10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended March 31, 2007

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	95-3654013
(State or other jurisdiction of incorporation)	(I.R.S. Employer Identification No.)

2300 N.E. Brookwood Parkway,

Hillsboro, Oregon 97124

(Address of principal executive offices) (Zip code)

(503) 615-9000

(Registrant’s telephone number, including area code)

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 whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ¨            Accelerated filer   x    Non-accelerated filer   ¨

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

As of April 27, 2007, there were 139,124,334 shares of the Registrant’s Common Stock outstanding.

TRIQUINT SEMICONDUCTOR, INC.

INDEX

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2007 and 2006	1
	Condensed Consolidated Balance Sheets at March 31, 2007 and December 31, 2006	2
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2007 and 2006	3
	Notes to Condensed Consolidated Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3.	Qualitative and Quantitative Disclosures About Market Risk	21
Item 4.	Controls and Procedures	22
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	40
Item 4.	Submission of Matters to a Vote of Security Holders	40
Item 5.	Other Information	40
Item 6.	Exhibits	40

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

TRIQUINT SEMICONDUCTOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

	Three Months Ended March 31,
	2007			2006
Revenues	$	110,603		$	87,880
Cost of goods sold		76,212			61,291
Gross profit		34,391			26,589
Operating expenses:
Research, development and engineering		14,328			12,529
Selling, general and administrative		15,066			12,748
Loss on disposal of equipment		96			38
Acquisition related charges		—			42
Total operating expenses		29,490			25,357
Income from operations		4,901			1,232
Other income (expense):
Interest income		3,437			3,584
Interest expense		(1,631	)		(2,458	)
Foreign currency gain		66			45
Other, net		35			(42	)
Total other income, net		1,907			1,129
Income before income tax		6,808			2,361
Income tax expense		412			115
Net income	$	6,396		$	2,246
Basic per share net income	$	0.05		$	0.02
Diluted per share net income	$	0.05		$	0.02
Common equivalent shares:
Basic		138,623			140,848
Diluted		141,148			141,282

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TRIQUINT SEMICONDUCTOR, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share and per share data)

	March 31, 2007			December 31, 2006
ASSETS
Current assets:
Cash and cash equivalents	$	105,658		$	133,918
Investments in marketable securities		44,389			239,314
Accounts receivable, net		68,220			64,688
Inventories, net		89,995			84,879
Prepaid expenses		5,163			6,071
Other current assets		9,841			8,907
Total current assets		323,266			537,777
Property, plant and equipment, net		205,960			200,346
Goodwill and intangible assets, net		4,302			4,363
Other noncurrent assets, net		12,359			11,929
Total assets	$	545,887		$	754,415
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	30,997		$	30,112
Accrued Payroll		17,226			12,007
Income tax liability		—			9,202
Other accrued liabilities		6,738			12,151
Convertible subordinated notes		—			218,755
Total current liabilities		54,961			282,227
Long-term liabilities:
Long term income tax liability		9,585			—
Other long-term liabilities		4,884			4,741
Total liabilities		69,430			286,968
Commitments and contingencies (Note 11)
Stockholders’ equity:
Common stock, $.001 par value, 600,000,000 shares authorized, 139,056,377 shares and 138,498,762 shares issued and outstanding at March 31, 2007 and December 31, 2006, respectively		139			138
Additional paid-in capital		475,387			471,588
Accumulated other comprehensive loss		(22	)		(290	)
Retained Earnings (accumulated deficit)		953			(3,989	)
Total stockholders’ equity		476,457			467,447
Total liabilities and stockholders’ equity	$	545,887		$	754,415

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TRIQUINT SEMICONDUCTOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	Three Months Ended March 31,
	2007			2006
Cash flows from operating activities:
Net income	$	6,396		$	2,246
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		7,741			7,987
Stock-based compensation expense		1,738			2,256
Loss on disposal of assets		96			38
Changes in assets and liabilities:
Accounts receivable, net		(3,532	)		(3,684	)
Inventories, net		(5,116	)		(9,028	)
Other assets		(10	)		(1,934	)
Accounts payable and accrued expenses		(895	)		3,717
Net cash provided by operating activities		6,418			1,598
Cash flows from investing activities:
Purchase of available-for-sale investments		(30,693	)		(83,549	)
Maturity/sale of available-for-sale investments		225,924			80,470
Business acquisition		—			(2,262	)
Capital expenditures		(13,215	)		(10,380	)
Net cash provided by (used in) investing activities		182,016			(15,721	)
Cash flows from financing activities:
Stock repurchase program		—			(4,705	)
Repayment of convertible subordinated notes		(218,755	)		—
Issuance of common stock, net		2,061			514
Net cash used in financing activities		(216,694	)		(4,191	)
Net decrease in cash and cash equivalents		(28,260	)		(18,314	)
Cash and cash equivalents at beginning of period		133,918			103,730
Cash and cash equivalents at end of period	$	105,658		$	85,416
Supplemental disclosures:
Cash paid for interest	$	4,375		$	4,375
Cash paid for income taxes	$	515		$	340
Sabbatical-cumulative adjustment	$	1,454		$	—

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TRIQUINT SEMICONDUCTOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands, except per share amounts)

(Unaudited)

1.    Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States. (“GAAP”). However, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed, or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In addition, the preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. For TriQuint Semiconductor, Inc. (the “Company”), the accounting estimates requiring management’s most difficult and subjective judgments include revenue recognition, the valuation of inventory, the assessment of recoverability of long-lived assets, the valuation of investments in and receivables from privately held companies, the recognition and measurement of income tax assets and liabilities and the accounting for stock-based compensation. In the opinion of management, the condensed consolidated financial statements include all adjustments consisting of normal, recurring adjustments necessary for the fair presentation of the results of the interim periods presented. These condensed consolidated financial statements should be read in conjunction with the audited financial statements of the Company for the fiscal year ended December 31, 2006, as included in the Company’s 2006 Annual Report on Form 10-K as filed with the SEC on March 15, 2007.

The Company’s fiscal quarters end on the Saturday nearest the end of the calendar quarter, which were March 31, 2007 and April 1, 2006, respectively. The Company’s fiscal year ends on December 31.

2.    Accounting Changes

In the first quarter of 2007, the Company adopted Emerging Issues Task Force Issue No. 06-2, “Accounting for Sabbatical Leave and Other Similar Benefits Pursuant to FASB Statement No. 43” (EITF 06-2). The consensus reached by the EITF, as set forth in EITF 06-2, determined that sabbatical and other similar benefits do accumulate and should be accrued for over the requisite service period. As such, the Company adopted EITF 06-2 through a cumulative-effect adjustment, which resulted in an increase to the liability and a reduction to cumulative retained earnings, of $1.5 million in the first quarter of 2007.

During the first quarter of 2007, the Company also adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes–an interpretation of FASB Statement No. 109” (FIN 48). Refer to Note 13, titled “Income Taxes,” for further discussion.

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TRIQUINT SEMICONDUCTOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands, except per share amounts)

(Unaudited)

3.    Stock-Based Compensation

Stock-based compensation expense recognized under SFAS No. 123(R) for the three months ended March 31, 2007 and 2006 was $1,738 and $2,256, respectively, which consisted of stock-based compensation expense related to unvested grants of employee stock options and the Company’s ESPP. The table below summarizes the stock-based compensation expense for the three months ended March 31, 2007 and 2006:

	Three Months Ended March 31,
	2007		2006
Cost of goods sold	$	575	$	768
Stock-based compensation expense included in cost of goods sold		575		768
Research, development and engineering		272		386
Selling, general and administrative		891		1,102
Stock-based compensation expense included in operating expenses		1,163		1,488
Total stock-based compensation expense included in income from operations	$	1,738	$	2,256

Stock Option Plans

The following summarizes the Company’s stock option transactions for the three months ended March 31, 2007:

	Three months ended March 31, 2007
	Shares		Weighted- average exercise price
Outstanding at the beginning of the period	25,723		$	9.85
Granted	399			4.80
Exercised	(558	)		3.70
Forfeited	(241	)		7.69
Outstanding at the end of the period	25,323		$	9.92

4.    Recent Accounting Pronouncements

The FASB issued SFAS No. 157, Fair Value Measurement, in September 2006. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosures about fair value measurements but does not require any new fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The Company will adopt SFAS No. 157 effective January 1, 2008. The Company is currently assessing the effects of SFAS No. 157 on its financial statements and it is not expected to have a material impact on the Company’s financial statements.

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TRIQUINT SEMICONDUCTOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands, except per share amounts)

(Unaudited)

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” Under SFAS No. 159 entities will have the option to measure certain financial instruments and other items at fair value that are not currently required to be measured at fair value. This statement expands the use of fair value measurement and applies to entities that elect the fair value option at a specified election date. SFAS 159 is effective the first fiscal year beginning after November 15, 2007. The Company are currently evaluating the impact, if any, the adoption of this statement will have on our consolidated financial statements.

5.    Net Income Per Share

Net income per share is presented as basic and diluted net income per share. Basic net income per share is net income available to common stockholders divided by the weighted-average number of common shares outstanding. Diluted net income per share is similar to basic net income per share, except that the denominator includes potential common shares that, had they been issued, would have had a dilutive effect.

The following is a reconciliation of the basic and diluted shares:

	Three Months Ended March 31,
	2007	2006
Shares for basic net income per share:
Weighted-average shares outstanding—Basic	138,623	140,848
Dilutive securities	2,525	434
Weighted-average shares outstanding—Dilutive	141,148	141,282

For the three months ended March 31, 2007 and 2006 options and other exercisable convertible securities totaling 19,672 and 19,524 shares, respectively, were excluded from the calculation as their effect would have been antidilutive.

6.    Inventories

Inventories, stated at the lower of cost or market, consisted of the following:

	March 31, 2007		December 31, 2006
Inventories, net:
Raw materials	$	26,738	$	27,622
Work-in-process		40,318		39,465
Finished goods		22,939		17,792
	$	89,995	$	84,879

7.    Goodwill and Other Acquisition-Related Intangible Assets

In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, the Company is required to perform an impairment analysis on its goodwill at least annually, or when events and circumstances warrant. The

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TRIQUINT SEMICONDUCTOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands, except per share amounts)

(Unaudited)

Company intends to perform this test in the fourth quarter of each year, unless indicators warrant testing at an earlier date. During the three months ended March 31, 2007, there were no impairments or impairment indicators present and no loss was recorded.

Information regarding the Company’s other acquisition-related intangible assets is as follows:

	Useful Life (Years)	March 31, 2007						December 31, 2006
				Accumulated Amortization		Net Book Value				Accumulated Amortization		Net Book Value
		Gross						Gross
Non-Amortizing:
Goodwill		$	3,248	$	—	$	3,248	$	3,240	$	—	$	3,240
Amortizing:
Patents, trademarks and other	2 -10	$	8,352	$	7,298	$	1,054	$	8,352	$	7,229	$	1,123
Total intangible assets		$	11,600	$	7,298	$	4,302	$	11,592	$	7,229	$	4,363

Amortization expense of amortizing intangible assets was $69 and $97 for the three months ended March 31, 2007 and 2006, respectively.

