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 September 30, 2008

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, or a smaller reporting company. See definitions of “accelerated filer,” and “large accelerated filer” and smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ¨	Accelerated filer  x
Non-accelerated filer  ¨    (Do not check if a smaller reporting company)	Smaller reporting company  ¨

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 November 3, 2008 there were 145,811,141 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 and nine months ended September 30, 2008 and 2007	3
	Condensed Consolidated Balance Sheets at September 30, 2008 and December 31, 2007	4
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2008 and 2007	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Qualitative and Quantitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	25
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 6.	Exhibits	38

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 September 30,						Nine Months Ended September 30,
	2008			2007			2008			2007
Revenues	$	186,347		$	122,918		$	424,442		$	347,292
Cost of goods sold		127,787			83,356			283,521			243,171
Gross profit		58,560			39,562			140,921			104,121
Operating expenses:
Research, development and engineering		25,234			16,532			66,841			45,900
Selling, general and administrative		21,148			15,382			56,187			46,071
In-process research and development		—			7,600			1,400			7,600
(Gain) loss on disposal of equipment		(101	)		2			(518	)		88
Total operating expenses		46,281			39,516			123,910			99,659
Operating income		12,279			46			17,011			4,462
Other income (expense):
Interest income		603			2,227			3,719			7,592
Interest expense		(134	)		(6	)		(148	)		(1,642	)
Foreign currency gain		136			78			715			273
Recovery of impairment		—			—			105			—
Other, net		19			51			38			84
Total other income, net		624			2,350			4,429			6,307
Income, before income tax		12,903			2,396			21,440			10,769
Income tax expense		1,060			518			1,753			1,144
Net income	$	11,843		$	1,878		$	19,687		$	9,625
Basic per share net income	$	0.08		$	0.01		$	0.14		$	0.07
Diluted per share net income	$	0.08		$	0.01		$	0.13		$	0.07
Common equivalent shares:
Basic		145,029			140,718			143,897			139,679
Diluted		148,082			142,511			146,835			141,761

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

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TRIQUINT SEMICONDUCTOR, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share and per share data)

	September 30, 2008		December 31, 2007
ASSETS
Current assets:
Cash and cash equivalents	$	78,220	$	203,501
Investments in marketable securities		1,994		—
Accounts receivable, net		113,956		73,185
Inventories		107,244		67,231
Prepaid expenses		6,469		4,778
Other current assets		21,799		10,890
Total current assets		329,682		359,585
Property, plant and equipment, net		255,606		204,553
Goodwill (Note 11)		34,186		4,817
Intangible assets, net (Note 11)		34,342		5,492
Other noncurrent assets		28,030		12,014
Total assets	$	681,846	$	586,461
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Line of credit	$	13,048	$	—
Accounts payable		50,279		29,423
Accrued payroll		25,252		17,179
Other accrued liabilities		15,547		9,875
Total current liabilities		104,126		56,477
Long-term liabilities:
Long term income tax liability		10,537		10,193
Other long-term liabilities		14,176		4,943
Total liabilities		128,839		71,613
Commitments and contingencies (Note 15)
Stockholders’ equity:
Common stock, $.001 par value, 600,000,000 shares authorized, 145,614,667 shares and 142,903,784 shares issued and outstanding at September 30, 2008 and December 31, 2007, respectively		146		143
Additional paid-in capital		514,736		496,083
Accumulated other comprehensive income		487		671
Retained earnings		37,638		17,951
Total stockholders’ equity		553,007		514,848
Total liabilities and stockholders’ equity	$	681,846	$	586,461

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

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TRIQUINT SEMICONDUCTOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	Nine Months Ended September 30,
	2008			2007
Cash flows from operating activities:
Net income	$	19,687		$	9,625
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		24,818			22,402
Stock-based compensation expense		8,405			6,182
(Gain) loss on disposal of assets		(518	)		88
Write-off of in-process research and development		1,400			7,600
Changes in assets and liabilities, net of assets acquired and liabilities assumed:
Accounts receivable, net		(34,245	)		(12,368	)
Inventories, net		(29,970	)		17,955
Other assets		(8,038	)		(945	)
Accounts payable and accrued expenses		16,245			(279	)
Net cash (used in) provided by operating activities		(2,216	)		50,260
Cash flows from investing activities:
Purchase of available-for-sale investments		(24,649	)		(104,877	)
Maturity/sale of available-for-sale investments		6,997			323,350
Other		1,865			747
Business acquisition, net of cash acquired (Note 5)		(61,740	)		(14,747	)
Capital expenditures		(70,887	)		(24,046	)
Net cash (used in) provided by investing activities		(148,414	)		180,427
Cash flows from financing activities:
Repayment of convertible subordinated notes		—			(218,755	)
Net borrowings on lines of credit		13,048			—
Issuance of common stock, net		12,301			7,527
Net cash provided by (used in) financing activities		25,349			(211,228	)
Net (decrease) increase in cash and cash equivalents		(125,281	)		19,459
Cash and cash equivalents at beginning of period		203,501			133,918
Cash and cash equivalents at end of period	$	78,220		$	153,377
Supplemental disclosures:
Cash paid for interest	$	41		$	4,375
Cash paid for income taxes	$	894		$	1,172
Sabbatical-cumulative adjustment		—		$	1,454

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

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TRIQUINT SEMICONDUCTOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(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, 2007, as included in the Company’s 2007 Annual Report on Form 10-K as filed with the SEC on March 11, 2008.

The Company’s fiscal quarters end on the Saturday nearest the end of the calendar quarter, which for the third quarters of the two most recent fiscal years were September 27, 2008 and September 29, 2007, respectively. For convenience, the Company has indicated that its third quarters ended on September 30. 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.

3. Recent Accounting Pronouncements

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations.” SFAS No. 141R establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. SFAS No. 141R also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. SFAS No. 141R is effective as of the beginning of an entity’s fiscal year that begins after December 15, 2008, and will be adopted by the Company on January 1, 2009. The Company does not believe that the adoption of SFAS No. 141R will have a material impact on its consolidated results of operations and financial condition.

4. Fair Value of Financial Instruments

The Company measures at fair value certain financial assets and liabilities, including cash equivalents, short term securities and long term securities. SFAS No. 157 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs have created the following fair-value hierarchy:

• Level 1—Quoted prices for identical instruments in active markets;

• Level 2—Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and

• Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

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	Fair Value Measurements as of September 30, 2008
	Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents—money market funds	$	78,220	$	78,220	$	—	$	—
Short-term—marketable securities		1,994		—		1,994		—
Long-term—marketable securities		15,678		2,525		13,153		—
Total	$	95,892	$	80,745	$	15,147	$	—

The investments classified as Level 2 were valued using quoted prices for identical instruments that are not observable in active markets. At September 30, 2008, the Company did not have any investments in auction-rate securities. The Company has deferred the adoption of SFAS No. 157 with respect to nonfinancial assets and liabilities in accordance with the provisions of FSP FAS 157-2, “Effective Date of FASB Statement No. 157.”

5. Business Combinations

Peak Devices, Inc

On August 31, 2007, the Company completed the acquisition of Peak Devices, Inc. (“Peak”), a privately-held, fabless semiconductor company focused on the fabrication of radio frequency discrete transistors, which is technology aligned with the Company’s current market focus. The Company paid $14,922 in cash on the closing date and as of September 30, 2008 the Company has paid an additional $183 of direct acquisition costs. No such charges were incurred during the nine months ended September 30, 2007. Of the $14,922, $1,500 is held in escrow for payment of claims and liabilities that may result from this acquisition. No amounts have been released from escrow. The escrow period expires on December 31, 2008. The Company is also obligated to pay earnout payments to the former shareholders of Peak based on 10% of the gross margin from sales of Peak technology- based products less a quarterly threshold over a five-year period from 2008 to 2012. These earnout amounts are not contingent on continued employment of the former shareholders. As of September 30, 2008, the Company has not incurred earnout charges.

The Company accounted for the Peak acquisition as a purchase in accordance with SFAS No. 141. Details of the purchase price were as follows:

Cash paid at closing	$	14,922
Acquisition costs		183
Total	$	15,105

The purchase price was allocated to Peak’s assets and liabilities based upon fair values as follows:

Cash	$	358
Accounts receivables and other assets		476
Inventory		1,494
Property, plant and equipment		174
In-process research and development		7,600
Intangible assets		5,000
Goodwill		1,533
Payables and other liabilities		(1,530	)
Total	$	15,105

The results of operations for the Peak business were included in the Company’s consolidated statements of operations for the 2007 period subsequent to the acquisition date as well as during the nine months ended September 30, 2008. Pro forma results of operations have not been presented for this acquisition because its effect was not material to the Company.

The intangible assets acquired are being amortized over a weighted average period of six years. The Company recorded an additional $165 of goodwill subsequent to the purchase date for the recognition of an assumed tax liability.

In-process research and development (“IPR&D”) represented Peak projects that had not reached technological feasibility and had no alternative future use when acquired but had been developed to a point where there was value associated with them in relation to potential future revenues. Using the income approach to value the IPR&D, the Company

7

determined that $7,600 of the purchase price represented purchased in-process technology. Because technological feasibility was not yet proven and no alternative future uses were believed to exist for the in-process technologies, the assigned value was expensed immediately into operating expenses upon the closing date of the acquisition.

