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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

------------------------

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
of
THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTER ENDED SEPTEMBER 30, 2000
COMMISSION FILE NUMBER 0-22660

------------------------

TRIQUINT SEMICONDUCTOR, INC.
(Registrant)

Incorporated in the State of Delaware
I.R.S. Employer Identification Number 95-3654013
2300 NE Brookwood Parkway, Hillsboro, OR 97124
Telephone: (503) 615-9000

------------------------

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 / /

As of September 30, 2000, there were 78,487,096 shares of the registrant's
common stock outstanding.

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TRIQUINT SEMICONDUCTOR, INC.
INDEX

PAGE
NO.
--------

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Statements of Operations--Three
months and nine months ended September 30, 2000 and 1999.... 3

Condensed Consolidated Balance Sheets--September 30, 2000
and December 31, 1999....................................... 4

Condensed Consolidated Statements of Cash Flows--Nine months
ended September 30, 2000 and 1999........................... 5

Notes to Condensed Consolidated Financial Statements........ 6

Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 11

Item 3. Qualitative and Quantitative Disclosures about Market and
Interest Rate Risk.......................................... 28

PART II. OTHER INFORMATION

Item 1. Legal Proceedings........................................... 28

Item 2. Changes in Securities....................................... 28

Item 6. Exhibits and Reports on Form 8-K............................ 28

SIGNATURES............................................................. 29

PART I--FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS

TRIQUINT SEMICONDUCTOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)

THREE MONTHS ENDED NINE MONTHS ENDED
----------------------------- -----------------------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2000 1999 2000 1999
------------- ------------- ------------- -------------

Total revenues............................ $80,623 $42,483 $210,495 $114,287

Operating costs and expenses:
Cost of goods sold...................... 35,850 24,384 101,213 68,138
Research, development and engineering... 7,747 5,475 22,230 15,482
Selling, general and administrative..... 8,530 5,985 23,866 16,934
------- ------- -------- --------
Total operating costs and expenses.... 52,127 35,844 147,309 100,554
------- ------- -------- --------
Income from operations................ 28,496 6,639 63,186 13,733
------- ------- -------- --------

Other income (expense):
Interest income......................... 9,089 2,509 23,624 4,135
Interest expense........................ (3,978) (256) (9,696) (839)
Other, net.............................. (9) 3 103 60
------- ------- -------- --------
Total other income, net............... 5,102 2,256 14,031 3,356
------- ------- -------- --------
Income before income taxes............ 33,598 8,895 77,217 17,089
Income tax expense........................ 12,599 1,690 28,957 2,344
------- ------- -------- --------
Net income............................ $20,999 $ 7,205 $ 48,260 $ 14,745
======= ======= ======== ========

Per share data:
Basic................................... $ 0.27 $ 0.10 $ 0.62 $ 0.24
======= ======= ======== ========
Weighted average common shares.......... 78,265 71,100 77,233 62,012
======= ======= ======== ========
Diluted................................. $ 0.24 $ 0.09 $ 0.55 $ 0.21
======= ======= ======== ========
Weighted average common and common
equivalent shares..................... 88,292 80,692 87,861 70,088
======= ======= ======== ========

See notes to Condensed Consolidated Financial Statements.

TRIQUINT SEMICONDUCTOR, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)
(UNAUDITED)

SEPTEMBER 30, DECEMBER 31,
2000 1999(1)
------------- ------------

ASSETS
Current assets:
Cash and cash equivalents................................. $152,889 $ 76,873
Investments............................................... 295,171 116,465
Accounts receivable, net.................................. 44,933 26,909
Inventories, net.......................................... 28,728 24,676
Prepaid expenses and other assets......................... 12,543 6,016
-------- --------
Total current assets.................................... 534,264 250,939
-------- --------
Property, plant and equipment, net.......................... 84,210 38,657
Restricted long-term assets................................. 54,710 40,163
Other noncurrent assets, net................................ 107,461 10,182
-------- --------
Total assets............................................ $780,645 $339,941
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of capital lease and installment note
obligations............................................. $ 2,761 $ 4,320
Accounts payable and accrued expenses..................... 43,285 28,922
-------- --------
Total current liabilities............................... 46,046 33,242
Long-term debt, less current installments................... 347,906 4,783
-------- --------
Total liabilities....................................... 393,952 38,025
-------- --------
Stockholders' equity:
Common stock.............................................. 339,451 302,937
Retained earnings (accumulated deficit)................... 47,242 (1,021)
-------- --------
Total stockholders' equity.............................. 386,693 301,916
-------- --------
Total liabilities and stockholders' equity.............. $780,645 $339,941
======== ========

- ------------------------

(1) The information in this column was derived from the Company's audited
financial statements as of December 31, 1999.

See notes to Consolidated Condensed Financial Statements.

TRIQUINT SEMICONDUCTOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)
(UNAUDITED)

NINE MONTHS ENDED
-----------------------------
SEPTEMBER 30, SEPTEMBER 30,
2000 1999
------------- -------------

Cash flows from operating activities:
Net income................................................ $ 48,260 $ 14,745
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization........................... 7,534 5,444
Deferred income taxes................................... 0 2,000
Income tax benefit of stock option exercises............ 28,957 0
Gain on disposal of assets.............................. (42) (9)
Change in assets and liabilities:
Accounts receivable................................... (18,024) (6,879)
Inventories........................................... (4,051) (3,756)
Prepaid expense and other assets...................... (6,539) 119
Accounts payable and accrued expenses................. 14,497 3,840
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES............... 70,592 15,504

Cash flows from investing activities:
Purchase of investments................................... (785,964) (240,539)
Sale/Maturity of investments.............................. 607,259 159,440
Capital expenditures...................................... (51,967) (4,230)
Proceeds from sale of assets.............................. 41 39
Increase in restricted long-term assets................... (14,547) 0
Purchase of long-term investments......................... (87,308) 0
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES................... (332,486) (85,290)

Cash flows from financing activities:
Principal payments under capital lease obligations........ (3,436) (3,821)
Proceeds from debt........................................ 345,000 0
Debt issuance costs....................................... (11,080) 0
Issuance of common stock, net............................. 7,426 150,044
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES............... 337,910 146,223

NET INCREASE IN CASH AND CASH EQUIVALENTS............... 76,016 76,437

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD.... 76,873 14,602
--------- ---------

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD.......... $ 152,889 $ 91,039
========= =========

See notes to Condensed Consolidated Financial Statements.