8.    Property, Plant and Equipment

Property, plant and equipment for operations consisted of the following:

	March 31, 2007			December 31, 2006
Land	$	19,691		$	19,691
Buildings		89,181			89,177
Leasehold improvements		4,969			4,811
Machinery and equipment		270,872			264,285
Furniture and fixtures		5,075			5,066
Computer equipment and software		28,154			27,545
Assets in process		24,007			19,670
		441,949			430,245
Accumulated depreciation		(235,989	)		(229,899	)
	$	205,960		$	200,346

For the three months ended March 31, 2007 and 2006, the Company incurred depreciation expense of $7,504 and $7,638, respectively.

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TRIQUINT SEMICONDUCTOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands, except per share amounts)

(Unaudited)

9.    Comprehensive Income

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

	Three Months Ended March 31,
	2007			2006
Net income	$	6,396		$	2,246
Other comprehensive income (loss):
Net unrealized (loss) gain on cash flow hedges, net of taxes		(39	)		103
Net unrealized gain on available for sale investments, net of taxes		307			490
Comprehensive income	$	6,664		$	2,839

10.    Foreign Currency Exchange

The Company’s functional currency for all operations worldwide is the U.S. dollar. For foreign operations with the U.S. dollar as the functional currency, monetary assets and liabilities are re-measured at the period-end exchange rates. Certain non-monetary assets and liabilities are re-measured using historical rates. Statements of operations are re-measured at the prior month’s balance sheet rate. To manage its exposure to foreign currency exchange rate fluctuations, the Company enters into derivative financial instruments, including hedges. The ineffective portion of the gain or loss for derivative instruments that are designated and qualify as cash flow hedges is immediately reported as a component of other income (expense), net. The effective portion of the gain or loss on the derivative instrument is initially recorded in accumulated other comprehensive income (“OCI”) as a separate component of stockholders’ equity and subsequently reclassified into earnings in the period during which the hedged transaction is recognized into earnings. During the three months ended March 31,2007, the Company reported foreign currency gains from re-measurement and hedging activity of $66 compared to $45 during the three months ended March 31, 2006.

As of March 31, 2007 and 2006, the Company had forward currency contracts outstanding of $4,550 and $3,495, respectively, all of which were designated as cash flow hedges.

11.    Commitments and Contingencies

Legal Matters

On January 18, 2006, the Company received notice that a suit had been filed against it by StratEdge Corporation (“StratEdge”) for patent infringement in the United States District Court, Southern District of California. StratEdge filed an amended complaint on June 30, 2006. In the amended complaint StratEdge alleged that the Company made, manufactured, marketed, promoted, advertised, offered for sale, and/or sold power amplifiers in packages that infringe one or more claims of StratEdge patent numbers 5,753,972, 6,172,412, 6,271,579, 5,736,783, and 5,692,298 (“the Asserted Patents”). The Company filed an answer to the original complaint on February 7, 2006, and an answer to the amended complaint on July 17, 2006, denying the plaintiff’s allegations. The plaintiff sought, among other items, an injunction against further infringement, full compensation for all damages attributable to the infringement in an amount according to proof at trial but not less than a reasonable royalty, delivery to StratEdge for destruction of all products that are found to infringe the Asserted Patents, and reasonable attorney’s fees. StratEdge also alleged willful infringement of the Asserted Patents and a declaration that the case is exceptional.

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TRIQUINT SEMICONDUCTOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands, except per share amounts)

(Unaudited)

On April 2, 2007, the Company and StratEdge entered into a Settlement Agreement and Mutual Release (the “Agreement”) pursuant to which the Company and StratEdge agreed to:

• the dismissal of the suit described above, with prejudice, within 10 days of the payment by the Company of $375 to StratEdge;

• a mutual release of claims by StratEdge and the Company, except that StratEdge’s release does not apply to parties to the suit other than the Company

• the payment by the Company of an aggregate of $625 (inclusive of the $375 referenced above) to StratEdge; and

The Company had previously reserved $625 in connection with the suit by StratEdge.

On February 28, 2007, a purported derivative action (case no. C-07-0299) was filed in the United States District Court for the District of Oregon, allegedly on behalf of TriQuint, against certain of TriQuint’s officers and directors. On March 16, 2007, a substantially similar action (case no. C-07-0398) was filed. The plaintiffs allege that the defendants violated Section 14 of the Securities Exchange Act, as amended, breached their fiduciary duty, abused control, engaged in constructive fraud, corporate waste, insider selling, and gross mismanagement, and were unjustly enriched by improperly backdating stock options. The plaintiffs also allege that TriQuint failed to properly account for stock options and that the defendants’ conduct caused artificial inflation in TriQuint’s stock price. The plaintiffs seek unspecified damages and disgorgement of profits from the alleged conduct, corporate governance reform, establishment of a constructive trust over defendants’ stock options and proceeds derived therefrom, punitive damages, and reasonable attorney’s, accountant’s, and expert’s fees. On April 25, 2007, the Court consolidated the two cases. Plaintiffs will file a consolidated complaint on or before May 25, 2007.

In October 2006, the Company received an informal request for information from the staff of the San Francisco district office of the Securities and Exchange Commission regarding its option granting practices. In November, 2006 the Company was contacted by the Office of the U.S. Attorney for the District of Oregon and was asked to produce documents relating to its option granting practices on a voluntary basis. The Company is cooperating in both inquiries.

Prior to the filing of its quarterly report on Form 10-Q for the quarter ended September 30, 2006, the Company conducted an extensive review of its option granting practices. The Company’s management concluded that no backdating had occurred with respect to its option grants and that prior disclosures regarding its option grants were not incorrect. The Company remains current in its reporting under the Securities Exchange Act of 1934, as amended.

12.    Convertible Subordinated Notes

At December 31, 2006, the Company had $218,755 principal amount of its 4% convertible subordinated notes, due March 1, 2007, outstanding and net capitalized issuance costs of $168. On March 1, 2007, the Company retired the balance of the notes, and accumulated interest, with its cash reserves. During the three months ended March 31, 2007 and 2006, the Company amortized $168 and $252, respectively, of the capitalized issuance costs.

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TRIQUINT SEMICONDUCTOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands, except per share amounts)

(Unaudited)

13.    Income Taxes

During the three months ended March 31, 2007 and 2006, the Company recorded net income tax expense from continuing operations of $412 and $115, respectively. The net tax expense for both periods was primarily associated with taxes from the Costa Rica entity. The Company’s income tax liability recorded on its condensed consolidated balance sheets relates primarily to management’s estimate of the income tax expense in the jurisdictions in which the Company has operations. The Company currently receives tax benefits due to a partial tax holiday associated with its Costa Rican operation. For the three months ended March 31, 2007 and 2006, these benefits were approximately $138 and $130, respectively.

The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48), on January 1, 2007. The Company recognized no adjustment in the liability for unrecognized tax benefits upon the adoption of FIN 48. As of the date of adoption, the Company’s unrecognized tax benefits totaled $9,293, including interest and penalties of $2,794.

The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state and foreign jurisdictions. The Company is no longer subject to U.S. federal income tax examinations for years before 2003; state and local income tax examinations before 2002; and foreign income tax examinations before 2001.

The Company is not currently under Internal Revenue Service (IRS) examination. During 2003, the Company settled an IRS tax examination related to the 2000 and 2001 tax years. In the first quarter of 2007, the state of Texas tax authorities commenced the 2002 through 2005 audit. To date, there are no proposed adjustments that will have a material impact on the Company’s position or results of operations. The Company is not currently under examination in any other states or foreign jurisdictions.

The Company’s continuing practice is to recognize potential accrued interest and penalties related to unrecognized tax benefits within its global operations in income tax expense. During the three months ended March 31, 2007, the Company recognized approximately $303 in potential interest and penalties associated with uncertain tax positions. With respect to the uncertain tax positions, to the extent interest and penalties are not assessed amounts accrued will be reduced and reflected as a reduction of the overall income tax provision.

The Company does not anticipate that the total unrecognized tax benefits will significantly change due to the settlement of examinations prior to December 31, 2007 or March 31, 2008. The unrecognized tax benefits, at the date of adoption, anticipated to be recognized due to the expiration of the statute of limitations prior to December 31, 2007, were $2,648. The unrecognized tax benefits anticipated to be recognized due to the expiration of statute of limitations prior to March 31, 2008 are $2,754. The unrecognized tax benefits anticipated to be recognized within twelve months relates to a foreign subsidiary’s U.S. activities and foreign tax on a foreign subsidiary’s income and expense items.

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

Introduction

You should read the following discussion and analysis in conjunction with our condensed consolidated financial statements and the related notes thereto included in this Report on Form 10-Q and with Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006. The discussion in this Report contains both historical information and forward-looking statements. 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 expected demand in the wireless handset, broadband, base station and military markets; changes in our critical accounting estimates including stock-based compensation expense; the ability to enter into military contracts; our ability to meet our revenue guidance and penetrate our market; expected operating expenses, gross margins and per share earnings; transactions affecting liquidity; and capital expenditures. In some cases, you can identify forward-looking statements by terminology such as “anticipates,” “appears,” “believes,” “continue,” “could,” “estimates,” “expects,” “feels,” “goal,” “hope,” “intends,” “may,” “our future success depends,” “plans,” “potential,” “predicts,” “projects,” “reasonably,” “seek to continue,” “should,” “thinks,” “will” or the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. 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 Part II of this report titled “Risk Factors”. 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, we are under no duty to update any of the forward-looking statements after the date of this Report on Form 10-Q to conform these statements to actual results. These forward-looking statements are made in reliance upon the safe harbor provision of The Private Securities Litigation Reform Act of 1995.

Overview

We are a supplier of high performance modules, components and foundry services for the world’s leading communications companies. Our focus is on the specialized expertise, materials and know-how of radio frequency (“RF”) and other high and intermediate frequency applications. We “connect the digital world to the global network ^®” as a premier supplier of advanced technology products and address three primary end markets: wireless handsets, communication networks and military systems. We continually strive to lower customers’ costs and improve system performance through advanced engineering expertise, dedicated service and forward-looking design. Our products are designed on various wafer substrates including compound semiconductor materials such as gallium arsenide (“GaAs”) and piezoelectric crystals such as lithium tantalite (“LiTaO₃”) and lithium niobate (“LiNbO₃”). We use a variety of process technologies using GaAs substrates including hetrojunction bipolar transistor (“HBT”) and pseudomophic high electron mobility transistor (“pHEMT”). Using various other substrates we also manufacture surface acoustic wave (“SAW”) and bulk acoustic wave (“BAW”) products. With these materials and our proprietary technology, we believe our products can overcome the performance barriers of competing devices in a variety of applications and offer other key advantages such as steeper selectivity, lower distortion, higher power and power-added efficiency, reduced size and weight and more precise frequency control. For example, GaAs 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 GaAs integrated circuits that operate at higher levels of performance than silicon devices. Customers for our products include major communication companies worldwide.

