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UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-K


|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                             
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|          
|           |  | For the fiscal year ended March 26, 2005                                                    
|          
|or        
|          
|o          |  | 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: 0-22594





Alliance Semiconductor Corporation


(Exact name of Registrant as specified in its charter)


|                                                                   |  |                                            
|------------------------------------------------------------------ |  | -------------------------------------------
|Delaware                                                           |  | 77-0057842                                 
|(State or other jurisdiction of
    incorporation or organization) |  | (I.R.S. Employer
    Identification Number)

2575 Augustine Drive


Santa Clara, California 95054-2914


(Address of principal executive offices including zip
code)


Registrants telephone number, including area code is
(408) 855-4900





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


None


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


Title of Each Class




þ o


þ


þ o






DOCUMENTS INCORPORATED BY REFERENCE












---










ALLIANCE SEMICONDUCTOR CORPORATION


FORM 10-K


For the Period Ended March 26, 2005


TABLE OF CONTENTS


|              |  |                                                                                                                      |             |          |        |  |  | 
|------------- |  | -------------------------------------------------------------------------------------------------------------------- | ----------- | -------- | ------ |  |  | 
|              |  |                                                                                                                      |             | Page     |       
|Item Number   |  |                                                                                                                      | Description |          | Number | 
|              |  |                                                                                                                      |             |          |        | 
|              |  |                                                                                                                      |             | PART I   |        |  |  | 
|Item 1.       |  | Business                                                                                                             |             |          | 2      | 
|Item 2.       |  | Properties                                                                                                           |             |          | 18     | 
|Item 3.       |  | Legal Proceedings                                                                                                    |             |          | 18     | 
|Item 4.       |  | Submission of Matters to a Vote of Security
    Holders                                                              |             |          | 19     | 
|              |  |                                                                                                                      |             | PART II  |        |  |  | 
|Item 5.       |  | Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities |             |          | 21     | 
|Item 6.       |  | Selected Financial Data                                                                                              |             |          | 22     | 
|Item 7.       |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                            |             |          | 23     | 
|Item 7A.      |  | Quantitative and Qualitative Disclosures
    About Market Risk                                                       |             |          | 50     | 
|Item 8.       |  | Financial Statements and Supplementary
    Data                                                                      |             |          | 51     | 
|Item 9.       |  | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosures                            |             |          | 51     | 
|Item 9A.      |  | Controls and Procedures                                                                                              |             |          | 52     | 
|Item 9B.      |  | Other Information                                                                                                    |             |          | 53     | 
|              |  |                                                                                                                      |             | PART III |        |  |  | 
|Item 10.      |  | Directors and Executive Officers of the
    Registrant                                                               |             |          | 54     | 
|Item 11.      |  | Executive Compensation                                                                                               |             |          | 54     | 
|Item 12.      |  | Security Ownership of Certain Beneficial
    Owners and Management                                                   |             |          | 54     | 
|Item 13.      |  | Certain Relationships and Related
    Transactions                                                                   |             |          | 54     | 
|Item 14.      |  | Principal Accountant Fees and Services                                                                               |             |          | 54     | 
|              |  |                                                                                                                      |             | PART IV  |        |  |  | 
|Item 15.      |  | Exhibits and Financial Statement
    Schedules                                                                       |             |          | 55     | 
|Signatures    |  |                                                                                                                      | 56          |         
|Exhibit Index |  |                                                                                                                      |             |         
|EXHIBIT 10.46
|EXHIBIT 21.01
|EXHIBIT 23.01
|EXHIBIT 31.01
|EXHIBIT 31.02
|EXHIBIT 32.01
|EXHIBIT 32.02