TRIQUINT SEMICONDUCTOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)

1. BASIS OF PRESENTATION

The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles. However, certain
information or footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed, or omitted, pursuant to the rules and regulations of the Securities
and Exchange Commission. In the opinion of management, the statements include
all adjustments necessary (which are of a normal and recurring nature) for the
fair presentation of the results of the interim periods presented. These
consolidated financial statements should be read in conjunction with the
Company's audited financial statements for the year ended December 31, 1999, as
included in the Company's 1999 Annual Report on Form 10-K.

The Company's quarters end on the Saturday nearest the end of the calendar
quarter. For convenience, the Company has indicated that its third quarter ended
on September 30. The Company's fiscal year ends on December 31.

2. STOCK ACTIVITY AND NET INCOME PER SHARE

On May 11, 2000, the Board of Directors approved a two-for-one forward stock
split of the outstanding common shares that was effected in the form of a stock
dividend paid on July 11, 2000 to stockholders of record as of June 19, 2000. On
December 2, 1999, the Board of Directors approved a two-for-one forward stock
split of the outstanding common shares that was effected in the form of a stock
dividend paid on February 22, 2000 to stockholders of record as of February 1,
2000. On June 10, 1999, the Board of Directors approved a three-for-two forward
stock split of the outstanding common shares that was effected in the form of a
stock dividend paid on July 2, 1999 to stockholders of record as of June 22,
1999. Common share and per share data for all periods presented in the
accompanying financial statements have been adjusted to give effect to these
stock splits effected in the form of stock dividends.

At a special meeting of stockholders on January 31, 2000, the Company's
stockholders approved an increase in the number of authorized shares of common
stock to 200.0 million shares. The increase was effected on February 1, 2000.

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

TRIQUINT SEMICONDUCTOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)

2. STOCK ACTIVITY AND NET INCOME PER SHARE (CONTINUED)
The following is a reconciliation of the basic and diluted earnings per
share (in thousands, except per share amounts):

THREE MONTHS ENDED
SEPTEMBER 30, 2000
-------------------------------
PER SHARE
INCOME SHARES AMOUNT
-------- -------- ---------

Basic earnings per share:
Income available to shareholders.......................... $20,999 78,265 $0.27
=====
Effect of dilutive securities:
Stock options............................................. -- 10,027
------- ------
Diluted earnings per share:
Income available to shareholders.......................... $20,999 88,292 $0.24
======= ====== =====

NINE MONTHS ENDED
SEPTEMBER 30, 2000
-------------------------------
PER SHARE
INCOME SHARES AMOUNT
-------- -------- ---------

Basic earnings per share:
Income available to shareholders.......................... $48,260 77,233 $0.62
=====
Effect of dilutive securities:
Stock options............................................. -- 10,628
------- ------
Diluted earnings per share:
Income available to shareholders.......................... $48,260 87,861 $0.55
======= ====== =====

THREE MONTHS ENDED
SEPTEMBER 30, 1999
-------------------------------
PER SHARE
INCOME SHARES AMOUNT
-------- -------- ---------

Basic earnings per share:
Income available to shareholders.......................... $ 7,205 71,100 $0.10
=====
Effect of dilutive securities:
Stock options............................................. -- 9,592
------- ------
Diluted earnings per share:
Income available to shareholders.......................... $ 7,205 80,692 $0.09
======= ====== =====

NINE MONTHS ENDED
SEPTEMBER 30, 1999
-------------------------------
PER SHARE
INCOME SHARES AMOUNT
-------- -------- ---------

Basic earnings per share:
Income available to shareholders.......................... $14,745 62,012 $0.24
=====
Effect of dilutive securities:
Stock options............................................. -- 8,076
------- ------
Diluted earnings per share:
Income available to shareholders.......................... $14,745 70,088 $0.21
======= ====== =====

TRIQUINT SEMICONDUCTOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)

2. STOCK ACTIVITY AND NET INCOME PER SHARE (CONTINUED)
The dilutive effect of common equivalent shares outstanding totaling
approximately 440,000 and 217,000 shares for the three months and nine months
ended September 30, 2000, respectively, and 8,000 and 72,000 shares for the
three months and nine months ended September 30, 1999, respectively, were not
included in the net income per share calculations, because to do so would have
been antidilutive.

3. RESEARCH AND DEVELOPMENT COSTS

The Company charges research and development costs associated with the
development of new products to expense when incurred. Engineering and design
costs related to revenues on nonrecurring engineering services billed to
customers are classified as cost of goods sold.

4. INCOME TAXES

The Company accounts for income taxes under the asset and liability method.
Under the asset and liability method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date. Valuation allowances are established
when necessary to reduce deferred tax assets to the amounts expected to be
realized.

The provision for income taxes has been recorded based on the current
estimate of the Company's annual effective tax rate. This rate differs from the
federal statutory rate primarily because of the utilization of net operating
loss carryforwards and other permanent items including tax credits.

5. INVESTMENTS

The Company classifies its restricted and unrestricted investments into
available-for-sale and held-to-maturity in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." Both categories are comprised of
short and medium-term corporate notes, commercial paper and market auction
preferred stock. As of September 30, 2000, available-for-sale investments
totaled $164.3 million and held-to-maturity investments totaled $130.9 million.
The carrying value of both types of securities approximates fair value at
September 30, 2000 and December 31, 1999.

6. INVENTORIES

Inventories are stated at the lower of cost or market and consist of (in
thousands):

SEPTEMBER 30, DECEMBER 31,
2000 1999
-------------- -------------

Raw Material................................................ $ 6,142 $ 4,425
Work in Progress............................................ 19,625 16,078
Finished Goods.............................................. 2,961 4,173
------- -------
Total Inventories, net.................................... $28,728 $24,676
======= =======

TRIQUINT SEMICONDUCTOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)

7. DEBT

In February and March 2000, the Company completed the sale of
$345.0 million aggregate principal amount of 4% convertible subordinated notes
due 2007, raising approximately $333.9 million net of fees and expenses. The
notes are unsecured obligations, convertible into TriQuint Common Stock at an
initial conversion price of $67.80 per share and subordinated to all of the
Company's present and future senior indebtedness.