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 at that location is (503) 615-9000. Information about the company is also available at our website at www.triquint.com, which

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includes links to reports we have filed with the Securities and Exchange Commission (“SEC”). The contents of our website are not incorporated by reference in this Report on Form 10-Q.

Strategy and Industry Considerations

Our business strategy is to provide our customers with high-performance, cost-effective solutions to applications in the wireless handset, communication networks and military markets. Our mission is, “Connecting the Digital World to the Global Network^™,” and we accomplish this through a diversified product portfolio within the communications and military industries. In the wireless handset market, we provide high performance devices such as RF filters, duplexers, receivers, small signal components, power amplifiers, switches and passive components. We have also developed integrated RF modules with the goal of maximizing content and minimizing stacked margins, by offering complete module solutions with almost all subcomponents sourced from our own technologies and manufacturing facilities. In the communications networks markets, we are a supplier of both active GaAs and passive SAW components. We provide the military market with phased-array radar antenna components and in 2005 were chosen to be the prime contractor on a Defense Advanced Research Projects Agency (“DARPA”) contract to develop high power wide band amplifiers in gallium nitride (“GaN”), a next generation technology.

The semiconductor industry in general was subject to slumping demand and excess capacity from 2001 through 2004; however, demand began to grow in 2005 and has remained strong through the first quarter of 2007 with some seasonal and customer specific slowness in the first quarter of 2007. This has been the case for our business as well. Wafer and semiconductor manufacturing facilities represent a very high level of fixed cost due to investments in plant and equipment, labor costs, and repair and maintenance costs. During periods of low demand, selling prices also tend to decrease which, when combined with high fixed manufacturing costs, can create a material adverse impact on operating results. In 2005 we began to increase the utilization at our facilities and have been able to maintain generally higher utilization rates through the first quarter of 2007. During the period between the end of 2005 and the first quarter of 2007 we have generally experienced increased demand in all of our markets. The handset market is our largest market. Transmit and power amplifier modules for the handset market, both relatively new products for the company, have been the largest source of revenue growth in recent times. Gross margins for handset products are typically lower than the gross margins of products in our other markets due to the competitive pressures associated with large unit volume opportunities and our learning associated with initials builds of these products in high volume. New product volume ramps can result in low yield for early production. As we increase our participation in the handset market we have improved our manufacturing effectiveness, measured in yield, and are transitioning from price sensitive handset sub-markets to sub-markets where our unique technology positioning and product offerings better differentiate us from our competition. This differentiation can result in better margins. In addition, our product cost is sensitive to overall unit volume in our factories. As we increase unit volume fixed cost per unit decreases and we generally benefit from better pricing for much of our variable cost. We expect these trends to continue and result in improved handset product gross margins. Our other markets, networks and military, generally have products that achieve higher gross margins. Products for these markets are manufactured on essentially the same equipment set in our factories and also benefit from overall volume and utilization increases resulting in lower product cost.

Handset

Specifically, the wireless handset market remained heathly in the first quarter of 2007, continuing a trend that began in 2003. The first year of the calendar quarter is seasonally lower in demand following a strong selling season in the prior quarter. Normal seasonality was experienced in the first quarter of 2007 where revenue were lower than the fourth quarter of 2006 but higher compared to the first quarter of 2006. By our estimates, the total global unit shipments for the entire market grew by approximately 23% in 2006, resulting in projected shipments of over 960 million handsets, up from approximately 780 million units in 2005. We believe the drivers for continued growth in the handset market remain strong as users in developed countries are looking for new features such as digital cameras, video recorders, music players, GPS, bluetooth, internet access, mobile

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television and other video standards, leading to high handset replacement rates. This transition to more sophisticated handsets increases the RF content in each device, increasing our addressable market. Further, China, India and other emerging countries with improving economies are growing the consumer market by introducing a new customer base. In the past however, during times of growing demand we have also experienced significant selling price pressure on some of our highest volume products. The current demand need for increased RF content required for the higher data rates and increased functionality of new handset devices, has allowed average selling prices to stabilize. However this stabilization may not continue.

The continued deployment of cellular systems in the Asia and other emerging markets such as India has driven GSM (global system for mobile communications) base station transceiver volumes to new record levels. However, softness in the CDMA (code division multiple access) infrastructure market coupled with slower than expected demand in WCDMA (wideband code division multiple access) have resulted in a flat market for products targeting the traditional cellular base station market. We do expect continued benefit in point-to-point radio products, largely resulting from build outs in developing countries and those areas of the world where wireless backhaul systems are prevalent.

Networks

Our networks market includes products that support the transfer of voice, data or video across wireless or wired networks. Our products for this market are divided into three main applications: 1) Base station, including point-to-point microwave radios, 2) Broadband which includes broadband wireless access products for bluetooth, wireless LANs (local area networks) / WiMAX (worldwide interoperability for microwave access), and WiBro (wireless broadband). It also includes wired broadband applications such as CATV (community access television or cable television), and optical communications and satellite broad communication applications such as VSAT (very small aperature terminals) which are classified as groundstation. 3) Other / Standard Products which includes numerous smaller markets and products that may serve multiple markets. Networks revenue reported here includes both revenue from products as wells as foundry that serves these applications. Our strength in this market in the first quarter of 2007 compared to the first quarter of 2006 is driven by an increase in revenue from products for base station and point to point radios, based on continued worldwide GSM and EDGE roll outs as well as initial TDSCDMA rollouts in China., cable, groundstation and other standard products.

Military

Revenues from the military market are generally for products in large scale programs with long lead-times. Once a component has been designed into an end-use product for a military application, the same component is generally used during the entire production life of the end-use product and as a result, we tend to produce large volumes of these components. Currently, we are actively engaged with multiple military industry contractors in the development of next-generation phased-array systems and have key design wins in major projects such as the Joint Strike Fighter and F-22. In addition, in 2005 we entered into a multi-year contract from the DARPA to develop high power, wide band amplifiers in GaN; and in July 2006, we were awarded a $3.1 million contract to improve manufacturing methods of producing high-power, high-voltage S-band GaAs amplifiers from the Office of Naval Research. We participate in other large projects such as the B-2 radar upgrade and hope to expand other programs in the future.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires us to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the 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. Some of our accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. The following accounting policies involve critical

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accounting estimates because they are particularly dependent on estimates and assumptions made by management about matters that are highly uncertain at the time the accounting estimates are made. In addition, while we have used our best estimates based on facts and circumstances available to us at the time, different estimates reasonably could have been used. Changes in the accounting estimates we use are reasonably likely to occur from time to time, which may have a material impact on the presentation of our financial condition and results of operations.

Our most critical accounting estimates include revenue recognition; the valuation of inventory, which impacts gross margin; assessment of recoverability of long-lived assets, which primarily impacts operating expense when we impair assets or accelerate depreciation; valuation of investments in privately held companies, which impacts net income when we record impairments; deferred income tax assets and liabilities, which impacts our tax provision; and stock-based compensation which impacts inventory, cost of goods sold and operating expenses. We also have other policies that we consider to be key accounting policies, such as our policies for the valuation of accounts receivable, reserves for sales returns and allowances, reserves for warranty costs and our reserves for commitments and contingencies; however, these policies either do not meet the definition of critical accounting estimates described above or are not currently material items in our financial statements. We review our estimates, judgments, and assumptions periodically and reflect the effects of revisions in the period in which they are deemed to be necessary. We believe that these estimates are reasonable; however, actual results could differ from these estimates.

Revenue Recognition

We derive revenues primarily from the sale of standard and customer-specific products and foundry services in the wireless handset, broadband, base station and military markets. We also receive revenues from non-recurring engineering fees and cost-plus contracts for research and development work, which collectively have been less than 5% of consolidated revenues for any period. Our markets during 2006, 2005, and 2004 included wireless handsets, base stations, military, broadband and other standard products. Our distribution channels include our direct sales staff, manufacturers’ representatives and two independent distributors. Sales of our products are generally made through either our sales force and independent manufacturers’ representatives or through our distributors. The majority of our shipments are made directly to our customers, with shipments to our buy/sell representatives and our distribution network accounting for less than 15% of total revenues during 2006, 2005 and 2004. Revenues from the sale of standard and customer-specific products are recognized when title to the products pass to the buyer.

As more of our customers utilize inventory hubbing distribution facilities, our visibility on when the customer takes title to the products becomes more difficult for us to determine. We receive periodic reports from these inventory hubs and recognize revenue when the customers acknowledge they have pulled inventory from our hub, the point at which title to the goods pass to the customer.

Revenues from foundry services and non-recurring engineering fees are recorded when the service is completed. Revenues from cost plus contracts are recognized in a manner so that the fees will reasonably reflect assured realization as the work is completed.

Revenues from our distributors are recognized when the product is sold to the distributors. Our distributor agreements provides for selling prices that are fixed at the date of sale, although we occasionally offer price protections, which are specific, of a fixed duration and for which we reserve. Further, the distributors are obligated to pay the amount and the price or payment obligation is not contingent on reselling the product; the distributors take title to the product and bear substantially all of the risks of ownership; the distributors have economic substance; we have no significant obligations for future performance to bring about resale; and the amount of future returns can be reasonably estimated. Sales to our distributors were less than 5% of our total revenues for 2006, 2005 and 2004.

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We allow our distributors to return products for warranty reasons; and stock rotation rights, within certain limitations, and we reserve for such instances. Customers can only return products for warranty reasons. If we are unable to repair or replace products returned under warranty, we will issue a credit for a warranty return.

Inventories

We state our inventories at the lower of cost or market. We use a combination of standard cost and moving average cost methodologies to determine our cost basis for our inventories. This methodology approximates actual cost on a first-in, first-out basis. In addition to stating our inventory at a lower of cost or market valuation, we also evaluate it each period for excess quantities and obsolescence. This evaluation, based on historical experience and our judgment of economic conditions, includes identifying those parts specifically identified as obsolete and reserving for them; analyzing forecasted demand versus quantities on hand and reserving for the excess; and identifying and recording other specific reserves. If future demand or market conditions are less favorable than our projections and we fail to reduce manufacturing output accordingly, additional inventory reserves may be required and would have a negative impact on our gross margin in the period the adjustment is made.

Long-Lived Assets

We evaluate long-lived assets for impairment of their carrying value when events or circumstances indicate that the carrying value may not be recoverable. Factors we consider in deciding when to perform an impairment review include significant negative industry or economic trends, significant changes or planned changes in our use of the assets, plant closure or production line discontinuance, technological obsolescence, or other changes in circumstances which indicate the carrying value of the assets may not be recoverable. If such an event occurs, we evaluate whether the sum of the estimated undiscounted cash flows attributable to the assets in question is less than their carrying value. If this is the case, we recognize an impairment loss to the extent that carrying value exceeds fair value. Fair value is determined based on market prices or discounted cash flow analysis, depending on the nature of the asset and the availability of market data. Any estimate of future cash flows is inherently uncertain. The factors we take into consideration in making estimates of future cash flows include product life cycles, pricing trends, future capital needs, cost trends, product development costs, competitive factors and technology trends as they each affect cash inflows and outflows. Technology markets are highly cyclical and are characterized by rapid shifts in demand that are difficult to predict in terms of direction and severity. If an asset is written down to fair value, that value becomes the asset’s new carrying value and is depreciated over the remaining useful life of the asset.