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PART I


Forward-Looking Statements









|        |         
|------- | --------
|Item 1. | Business



| |         
| | --------
| | Overview

tm










2



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Reportable Segments






3



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|                      |  |        |         |   |            |   |         |             |  |   |       |   |  |   |         |  
|--------------------- |  | ------ | ------- | - | ---------- | - | ------- | ----------- |  | - | ----- | - |  | - | ------- | -
|Fiscal Year 2005      |  | Memory |         |   | Non-Memory |   |         | Unallocated |  |   | Total |  
|                      |  |        |         |   |            |   |         |             |  |   |       |  
|Revenue               |  | $      | 11,787  |   |            | $ | 11,812  |             |  | $ |       |   |  | $ | 23,599  |  
|Cost of goods sold    |  |        | 17,973  |   |            |   | 8,201   |             |  |   |       |   |  |   | 26,174  |  
|                      |  |        |         |   |            |   |         |             |  |   |       |  
|Gross profit/(loss)   |  |        | (6,186  | ) |            |   | 3,611   |             |  |   |       |   |  |   | (2,575  | )
|R&D expense           |  |        | 4,156   |   |            |   | 15,413  |             |  |   |       |   |  |   | 19,569  |  
|SG&A expense          |  |        | 4,046   |   |            |   | 8,066   |             |  |   | 343   |   |  |   | 12,455  |  
|Write-off of goodwill |  |        |         |   |            |   | 1,538   |             |  |   |       |   |  |   | 1,538   |  
|                      |  |        |         |   |            |   |         |             |  |   |       |  
|Operating expense     |  |        | 8,202   |   |            |   | 25,017  |             |  |   | 343   |   |  |   | 33,562  |  
|                      |  |        |         |   |            |   |         |             |  |   |       |  
|Operating income      |  | $      | (14,388 | ) |            | $ | (21,406 | )           |  | $ | (343  | ) |  | $ | (36,137 | )
|                      |  |        |         |   |            |   |         |             |  |   |       |  

|                   |  |        |        |   |            |   |         |             |  |   |        |   |  |   |         |  
|------------------ |  | ------ | ------ | - | ---------- | - | ------- | ----------- |  | - | ------ | - |  | - | ------- | -
|Fiscal Year 2004   |  | Memory |        |   | Non-Memory |   |         | Unallocated |  |   | Total  |  
|                   |  |        |        |   |            |   |         |             |  |   |        |  
|Revenue            |  | $      | 17,860 |   |            | $ | 8,811   |             |  | $ |        |   |  | $ | 26,671  |  
|Cost of goods sold |  |        | 15,804 |   |            |   | 5,036   |             |  |   |        |   |  |   | 20,840  |  
|                   |  |        |        |   |            |   |         |             |  |   |        |  
|Gross profit       |  |        | 2,056  |   |            |   | 3,775   |             |  |   |        |   |  |   | 5,831   |  
|R&D expense        |  |        | 6,035  |   |            |   | 16,205  |             |  |   | 2,413  |   |  |   | 24,653  |  
|SG&A expense       |  |        | 4,960  |   |            |   | 8,657   |             |  |   | 2,004  |   |  |   | 15,621  |  
|                   |  |        |        |   |            |   |         |             |  |   |        |  
|Operating expense  |  |        | 10,995 |   |            |   | 24,862  |             |  |   | 4,417  |   |  |   | 40,274  |  
|                   |  |        |        |   |            |   |         |             |  |   |        |  
|Operating income   |  | $      | (8,939 | ) |            | $ | (21,087 | )           |  | $ | (4,417 | ) |  | $ | (34,443 | )
|                   |  |        |        |   |            |   |         |             |  |   |        |  





| |         
| | --------
| | Products

Analog and Mixed Signal Business Unit






| |                          
| | -------------------------
| | Clock and Timing Products







| |                                      
| | -------------------------------------
| | Power and Systems Management Products



4



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System Solutions Business Unit






| |                      
| | ---------------------
| | Connectivity Products

tm tm






| |                    
| | -------------------
| | Networking Products



Memory Business Unit






| |                                     
| | ------------------------------------
| | Static Random Access Memory Products



5



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| |                                      
| | -------------------------------------
| | Dynamic Random Access Memory Products





| |                    
| | -------------------
| | Product Development









| |          
| | ---------
| | Customers





6



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| |                    
| | -------------------
| | Sales and Marketing











| |              
| | -------------
| | Manufacturing



7



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8



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| |            
| | -----------
| | Competition





| |                                          
| | -----------------------------------------
| | Licenses, Patents and Maskwork Protection



9



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Backlog






| |            
| | -----------
| | Investments



United Microelectronics Corporation




10



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Tower Semiconductor Ltd.