8. STOCKHOLDERS' EQUITY

Components of stockholders' equity (in thousands, except per share amounts):

SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- -------------

Preferred stock, $.001 par value, 5,000 shares authorized... -- --
Common stock, $.001 par value, 200,000 shares authorized,
78,129 and 75,688 outstanding, respectively............... 79 76
Additional paid-in capital.................................. 339,372 302,861

9. SUPPLEMENTAL CASH FLOW INFORMATION

NINE MONTHS ENDED
-----------------------------
SEPTEMBER 30, SEPTEMBER 30,
2000 1999
------------- -------------

Cash Transactions:
Cash paid for interest.................................... $7,657 $836
Cash paid for income taxes................................ 1 344

10. COMPREHENSIVE INCOME

The Company has adopted SFAS No. 130, "Reporting Comprehensive Income."
There is no difference between net income and comprehensive income.

11. SEGMENT INFORMATION

The Company has adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." The Company has concluded that it has only
one reportable segment.

12. RECENT ACCOUNTING PRONOUNCEMENT

In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities," as amended, establishing
accounting and reporting standards for derivative instruments and hedging
activities requiring that all derivatives be recognized in the balance sheet and
measured at its fair value. SFAS No. 133, as amended by SFAS No. 137, is
effective for fiscal years beginning after June 15, 2000. We are evaluating any
possible effect SFAS No. 133 may have on our consolidated financial statements.

TRIQUINT SEMICONDUCTOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)

12. RECENT ACCOUNTING PRONOUNCEMENT (CONTINUED)
to new awards, exchanges of awards in a business combination, modifications to
outstanding awards, and changes in grantee status that occur on or after
July 1, 2000, except for the provisions related to repricings and the definition
of an employee, which apply to awards issued after December 15, 1998. The
provisions related to modifications to fixed stock option awards to add a reload
feature are effective for awards modified after January 12, 2000. We adopted the
provisions of FIN 44 as of the required effective dates, and this adoption has
not had a material impact on our consolidated financial statements.

In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB
101"). SAB 101 summarizes certain areas of the Staff's views in applying
generally accepted accounting principles to revenue recognition in financial
statements. In June 2000, SAB 101B was issued which defers the implementation
date of SAB 101 until October 1, 2000. We do not expect the adoption of SAB 101
will have a material impact on our financial statements.

13. LITIGATION

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

14. COMMITMENTS

On September 11, 2000, the Company announced that it had begun the expansion
of its engineering and administration building in Hillsboro, Oregon. The
expansion will add 65,000 square feet to the existing building for marketing,
engineering and light manufacturing activities. The expansion cost will be
approximately $7.5 million. Completion is expected in February 2001.

15. LEASE

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 FINANCIAL STATEMENTS AND THE RELATED NOTES THERETO INCLUDED IN THIS REPORT
ON FORM 10-Q. 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 OPERATING RESULTS, INVESTMENTS IN NEW FACILITIES, SALES TO A LIMITED
NUMBER OF CUSTOMERS, GROWTH AND DIVERSIFICATION OF OUR MARKETS, STARTUP OF NEW
FACILITIES, AND TRANSITION OF MANUFACTURING PROCESSES FROM FOUR-INCH TO SIX-INCH
WAFERS. THESE FORWARD-LOOKING STATEMENTS INCLUDE, AMONG OTHERS, THOSE STATEMENTS
INCLUDING THE WORDS "EXPECTS," "ANTICIPATES," "INTENDS," "BELIEVES," "PLANS" AND
SIMILAR LANGUAGE. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
DISCUSSED BELOW. IN ADDITION, HISTORICAL INFORMATION SHOULD NOT BE CONSIDERED AN
INDICATOR OF FUTURE PERFORMANCE. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO THESE
DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THE RISKS DISCUSSED IN THE SECTION
TITLED "FACTORS AFFECTING FUTURE OPERATING RESULTS" BELOW.

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

RESULTS OF OPERATIONS

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

Total revenues................................. 100.0% 100.0% 100.0% 100.0%
Operating costs and expenses:
Cost of goods sold........................... 44.5 57.4 48.1 59.6
Research, development and engineering........ 9.6 12.9 10.6 13.6
Selling, general and administrative.......... 10.6 14.1 11.3 14.8
----- ----- ----- -----
Total operating costs and expenses......... 64.7 84.4 70.0 88.0
===== ===== ===== =====
Income from operations......................... 35.3 15.6 30.0 12.0
Other income, net.............................. 6.3 5.3 6.7 2.9
----- ----- ----- -----
Income before income taxes................... 41.6 20.9 36.7 14.9
Income tax expense............................. 15.6 4.0 13.8 2.0
----- ----- ----- -----
Net income..................................... 26.0% 16.9% 22.9% 12.9%
===== ===== ===== =====

TOTAL REVENUES

We derive revenues from the sale of standard and customer-specific products
and services. Our revenues also include nonrecurring engineering revenues
relating to the development of customer-specific products. Total revenues for
the three and nine months ended September 30, 2000 increased 89.8% and 84.2%,
respectively, to $80.6 million and $210.5 million from $42.5 million and
$114.3 million, respectively, for the three and nine months ended September 30,
1999. The increase in total revenues during the three

and nine months ended September 30, 2000 reflected increased demand for our
products across all product lines and markets. Domestic revenues for the three
and nine months ended September 30, 2000 increased to $46.2 and $113.8 million,
respectively, from $24.7 and $76.8 million, respectively, for the three and nine
months ended September 30, 1999. International revenues for the three and nine
months ended September 30, 2000 increased to $34.4 and $96.7 million,
respectively, from $17.8 and $37.5 million, respectively, for the three and nine
months ended September 30, 1999.