Investments in Privately Held Companies

In previous years, we made a number of investments in small, privately held technology companies in which we held less than 20% of the capital stock or held notes receivable. In addition, as a result of the sale of our former optoelectronics operations, we received as partial consideration $4.5 million of preferred stock in CyOptics, Inc. (“CyOptics”) and an unsecured promissory note from CyOptics for $5.6 million, that was discounted $2.3 million to reflect the current market rate for similar debt of comparable companies. We account for all of these investments at cost unless their value has been determined to be other than temporarily impaired, in which case we write the investment down to its estimated fair value. We review these investments periodically for impairment and make appropriate reductions in carrying value when an other than temporary decline in value is evident; however, for non-marketable equity securities, the impairment analysis requires significant judgment. During our review, we evaluate the financial condition of the issuer, market conditions, and other factors providing an indication of the fair value of the investments. Adverse changes in market conditions or operating results of the issuer that differ from expectation could result in additional other than temporary losses in future periods. At March 31, 2007 and December 31, 2006, our investments in privately held companies included our CyOptics preferred stock and promissory note from CyOptics, valued at $4.5 million and $3.3 million, respectively.

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Income Taxes

We are subject to taxation from federal, state and international jurisdictions. A significant amount of management judgment is involved in preparing our annual provision for income taxes and the calculation of resulting deferred tax assets and liabilities. We evaluate liabilities for estimated tax exposures in jurisdictions of operation which include federal, state and international tax jurisdictions. Significant income tax exposures include potential challenges on foreign entities, merger, acquisition and disposition transactions and intercompany pricing. Exposures are settled primarily through the completion of audits within these tax jurisdictions, but can also be affected by other factors. Changes could cause management to find a revision of past estimates appropriate. The liabilities are frequently reviewed by management for their adequacy and appropriateness. As of March 31, 2007, we were not currently under audit by the U.S. income taxing authorities. We concluded federal income tax audits for the U.S. consolidated tax group on earlier years, most recently for the years 2000 and 2001. A 2001 to 2003 German tax audit of our subsidiary, TriQuint Semiconductor GmbH, was completed during the third quarter of 2005. No significant adjustments were required as a result of the resolution of the audit. Tax periods within the statutory period of limitations not previously audited are potentially open for examination by the taxing authorities. Potential liabilities associated with these years will be resolved when an event occurs to warrant closure, primarily through the completion of audits by the taxing jurisdictions and/or the expiration of the statutes of limitation. To the extent audits or other events result in a material adjustment to the accrued estimates, the effect would be recognized during the period of the event. Management believes that an appropriate estimated liability has been established for potential exposures.

In 2002, we determined that a valuation allowance should be recorded against all of our deferred tax assets based on the criteria of Statement of Financial Accounting Standards (“SFAS”) No. 109, Accounting for Income Taxes. We record the valuation allowance to reduce deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets may not be realized. We consider future taxable income and prudent and feasible tax planning strategies in determining the need for a valuation allowance and evaluate the need for a valuation allowance on a regular basis. Adjustments are made as needed and these adjustments have an impact on our financial statements in the periods in which they are recorded.

Stock-Based Compensation

The table below summarizes the stock based compensation expense for the three months ended March 31, 2007 and 2006, included in Company’s condensed consolidated statements of operations:

	Three Months Ended March 31,
(in millions)	2007		2006
Cost of goods sold	$	0.6	$	0.8
Stock-based compensation expense included in cost of goods sold		0.6		0.8
Research, development and engineering		0.2		0.4
Selling, general and administrative		0.9		1.1
Stock-based compensation expense included in operating expenses		1.1		1.5
Total stock-based compensation expense included in income from operations	$	1.7	$	2.3

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Results of Operations

The following table sets forth the results of our operations expressed as a percentage of revenues for the three months ended March 31, 2007 and 2006:

	Three Months Ended March 31,
	2007		2006
Revenues	100.0	%	100.0	%
Cost of goods sold	68.9		69.7
Gross profit	31.1		30.3
Operating expenses:
Research, development and engineering	13.0		14.3
Selling, general and administrative	13.6		14.5
Loss on disposal of equipment	0.1		0.0
Acquisition related charges	—		0.1
Total operating expenses	26.7		28.9
Operating income	4.4		1.4
Other income (expense):
Interest income	3.1		4.1
Interest expense	(1.5	)	(2.8	)
Foreign currency gain	0.1		0.1
Other, net	0.1		(0.1	)
Total other income, net	1.8		1.3
Income before income tax	6.2		2.7
Income tax expense	0.4		0.1
Net income (loss)	5.8	%	2.6	%

Three-Month Periods Ended March 31, 2007 and 2006

Revenues from Continuing Operations.

The Company has classified its revenues for the first quarter 2007 and 2006 into three product categories: Handsets, Networks and Military. This classification aligns with the current product set and markets and management’s analysis of the business.

Our revenues from operations increased $22.7 million or 26% to $110.6 million in the first quarter of 2007 as compared to $87.9 million in the first quarter of 2006. This increase in revenue was primarily a result of significantly higher sales of products for the handset and networks markets. Our book-to-bill ratio for the first quarter was 0.99 to 1, representing over $100.0 million of bookings. Our revenues by end market for the first quarter of 2007 and 2006 were as follows:

(as a % of Total Revenues from Continuing Operations)	Three Months Ended March 31,
	2007		2006
Handsets	53	%	47	%
Networks	35	%	39	%
Military	12	%	14	%
Total	100	%	100	%

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Handsets

Our revenues in the wireless handset market for the first quarter of 2007 increased approximately 41% as compared to the first quarter of 2006, and accounted for 53% of our revenues. This increase in revenues was primarily due to significant increases in revenues from our power amplifier modules (“PAMs”) and transimit modules (“Tx modules”) for which revenues collectively increased approximately 108% as compared to the first quarter of 2006. These products accounted for approximately 74% of our handset revenues during the first quarter of 2007, compared to 50% in the first quarter of 2006. The increases in these products was partially offset by a decrease in revenues from our receivers, RF filters and front end modules (“FEMs”), duplexers and other products, which declined approximately 62%,16%, 9% and 161%, respectively in the first quarter of 2007 as compared to the first quarter of 2006. These products collectively accounted for approximately 14% of our revenues during the first quarter of 2007.

Our wireless handset revenues from WCDMA and EDGE (enhanced data rates for global evolution) product standards rose more than 200% and represented more than 17%of the handset revenues in the quarter and revenues from these products continue to grow. As a result, we are reporting revenue from these product standards separately from CDMA and GSM/GPRS (general packet radio service) products. Specifically, in the first quarter of 2007, our revenues from CDMA products grew approximately 31% from the first quarter of 2006. This growth was primarily driven from demand for our narrow band CDMA transmit modules from Tier I handset suppliers. Revenues from GSM/GPRS products in the first quarter of 2007 increased 23% from the first quarter of 2006 and represented approximately 41% of the handset revenue for the quarter. The GSM/GPRS growth was primarily driven by growth of our PAMs and transmit modules.

Networks

Revenues from the networks market which include base station, broadband and other standard products increased approximately 15% in the first quarter of 2007 as compared to the first quarter of 2006. This increase was primarily due to increases in revenue from standard products which include products that serve multiple applications, satellite ground station products and base station and point-to-point radio products. Overall, our revenues from this market for the first quarter of 2007 represented approximately 35% of our total revenues, as compared to approximately 39% of our total revenues in the first quarter of 2006.

Revenues from standard products and other increased approximately 32% in the first quarter of 2007 compared to the first quarter of 2006. As a percentage of total networks revenues, standard products and other represented approximately 33% for the first quarter of 2007 compared to approximately 29% for the first quarter of 2006. Revenues from satellite ground station products increased approximately 60% in the first quarter of 2007 as compared to the first quarter of 2006. As a percentage of our total networks revenues, the ground station market represented approximately 9% for the first quarter of 2007, as compared to approximately 6% in the first quarter of 2006.

Military

Revenues from our military-related products increased approximately 6% in the first quarter of 2007 as compared to the first quarter of 2006. As a percentage of our total revenues, military-related products decreased to 12% of our total revenues for the first quarter of 2007 as compared to 14% for the first quarter of 2006. The increase in revenue in the first quarter of 2007 compared to the first quarter of 2006 was primarily due to increased space business and other products of 30% and IF and RF filters of 67%. The increases in revenues were partially offset by decreases in LNAs of 60% and PAs of 26%.

Domestic and International Revenues

Revenues from domestic customers were approximately $44.9 million in the first quarter of 2007, compared to $34.8 million in the first quarter of 2006. Revenues from international customers were approximately

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$65.7 million for the first quarter of 2007, compared $53.1 million for the first quarter of 2006. As a percentage of total revenues, revenues from international customers were 59% of revenues in the first quarter of 2007 as compared to 60% in the first quarter of 2006. Revenues from international customers remained high due to strong demand for wireless handsets and infrastructure products in developing regions.

Gross Profit

Our gross profit margin as a percentage of revenues increased to 31.1% in the first quarter of 2007, compared to 30.3% in the first quarter of 2006. The profit margin in the first quarter of 2007 included stock-based compensation charges in the amount of $0.6 million, as compared to $0.8 million in the first quarter of 2006. We were able to improve our gross margin in the first quarter of 2007 as compared to the first quarter of 2006, primarily from improved capacity utilization and handset module yields.

Operating expenses

Research, development and engineering

Our research, development and engineering expenses during the first quarter of 2007 increased $1.8 million or 14.4% to $14.3 million, and represented 13.0% of revenues, as compared to the first quarter of 2006. Included in these are $0.2 million in stock-based compensation expenses as compared to $0.4 for the period ended March 31, 2006. Our research, development and engineering expenses increased in the first quarter of 2007 as compared to the first quarter of 2006, primarily due to planned investment in our handset and networks R&D efforts.

Selling, general and administrative

Selling, general and administrative expenses during the first quarter of 2007 increased $2.3 million (18%) to $15.1 million, or 13.6% of revenues, as compared to the first quarter of 2006. The March 31, 2007 expenses include stock-based compensation costs of $0.9 million resulting from the adoption of SFAS No. 123(R) on January 1, 2006. Our selling, general and administrative expenses for the first quarter of 2006 were $12.7 million, or 14.5% of revenues, including stock-based compensation charges of $1.1 million. Our selling, general and administrative expenses increased in the first quarter of 2007 as compared to the first quarter of 2006, primarily due to increased commissions, labor costs, depreciation, travel expenses, and insurance costs.

Other income (expense), net

In the first quarter of 2007, we recorded net other income of $1.9 million, an increase of $0.8 million from the $1.1 million recorded in the first quarter of 2006. The change from the prior year is primarily due to decreased interest expense resulting from the retirement of our convertible subordinated notes on March 1, 2007.

Income tax expense

In the first quarters of 2007 and 2006, we recorded a net income tax expense of $0.4 and $0.1 million primarily due to tax expense recorded from our Costa Rica entity.

