank) could have achieved but for such law, rule, regulation, interpretation, administration, request or directive (taking into consideration its policies with respect to capital adequacy) by an amount deemed by the Bank to be material, then from time to time, within fifteen (15) days after demand by the Bank, the Lessee shall pay to the Bank such additional amount or amounts as will compensate the Bank (or its parent) for such reduction.

    (f)  The Bank will promptly notify the Lessee of any event of which it has knowledge which will entitle the Bank to compensation pursuant to subsection (d) and (e) of this Section and will, if practicable, with the consent of the Lessee (which consent shall not unreasonably be withheld), designate a different funding office or take any other reasonable action if such designation or

5

action will avoid the need for, or reduce the amount of, such compensation and will not, in the judgment of the Bank, be otherwise disadvantageous to the Bank. A certificate of the Bank claiming compensation under this Section and setting forth in reasonable detail its computation of the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. In determining such amount, the Bank may use any reasonable averaging and attribution methods. This Section shall survive the termination of this Participation Agreement and payment of the outstanding Loan Advances."

SECTION 3.  CONDITIONS PRECEDENT TO AMENDMENT

    SECTION 3.1.  Conditions Precedent.  The effectiveness of this First Amendment is subject to satisfaction or waiver of the following conditions precedent:

    (a) Operative Documents. Each of the Operative Documents shall be in full force and effect. No Loan Default, Loan Event of Default, Lease Default or Lease Event of Default shall exist thereunder (both before and after giving effect to the transactions contemplated by this First Amendment).

    (b) Requirements of Law. In the reasonable opinion of the Bank, or its counsel, the transactions contemplated by this First Amendment do not and will not violate any Requirements of Law.

    (c) The Lessee's Resolutions and Incumbency Certificate, etc. The Bank shall have received, in form and substance satisfactory to Bank, (i) a certificate of the Secretary or an Assistant Secretary of the Lessee attaching and certifying as to (A) the resolutions of the Board of Directors duly authorizing this First Amendment and (B) the incumbency and signature of persons authorized to execute and deliver this First Amendment on its behalf.

    (d) Wolverine's Resolutions and Incumbency Certificate, etc. The Bank shall have received, in form and substance satisfactory to Bank, (i) a certificate of the Secretary or an Assistant Secretary of Wolverine attaching and certifying as to (A) the resolutions of the Board of Directors duly authorizing the execution, delivery and performance by Wolverine of this First Amendment, and (B) the incumbency and signature of persons authorized to execute and deliver this First Amendment on its behalf.

    (e) Matisse's Resolutions and Incumbency Certificate, etc. The Bank shall have received, in form and substance satisfactory to Bank, a certificate of the Secretary or an Assistant Secretary of Matisse attaching and certifying as to (A) the resolutions of the Board of Directors duly authorizing the execution, delivery and performance by Matisse of this First Amendment and (B) the incumbency and signature of persons authorized to execute and deliver on its behalf the Operative Documents to which it is a party.

    (f)  Representations and Warranties. On the date on which this First Amendment is to become effective, the representations and warranties of the Lessee, Wolverine and Matisse contained in the Operative Documents shall be true and correct in all material respects as though made on and as of such date, except to the extent such representations or warranties relate solely to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date. For the foregoing purposes, any representation reflecting the absence of Lessor Liens shall not be violated as a result of any easement granted by Wolverine or Matisse at the request of the Lessee in connection with the construction or operation of the Improvements described in the Participation Agreement or granted according to a supplemental declaration of delegation dated June 30, 1997 and recorded December 11, 1997, or as a result of unpaid real estate taxes for the current year not yet due and payable.

6

    (g) Title. Title to the Property shall conform to the representations and warranties set forth in Section 8.4(c) of the Participation Agreement. For the foregoing purposes, any representation requiring the absence of Lessor Liens shall not be violated as a result of any easement granted by Wolverine or Matisse at the request of the Lessee in connection with the construction or operation of the Improvements described in the Participation Agreement or granted according to a supplemental declaration of delegation dated June 30, 1997 and recorded December 11, 1997, or as a result of unpaid real estate taxes for the current year not yet due and payable.

SECTION 4.
REPRESENTATIONS

    SECTION 4.1.  Representations of Wolverine.  Wolverine represents and warrants to the Bank and the Lessee that all of its representations and warranties in the Operative Documents are true and correct in all material respects as though made on and as of the date hereof, except to the extent such representations or warranties relate solely to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date. For the foregoing purposes, any representation concerning Lessor Liens shall not be violated as a result of any easement granted by Wolverine at the request of the Lessee in connection with the construction or operation of the Improvements described in the Participation Agreement or granted according to a supplemental declaration of delegation dated June 30, 1997 and recorded December 11, 1997, or as a result of unpaid real estate taxes for the current year not yet due and payable. Wolverine has no offset or defense to the payment and performance in full of its obligations under the Operative Documents.

    SECTION 4.2.  Representations of Matisse.  Matisse represents and warrants to the Bank and to the Lessee that all of its representations in the Operative Documents are true and correct in all material respects as though made on and as of the date hereof, except to the extent such representations or warranties relate solely to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date. For the foregoing purposes, any representation concerning Lessor Liens shall not be violated as a result of any easement granted by Matisse at the request of the Lessee in connection with the construction or operation of the Improvements described in the Participation Agreement or granted according to a supplemental declaration of delegation dated June 30, 1997 and recorded December 11, 1997, or as a result of unpaid real estate taxes for the current year not yet due and payable. Matisse has no offset or defense to the payment and performance in full of its obligations under the Operative Documents.

    SECTION 4.3.  Representations of the Lessee.  The Lessee represents and warrants to the Bank, Wolverine, and Matisse that all of its representations in the Operative Documents are true and correct in all material respects as though made on and as of the date hereof, except to the extent such representations or warranties relate solely to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date. Lessee has no offset or defense to the payment and performance in full of its obligations under the Operative Documents.

SECTION 5
MISCELLANEOUS

    SECTION 5.1.  Counterparts.  This First Amendment may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.

7

    SECTION 5.2.  Effective Date.  The effective date of the amendments provided for herein shall occur on the date on which all the conditions precedent thereto set forth in Section 3.1 hereof shall have been satisfied or waived by the applicable parties as set forth therein.

    SECTION 5.3.  No Other Amendment.  Each and every and all and singular of the terms, conditions and covenants contained in the Operative Documents shall remain in full force and effect except as specifically amended herein, and no present or future rights, remedies, benefits or powers belonging or accruing to Bank, arising out of the Operative Documents shall be affected, prejudiced, limited or restricted hereby. The parties thereto hereby jointly affirm and agree that the Wolverine/Matisse Deed of Trust, Investment Collateral Security Agreement, Lease and all other Operative Documents providing for the grant of a lien or security interest in any property secure the full performance of each and every obligation stated therein to be secured thereby, as the same may be modified by this First Amendment, and continue to be effective as, and to constitute, a first and prior lien and charge on the property encumbered thereby to the full extent of all obligations secured thereby, as the same may be modified by this First Amendment.

    SECTION 5.4.  Notice Address.  Schedule 2 to the Participation Agreement is hereby amended to delete the previous notice addresses of Wolverine and Matisse and to substitute such addresses as follows:

Wolverine:	Wolverine Leasing Corp.
	15601 Dallas Parkway, Suite 400 Addison, TX 75001 Attention: Kristin S. Markham Phone: 972-361-5000 Fax: 972-361-5906
Matisse:	Matisse Holding Company
	15601 Dallas Parkway, Suite 400 Addison, TX 75001 Attention: Kristin S. Markham Phone: 972-361-5000 Fax: 972-361-5906

8

    IN WITNESS WHEREOF, the undersigned have executed this First Amendment as of the day and year first hereinabove written.

MATISSE	MATISSE HOLDING COMPANY, a Texas corporation
	By:	/s/ Kristin Markham
	Name:	Kristin Markham
	Its:	Vice President
LESSEE	TRIQUINT SEMICONDUCTOR, INC., a Delaware corporation
	By:	/s/ Steven J. Sharp
	Name:	Steven J. Sharp
	Its:	President and CEO
WOLVERINE	WOLVERINE LEASING CORP., a Texas corporation
	By:	/s/ Kristin Markham
	Name:	Kristin Markham
	Its:	Vice President
BANK	U.S. BANK NATIONAL ASSOCIATION
	By:	/s/ Ross Beaton
	Name:	Ross Beaton
	Its:	Vice President

9

Exhibit A
CD RATE CONVERSION/CONTINUATION REQUEST
      , 2000

United States National Bank of Oregon
111 S.W. Fifth Avenue, Suite 400
Portland, Oregon 97204

Matisse Holding Company
15601 Dallas Parkway
Suite 400
Addison, Texas 75001

Wolverine Leasing Corp.
15601 Dallas Parkway
Suite 400
Addison, Texas 75001

Re: Participation Agreement, dated as of May 17, 1996 (as amended by the First Amendment thereto, dated as of November 1, 2000, and as further amended, modified, supplemented, restated or renewed from time to time, the "Participation Agreement"), among UNITED STATES NATIONAL BANK OF OREGON, a national banking association ("Bank"), TRIQUINT SEMICONDUCTOR, INC., a Delaware corporation ("TriQuint"), WOLVERINE LEASING CORP., a Texas corporation ("Wolverine"), and MATISSE HOLDING COMPANY, a Texas corporation ("Matisse").

Ladies and Gentlemen:

    Any capitalized term used in this CD Rate Conversion/Continuation Request without definition has the meanings specified in the above referenced Participation Agreement.

    Pursuant to Section 3.4(f) of the Participation Agreement, TriQuint hereby elects to convert or continue the Lease Advance described in the attached Schedule 1 (the "Requested Lease Advance"). In connection therewith, TriQuint and the undersigned Responsible Officer of TriQuint hereby certify to the Bank and Wolverine that:

    (1)  Maximum Lease Advances.  The sum of all Lease Advances shall not, after giving effect to the conversion/continuation of the Requested Lease Advance, exceed Forty-Five Million and No/100 Dollars ($45,000,000.00), as more fully described on Schedule 1;

    (2)  Representations and Warranties.  All representations and warranties of TriQuint contained in or made pursuant to the Operative Documents, including those contained in Section 8 of the Participation Agreement, are true and correct as of the date hereof and shall be true and correct on the Pricing Conversion Date, both before and after giving effect to the conversion/continuation of the Requested Lease Advance and as if made on such dates; provided, that, for the foregoing purposes, any representation requiring the absence of Lessor Liens shall not be violated as a result of any easement granted by Wolverine or Matisse at the request of the Lessee in connection with the construction or operation of the Improvements described in the Participation Agreement or granted according to a supplemental declaration of delegation dated June 30, 1997 and recorded December 11, 1997, or as a result of unpaid real estate taxes for the current year not yet due and payable.

    (3)  No Default/Event of Default.  No Lease Default or Lease Event of Default exists as of the date hereof or will result from the conversion/continuation of the Requested Lease Advance;

    (4)  CD Rate Funding Condition.  The CD Rate Funding Condition as defined in the Participation Agreement is satisfied with respect to the Lease Advance to be continued or converted pursuant hereto; and

    (5)  No Material Adverse Effect.  As of the date hereof, no material adverse change in TriQuint's capital structure, ownership or consolidated assets, liabilities, results of operations, or financial condition from that set forth or contemplated in the financial statements of TriQuint dated [December 31,  ], has occurred, nor has there been since such date any change in the senior management of TriQuint.

TRIQUINT
TRIQUINT SEMICONDUCTOR, INC., a
Delaware corporation

By:

Name:

Its:

Schedule 1
to CD Rate Conversion/Continuation Request

LEASE ADVANCE TO BE CONVERTED OR CONTINUED

    A.  All conversions and continuations must be of a Lease Advance, or portion thereof, in a principal amount of $500,000 or in excess thereof.

    B.  Conversions/continuations to a CD Rate Advance are not permitted if the designated Interest Period terminates after the Maturity Date.

(1)

Conversion of the following Eurodollar Advance or Alternate Base Rate Advance into a CD Rate Advance:

Amount:	$
Requested Pricing Conversion Date (which must be a Business Day at least one (1) Business Day after date of notice):
Last day of current Interest Period:

(2)

Continuation of the following CD Rate Advance for a subsequent Interest Period:

Amount:	$
Requested Pricing Conversion Date (which must be the last date of the current Interest Period and which must be a Business Day at least one (1) Business Day after date of notice):
Requested Interest Period (not more than one month—See Section 3.4(f)(i)(C)(IV) of the Participation Agreement):

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Exhibit 13.1

Overview

    TriQuint Semiconductor, Inc. ("TriQuint") designs, develops, manufactures and markets a broad range of high-performance gallium arsenide ("GaAs") integrated circuits and transistors for the wireless communications, telecommunications, data communications and aerospace markets. TriQuint's products span the radio frequency ("RF") and millimeter wave frequency ranges and employ analog and mixed-signal circuit designs. TriQuint's engineers apply the company's proprietary GaAs technology to produce high-performance, low-cost devices that give customers a competitive edge in their product strategy. TriQuint offers a broad range of standard and customer-specific products as well as foundry services.

    Inherent physical properties allow electrons to move approximately five times faster in GaAs than in silicon. This enables GaAs integrated circuits to operate at much higher frequencies than silicon devices or to perform as fast while using substantially less power. GaAs also provides lower distortion amplification, can receive weaker signals due to its low-noise characteristics and can transmit strong clean signals at lower voltages.

    TriQuint's wafer fabrication facilities, located in Oregon and Texas, produce 4-inch wafers using high-volume, low-cost ion-implanted metal semiconductor field effect transistor ("MESFET") processes, high power and efficiency pseudomorphic high electron mobility transistor ("PHEMT"), heterojunction bipolar transistor ("HBT") and heterojunction field effect transistor ("HFET") processes. All TriQuint operations are ISO 9001 certified.

    End-user customers include market-leading equipment manufacturers such as Alcatel, Ericsson Inc., Finisar Corp., Hittite Microwave Corp., Hughes Electronics Corp., Lucent Technologies, Inc., Marconi Communications, Mini Circuits, Motorola, Inc., Nokia Corporation, Nortel Networks Corp., Raytheon Company and Schlumberger Limited.

TriQuint Semiconductor, Inc.
Financial Highlights
IN THOUSANDS, EXCEPT PER SHARE INFORMATION

	Years Ended December 31, (1)
	1999		2000
Total revenues	$	163,663	$	300,749
Income from operations		23,094		95,989
Income before income taxes		29,372		114,258
Net income		24,956		71,411
Diluted net income per share		0.34		0.83
Cash and investments		233,501		513,426
Stockholders' equity	$	301,916	$	430,687

(1)

Historical per share data is adjusted for all stock splits.

1

Common Stock Prices (1)

Quarter	High		Low
Q1 1999	$	4.46	$	2.58
Q2 1999		10.21		3.11
Q3 1999		18.08		9.12
Q4 1999		28.44		13.58
Q1 2000		67.75		25.31
Q2 2000		66.63		23.75
Q3 2000		59.25		30.56
Q4 2000	$	61.56	$	21.00

(1)

Historical per share data is adjusted for all stock splits.