The fair value underlying the $7,600 assigned to acquire IPR&D from the Peak acquisition was determined by identifying research projects in areas for which technological feasibility had not been established and there were no alternative future uses. The acquired IPR&D consisted of wide band transistor products and was approximately 75% complete as of September 30, 2008. This technology is being integrated into products expected to be completed in 2009. There has been no material change in the estimated cost of these projects.

The fair value of IPR&D was determined by an income approach where fair value is the present value of projected net free cash flows that will be generated by the products incorporating the acquired technologies under development, assuming they are successfully completed. The estimated net free cash flows generated by the products over a 10-year period was discounted at a rate of 40%, which reflected the stage of completion and the technical risks associated with achieving technological feasibility. Other factors considered were the inherent uncertainties in future revenue estimates from technology investments including the uncertainty surrounding the successful development of the IPR&D, the useful life of the technology and the profitability levels of the technology. The estimated net cash flows from these products were based on estimates of related revenues, cost of sales, R&D costs, SG&A costs, asset requirements and income taxes. The stages of completion of the products at the date of the acquisition were estimated based on the tasks required to develop the technology into a commercially viable product. The nature of the efforts to develop the in-process technology into commercially viable products principally related to the completion of all planning, designing, prototyping, verification and testing activities that are necessary to establish that the product can be produced to meet its design specification, including function, features and technical performance requirements. These estimates are subject to change, given the uncertainties of the development process, and no assurance can be given that deviations from these estimates will not occur or that the Company will realize any anticipated benefits of the acquisition. The risks associated with IPR&D are considered high and no assurance can be made that these products will generate any benefit or meet market expectations.

To the extent that estimated completion dates are not met, the risk of competitive product introduction is greater and revenue opportunity may be permanently lost.

WJ Communications, Inc

On May 22, 2008, the Company completed the acquisition of WJ Communications, Inc (“WJ”), a radio frequency (“RF”) semiconductor company that provides RF product solutions worldwide to communications equipment companies. The acquisition will enable the Company to combine RF power, switching and filtering in cost effective module solutions for base station and other infrastructure applications. The Company paid $71,957 in cash on the closing date, paid $622 of direct acquisition costs through the third quarter of 2008 and accrued an additional $33 for direct acquisition costs for 100% of the shares of WJ.

The Company accounted for the WJ acquisition as a purchase in accordance with SFAS No. 141, “Business Combinations.” Details of the purchase price are as follows:

Cash paid at closing	$	71,957
Acquisition costs		655
Total	$	72,612

The total purchase price was preliminarily allocated to WJ’s assets and liabilities based upon fair values as determined by the Company. Further adjustments to these estimates may be included in the final allocation of the purchase price of WJ, if the adjustment is determined within the purchase price allocation period (up to twelve months from the closing date).

Cash	$	10,839
Accounts receivables and other assets		7,472
Inventory		10,043
Property, plant and equipment		4,673
Intangible assets (Note 11)		31,000
In-process research and development		1,400
Goodwill (Note 11)		29,851
Payables and other liabilities		(22,666	)
Total	$	72,612

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The Company recognized goodwill of $29,851 which represents payment in excess of the fair values of WJ’s assets and liabilities because this acquisition will enable the Company to combine RF power, switching and filtering in cost effective module solutions for base station and other infrastructure applications. The acquisition leverages WJ’s radio frequency/ microwave design expertise with the Company’s technologies to expand the Company’s presence in the communications infrastructure market. The acquisition completes the Company’s RF front-end portfolio for cellular base stations, adds products which complement the Company’s current base station line-up, and provides the Company with a Silicon Valley based design center, which are key aspects of the Company’s networks strategy.

The results of operations for the WJ business are included in the Company’s consolidated statements of operations for the period from May 23, 2008 through September 30, 2008. The following unaudited pro forma consolidated information gives effect to the acquisition of WJ as if it had occurred on January 1, 2007 and 2008 by consolidating the results of operations of WJ with the results of operations of the Company for the nine months ended September 30, 2007 and 2008.

	Nine Months Ended September 30,
Proforma results of operations (unaudited)	2008	2007
Revenue	440,032	380,637
Net Income	11,981	(2,324	)
Basic EPS	0.08	(0.02	)
Diluted EPS	0.08	(0.02	)

The acquisition also resulted in the recognition of $1,400 of in process research and development costs which the Company has written off in operating expenses in the quarter ended June 30, 2008.

In-process research and development (“IPR&D”) represented projects from the WJ acquisition that had not reached technological feasibility and had no alternative future use when acquired but had been developed to a point where there was value associated with them in relation to potential future revenue. Using the income approach to value the IPR&D, the Company determined that $1,400 of the purchase price represented purchased in-process technology. Because technological feasibility was not yet proven and no alternative future uses were believed to exist for the in-process technologies, the assigned value was expensed immediately into operating expenses upon the closing date of the acquisition.

The fair value underlying the $1,400 assigned to acquire IPR&D from the WJ acquisition was determined by identifying research projects in areas for which technological feasibility had not been established and there were no alternative future uses. The acquired IPR&D consisted of small, signal, and power products and was approximately 50% complete as of September 30, 2008. This technology is being integrated into products expected to be completed in 2008 and 2009. There has been no material change in the estimated cost of these projects.

The fair value of IPR&D was determined by an income approach where fair value is the present value of projected net free cash flows that will be generated by the products incorporating the acquired technologies under development, assuming they are successfully completed. The estimated net free cash flows generated by the products over a 5 year period was discounted by a rate of 25%, which reflected the stage of completion and the technical risks associated with achieving technological feasibility. Other factors considered were the inherent uncertainties in future revenue estimates from technology investments, including the uncertainty surrounding the successful development of the IPR&D, the useful life of the technology and the profitability levels of the technology. The estimated net cash flows from these products were based on estimates of related revenues, cost of sales, R&D costs, SG&A costs, asset requirements and income taxes. The stage of completion of the products at the date of the acquisition was estimated based on the tasks required to develop the technology into a commercially viable product and the costs remaining to completion. The nature of the efforts to develop the in-process technology into commercially viable products principally related to the completion of all planning, designing, prototyping, verification and testing activities that are necessary to establish that the product can be produced to meet its design specification, including function, features and technical performance requirements. These estimates are subject to change, given the uncertainties of the development process, and no assurance can be given that deviations from these estimates will not occur or that we will realize any anticipated benefits of the acquisition. The risks associated with IPR&D are considered high and no assurance can be made that these products will generate any benefit or meet market expectations.

To the extent that estimated completion dates are not met, the risk of competitive product introduction is greater and revenue opportunity may be permanently lost.

9

In accordance with EITF 95-3 “Recognition of Liabilities in Connection with a Purchase Business Combination” the Company committed to a restructuring plan to consolidate facilities in San Jose and China and to reduce certain redundant positions in the WJ operations as a result of the acquisition. The consolidation of the facilities and the reduction of personnel is expected to be completed by the end of 2008. The plan to consolidate facilities includes partial abandonment of the San Jose facility and full abandonment of the China leases. The China and San Jose leases expire in 2009 and 2011, respectively. Payments related to this restructuring are expected to be complete by 2011.

The following table summarizes the charges taken as part of the restructuring plan:

	Personnel			Lease abandonment costs			Total
Beginning balance	$	3,859		$	11,148		$	15,007
Payments		(211	)		(185	)		(396	)
Balance at June 30, 2008		3,648			10,963			14,611
Payments		(1,170	)		(1,070	)		(2,240	)
Balance at September 30, 2008	$	2,478		$	9,893		$	12,371

The Company has estimated the fair value of the acquired identifiable intangible assets, which are subject to amortization, using the income approach. The following table sets forth the components of these intangible assets and their estimated useful lives.

	Fair value		Estimated useful life
Developed technology	$	22,800	7 years
Customer relationships	$	8,200	10 Years
In-process research and development	$	1,400	Expensed

6. 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 September 30,		Nine Months Ended September 30,
	2008	2007	2008	2007
Shares for basic net income per share:
Weighted-average shares outstanding—Basic	145,029	140,718	143,897	139,679
Dilutive securities	3,053	1,793	2,938	2,082
Weighted-average shares outstanding—Dilutive	148,082	142,511	146,835	141,761

For the three and nine months ended September 30, 2008, options and other exercisable convertible securities totaling 14,096 and 11,930 shares, respectively, were excluded from the calculation as their effect would have been antidilutive. For the three and nine months ended September 30, 2007, options and other exercisable convertible securities totaling 19,397 and 15,358 shares, respectively, were excluded from the calculation as their effect would have been antidilutive.

7. Comprehensive Income

The components of other comprehensive income were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2008		2007		2008			2007
Net income	$	11,843	$	1,878	$	19,687		$	9,625
Other comprehensive income:
Net unrealized gain on cash flow hedges		73		113		209			74
Net unrealized gain (loss) on available for sale investments		64		69		(25	)		479
Comprehensive income	$	11,980	$	2,060	$	19,871		$	10,178

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8. 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 as a separate component of stockholders’ equity and subsequently reclassified into earnings in the period during which the hedged transaction is recognized into earnings. For the three and nine months ended September 30, 2008, the Company reported foreign currency gains from re-measurement and hedging activity of $136 and $715, respectively, as compared to $78 and $273 for the three and nine months ended September 30, 2007, respectively.