Liquidity and Capital Resources

Liquidity

As of March 31, 2007, our cash, cash equivalents and marketable securities decreased $223.2 million (60%) to $150.0 million, from $373.2 million as of December 31, 2006. This decrease in cash, cash equivalents and marketable securities during the three months ended March 31, 2007 was primarily due to the retirement of $218.8 million of convertible subordinated notes, along with capital expenditures of $13.2 million. These cash outflows were partially offset by cash provided by operating activities ($6.4 million) and the issuance of common stock through stock option exercises and our ESPP ($2.1 million).

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The $6.4 million of cash provided by continuing operations for the three months ended March 31, 2007 represented an increase of $4.8 million from the $1.6 million of cash provided by continuing operations during the three months ended March 31, 2006. The increase from the prior year was primarily due to a $4.2 million increase in net income which totaled $6.4 million during the three months ended March 31, 2007 compared to $2.2 million for the three months ending March 31, 2006.

At March 31, 2007, our net accounts receivable balance increased $3.5 million (5%) to $68.2 million, from $64.7 million at December 31, 2006. This increase was primarily due to relatively more shipments at the end of the first quarter of 2007 compared to the fourth quarter of 2006 due to the factory shut-downs during the holiday season in the fourth quarter. Our days sales outstanding at March 31, 2007 was 56 compared to 52 December, 31, 2006.

At March 31, 2007, our net inventory balance increased $5.1 million (6%) to $90.0 million, compared to $84.9 million at December 31, 2006. This increase in inventory during the period was primarily the result of lowered demand from a significant customer.

At March 31, 2007, our net property, plant and equipment increased $5.7 million (3%) to $206.0 million, compared to $200.3 million at December 31, 2006. This increase was primarily due to capital expenditures of $13.2 million during the three months ended March 31, 2007, partially offset by depreciation of $7.5 million. The capital expenditures made during the three months ended March 31, 2007 were primarily to increase handset module test capacity and for new technology development.

At March 31, 2007, our current liabilities, excluding the income tax liability and convertible notes, increased $1.1 million (2%) to $55.4 million, compared to $54.3 million at December 31, 2006. The increase was primarily due to increases in trade payables related to increased revenue and activity in our facilities as well as increased payroll liabilities due to timing of our payroll cycle and ESPP purchase.

As discussed in Note 13 to our Consolidated Financial Statements as of March 31, 2007, the Company has approximately $9.6 million associated with unrecognized tax benefits and tax related liabilities. These liabilities are included as “Long term income tax liability” in the Company’s Consolidated Balance Sheet because the Company generally does not anticipate that settlement of the liabilities will require payment of cash within the next twelve months. The Company is not able to reasonably estimate the timing of any cash payments required to settle these liabilities, and do not believe that the ultimate settlement of these obligations will materially affect the Company’s liquidity.

Recent Transactions Affecting Liquidity

On March 1, 2007, our 4% convertible subordinated notes became due. On this date we retired the $218.8 million outstanding notes along with accrued interest payable using our cash reserves. Prior to the March 1, 2007 maturity of the notes, we had repurchased $126.2 million face value of the original $345.0 million since their 2000 issuance.

Capital Resources

Our current cash, cash equivalent and short-term investment balances, together with cash anticipated to be generated from continuing operations are currently our principal sources of liquidity and we believe these will satisfy our projected working capital, capital expenditure, debt servicing and possible investment needs, at a minimum, through the next 12 months. The principal risks to these sources of liquidity are capital expenditures or investment needs in excess of our expectations, in which case we may be required to finance any additional requirements through additional equity offerings, 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.

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We are currently budgeted for capital expenditures of approximately $11.8 million for the second quarter 2007. During the fourth quarter of 2006, we concluded our $25.0 million common stock repurchase plan. As of the date of this report, the repurchase plan has not been renewed.

Recent Accounting Pronouncements

See Note 4 of the Notes to Condensed Consolidated Financial Statements for a discussion of recent accounting pronouncements.

Item 3. Qualitative and Quantitative Disclosure about Market Risk

Cash Equivalents, Short-term and Long-term Investments

Our investments in cash equivalents, short-term investments and long-term investments are classified as available-for-sale securities and are comprised of highly rated, short and medium-term investments, such as U.S. government agencies, corporate debt securities, commercial paper and other low risk investments in accordance with an investment policy approved by our board of directors. All of these investments are held at fair value. Although we manage investments under an investment policy, economic, market and other events may occur which we cannot control. Although the risks are minimal, fixed rate securities may have their fair values adversely impacted because of changes in interest rates and credit ratings. Due in part to these factors, our future investment income may fall short of expectations because of changes in interest rates or we may suffer principal losses if we were to sell securities that have declined in value because of changes in interest rates or issuer credit ratings. We do not hold or issue derivatives, derivative commodity instruments or other financial instruments for trading or speculative purposes; however we do hedge certain foreign currency exposures of our foreign operations. We do not believe that our results of operations would be materially impacted by an immediate 10% change in interest rates.

Debt

Our convertible subordinated notes due March 1, 2007 were repaid from existing cash balances.

The following table shows the fair values of our investments as of March 31, 2007 (in thousands):

	Cost		Fair Value
Cash and cash equivalents (including net unrealized losses of less than $0)	$	105,658	$	105,658
Available-for-sale investments (including net unrealized losses of $86)	$	44,475	$	44,389

Foreign Currency Risk

We are exposed to currency exchange fluctuations because we sell our products internationally and have assembly operations in Costa Rica, a design center in Germany and sales offices throughout Europe and Asia. We manage the sensitivity of our international sales, purchases of raw materials and equipment and our Costa Rican operations by denominating most transactions in U.S. dollars. We engage in limited foreign currency hedging transactions, principally to lock in the cost of purchase commitments and to hedge material cash flows that are not denominated in U.S. dollars, in accordance with a foreign exchange risk management policy approved by our board of directors. We primarily use currency forward contracts for this purpose. This hedging activity will reduce, but may not always entirely eliminate, the impact of currency exchange movements. As of March 31, 2007 and 2006, we had forward currency contracts outstanding of approximately $4.5 million and $3.5 million, all of which were designated as cash flow hedges.

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Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures. Our management evaluated, with the participation of our chief executive officer and chief financial officer, the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures were effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding our required disclosure, and that such information is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms.

Changes in internal control over financial reporting. There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

On January 18, 2006, TriQuint Semiconductor, Inc. (the “Company”) received notice that a suit had been filed against it by StratEdge Corporation (“StratEdge”) for patent infringement in the United States District Court, Southern District of California. StratEdge filed an amended complaint on June 30, 2006. In the amended complaint StratEdge alleged that the Company made, manufactured, marketed, promoted, advertised, offered for sale, and/or sold power amplifiers in packages that infringed one or more claims of StratEdge patent numbers 5,753,972, 6,172,412, 6,271,579, 5,736,783, and 5,692,298 (“the Asserted Patents”). The Company filed an answer to the original complaint on February 7, 2006, and an answer to the amended complaint on July 17, 2006, denying the plaintiff’s allegations. The plaintiff sought, among other items, an injunction against further infringement, full compensation for all damages attributable to the infringement in an amount according to proof at trial but not less than a reasonable royalty, delivery to StratEdge for destruction of all products that are found to infringe the Asserted Patents, and reasonable attorney’s fees. StratEdge also alleged willful infringement of the Asserted Patents and a declaration that the case is exceptional.

On April 2, 2007, the Company and StratEdge entered into a Settlement Agreement and Mutual Release (the “Agreement”) pursuant to which the Company and StratEdge agreed to:

• the dismissal of the suit described above, with prejudice, within 10 days of the payment by the Company of $375 to StratEdge;

• a mutual release of claims by StratEdge and the Company, except that StratEdge’s release does not apply to parties to the suit other than the Company

• the payment by the Company of an aggregate of $625 (inclusive of the $375 referenced above) to StratEdge; and

The Company had previously reserved $625 in connection with the suit by StratEdge.

On February 28, 2007, a purported derivative action (case no. C-07-0299) was filed in the United States District Court for the District of Oregon, allegedly on behalf of TriQuint, against certain of TriQuint’s officers and directors. On March 16, 2007, a substantially similar action (case no. C-07-0398) was filed. The plaintiffs allege that the defendants violated Section 14 of the Securities Exchange Act, as amended, breached their fiduciary duty, abused control, engaged in constructive fraud, corporate waste, insider selling, and gross mismanagement, and were unjustly enriched by improperly backdating stock options. The plaintiffs also allege that TriQuint failed to properly account for stock options and that the defendants’ conduct caused artificial inflation in TriQuint’s stock price. The plaintiffs seek unspecified damages and disgorgement of profits from the alleged conduct, corporate governance reform, establishment of a constructive trust over defendants’ stock options and proceeds derived therefrom, punitive damages, and reasonable attorney’s, accountant’s, and expert’s fees. On April 25, 2007, the Court consolidated the two cases. Plaintiffs will file a consolidated complaint on or before May 25, 2007.

In October 2006, the Company received an informal request for information from the staff of the San Francisco district office of the Securities and Exchange Commission regarding its option granting practices. In November, 2006 the Company was contacted by the Office of the U.S. Attorney for the District of Oregon and was asked to produce documents relating to its option granting practices on a voluntary basis. The Company is cooperating in both inquiries.

Prior to the filing of its quarterly report on Form 10-Q for the quarter ended September 30, 2006, the Company conducted an extensive review of its option granting practices. The Company’s management concluded that no backdating had occurred with respect to its option grants and that prior disclosures regarding its option grants were not incorrect. The Company remains current in its reporting under the Securities Exchange Act of 1934, as amended.

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In addition, from time to time we are involved in judicial and administrative proceedings incidental to our business. Although occasional adverse decisions (or settlements) may occur, we believe that the final disposition of such matters will not have a material adverse effect on our financial position or results of operations.

Item 1A. Risk Factors

Risk Factors

An investment in our common stock is extremely risky. This Annual Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our actual results to differ materially from those expressed or implied by such forward-looking statements. Such statements reflect management’s current expectations, assumptions and estimates of future performance and economic conditions. Such statements are made in reliance upon the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The following are some of the factors we believe could cause our actual results to differ materially from expected and historical results. The trading price of our common stock could decline due to any of these risks and you may lose part or all of your investment. Other factors besides those listed here could also adversely affect us.

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;

• market acceptance of our products and those of our customers;

• market acceptance of new/developing technologies that perform similar to our products;

• variability of the life cycles of our customers’ products;

• variations in manufacturing yields;

• timing of announcements and introduction of new products by us, our customers 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;

• variations in the costs of assembly and test services;

• variations in product warranty claims;

• willingness of customers to accept manufacturing process changes that reduce our costs to levels that result in reasonable gross margins;

• impairments of our assets;

• the long sales cycles associated with our products;

• the timing and level of product and process development costs;

• availability of materials used in the assembly of our products;

• variations in raw material availability, quality and costs;

• delays in new process qualification or delays in transferring processes;

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• additional costs or delays in increasing manufacturing capacity needed to support increasing customer demand;

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

• availability of assembly and test service capacity at our factory’s service providers;

• significant changes in our own inventory levels as well as our customers’; and

• delivery terms requiring that we cover shipment and insurance costs as well as import/export duty costs.