Total Revenues
in millions by quarter
—Description of graphic: Graphic representation of total revenues (in millions) by quarter. Data used to produce the graphic is as follows:
	Q1 1999	33.7
	Q2 1999	38.1
	Q3 1999	42.5
	Q4 1999	49.4
	Q1 2000	59.3
	Q2 2000	70.6
	Q3 2000	80.6
	Q4 2000	90.3

Total Gross Margin
in millions by quarter
—Description of graphic: Graphic representation of gross margin (in millions) by quarter. Data used to produce the graphic is as follows:
	Q1 1999	12.7
	Q2 1999	15.3
	Q3 1999	18.1
	Q4 1999	22.4
	Q1 2000	28.1
	Q2 2000	36.4
	Q3 2000	44.8
	Q4 2000	51.8

Diluted Net Income Per Share
by quarter (1)
—Description of graphic: Graphic representation of net income per share by quarter. Data used to produce the graphic is as follows:
	Q1 1999	0.05
	Q2 1999	0.07
	Q3 1999	0.09
	Q4 1999	0.12
	Q1 2000	0.13
	Q2 2000	0.19
	Q3 2000	0.24
	Q4 2000	0.27

(1)

Historical per share data is adjusted for all stock splits.

2

Total Operating Income
in millions by quarter
—Description of graphic: Graphic representation of operating income (in millions) by quarter. Data used to produce the graphic is as follows:
	Q1 1999	3.0
	Q2 1999	4.1
	Q3 1999	6.6
	Q4 1999	9.4
	Q1 2000	13.5
	Q2 2000	21.2
	Q3 2000	28.5
	Q4 2000	32.8

    STOCKHOLDERS  This has been a wonderful year for all of us at TriQuint, one that we will never forget. Our revenues increased 84% in 2000 with all of our markets showing excellent growth. Not only did our markets expand, but we also achieved increased penetration and gained market share in our markets. The global demand for advanced communications products presented many new opportunities for us to apply our improved solutions. The diversity of our technologies, products, markets and customers made our company stronger. Excellent operational execution provided the momentum to improve our financial performance.

    FINANCIAL PERFORMANCE  From every financial perspective, 2000 was an outstanding year for TriQuint. Revenues grew to $300.7 million for the year, compared to $163.7 million in 1999. Fueled by an increase in gross margin from 42% in 1999 to 54% in 2000, Operating Profit jumped to $96 million. This represented an increase of 317% over the $23 million reported in 1999. Net Income was $71 million or $0.83 per share compared to $25 million and $0.34 cents per share last year.

    In February of 2000, TriQuint completed a very successful Convertible Debt offering. We issued $345 million of 4% convertible subordinated notes due 2007. We now have significant cash resources for capital expenditures and working capital to continue our growth. A portion of these proceeds will be used to acquire or invest in complementary businesses, products and technologies. In February and again in July, TriQuint effected a two-for-one stock split.

    DIVERSITY  TriQuint continues to distinguish itself within the growing communications market by developing diversity in its markets, products and customers. We focus on commercial applications in wireless communications, optical networking and wireless broadband data markets and continue to emphasize the growth and diversity of our customer base for each of these markets. Last year, Mobile Phones accounted for about 47% of our business, Optical Networks accounted for about 30% and Wireless Broadband Data accounted for about 23%.

    TriQuint's customer diversity is exemplified by the fact that we have over 400 customers in total, of which 30 purchased over $1 million of product this year and only three that each represent over 10% of revenue. The newest member of this group was Ericsson, which jumped from under 10% to about 20% of sales in 2000. Nokia, the leading wireless telephone handset manufacturer, represented 19%, while Nortel, the world leader in optical networks, accounted for 17% of sales.

    TriQuint's market diversity was amplified this year as each business unit showed tremendous growth. As expected, Wireless Communications led the way driven by the cellular telephone business. This unit grew over 111% this year and represented 38% of our total revenue. We are particularly pleased with the success of our Millimeter Wave operation in Dallas, Texas. In 2000, this business grew an amazing 73% and represented 27% of our total revenue. This growth was fueled by the tremendous expansion in a variety of broadband applications including optical networks, point-to-point and LMDS communications, satellite communications, cellular base station and the aerospace marketplace. Our Foundry business, which manufactures products based on our customers' product designs, also grew in size and breadth this year. Foundry growth was 71% and represented 20% of our total sales. Our

3

Telecommunications product line, driven also by optical network opportunities, grew 68% this year and represented 15% of sales. In summary, every one of our product lines grew substantially this year both in total revenue and in product offerings.

    DESIGN WINS AND NEW PRODUCTS  Major design wins reached a new record of 582 for the year compared to 400 last year and 235 in 1998. Since all of TriQuint's products are proprietary sole-source devices, this is a particularly important indicator for an analog and mixed-signal company such as TriQuint. Another important milestone was our introduction of approximately 100 new communications products for use in a wide variety of applications. We believe that this diversity of applications, markets, customers and products will enable us to be more financially stable and grow on a more consistent basis.

    MANUFACTURING OPERATIONS  TriQuint's manufacturing capacity increased this year via a number of initiatives. First and foremost, our continued increase in manufacturing efficiencies and yields enabled us to produce more products in our existing space. In addition, we increased our wafer fabrication clean room in Oregon by 35% and acquired a new state-of-the-art manufacturing facility in Richardson, Texas. We also completed the development of a six-inch fabrication process and we are currently producing the first product wafers for qualification. Our intention is to build out the new Richardson facility as needed and, when it is fully operational, we will have the capacity to generate over $1 billion dollars of revenue. Our Continuous Process Improvement ("CPI") initiative was very successful in 2000, improving quality metrics and Gross Margin. Customer on-time delivery improved significantly, electrical defects per million devices shipped dropped below 100 and customer returns were less than one half of one percent.

    THE FAMILY  Our TriQuint family has grown from 802 employees at the beginning of the year to 1073 at the end of 2000. This growth of 34% in talent and professional strength is well in line with our business growth model. Our family works hard and is not averse to having fun at the same time. This attribute was personified by the wager between the sales force and the senior management team regarding the sales force's ability to generate over $300 million in revenue, a wager that the vice presidents happily lost (along with their hair)! The ensuing shearing in the company cafeteria was witnessed by an enthusiastic crowd of unbelieving employees.

    LOOKING FORWARD  TriQuint's communications markets experienced some volatility as we exited 2000 and entered 2001. We believe this is normal in the semiconductor industry and are prepared for it. We have become the largest public analog and mixed-signal company in the high-performance Gallium Arsenide sector, have very strong financial reserves, have an excellent cost structure and are in an excellent diversified position. I believe that we are in a position to excel in a market that is not favorable to new entries.

    IN SUMMARY TriQuint has solidified our relationships with our customers during this most exciting and satisfying year and we thank them as well as our suppliers and our investors for their commitment to TriQuint. I particularly wish to thank our employees for their contributions and support in 2000. The employees had to give the company more than the usual 100% effort in order to achieve these results. We look forward to another challenging and exciting year in 2001.

4

TriQuint Semiconductor, Inc.
Selected Consolidated Financial Data
IN THOUSANDS, EXCEPT PER SHARE INFORMATION

			Year Ended December 31,
			2000		1999		1998			1997		1996
Consolidated Statement of Operations Data:
Total revenues			$	300,749	$	163,663	$	111,605		$	71,367	$	59,526
Operating costs and expenses:
	Cost of goods sold			139,688		95,069		72,784			40,028		34,258
	Research, development and engineering			31,201		21,976		18,984			11,518		10,858
	Selling, general and administrative			33,871		23,524		15,962			14,188		10,975
	Special charges			—		—		10,220			—		—
		Total operating costs and expenses		204,760		140,569		117,950			65,734		56,091
Income (loss) from operations				95,989		23,094		(6,345	)		5,633		3,435
Other income, net				18,269		6,278		2,484			2,117		3,083
Income (loss) before income taxes				114,258		29,372		(3,861	)		7,750		6,518
Income tax expense				42,847		4,416		94			890		231
Net income (loss)			$	71,411	$	24,956	$	(3,955	)	$	6,860	$	6,287
Per Share Data: (1)
Net income (loss):
	Basic		$	0.92	$	0.38	$	(0.07	)	$	0.14	$	0.13
	Diluted		$	0.83	$	0.34	$	(0.07	)	$	0.13	$	0.12
Weighted-average shares:
	Basic			77,687		65,184		56,398			50,240		48,268
	Diluted			86,251		74,334		56,398			54,648		52,576
Consolidated Balance Sheet Data:
Working capital			$	502,664	$	217,697	$	44,494		$	35,180	$	37,591
Total assets				825,416		339,941		141,306			121,418		107,596
Long-term obligations, less current installments				346,991		4,783		9,369			12,550		9,891
Stockholders' equity			$	430,687	$	301,916	$	107,615		$	90,038	$	80,246

(1)

Historical per share data is adjusted for all stock splits.

5

MANAGEMENT'S DICUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis in conjunction with our consolidated financial statements and the related notes thereto included in this Annual Report to Stockholders for the fiscal year ended December 31, 2000. This discussion in this Annual Report to Stockholders for the fiscal year ended December 31, 2000 contains both historical information and forward-looking statements that involve risks and uncertainties. A number of factors affect our operating results and could cause our actual future results to differ materially from any forward-looking results discussed below, including, but not limited to, those related to operating results, investments in new facilities, sales to a limited number of customers, growth and diversification of our markets, sales to international customers, continued growth in communications markets, startup of new facilities and transition of manufacturing processes from four-inch to six-inch wafers. These forward-looking statements include, among others, those statements including the words "expects", "anticipates", "intends", "believes", "plans" and similar language. Our actual results could differ materially from those discussed below. In addition, historical information should not be considered an indicator of future performance. Factors that could cause or contribute to these differences include, but are not limited to, the risks discussed in the section titled "Factors Affecting Future Operating Results" in this Annual Report to Stockholders for the fiscal year ended December 31, 2000.

OVERVIEW

    We are a leading supplier of high-performance gallium arsenide integrated circuits for the wireless communications, telecommunications, data communications and aerospace markets. Our products incorporate our proprietary analog and mixed-signal designs and our advanced gallium arsenide manufacturing processes to address a broad range of applications and customers. We sell our products worldwide to end-use customers, including Alcatel, Ericsson, Finisar, Hittite, Hughes, Lucent, Marconi, Mini-Circuits, Motorola, Nokia, Nortel, Raytheon and Schlumberger.

    We recognize revenues on standard products when we ship them. With respect to foundry and customer-specific products, we recognize revenues based on the achievement of various design, manufacturing and other milestones. We recognize revenues on cost-plus contracts as we perform the work. Revenue from customers who have acceptance criteria is not recognized until all acceptance criteria are satisfied. We estimate and establish allowances and reserves for product returns, warranty obligations, excess and obsolete inventories, accounts receivable for which collection is doubtful and price adjustments. We comply with the revenue recognition guidance summarized in Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements".

    We sell our products through independent manufacturer representatives and distributors, as well as our direct sales staff. As of December 31, 2000, we had twenty-two independent manufacturer representative firms and two distributors in North America. Our eight-person direct sales management staff provides sales direction and support to manufacturer representatives and distributors. We have domestic sales management offices located in the metropolitan areas of Los Angeles, California; Philadelphia, Pennsylvania; Portland, Oregon; San Jose, California; Atlanta, Georgia; Boston, Massachusetts; and Raleigh, North Carolina. Our international business is supported by a network of seventeen manufacturer representatives and distributors in Europe and the Pacific Rim. We also have sales and marketing offices in Germany, France, Japan and Korea.

    We include in our backlog all purchase orders and contracts for products requested by the customer for delivery within twelve months. We do not have long-term agreements with any of our customers. Customers generally purchase our products pursuant to cancelable short-term purchase orders. Our customers have canceled these purchase contracts or rescheduled delivery dates in the past, and we expect that these events may also occur in the future. In addition, we produce standard semiconductors that frequently can be shipped from inventory within a short time after receipt of an

6

order. These orders may not be reflected in backlog, and backlog as of any particular date may not necessarily be representative of actual sales for any future period.

    In February and March 2000, we completed a private placement of $345.0 million (net proceeds of $333.9 million) of 4% convertible subordinated notes due 2007. The notes are convertible, at the option of the holder, at any time prior to redemption or maturity into shares of our common stock at a conversion price of $67.80, subject to certain adjustments. The notes may be redeemed, at our option, at any time prior to conversion or maturity at the redemption price of $101.70 through March 2003 and $67.80 thereafter, subject to certain adjustments and/or premiums. The net proceeds of the offering will be used for general corporate purposes, including capital expenditures and working capital, and increasing our manufacturing capacity and engineering resources. We may also use a portion of the net proceeds to acquire or invest in complementary businesses, products or technologies.

    In August 2000, we completed the purchase of a 420,000 square foot fabrication facility in Richardson, Texas from Micron Technology Texas, LLC. The facility, located on a thirty-eight acre campus, is configured as 48,500 square feet of Class 1 performance clean room, 10,000 square feet of Class 100 performance clean room and approximately 84,000 square feet of office space. This facility will provide the capacity needed to meet future demand for office and manufacturing space. We plan to continue to operate our Dallas facility during the configuration, setup and testing of our new Richardson facility. The purchase was financed through a synthetic lease transaction consisting of a participation agreement and master lease agreement. The lease provides for the purchase and expansion of our wafer fabrication facility in Richardson under a five-year operating lease. At the end of the lease term, we may (i) renew our lease for two additional two-year terms, (ii) exercise its purchase option or (iii) cause the leased assets to be sold to a third party whereby we guarantee up to a maximum of 83.5% of the original cost. A portion of the loan is collateralized by pledged investment securities. Additionally, we participated as a lender in the synthetic lease.

    In 2000, we completed an expansion of our Hillsboro manufacturing facility increasing the square footage of our Class 10 performance clean room to 23,000 square feet. This expansion was necessary to convert our four-inch manufacturing process to a six-inch manufacturing process. We have produced our first engineering wafer and are currently producing the first production wafers for qualification purposes. We plan to have the six-inch manufacturing process qualified in 2001.

    In September 2000, we began the expansion of our engineering and administrative building in Hillsboro, Oregon. This expansion will add approximately 65,000 square feet to our existing building and provide for an additional 62,200 square feet of office space to be completed at a later date. The additional space will be used for marketing, engineering and light manufacturing activities. This expansion will enable us to keep pace with the future needs of our customers and markets and will provide the needed resources to grow our research and development activities in Oregon. When both expansions are complete, our Hillsboro facility will be in excess of 300,000 square feet.

    In June 2000, we announced the opening of our Engineering Design Center in Massachusetts (the "Engineering Center"). The Engineering Center was established to take advantage of the strong RFIC design talent in the region and will focus on development of integrated circuits for applications that serve the cellular phone market. The Engineering Center is located in Lowell, Massachusetts.

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Results of Operations

    The following table sets forth the results of our operations expressed as a percentage of total revenues. Our historical operating results are not necessarily indicative of the results for any future period.

			Years Ended December 31,
			2000		1999		1998
Total revenues			100.0	%	100.0	%	100.0	%
Operating costs and expenses:
	Cost of goods sold		46.4		58.1		65.2
	Research, development and engineering		10.4		13.4		17.0
	Selling, general and administrative		11.3		14.4		14.3
	Special charges		—		—		9.2
		Total operating costs and expenses	68.1		85.9		105.7
		Income (loss) from operations	31.9		14.1		(5.7	)
Other income, net			6.1		3.8		2.2
	Income (loss) before income taxes		38.0		17.9		(3.5	)
Income tax expense			14.3		2.7		0.1
	Net income (loss)		23.7	%	15.2	%	(3.6	)%

Comparison of 2000 and 1999

Total revenues

    We derive revenues from the sale of standard and customer-specific products and services. Our revenues also include non-recurring engineering revenues relating to the development of customer-specific products. Total revenues increased 83.7% to $300.7 million in 2000 from $163.7 million in 1999. The increase in total revenues primarily reflected increased demand for our products across all product lines and markets. Revenues increased 111%, 68%, 73% and 71%, respectively, for our wireless communications products, telecommunications products, millimeter wave products and foundry services products from the previous year. Domestic and international revenues were $166.7 million and $134.1 million, respectively, in 2000 as compared to $100.9 million and $62.8 million, respectively, in 1999. We currently anticipate an overall increase in the volume of product revenues from existing and new customers. However, the communications market is experiencing some volatility and our growth, as a percentage will likely not be as substantial in 2001 as compared to 2000.