As of September 30, 2008, the Company had no forward currency contracts outstanding. As of September 30, 2007, the Company had forward currency contracts outstanding $4,735.

9. Inventories

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

	September 30, 2008		December 31, 2007
Inventories:
Raw materials	$	32,547	$	15,561
Work-in-process		49,934		30,218
Finished goods		24,763		21,452
	$	107,244	$	67,231

10. Property, Plant and Equipment

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

	September 30, 2008			December 31, 2007
Land	$	15,668		$	19,691
Buildings		89,362			89,233
Leasehold improvements		5,867			5,029
Machinery and equipment		325,126			280,830
Furniture and fixtures		5,791			5,098
Computer equipment and software		33,085			29,876
Assets in process		54,203			28,310
		529,102			458,067
Accumulated depreciation		(273,496	)		(253,514	)
	$	255,606		$	204,553

For the three and nine months ended September 30, 2008, the Company incurred depreciation expense of $8,270 and $22,668, respectively. For the three and nine months ended September 30, 2007, the Company incurred depreciation expense of $6,983 and $21,942, respectively. As of September 30, 2008, the Company had $4,023 of land classified as available for sale.

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11. 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. Conditions that would trigger an impairment assessment, include, but are not limited to, a significant adverse change in legal factors or in the business climate that could affect the value of an asset or an adverse action or assessment by a regulator. The Company is considered one reporting unit. As a result, to determine whether or not goodwill may be impaired, the Company compares its book value to its market capitalization. If the trading price of the Company’s common stock is below the book value per share at the date of the annual impairment test or if the average trading price of the Company’s common stock is below book value per share for a sustained period, a goodwill impairment test will be performed by comparing book value to estimated market value. If the comparison of book value to estimated market value indicates impairment, then the Company compares the implied fair value of goodwill and other intangible assets to its carrying amount in a manner similar to a purchase price allocation for a business combination. If the carrying amount of goodwill and other intangible assets exceeds its implied fair value, an impairment loss is recognized equal to that excess.

The Company performs this test in the fourth quarter of each year, unless indicators warrant testing at an earlier date. During the three and nine months ended September 30, 2008 and 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)	September 30, 2008						December 31, 2007
		Gross		Accumulated Amortization		Net Book Value		Gross		Accumulated Amortization		Net Book Value
Non-Amortizing:
Goodwill		$	34,186	$	—	$	34,186	$	4,817	$	—	$	4,817
Amortizing:
Patents, trademarks and other	2 - 10		44,352		10,010		34,342		13,353		7,861		5,492
Total intangible assets		$	78,538	$	10,010	$	68,528	$	18,170	$	7,861	$	10,309

Amortization expense of amortizing intangible assets was $1,283 and $2,150 for the three and nine months ended September 30, 2008, respectively. During the three and nine months ended September 30, 2007, amortization expense of amortizing intangible assets was $153 and $292, respectively.

In May 2008, the Company paid $72,612 in cash to acquire WJ Communications’ stock, resulting in the allocation of $29,851 million to goodwill. For additional information regarding these acquisitions, see Note 5, Business Combinations.

12. Bank Line

On June 27, 2008, the Company and Bank of America, N.A. (the “Lender”) entered into a Credit Agreement dated as of June 27, 2008 (the “Agreement”). The Agreement provides the Company with a two-year unsecured revolving credit facility of $50,000.

Borrowings under the Agreement bears interest in two possible ways, at the election of the Company. The Company pays interest at an amount equal to the sum of a rate per annum calculated from the British Bankers Association LIBOR rate plus a designated percentage per annum (the “Applicable Rate.”) The Applicable Rate is based on the Company’s consolidated total leverage ratio (as defined in the Agreement) and is subject to a floor of 1.25% per annum and a cap of 1.75% per annum. Alternatively, the Company may pay interest at a rate equal to the higher of the federal funds rate plus ¹/2% and the prime rate of the Lender plus the Applicable Rate. The interest payment date (as defined in the Agreement) varies based on the type of loan but generally is either quarterly or a specified period of every one, two or three months.

The Agreement contains non-financial covenants including restrictions on the ability to create, incur or assume liens and indebtedness, make certain investments and dispositions, including payments of dividends or repurchases of stock, change the nature of the business, and merge with other entities. The Agreement requires the Company to maintain a consolidated total leverage ratio during any period of four fiscal quarters not in excess of 2.00:1.00 and a consolidated liquidity ratio (as defined in the Agreement) of at least 1.50:1.00.

Outstanding amounts are due in full on the maturity date of June 27, 2010, subject to a one-year extension at the Company’s option and with the Lender’s consent. Upon the occurrence of certain events of default specified in the Agreement, amounts due under the Agreement may be declared immediately due and payable. Including accrued interest, at September 30, 2008, the Company currently had $13,048 outstanding under the Agreement which was repaid in full on October 17, 2008.

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13. Stock-Based Compensation

Stock-based compensation expense recognized under SFAS No. 123(R) consisted of stock-based compensation expense related to unvested grants of employee stock options and the Company’s employee stock purchase plan. The table below summarizes the stock-based compensation expense for the three and nine months ended September 30, 2008 and 2007:

	Three Months Ended September 30				Nine Months Ended September 30,
	2008		2007		2008		2007
Stock-based compensation expense:
Cost of goods sold	$	1,163	$	731	$	3,248	$	2,090
Total in cost of goods sold		1,163		731		3,248		2,090
Research, development and engineering		821		421		1,910		997
Selling, general and administrative		1,243		1,190		3,247		3,095
Total in operating expenses		2,064		1,611		5,157		4,092
Total in income from operations	$	3,227	$	2,342	$	8,405	$	6,182

The following summarizes the Company’s stock option transactions for the nine months ended September 30, 2008:

	Nine months ended September 30, 2008
	Shares		Weighted-average exercise price
Outstanding at the beginning of the period	27,321		$	9.55
Granted	5,681			6.33
Exercised	(1,953	)		3.31
Forfeited	(1,015	)		8.70
Outstanding at the end of the period	30,034		$	9.37

14. Income Taxes

For the three and nine months ended September 30, 2008, the Company recorded net income tax expense from continuing operations of $1,060 and $1,753, respectively. The Company currently receives tax benefits due to a partial tax holiday associated with its Costa Rican operation. For the nine months ended September 30, 2008, the benefit was approximately $1,264.

In January 2008, the Company received a $63,000 dividend distribution from its Costa Rica subsidiary. Of the $63,000 dividend, the majority was from previously taxed income and the remainder is taxable in 2008, on which a deferred tax liability was established in the prior year. This distribution is expected to have no impact on the Company’s financial position or liquidity. No provision has been made for the U.S, state or additional foreign income taxes related to approximately $96,520 of undistributed earnings of foreign subsidiaries which have been, or are, intended to be permanently reinvested.

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 2002; state and local income tax examinations before 2002; and foreign income tax examinations before 2003.

The Company is not currently under Internal Revenue Service (IRS), states or foreign jurisdictional examinations.

In 2002, the Company determined that a valuation allowance should be recorded against all of the Company’s deferred tax assets based on the criteria of Statement of Financial Accounting Standards (“SFAS”) No. 109, Accounting for Income Taxes. The Company records a 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. WJ recorded, and the Company maintained, a valuation allowance against its deferred tax assets. The Company considers future taxable income and prudent and feasible tax planning strategies in determining the need for a valuation allowance and evaluates the need for a valuation allowance on a regular basis. At September 30, 2008, management determined that it is more likely than not that the deferred tax assets will not be realized.

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15. Commitments and Contingencies

Legal Matters

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 filed a consolidated complaint on or about May 25, 2007. On July 23, 2007, the Company and the individual defendants filed separate motions for the dismissal of all claims in each case with the District Court for the District of Oregon. On September 28, 2007, the plaintiffs filed a consolidated opposition to the motions for the dismissal of all claims in each case. On October 26, 2007, the Company and the individual defendants filed separate reply briefs in support of their motions for the dismissal of all claims in each case. On March 13, 2008, the Court granted motions for dismissal, but indicated that plaintiffs could amend their complaint to address the grounds on which the Court based the dismissal. On March 28, 2008, the plaintiffs filed an amended complaint pursuant to the Court’s ruling on the motions for dismissal. Defendants filed an answer to the amended complaint on September 29, 2008.

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 option granting practices on a voluntary basis. The Company has cooperated in both inquiries. On October 24, 2007, the San Francisco district office of the SEC sent the Company a letter indicating that the district office had terminated its investigation and is not recommending that the SEC take any enforcement action against the Company. The U.S. Attorney for the District of Oregon has also stated that it has terminated its inquiry.

Prior to filing the quarterly report on Form 10-Q for the quarter ended September 30, 2006, the Company conducted an extensive review of its option granting practices. Accordingly, the Company 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.

Environmental Remediation

Current operations are subject to federal, state and local laws and regulations governing the use, storage, disposal of and exposure to hazardous materials, the release of pollutants into the environment and the remediation of contamination.