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. 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.

Additionally, if our operating results are not within the market’s expectations, then our stock price may fall. The public stock markets have experienced 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.

New competitive products and technologies brought into the market could reduce demand for our current product offerings. Our business may be adversely impacted if we fail to successfully introduce new products or to gain our customers’ acceptance of those new products.

The markets for electronic communications applications in which we participate are subject to intense competition, rapid technological change, and short product life cycles. It is critical for companies such as ours to continually and quickly develop new products to meet the changing needs of these markets. If we fail to develop new products to meet our customers’ needs on a timely basis, we will not be able to effectively compete in these markets. Further, new products could be introduced by competitors that have competitive and technological advantages over our current product line-up. For example, new products have been introduced that use a direct conversion architecture in wireless phones. Direct conversion architecture has been available since the mid-1990’s for GSM phones and wireless phone manufacturers are increasingly using this technology in their new handsets. This technology reduces the number of components needed in the receiver portion of wireless phones, including our SAW IF filter products. As a result of the adoption of direct conversion technology, the sale of our IF filters declined approximately 79% in 2005 as compared to 2004, and during 2006, our handset revenue from IF filters diminished to a negligible amount. Other competitive filtering technologies, including BAW and film bulk acoustic resonator (“FBAR”), a form of BAW, have been introduced and have gained market acceptance in certain applications. Further, continual improvements in semiconductor technology, such as CMOS (complementary metal oxide semiconductor), and development of these products could also take market share from our products.

We are actively pursuing new products such as RF filters, duplexers, power amplifiers, RF modules and SAW/BAW filtering to address the potential of lost of revenues from new/developing technologies. If we fail to design and produce these products in a manner acceptable to our customers, or have incorrectly anticipated our customers’ demand for these types of products, our business, financial condition and results of operation will suffer.

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Our business will be adversely impacted if we do not continue to gain market acceptance of our wireless handset module products or develop effective manufacturing processes to produce them.

Our strategy for handset products depends in large part upon the success of our design and marketing of handset modules. Wireless phone modules represent the incorporation of some or all of the components of the handset radio into a single product. If we are unable to design these modules in a manner acceptable to our customers, or have incorrectly anticipated our customers’ demand for these products, our operating results will be adversely affected.

Manufacturing RF module products represents a departure from our traditional component manufacturing business. Production of module products entails different manufacturing and planning processes, costs, yields, and lead times. If we fail to successfully transition manufacturing resources to produce these products or are unable to do so cost-effectively, our operating results will be adversely affected. Our initial experience is that increased module sales as a percent of our total sales has a negative impact on our gross margins due to our production costs. If we are unable to reduce the costs of producing modules, our total gross margin will decrease as the proportion of module sales increase and our operating results may decline.

Our operating results may suffer due to fluctuations in demand for semiconductors and electronic communications components.

From time to time, our handsets, networks and military markets have experienced significant downturns and wide fluctuations in product supply and demand, often in connection with, or in anticipation of, maturing product cycles, capital spending cycles and declines in general economic conditions. The cyclical nature of these markets 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 integrated circuits and modules, components and other products in these applications would also decline, which would negatively affect our operating results.

We depend on the continued growth of communications markets and cost-effective selling prices.

We derive our product revenues from sales of products and services for electronic communication applications. These markets are characterized by the following:

• cyclical demand;

• intense competition;

• rapid technological changes; and

• short product life cycles, especially in the wireless phone market.

The electronic communications markets are currently above their cyclical lows of the recent past; however there is no guarantee that these markets will resume historical growth rates. Further, as is characteristic of the integrated circuit and acoustic filter component industries, the average selling prices of our products have historically decreased over the products’ life cycles and we expect this pattern to continue. To offset these decreasing selling prices, we rely primarily on obtaining yield improvements and corresponding cost reductions in the manufacturing of existing products. We try to introduce new products with similar functionality of existing products but with lower costs by design, or new products which incorporate advanced features and can be sold at higher average selling prices. We work closely with our suppliers to obtain continual improvement on pricing of key raw materials and components. As more of our product offerings migrate toward integrated assemblies requiring the acquisition of outside manufactured components, we will have to work effectively with our suppliers to reduce the total cost of the respective bills of material.

If the current market demand trend does not continue to improve, and/or if there is continued pressure on average selling prices and our cost reduction efforts are not effective, our operating results could suffer.

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Additionally, our future success will depend, in part, upon our ability to successfully develop and introduce new products based on emerging industry standards. If we are unable to successfully design and manufacture new products that address the needs of our customers in a timely manner, or if our customers’ products do not achieve market acceptance, our operating results could be adversely affected. Further, if we are unable to improve existing yields in a timely manner, or prevent yield issues on future new product introductions, we may not be able to achieve gross profit targets that meet market expectations which could negatively affect our stock price.

Our operating results could be harmed if we fail to effectively manage our growth.

Our business and operations have grown substantially over the past year and we hope to continue this trend in the future. Maintaining profitability during a period of expansion will depend, among other things, on our ability to manage effectively our operations, particularly our manufacturing yields. If we are unable to manage our growth effectively, it may have a material adverse effect on our business and results of operations.

In the event we are not able to satisfy a significant increase in demand from any one of our customers or our customers in total we may not be viewed as a dependable high volume supplier and our customers will source their demand elsewhere.

In some areas of our business, we have customers, particularly those in the wireless handset market, who ship their completed products in very large unit volumes. These customers may require large inventories of our products on short notice. If we are unable to support our customers when their production volume increases, we may be considered an undependable supplier and our customer may seek alternate suppliers for products which we may have anticipated producing over an extended period of time and in large quantities. In 2006, we experienced such demand at times and were not able meet all of our customers’ requests. As a result, we have increased the capacity at our Hillsboro facility to address this issue; however we may still be unable to support our customers’ needs. If our customers consider us to be an undependable supplier, our operating results could be adversely affected as we may not be able to find alternative sources of revenue.

A limited number of customers represent a significant portion of our revenue. If we were to lose any of these customers, our revenue could decrease significantly.

We typically have customers who generate more than 10% of our revenues for a given period. For example, in 2006, Motorola and Samsung each represented more than 10% of our revenues. In the first quarter of 2007 Samsung and Motorola together accounted for over 30% of our revenue. There can be no assurance that we will be able to retain these customers in the future and any significant loss of, or a significant reduction in purchases by, one or more of these customers could have an adverse affect on our financial condition and results of operations. Further, the consolidation of our customers may result in increased customer concentration and/or the potential loss of customers, which could also negatively affect our financial condition and results of operations.

If we build products to support high volume forecasts that never materialize into orders, we may have to write-off excess and obsolete inventory or reduce our prices.

During 2006 and the first quarter of 2007 we increased our inventory levels to meet forecasted future demand. If the forecasted demand does not materialize into purchase orders for these products, we may be required to write-off our inventory balances or reduce the value of our inventory to fair value, based on a reduced sales prices. A write-off of the inventory, or a reduction in the inventory value due to a sales price reduction, could have a material impact on our operating results. Further, if we are unable to improve inventory turns and generate targeted operating cash flow projections, we may not satisfy market expectations which could negatively affect our stock price.

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Our financial statements include significant material expenses related to the adoption of SFAS 123(R). These expenses may fluctuate greatly in the future due to a number of estimates and assumptions used in the pricing model.

On January 1, 2006, we adopted SFAS No. 123(R), which requires us to recognize share-based compensation expense in our financial statements based on the fair value determined for our stock option grants and employee stock purchase plan. Previously we applied SFAS No. 123, which allowed us to apply the provisions of APB No. 25 and provide pro forma net income (loss) and pro forma net income (loss) per share disclosures for stock-based payments as if the expense had been recognized. We have elected to apply the modified prospective approach in our adoption of SFAS No. 123(R) and thus have not restated our prior results to include stock-based payment expense. We use the Black-Scholes model for the stock-based payment expense calculation to determine their fair value, which includes a number of estimates including the expected lives of the options, the volatility of the prices of our common stock on the NASDAQ Global Select Market and interest rates. A significant change in any of these estimates, or in our option pricing model, could have a material impact on our financial statements. In addition, although we have provided supplemental data to assist investors in comparing our results after January 1, 2006 with prior results, investors may not be able to assess improvements or declines in our operating results absent the impact of stock-based compensation expense, and our stock price may be adversely affected.

In the event we are unable to satisfy regulatory requirements relating to internal controls, or if these internal controls over financial reporting are not effective, our business and our stock price could suffer.

Section 404 of the Sarbanes-Oxley Act of 2002 requires companies to do a comprehensive and costly evaluation of their internal controls. As a result, as of December 31, 2006, we were required to perform an evaluation of our internal controls over financial reporting and have our independent auditor attest to our evaluation. At December 31, 2006, management and our auditors did not identify any material weaknesses over internal controls over financial reporting. Our efforts to comply with Section 404 and related regulations regarding our management’s required assessment of internal control over financial reporting and our independent auditors’ attestation of that assessment has required, and continues to require, the commitment of significant financial and managerial resources. While we anticipate maintaining the integrity of our internal controls over financial reporting and all other aspects of Section 404, we cannot be certain that a material weakness will not be identified when we test the effectiveness of our control systems in the future. If a material weakness is identified, we could be subject to regulatory investigations or sanctions, costly litigation or a loss of public confidence in our internal controls, which could have an adverse effect on our business and our stock price.

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

The production of GaAs integrated circuits has been and continues to be more costly than the production of silicon devices. Although we have reduced production costs through decreasing raw wafer costs, increasing wafer size and fabrication yields, decreasing die size and achieving higher volumes, there can be no assurance that we will be able to continue to decrease production costs. Further, the average selling prices of our products have historically 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 be manufactured at lower costs. However, we believe our costs of producing GaAs 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 and 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. We believe our future success depends, in part, on our timely development and introduction of

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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 own new products, or of our customers’ new products;

• achievement of acceptable manufacturing yields;

• our ability to offer new products at competitive prices; and

• managing the cost of raw materials and manufacturing services.

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.

Our business could be harmed if systems manufacturers do not use components made of GaAs or the other alternative materials we utilize.

Silicon semiconductor technologies are the dominant process technologies for integrated circuits and the performance of silicon integrated circuits continues to improve. System designers may be reluctant to adopt our products because of:

• their unfamiliarity with designing systems with our products;

• their concerns related to manufacturing costs and yields;

• their unfamiliarity with our 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 GaAs components because the production of GaAs integrated circuits has been, and continues to be, more costly than the production of silicon devices. Systems manufacturers may also be reluctant to rely on a jointly produced product because future supplies may depend on our continued good relationships with those vendors. As a result, we must offer devices that provide superior performance to that of traditional silicon based devices.

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

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

Because large portions of our manufacturing costs are relatively fixed, high 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 negatively affect 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. If we receive fewer customer orders than expected or if our customers delay or cancel orders, we may not be able to reduce our manufacturing costs in the short-term and our operating results would be harmed. In addition, we are selling products to an increasing number of our customers on a consignment basis, which can limit our ability to forecast revenues and adjust our costs in the short-term, if appropriate.