Operating costs and expenses

Cost of goods sold

    Cost of goods sold includes all direct material, labor and overhead expenses and certain production costs related to non-recurring engineering revenues. In general, gross margin generated from the sale of customer-specific products and from non-recurring engineering revenues are typically higher than gross margin generated from the sale of standard products. The factors affecting product mix include the relative demand in our various markets incorporating our customer-specific products and standard products, as well as the number of non-recurring contracts.

    Cost of goods sold increased 46.9% to $139.7 million in 2000 from $95.1 million in 1999. Cost of goods sold decreased as a percentage of total revenues to 46.4% in 2000 from 58.1% in 1999. The increase in absolute dollar value of cost of goods sold was primarily attributable to the related increase

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in sales volume. The decrease in cost of goods sold as a percentage of total revenues is attributable to continuing improvements in production yields and increased economies of scale associated with increased sales volumes. We expect that increased economies of scale will continue from our conversion of a four-inch manufacturing process to a six-inch manufacturing process; however, these benefits may be offset by fixed costs from our newly acquired Richardson facility such as operating expenses, start-up costs and depreciation/amortization of capitalized costs.

    We have at various times in the past experienced lower than expected production yields that have delayed shipments of a given product and adversely affected gross margins. There can be no assurance that we will be able to maintain acceptable production yields in the future and, to the extent that we do not achieve acceptable production yields, our operating results would be materially adversely affected. The operation of our leased wafer fabrication facilities entails a high degree of fixed costs and requires an adequate volume of production and sales to be profitable. During periods of decreased demand, high fixed wafer fabrication costs would have a material adverse effect on our operating results.

Research, development and engineering

    Research, development and engineering expenses include certain costs incurred in the design of products associated with nonrecurring engineering revenues, as well as ongoing product development and research and development expenses. Our research, development and engineering expenses increased 41.8% in 2000 to $31.2 million from $22.0 million in 1999. Research, development and engineering expenses as a percentage of total revenues decreased to 10.4% in 2000 from 13.4% in 1999. The increase in research, development and engineering expenses on an absolute dollar basis is primarily due to the addition of new employees, which is a direct result of our aggressive recruiting program which increased our engineering employees from 282 in 1999 to 351 in 2000, our creation of the Engineering Center and other costs associated with the development of new products. The decrease in research, development and engineering expenses as a percentage of total revenues was due to revenues increasing at a faster rate than research, development and engineering spending. We are committed to substantial investments in research, development and engineering, as displayed by our expansion of our Hillsboro facility and establishment of the Engineering Center, and expect these expenses will continue to increase in absolute dollar amount in the future.

Selling, general and administrative

    Selling, general and administrative expenses increased 44.3% to $33.9 million in 2000 from $23.5 million in 1999. Selling, general and administrative expenses as a percentage of total revenues decreased to 11.3% in 2000 compared to 14.4% in 1999. The increase in selling, general and administrative expenses on an absolute dollar basis was primarily attributable to increased costs associated with the continued development of infrastructure and business support and increased selling costs associated with the increased sales volume and additional domestic and international sales offices. The decrease in general and administrative expenses as a percentage of total revenue is due to the increase of total revenues at a faster rate than general and administrative spending. These expenses are expected to increase in absolute dollar amount as revenue increases.

Other income, net

    Other income, net includes interest income, interest expense and gains and losses on assets. Other income, net increased to $18.3 million in 2000 as compared to $6.3 million in 1999. This increase resulted primarily from increased interest income on higher cash balances due to the proceeds of our July 1999 public offering and 2000 convertible debt offering, but was offset in part by increased interest expense related to the increase in long-term debt. We expect other income, net to be impacted in future periods due to the investment in our newly acquired Richardson, Texas facility and the capital

9

investments required for the planned conversion of a portion of our manufacturing process from four-inch wafers to six-inch wafers.

Income tax expense

    Income tax expense increased to $42.8 million in 2000 from $4.4 million in 1999. This increase in income tax expense was attributable to our increased profitability, as reflected by the increase in income before income taxes. We expect that our operating income before tax will increase and, therefore, income tax expense will increase. Our effective tax rate was 37.5% in 2000 compared to 15.1% in 1999. The change was primarily due to the changes in our estimation of valuation allowance in 1999.

    At December 31, 2000, we had approximately $59.6 million of net operating loss carryforwards to offset against future income for federal income tax purposes, which expire from 2001 through 2020, and $28.3 million for Oregon state income tax purposes, which expire in years 2006 through 2015. See Note 8 of Notes to Consolidated Financial Statements. We have not recorded a valuation allowance as of December 31, 2000, as management believes it is more likely than not that the results of future operations will generate sufficient taxable income to realize the net deferred tax assets.

Comparison of 1999 and 1998

Total revenues

    Total revenues increased 46.6% to $163.7 million in 1999 from $111.6 million in 1998. The increase in total revenues primarily reflected increased demand for our products across all product lines and markets. Revenues increased 118%, 32%, 18% and 35%, respectively, for our wireless communications products, telecommunications products, millimeter wave products and foundry services products from the previous year. Domestic and international revenues were $100.9 million and $62.8 million, respectively, in 1999 as compared to $84.8 million and $26.8 million, respectively, in 1998.

Operating costs and expenses

Cost of goods sold

    Cost of goods sold increased 30.6% to $95.1 million in 1999 from $72.8 million in 1998. Cost of goods sold decreased as a percentage of total revenues to 58.1% in 1999 from 65.2% in 1998. The increase in absolute dollar value of cost of goods sold was primarily attributable to the related increase in sales volume. The decrease in cost of goods sold as a percentage of total revenues was attributable to continuing improvements in production yields and increased economies of scale associated with increased sales volumes. In addition, cost of goods sold for 1998 included non-recurring costs related to the relocation of our manufacturing facility to Hillsboro.

Research, development and engineering

    Our research, development and engineering expenses increased 15.8% in 1999 to $22.0 million from $19.0 million in 1998. Research, development and engineering expenses as a percentage of total revenues decreased to 13.4% in 1999 from 17.0% in 1998. The increase in research, development and engineering expenses on an absolute dollar basis was primarily due to the addition of new employees and the costs associated with the development of new products. The decrease in research, development and engineering expenses as a percentage of total revenues was due to revenues increasing at a faster rate than research, development and engineering spending.

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Selling, general and administrative

    Selling, general and administrative expenses increased 46.9% to $23.5 million in 1999 from $16.0 million in 1998. Selling, general and administrative expenses as a percentage of total revenues remained level at 14.4% in 1999 compared to 14.3% in 1998. The increase in selling, general and administrative expenses on an absolute dollar basis was primarily attributable to increased costs associated with the ongoing development of infrastructure and business support and increased selling costs associated with the increased sales volume.

Special charges

    In 1998, we recorded a write-off of in-process research and development of $8.8 million associated with our acquisition of our Millimeter Wave Communications business. In addition, during 1998, we settled a stockholder class action filed in 1994 and recorded a charge of $1.4 million associated with the settlement of this lawsuit and related legal expenses, net of accruals and insurance proceeds.

Other income, net

    Other income, net increased to $6.3 million in 1999 as compared to $2.5 million in 1998. This increase resulted primarily from increased interest income on higher cash balances and decreased interest expense due to reductions in long-term debt.

Income tax expense

    Income tax expense increased to $4.4 million in 1999 from $94,000 in 1998. This increase in income tax expense was attributable to our increased profitability, as reflected by the increase in income before income taxes.

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Liquidity and Capital Resources

    In August 2000, we completed the purchase of a 420,000 square foot wafer fabrication facility in Richardson, Texas from Micron Technology Texas, LLC for aggregate consideration of $87.0 million. The purchase was financed through a synthetic lease transaction consisting of a participation agreement and master lease agreement. The lease provides for the purchase and expansion of our wafer fabrication facility in Richardson, Texas under an operating lease. At the end of the lease term, we may (i) renew our lease for two additional two-year terms, (ii) exercise its purchase option or (iii) cause the facility to be sold to a third party whereby we guarantee residual value to the lessor. A portion of the loan is collateralized by pledged investment securities. Additionally, we participated as a lender in the synthetic lease transaction. Restrictive covenants included in the synthetic lease require us to maintain (a) a debt service coverage ratio of not more than 3.00 to 1.00 until June, 2001 and not more than 2.50 to 1.00 thereafter, (b) a quick ratio of not less than 1.25 to 1.00, (c) a fixed charge coverage ratio of not less than 1.50 to 1.00 beginning first quarter of 2001 and not less than 2.00 to 1.00 beginning first quarter of 2002 and thereafter and (d) tangible net worth not less than 90% of tangible net worth as of December 31, 1999 plus 75% of net income and net equity additions without deductions for losses. As of December 31, 2000, we were in compliance with the restrictive covenants contained in this synthetic lease.

    We have a $10.0 million unsecured revolving line of credit with U.S. Bank National Association, formerly known as United States National Bank of Oregon ("USNB") that matures May 31, 2001. Restrictive covenants included in the line of credit require us to maintain (a) a total liability to tangible net worth ratio of not more than 1.50 to 1.00, (b) a current ratio of not less than 1.75 to 1.00 and (c) cash and investments, including restricted investments, greater than $45.0 million. As of December 31, 2000, we were in compliance with the restrictive covenants contained in this line of credit.

    In February and March 2000, we completed a private placement of $345.0 million (net proceeds of $333.9 million) of 4% convertible subordinated notes due 2007. The notes are unsecured obligations, are initially convertible into our Common Stock at a conversion price of $67.80 per share and are subordinated to all of our present and future senior indebtedness. We also completed public offerings of our common stock in July 1999 and September 1995, raising approximately $146.6 million and $48.1 million, respectively, net of offering expenses. In December 1993 and January 1994, we completed our initial public offering raising approximately $16.7 million, net of offering expenses. In addition, we have funded our operations to date through other private sales of equity, borrowings, equipment leases and cash flow from operations. As of December 31, 2000, we had working capital of approximately $502.7 million, including $460.6 million in cash, cash equivalents and unrestricted investments.

    In November 1997, we entered into a $1.5 million lease agreement for land adjacent to our Hillsboro facility. Under the terms of that agreement, USNB provided loans to Matisse Holding Company ("Matisse") to purchase the land and Matisse in turn leased it to us under a renewable one-year lease agreement. The loan from USNB was partially collateralized by a guarantee from us. In June 2000, we exercised our purchase option, retired this loan and no longer have any obligation under the agreement.

    In May 1996, we entered into a five-year synthetic lease through a participation agreement with Wolverine Leasing Corp. ("Wolverine"), USNB and Matisse. The lease provided for the construction and occupancy of our headquarters and wafer fabrication facility in Hillsboro, Oregon under an operating lease from Wolverine. At the end of the lease term, we may (i) renew our lease for an additional five years, (ii) exercise its purchase option or (iii) cause the facility to be sold to a third party whereby we guarantee residual value to the lessor. Under the terms of the agreement, USNB and Matisse made loans to Wolverine, which in turn advanced the funds to us for the construction of the Hillsboro facility and other associated costs and expenses. The loan from USNB is collateralized by

12

investment securities we have pledged. These investment securities are classified on our balance sheet as restricted long-term assets. In addition, restrictive covenants in the participation agreement require us to maintain (a) a total liability to tangible net worth ratio of not more than 1.50 to 1.00, (b) minimum tangible net worth greater than $50.0 million and (c) more than $45.0 million of cash and liquid investment securities, including restricted securities. As of December 31, 2000, we were in compliance with the covenants described above. We expect to exercise the purchase option on this lease when it expires in May 2001.

    The following table presents a summary of our cash flows (in thousands):

	Years ended December 31,
	2000			1999			1998
Net cash provided by operating activities	$	110,555		$	34,589		$	10,218
Net cash used in investing activities		(436,102	)		(121,457	)		(10,874	)
Net cash provided by (used in) financing activities		342,885			149,139			(3,476	)
Net increase (decrease) in cash and cash equivalents	$	17,338		$	62,271		$	(4,132	)

    The $110.6 million of cash provided by operating activities in 2000 related primarily to net income of $71.4 million, depreciation and amortization of $11.6 million, an income tax benefit of stock option exercises of $43.9 million as well as increases in accounts payable and other accrued liabilities of $16.1 million and a decrease in prepaid expenses and other assets of $919,000. This was offset by increases in accounts receivable of $22.9 million, inventories of $9.1 million and deferred income taxes of $1.5 million. The $34.6 million of cash provided by operating activities in 1999 related primarily to net income of $25.0 million, as well as increases in depreciation and amortization of $7.4 million, income tax benefit from stock option exercises of $15.0 million and accounts payable and other accrued liabilities of $9.5 million. These were offset by increases in deferred income taxes of $11.0 million, accounts receivable of $5.9 million, inventories of $5.0 million and prepaid expenses and other assets of $470,000. The $10.2 million of cash provided by operating activities in 1998 related primarily to a combined increase in accounts payable and other accrued liabilities of $1.9 million, depreciation and amortization of $5.9 million and a decrease in accounts receivable of $939,000. This was offset by increases in inventories of $2.8 million, gain on disposal of assets of $475,000 and a net loss of $4.0 million. Cash provided by operating activities also included $8.8 million related to the special charges associated with the acquisition of the Millimeter Wave Communications operations business as an offset to the net changes in assets and liabilities.

    The $436.1 million of cash used in investing activities in 2000 related to the purchase of $790.4 million of available-for-sale investments, the purchase of $341.9 million of held-to-maturity investments, capital expenditures of $82.1 million, increase in restricted long-term assets of $12.6 million, purchase of preferred stock in investee companies of $17.9 million and purchase of participation in synthetic lease of $73.6 million associated with the Richardson facility, offset in part by the sale/maturity of $687.4 million of available-for-sale investments and maturity of $195.1 million of held-to-maturity investments. The $121.5 million used in investing activities in 1999 related primarily to the purchase of $317.3 million of investments and capital expenditures of $15.3 million, offset in part by the sale and/or maturity of $212.3 million of investments. The $10.9 million used in investing activities in 1998 related to the purchase of $68.0 million of investments and capital expenditures of $5.6 million, offset in part by the sale and/or maturity of $62.3 million of investments.

    The $342.9 million of cash provided by financing activities in 2000 related primarily to the net proceeds from debt of $333.9 million and from the issuance of common stock of $13.3 million. This was offset by payment of principal on capital leases of $4.4 million. The $149.1 million of cash provided by financing activities in 1999 related primarily to the issuance of common stock of $154.3 million and was offset in part by payment of principal on capital leases of $5.2 million. Cash used by financing activities

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of $3.5 million in 1998 is primarily the result of net principal payments under capital lease obligations and installment notes, partially offset by the proceeds of the issuance of common stock upon option exercises.

    Cash used for capital expenditures for 2000 was approximately $82.1 million. We anticipate that our capital equipment needs, including manufacturing and test equipment and computer hardware and software, will require additional expenditures of approximately $137.0 million during the next 12 months.