| |   |                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 30% of all Tower shares acquired by us (including shares
    acquired in exchange for payments made in accordance with the
    original Share Purchase Agreement and subsequent amendments,
    shares acquired as a result of Towers rights offering in
    September 2002, and shares which may be acquired upon exchange
    of certain wafer credits) are unrestricted and
    available-for-sale;
| |  | the remaining 70% of all Tower shares acquired by us are
    restricted from sale, transfer, or disposition until January
    2006; and                                                                                                                                                                                                                                                                
| |  | between January 2006 and January 2008 we may transfer no more
    than 6% of our total shares in any quarter on a cumulative basis
    and no more than 48% of our total shares by the end of this
    period.                                                                                                                                                                                         







11



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|            |  |             |           |       |       |   |            |           |  |               |               |  |       |            |       |   |  |   |      |  |  |  |  | 
|----------- |  | ----------- | --------- | ----- | ----- | - | ---------- | --------- |  | ------------- | ------------- |  | ----- | ---------- | ----- | - |  | - | ---- |  |  |  |  | 
|            |  |             |           | Share |       |   | Investment |           |  | Investment in |               |  | Total |            |       |  
|Period      |  | # of Shares |           |       | Price |   |            | in Shares |  |               | Wafer Credits |  |       | Investment |       |   | 
|            |  |             |           |       |       |   |            |           |  |               |               |  |       |            |       |   | 
|FY 2001     |  |             | 1,233,241 |       |       | $ | 13.24      |           |  | $             | 16.3          |  |       | $          | 14.7  |   |  | $ | 31.0 |  |  |  |  | 
|FQ1 2002    |  |             | 366,690   |       |       |   | 12.50      |           |  |               | 4.6           |  |       |            | 6.4   |   |  |   | 11.0 |  |  |  |  | 
|FQ2 2002(a) |  |             | 1,255,848 |       |       |   | 12.75      |           |  |               | 16.0          |  |       |            | (16.0 | ) |  |   | 0.0  |  |  |  |  | 
|FQ1 2003    |  |             | 1,071,497 |       |       |   | 6.16       |           |  |               | 6.6           |  |       |            | 4.4   |   |  |   | 11.0 |  |  |  |  | 
|FQ3 2003    |  |             | 1,344,829 |       |       |   | 4.91       |           |  |               | 6.6           |  |       |            | 4.4   |   |  |   | 11.0 |  |  |  |  | 
|(b)         |  |             | 794,995   |       |       |   | 5.03       |           |  |               | 4.0           |  |       |            |       |   |  |   | 4.0  |  |  |  |  | 
|FQ1 2004    |  |             | 1,206,839 |       |       |   | 2.98       |           |  |               | 3.6           |  |       |            |       |   |  |   | 3.6  |  |  |  |  | 
|FQ2 2004    |  |             | 228,546   |       |       |   | 2.98       |           |  |               | 0.7           |  |       |            |       |   |  |   | 0.7  |  |  |  |  | 
|FQ3 2004    |  |             | 777,295   |       |       |   | 2.98       |           |  |               | 2.3           |  |       |            |       |   |  |   | 2.3  |  |  |  |  | 
|FQ4 2004    |  |             | 628,611   |       |       |   | 7.00       |           |  |               | 4.4           |  |       |            |       |   |  |   | 4.4  |  |  |  |  | 
|            |  |             |           |       |       |   |            |           |  |               |               |  |       |            |       |   |  |  
|Totals      |  |             | 8,908,391 |       |       |   |            |           |  | $             | 65.1          |  |       | $          | 13.9  |   |  | $ | 79.0 |  |  |  |  | 
|            |  |             |           |       |       |   |            |           |  |               |               |  |       |            |       |   |  |  






|    |                                               
|--- | ----------------------------------------------
|(a) | Conversion of wafer credits to ordinary shares
|   
|(b) | Tower rights offering                         

Vitesse Semiconductor Corporation






Adaptec, Inc.