COST OF GOODS SOLD

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

Cost of goods sold increased to $35.9 million for the three months ended
September 30, 2000 from $24.4 million for the three months ended September 30,
1999. Cost of goods sold increased to $101.2 million for the nine months ended
September 30, 2000, from $68.1 million for the nine months ended September 30,
1999. The increase in absolute dollar value of cost of goods sold was primarily
attributable to the related increase in sales volume. Cost of goods sold as a
percentage of total revenues for the three months ended September 30, 2000
decreased to 44.5% from 57.4% for the three months ended September 30, 1999. As
a percentage of total revenues, cost of goods sold for the nine months ended
September 30, 2000 decreased to 48.1% from 59.6% for the nine months ended
September 30, 1999. The decrease in cost of goods sold as a percentage of
revenues was attributable to continuing improvements in production yields and
increased economies of scale associated with increased sales volumes.

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

RESEARCH, DEVELOPMENT AND ENGINEERING

Research, development and engineering expenses include the costs incurred in
the design of new products, as well as ongoing product development and research
and development expenses. Our research, development and engineering expenses for
the three and nine months ended September 30, 2000 increased to $7.7 million and
$22.2 million, respectively, from $5.5 and $15.5 million, respectively, for the
three and nine months ended September 30, 1999. The increase in research,
development and engineering expenses on an absolute dollar basis was primarily
due to the addition of new employees and the costs associated with the
development of new products. Research, development and engineering expenses as a
percentage of total revenues for the three and nine months ended September 30,
2000 decreased to 9.6% and 10.6, respectively, from 12.9% and 13.6%,
respectively, for the three and nine months ended September 30, 1999. The
decrease in research, development and engineering expenses as a percentage of
total revenues was due to revenues increasing at a faster rate than research,
development and engineering spending. We are committed to substantial
investments in research, development and engineering and expect these expenses
will continue to increase in absolute dollars in the future.

SELLING, GENERAL AND ADMINISTRATIVE

Selling, general and administrative expenses include commissions, labor
expenses for marketing and administrative personnel and other corporate
administrative expenses. Selling, general and administrative expenses for the
three and nine months ended September 30, 2000 increased to $8.5 million and
$23.9 million, respectively, from $6.0 million and $16.9 million, respectively,
for the three and nine months ended September 30, 1999. The increase in selling,
general and administrative expenses on an absolute dollar basis was primarily
attributable to increased costs associated with the on-going development of
infrastructure and business support and increased selling costs associated with
the increased sales volume. Selling, general and administrative expenses as a
percentage of total revenues for the three and nine months ended September 30,
2000 declined to 10.6% and 11.3%, respectively, from 14.1% and 14.8%,
respectively, for the three and months ended September 30, 1999.

OTHER INCOME, NET

Other income, net includes interest income, interest expense and gains and
losses on assets. Other income, net for the three and nine months ended
September 30, 2000, increased to $5.1 million and $14.0 million, respectively,
from $2.3 million and $3.4 million, respectively, for the three and nine months
ended September 30, 1999. This increase resulted primarily from increased
interest income on higher cash balances due to the proceeds of our July 1999
public offering and 2000 convertible debt offering, but was offset in part by
increased interest expense related to the increase in long-term debt. We expect
other income to be impacted in future quarters by the reduction in
interest-earning cash due to the investment in our newly acquired Richardson,
Texas facility and the capital investments required for the planned conversion
of a portion of our manufacturing process from four-inch wafers to six-inch
wafers.

INCOME TAX EXPENSE

Income tax expense for the three and nine months ended September 30, 2000
increased to $12.6 million and $29.0 million, respectively, from $1.7 million
and $2.3 million, respectively, for the three and nine months ended
September 30, 1999. The increase in income tax expense was attributable to our
increased profitability, as reflected by the increase in income before income
taxes.

The provision for income taxes was recorded based on the current estimate of
our annual effective tax rate. For certain periods, this rate differed from the
federal statutory rate primarily because of the utilization of net operating
loss carryforwards.

RECENT ACCOUNTING PRONOUNCEMENTS

In March 2000, the FASB issued Interpretation No. 44, "Accounting for
Certain Transactions involving Stock Compensation--an interpretation of APB
Opinion No. 25" ("FIN 44"). FIN 44 applies prospectively to new awards,
exchanges of awards in a business combination, modifications to outstanding
awards, and changes in grantee status that occur on or after July 1, 2000,
except for the provisions related to repricings and the definition of an
employee, which apply to awards issued after December 15, 1998. The provisions
related to modifications to fixed stock option awards to add a reload feature
are effective for awards modified after January 12, 2000. We adopted the
provisions of FIN 44 as of the required effective dates and this adoption has
not had a material impact on our consolidated financial statements.

FACTORS AFFECTING FUTURE OPERATING RESULTS

OUR OPERATING RESULTS MAY FLUCTUATE SUBSTANTIALLY, WHICH MAY CAUSE OUR STOCK
PRICE TO FALL.

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

- cancellation or delay of customer orders or shipments;

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

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

- variability of the life cycles of our customers' products;

- variations in manufacturing yields;

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

- changes in the mix of products we sell;

- declining average sales prices for our products;

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

- variations in operating expenses;

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

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

- performance of vendors and subcontractors;

- realization of research and development efforts;

- variations in raw material quality and costs;

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

- the cyclicality of the semiconductor industry;

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

- significant changes in our and our customers' inventory levels.

We expect that our operating results will continue to fluctuate in the
future as a result of these and other factors. Any unfavorable changes in these
or other factors could cause our results of operations to suffer as they have in
the past, based upon some of these factors. If our operating results are not
within the market's expectations, then our stock price may fall. For example, in
June 1994, Nortel, formerly Northern Telecom, requested that we delay shipment
of some of our products. Nortel was then our largest customer and the delay,
together with lower than expected orders, materially reduced our revenues and
results of operations in the second quarter and for the remainder of 1994. Due
to potential fluctuations, we believe

that period to period comparisons of our results of operations are not
necessarily meaningful and should not be relied upon as indicators of our future
performance.