    We believe that our current cash and cash equivalent balances, together with cash anticipated to be generated from operations and anticipated financing arrangements, will satisfy our projected working capital and capital expenditure requirements, at a minimum, through the next 12 months. However, we may be required to finance any additional requirements through additional equity, debt financings or credit facilities. We may not be able to obtain additional financings or credit facilities, or if these funds are available, they may not be available on satisfactory terms.

Recent Accounting Pronouncements

    In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities", as amended, establishing accounting and reporting standards for derivative instruments and hedging activities requiring that all derivatives be recognized in the balance sheet and measured at their fair value. SFAS No. 133, as amended, is effective for fiscal years beginning after June 15, 2000. We are evaluating any possible effect SFAS No. 133 may have on our consolidated financial statements.

Factors Affecting Future Operating Results

Our operating results may fluctuate substantially, which may cause our stock price to fall.

    Our quarterly and annual results of operations have varied in the past and may vary significantly in the future due to a number of factors including, but not limited to, the following:

•

cancellation or delay of customer orders or shipments;



•

our success in achieving design wins in which our products are designed into those of our customers;



•

market acceptance of our products and those of our customers;



•

variability of the life cycles of our customers' products;



•

variations in manufacturing yields;



•

timing of announcements and introduction of new products by us and our competitors;



•

changes in the mix of products we sell;



•

declining average sales prices for our products;



•

changes in manufacturing capacity and variations in the utilization of that capacity;



•

variations in operating expenses;



•

the long sales cycles associated with our customer-specific products;



•

the timing and level of product and process development costs;



•

performance of vendors and subcontractors;



•

realization of research and development efforts;

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•

variations in raw material quality and costs;



•

delays in new process qualification or delays in transferring processes;



•

the cyclicality of the semiconductor industry;



•

the timing and level of nonrecurring engineering revenues and expenses relating to customer-specific products; and



•

significant changes in our and our customers' inventory levels.

    We expect that our operating results will continue to fluctuate in the future as a result of these and other factors. Any unfavorable changes in these or other factors could cause our results of operations to suffer as they have in the past, based upon some of these factors. Due to potential fluctuations, we believe that period to period comparisons of our results of operations are not necessarily meaningful and should not be relied upon as indicators of our future performance.

    If our operating results are not within the market's expectations, then our stock price may fall. The public stock markets have experienced, and are currently experiencing, extreme price and trading volume volatility, particularly in high technology sectors of the market. This volatility has significantly affected the market prices of securities of many technology companies for reasons frequently unrelated to or disproportionately impacted by the operating performance of these companies. These broad market fluctuations may adversely affect the market price of our common stock.

We rely on a limited number of customers for a substantial part of our revenues.

    Sales to a limited number of customers have accounted for a significant portion of our revenues in each fiscal period. We have experienced periods in which sales to some of our major customers, as a percentage of total revenues, have fluctuated due to delays or failures to place expected orders. We expect that sales to a limited number of customers will continue to account for a substantial portion of our total revenues in future periods. In 1998, Nokia accounted for approximately 12.0%, Nortel accounted for approximately 10.0% and Raytheon accounted for approximately 11.7% of total revenues. In 1999, Nokia and Nortel accounted for approximately 21.0% and 17.3%, respectively, of our total revenues. In 2000, Nokia, Nortel and Ericsson accounted for approximately 18.3%, 17.3% and 19.9%, respectively, of our total revenues. We do not have long-term agreements with any of our customers. Customers generally purchase our products pursuant to cancelable short-term purchase orders. Our results of operations have been negatively affected in the past by the failure of anticipated orders to materialize and by delays in or cancellations of orders. If we were to lose a major customer or if orders by or shipments to a major customer were to otherwise decrease or be delayed, our results of operations would be harmed.

We face risks from failures in our manufacturing processes.

    The fabrication of integrated circuits, particularly those made of gallium arsenide, is a highly complex and precise process. Our integrated circuits are currently manufactured from four-inch round wafers made of gallium arsenide. During manufacturing, each wafer is processed to contain numerous die, the individual integrated circuits. We may reject or be unable to sell a substantial percentage of wafers or the die on a given wafer because of:

•

minute impurities;



•

difficulties in the fabrication process, such as failure of special equipment, operator error or power outages;



•

defects in the masks used to print circuits on a wafer;



•

electrical performance;

15

•

wafer breakage; or



•

other factors.

    We refer to the proportion of final good integrated circuits that have been processed, assembled and tested relative to the gross number of integrated circuits that could be constructed from the raw materials as our manufacturing yield. Compared to the manufacture of silicon integrated circuits, gallium arsenide technology is less mature and more difficult to design and manufacture within specifications in large volume. In addition, the more brittle nature of gallium arsenide wafers can result in lower manufacturing yields than with silicon wafers. We have in the past experienced lower than expected manufacturing yields, which have delayed product shipments and negatively impacted our results of operations. We may experience difficulty maintaining acceptable manufacturing yields in the future.

    In addition, the maintenance of our fabrication facilities in Oregon and Texas are subject to risks, including:

•

the demands of managing and coordinating workflow between geographically separate production facilities;



•

disruption of production in one of our facilities as a result of a slowdown or shutdown in our other facility; and



•

higher operating costs from managing geographically separate manufacturing facilities.

If we fail to sell a high volume of products, our operating results will be harmed.

    Because a large portion of our manufacturing costs are relatively fixed, our manufacturing volumes are critical to our operating results. If we fail to achieve acceptable manufacturing volumes or experience product shipment delays, our results of operations could be harmed. During periods of decreased demand, our high fixed manufacturing costs could have a negative effect on our results of operations. We base our expense levels in part on our expectations of future orders and these expense levels are predominantly fixed in the short-term. All of our revenues stem from the production of products for the communications markets, specifically the mobile phone market, optical market, broadband wireless market and other wireless markets. We expect that end-use customers will continue to replace their communication devices due to continued innovations, therefore continuing the demand for communications applications. However, if this demand decreases from our historic growth, we may not be able to sustain our historic growth. If we receive fewer customer orders than expected, we may not be able to reduce our manufacturing costs in the short-term and our operating results would be harmed.

If we do not sell our customer-specific products in large volumes, our operating results may be harmed.

    We manufacture a substantial portion of our products to address the needs of individual customers. Frequent product introductions by systems manufacturers make our future success dependent on our ability to select development projects which will result in sufficient volumes to enable us to achieve manufacturing efficiencies. Because customer-specific products are developed for unique applications, we expect that some of our current and future customer-specific products may never be produced in volume and may impair our ability to cover our fixed manufacturing costs. In addition, if we experience delays in completing designs, if we fail to obtain development contracts from customers whose products are successful or if we fail to have our product designed into the next generation product of existing volume production customers, our revenues could be harmed.

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Our operating results could be harmed if we lose access to sole or limited sources of materials, equipment or services.

    We currently obtain some components, equipment and services for our products from limited or single sources, such as ceramic and plastic packages from Kyocera. We purchase these components, equipment and services on a purchase order basis, do not carry significant inventories of components and do not have any long-term supply contracts with these vendors. Our requirements are relatively small compared to silicon semiconductor manufacturers. Because we often do not account for a significant part of our vendors' business, we may not have access to sufficient capacity from these vendors in periods of high demand. If we were to change any of our sole or limited source vendors, we would be required to requalify each new vendor. Requalification could prevent or delay product shipments that could negatively affect our results of operations. In addition, our reliance on these vendors may negatively affect our production if the components, equipment or services vary in reliability or quality. If we are unable to obtain timely deliveries of sufficient quantities of acceptable quality or if the prices increase, our results of operations could be harmed.

Our operating results could be harmed if our subcontractors are unable to fulfill our requirements.

    We currently utilize subcontractors for the majority of our assemblies and some of our tests. There are certain risks associated with dependence on third party providers, such as minimal control over delivery scheduling, adequate capacity during demand peaks, warranty issues and protection of intellectual property. Additionally, if these subcontractors are unable to meet our demands, it could prevent or delay production shipments that could negatively affect our results of operations. If we were to change any of our subcontractors, we would be required to requalify each new subcontractor, which could also prevent or delay product shipments that could negatively affect our results of operations. In addition, our reliance on these subcontractors may negatively affect our production if the services vary in reliability or quality. If we are unable to obtain timely service of acceptable quality or if the prices increase, our results of operations could be harmed.

If our products fail to perform or meet customer requirements, we could incur significant additional costs.

    The fabrication of gallium arsenide integrated circuits is a highly complex and precise process. Our customers specify quality, performance and reliability standards that we must meet. If our products do not meet these standards, we may be required to rework or replace the products. Gallium arsenide integrated circuits may contain undetected defects or failures that only become evident after we commence volume shipments. We have experienced product quality, performance or reliability problems from time to time. Defects or failures may occur in the future. If failures or defects occur, we could:

•

lose revenue;



•

incur increased costs such as warranty expense and costs associated with customer support;



•

experience delays, cancellations or rescheduling of orders for our products; or



•

experience increased product returns or discounts.

Our operating results may suffer if we are unable to configure and commence manufacturing at our new Richardson, Texas facility.

    In August 2000, we completed the purchase of a 420,000 square foot fabrication facility in Richardson, Texas from Micron Technology Texas, LLC. This facility will provide the capacity needed to meet future demands and manufacturing space in the event we elect to transfer from our Dallas facility. We plan to continue to operate our Dallas facility during the configuration, setup and testing of

17

our new Richardson facility. Given the long lead times associated with bringing a new facility to a fully qualified manufacturing production status, we will incur substantial expenses before achieving volume production in the Richardson facility. The establishment of our wafer fabrication processes at the Richardson facility will involve a number of significant risks and uncertainties, including, but not limited to, manufacturing transition, startup or process problems, construction, process qualification or equipment delays, cost overruns or shortages of equipment or materials, any of which may also adversely affect yields. Should there be delays in commencing production at the Richardson facility, we may not have adequate capacity to respond to all orders during the transition period. There can be no assurance that we will be able to successfully transition our manufacturing operations to the Richardson facility prior to the expiration of our existing Dallas facility's lease, in the event we elect to transfer from our Dallas facility, or that we will not experience difficulties in replicating critical manufacturing processes or a reduction in manufacturing output as a result. Nor have we determined whether we will seek to extend our lease in our Dallas facility. Moreover, believing that our commencement of production at the Richardson facility could cause manufacturing delays, some customers may have purchased quantities of our products in recent fiscal quarters in excess of such customers' respective immediate needs and may continue to do so. As a result, our operating results in subsequent quarters may be materially reduced. Commencing manufacturing operations at our Richardson facility could place significant strain on our management and engineering resources and result in diversion of management attention from the day-to-day operation of our business.

    Our lease and operation of our own manufacturing facilities entails a high level of fixed costs. Such fixed costs consist primarily of occupancy costs, investment in manufacturing equipment, repair, maintenance and depreciation costs related to equipment and fixed labor costs related to manufacturing and process engineering. Our manufacturing yields vary significantly among our products, depending on a given product's complexity and our experience in manufacturing such product. We have experienced in the past and may experience in the future substantial delays in product shipments due to lower than expected production yields. However, before we realize any revenues from our commencement of our manufacturing operations at the higher capacity Richardson facility, we will have a significant increase in fixed and operating expenses. Once we commence volume production at the Richardson facility, our results of operations may still be adversely affected if revenue levels do not increase sufficiently to offset these additional expense levels. Because we have capitalized and intend to continue to capitalize certain costs associated with bringing the Richardson facility to commercial production, we will recognize depreciation or amortization expenses thereafter. In addition, during periods of low demand, high fixed wafer fabrication costs could have a material adverse effect on our business, financial condition and results of operations.

Our operating results may suffer if we do not expand our manufacturing capacity in a timely manner.

    We plan to increase our capacity by converting our existing Hillsboro facility to accommodate equipment that uses six-inch (150 millimeter) wafer production. In addition, a portion of the Richardson facility will be configured to accommodate a six-inch product line. We do not have any experience processing six-inch wafers in our fabrication facilities. Our inexperience may result in lower volume of production or higher cost of goods sold. We may be required to redesign our processes and procedures substantially to accommodate the larger wafers. As a result, implementing additional capacity for six-inch wafers may take longer than planned, could interrupt production of integrated circuits from four-inch wafers and could harm our results of operations. Additionally, we do not know if our vendors will be able to supply an adequate quantity of six-inch production wafers. We do not have any long-term supply contracts and if the vendors are unable to provide sufficient quantities for both production lines, it will impact our results. If we are unable to acquire sufficient six-inch manufacturing equipment, it may delay commencement of our manufacturing operations in the Richardson facility or conversion of our Hillsboro facility and could have a material adverse effect on our business, financial condition and results of operations. If we fail to successfully transition to six-inch

18

wafers in a timely manner or our manufacturing yields decline, our relationships with our customers may be harmed.

    Our facilities have a level of capacity beyond which we cannot cost-effectively produce our products. Although we are not currently approaching those constraints, we may be unable to further expand our business if we fail to plan and build sufficient capacity. The process of building, testing and qualifying a gallium arsenide integrated circuit fabrication facility is time consuming and difficult. Additionally, we must have adequate resources available to execute our expansion plans.

We may face fines or our facilities could be closed if we fail to comply with environmental regulations.

    Federal, state and local regulations impose various environmental controls on the storage, handling, discharge and disposal of chemicals and gases used in our manufacturing process. For our manufacturing facility located in Hillsboro, Oregon, we provide our own manufacturing waste treatment and contract for disposal of some materials. We are required by the State of Oregon Department of Environmental Quality to report usage of environmentally hazardous materials.

    At our Richardson facility, we provide our own wastewater treatment and contract for disposal of some materials.

    At our Dallas facility, we utilize Texas Instruments' industrial wastewater treatment facilities and services for the pre-treatment and discharge of wastewater generated by us. Our wastewater streams are commingled with those of Texas Instruments and are covered by Texas Instruments' wastewater permit.

    The failure to comply with present or future regulations could result in fines being imposed on us and we could be required to suspend production or cease our operations. These regulations could require us to acquire significant equipment or to incur substantial other expenses to comply with environmental regulations. We rely to a great extent on Texas Instruments' hazardous waste disposal system at our Dallas facility. Any failure by us, or by Texas Instruments with respect to our Dallas facility, to control the use of, or to adequately restrict the discharge of, hazardous substances could subject us to future liabilities and harm our results of operations.

We depend on the continued growth of communications markets.

    We derive all of our product revenues from sales of products for communication applications, specifically the mobile phone market, optical market, broadband wireless market and other wireless markets. These markets are characterized by the following:

•

intense competition;



•

rapid technological change; and



•

short product life cycles, especially in the wireless market.

    In the last few years, the communications markets have grown rapidly; however, these markets may not continue to grow or may experience a significant slowdown. In general, the communications markets are currently experiencing and may continue to experience softness, which impacts us across all markets in which we operate. Additionally, if these markets do not recover and demand for communications applications declines, our operating results could suffer.

    Products for communications applications are often based on industry standards, which are continually evolving. Our future success will depend, in part, upon our ability to successfully develop and introduce new products based on emerging industry standards, which could render our existing products unmarketable or obsolete. If communications markets evolve to new standards, we may be

19

unable to successfully design and manufacture new products that address the needs of our customers or that will meet with substantial market acceptance.

Our business will be impacted if systems manufacturers do not use gallium arsenide components.