12



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| |                                 
| | --------------------------------
| | Alliance Venture Management, LLC















13



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Solar Venture Partners, LP






14



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Equity Method Investments








The Investment Company Act of 1940






15



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16



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Employees








17



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Web Site Access to Our Periodic SEC Reports









|        |           
|------- | ----------
|Item 2. | Properties








|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings





18



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



Executive Officers of the Registrant




|                 |  |     |    |  |          |                                                                            
|---------------- |  | --- | -- |  | -------- | ---------------------------------------------------------------------------
|Name             |  | Age |    |  | Position
|                 |  |     |    |  |         
|N. Damodar Reddy |  |     | 66 |  |          | Chairman, President and Chief Executive Officer                            
|C.N. Reddy       |  |     | 49 |  |          | Executive Vice President for Investments, Director                         
|Jeff Parsons     |  |     | 45 |  |          | Vice President, Finance and Administration, and Chief Financial
    Officer

19



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Inc.






20



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PART II







|        |                                                                                                                 
|------- | ----------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity, Related
    Stockholder Matters and Issuer Purchases of Equity Securities



|                 |                                                                |      |   |      |     |  |   |      | 
|---------------- | -------------------------------------------------------------- | ---- | - | ---- | --- |  | - | ---- | 
|                 |                                                                | High |   |      | Low | 
|                 |                                                                |      |   |      |     | 
|Fiscal Year 2005 |                                                                |      |   |      |     |  |   |     
|                 | 1st Quarter (from March 28, 2004 to June 26, 2004)             |      | $ | 8.25 |     |  | $ | 5.22 | 
|                 | 2nd Quarter (from June 27, 2004 to September 25,
    2004)     |      |   | 5.95 |     |  |   | 3.54 | 
|                 | 3rd Quarter (from September 26, 2004 to
    December 25, 2004) |      |   | 3.74 |     |  |   | 3.26 | 
|                 | 4th Quarter (from December 26, 2004 to March 26,
    2005)     |      |   | 3.71 |     |  |   | 2.55 | 
|Fiscal Year 2004 |                                                                |      |   |      |     |  |   |     
|                 | 1st Quarter (from March 30, 2003 to June 28, 2003)             |      | $ | 4.94 |     |  | $ | 3.20 | 
|                 | 2nd Quarter (from June 29, 2003 to September 27,
    2003)     |      |   | 6.49 |     |  |   | 4.27 | 
|                 | 3rd Quarter (from September 28, 2003 to
    December 27, 2003) |      |   | 8.73 |     |  |   | 5.44 | 
|                 | 4th Quarter (from December 28, 2003 to March 27,
    2004)     |      |   | 9.24 |     |  |   | 6.55 | 





| |                
| | ---------------
| | Dividend Policy





| |                                      
| | -------------------------------------
| | Issuer Purchases of Equity Securities



21



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|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data