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Underutilization of our manufacturing facilities and additional capital expenditures may adversely affect our operating results.

Historically, we have underutilized our manufacturing lines. This excess capacity means we incur increased fixed costs in our products relative to the revenues we generate, which could have an adverse effect on our results of operations, particularly during economic downturns. If we are unable to improve utilization levels at these facilities and correctly manage capacity, the increased expense levels will have an adverse effect on our business, financial condition and results of operations.

Alternatively, we have increased our capacity in certain facilities to meet current customer demands. These facilities currently have limitations in certain areas of manufacturing and we may need to invest in more capital equipment to relieve these manufacturing limitations and allow for greater capacity. If we acquire more equipment, our fixed costs will increase. Further, if customer demand later falls, the increased expense levels will have an adverse effect on our business, financial condition and results of operations.

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 sufficient volume and may impair our ability to cover our fixed manufacturing costs. Furthermore, if customers cancel or delay orders for these customer-specific products, our inventory of these products may become unmarketable or obsolete, which would negatively affect our operating results.

In addition, if we experience delays in completing designs, fail to obtain development contracts from customers whose products are successful, or fail to have our product designed into the next generation product of existing volume production customers, our revenues could be harmed.

We face risks of a loss of revenues if contracts with the U.S. government or military contractors are canceled or delayed.

In 2006 we received approximately 10% of our revenues from the U.S. government or from prime contractors on U.S. government sponsored programs principally for military applications. These military programs with the U.S. government generally have long lead times such as the DARPA contract and F-22 Raptor and Joint Strike Fighter aircraft programs. They are also subject to delays or cancellation. Changes in military funding or the loss of a significant military program or contract would have a material adverse impact on our operating results. Further, spending on military contracts can vary significantly depending on funding from the U.S. government. We believe our government and military contracts in the recent past have been negatively impacted by the war in Iraq as the government allocated more funding to the war and less on new development and long-term programs, such as the ones in which we participate.

We face risks from failures in our manufacturing processes, the maintenance of our fabrication facilities and the processes of our vendors.

The fabrication of integrated circuits, particularly those made of GaAs, is a highly complex and precise process. Our integrated circuits are primarily manufactured on wafers made of GaAs while our SAW filters are currently manufactured primarily on LiNbO₃, LiTaO₃ and quartz wafers and our BAW wafers are currently manufactured on sapphire or silicon wafers. We refer to the proportion of final components that have been processed, assembled and tested relative to the gross number of components that could be constructed from the raw materials as our manufacturing yield. Compared to the manufacturing of silicon integrated circuits, GaAs technology is less mature and more difficult to design and manufacture within specifications in large volume. In addition, the more brittle nature of GaAs wafers can result in lower

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manufacturing yields than with silicon wafers. Further, during manufacturing, each wafer is processed to contain numerous integrated circuits or SAW/BAW filters which may also result in lower manufacturing yields. As a result, we may reject or be unable to sell a substantial percentage of wafers or the components 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 and/or optical performance;

• wafer breakage; or

• other factors.

In the past we have experienced lower than expected manufacturing yields, which have delayed product shipments and negatively impacted our results of operations. We may experience similar difficulty in maintaining acceptable manufacturing yields in the future. Further, the transfer of production of a product to a different facility often requires the qualification of the facility by certain customers. There can be no certainty that such changes and transfers will be implemented on a cost-effective basis without delays or disruption in our production and without adversely affecting our results of operations. Further, offshore operations are subject to certain inherent risks, including delays in transportation, changes in governmental policies, tariffs, import/export regulations and fluctuations in currency exchange rates in addition to geographic limitations on management controls and reporting and there can be no assurance that the inherent risks of offshore operations will not adversely affect our future operating results. We also depend on certain vendors for components, equipment and services. We maintain stringent policies regarding qualification of these vendors. However, if these vendors’ processes vary in reliability or quality, they could negatively affect our products, and thereby, our results of operations.

In addition, the maintenance of our fabrication facilities and our assembly facilities is 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.

We face risks from a proportion of our operations and employees being located outside of the U.S.

A number of our employees and operations are located in countries other than the U.S. We also employ contractors in other countries to perform certain packaging and test operations for us. The laws and governance of these countries may differ substantially from that of the U.S. and may expose us to increased risks of adverse impacts on our operations and results of operations. These risks could include: loss of protection of proprietary technology, disruption of production processes, interruption of freight channels and delivery schedules, currency exposure, financial institution failure, government expropriation, labor shortages, political unrest, local tax laws and fraud. For example, our operating facility in Costa Rica presents risks of disruption such as government intervention, currency fluctuations, labor disputes, limited supplies of labor, power interruption, civil unrest, or war. Any such disruptions could have a material adverse effect on our business, results of operations and financial condition.

Some of our manufacturing facilities are located in areas prone to natural disasters.

We have a SAW manufacturing and assembly facility located in Apopka, Florida and an assembly facility for SAW products in San Jose, Costa Rica. Hurricanes, tropical storms, flooding, tornadoes, and other natural

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disasters are common events for Florida and Central America that could affect our operations in these areas. Other natural disasters such as earthquakes, volcanic eruptions, tornadoes and flooding could also affect our facilities in Oregon and Texas. Any disruptions from these or other natural disasters would have a material adverse impact on our operations and financial results. The following table indicates the approximate exposure we believe we have with respect to natural disasters:

	Type of Disaster	Approximate Percent of Total*
Location		Fixed Assets		Revenues
Apopka, Florida	H	15	%	22	%
Bend, Oregon	E, V	0	%	0	%
Dallas, Texas	H	45	%	22	%
Hillsboro, Oregon	E, V	30	%	56	%
San Jose, Costa Rica	E, V, H	10	%	22	%

E— Earthquake/mudslide

V— Volcanic eruption

H— Hurricane and/or tornado and flooding

* Figures are based on revenues for the quarter ended March 31, 2007 or net fixed assets as of March 31, 2007. Additionally, the sum may be greater than 100% due to shared risks between locations.

We may have exposure to income tax rate fluctuations as well as to additional tax liabilities, which would affect our financial position.

As a corporation with operations both in the United States and abroad, we are subject to income taxes in both the United States and various foreign jurisdictions. Significant judgment is required in determining our worldwide income tax provision. Our effective tax rate is subject to fluctuations as the income tax rates for each year are a function of the following factors, among others:

• the effects of a mix of profits or losses earned by us and our subsidiaries in numerous foreign tax jurisdictions with a broad range of income tax rates;

• our ability to utilize recorded deferred tax assets;

• changes in contingencies related to taxes, interest or penalties resulting from internal, accounting firm and governmental tax reviews and audits;

• tax holidays; and

• changes in tax laws or the interpretation of such laws, specifically transfer pricing, permanent establishment and other intercompany transactions.

Changes in the mix of these items and other items may cause our effective tax rate to fluctuate between periods, which could have a material adverse effect on our financial position.

Our business may be adversely affected by acts of terrorism or war.

Acts of terrorism or war could interrupt or restrict our business in several ways. We rely extensively on the use of air transportation to move our inventory between our facilities and to and from our vendors, as well as to ship finished products to our customers. If war or terrorist acts cause air transportation to be grounded or severely interrupted, our business would be adversely impacted. Additionally, war or acts of terrorism could cause existing export regulations to be changed, which could limit the extent to which we are allowed to export our products. To the extent that war or acts of terrorism also reduce customer confidence and create general economic weakness, our business would also be adversely affected. Further, our products are sold to manufacturers who sell their devices around the world. If acts of terrorism or war reduce the demand for these devices in certain areas, our results could suffer.

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A widespread outbreak of an infectious disease or illness could negatively affect our marketing, assembly and test, design, or other operations, making it more difficult and expensive to meet our obligations to our customers and could result in reduced demand from our customers.

A widespread outbreak of an infectious disease or illness such as avian influenza could adversely affect our operations as well as demand from our customers. A number of countries in the Asia/Pacific region have experienced outbreaks of different infectious diseases and illnesses in the past. Many of our customers operate facilities in these areas and some of our assembly and test subcontractors are located in these regions. As a result of widespread outbreaks, our operations could be severely affected through reduced demand from customers. Further, employees of our customers’ and subcontractors’ could become ill, or be quarantined, and they could suspend operations.

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

We currently obtain a portion of the components, equipment and services for our products from limited or single sources, such as certain ceramic packages and chemicals. We purchase these components, equipment, supplies and services on a purchase order basis, do not carry significant inventories and generally do not have 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, which could negatively affect our results of operations. In some cases, it would be difficult to replace these suppliers and requalification could take up to 12 months.

Our reliance on a limited number of suppliers for certain raw materials and parts may impair our ability to produce our products on time and with acceptable yields. For example, at times in the past, we have experienced difficulties in obtaining ceramic packages and lids used in the production of bandpass filters. At other times, the acquisition of relatively simple devices, such as capacitors, has been problematic because of the large demand swings that can occur in the handset market for such components. The success of these products is critical to the overall success of our business. The primary risk surrounding our source of supply to manufacture these products is the possible bankruptcy of our suppliers or their inability to meet our delivery schedules. 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 and partners are unable to fulfill our requirements.

We currently use subcontractors for the majority of our integrated circuit and module assemblies, as well as final product testing. Approximately 60% of our revenues are derived from components in which we utilize subcontractors for some portion of the production process. We expect this percentage to grow as module products become a larger portion of our product revenues. 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 needs, it could prevent or delay production shipments that could negatively affect our results of operations and our customer relationships. If we were to change any of our subcontractors, we would be required to re-qualify 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.

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

The fabrication of integrated circuits and SAW/BAW filters from substrate materials and the modules containing these components 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. Our products may contain undetected defects or failures that only become evident after we commence volume shipments, which we may experience from time to time. Other defects or failures may also occur in the future. If such failures or defects occur, we could:

• lose revenues;

• 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.

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 facilities, we generally provide our own manufacturing waste treatment and contract for disposal of some materials. We are required to report usage of environmentally hazardous materials and 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 other substantial expenses to comply with environmental regulations. Any failure by us 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. Further, new environmental initiatives could affect the materials we currently use in production.

Environmental regulations such as the WEEE and RoHS directives may require us to redesign our products and to develop compliance administration systems.

Various countries have begun to require companies selling a broad range of electrical equipment to conform to regulations such as the WEEE and RoHS directives and we expect additional countries and locations to adopt similar regulations in the future. New environmental standards such as these could require us to redesign our products in order to comply with the standards, and require the development of compliance administration systems. We have already invested significant resources into developing compliance tracking systems, and further investments may be required. Additionally, we may incur significant costs to redesign our products and to develop compliance administration systems; however alternative designs may have an adverse effect on our gross profit margin. If we cannot develop compliant products timely or properly administer our compliance programs, our revenues may also decline due to lower sales, which would adversely affect our operating results.

Customers may delay or cancel orders due to regulatory delays.

The increasing significance of electronic communications products has increased pressure on regulatory bodies worldwide to adopt new standards for electronic communications, 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.

We had substantial indebtedness at December 31, 2006 and could incur additional debt in the future.