WE RELY ON A LIMITED NUMBER OF CUSTOMERS FOR A SUBSTANTIAL PART OF OUR REVENUES.

Sales to a limited number of customers have accounted for a significant
portion of our revenues in each fiscal period. In recent periods, sales to some
of our major customers as a percentage of total revenues have fluctuated due to
delays or failures to place expected orders. We expect that sales to a limited
number of customers will continue to account for a substantial portion of our
total revenues in future periods. We expect that Ericsson, Nokia and Nortel will
each account for approximately 15% to 20% of our total revenues for 2000. We do
not have long-term agreements with any of our customers. Customers generally
purchase our products pursuant to cancelable short-term purchase orders. Our
results of operations have been negatively affected in the past by the failure
of anticipated orders to materialize and by delays in or cancellations of
orders. If we were to lose a major customer or if orders by or shipments to a
major customer were to otherwise decrease or be delayed, our results of
operations would be harmed.

WE FACE RISKS FROM FAILURES IN OUR MANUFACTURING PROCESSES.

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

- minute impurities;

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

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

- electrical performance;

- wafer breakage; or

- other factors.

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

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

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

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

- higher operating costs from managing geographically separate manufacturing
facilities.

IF WE FAIL TO SELL A HIGH VOLUME OF PRODUCTS, OUR OPERATING RESULTS WILL BE
HARMED.

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

IF WE DO NOT SELL OUR CUSTOMER-SPECIFIC PRODUCTS IN LARGE VOLUMES, OUR OPERATING
RESULTS MAY BE HARMED.

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

OUR OPERATING RESULTS COULD BE HARMED IF WE LOSE ACCESS TO SOLE OR LIMITED
SOURCES OF MATERIALS, EQUIPMENT OR SERVICES.

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

OUR OPERATING RESULTS COULD BE HARMED IF OUR SUBCONTRACTORS ARE UNABLE TO
FULFILL OUR REQUIREMENTS.

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

are unable to obtain timely service of acceptable quality or if the prices
increase, our results of operations could be harmed.

IF OUR PRODUCTS FAIL TO PERFORM OR MEET CUSTOMER REQUIREMENTS, WE COULD INCUR
SIGNIFICANT ADDITIONAL COSTS.

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

- lose revenue;

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

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

- experience increased product returns or discounts.

OUR OPERATING RESULTS MAY SUFFER IF WE ARE UNABLE TO CONFIGURE AND COMMENCE
MANUFACTURING AT OUR NEW RICHARDSON, TEXAS FACILITY.

In August 2000, we completed the purchase of a 420,000 square foot
fabrication facility in Richardson, Texas from Micron Technology Texas, LLC.
This facility will provide the capacity needed to meet future demands and
manufacturing space in the event we elect to transfer from our Dallas, Texas
facility. We plan to continue to operate our Dallas, Texas facility and our
Hillsboro, Oregon facility during the configuration, setup and testing of our
new Richardson, Texas facility. Given the long lead times associated with
bringing a new facility to a fully qualified manufacturing production status, we
will incur substantial expenses before achieving volume production in the
Richardson, Texas facility. The establishment of our wafer fabrication processes
at the Richardson, Texas facility will involve a number of significant risks and
uncertainties, including, but not limited to, manufacturing transition, startup
or process problems, construction, process qualification or equipment delays,
cost overruns or shortages of equipment or materials, any of which may also
adversely affect yields. Should there be delays in commencing production at the
Richardson, Texas facility, we may not have adequate capacity to respond to all
orders during the transition period. There can be no assurance that we will be
able to successfully transition our manufacturing operations to the Richardson,
Texas facility prior to the expiration of our existing Dallas, Texas facility's
lease, in the event we elect to transfer from our Dallas, Texas facility, or
that we will not experience difficulties in replicating critical manufacturing
processes or a reduction in manufacturing output as a result. Nor have we
determined whether we will seek to extend our lease in our Dallas, Texas
facility. Moreover, believing that our commencement of production at the
Richardson, Texas facility could cause manufacturing delays, some customers may
have purchased quantities of our products in recent fiscal quarters in excess of
such customers' respective immediate needs and may continue to do so. As a
result, our operating results in subsequent quarters may be materially reduced.
Commencing manufacturing operations at our Richardson, Texas facility could
place significant strain on our management and engineering resources and result
in diversion of management attention from the day-to-day operation of our
business.

Our lease and operation of our own manufacturing facilities entails a high
level of fixed costs. Such fixed costs consist primarily of occupancy costs,
investment in manufacturing equipment, repair, maintenance and depreciation
costs related to equipment and fixed labor costs related to manufacturing and
process engineering. Our manufacturing yields vary significantly among our
products, depending on a given product's complexity and our experience in
manufacturing such product. We have experienced in the past and may experience
in the future substantial delays in product shipments due to lower than expected

production yields. However, before we realize any revenues from our commencement
of our manufacturing operations at the higher capacity Richardson, Texas
facility, we will have a significant increase in fixed and operating expenses.
Once we commence volume production at the Richardson, Texas facility, our
results of operations may still be adversely affected if revenue levels do not
increase sufficiently to offset these additional expense levels. Because we have
capitalized and intend to continue to capitalize certain costs associated with
bringing the Richardson, Texas facility to commercial production, we will
recognize depreciation or amortization expenses thereafter. In addition, during
periods of low demand, high fixed wafer fabrication costs could have a material
adverse effect on our business, financial condition and results of operations.

OUR OPERATING RESULTS MAY SUFFER IF WE DO NOT EXPAND OUR MANUFACTURING CAPACITY
IN A TIMELY MANNER.

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

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

WE MAY FACE FINES OR OUR FACILITIES COULD BE CLOSED IF WE FAIL TO COMPLY WITH
ENVIRONMENTAL REGULATIONS.

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

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

At our Dallas, Texas facility, we utilize Texas Instruments' industrial
wastewater treatment facilities and services for the pre-treatment and discharge
of wastewater generated by us, pursuant to the Asset Purchase Agreement dated
January 8, 1998. Our wastewater streams are commingled with those of Texas
Instruments and are covered by Texas Instruments' wastewater permit.