The Company continues to be in compliance with the remedial action plans being monitored by various regulatory agencies at WJ’s former Palo Alto and Scotts Valley sites. The Company has entered into funded fixed price remediation contracts and obtained cost-overrun and unknown pollution conditions insurance coverage. The Company believes that it is remote that it would incur any significant liability beyond that which it has recorded. The Company does ultimately retain responsibility for these environmental liabilities in the unlikely event that the environmental remediation firm and the insurance company do not meet their obligations.

With respect to other former production facilities, to date either no contamination of significance has been identified or reported to the Company or the regulatory agency involved has granted closure with respect to the identified contamination. Nevertheless, the Company may face environmental liabilities related to these sites in the future.

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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, 2007. 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 and growth in the wireless handset, broadband, base station, aerospace, networks, networking and military markets; changes in our critical accounting estimates; the reasonableness of our estimates; the ability to enter into military contracts; the effects of our acquisition of WJ Communications, Inc. (“WJ”); our ability to meet our revenue guidance and penetrate our market; expected operating expenses, gross margins and per share earnings; transactions affecting liquidity; and expected capital expenditures. In some cases, you can identify forward-looking statements by terminology such as “believes,” “continue,” “could,” “estimates,” “expects,” “goal,” “hope,” “intends,” “may,” “our future success depends,” “plans,” “potential,” “predicts,” “projects,” “reasonably,” “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 Item 1A of Part II of this report entitled “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 do not guarantee future results, levels of activity, performance or achievements. Moreover, we do not intend 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 communications applications. Our focus is on the specialized expertise, materials and know-how of radio frequency (“RF”) and other high and intermediate frequency applications. We enjoy diversity in our markets, applications, products, technology and customer base. Our products are designed on various wafer substrates, including compound semiconductor materials such as gallium arsenide (“GaAs”), Gallium Nitride on Silicon Carbide (“GaN”), and piezoelectric crystals such as lithium tantalate (“LiTaO3”). We use a variety of process technologies using these substrates, including heterojunction bipolar transistors (“HBTs”) and pseudomorphic high electron mobility transistors (“pHEMTs”). We also manufacture surface acoustic wave (“SAW”) and bulk acoustic wave (“BAW”) products. Using 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. We believe that these advantages our products offer can be a tremendous benefit to our customers, which 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 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, low-cost solutions to applications in the handset, 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 handset market, we have also developed integrated RF modules with the goal of maximizing performance and minimizing costs, by offering complete module solutions with almost all subcomponents sourced from our own technologies and manufacturing facilities. In the 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 we 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 GaAs-derived technology. Subsequently, we have obtained additional funding from the Office of Naval Research to improve manufacturing methods of producing high-power, high-voltage S-band GaAs amplifiers.

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Wafer and semiconductor manufacturing facilities require a significant 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. However, demand has remained strong; equipment utilization in our Oregon factory has risen to the extent that we have decided to increase capital expenditures for equipment and increase the capacity of this factory in 2008. We have raised capacity through these capital investments to add GaAs fabrication capacity in our Oregon factory as well as filter capacity in Florida in 2008. Gross margins are also impacted by the price of platinum and gold which are used in the manufacturing process. We use the sputtering technique in which a “target” of the metal is loaded into the manufacturing equipment. The manufacturing process consumes approximately 20% of the target over several months. The remaining 80% of the base metal is reclaimed and sold. During the first half of 2008, precious metal prices rose steadily and then sharply declined during the three months ended September 30, 2008. Due to the timing of the purchases and the subsequent reclamation, we experienced an unfavorable reclaim price ratio because we purchased at high prices but sold the reclaimed target at lower prices, which negatively impacted gross margins. Assuming flat precious metal prices, gross margins are expected to continue trending modestly upward in the fourth quarter of 2008 due primarily to improved yields.

The market for handset RF components was strong in the third quarter of 2008. We experienced strong growth in third generation (“3G”) product revenues with an increase of 498% for the third quarter of 2008 compared to the third quarter of 2007. The 3G revenues growth was partially off-set by a decrease in the GSM/GPRS product revenues of 40% for the third quarter of 2008 compared to the third quarter of 2007. We believe the fundamental drivers of continued long-term growth in the handset market remain solid as the number of new users in developed countries grows and existing users are adopting 3G enabled handset that offer additional features and functionality as compared to a traditional 2G handset. These more sophisticated handsets, sometimes called Smartphones, which incorporate a variety of features consumers are finding attractive, especially when combined with wireless broadband access enabled by 3G technologies, is one of the fastest growing portions of our market. 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 for increased RF content required for the higher data rates and increased functionality of 3G handset devices has allowed average selling prices to stabilize. Our opportunity in a 3G phone, which is quad band capable in the enhanced data for GPRS/EDGE GSM evolution (“EDGE”) mode and supports 3 bands in the wideband code division multiple access (“WCDMA”) mode, is over $7.00 of content per unit. For example, our content for a low cost dual-band GSM/GPRS phone is approximately $1.20 per unit. Typical functional price erosion is 10-15% per year, offset by increasing content.

In our networks business, wireless local area networks (“WLAN”) product revenues increased 174% for the third quarter of 2008 compared to the third quarter of 2007. RF content for WLAN has increased the requirements for greater data rates and faster access. The market is also developing mobile devices that are taking on new forms, such as small laptop notebooks also referred to as “netbooks” and mobile internet devices (“MIDs”). These new forms, combined with traditional laptops and WLAN attachment to handsets, have created a significant growth opportunity. Additionally, the continued deployment of cellular systems in emerging markets such as India, Africa and in the rest of Asia has driven GSM/GPRS base station transceiver volumes to new record levels. We expect continued benefit in sales of our point-to-point radio products, largely resulting from build outs in developing countries and data demand increases in those areas of the world where wireless backhaul systems are prevalent.

Our networks market includes products that support the transfer of data at high rates across wireless or wired networks. Our products for this market include those related to base station, WLANs, worldwide interoperability for microwaved access (“WiMAX”), global positioning system (“GPS”), cable television, microwave radio, satellite, groundstation, and optical communications. We also support emerging wireless markets such as automotive and radio-frequency identification (“RFID”). We include our multi-market standard products in the networks category.

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, HTM4 airborne radar and Cobra Judy shipboard radar for detecting missile launches. In addition, in 2005 we entered into a multi-year contract with DARPA to develop high power, wide band amplifiers in GaN. From DARPA, we were awarded a $1.3 million program to optimize GaN technology for S-band. From the Office of Naval Research, we were awarded a $1.6 million

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program to develop 40V Gallium Arsenide High Power S-band Amplifiers and a $4.5 million contract to advance manufacturing methods in the production of GaAs technologies. We expect to continue to win government funding for advanced technologies in the future and we expect to participate in other large projects such as the B-2 radar upgrade, and hope to expand other programs in the future. In the nine months ended September 30, 2008, we launched a new family of GaN power amplifier products for the defense market. These products also have cross over application in our aerospace and networks markets.

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 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. 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 and debt in privately held companies, which impacts net income when we record impairments; valuation of deferred income tax assets and liabilities, which impacts our tax provision; and stock-based compensation, which impacts 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 handset, networks 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 handset distribution channels include our direct sales staff, manufacturers’ representatives and independent distributors. The majority of our shipments are made directly to our customers. Revenues from the sale of standard and customer-specific products are recognized when title to the product passes to the buyer.

We receive periodic reports from customers who utilize inventory hubs and recognize revenues when the customers acknowledge they have pulled inventory from our hub, which is the point at which title to the product passes 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 as costs are incurred.

Revenues from our distributors are recognized when the product is sold to the distributors. Our distributor agreements provide for selling prices that are fixed at the date of sale, although we 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; and we have no significant obligations for future performance to bring about resale. We can reasonably estimate the amount of future returns. Sales to our distributors were approximately 13% of our total revenues for the nine months ended September 30, 2008 and less than 8% during the same period in 2007. We allow our distributors to return products for warranty reasons and give them stock rotation rights, within certain limitations, and reserve for such instances. Customers that are not distributors 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.

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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 the lower of cost or market, we also evaluate it each period for excess quantities and obsolescence. We analyze forecasted demand versus quantities on hand and reserve for the excess.

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 changes or planned changes in our use of the assets, plant closure or production line discontinuance, technological obsolescence, significant negative industry or economic trends 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. 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. 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 impaired value. We review these investments periodically for impairment and make appropriate reductions in carrying value when an other-than-temporary decline 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 expectations, could result in additional other-than-temporary impairments in future periods.

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 by $2.3 million to reflect the current market rate for similar debt of comparable companies. CyOptics paid $1.1 million towards the promissory note for the nine months ended September 30, 2008 and $0.9 million for the nine months ended September 30, 2007. On October 9, 2007, we participated in an additional bridge financing where we purchased $0.5 million of a subordinated convertible promissory note from CyOptics which converted into preferred stock on July 24, 2008.

At September 30, 2008 and December 31, 2007, our investments in privately held companies consisted of our CyOptics preferred stock and unsecured promissory notes with carrying values of $6.1 million and $7.2 million, respectively.

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.

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

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We are not currently under Internal Revenue Service (IRS), states or foreign jurisdictional examinations.