    Silicon semiconductor technologies are the dominant process technologies for integrated circuits and the performance of silicon integrated circuits continues to improve. Our prospective customers may be systems designers and manufacturers who are evaluating such silicon technologies and in particular, silicon germanium, versus gallium arsenide integrated circuits for use in their next generation high performance systems. Customers may be reluctant to adopt our products because of:

•

their unfamiliarity with designing systems with gallium arsenide products;



•

their concerns related to manufacturing costs and yields;



•

their unfamiliarity with design and manufacturing processes; and



•

uncertainties about the relative cost effectiveness of our products compared to high-performance silicon components.

    Systems manufacturers may not use gallium arsenide components because the production of gallium arsenide integrated circuits has been, and continues to be, more costly than the production of silicon devices. As a result, we must offer devices that provide superior performance to that of silicon-based devices.

    In addition, customers may be reluctant to rely on a smaller company like us for critical components. We cannot be certain that additional systems manufacturers will design our products into their systems, that the companies that have utilized our products will continue to do so in the future or that gallium arsenide technology will continue to achieve widespread market acceptance. If our gallium arsenide products fail to achieve market acceptance, our results of operations would suffer.

We increased our indebtedness substantially.

    In February and March 2000, we sold $345.0 million of convertible subordinated notes in a private placement to qualified institutional buyers. As a result of the sale of notes, we incurred $345.0 million of additional indebtedness increasing our ratio of debt to equity (expressed as a percentage) from approximately 3.0% as of December 31, 1999 to approximately 81.2% as of December 31, 2000. Our other indebtedness is principally comprised of operating, synthetic and capital leases. We may incur substantial additional indebtedness in the future. For example, we entered into an $87.0 million synthetic lease obligation to finance the purchase of our new Richardson facility. The level of our indebtedness, among other things, could:

•

make it difficult for us to make payments on the notes and leases,



•

make it difficult for us to obtain any necessary future financing for working capital, capital expenditures, debt service requirements or other purposes;



•

require us to dedicate a substantial portion of our expected cash flow from operations to service our indebtedness, which would reduce the amount of our expected cash flow available for other purposes, including working capital and capital expenditures;



•

limit our flexibility in planning for or reactingto, changes in our business; and



•

make us more vulnerable in the event of a downturn in our business.

    There can be no assurance that we will be able to meet our debt service obligations, including our obligation under the notes.

20

We may not be able to pay our debt and other obligations.

    If our cash flow is inadequate to meet our obligations, we could face substantial liquidity problems. If we are unable to generate sufficient cash flow or otherwise obtain funds necessary to make required payments on the notes, or our other obligations, we would be in default under the terms thereof. Default under the indenture would permit the holders of the notes to accelerate the maturity of the notes and could cause defaults under future indebtedness we may incur. Any such default could have a material adverse effect on our business, prospects, financial condition and operating results. In addition, we can not assure you that we would be able to repay amounts due in respect of the notes if payment of the notes were to be accelerated following the occurrence of an event of default as defined in the indenture.

Customers may delay or cancel orders due to regulatory delays.

    The increasing demand for communications products has exerted pressure on regulatory bodies worldwide to adopt new standards for these products, generally following extensive investigation of and deliberation over competing technologies. The delays inherent in the regulatory approval process may in the future cause the cancellation, postponement or rescheduling of the installation of communications systems by our customers. These delays have in the past had and may in the future have a negative effect on our sales and our results of operations.

Our revenues are at risk if we do not introduce new products and/or decrease costs.

    Historically, the average selling prices of some of our products have decreased over the products' lives and we expect them to continue to do so. To offset these decreases, we rely primarily on achieving yield improvements and other cost reductions for existing products and on introducing new products that can often be sold at higher average selling prices. We believe our future success depends, in part, on our timely development and introduction of new products that compete effectively on the basis of price and performance and adequately address customer requirements. The success of new product and process introductions depends on several factors, including:

•

proper selection of products and processes;



•

successful and timely completion of product and process development and commercialization;



•

market acceptance of our or our customers' new products;



•

achievement of acceptable manufacturing yields; and



•

our ability to offer new products at competitive prices.

    Our product and process development efforts may not be successful and our new products or processes may not achieve market acceptance. To the extent that our cost reductions and new product introductions do not occur in a timely manner, our results of operations could suffer.

We must improve our products and processes to remain competitive.

    If technologies or standards supported by our or our customers' products become obsolete or fail to gain widespread commercial acceptance, our results of operations may be materially impacted. Because of continual improvements in semiconductor technology, including those in high performance silicon where substantially more resources are invested than in gallium arsenide, we believe that our future success will depend, in part, on our ability to continue to improve our product and process technologies. We must also develop new technologies in a timely manner. In addition, we must adapt our products and processes to technological changes and to support emerging and established industry standards. We have and must continue to perform significant research and development into advanced material development such as indium phosphide, gallium nitride, silicon carbide and silicon germanium

21

to compete with future technologies of our competitors. These research and development efforts may not be accepted by our customers, and therefore may not go into full production in the future. We may not be able to improve our existing products and process technologies, develop new technologies in a timely manner or effectively support industry standards. If we fail to do so, our customers may select another gallium arsenide product or move to an alternative technology.

Our results of operations may suffer if we do not compete successfully.

    The semiconductor industry is intensely competitive and is characterized by rapid technological change, rapid product obsolescence and price erosion. Currently, we compete primarily with manufacturers of high-performance silicon integrated circuits such as Applied Micro Circuits Corporation, Maxim Integrated Products Inc., Motorola, Philips and STMicroelectronics N.V. and with manufacturers of gallium arsenide integrated circuits such as Alpha Industries Inc., Anadigics Inc., Conexant Systems Inc., Fujitsu Microelectronics, Inc., Infineon Technologies AG, Raytheon, RF Micro Devices and Vitesse Semiconductor Corp. We also face competition from the internal semiconductor operations of some of our current and potential customers. Competition from existing or potential competitors may increase due to a number of factors including, but not limited to, the following:

•

offering of new or emerging technologies such as silicon germanium;



•

mergers and acquisitions;



•

longer operating histories and presence in key markets;



•

development of strategic relationships;



•

access to a wider customer base; and



•

access to greater financial, technical, manufacturing and marketing resources.

    Additionally, manufacturers of high performance silicon integrated circuits have achieved greater market acceptance of their existing products and technologies in some applications.

    We compete with both gallium arsenide and silicon suppliers in the wireless, data communications and telecommunications markets. In the microwave and millimeter wave markets, our competition is primarily from a limited number of gallium arsenide suppliers, which are in the process of expanding their product offerings to address commercial applications other than aerospace.

    Our prospective customers are typically systems designers and manufacturers that are considering the use of gallium arsenide integrated circuits for their high performance systems. Competition is primarily based on performance elements such as speed, complexity and power dissipation, as well as price, product quality and ability to deliver products in a timely fashion. Due to the proprietary nature of our products, competition occurs almost exclusively at the system design stage. As a result, a design win by us or our competitors typically limits further competition with respect to manufacturing a given design.

Our operating results may suffer due to fluctuations in demand for semiconductors.

    From time to time, the semiconductor industry has experienced significant downturns and wide fluctuations in product supply and demand, often in connection with, or in anticipation of, maturing product cycles and declines in general economic conditions. This cyclicality has led to significant imbalances in demand, inventory levels and production capacity. It has also accelerated the decrease of average selling prices per unit. We have experienced, and may experience again, periodic fluctuations in our financial results because of these or other industry-wide conditions. For example, if demand for communications applications were to decrease substantially, demand for the semiconductor components in these applications would also decline, which would negatively affect our operating results.

22

If we fail to integrate any future acquisitions, our business will be harmed.

    We face risks from any future acquisitions, including the following:

•

we may fail to merge and coordinate the operations and personnel of newly acquired companies with our existing business;



•

we may experience difficulties integrating our financial and operating systems;



•

our ongoing business may be disrupted or receive insufficient management attention;



•

we may not cost-effectively and rapidly incorporate the technology we acquire;



•

we may not be able to recognize the cost savings or other financial benefits we anticipated;



•

we may not be able to retain the existing customers of newly acquired operations;



•

our corporate culture may clash with that of the acquired businesses; and



•

we may incur unknown liabilities associated with acquired businesses.

    We may not successfully address these risks or any other problems that arise in connection with future acquisitions.

    We will continue to evaluate strategic opportunities available to us and we may pursue product, technology or business acquisitions. In addition, in connection with any future acquisitions, we may issue equity securities that could dilute the percentage ownership of our existing stockholders, we may incur additional debt and we may be required to amortize expenses related to goodwill and other intangible assets that may negatively affect our results of operations.

We must manage our growth.

    Our total number of employees grew to 1,073 as of December 31, 2000 from 802 as of December 31, 1999. The resulting growth has placed, and is expected to continue to place, significant demands on our personnel, management and other resources. We must continue to improve our operational, financial and management information systems to keep pace with the growth of our business.

If we do not hire and retain key employees, our business will suffer.

    Our future success depends in large part on the continued service of our key technical, marketing and management personnel. We also depend on our ability to continue to identify, attract and retain qualified technical employees, particularly highly skilled design, process and test engineers involved in the manufacture and development of our products and processes. We must also recruit and train employees to manufacture our products without a substantial reduction in manufacturing yields. There are many other semiconductor companies located in the communities near our facilities and it may become increasingly difficult for us to attract and retain those employees. The competition for these employees is intense, and the loss of key employees could negatively affect us.

Our business may be harmed if we fail to protect our proprietary technology.

    We rely on a combination of patents, trademarks, copyrights, trade secret laws, confidentiality procedures and licensing arrangements to protect our intellectual property rights. We currently have patents granted and pending in the United States and in foreign countries and intend to seek further international and United States patents on our technology. We cannot be certain that patents will be issued from any of our pending applications or that patents will be issued in all countries where our products can be sold or that any claims allowed from pending applications or will be of sufficient scope or strength to provide meaningful protection or any commercial advantage. Our competitors may also

23

be able to design around our patents. The laws of some countries in which our products are or may be developed, manufactured or sold, may not protect our products or intellectual property rights to the same extent as do the laws of the United States, increasing the possibility of piracy of our technology and products. Although we intend to vigorously defend our intellectual property rights, we may not be able to prevent misappropriation of our technology. Our competitors may also independently develop technologies that are substantially equivalent or superior to our technology.

Our ability to produce our semiconductors may suffer if someone claims we infringe on their intellectual property.

    The semiconductor industry is characterized by vigorous protection and pursuit of intellectual property rights or positions, which have resulted in significant and often protracted and expensive litigation. If it is necessary or desirable, we may seek licenses under such patents or other intellectual property rights. However, we cannot be certain that licenses will be offered or that we would find the terms of licenses that are offered acceptable or commercially reasonable. Our failure to obtain a license from a third party for technology used by us could cause us to incur substantial liabilities and to suspend the manufacture of products. Furthermore, we may initiate claims or litigation against third parties for infringement of our proprietary rights or to establish the validity of our proprietary rights. Litigation by or against us could result in significant expense and divert the efforts of our technical personnel and management, whether or not the litigation results in a favorable determination. In the event of an adverse result in any litigation, we could be required to:

•

pay substantial damages;



•

indemnify our customers;



•

stop the manufacture, use and sale of the infringing products;



•

expend significant resources to develop non-infringing technology;



•

discontinue the use of certain processes; or



•

obtain licenses to the technology.

    We may be unsuccessful in developing non-infringing products or negotiating licenses upon reasonable terms, or at all. These problems might not be resolved in time to avoid harming our results of operations. If any third party makes a successful claim against our customers or us and a license is not made available to us on commercially reasonable terms, our business could be harmed.

    On February 26, 1999, a lawsuit was filed against 88 firms, several of which are still in litigation, including us, in the United States District Court for the District of Arizona. The suit alleges that the defendants, including us, infringe upon certain patents held by The Lemelson Medical, Education and Research Foundation, Limited Partnership. Although we believe the suit is without merit and intend to vigorously defend ourselves against the charges, we cannot be certain that we will be successful. Moreover, this litigation may require us to spend a substantial amount of time and money and could distract management from our day to day operations.

Our business may suffer due to risks associated with international sales.

    Our sales outside of the United States were 44.6% of total revenues in 2000 and 38.4% of total revenues in 1999. We face inherent risks from these sales, including:

•

imposition of government controls;



•

currency exchange fluctuations;

24

•

longer payment cycles and difficulties related to the collection of receivables from international customers;



•

reduced protection for intellectual property rights in some countries;



•

the impact of recessionary environments in economies outside the United States;



•

unfavorable tax consequences;



•

difficulty obtaining distribution and support;



•

political instability; and



•

tariffs and other trade barriers.

    In addition, due to the technological advantages provided by gallium arsenide integrated circuits in many military applications, all of our sales outside of North America must be licensed by the Office of Export Administration of the U.S. Department of Commerce. If we fail to obtain these licenses or experience delays in obtaining these licenses in the future, our results of operations could be harmed. Also, because all of our foreign sales are denominated in U.S. dollars, increases in the value of the dollar would increase the price in local currencies of our products and make our products less price competitive.

We may be subject to a securities class action suit if our stock price falls.

    Following periods of volatility in the market price of a company's stock, some stockholders may file a securities class action litigation. For example, in 1994, a stockholder class action lawsuit was filed against us, our underwriters and some of our officers, directors and investors, which alleged that we, our underwriters and certain of our officers, directors and investors intentionally misled the investing public regarding our financial prospects. We settled the action and recorded a special charge of $1.4 million associated with the settlement of this lawsuit and related legal expenses, net of accruals, in 1998. Any future securities class action litigation could be expensive and divert our management's attention and harm our business, regardless of its merits.

Our stock will likely be subject to substantial price and volume fluctuations due to a number of factors, many of which are beyond our control and may prevent our stockholders from reselling our common stock at a profit.

    The securities markets have experienced significant price and volume fluctuations and the market prices of the securities of semiconductor companies have been especially volatile. The market price of our common stock may experience significant fluctuations in the future. For example, our common stock price has fluctuated from a high of approximately $67.75 to a low of approximately $21.00 during the 52 weeks ended December 31, 2000. This market volatility, as well as general economic, market or political conditions, could reduce the market price of our common stock in spite of our operating performance. In addition, our operating results could be below the expectations of public market analysts and investors, and in response, the market price of our common stock could decrease significantly.

25

Our certificate of incorporation and bylaws include anti-takeover provisions, which may deter or prevent a takeover attempt.

    Some provisions of our certificate of incorporation and bylaws and provisions of Delaware law may deter or prevent a takeover attempt, including a takeover that might result in a premium over the market price for our common stock. These provisions include:

    Cumulative voting.  Our stockholders are entitled to cumulate their votes for directors. This may limit the ability of the stockholders to remove a director other than for cause.

    Stockholder proposals and nominations.  Our stockholders must give advance notice, generally 120 days prior to the relevant meeting, to nominate a candidate for director or present a proposal to our stockholders at a meeting. These notice requirements could inhibit a takeover by delaying stockholder action.

    Stockholder rights plan.  We may trigger our stockholder rights plan in the event our board of directors does not agree to an acquisition proposal. The rights plan may make it more difficult and costly to acquire our company.

    Preferred stock.  Our certificate of incorporation authorizes our board of directors to issue up to 5 million shares of preferred stock and to determine what rights, preferences and privileges such shares have. No action by our stockholders is necessary before our board of directors can issue the preferred stock. Our board of directors could use the preferred stock to make it more difficult and costly to acquire our company.