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

the use of, or to adequately restrict the discharge of, hazardous substances
could subject us to future liabilities and harm our results of operations.

WE DEPEND ON THE CONTINUED GROWTH OF COMMUNICATIONS MARKETS.

We derive a substantial portion of our product revenues from sales of
products for communication applications. These markets are characterized by the
following:

- intense competition;

- rapid technological change; and

- short product life cycles, especially in the wireless market.

In addition, although the communications markets have grown rapidly in the
last few years, these markets may not continue to grow or may experience a
significant slowdown. A large percentage of our revenues stem from the
production of products for our mobile phone customers. In 2000, the mobile phone
business will account for approximately 50% of our business; however, we are
experiencing a shift in markets. Other markets in which we participate, such as
optical, broadband wireless and other wireless, are growing and we expect them
to become a substantial portion of our business. If these other markets do not
continue to represent a growing percentage of our sales and demand for mobile
phones declines, our operating results could suffer.

Products for communications applications are often based on industry
standards, which are continually evolving. Our future success will depend, in
part, upon our ability to successfully develop and introduce new products based
on emerging industry standards, which could render our existing products
unmarketable or obsolete. If communications markets evolve to new standards, we
may be unable to successfully design and manufacture new products that address
the needs of our customers or that will meet with substantial market acceptance.

OUR BUSINESS WILL BE IMPACTED IF SYSTEMS MANUFACTURERS DO NOT USE GALLIUM
ARSENIDE COMPONENTS.

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

- their unfamiliarity with designing systems with gallium arsenide products;

- their concerns related to manufacturing costs and yields;

- their unfamiliarity with design and manufacturing processes; and

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

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

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

WE INCREASED OUR INDEBTEDNESS SUBSTANTIALLY.

In February and March 2000, we sold $345.0 million of convertible
subordinated notes in a private placement to qualified institutional buyers. As
a result of the sale of notes, we incurred $345.0 million of additional
indebtedness increasing our ratio of debt to equity (expressed as a percentage)
from approximately 3.0% as of December 31, 1999 to approximately 90.7% as of
September 30, 2000, after giving effect to the sale of the notes. Our other
indebtedness is principally comprised of operating, synthetic and capital
leases. We may incur substantial additional indebtedness in the future. For
example, we entered into a $87.0 million synthetic lease obligation to finance
the purchase of our new Richardson, Texas facility. The level of our
indebtedness, among other things, could:

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

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

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

- limit our flexibility in planning for, or reacting to changes in, our
business; and

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

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

WE MAY NOT BE ABLE TO PAY OUR DEBT AND OTHER OBLIGATIONS.

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

CUSTOMERS MAY DELAY OR CANCEL ORDERS DUE TO REGULATORY DELAYS.

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

OUR REVENUES ARE AT RISK IF WE DO NOT INTRODUCE NEW PRODUCTS AND/OR DECREASE
COSTS.

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

performance and adequately address customer requirements. The success of new
product and process introductions depends on several factors, including:

- proper selection of products and processes;

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

- market acceptance of our or our customers' new products;

- achievement of acceptable manufacturing yields; and

- our ability to offer new products at competitive prices.

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

WE MUST IMPROVE OUR PRODUCTS AND PROCESSES TO REMAIN COMPETITIVE.

If technologies or standards supported by our or our customers' products
become obsolete or fail to gain widespread commercial acceptance, our results of
operations may be materially impacted. Because of continual improvements in
semiconductor technology, including those in high performance silicon where
substantially more resources are invested than in gallium arsenide, we believe
that our future success will depend, in part, on our ability to continue to
improve our product and process technologies. We must also develop new
technologies in a timely manner. In addition, we must adapt our products and
processes to technological changes and to support emerging and established
industry standards. We have and must continue to perform significant research
and development into advanced material development to compete with future
technologies of our competitors. These research and development efforts may not
be accepted by our customers, and therefore may not go into full production in
the future. We may not be able to improve our existing products and process
technologies, develop new technologies in a timely manner or effectively support
industry standards. If we fail to do so, our customers may select another
gallium arsenide product or move to an alternative technology.

OUR RESULTS OF OPERATIONS MAY SUFFER IF WE DO NOT COMPETE SUCCESSFULLY.

The semiconductor industry is intensely competitive and is characterized by
rapid technological change, rapid product obsolescence and price erosion.
Currently, we compete primarily with manufacturers of gallium arsenide
integrated circuits such as Alpha Industries Inc., Anadigics Inc., Conexant
Systems Inc., Fujitsu Microelectronics, Inc., Infineon Technologies AG, Raytheon
Company, RF Micro Devices Inc. and Vitesse Semiconductor Corp. and with
manufacturers of high-performance silicon integrated circuits such as Applied
Micro Circuits Corporation, Maxim Integrated Products Inc., Motorola Inc.,
Philips and ST Microelectronics. We also face competition from the internal
semiconductor operations of some of our current and potential customers. We
expect increased competition from existing competitors and from a number of
companies that may enter the gallium arsenide integrated circuits market, as
well as future competition from companies that may offer new or emerging
technologies such as silicon germanium. Most of our current and potential
competitors have significantly greater financial, technical, manufacturing and
marketing resources than we do. Manufacturers of high performance silicon
integrated circuits have achieved greater market acceptance of their existing
products and technologies in some applications.

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

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

OUR OPERATING RESULTS MAY SUFFER DUE TO DECLINING DEMAND FOR SEMICONDUCTORS.

From time to time, the semiconductor industry has experienced significant
downturns and wide fluctuations in product supply and demand. This cyclicality
has led to significant imbalances in demand and production capacity. It has also
accelerated the decrease of average selling prices per unit. We may experience
periodic fluctuations in our future financial results because of these or other
industry-wide conditions. For example, if demand for mobile phones were to
decrease substantially, demand for the semiconductor components in these phones
would also decline.

IF WE FAIL TO INTEGRATE ANY FUTURE ACQUISITIONS, OUR BUSINESS WILL BE HARMED.

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

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

- we may experience difficulties integrating our financial and operating
systems;

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

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

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

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

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

- we may incur unknown liabilities associated with acquired businesses.