In January 2008, we received a $63.0 million dividend distribution from the Costa Rica subsidiary. Of the $63.0 million dividend, the majority was from previously taxed income and the remainder taxable in 2008, on which a deferred tax liability was established in the prior year. This distribution is expected to have no impact on our financial position or liquidity. No provision has been made for the U.S, state or additional foreign income taxes related to approximately $96.5 million of undistributed earnings of foreign subsidiaries which have been, or are, intended to be permanently reinvested.

In 2002, we determined that a valuation allowance should be recorded against all of the Company’s 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. WJ recorded, and we maintained a valuation allowance against, its deferred tax assets. 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.

In assessing the realizability of our deferred tax assets, we considered the four sources of taxable income. Because we have no carryback ability and have not identified any viable tax planning strategies, two of the sources are not available. Reversing taxable temporary differences have been properly considered as the deferred tax liabilities reverse in the same period as existing deferred tax assets. However, reversing the deferred tax liabilities is insufficient to fully recover existing deferred tax assets. Therefore, future taxable income, the most subjective of the four sources, is the remaining source available for realization of our net deferred tax assets.

Significant operating losses in 2005 and prior years, modest earnings levels in recent years that are highly sensitive to changes in the business environment, instances of missed projections, the cyclical nature of our industry and the recent significant economic uncertainties in the market have been important in concluding that projected future taxable income is too uncertain to be used as justification for the realization of deferred tax assets. For example, in the second quarter of 2008, we recorded a pre-tax income that was below the earlier projections. Subsequently, a number of events have made forecasting taxable income even more difficult. The acquisition of WJ, with a prior history of pre-tax losses, created a risk that we would not be able to improve this performance or would fail to integrate it successfully into our operations. The substantial slow down in the world economy has also heightened the risk of a material reduction in business levels. Our customers and competitors have noted similar uncertainties regarding the performance of our industry. In addition, during the second and third quarters of 2008, we added significant capacity and fixed costs to respond to growths in demand, adding more risk to taxable income should sales decline. Finally, our third quarter 2008 earnings were negatively impacted by the unpredictable volatility in platinum pricing which resulted in higher costs that could not be passed on to customers.

During the fourth quarter of 2008, we expect to complete the integration of WJ into our operations. We also expect to complete our operating budget for 2009, late in the fourth quarter of 2008 or early in the first quarter of 2009. Completion of these two activities should clarify our understanding of future profitability expectations and may trigger a reversal of all or a portion of our valuation allowance. However, at the date of this report, we are unable to predict the timing of improvements in the world economy or a decline in volatility of precious metals prices which makes it difficult to accurately forecast taxable income. Seasonally weak first quarter of 2009 performance combined with significant market uncertainty may continue to result in the need for a valuation allowance.

Stock-Based Compensation

There were no significant changes to our stock-based compensation accounting estimates and assumptions in the three months ended September 30, 2008. Refer to our most recent Annual Report on Form 10-K for a complete description of our stock-based compensation accounting estimates and assumptions.

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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 and nine months ended September 30, 2008 and 2007:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2008		2007		2008		2007
Revenues	100.0	%	100.0	%	100.0	%	100.0	%
Cost of goods sold	68.6		67.8		66.8		70.0
Gross profit	31.4		32.2		33.2		30.0
Operating expenses:
Research, development and engineering	13.5		13.5		15.7		13.2
Selling, general and administrative	11.3		12.5		13.2		13.3
In-process research and development	—		6.2		0.3		2.2
(Gain) loss on disposal of equipment	(0.1	)	0.0		(0.1	)	0.0
Total operating expenses	24.7		32.2		29.1		28.7
Operating income	6.7		0.0		4.1		1.3
Other income (expense):
Interest income	0.3		1.8		0.9		2.2
Interest expense	(0.1	)	(0.0	)	(0.0	)	(0.5	)
Foreign currency gain	0.1		0.1		0.2		0.1
Other, net	(0.0	)	0.0		0.0		0.0
Total other income, net	0.3		1.9		1.1		1.8
Income before income tax	7.0		1.9		5.2		3.1
Income tax expense	0.6		0.4		0.4		0.3
Net Income	6.4		1.5		4.8		2.8

Three Months Ended September 30, 2008 and 2007

Our revenues increased $63.4 million, or 52%, to $186.3 million for the three months ended September 30, 2008 as compared to $122.9 million for the three months ended September 30, 2007. For the three months ended September 30, 2008, Foxconn accounted for more than 10% of our revenues. Our revenues by end market for the three months ended September 30, 2008 and 2007 were as follows:

(as a % of Total Revenues from Continuing Operations)	Three Months Ended September 30,
	2008		2007
Handsets	55	%	54	%
Networks	37		35
Military	8		11
Total	100	%	100	%

Handset

Revenues from handset market products for the three months ended September 30, 2008 increased approximately 54% as compared to the three months ended September 30, 2007. The increase in handset revenues was primarily due to increases in revenues from 3G products, which increased 498% over the third quarter of 2007. These products accounted for 61% of the handset revenues for the third quarter of 2008, as compared with the 16% of handset revenues for the third quarter of 2007.

The increase in 3G product revenues was partially offset by decreases in revenues from sales of our CDMA and GSM/GPRS products that, combined, accounted for 36% of handset revenues for the third quarter of 2008, as compared with 82% of handset revenues for the second third of 2007. Our 3G products have a higher average sales price than CDMA and GSM/GPRS products.

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Networks

Revenues from the networks market products, which include base station products, broadband products, and various standard products, increased approximately 59% for the third quarter of 2008 as compared to the third quarter of 2007. The increases in networks revenue was partially due to an increase in revenues from sales of our broadband products such as WLAN, optical, and cable products which grew 174%, 104% and 81%, respectively, for the third quarter of 2008 compared to the third quarter of 2007, respectively and increases in revenues from our 3G base station products products, such as WCDMA products. These revenue increases were partially offset by decreases in some of our 2G base station products such as GSM and CDMA products which decreased 25% and 53%, respectively, for the third quarter of 2008 as compared to the third quarter of 2007, respectively.

Military

Revenues from our military-related market products increased approximately 22% for the third quarter of 2008 as compared to the third quarter of 2007. The increase in military-related products revenues in the third quarter of 2008 compared to the third quarter of 2007 was primarily due to a 60% increase in revenues from radar products. The increase in radar revenues was partially offset by a decrease in revenues from research and development funding in the quarter. As a percentage of our total revenues, military-related products decreased to 8% of our total revenues for the third quarter of 2008 as compared to 11% for the third quarter of 2007.

Domestic and International Revenues

Revenues from domestic customers were approximately $33.5 million for the third quarter of 2008, compared to $48.5 million for the third quarter of 2007. Revenues from international customers were approximately $152.8 million for the third quarter of 2008, compared to $74.4 million for the third quarter of 2007. As a percentage of total revenues, revenues from international customers were 82% of revenues for the third quarter of 2008, as compared to 61% for the third quarter of 2007. Revenues from international customers remained high due to strong demand for handsets and networks products in Asia.

Gross Profit

Our gross profit margin as a percentage of revenues decreased to 31.4% for the third quarter of 2008, compared to 32.2% for the third quarter of 2007. The decrease in gross profit margin was primarily due to the unfavorable impact of purchasing precious metals targets at high prices and selling the reclaimed target at lower prices and lower than expected yields from new products, equipment, and personnel.

Operating expenses

Research, development and engineering

Our research, development and engineering expenses for the third quarter of 2008 increased $8.7 million, or 53%, to $25.2 million, or 13.5% of revenues, as compared to the third quarter of 2007. The increase was primarily due to an increase in headcount and a full quarter of WJ operations. As a percentage of revenues, research, development and engineering expenses remained flat at 13.5% of revenues for the third quarter of 2008.

Selling, general and administrative

Selling, general and administrative expenses for the third quarter of 2008 increased $5.8 million, or 38%, to $21.1 million, or 11% of revenues, as compared to the third quarter of 2007. Our selling, general and administrative expenses increased primarily as a result of an increase in commissions due to higher sales levels and increased labor costs from an increase in headcount. As a percentage of revenues, selling, general and administrative expenses fell to 11% of revenues for the third quarter of 2008, from 12% of revenues for the third quarter of 2007.

In-process research and development

In-process research and development costs of $7.6 million for the third quarter of 2007 resulted from the acquisition of Peak Devices, which was completed on August 31, 2007. No similar charges were incurred for the three months ended September 30, 2008.

Other income (expense), net

For the third quarter of 2008 we recorded net interest income of $0.5 million, a decrease of $1.8 million, as compared with $2.2 million recognized for the third quarter of 2007, as a result of a decrease in interest rates and cash balances.

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Income tax expense

For the third quarters of 2008 and 2007, we recorded a net income tax expense of $1.1 million and $0.5 million, respectively.

Nine Months Ended September 30, 2008 and 2007

Revenues increased $77.1 million, or 22%, to $424.4 million for the nine months ended September 30, 2008 as compared to $347.3 million for the nine months ended September 30, 2007. For the nine months ended September 30, 2008 Foxconn accounted for more than 10% of our revenues. Our revenues by end market for the nine months ended September 30, 2008 and 2007 were as follows:

(as a % of Total Revenues from Continuing Operations)	Nine Months Ended September 30,
	2008		2007
Handsets	52	%	54	%
Networks	38		35
Military	10		11
Total	100	%	100	%

Handsets

Revenues from the handset market products increased approximately 19% for the nine months ended September 30, 2008 as compared to the nine months ended September 30, 2007. Revenues from our 3G and WLAN products increased approximately 186% and 411%, respectively, for the nine months ended September 30, 2008 compared to the nine months ended September 30, 2007. These products combined accounted for 43% and 4% of handset revenues for the nine months ended September 30, 2008 and 2007, respectively.