    Delaware anti-takeover statute.  The Delaware anti-takeover law restricts business combinations with some stockholders once the stockholder acquires 15% or more of our common stock. The Delaware statute makes it harder for our company to be acquired without the consent of our board of directors and management.

26

Independent Auditors' Report

The Board of Directors and Stockholders
TriQuint Semiconductor, Inc.:

    We have audited the accompanying consolidated balance sheets of TriQuint Semiconductor, Inc. and subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

    We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

    In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of TriQuint Semiconductor, Inc. and subsidiaries as of December 31, 2000 and 1999, and the results of their operations, and their cash flows for each of the years in the three-year period ended December 31, 2000 in conformity with accounting principles generally accepted in the United States of America.

/s/ KPMG LLP

Portland, Oregon
January 31, 2001

27

TRIQUINT SEMICONDUCTOR, INC.
Consolidated Statements of Operations
(In thousands, except share and per share information)

			Years ended December 31,
			2000			1999			1998
Total revenues			$	300,749		$	163,663		$	111,605
Operating costs and expenses:
	Cost of goods sold			139,688			95,069			72,784
	Research, development and engineering			31,201			21,976			18,984
	Selling, general and administrative			33,871			23,524			15,962
	Special charges			—			—			10,220
		Total operating costs and expenses		204,760			140,569			117,950
		Income (loss) from operations		95,989			23,094			(6,345	)
Other income (expense):
	Interest income			31,572			7,279			3,375
	Interest expense			(13,475	)		(1,062	)		(1,454	)
	Other, net			172			61			563
				18,269			6,278			2,484
		Income (loss) before income taxes		114,258			29,372			(3,861	)
Income tax expense				42,847			4,416			94
		Net income (loss)	$	71,411		$	24,956		$	(3,955	)
Per share data:
	Net income (loss):
		Basic	$	0.92		$	0.38		$	(0.07	)
		Diluted	$	0.83		$	0.34		$	(0.07	)
	Weighted-average shares:
		Basic		77,686,666			65,184,272			56,397,936
		Diluted		86,251,030			74,334,092			56,397,936

See accompanying notes to consolidated financial statements.

28

TRIQUINTSEMICONDUCTOR, INC.
Consolidated Balance Sheets
(In thousands, except share and per share information)

				December 31,
				2000		1999
Assets
Current assets:
	Cash and cash equivalents			$	94,211	$	76,873
	Investments				366,418		116,465
	Trade accounts receivable, net				49,813		26,909
					510,442		220,247
	Inventories, net:
		Raw material			9,128		4,425
		Work in process			21,663		16,078
		Finished goods			2,946		4,173
					33,737		24,676
		Deferred income taxes			4,753		3,500
		Prepaid expenses and other assets			1,470		2,516
			Total current assets		550,402		250,939
Property, plant and equipment, net					110,741		38,657
Deferred income taxes					7,658		7,450
Participation in synthetic lease					73,617		—
Other non-current assets, net					30,201		2,732
Restricted long-term assets					52,797		40,163
			Total assets	$	825,416	$	339,941
Liabilities and Stockholders' Equity
Current liabilities:
	Current installments of capital lease and installment note obligations			$	2,744	$	4,320
	Accounts payable				17,528		14,633
	Other accrued liabilities				20,251		9,382
	Accrued payroll				7,215		4,907
			Total current liabilities		47,738		33,242
Capital lease and installment note obligations, less current installments					1,991		4,783
Convertible subordinated notes					345,000		—
			Total liabilities		394,729		38,025
Commitments and contingencies
Stockholders' equity:
	Common stock, $.001 par value. Authorized 200,000,000 shares at December 31, 2000 and 1999; issued and outstanding 80,098,508 and 75,686,880 shares at December 31, 2000 and 1999, respectively				80		75
	Additional paid-in capital				360,138		302,862
	Accumulated other comprehensive income				79		—
	Retained earnings (accumulated deficit)				70,390		(1,021	)
			Total stockholders' equity		430,687		301,916
			Total liabilities and stockholders' equity	$	825,416	$	339,941

See accompanying notes to consolidated financial statements.

29

TRIQUINT SEMICONDUCTOR, INC.
Consolidated Statements of Stockholders' Equity
(In thousands, except share information)

	Common stock					Accumulated other comprehensive income		Retained earnings (accumulated deficit)
				Additional paid-in capital							Total stockholders' equity
	Shares	Amount
Balance, December 31, 1997	50,965,392	$	51	$	112,009	$	—	$	(22,022	)	$	90,038
Issuance of common stock under option plans	611,036		1		497		—		—			498
Issuance of common stock under stock purchase plan	666,576		—		1,924		—		—			1,924
Issuance of common stock for acquisition of Millimeter Wave Communications operations	5,067,676		5		19,105		—		—			19,110
Net loss	—		—		—		—		(3,955	)		(3,955	)
Balance, December 31, 1998	57,310,680		57		133,535		—		(25,977	)		107,615
Issuance of common stock under option plans	2,309,844		2		4,926		—		—			4,928
Issuance of common stock under stock purchase plan	1,053,708		1		2,823		—		—			2,824
Issuance of common stock, net	15,012,648		15		146,572		—		—			146,587
Income tax benefit of stock option exercises	—		—		15,006		—		—			15,006
Net income	—		—		—		—		24,956			24,956
Balance, December 31, 1999	75,686,880		75		302,862		—		(1,021	)		301,916
Issuance of common stock under option plans	2,892,751		3		8,177		—		—			8,180
Issuance of common stock under stock purchase plan	1,518,877		2		5,151		—		—			5,153
Income tax benefit of stock option exercises	—		—		43,948		—		—			43,948
Accumulated other comprehensive income	—		—		—		79		—			79
Net income	—		—		—		—		71,411			71,411
Balance, December 31, 2000	80,098,508	$	80	$	360,138	$	79	$	70,390		$	430,687

See accompanying notes to consolidated financial statements.

30

TRIQUINT SEMICONDUCTOR, INC.
Consolidated Statements of Cash Flows
(In thousands)

					Years ended December 31,
					2000			1999			1998
Cash flows from operating activities:
	Net income (loss)				$	71,411		$	24,956		$	(3,955	)
	Adjustments to reconcile net income (loss) to net cash provided by operating activities:
		Depreciation and amortization				11,606			7,424			5,889
		Income tax benefit of stock option exercises				43,948			15,006			—
		Non-cash special charge				—			—			8,820
		(Gain) loss on sale of assets				25			(53	)		(475	)
		Deferred income taxes				(1,461	)		(10,950	)		—
		Change in assets and liabilities:
			Receivables			(22,904	)		(5,889	)		939
			Inventories			(9,061	)		(4,970	)		(2,795	)
			Prepaid expenses and other assets			919			(470	)		(66	)
			Accounts payable			2,895			4,606			(453	)
			Other accrued liabilities			13,177			4,929			2,314
				Net cash provided by operating activities		110,555			34,589			10,218
Cash flows from investing activities:
	Purchase of available-for-sale investments					(790,390	)		(317,341	)		(67,993	)
	Sale of available-for-sale investments					687,352			212,336			62,262
	Purchase of held-to-maturity investments					(341,937	)		—			—
	Maturities of held-to-maturity investments					195,101			—			—
	Increase in restricted long-term assets					(12,634	)		—			—
	Capital expenditures					(82,126	)		(15,289	)		(5,618	)
	Purchase of preferred stock in investee companies					(17,852	)		(1,248	)		—
	Purchase of participation in synthetic lease					(73,617	)		—			—
	Proceeds from sale of assets					1			85			475
				Net cash used in investing activities		(436,102	)		(121,457	)		(10,874	)
Cash flows from financing activities:
	Principal payments under capital lease and installment note obligations					(4,368	)		(5,200	)		(5,508	)
	Proceeds from convertible subordinated notes					345,000			—			—
	Debt issuance costs					(11,080	)		—			—
	Issuance of common stock, net					13,333			154,339			2,032
				Net cash provided by (used in) financing activities		342,885			149,139			(3,476	)
				Net increase (decrease) in cash and cash equivalents		17,338			62,271			(4,132	)
Cash and cash equivalents at beginning of year						76,873			14,602			18,734
Cash and cash equivalents at end of year					$	94,211		$	76,873		$	14,602
Supplemental disclosures of cash flow information:
	Cash paid for:
		Interest			$	7,590		$	1,062		$	1,452
		Income taxes			$	(32	)	$	400		$	4
Supplemental schedule of non-cash investing and financing activities:
	Purchase of assets through capital lease and installment notes					—			—			2,216
	Recorded in acquisition of Millimeter Wave:
		Receivables				—			—			5,973
		Inventories				—			—			4,623
		Prepaid expenses and other assets				—			—			2,839
		Equipment				—			—			987
		Accounts payable				—			—			1,743
		Accrued liabilities				—			—			1,999
		Common stock				—			—			19,500

See accompanying notes to consolidated financial statements.

31

TRIQUINT SEMICONDUCTOR
Notes to Consolidated Financial Statements
December 31, 2000, 1999 and 1998
(In thousands, except share and per share information)

(1) Summary of Significant Accounting Policies

Description of the Company

    TriQuint Semiconductor, Inc. (the "Company") is a leading supplier of high-performance gallium arsenide integrated circuits for the wireless communications, telecommunications, data communications and aerospace markets. The Company's products incorporate its proprietary analog and mixed-signal designs and its advanced gallium arsenide manufacturing processes to address a broad range of applications and customers.

Principles of Consolidation

    The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation.

Reclassifications

    Certain amounts in the December 31, 1999 and 1998 financial statements have been reclassified to conform to the December 31, 2000 presentation. These reclassifications had no effect on net income or stockholders' equity as previously reported.

Management Estimates

    The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

    Standard product revenue is recognized upon shipment of product with provisions established for estimated customer and distributor product returns. Generally, the Company ships products FOB shipping point. The Company recognizes revenue on certain foundry and customer-specific products based on certain design, manufacturing and other milestones. The Company recognizes revenue on cost-plus contracts as work is performed. Revenue from customers who have acceptance criteria is not recognized until all acceptance criteria are satisfied. The Company complies with the revenue recognition guidance summarized in Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements.

Cash Equivalents

    The Company considers all highly liquid debt and equity instruments purchased with an original maturity of three months or less to be cash equivalents. These investments include commercial paper, market auction preferred stock and money market funds.

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Investments

    Investment securities at December 31, 2000 consisted of short and medium-term corporate notes, commercial paper and other investments. The Company classifies its investments in one of two categories: available-for-sale or held-to-maturity. Held-to-maturity securities are those securities in which the Company has the ability and intent to hold it until maturity. All securities not included in held-to-maturity are classified as available-for-sale.

    Available-for-sale securities are recorded at fair value. Held-to-maturity securities are recorded at amortized cost, adjusted for the amortization or accretion of premiums or discounts. Unrealized holding gains and losses, net of the related tax effect, on available-for-sale securities are excluded from earnings and are reported as a separate component of other comprehensive income until realized. Realized gains and losses from the sale of available-for-sale securities are determined on a specific identification basis.

    A decline in the market value of any available-for-sale or held-to-maturity security below cost that is deemed to be other than temporary results in a reduction in carrying amount to fair value. This impairment is charged to earnings and a new cost basis for the security is established. Premiums and discounts are amortized or accreted over the life of the related held-to-maturity or available-for-sale security as an adjustment to yield using the effective interest method. Dividend and interest income are recognized when earned.

Trade Accounts Receivable

    Trade accounts receivable are shown net of an allowance for doubtful accounts of $1,065 and $843 at December 31, 2000 and 1999, respectively.

Inventories

    Inventories are stated at the lower of cost (approximates actual cost on a first-in, first-out basis) or market (net realizable value). Inventories are shown net of reserves of $7,219 and $5,156 at December 31, 2000 and 1999, respectively.

Property, Plant and Equipment

    Property, plant and equipment are recorded at cost. Machinery and equipment under capital leases are stated at the lower of the present value of the minimum lease payments at the beginning of the lease term or the fair value of the leased assets at the inception of the lease.

    Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which are as follows: five to seven years for machinery and equipment, furniture and fixtures and computer equipment; three to seven years for leasehold improvements and thirty-nine years for buildings. Leasehold improvements are amortized over the shorter of the estimated life of the asset or the term of the related lease. Depreciation begins at the time assets are placed in service. Maintenance and repairs are expensed as incurred.

Goodwill and Intangible Assets

    Goodwill and intangible assets principally result from business acquisitions and debt issuance costs. Goodwill, patents, developed technology and other intangibles are amortized on a straight-line basis over their estimated useful lives, ranging from 2 to 10 years. Financing costs related to the issuance of debt are capitalized as other noncurrent assets, net and amortized to interest expense over the term of the related debt using the straight-line method, which approximates the effective interest method.

33

    Intangible assets consisted of the following (in thousands):

		2000		1999
Intangible Assets:
	Patents, technology and other	$	2,132	$	2,132
	Debt issuance costs		11,080		—
			13,212		2,132
Less accumulated amortization			2,246		657
		$	10,966	$	1,475

Long-term Investments

    Other noncurrent assets, net includes long-term investments in other companies. Each of these investments represents less than 10% ownership and is accounted for using the cost method.

Research and Development Costs

    The Company charges research and development costs associated with the development of new products to expense when incurred.

    Engineering and design costs related to revenues on non-recurring engineering services billed to customers are classified as cost of goods sold.

Advertising Costs

    The Company expenses advertising costs as incurred.

Comprehensive Income

    The Company has adopted the provisions of Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income". The objective of SFAS No. 130 is to report all changes in equity that result from transactions and economic events other than transactions with owners. Accumulated other comprehensive income includes unrealized holding gains and losses on available-for-sale investments and are included as a separate component of stockholders' equity until realized. The difference between net income and comprehensive income for the periods presented are not significant.

Net Income (Loss) Per Share

    The Company has adopted SFAS No. 128, "Earnings Per Share". SFAS No. 128 requires presentation of basic and diluted net income (loss) per share. Basic net income (loss) per share is net income available to common stockholders divided by the weighted-average number of common shares outstanding. Diluted net income (loss) per share is similar to basic except that the denominator includes potential common shares that, had they been issued, would have had a dilutive effect. The reconciliation of shares used to calculate basic and diluted income (loss) per share consists of the following:

		2000	1999	1998
Basic weighted-average shares of common stock		77,686,666	65,184,272	56,397,936
Effect of dilutive securities:
	Stock options	8,564,364	9,149,820	—
Diluted weighted-average shares of common stock		86,251,030	74,334,092	56,397,936

34

    Common stock equivalents related to stock options and conversion of convertible subordinated notes totaling 4,734,238; 365,188 and 2,656,988 were anti-dilutive and, therefore, were not included in the diluted net income (loss) per share calculation for the years ended December 31, 2000, 1999 and 1998, respectively.

Financial Instruments

    The carrying amount of cash equivalents, investments, trade accounts receivable and accounts payable approximate fair value because of the short-term nature of these instruments. The fair value of capital lease obligations were estimated by discounting the future cash flows using market interest rates and does not differ significantly from that reflected in the accompanying financial statements. The fair market value of our 4% convertible subordinated notes due 2007 was $301,444 at December 31, 2000.

    Fair value estimates are made at a specific point in time, based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Income Taxes

    The Company accounts for income taxes under the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized.