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

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

WE MUST MANAGE OUR GROWTH.

Our total number of employees grew to 1,020 as of September 30, 2000 from
802 as of December 31, 1999. The resulting growth has placed, and is expected to
continue to place, significant demands on our personnel, management and other
resources. We must continue to improve our operational, financial and management
information systems to keep pace with the growth of our business.

IF WE DO NOT HIRE AND RETAIN KEY EMPLOYEES, OUR BUSINESS WILL SUFFER.

Our future success depends in large part on the continued service of our key
technical, marketing and management personnel. We also depend on our ability to
continue to identify, attract and retain qualified

technical employees, particularly highly skilled design, process and test
engineers involved in the manufacture and development of our products and
processes. We must also recruit and train employees to manufacture our products
without a substantial reduction in manufacturing yields. There are many other
semiconductor companies located in the communities near our facilities and it
may become increasingly difficult for us to attract and retain those employees.
The competition for these employees is intense, and the loss of key employees
could negatively affect us.

OUR BUSINESS MAY BE HARMED IF WE FAIL TO PROTECT OUR PROPRIETARY TECHNOLOGY.

We rely on a combination of patents, trademarks, copyrights, trade secret
laws, confidentiality procedures and licensing arrangements to protect our
intellectual property rights. We currently have patents granted and pending in
the United States and in foreign countries and intend to seek further
international and United States patents on our technology. We cannot be certain
that patents will be issued from any of our pending applications or that patents
will be issued in all countries where our products can be sold or that any
claims allowed from pending applications or will be of sufficient scope or
strength to provide meaningful protection or any commercial advantage. Our
competitors may also be able to design around our patents. The laws of some
countries in which our products are or may be developed, manufactured or sold,
may not protect our products or intellectual property rights to the same extent
as do the laws of the United States, increasing the possibility of piracy of our
technology and products. Although we intend to vigorously defend our
intellectual property rights, we may not be able to prevent misappropriation of
our technology. Our competitors may also independently develop technologies that
are substantially equivalent or superior to our technology.

OUR ABILITY TO PRODUCE OUR SEMICONDUCTORS MAY SUFFER IF SOMEONE CLAIMS WE
INFRINGE ON THEIR INTELLECTUAL PROPERTY.

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

- pay substantial damages;

- indemnify our customers;

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

- expend significant resources to develop non-infringing technology;

- discontinue the use of certain processes; or

- obtain licenses to the technology.

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

OUR BUSINESS MAY SUFFER DUE TO RISKS ASSOCIATED WITH INTERNATIONAL SALES.

Our sales outside of the United States were 45.9% of total revenues in the
nine months ended September 30, 2000 and 38.4% of total revenues in 1999. We
face inherent risks from these sales, including:

- imposition of government controls;

- currency exchange fluctuations;

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

- reduced protection for intellectual property rights in some countries;

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

- unfavorable tax consequences;

- political instability; and

- tariffs and other trade barriers.

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

WE MAY BE SUBJECT TO A SECURITIES CLASS ACTION SUIT IF OUR STOCK PRICE FALLS.

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

OUR STOCK WILL LIKELY BE SUBJECT TO SUBSTANTIAL PRICE AND VOLUME FLUCTUATIONS
DUE TO A NUMBER OF FACTORS, MANY OF WHICH ARE BEYOND OUR CONTROL AND MAY PREVENT
OUR STOCKHOLDERS FROM RESELLING OUR COMMON STOCK AT A PROFIT.

The securities markets have experienced significant price and volume
fluctuations and the market prices of the securities of semiconductor companies
have been especially volatile. The market price of our common stock may
experience significant fluctuations in the future. For example, our common stock
price has fluctuated from a high of approximately $67.75 to a low of
approximately $13.58 during the 52 weeks

ended September 30, 2000. This market volatility, as well as general economic,
market or political conditions, could reduce the market price of our common
stock in spite of our operating performance. In addition, our operating results
could be below the expectations of public market analysts and investors, and in
response, the market price of our common stock could decrease significantly.

OUR CERTIFICATE OF INCORPORATION AND BYLAWS INCLUDE ANTI-TAKEOVER PROVISIONS,
WHICH MAY DETER OR PREVENT A TAKEOVER ATTEMPT.

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

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

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

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

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

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

LIQUIDITY AND CAPITAL RESOURCES

On September 5, 2000, we announced the acquisition from Micron Technology
Texas, LLC of its Richardson, Texas wafer fabrication facility for aggregate
consideration of $87.0 million. The purchase was financed through a synthetic
lease transaction consisting of a participation agreement and master lease
agreement. The lease provides for the purchase and expansion of our wafer
fabrication facility in Richardson, Texas under an operating lease and provides
us with an option to purchase the property or renew our lease for an additional
four years. A portion of the loan is collateralized by pledged investment
securities. Additionally, we participated as a lender in the synthetic lease
transaction, and our participation is classified as other noncurrent assets.
Restrictive covenants included in the synthetic lease require us to maintain
(a) a debt service coverage ratio of not more than 3.00 to 1.00 through June,
2001 and not more than 2.50 to 1.00 thereafter, (b) a quick ratio of not less
than 1.25 to 1.00, (c) a fixed charge coverage ratio of not less than 1.50 to
1.00 beginning first quarter of 2001 and not less than 2.00 to 1.00 beginning
first quarter of 2002 and thereafter and (d) tangible net worth not less than
90% of tangible net worth as of December 31, 1999 plus 75% of net income and net
equity additions without deductions for losses. As of September 30, 2000, we
were in compliance with the restrictive covenants contained in this synthetic
lease.

We have a $10.0 million unsecured revolving line of credit with US Bank N.A.
that matures May 31, 2001. Restrictive covenants included in the line of credit
require us to maintain (a) a total liability to

tangible net worth ratio of not more than 1.50 to 1.00, (b) a current ratio of
not less than 1.75 to 1.00 and (c) cash and investments, including restricted
investments, greater than $45.0 million. As of September 30, 2000, we were in
compliance with the restrictive covenants contained in this line of credit.