The increases in 3G and WLAN product revenues were offset by decreases in revenues from sales of our CDMA and GSM/GPRS products of approximately 14% and 30%, respectively, for the nine months ended September 30, 2008 compared to the nine months ended September 30, 2007. The revenues from our CDMA and GSM/GPRS products comprised approximately 53% of total handset revenues for the nine months ended September 30, 2008 compared to 81% of total handset revenues for the nine months ended September 30, 2007.

Networks

Revenues from the networks market products increased approximately 36% for the nine months ended September 30, 2008 as compared to the nine months ended September 30, 2007. The increase was primarily due to increases of 129%, 71%, and 72% in revenues from sales of our broadband products such as WLAN, cable and optical broadband products, respectively, for the nine months ended September 30, 2008, compared to the nine months ended September 30, 2007 respectively. Revenues from our basestation products such as WCDMA and broadband wireless access (“BWA”) products increased 73% and 52%, respectively, for the nine months ended September 30, 2008 compared to the nine months ended September 30, 2007. These increases were partially offset by decreases in revenues from groundstation and GPS products of 22% and 26%, respectively.

Military

Revenues from our military-related market products increased approximately 13% for the nine months ended September 30, 2008 as compared to the nine months ended September 30, 2007. As a percentage of our total revenues, military-related products remained relatively flat at 10% and 11 % of our total revenues for the nine months ended September 30, 2008 and 2007, respectively. The increase in revenue for the nine months ended September 30, 2008 compared to the nine months ended September 30, 2007 was primarily due to a 64% increase in radar products revenue. The increases were partially offset by a decrease in revenues from research and development funding of approximately 62% for the nine months ended September 30, 2008 compared to the nine months ended September 30, 2007.

Domestic and International Revenues

Revenues from domestic customers were approximately $76.4 million for the nine months ended September 30, 2008, compared to approximately $140.7 million for the nine months ended September 30, 2007. Revenues from international customers were approximately $348.0 million for the nine months ended September 30 2008, compared to approximately $206.6 million for the nine months ended September 30, 2007. As a percentage of total revenues, revenues from international customers were 82% of revenues for the nine months ended September 30, 2008, as compared to 60% of revenues for the

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nine months ended September 30, 2007. Revenues from international customers continued to grow due to the increasing demand for wireless handsets and infrastructure products in developing regions, where wireless subscriber penetration rates are significantly lower than penetration rates in the U.S. and Western Europe.

Gross Profit

Our gross profit margin as a percentage of revenues increased to 33.2% for the nine months ended September 30, 2008, compared to 30.0% for the nine months ended September 30, 2007. The gross profit margin for the nine months ended September 30, 2007 included an excess inventory charge of $4.1 million. Gross profit margin for the nine months ended September 30, 2008 increased by a small percentage due to higher efficiency and utilization rates offset by an unfavorable impact of purchasing precious metals targets at high prices and selling the reclaimed target at lower prices.

Operating expenses

Research, development and engineering

Our research, development and engineering expenses for the nine months ended September 30, 2008 increased $20.9 million, or 46%, to $66.8 million, from $45.9 million for the nine months ended September 30, 2007. Research, development and engineering expenses increased primarily due to an increase in labor costs and purchases of technical supplies. As a percentage of total revenues, research, development and engineering expenses were 15.7% of revenues for the nine months ended September 30, 2008 and 13.2% of revenues for the nine months ended September 30, 2007.

Selling, general and administrative

Selling, general and administrative expenses for the nine months ended September 30, 2008 increased $10.1 million, or 22%, to $56.2 million from $46.1 million for the nine months ended September 30, 2007. Our selling, general and administrative expenses increased for the nine months ended September 30, 2008 primarily due to increased commissions, labor costs, and insurance costs. As a percentage of revenues, selling, general and administrative expenses were 13.2% for the nine months ended September 30, 2008 and 13.3% for the nine months ended September 30, 2007.

In-process research and development

In-process research and development costs of $1.4 million and $7.6 million for the nine months ended September 30, 2008 and 2007, respectively, resulted from the acquisition of Peak Devices, Inc., which was completed on August 31, 2007 and from the acquisition of WJ Communications, which was completed on May 22, 2008.

Other income (expense), net

For the nine months ended September 30, 2008, we recorded net interest income of $3.6 million, compared to $6.0 million for the nine months ended September 30, 2007. The decrease for the nine months ended September 30, 2008 was primarily a result of a decrease in interest income of $3.9 million due to a decrease in earned interest rates and cash balances partially offset by a decrease of $1.5 million in interest expense.

Income tax expense

For the nine months ended September 30, of 2008 and 2007, we recorded a net income tax expense of $1.8 million and $1.1 million, respectively.

Liquidity and Capital Resources

Liquidity

As of September 30, 2008, our cash, cash equivalents and marketable securities decreased $123.3 million, or 61%, to $80.2 million, from $203.5 million as of December 31, 2007. This decrease in cash, cash equivalents and marketable securities during the nine months ended September 30, 2008 was primarily due to the payment for purchase acquisition of WJ Communications for a purchase price of $61.7 million, net of cash acquired, the payment of capital expenditures in the amount of $70.9 million, and the purchase of $17.7 million of long term investments. The decrease in cash, cash equivalents and marketable securities was partially offset by cash inflows in financing activities of $25.3 million, largely due to the net borrowings on our lines of credit of $13.0 million.

At September 30, 2008, our net accounts receivable balance increased $40.8 million, or 56%, to $114.0 million, from $73.2 million at December 31, 2007. This increase was primarily due to higher Q3 revenue for the nine months ended September 30, 2008 and the timing of shipments. Days sales outstanding increased slightly from 52 days at December 31, 2007 to 58 days at September 30, 2008.

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At September 30, 2008, our net inventory balance increased $40.0 million, or 60%, to $107.2 million, compared to $67.2 million at December 31, 2007. This increase in inventory during the period was due to an increase in purchased material and built product in anticipation of strong second half of 2008 demand. Inventory turns, calculated using ending inventory, were 4.7 for the third quarter of 2008 compared to 4.2 for the second quarter of 2007.

At September 30, 2008, our net property, plant and equipment increased $51.1 million, or 25%, to $255.6 million, from $204.6 million at December 31, 2007. The increase was primarily due to capital expenditures of $70.9 million during 2008, partially offset by depreciation of $24.8 million. The capital expenditures made during the nine months ended September 30, 2008 were for the purpose of increasing the capacity at our Oregon facility and for equipment to support new products and technologies at our Texas and Oregon facilities.

At September 30, 2008, our accounts payable and accrued expenses increased $28.9 million, or 62%, to $75.5 million, compared to $46.6 million at December 31, 2007. The increase was consistent with the increase in inventory and capital expenditures.

Transactions Affecting Liquidity

On May 22, 2008, we completed the acquisition of WJ and paid $72.6 million on the closing date and acquired cash of $10.8 million.

On June 27, 2008, we entered into a Credit Agreement (the “Agreement”) with Bank of America, N.A. The Agreement provides for a two-year unsecured revolving credit facility of $50.0 million. We pay interest at an amount equal to the sum of the rate per annum calculated from the British Bankers Association LIBOR rate plus a designated percentage per annum Alternatively, we may pay interest at a rate equal to the higher of the federal funds rate plus ¹/2% and the prime rate of the lenders plus the applicable rate, as defined in the Agreement. The Agreement contains non-financial covenants and amounts are due in full on the maturity date of June 27, 2010, subject to a one-year extension. At September 30, 2008, $13.0 million was outstanding under the Agreement which was repaid in full on October 17, 2008.

Sources of Liquidity

Our current cash, cash equivalent and short-term investment balances, together with cash anticipated to be generated from 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 through the next 12 months. The principal risks to these sources of liquidity are lower than expected earnings or capital expenditures 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.

We currently expect capital expenditures of approximately $10.0 million for the fourth quarter of 2008.

There have been no material changes in the disclosure related to our contractual obligations contained in our Annual Report on Form 10-K for the year ended December 31, 2007.

Off Balance Sheet Arrangements

As of September 30, 2008, we did not have any off balance sheet arrangements as defined in Regulation S-K Item 303 (a)(4). We did not have any relationships with unconsolidated entities or financial partnerships such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As such, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

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 consist of highly rated, short term and long term investments, such as money market funds, in accordance with an investment policy approved by our Board of Directors. All of these investments are held at fair value. We do not hold or issue derivatives, derivative commodity instruments or other financial instruments for speculative trading purposes. In addition, at September 30, 2008, we did not have any investments in auction-rate securities. Further, we do not believe that our results of operations would be materially impacted by an immediate 10% change in interest rates.