|                                                                                                                                                                                          |                   |      |         |        |      |   |         |        |   |   |          |        |   |      |          |        |   |   |          |        |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------- | ---- | ------- | ------ | ---- | - | ------- | ------ | - | - | -------- | ------ | - | ---- | -------- | ------ | - | - | -------- | ------ | -
|                                                                                                                                                                                          |                   | 2005 |         |        | 2004 |   |         | 2003   |   |   | 2002     |        |   | 2001 |         
|                                                                                                                                                                                          |                   |      |         |        |      |   |         |        |   |   |          |        |   |      |         
|Selected Consolidated Statement of Operations Data:                                                                                                                                       |                   |      |         |        |      |   |         |        |   |   |          |        |   |      |          |        |   |   |          |       
|Net revenue                                                                                                                                                                               |                   | $    | 23,599  |        |      | $ | 26,671  |        |   | $ | 18,522   |        |   | $    | 26,547   |        |   | $ | 208,678  |       
|                                                                                                                                                                                          |                   |      |         |        |      |   |         |        |   |   |          |        |   |      |         
|Loss from operations                                                                                                                                                                      |                   |      | (36,137 | )      |      |   | (34,443 | )      |   |   | (63,611  | )      |   |      | (79,137  | )      |   |   | (12,692  | )     
|                                                                                                                                                                                          |                   |      |         |        |      |   |         |        |   |   |          |        |   |      |         
|Gain/(loss) on investments, write-down of marketable securities
    and venture investments, loss in investees accounted for under
    the equity method, and other income (expense), net |                   |      | (30,666 | )      |      |   | 252     |        |   |   | (62,872  | )      |   |      | (311,990 | )      |   |   | (439,585 | )     
|                                                                                                                                                                                          |                   |      |         |        |      |   |         |        |   |   |          |        |   |      |         
|Loss before cumulative effect of change in accounting
    principle(1)                                                                                                                    |                   |      | (49,811 | )      |      |   | (19,411 | )      |   |   | (106,048 | )      |   |      | (242,771 |        |   |   | (272,321 | )     
|                                                                                                                                                                                          |                   |      |         |        |      |   |         |        |   |   |          |        |   |      |         
|Net Loss                                                                                                                                                                                  |                   | $    | (49,811 | )      |      | $ | (19,411 | )      |   | $ | (106,048 | )      |   | $    | (240,716 | )      |   | $ | (272,321 | )     
|                                                                                                                                                                                          |                   |      |         |        |      |   |         |        |   |   |          |        |   |      |         
|Net loss per share before effect of change in accounting
    principle(1)                                                                                                                 |                   |      |         |        |      |   |         |        |   |   |          |        |   |      |          |        |   |   |          |       
|                                                                                                                                                                                          | Basic and Diluted |      | $       | (1.41  | )    |   | $       | (0.55  | ) |   | $        | (2.85  | ) |      | $        | (5.91  | ) |   | $        | (6.58  | )
|                                                                                                                                                                                          |                   |      |         |        |      |   |         |        |   |   |          |        |   |      |         
|Net loss per share:                                                                                                                                                                       |                   |      |         |        |      |   |         |        |   |   |          |        |   |      |          |        |   |   |          |       
|                                                                                                                                                                                          | Basic and Diluted |      | $       | (1.41  | )    |   | $       | (0.55  | ) |   | $        | (2.85  | ) |      | $        | (5.86  | ) |   | $        | (6.58  | )
|                                                                                                                                                                                          |                   |      |         |        |      |   |         |        |   |   |          |        |   |      |         
|Weighted average number of common shares:                                                                                                                                                 |                   |      |         |        |      |   |         |        |   |   |          |        |   |      |          |        |   |   |          |       
|                                                                                                                                                                                          | Basic and Diluted |      |         | 35,402 |      |   |         | 35,093 |   |   |          | 37,160 |   |      |          | 41,078 |   |   |          | 41,376 |  
|                                                                                                                                                                                          |                   |      |         |        |      |   |         |        |   |   |          |        |   |      |         

|                                 |  |      |         |  |      |   |         |      |  |   |         |  |  |      |         |  |  |   |         | 
|-------------------------------- |  | ---- | ------- |  | ---- | - | ------- | ---- |  | - | ------- |  |  | ---- | ------- |  |  | - | ------- | 
|                                 |  | 2005 |         |  | 2004 |   |         | 2003 |  |   | 2002    |  |  | 2001 |        
|                                 |  |      |         |  |      |   |         |      |  |   |         |  |  |      |        
|Consolidated Balance Sheet Data: |  |      |         |  |      |   |         |      |  |   |         |  |  |      |         |  |  |   |         | 
|Working capital                  |  | $    | 38,378  |  |      | $ | 93,384  |      |  | $ | 83,572  |  |  | $    | 323,791 |  |  | $ | 319,289 | 
|Total assets                     |  |      | 159,541 |  |      |   | 267,097 |      |  |   | 242,722 |  |  |      | 682,570 |  |  |   | 853,243 | 
|Stockholders equity             |  |      | 97,421  |  |      |   | 174,722 |      |  |   | 159,220 |  |  |      | 451,255 |  |  |   | 547,289 | 
|Long-term obligations            |  |      | 45      |  |      |   | 241     |      |  |   | 312     |  |  |      | 4,808   |  |  |   | 12,568  | 






|    |                                                                                                                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | We recognized a gain from the impact of an accounting change in
    fiscal 2002 which increased stockholders equity by
    $2.1 million. The gain was realized from our adoption of
    SFAS 133 and designating two derivative instruments on our
    books as fair value hedges.

