Analyst Conference Summary

conference date: November 1, 2007 @ 2:00 PM PT
for quarter ending: September 29, 2007 (1st fiscal quarter 2008)

Forward-looking statements

Overview: Good sequential revenue growth. Due to ongoing accounting restatement, still no SEC filings or GAAP numbers.

Basic data:

Revenues were $522.7 million, a 6% sequential increase when using 13 week quarters, and a 4% increase from year-earlier.

Cash and equivalents ended at $1.349 billion. Up by $49.6 million.

Guidance:

Fiscal Q2 (December quarter) revenues between $530 and $550 million.

Conference Highlights:

Consistent revenue growth, solid cash flow, and reduced inventories characterized the quarter. Acquired a storage product line from Vitesse. Many new products were announced. The cash dividend of $0.1875 per share will be due to shareholders of record on November 15, 2007.

Hope to complete accounting restatement by the first quarter of calendar 2008.

Increased revenue was driven by strength in notebook and cell phone segments. Inventory in distribution decreased.

Gross margins decline 0.4% sequentially due to change in product mix towards notebook PCs. Aggressively controlling operating expenses.

$68.5 million capital expense.

$523.2 million in bookings. Beginning backlog up 3% from prior quarter.

For Q2 see strength in cell phone and consumer segments. Gross margins will be flat to Q1.

Computing markets had high notebook shipments. Revenues increased 13% sequentially on a normalized basis. A new power adapter chip, display driver, and LTV display drivers were important factors. Focusing less on power management chips.

Consumer market revenues increased 9% sequentially on normalized basis. CDMA device, USB transceiver chips and others drove increases. Integrating multiple functions on chips for mid and high end. Orders increased by 26%, driven by cell phone chips.

Industrial market revenues decreased 2% normalized. Continuing to create automotive products.

Communications segment revenues up 4% normalized.

Vitesse acquisition expected to be profitable by end of fiscal year.

Q&A:

Gaining share in notebooks and cell phones, or just following market? Believe we are gaining share in cell phone market, but in notebooks mostly growing market with some market share gains for particular components.

Cell phone revenue gains from more units or higher-priced products? Combination.

Mix going forward? Hard to say beyond fiscal Q2. Some customers are concerned about macroeconomic situation. It is better for us to be cautious right now.

Depreciation? Around $30 million this quarter, not giving guidance for it.

Cancellations? Were down for the quarter, so we have no real issues there. Lead times are between 8 and 9 weeks and appear stabile.

Employee attitude toward stock delisting? They did not like it, but our attrition rate has actually gone down.

RF goals for handsets? Most of our products have been in additional functions like a TV tuner chip, not in main signal path. We used to have some emphasis on tranceiver chips for CDMA, but have changed focus from that to specialty chips. Most of our CDMA customers happen to be in Korea.

Industrial market seasonality? Usually a bit stronger in first half of calendar year, but it is a slight trend.

Earnings and sales growth in fiscal 2008? Earnings should grown faster than revenues in fiscal 2008.

Manufacturing capacity issues? Internal fab capacity and strategic alliance with Epson, we are about 75% of capacity. Completely outfitted, we would only be at about 46% of capacity.

Order linearity in quarter or this quarter? Q1 quarter started strong, was less towards the end, which is one reason for our guidance. Too early to tell about Q2 yet. Comfortable that bookings support the guidance we are giving.

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