Stock Option Plans

    The Company accounts for its stock option plans in accordance with the provisions of Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees", and related interpretations including Financial Accounting Standards Board ("FASB") Interpretation No. 44 "Accounting for Certain Transactions Involving Stock Compensation, an Interpretation of APB No. 25", issued in March, 2000. As such, compensation expense would be recorded on the date of grant only if the current market price of the underlying stock exceeded the exercise price. The Company also applies SFAS No. 123, "Accounting for Stock-Based Compensation", which allows entities to continue to apply the provisions of APB Opinion No. 25 and provide pro forma net income and pro forma earnings per share disclosures for employee stock option grants as if the fair-value-based method defined in SFAS No. 123 had been applied.

Impairment of Long-lived Assets and Long-lived Assets to be Disposed of

    The Company accounts for long-lived assets in accordance with the provisions of SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". This Statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

35

(2) Investments

    The amortized cost, gross unrealized holding gains, gross unrealized holding losses and fair values of available-for-sale investments and held-to-maturity investments by major security types and classes of security at December 31, 2000 and 1999 consisted of the following (in thousands):

		Amortized cost		Gross unrealized holding gains	Gross unrealized holding losses		Fair value
At December 31, 2000
Available-for-sale:
	Short-term and medium-term notes	$	112,789	99	—		$	112,888
	Commercial paper		87,364	—	(20	)		87,344
	Other		19,350	—	—			19,350
		$	219,503	99	(20	)	$	219,582
Held-to-maturity:
	Short-term and medium-term notes	$	80,990	—	—		$	80,990
	Commercial paper		65,846	—	—			65,846
		$	146,836	—	—		$	146,836
At December 31, 1999
Available-for-sale:
	Short-term and medium-term notes	$	49,914	—	—		$	49,914
	Commercial paper		25,451	—	—			25,451
	Other		41,100	—	—			41,100
		$	116,465	—	—		$	116,465

(3) Property, Plant and Equipment

    Property, plant and equipment consist of the following (in thousands):

	December 31,
	2000		1999
Land	$	5,523	$	4,023
Leasehold improvements		4,951		4,471
Machinery and equipment		76,340		48,150
Furniture and fixtures		2,137		1,558
Computer equipment and software		14,621		12,739
Assets in process		61,303		11,988
Other		619		619
		165,494		83,548
Less accumulated depreciation and amortization		54,753		44,891
	$	110,741	$	38,657

    The Company capitalizes interest costs as a component of construction in progress. For the year ended December 31, 2000, assets in process included capitalized interest of $193. Additionally, prepayments for assets of approximately $3,000 were included in assets in process as of December 31, 2000. Remaining purchase commitments for assets with prepayments are approximately $8,700. There was no capitalized interest or asset prepayments included in assets in process in 1999 or 1998.

36

(4) Leases and Installment Notes

    At December 31, 2000 and 1999, the Company had outstanding $3,889 and $7,311 respectively of capital leases and $1,216 and $1,588 respectively of installment notes with interest rates ranging from 7.9% to 9.9%. The notes are payable in monthly installments of principal and interest through 2003 and are secured by equipment.

    Additionally, the Company leases certain equipment, office and manufacturing space under operating leases that expire at various dates through 2005. The future minimum lease payments under installment notes and non-cancelable leases as of December 31, 2000 are as follows (in thousands):

			Installment notes and capital leases		Operating leases
Years ending:
	2001		$	3,033	$	9,937
	2002			1,705		1,912
	2003			368		330
	2004			—		300
	2005			—		300
		Total		5,106	$	12,779
Less amounts representing interest				371
		Present value of minimum payments		4,735
Less current installments				2,744
			$	1,991

    Amounts applicable to capital leases and installment notes, which are included in machinery and equipment, are summarized as follows (in thousands):

	December 31,
	2000		1999
Machinery and equipment	$	22,666	$	22,666
Less accumulated amortization		17,329		13,767
	$	5,337	$	8,899

    Rent expense under operating leases was $14,354, $12,884 and $9,779 during the years ended December 31, 2000, 1999 and 1998, respectively.

    The Company entered into a five-year agreement to construct and lease an office building and fabrication facility in Hillsboro, Oregon (the "Hillsboro Facility") in 1996. Rent obligations began in February of 1997 and approximate the lessor's debt service costs. At the end of the lease term, the Company may (i) renew the lease for up to five additional years, (ii) exercise its purchase option, or (iii) cause the leased assets to be sold to a third party whereby the Company guarantees up to a maximum of 85% of the original cost. The future minimum lease payments stated above exclude any payments required at the end of the lease term.

    As part of the above lease, the Company restricted $38,250 of its investments as collateral for specified obligations of the lessor under the lease. These investments are restricted as to withdrawal and are managed by the Company subject to certain limitations under its investment policy. In addition, the Company must maintain a minimum consolidated tangible net worth of $50,000, total liabilities to

37

net worth ratio equal to or less than 1.50 to 1.00 and maintain cash and liquid investments, including restricted investments, greater than $45,000.

    In November 1997, the Company entered into a $1,500 lease agreement for additional property adjacent to its Hillsboro Facility. Pursuant to the terms of that agreement, the transaction was partially collateralized by a guarantee from the Company. In June 2000, the Company exercised its purchase option, retired this loan and no longer has any obligation under the agreement.

    The Company has entered into agreements to lease equipment in Dallas, Texas and Hillsboro, Oregon. Rent obligations will expire at the end of the initial lease terms. At the end of the lease terms, the Company may (i) renew the leases for up to three additional one-year terms, (ii) exercise its purchase options, or (iii) cause the equipment to be sold to a third party whereby the Company guarantees residual values to the lessor. The future minimum lease payments stated above exclude any payments required at the end of the lease term.

    On August 30, 2000, the Company acquired from Micron Technology Texas, LLC its Richardson, Texas wafer fabrication facility. The acquisition was financed through a synthetic lease transaction consisting of a participation agreement and master lease agreement. The lease provides for the purchase and expansion of the Company's wafer fabrication facility in Richardson, Texas under an initial five-year operating lease. At the end of the lease term, the Company may (i) renew the lease for two additional two-year terms, (ii) exercise its purchase option or (iii) cause the leased assets to be sold to a third party whereby the Company guarantees up to a maximum of 83.5% of the original cost. A portion of the lease is collateralized by pledged investment securities of approximately $14,547. Additionally, the Company is a participant in the synthetic lease transaction, and the Company's participation of approximately $73,617 is classified as participation in synthetic lease. Restrictive covenants, which are measured periodically, included in the synthetic lease require the Company to maintain (a) a debt service coverage ratio of not more than 3.00 to 1.00 through June, 2001 and not more than 2.50 to 1.00 thereafter, (b) a quick ratio of not less than 1.25 to 1.00, (c) a fixed charge coverage ratio of not less than 1.50 to 1.00 beginning first quarter of 2001 and not less than 2.00 to 1.00 beginning first quarter of 2002 and thereafter and (d) tangible net worth not less than 90% of tangible net worth as of December 31, 1999 plus 75% of net income and net equity additions without deductions for losses. As of December 31, 2000, the Company was in compliance with the restrictive covenants contained in this synthetic lease.

(5) Line of Credit

    The Company has a line of credit agreement for general corporate purposes with a commercial bank. The agreement is unsecured, and provides for aggregate borrowings of $10,000. The interest rate is based on two pricing options (LIBOR and prime) plus an interest rate spread. Interest is payable periodically with maturity set at May 31, 2001. No amount was outstanding on the line of credit at December 31, 2000 or 1999. The Company has an annual commitment fee equal to .125% of the unused line of credit. The line of credit is subject to loan covenants for which the Company was in compliance at December 31, 2000 and 1999.

(6) Convertible Subordinated Notes

    In February and March 2000, the Company completed the sale of $345,000 aggregate principal amount of 4% convertible subordinated notes due 2007, raising approximately $333,900 net of fees and expenses. The notes are unsecured obligations of the Company and subordinated to all of the Company's present and future senior indebtedness. Interest on the notes is payable in arrears semiannually on each March 1 and September 1. The notes are convertible, at the option of the holder, at any time prior to redemption or maturity into shares of the Company's common stock at a conversion price of $67.80, subject to certain adjustments. The notes may be redeemed, at the

38

Company's option at any time prior to conversion or maturity at the redemption price of $101.70 through March 2003 and $67.80 thereafter, subject to certain adjustments and/or premiums.

39

(7) Stockholders' Equity

Stock Split

    On May 11, 2000, the Board of Directors approved a two-for-one forward stock split of the outstanding common shares effected in the form of a stock dividend paid on July 11, 2000 to stockholders of record as of June 19, 2000. On December 2, 1999, the Board of Directors approved a two-for-one stock split of the outstanding common shares effected in the form of a stock dividend on February 22, 2000 to stockholders of record as of February 1, 2000. On June 10, 1999, the Board of Directors approved a three-for-two stock split of the outstanding common shares effected in the form of a stock dividend on July 2, 1999 to stockholders of record as of June 22, 1999.

    Common share and per share data for all periods presented in the accompanying financial statements have been adjusted to give effect to all stock splits.

Stock Option Plans and Employee Stock Purchase Plans

    Under the 1987 and 1996 Stock Incentive Programs and the 1998 Nonstatutory Stock Option Plan (the "Plans"), the Company has authorized the issuance of 11,386,612, 14,150,000 and 3,000,000 common shares, respectively, of which a total of 1,624,336 shares are available to grant. The Plans provide for the grant of incentive stock options to officers and other employees of the Company or any parent or subsidiary, and non-qualified stock options to officers and other employees of the Company, directors, and consultants of the Company. Subject to the discretion of the Board of Directors, options granted under the Plans generally vest and become exercisable at the rate of 28% at the end of the first year, and thereafter at a rate of 2% per month and have a ten-year term.

    The exercise price of all incentive stock options granted under the Plans must be at least equal to the fair market value of the shares on the date of grant. With respect to any participant who owns stock possessing more than 10% of the voting rights of the Company's outstanding capital stock, the exercise price of any incentive stock option granted must equal at least 110% of the fair market value on the grant date. The exercise price of all non-statutory stock options granted under the Plans must equal at least 50% of the fair market value of the common stock on the date of grant. However, it is the Company's practice to issue options at fair market value. The terms of all options granted under the Plans may not exceed ten years.

    Under the 1992 and 1998 Employee Stock Purchase Plans (the "Purchase Plans"), the Company has authorized the issuance of 4,829,602 common shares, of which 1,166,035 were available for issuance at December 31, 2000. The Purchase Plans allow eligible employees to purchase the Company's common stock through payroll deductions, which may not exceed 15% of an employee's base compensation including overtime and sales commission, not to exceed amount subject to regulatory limits. The stock purchase price is equal to 85% of the lower of the fair value at enrollment date or purchase date.

40

    The fair value of each stock based compensation award is estimated on the date of grant using the Black Scholes option-pricing model assuming no dividend yield and the following weighted-average assumptions for stock based compensation awards during the years ended December 31:

	Stock Option Plans
	2000		1999		1998
Risk-free interest rate	6.16	%	5.55	%	5.20	%
Expected life in years	5		5		5
Expected volatility	86	%	76	%	62	%

	Employee Stock Purchase Plans
	2000		1999		1998
Risk-free interest rate	6.11	%	5.08	%	4.80	%
Expected life in years	.5		.5		.5
Expected volatility	123	%	79	%	66	%

    The per share weighted average fair value of stock based compensation awards granted under the various plans are as follows for the years ended December 31:

	2000		1999		1998
Stock Option Plans	$	29	$	11	$	2
Employee Stock Purchase Plans	$	37	$	12	$	1

    The Company applies APB Opinion No. 25 in accounting for its Plans and, accordingly, no compensation cost has been recognized for its stock based compensation awards in the financial statements. Had the Company determined compensation cost based on the fair value at the date of grant for its stock based compensation awards under SFAS No. 123, the Company's net income (loss) would have been adjusted to the pro forma amounts indicated below (in thousands except per share information):

				Years ended December 31,
		2000		1999		1998
Net income (loss)		$	22,054	$	8,346	$	(8,314	)
Diluted net income (loss) per share:
	Basic		0.27		0.13		(0.15	)
	Diluted	$	0.24	$	0.11	$	(0.15	)

41

    Activity under the Company's stock option plans is as follows:

		Number of shares		Weighted- average exercise price
Options outstanding at December 31, 1997		8,245,128		$	2.49
Options:
	Granted	9,727,004			3.19
	Exercised	(611,036	)		0.81
	Canceled	(4,741,020	)		3.76
Options outstanding at December 31, 1998		12,620,076			2.64
Options:
	Granted	3,492,568			16.06
	Exercised	(2,309,844	)		2.14
	Canceled	(292,724	)		2.63
Options outstanding at December 31, 1999		13,510,076			6.18
Options:
	Granted	3,847,587			40.41
	Exercised	(2,892,751	)		2.83
	Canceled	(288,853	)		23.25
Options outstanding at December 31, 2000		14,176,059		$	15.81

    In September 1998, the Compensation Committee of the Board of Directors adopted a resolution to offer employees holding stock options for 5,299,272 shares the opportunity to exchange their existing stock options for new stock options. The exchange allowed employees to receive options for the same number of shares at $2.69 per share, which exceeded the market price during the employee decision period, in place of an original average exercise price of $3.69. The new options vest over one to four years. Options for directors and officers were not repriced. Option holders elected to exchange options covering 4,227,760 shares, which are included as both options granted and canceled during 1998 in the preceding table.

42

    The following table summarizes information concerning stock options outstanding and exercisable at December 31, 2000:

Range of exercise prices		Number outstanding as of December 31, 2000	Weighted- average remaining contractual life		Weighted- average exercise price		Number exercisable as of December 31, 2000	Weighted- average exercise price
$	0.23—1.94	678,693	$	3.73	$	1.17	678,693	$	1.17
	1.96—2.69	3,303,658		7.59		2.66	1,471,004		2.62
	2.77—3.33	1,555,265		7.76		3.07	242,711		3.16
	3.35—3.88	1,494,317		6.55		3.63	1,020,291		3.70
	3.95—14.38	1,360,245		7.88		9.08	435,687		7.16
	14.97—21.13	2,032,720		8.90		20.66	112,234		18.36
	21.28—34.38	298,972		9.33		31.07	17,054		23.89
	34.94—36.50	1,820,486		9.95		36.45	3,190		35.44
	36.75—54.02	1,429,853		8.97		43.91	54,249		42.79
	54.34—61.44	201,850		9.48		57.50	—		—
$	0.23—61.44	14,176,059	$	8.04	$	15.81	4,035,113	$	4.27

Preferred Shares Rights Agreement

    On June 30, 1998, the Company adopted a Preferred Shares Rights Agreement (the "Agreement"). Pursuant to the Agreement, rights were distributed as a dividend at the rate of one right for each share of TriQuint common stock, par value $0.001 per share of the Company held by stockholders of record as of the close of business on July 24, 1998. The rights will expire on June 29, 2008, unless redeemed or exchanged. Initially, under the Agreement, each right entitled the registered holder to buy one share of preferred stock for $20.83. On April 5, 2000, the Company approved an amendment to the Agreement to increase the per unit price to $200.00. These prices are reflective of all stock splits. The rights will become exercisable only if a person or group (other than stockholders currently owning 15% of the Company's common stock) acquires beneficial ownership of 15% or more of the Company's common stock, or commences a tender offer or exchange offer upon consummation of which such person or group would beneficially own 15% or more of the Company's common stock.