22



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|                                                                                                                                                                                          |         |                  |         |        |                  |   |        |          |   |   |          |        |   |          |        |        |          |   |        |          |  |   |          |        |   |   |        |        |   |   |         |        |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------- | ---------------- | ------- | ------ | ---------------- | - | ------ | -------- | - | - | -------- | ------ | - | -------- | ------ | ------ | -------- | - | ------ | -------- |  | - | -------- | ------ | - | - | ------ | ------ | - | - | ------- | ------ | -
|                                                                                                                                                                                          |         | Fiscal Year 2005 |         |        | Fiscal Year 2004 |  
|                                                                                                                                                                                          |         |                  |         |        |                  |  
|                                                                                                                                                                                          |         | 4th Qtr.         |         |        | 3rd Qtr.         |   |        | 2nd Qtr. |   |   | 1st Qtr. |        |   | 4th Qtr. |        |        | 3rd Qtr. |   |        | 2nd Qtr. |  |   | 1st Qtr. |       
|                                                                                                                                                                                          |         |                  |         |        |                  |   |        |          |   |   |          |        |   |          |        |        |          |   |        |          |  |   |          |       
|Operating Summary:                                                                                                                                                                        |         |                  |         |        |                  |   |        |          |   |   |          |        |   |          |        |        |          |   |        |          |  |   |          |        |   |   |        |        |   |   |         |       
|Net revenue                                                                                                                                                                               |         | $                | 5,628   |        |                  | $ | 5,300  |          |   | $ | 5,535    |        |   | $        | 7,136  |        |          | $ | 8,934  |          |  | $ | 7,102    |        |   | $ | 5,561  |        |   | $ | 5,074   |       
|                                                                                                                                                                                          |         |                  |         |        |                  |   |        |          |   |   |          |        |   |          |        |        |          |   |        |          |  |   |          |       
|Gross profit (loss)                                                                                                                                                                       |         |                  | (213    | )      |                  |   | 1,002  |          |   |   | (2,941   | )      |   |          | (423   | )      |          |   | 257    |          |  |   | 2,402    |        |   |   | 1,343  |        |   |   | 1,829   |       
|                                                                                                                                                                                          |         |                  |         |        |                  |   |        |          |   |   |          |        |   |          |        |        |          |   |        |          |  |   |          |       
|Loss from operations                                                                                                                                                                      |         |                  | (9,702  | )      |                  |   | (6,684 | )        |   |   | (11,325  | )      |   |          | (8,426 | )      |          |   | (8,819 | )        |  |   | (7,254   | )      |   |   | (9,608 | )      |   |   | (8,762  | )     
|                                                                                                                                                                                          |         |                  |         |        |                  |   |        |          |   |   |          |        |   |          |        |        |          |   |        |          |  |   |          |       
|Gain (loss) on investments, write-down of marketable securities
    and venture investments, loss in investees accounted for under
    the equity method, and other income (expense), net |         |                  | (20,925 | )      |                  |   | (6,212 | )        |   |   | (3,019   | )      |   |          | (510   | )      |          |   | 7,182  |          |  |   | 1,932    |        |   |   | (2,397 | )      |   |   | (6,465  | )     
|                                                                                                                                                                                          |         |                  |         |        |                  |   |        |          |   |   |          |        |   |          |        |        |          |   |        |          |  |   |          |       
|Net loss                                                                                                                                                                                  |         | $                | (23,157 | )      |                  | $ | (9,876 | )        |   | $ | (10,147  | )      |   | $        | (6,631 | )      |          | $ | 4,792  |          |  | $ | (6,632   | )      |   | $ | (4,540 | )      |   | $ | (13,031 | )     
|                                                                                                                                                                                          |         |                  |         |        |                  |   |        |          |   |   |          |        |   |          |        |        |          |   |        |          |  |   |          |       
|Net loss per share:                                                                                                                                                                       |         |                  |         |        |                  |   |        |          |   |   |          |        |   |          |        |        |          |   |        |          |  |   |          |        |   |   |        |        |   |   |         |       
|                                                                                                                                                                                          | Basic   |                  | $       | (.65   | )                |   | $      | (.28     | ) |   | $        | (.29   | ) |          | $      | (.19   | )        |   | $      | 0.14     |  |   | $        | (0.19  | ) |   | $      | (0.13  | ) |   | $       | (0.37  | )
|                                                                                                                                                                                          |         |                  |         |        |                  |   |        |          |   |   |          |        |   |          |        |        |          |   |        |          |  |   |          |       
|                                                                                                                                                                                          | Diluted |                  | $       | (.65   | )                |   | $      | (.28     | ) |   | $        | (.29   | ) |          | $      | (.19   | )        |   | $      | 0.13     |  |   | $        | (0.19  | ) |   | $      | (0.13  | ) |   | $       | (0.37  | )
|                                                                                                                                                                                          |         |                  |         |        |                  |   |        |          |   |   |          |        |   |          |        |        |          |   |        |          |  |   |          |       
|Weighted average number of common shares:                                                                                                                                                 |         |                  |         |        |                  |   |        |          |   |   |          |        |   |          |        |        |          |   |        |          |  |   |          |        |   |   |        |        |   |   |         |       
|                                                                                                                                                                                          | Basic   |                  |         | 35,515 |                  |   |        | 35,475   |   |   |          | 35,353 |   |          |        | 35,262 |          |   |        | 35,208   |  |   |          | 35,141 |   |   |        | 35,033 |   |   |         | 34,988 |  
|                                                                                                                                                                                          |         |                  |         |        |                  |   |        |          |   |   |          |        |   |          |        |        |          |   |        |          |  |   |          |       
|                                                                                                                                                                                          | Diluted |                  |         | 35,515 |                  |   |        | 35,475   |   |   |          | 35,353 |   |          |        | 35,262 |          |   |        | 35,897   |  |   |          | 35,141 |   |   |        | 35,033 |   |   |         | 34,988 |  
|                                                                                                                                                                                          |         |                  |         |        |                  |   |        |          |   |   |          |        |   |          |        |        |          |   |        |          |  |   |          |       