At December 31, 2006, we had $218.8 million of indebtedness remaining in the form of our convertible subordinated notes. The notes were due on March 1, 2007 and at that time we paid the balance of the debt and

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accrued interest from our cash reserves. We may incur additional debt in the future, which could be at substantially different terms. Further, there can be no assurance that we will be able to obtain debt when needed or in the amount needed, or to meet debt service obligations once debt is obtained.

The use of approximately $223.1 million to retire our convertible subordinated notes substantially reduced our cash, cash equivalents and marketable securities which were $373.2 million as of December 31, 2006. If we do not have adequate amounts of cash, cash equivalents and marketable securities to fund our working capital needs we may be required to obtain debt or sell additional common stock to expand our business or to satisfy short-term cash needs.

We must improve our products and processes to remain competitive.

If technologies or standards that are supported by either our products or by 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 technologies such as CMOS (complementary metal oxide semiconductor) where substantially more resources are invested than in other technologies such as GaAs and SAW products, 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 and be able to adapt our products and processes to technological changes to support emerging and established industry standards. We have and must continue to perform significant research and development into advanced material development such as GaN, and silicon carbide (“SiC”) to compete with future technologies of our competitors. These research and development efforts may not be accepted by our customers, and therefore may not achieve sustained production in the future. Further, we may not be able to improve our existing products and process technologies, or be able to develop new technologies in a timely manner or effectively support industry standards. If we fail to do so, our customers may select another GaAs, SAW or BAW product, or even move to an alternative technology.

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

The markets for our products are characterized by price competition, rapid technological change, short product life cycles, and heightened global competition. Many of our competitors have significantly greater financial, technical, manufacturing and marketing resources. We expect intensified competition from existing integrated circuit, SAW and BAW device suppliers, as well as from the entry of new competitors to our target markets and from the internal operations of some companies producing products similar to ours for their internal requirements.

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 in integrated circuit design using alternative materials;

• offering of new or emerging technologies such as digital filtering direct conversion as alternatives to SAW filters;

• mergers and acquisitions of our customers with our competitors or other entities;

• longer operating histories and presence in key markets;

• development of strategic relationships between, or mergers of, our competitors;

• ability to obtain raw materials at lower costs due to larger purchasing volumes or other advantageous supply relationships;

• access to a wider customer base; and

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

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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 our competitors or by us typically limits further competition with respect to manufacturing a given design. Additionally, manufacturers of high performance silicon integrated circuits have achieved greater market acceptance of their existing products and technologies in some applications, as compared to GaAs. Further, we compete with both GaAs and silicon suppliers in all of our target markets.

If we fail to integrate any future acquisitions or if we unsuccessfully invest in privately held companies, our business will be harmed.

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

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

• we may fail to retain the key employees required to make the operation successful;

• additional complexity may affect our flexibility and ability to respond quickly to market and management issues;

• we may experience difficulties integrating our financial and operating systems and maintaining effective internal controls over financial reporting;

• we may experience additional financial and accounting challenges and complexities in areas such as tax planning, treasury management, financial reporting and risk management;

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

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

• we may not be able to cost-effectively develop commercial products using the newly acquired technology;

• 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;

• existing customers of the acquired operations may demand significant price reductions or other detrimental term changes as a result of the change in ownership;

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

• we may incur unknown liabilities associated with acquired businesses.

We face risks from equity investments in privately held companies, such as:

• we may not realize the expected benefits associated with the investment resulting in a partial or total write-off of this investment;

• additional rounds of funding may substantially dilute our position if we do not participate in the subsequent funding;

• we may need to provide additional funding to support the privately held company; or

• if the value of the equity investment decreases, we may realize losses on our holdings.

We will continue to evaluate strategic opportunities available to us and we may pursue product, technology or business acquisitions or investments in strategic partners. However, we may not successfully address these risks or any other problems that arise in connection with future acquisitions or equity investments in privately held companies.

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In addition to the risks above 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 other intangible assets or record impairment of goodwill, all of which may negatively affect our results of operations.

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, as the economy improves, it may become increasingly difficult for us to attract and retain employees. The competition for key employees is intense, and the loss of key employees could negatively affect us.

Increases in salaries of technical, sales and administrative personnel may outpace productivity gains, which could result in our expenses growing at a rate that exceeds our revenue growth rate.

The U.S. economy and the demand for our products improved 2006, which led to increased production volumes and a higher absorption of fixed costs and operating expenses for our company. In addition, this economic recovery has led to increases in the salaries of our technical, sales and administrative personnel. As we try to remain competitive and retain our employees and increase salaries, these increases may outpace our productivity gains and result in our expenses growing at a rate that exceeds our revenue growth rate, which could have an adverse effect on our financial results.

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

We rely on a combination of patents, trademarks, trade secret laws, confidentiality procedures and licensing arrangements to protect our intellectual property rights. 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. Further, we cannot be certain that any claims allowed from pending applications will be of sufficient scope or strength to provide meaningful protection or any commercial advantage. Our competitors may also 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 U.S., 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 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.

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

The integrated circuit, SAW and BAW device industries are 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

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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. For example, in 2006, we received notice that a claim alleging patent infringement had been filed against us by StratEdge. Although we deny any wrongdoing, we paid substantial legal fees in defending ourselves and settling the claim. 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

• purchase licenses to the technology and/or pay royalties.

We may be unsuccessful in developing non-infringing products or negotiating licenses upon reasonable terms, as the case may be. These problems might not be resolved in time to avoid harming our results of operations. Further, 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.

Our ability to accurately predict revenues and inventory needs could deteriorate if we generate additional sales through inventory hubbing distribution facilities.

Several of our larger customers have requested that we send our products to independent warehouses known as inventory hubbing distribution facilities to assist them with their inventory control. We do not recognize revenues from these hubbing arrangements until the customer takes delivery of the inventory and title of the goods passes to the customer. As a result, increased shipments to these facilities make it more difficult for us to predict short-term revenues and inventory consumption as customers can take delivery of the products with little or no lead-time. In addition, stocking requirements at hubbing facilities tends to reduce inventory turns, increase working capital requirements and increase the possibility of excess, obsolete and inventory loss issues.

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

Our sales outside of the U.S. during 2006, 2005 and 2004 were approximately 60%, 68% and 58%, respectively. Our sales outside of the first quarter of 2007 were approximately 60%. As a result of having a significant amount of sales outside of the U.S., we face inherent risks from these sales, including:

• imposition of government controls;

• currency exchange rate fluctuations;

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

• reduced protection for intellectual property rights in some countries;

• unfavorable tax consequences;

• difficulty obtaining distribution and support;

• political instability; and

• tariffs and other trade barriers.

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In addition, due to the technological advantages provided by GaAs integrated circuits in many military applications, the Office of Export Administration of the U.S. Department of Commerce must license all of our sales outside of the U.S. We are also required to obtain licenses from that agency for sales of our SAW products to customers in certain countries. 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 a majority 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.

Our operating results may be negatively affected by class action or derivative lawsuits.

Following periods of volatility in the market price of a company’s stock, some stockholders may file 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. Additionally, in 2003, a class action complaint was purportedly filed on behalf of purchasers of the stock of Sawtek, Inc., our wholly owned subsidiary between January 2000 and May 24, 2001, against Sawtek and former officers of Sawtek and the Company. Although the claim was dismissed with prejudice in October 2005, our management spent time defending the claims and we incurred legal fees to defend ourselves. Future claims, if any, could harm our operating results, and we may incur significant legal fees defending these claims. Further, defending these claims distracts our management from running our business.

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 $6.07 to a low of approximately $3.70 during the 52 weeks ended March 31, 2007. 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. Further, high stock price volatility could result in higher stock-based compensation expense charges.

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 amended and restated 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.

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.

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Preferred stock. Our certificate of incorporation authorizes our board of directors to issue up to five 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.

We face risks from changes in tax regulations and a change in our Costa Rican subsidiary’s favorable tax status would have an adverse impact on our operating results.

We are subject to taxation in many different countries and localities worldwide. In some jurisdictions, we have employed specific business strategies to minimize our tax exposure. To the extent the tax laws and regulations in these various countries and localities could change, our tax liability in general could increase or our tax saving strategies could be threatened. Such changes could have a material adverse effect on our operations and financial results. For example, our subsidiary in Costa Rica operates in a free trade zone. We expect to receive a 75% exemption from Costa Rican income taxes through 2007. The Costa Rican government continues to review its policy on granting tax exemptions to companies located in free trade zones and it may change our tax status or minimize our benefit at any time. Any adverse change in the tax structure for our Costa Rican subsidiary made by the Costa Rican government would have a negative impact on our net income. During the first quarters of 2006 and 2005, the 75% tax exemption reduced our income tax expense by $0.1 million and $0.3 million, respectively.

In addition, the U.S. Internal Revenue Service and several foreign tax authorities could assert additional taxes associated with our subsidiary due to differing interpretations of transfer pricing and other intercompany transactions.

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

None

Item 3. Defaults Upon Senior Securities

None

Item 4. Submission of Matters to a Vote of Security Holders

None

Item 5. Other Information

None

Item 6. Exhibits

31.1	Certification of Chief Executive Officer pursuant to Rule 13a – 14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a – 14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification pursuant to 18.U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

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SIGNATURES

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

	TRIQUINT SEMICONDUCTOR, INC.
Dated: May 9, 2007	By:	/s/    RALPH G. QUINSEY
		Ralph G. Quinsey President and Chief Executive Officer
Dated: May 9, 2007	By:	/s/    STEPHANIE J. WELTY
		Stephanie J. Welty
		Vice President of Finance and Administration, Secretary and Chief Financial Officer

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INDEX TO EXHIBITS

Exhibit Number	Description of Exhibit
31.1	Certification of Chief Executive Officer pursuant to Rule 13a – 14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a – 14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification pursuant to 18.U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Ralph G. Quinsey, certify that:

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

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/    RALPH G. QUINSEY        

Ralph G. Quinsey

President and Chief Executive Officer

(Principal Executive Officer)

Date: May 9, 2007

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Stephanie J. Welty, certify that:

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

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/    STEPHANIE J. WELTY        

Stephanie J. Welty

Vice President of Finance and Administration,

Secretary and Chief Financial Officer

(Principal Financial and Accounting Officer)

Date: May 9, 2007

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO SECTION

1350 OF CHAPTER 63 OF TITLE 18

OF THE UNITED STATES CODE AS

ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the filing of the Quarterly Report on Form 10-Q of TriQuint Semiconductor, Inc. (“TriQuint”) for the quarterly period ended September 30, 2006, as filed with the Securities and Exchange Commission on the date hereof (“the Report”), each of the undersigned officers of TriQuint, hereby certifies, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and

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

The undersigned have executed this Certification effective as of May 9, 2007.

/s/    RALPH G. QUINSEY        

Ralph G. Quinsey

President and Chief Executive Officer

(Principal Executive Officer)

/s/    STEPHANIE J. WELTY        

Stephanie J. Welty

Vice President of Finance and Administration,

Secretary and Chief Financial Officer

(Principal Financial and Accounting Officer)