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The following table shows the fair values of our investments as of September 30, 2008 (in millions):

	Cost		Fair Value
Cash and cash equivalents (including unrealized gain of less than $0.003)	$	78.2	$78.2
Available-for-sale investments (including net unrealized losses of $0.005)	$	2.0	$  2.0
Long term investments (including net unrealized gains of $0.027)	$	15.7	$15.7

Foreign Currency Risk

We are exposed to currency exchange rate fluctuations, because we sell our products internationally and have operations in Costa Rica and Germany. We manage the foreign currency risk 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 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 had primarily used 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 September 30, 2008 we had no forward currency exchange contracts outstanding.

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 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 filed a consolidated complaint on or about May 25, 2007. On July 23, 2007, the Company and the individual defendants filed separate motions for the dismissal of all claims in each case with the District Court for the District of Oregon. On September 28, 2007, plaintiffs filed a consolidated opposition to defendants’ motions for the dismissal of all claims in each case. On October 26, 2007, the Company and the individual defendants filed separate reply briefs in support of their motions for the dismissal of all claims in each case. On March 13, 2008, the Court granted the motions for dismissal, but indicated that plaintiffs could amend their complaint to address the grounds on which the Court based the dismissal. On March 28, 2008, the plaintiffs filed an amended complaint pursuant to the Court’s ruling on the motions for dismissal. Defendants filed an answer to the amended complaint on September 29, 2008.

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, it was contacted by the Office of the U.S. Attorney for the District of Oregon and asked to produce documents relating to its option granting practices on a voluntary basis. TriQuint has cooperated in both inquiries. On October 24, 2007, the San Francisco district office of the SEC sent TriQuint a letter indicating that the district office has terminated its investigation and is not recommending that the SEC take any enforcement action against the Company. The U.S. Attorney for the District of Oregon has also stated that it has terminated its inquiry.

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

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

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 the following:

• general economic conditions, including the possibility of a severe recession in the U.S. and a worldwide economic slowdown;

• recent disruptions to the global credit and financial markets;

• cancellation or delay of customer orders or shipments;

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

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• market acceptance of new/developing technologies that perform in a manner comparable to our products;

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

• variations in manufacturing capacity and yields, including additional costs or delays in increasing manufacturing capacity needed to support increasing customer demand;

• changes in the mix of products we sell;

• volatility in precious metal prices;

• variations in operating expenses;

• variations in product warranty claims;

• impairments of our assets;

• the long sales cycles associated with our products;

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

• variations in raw material availability, quality and costs;

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

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

• 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. We experienced rapid growth last quarter associated with design wins that represent significant opportunities compared to the size of our company. Unfavorable changes in these or other factors could cause our results of operations to materially suffer. Due to potential fluctuations, period-to-period comparisons of our results of operations are not necessarily indicative of our future performance.

Our business may be negatively impacted by the volatility and disruption of the capital and credit markets, and adverse changes in the global economy.

Current uncertainty in global economic conditions poses a risk to the overall economy as consumers and businesses may defer purchases in response to restricted access to credit and negative financial news, which could negatively affect product demand and other related matters. Consequently, demand could be different from our expectations due to factors including changes in business and economic conditions; conditions in the credit market that could affect consumer confidence; customer acceptance of our and our competitors’ products; changes in customer order patterns including order cancellations; and changes in the level of our customers’ inventory. Credit market conditions also may slow our collection efforts as customers experience increased difficulty in obtaining requisite financing, leading to higher than normal accounts receivable. This could result in greater expense associated with collection efforts and increased bad debt expense. In addition, credit conditions may impair our vendors’ ability to finance the portion of raw materials or general working capital needs to support our production requirements, resulting in a delay or non-delivery of inventory shipments.

Our ability to find investments that are both safe and liquid and that provide a reasonable return may be impaired. This could result in lower interest income, longer investment tenors and/or higher other-than-temporary impairments.

Our business may be adversely affected by our customers ability to access the capital markets.

Although we believe we have adequate liquidity and capital resources to fund our operations internally, in light of current market conditions, our inability or the inability of our customers to access the capital markets, on favorable terms or at all, may adversely affect our financial performance. The inability to obtain adequate financing from debt or capital sources could force us to self-fund strategic initiatives or even forgo certain opportunities, potentially harming our performance.

Additionally, the inability of our customers to access capital efficiently could cause disruptions in their businesses, thereby negatively impacting ours. For example, if our customers do not have sufficient liquidity, they could reduce or limit new purchases, which could result in lower demand for our products and/or we may be at risk for any trade credit we have extended to them, due to their inability to repay us. This risk may increase if there is a general economic downturn affecting significant customers or a large number of our other customers and they are not able to adequately manage their business risks or do not properly disclose their financial condition to us.

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New competitive products and technologies brought into the market could reduce demand for our current product offerings. Our business may be adversely affected 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 characterized by the following:

• intense competition;

• rapid technological change;

• cyclical demand; and

• short product life cycles.

We compete with U.S. and international semiconductor manufacturers including Skyworks, RF Micro Devices and Anadigics. Some of our competitors have significantly greater financial, technical, manufacturing and marketing resources than we do. We expect intensified competition from existing integrated circuit, SAW and BAW device suppliers, and from the entry of new competitors into our target markets. The operations of some companies producing products similar to ours for their internal requirements also contribute to a competitive environment.

Competition is primarily based on performance characteristics such as speed, complexity and power dissipation. Other principal competitive factors include:

• prices of competitors’ products;

• the timeliness of adoption of new technology;

• market acceptance of varying technologies;

• impact of new technologies on the demand for our existing products;

• product quality; and

• strategic customer relationships.

Competition from existing or potential competitors may increase due to a number of factors including the following:

• new or emerging technologies in integrated circuit design using alternative materials;

• 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;

• 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.

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 a given design. Additionally, compared to GaAs, manufacturers of high performance silicon integrated circuits have achieved greater market acceptance of their existing products and technologies in some applications. Further, we compete with both GaAs and silicon suppliers in all of our target markets. If we are unable to effectively compete in these markets, our results of operations may be adversely affected.

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.

Our future success will depend, in part, upon our ability to successfully develop and introduce new products based on emerging industry standards. We have and must continue to perform significant research and development into advanced material development such as GaN on silicon carbide 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

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technologies in a timely manner or effectively support industry standards. 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 operations could suffer.

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

From time to time, our 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. If the current market demand 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.

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

We typically have customers who generate more than 10% of our revenues for a given period. For the three and nine months ended September 30, 2008, Foxconn accounted for more than 10% of our revenues. We do not know 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.

We typically increase 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 price. A write-off of the inventory, or a reduction in the inventory value due to a sales price reduction, could have a material adverse effect on our financial condition and operating results. In the second quarter of 2007, we incurred $4.1 million in excess inventory charges primarily due to reduced demand for a single device from a specific customer. We could incur similar charges in the future, which would negatively affect our financial condition. Further, if we are unable to generate targeted operating cash flow projections, we may not satisfy market expectations, which could negatively affect 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, we do not assure you 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 must achieve yield improvements and other cost reductions for existing products and introduce 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, to remain competitive, we must offer devices which provide performance superior to silicon-based solutions. If we do not continue to identify markets that require performance superior to that offered by silicon solutions or if we do not continue to offer products that provide sufficiently superior performance to offset the cost differentials, our operating results could be adversely affected.

Our future success depends, in part, on our timely development and introduction of new products that compete effectively on the basis of price and performance and adequately address customer requirements. The success of new product and process introductions depends on several factors, including:

• proper selection of products and processes;

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

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• 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.

We may be unable to achieve expected yields on new products prior to experiencing average selling price pressure on them. If our cost reductions and new product introductions do not occur in a timely manner or do not achieve market acceptance, 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 our products, including customer-specific products, our operating results could 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 manufacture a substantial portion of our products to address the needs of individual customers. We base our expense levels in part on our expectations of future orders and these expense levels are predominantly fixed in the short-term. 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. 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, which could have an adverse effect on our results of operations.

In some areas of our business, particularly in handsets, we have customers who ship their completed products in very large unit volumes. If we are unable to support our customers when their production volume increases, we may be considered an undependable supplier and our customers may seek alternate suppliers for products that we may have anticipated producing over an extended period of time and in large quantities, which could adversely affect our results of operations. 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.

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

From time to time, 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

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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 and facilities 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.

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

For the nine months ended September 30, 2008 and 2007, we received a portion 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 to develop high power, wide band amplifiers in GaN and the F-22 Raptor and Joint Strike Fighter aircraft programs. These military programs are also subject to delays or cancellation. 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 affected by military operations such as the war in Iraq, as the government has allocated more funding to the war and less on new development and long-term programs, such as the ones in which we participate. Reductions in military funding or the loss of a significant military program or contract would have a material adverse effect on our operating results.

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 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, among other factors:

• 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; or

• wafer breakage.

In the past we have experienced lower than expected manufacturing yields, which have delayed product shipments and negatively affected our results of operations. We may experience similar difficulty in maintaining acceptable manufacturing yields in the future.

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.

The transfer of production of a product to a different facility often requires the qualification of the facility by certain customers. If such changes and transfers are not implemented on a cost-effective basis or cause delays or disruption in our production, our results of operations could be adversely affected. 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.