In February and March 2000, we completed a private placement of
$345.0 million (net proceeds of $333.9 million) of 4% convertible subordinated
notes due 2007. The notes are unsecured obligations, are initially convertible
into our Common Stock at a conversion price of $67.80 per share and subordinated
to all of our present and future senior indebtedness. We also completed public
offerings of our common stock in July 1999 and September 1995, raising
approximately $146.6 million and $48.1 million, respectively, net of offering
expenses. In December 1993 and January 1994, we completed our initial public
offering raising approximately $16.7 million, net of offering expenses. In
addition, we have funded our operations to date through other private sales of
equity, borrowings, equipment leases and cash flow from operations. As of
September 30, 2000, we had working capital of approximately $488.2 million,
including $448.1 million in cash, cash equivalents and unrestricted investments.

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

In May 1996, we entered into a five-year synthetic lease through a
participation agreement with Wolverine Leasing Corp. ("Wolverine"), USNB and
Matisse. The lease provides for the construction and occupancy of our
headquarters and wafer fabrication facility in Hillsboro, Oregon under an
operating lease from Wolverine and provides us with an option to purchase the
property or renew our lease for an additional five years. Under the terms of the
agreement, USNB and Matisse made loans to Wolverine, which in turn advanced the
funds to us for the construction of the Hillsboro, Oregon facility and other
associated costs and expenses. The loan from USNB is collateralized by
investment securities we have pledged. These investment securities are
classified on our balance sheet as restricted long-term assets. In addition,
restrictive covenants in the participation agreement require us to maintain
(a) a total liability to tangible net worth ratio of not more than 1.50 to 1.00,
(b) minimum tangible net worth greater than $50.0 million and (c) more than
$45.0 million of cash and liquid investment securities, including restricted
securities. As of September 30, 2000, we were in compliance with the covenants
described above.

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

NINE MONTHS ENDED
SEPTEMBER 30,
--------------------
2000 1999
--------- --------

Net cash provided by operating activities................... $ 70,592 $ 15,504
Net cash used in investing activities....................... (332,486) (85,290)
Net cash provided by financing activities................... 337,910 146,223
--------- --------
Net increase in cash and cash equivalents................... $ 76,016 $ 76,437
========= ========

The $70.6 million of cash provided by operating activities for the nine
months ended September 30, 2000 related primarily to net income of
$48.3 million, depreciation and amortization of $7.5 million, a tax benefit of
stock options exercises of $29.0 million as well as increases in accounts
payable and accrued expenses of $14.5 million. This was offset by increases in
accounts receivable of $18.0 million, inventories of $4.1 million and prepaid
expense and other assets of $6.5 million. The $15.5 million of cash provided by
operating activities for the nine months ended September 30, 1999 related
primarily to net income of $14.7 million, an increase in accounts payable and
accrued expenses of $3.8 million, depreciation and

amortization of $5.4 million and deferred income taxes of $2.0 million. This was
offset by increases in accounts receivable of $6.9 million and inventories of
$3.8 million.

The $333.8 million of cash used in investing activities for the nine months
ended September 30, 2000 related to the purchase of $786.0 million of
investments, capital expenditures of $52.0 million, increase in restricted
long-term assets of $14.5 million and purchase of long-term investments of
$88.6 million offset in part by the sale/maturity of $607.3 million of
investments. The $85.3 million of cash used in investing activities for the nine
months ended September 30, 1999 related to the purchase of $240.5 million of
investments and capital expenditures of approximately $4.2 million, but was
offset in part by the sale/ maturity of $159.4 million of investments.

The $338.0 million of cash provided by financing activities for the nine
months ended September 30, 2000 related primarily to the net proceeds from debt
of $333.9 million and from the issuance of common stock of $7.6 million. This
was offset in part by payment of principal on capital leases of $3.4 million.
The $146.2 million of cash provided by financing activities for the nine months
ended September 30, 1999 related primarily to the issuance of common stock of
$150.0 million and was offset in part by payment of principal on capital leases
of $3.8 million.

Cash used for capital expenditures for the nine months ended September 30,
2000 was approximately $52.0 million. We anticipate that our capital equipment
needs, including manufacturing and test equipment and computer hardware and
software, will require additional expenditures of approximately $140.3 million
during the next 12 months.

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

ITEM 3: QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET AND INTEREST RATE
RISK

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

We are exposed to interest rate risk, as we use additional financing
periodically to fund capital expenditures. The interest rate that we may be able
to obtain on financings will depend on market conditions at that time and may
differ from the rates we have secured in the past. Sensitivity of results of
operations to market and interest rate risks is managed by maintaining a
conservative investment portfolio.

PART II--OTHER INFORMATION

ITEM 1: LEGAL PROCEEDINGS.

ITEM 2: CHANGES IN SECURITIES.

None.

ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

Exhibit 10.26 Loan agreement between U.S. Bank National Association and
registrant dated September 28, 2000

Exhibit 27.1 Financial Data Schedule

(b) Reports on Form 8-K

We filed a Report on Form 8-K (File No. 000-22660) with the Securities and
Exchange Commission on August 30, 2000 to announce our acquisition from Micron
Technology Texas, LLC of its Richardson, Texas wafer fabrication facility for
aggregate consideration of $87 million.

SIGNATURES

Pursuant to the requirements of the Securities and 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 13, 2000 /s/ STEVEN J. SHARP
--------------------------------------------
Steven J. Sharp
CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF
EXECUTIVE OFFICER (PRINCIPAL EXECUTIVE
OFFICER)

Dated: November 13, 2000 /s/ EDSON H. WHITEHURST, JR.
--------------------------------------------
Edson H. Whitehurst, Jr.
VICE PRESIDENT, FINANCE AND ADMINISTRATION,
CHIEF FINANCIAL OFFICER AND SECRETARY
(PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)

TRIQUINT SEMICONDUCTOR, INC.
INDEX TO EXHIBITS

SEQUENTIAL
EXHIBIT NO. DESCRIPTION PAGE NO.
- --------------------- ----------- -----------

10.26 Loan Agreement between U.S. Bank National
Association and registrant dated
September 28, 2000
27.1 Financial Data Schedule