(8) Income Taxes

    The provision for income taxes consists of (in thousands):

			Years ended December 31,
			2000			1999			1998
Current:
	Federal		$	39,470		$	13,619		$	—
	State			4,838			1,747			94
		Total current		44,308			15,366			94
Deferred:
	Federal			(1,301	)		(9,705	)		—
	State			(160	)		(1,245	)		—
		Total deferred		(1,461	)		(10,950	)		—
		Total	$	42,847		$	4,416		$	94

43

    The effective tax rate differs from the federal statutory income tax rate as follows (in thousands):

	Years ended December 31,
	2000		1999		1998
Tax expense (benefit) computed at federal statutory rate	35.0	%	34.0	%	(34.0	)%
State income tax, net of federal effect	3.6		4.4		(4.3	)
Increase (decrease) in valuation allowance	—		(22.1	)	43.6
Other	(1.1	)	(1.2	)	(2.9	)
Effective tax rate	37.5	%	15.1	%	2.4	%

    The tax effects of significant items comprising the Company's deferred tax asset and liability are as follows (in thousands):

			December 31,
			2000		1999
Deferred tax liabilities:
	Capital leases		$	29,165	$	31,122
	Other			912		170
		Total deferred tax liability		30,077		31,292
Deferred tax assets:
	Amortization and depreciation			12,782		18,966
	Accounts receivable			399		221
	Inventories			3,083		2,119
	Accrued liabilities			876		509
	Net operating loss carryforwards			22,545		19,004
	Accrued liabilities and reserves			1,405		844
	Research and development and other credits			1,398		579
		Total deferred tax asset		42,488		42,242
		Net deferred tax asset	$	12,411	$	10,950

    The valuation allowance for deferred tax assets as of December 31, 1998 was $12,342. The net change in total valuation allowance for the years ended December 31, 2000, 1999 and 1998 was an increase (decrease) of $-0-, $(12,342) and $2,207, respectively. Approximately $5,854 of the change in valuation allowance for deferred tax assets was credited directly to stockholders' equity in 1999 since it is more likely than not that the tax benefits of net operating losses that resulted from stock option exercises will be recognized. The Company did not record a valuation allowance at December 31, 2000, as management believes it is more likely than not that the results of future operations will generate sufficient taxable income to realize the net deferred tax assets.

44

    At December 31, 2000, the Company had approximately $59,642 of net operating loss carryforwards to offset against future income for federal income tax purposes, which expire from 2001 through 2020, and $28,341 for Oregon state income tax purposes, which expire in years 2006 through 2015.

    The Company's ability to use its net operating loss carryforwards to offset future taxable income is subject to annual restrictions contained in the United States Internal Revenue Code of 1986, as amended (the "Code"). These restrictions act to limit the Company's future use of its net operating losses following certain substantial stock ownership changes enumerated in the Code and referred to hereinafter as an "ownership change."

    Consummation of the Company's initial public offering created an ownership change that has resulted in approximately $19,163 of the pre-1994 net operating loss carryforwards being limited to approximately $1,812 per year. In addition, approximately $15,096 are further limited to approximately $967 per year due to changes in the Company's ownership structure during 1991.

(9) Contingencies

Commitments

    On September 11, 2000, the Company announced that it had begun the expansion of its engineering and administration building in Hillsboro, Oregon. The expansion will add 65,000 square feet to the existing building for marketing, engineering and light manufacturing activities. The expansion cost will be approximately $7,500 of which approximately $2,900 has been paid.

Employment Agreements

    The Company has an employment contract with one key officer that in the event of his termination provides for total payments up to approximately $300.

(10) Benefit Plans

    The Company sponsors a voluntary contribution profit sharing and savings plan under Section 401(k) of the Internal Revenue Code which is available to substantially all employees. Employees can make voluntary contributions up to limitations prescribed by the Internal Revenue Code. Company matching contributions are discretionary. For the years ended December 31, 2000 and 1999, the Company made matching contributions of 50% of employees' contribution up to a maximum of $1 per employee. No contributions were made in 1998.

(11) Concentration of Risk

Suppliers

    The Company currently obtains some components, equipment and services for their products from limited or single sources. The Company purchases these components, equipment and services on a purchase order basis, does not carry significant inventories of components and does not have any long-term supply contracts with these vendors. Requirements of the Company are relatively small compared to silicon semiconductor manufacturers. Access to sufficient capacity from these vendors in periods of high demand may be limited, as the Company often does not account for a significant part of the vendor's business. If the Company were to change any of its sole or limited source vendors, it would be required to requalify each new vendor. Requalification could prevent or delay product shipments that could negatively affect its results of operations. In addition, reliance on these vendors may negatively affect the Company's production if the components, equipment or services vary in reliability or quality. If the Company is unable to obtain timely deliveries of sufficient quantities of acceptable quality or if the prices increase, results of operations could be harmed.

45

Credit Risk

    The Company performs continuing credit evaluations of its customers and generally does not require collateral; however, in certain circumstances, the Company may require letters of credit from its customers. All of the Company's customers are in the communications markets.

(12) Segment Information

    The Company has adopted SFAS No. 131, Disclosures About Segments of an Enterprise and Related Information. SFAS No. 131 establishes standards for the reporting by public business enterprises of information about operating segments, products and services, geographic areas and major customers. The method for determining what information to report is based on the way that management organizes the segments within the Company for making operating decisions and assessing financial performance.

    The Company's chief operating decision maker is considered to be the President and Chief Executive Officer (the "CEO"). The Company's CEO evaluates both consolidated and disaggregated financial information in deciding how to allocate resources and assess performance. The CEO receives certain disaggregated financial information for the Company's four business groups: Wireless Communications; Telecommunications and Data Communications; Foundry; and Millimeter Wave Communications.

    The Company has aggregated its four business groups into a single reportable segment as allowed under SFAS No. 131 because these business groups have similar long-term economic characteristics, including average gross margin. In addition, the business groups are similar in regards to (a) nature of products and production processes, (b) type of customers and (c) method used to distribute products. Accordingly, the Company describes its reportable segment as gallium arsenide integrated circuits for the communications market. All of the Company's revenues result from sales in its product lines.

    Revenues by business group (as defined by the Company) as a percentage of total revenues for years ended December 31, 2000, 1999 and 1998 were as follows: Wireless Communications, 38%, 33% and 45%, respectively; Telecommunications and Data Communications, 15%, 16% and 18%, respectively; Foundry, 20%, 21% and -0-%, respectively; Millimeter Wave Communications, 27%, 30% and 37%, respectively.

    Revenues outside of the United States were approximately $134,100, $62,800 and $26,800 in 2000, 1999 and 1998, respectively, of which sales to Canada were approximately $49,000, $26,900 and $10,500, respectively and sales to Malaysia were approximately $28,300 in 2000. There were no other foreign countries to which sales represented 5% or more of total revenues.

    Revenues for significant customers, those representing approximately 10% or more of total revenues for each period, are summarized as follows:

	Years ended December 31,
	2000	1999	1998
Customer A	17%	17%	10%
Customer B	19	21	12
Customer C	—	—	12
Customer D	20	—	—

    Related receivables from such customers were 41% and 30% of trade accounts receivable at December 31, 2000 and 1999, respectively.

46

(13) Litigation

    On February 26, 1999, a lawsuit was filed against 88 firms, several of which are still in litigation, including the Company, in the United States District Court for the District of Arizona. The suit alleges that the defendants, including the Company, infringe upon certain patents held by The Lemelson Medical, Education and Research Foundation, Limited Partnership. Although the Company believes the suit is without merit and intends to vigorously defend itself against the charges, it cannot be certain that it will be successful. Moreover, this litigation may require the Company to spend a substantial amount of time and money and could distract management from its day to day operations.

    From time to time the Company is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material effect on the Company's consolidated financial position, results of operations or cash flows.

(14) Subsequent Event

    On January 15, 2001, bonds issued by Southern California Edison, a subsidiary of Edison International, matured but were not paid. These bonds with a book value of approximately $4,300 are included in investments. The Company believes that this is a short-term situation and resolution will not include a reduction in the value of the investment. Southern California Edison is considering proposals by the California legislature and resolution is expected.

47

TriQuint Semiconductor, Inc.
Consolidated Supplementary
Unaudited Financial Data
In thousands, except per share information

			2000								1999
			Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Consolidated Statement of Operations Data:
Total revenues			$	90,254	$	80,623	$	70,618	$	59,254	$	49,374	$	42,483	$	38,109	$	33,695
Operating costs and expenses:
	Cost of goods sold			38,475		35,850		34,193		31,170		26,931		24,384		22,803		20,951
	Research, development and engineering			8,971		7,747		7,429		7,054		6,494		5,475		5,413		4,594
	Selling, general and administrative			10,005		8,530		7,835		7,501		6,590		5,985		5,766		5,183
		Total operating costs and expenses		57,451		52,127		49,457		45,725		40,015		35,844		33,982		30,728
		Income from operations		32,803		28,496		21,161		13,529		9,359		6,639		4,127		2,967
Other income, net				4,238		5,102		5,148		3,781		2,924		2,256		575		525
		Income before income taxes		37,041		33,598		26,309		17,310		12,283		8,895		4,702		3,492
Income tax expense				13,890		12,599		9,866		6,492		2,072		1,690		375		279
		Net income	$	23,151	$	20,999	$	16,443	$	10,818	$	10,211	$	7,205	$	4,327	$	3,213
Per Share Data:
Net income:
	Basic		$	0.29	$	0.27	$	0.21	$	0.14	$	0.14	$	0.10	$	0.07	$	0.06
	Diluted		$	0.27	$	0.24	$	0.19	$	0.13	$	0.12	$	0.09	$	0.07	$	0.05
Weighted-average shares:
	Basic			79,020		78,265		77,326		76,120		74,908		71,100		57,780		57,356
	Diluted			86,643		88,292		87,853		87,446		84,792		80,692		66,084		60,596

(1)

Historical share and per share data is adjusted for all stock splits.

Market for Company's Common Equity and Related Stockholder Matters

    The Company made its initial public offering on December 13, 1993 at a price of $1.83 per share. The Company's Common Stock is quoted on the Nasdaq Stock Market's National Market under the symbol "TQNT". As of March 1, 2001, there were 310 holders of record of the Company's Common Stock.

    The Company has never declared or paid cash dividends on its Common Stock and does not anticipate paying cash dividends in the foreseeable future. The Company's line of credit with a financial institution, synthetic lese financings and subordinated convertible debt contain restrictive covenants which could limit the Company's ability to pay cash dividends or make stock repurchases. Any future determination to pay cash dividends will also be at the discretion of the Board of Directors and will be dependent upon the Company's financial condition, results of operations, capital requirements, general business conditions and such other factors as the Board of Directors deems relevant.

48

SALES OFFICES

North America

Campbell, California
Phone: (408) 370-6125
Fax: (408) 370-6140

Cary, North Carolina
Phone: (919) 380-0805
Fax: (919) 380-7009

El Segundo, California
Phone: (310) 648-6681
Fax: (310) 648-6687

Lowell, Massachusetts
Phone: (978) 764-0706
Fax: (978) 970-1866

Atlanta, Georgia
Phone: (770) 396-8258
Fax: (770) 396-9760

Asia

Sungnam City, South Korea
Phone: (82) 31-716-0132
Fax: (82) 31-716-0133

Fukuoka, Japan
Phone: (81) 92-513-9343
Fax: (81) 92-513-9342

Europe

Eiselfing, Germany
Phone: (49) 8071-93504
Fax: (49) 8071-93505

Tourrettes Sur Loup, France
Phone: (33) 4-9359-2424
Fax: (33) 4-9359-2425

49

GENERAL INFORMATION

BOARD OF DIRECTORS

STEVEN J. SHARP
Chairman of the Board, President
and Chief Executive Officer,
TriQuint Semiconductor, Inc.

FRANCISCO ALVAREZ
Retired Executive of Intel Corporation

PAUL A. GARY
Retired Executive of AT&T Corp.

CHARLES SCOTT GIBSON
Consultant

NICOLAS KAUSER
Retired Executive of AT&T Corp.

WALDEN C. RHINES
Chairman of the Board and Chief Executive
Officer, Mentor Graphics Corporation

EDWARD TUCK
General Partner,
Kinship Venture Management, LLP EXECUTIVE OFFICERS

STEVEN J. SHARP
Chairman of the Board, President
and Chief Executive Officer

EDSON H. WHITEHURST, JR.
Vice President, Finance and
Administration, Chief Financial Officer and
Secretary

THOMAS V. CORDNER
Vice President & General Manager,
Millimeter Wave Communications

BRUCE R. FOURNIER
Vice President and General Manager,
Foundry Services

LEHMAN H. JOHNSON, III
Vice President and General Manager,
Telecommunications

PAUL KOLLAR
Vice President, Sales
Kinship Venture Management, LLP

DAVID N. MCQUIDDY, JR.
Vice President, Research and Development

DONALD H. MOHN
Vice President, Strategic Marketing and
Business Development

J. DAVID PYE
Vice President, Manufacturing

RONALD R. RUEBUSCH
Vice President and General Manager,
Wireless Communications

STEPHANIE J. WELTY
Vice President, Finance and
Assistant Secretary

50

ANNUAL MEETING

The Company's Annual Meeting of Stockholders for the fiscal year ended December 31, 2000 will be held on Wednesday, May 23, 2001 at 2:00 p.m. (PDT) at the Company's principal executive offices, located at 2300 NE Brookwood Parkway, Hillsboro, Oregon 97124.

FORM 10K

A copy of the Company's Form 10-K as filed with the Securities and Exchange Commission is available free of charge by calling the Investor Relations number.

CORPORATE HEADQUARTERS

2300 NE Brookwood Parkway
Hillsboro, Oregon 97124
Phone: (503) 615-9000
Fax: (503) 615-8900

INVESTOR RELATIONS

Ed Whitehurst
(503) 615-9444

Heidi Flannery
(503) 844-8888

TRANSFER AGENT

Common Stock:
ChaseMellon
Shareholder Services
Seattle, Washington

Convertible Subordinated Notes:
State Street Bank and Trust Company of California, N.A.
Los Angeles, California

INDEPENDENT PUBLIC ACCOUNTANTS

KPMG LLP
Portland, Oregon

LEGAL COUNSEL

Wilson Sonsini Goodrich & Rosati
Palo Alto, California

51

QuickLinks

Exhibit 13.1

EX-21.1

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EXHIBIT 21.1

TRIQUINT SEMICONDUCTOR, INC.
SUBSIDIARIES OF THE REGISTRANT

Name of Subsidiary		State or Other Jurisdiction of Incorporation
TriQuint Texas Limited Holding Company		Delaware
TriQuint Texas General Holding Company		Delaware
	TriQuint Semiconductor Texas, LP	Texas
TriQuint Semiconductor GmbH		Germany
TriQuint Semiconductor Korea, Ltd.		South Korea
TriQuint Foreign Sales Corporation		Barbados

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EXHIBIT 21.1

EX-23.1

EXHIBIT 23.1

Independent Auditors' Consent

The Board of Directors
TriQuint Semiconductor, Inc.:

    We consent to incorporation by reference in the registration statements (Nos. 333-75464, 333-02166, 333-08891, 333-08893, 333-31585, 333-48883, 333-66707, 333-74617, 333-81273, 333-39730, 333-39732) on Form S-8 and the registration statement (No. 333-36112) on Form S-3 of TriQuint Semiconductor, Inc. of our report dated January 31, 2001, relating to the consolidated balance sheets of TriQuint Semiconductor, Inc. and subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the years in the three-year period ended December 31, 2000, and the related financial statement schedule, which report appears in the December 31, 2000 Annual Report on Form 10-K of TriQuint Semiconductor, Inc.

/s/ KPMG LLP

Portland, Oregon
March 28, 2001