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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 assembly facilities in San Jose, Costa Rica and the Philippines. Hurricanes, tropical storms, flooding, tornadoes, and other natural disasters are common events for Florida, Asia 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 Colorado, California, Oregon and Texas. 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	13%	10%
Bend, Oregon	E, V	0%	1%
Boulder, Colorado	E, H	1%	0%
Dallas, Texas	H	39%	21%
Hillsboro, Oregon	E, V	26%	64%
San Jose, Costa Rica	E, V, H	13%	4%
San Jose, California	E	1%	4%
Laguna Technopark, Philippines	V, H,	1%	0%

E— Earthquake/mudslide

V— Volcanic eruption

H— Hurricane, tornado, typhoon, and/or flooding

* Figures are based on revenues for the nine months ended September 30, 2008 or net fixed assets as of September 30, 2008. Additionally, the sum may be greater than 100% due to shared risks between locations.

Any disruptions from these or other natural disasters would have a material adverse effect on our operations and financial results.

Our operating results could be harmed if we lose access to sole or limited sources of materials, equipment or services or if our third party providers are unable to fulfill our requirements.

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. We currently use subcontractors for the majority of our integrated circuit and module assemblies, as well as final product testing. Further, we expect our utilization of subcontractors to grow as module products become a larger portion of our product revenues. 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 sole or limited source vendors or subcontractors, we would be required to requalify each new vendor and subcontractor. Requalification, which can take up to 12 months, 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.

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. 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. 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. Our success in obtaining these products is critical to the overall success of our business. If our suppliers were unable to meet our delivery schedules or went out of business, we could have difficulty locating an alternative source, harming our business. In addition, our reliance on third-party vendors and subcontractors may negatively affect our production if the services vary in reliability or quality. If we are unable to obtain timely deliveries of our source materials in sufficient quantities and 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;

all of which could negatively affect our financial condition and results of operations.

If we fail to comply with environmental regulations we could be subject to substantial fines, we could be required to suspend production, alter manufacturing processes or cease operations.

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. The failure to comply with present or future regulations could result in our having to pay a fine, 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. Further, new environmental initiatives could affect the materials we currently use in production. 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 financial condition and results of operations.

Two former production facilities at Scotts Valley and Palo Alto from our acquisition of WJ Communications, have significant environmental liabilities for which we have entered into and funded fixed price remediation agreements and obtained cost-overrun and unknown pollution insurance coverage. We do not assure you that these arrangements will be sufficient to cover all liabilities related to these two sites.

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 Waste Electrical and Electronic Equipment Directive (WEEE) and the European Union Restriction of Hazardous Substances in Electrical and Electronic Equipment Directive (RoHS). 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. For example, RoHS requires that certain substances be removed from all electronic components. 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. Further, if we were found to be non-compliant with any rule or regulation, we could be subject to fines, penalties and/or restrictions imposed by government agencies that could 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 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.

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If we fail to manage our growth effectively or to integrate WJ Communications and any future acquisitions, or if we unsuccessfully invest in privately held companies, our business could be harmed.

On an ongoing basis, we review acquisition and investment opportunities that would strengthen our product line, expand market presence and complement our technologies. We face risks from our recent and any future acquisitions or investments, including the following:

• we may fail to retain the key employees or successfully integrate personnel of newly acquired companies required to make the operation successful;

• we may experience difficulties integrating our financial and operating systems and maintaining effective internal control 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 and operations, particularly our manufacturing yields, may be disrupted or receive insufficient management attention;

• we may not cost-effectively and rapidly incorporate the technologies we acquire or recognize the cost savings or other financial benefits we anticipated;

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

• we may not be able to meet the demands of and/or retain the existing customers of newly acquired operations;

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

• we may incur unknown liabilities associated with acquired businesses.

We 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.

WJ had identified a material weakness in its internal control over financial reporting as of December 31, 2007 that consisted of not maintaining a sufficient number of qualified resources with the required proficiency to apply their accounting policies in accordance with generally accepted accounting principles of the United States of America. While we do not anticipate this material weakness will affect the effectiveness of our internal control over financial reporting, no assurance can be made that this material weakness or other issues related to WJ’s internal control over financial reporting will not have an adverse effect on the effectiveness of our internal control over financial reporting. We are still assessing WJ’s procedures and controls and may make additional changes in those controls in the future. 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.

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

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

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

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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.

In the future, we may need to engage in legal actions to enforce our intellectual property rights, which could require the spending of a significant amount of resources and the attention and efforts of our management and technical personnel. We may initiate claims or litigation against third parties for infringement of our proprietary rights or to establish the validity of our proprietary rights. 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 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. We have in the past paid substantial legal fees in defending ourselves against patent infringement claims and may be required to do so again in future claims. 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.

We may be subject to other lawsuits and claims relating to our products.

We cannot be sure that third parties will not assert product liability or other claims against us, our customers or our licensors with respect to existing and future products. Any litigation to determine the validity of any third party’s claims could result in significant expense and liability to us and divert the efforts of our technical and management personnel, whether or not the litigation is determined in our favor or covered by insurance.

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 our operations and employees located outside of the U.S.

Our sales outside of the United States for the nine months ended September 30, 2008 and 2007 were 82% and 60% of total revenues, respectively. A number of our employees and operations are located in countries other than the United States. We also employ contractors in other countries to perform certain packaging and test operations for us. The laws and operating conditions of these countries may differ substantially from that of the U.S. As a result of having a significant amount of sales outside of the United States, we face inherent risks from these operations, including but not limited to:

• imposition of restrictive government actions, including controls, expropriations and interventions;

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• 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 laws;

• difficulty obtaining distribution and support;

• political instability;

• tariffs and other trade barriers;

• labor shortages and disputes;

• financial institution failure;

• widespread illness, acts of terrorism or war;

• disruption of production processes;

• power interruptions;

• interruption of freight channels and delivery schedules; and

• fraud.

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 United States. 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.

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 operation 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 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.

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 50% exemption from Costa Rican income taxes

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through November 2009. 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. For the nine months ended September 30, 2008, the 50% tax exemption reduced our income tax expense by $1.3 million.

In addition, the U.S. Internal Revenue Service and several foreign tax authorities could assert additional taxes associated with our foreign subsidiaries activities.

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. Such litigation has occurred in the past and could occur again in the future. In 2007, two purported derivative actions filed in the United States District Court for the District of Oregon were consolidated. The plaintiffs alleged that certain of our officers and directors 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. We have filed motions for the dismissal of all claims. The plaintiffs have filed an amendment of their complaint. While no action has yet been taken by the Court, our management has spent time defending the claims of the current derivative suit. We also 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 $7.04 to a low of $4.40 for the 52 weeks ended September 30, 2008. 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.

Our indebtedness could materially adversely affect our financial health, limit our ability to finance future acquisitions and capital expenditures, and prevent us from fulfilling our financial obligations.

Our line of credit contains numerous covenants that restrict our ability to create, incur or assume liens and indebtedness, make certain investments and dispositions, change the nature of the business, and merge with other entities. Other covenants are financial in nature, including leverage and liquidity ratios. A breach of any of these covenants could result in a default under the applicable agreement or indenture. If a default were to occur, we may not be able to pay our debts or borrow sufficient funds to refinance them. Even if new financing were available, it may not be on terms acceptable to us. As a result of this risk, we could be forced to take actions that we otherwise would not take, or not take actions that we otherwise might take, in order to comply with the covenants in these agreements and indentures.

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 the provisions of Delaware General Corporate 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. Our certificate of incorporation and amended and restated bylaws include provisions such as:

• 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. In addition, Delaware General Corporate 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.

Item 6. Exhibits

4	Amended and Restated Rights Agreement, dated as of June 23, 2008, between TriQuint Semiconductor, Inc. and Mellon Investor Services LLC, as Rights Agent (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on June 24, 2008).
10.1	Agreement and Plan of Merger between TriQuint Semiconductor Inc, ML Acquisition, Inc and WJ Communications, Inc. dated as of March 9, 2008 (incorporated by reference to Exhibit 10.57 to the Company’s Annual Report on Form 10-K filed on March 11, 2008).
10.2	Employment Agreement dated as of May 30, 2008 by and between TriQuint Semiconductor, Inc. and Steven R. Grant (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 26, 2008).
10.3	Credit Agreement, dated June 27, 2008 by and between TriQuint Semiconductor, Inc and Bank of America, N.A. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 1, 2008).
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: November 6, 2008	By:	/s/    RALPH G. QUINSEY
		Ralph G. Quinsey President and Chief Executive Officer
Dated: November 6, 2008	By:	/s/    STEVE BUHALY
		Steve Buhaly Vice President of Finance, Secretary and Chief Financial Officer

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INDEX TO EXHIBITS

4	Amended and Restated Rights Agreement, dated as of June 23, 2008, between TriQuint Semiconductor, Inc. and Mellon Investor Services LLC, as Rights Agent (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on June 24, 2008).
10.1	Agreement and Plan of Merger between TriQuint Semiconductor Inc, ML Acquisition, Inc and WJ Communications, Inc. dated as of March 9, 2008 (incorporated by reference to Exhibit 10.57 to the Company’s Annual Report on Form 10-K filed on March 11, 2008).
10.2	Employment Agreement dated as of May 30, 2008 by and between TriQuint Semiconductor, Inc. and Steven R. Grant (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 26, 2008).
10.3	Credit Agreement, dated June 27, 2008 by and between TriQuint Semiconductor, Inc and Bank of America, N.A. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 1, 2008).
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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