|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations



Overview




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| |                             
| | ----------------------------
| | Critical Accounting Policies



Revenue Recognition










Inventory Valuation




Marketable Securities




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Valuation of Alliance Ventures and Solar Venture
Investments






| |                      
| | ---------------------
| | Results of Operations



|                                                                                |                                                  |                           |      |    |      |    |      |      |     |    |      |     |      |   
|------------------------------------------------------------------------------- | ------------------------------------------------ | ------------------------- | ---- | -- | ---- | -- | ---- | ---- | --- | -- | ---- | --- | ---- | --
|                                                                                |                                                  | Percentage of Net Revenue |     
|                                                                                |                                                  |                           |     
|                                                                                |                                                  | 2005                      |      |    | 2004 |    |      | 2003 |    
|                                                                                |                                                  |                           |      |    |      |    |      |      |    
|Net revenue                                                                     |                                                  |                           | 100  | %  |      |    | 100  | %    |     |    | 100  | %  
|Cost of revenue                                                                 |                                                  |                           | 111  |    |      |    | 78   |      |     |    | 215  |    
|                                                                                |                                                  |                           |      |    |      |    |      |      |    
|Gross profit (loss)                                                             |                                                  |                           | (11  | )  |      |    | 22   |      |     |    | (115 | )  
|Operating expense:                                                              |                                                  |                           |      |    |      |    |      |      |     |    |      |    
|                                                                                | Research and development                         |                           |      | 83 |      |    |      | 92   |     |    |      | 124 |     
|                                                                                | Selling, general and administrative              |                           |      | 52 |      |    |      | 59   |     |    |      | 96  |     
|                                                                                | Write-off of goodwill                            |                           |      | 7  |      |    |      |      |     |    |      |     |     
|                                                                                | Write-off of in-process research and development |                           |      |    |      |    |      |      |     |    |      | 8   |     
|                                                                                |                                                  |                           |      |    |      |    |      |      |    
|Loss from operations                                                            |                                                  |                           | (153 | )  |      |    | (129 | )    |     |    | (343 | )  
|Gain on investments                                                             |                                                  |                           | 33   |    |      |    | 110  |      |     |    | 76   |    
|Write-down of marketable securities and venture investments                     |                                                  |                           | (71  | )  |      |    | (2   | )    |     |    | (243 | )  
|Loss in investees accounted for under the equity method                         |                                                  |                           | (85  | )  |      |    | (78  | )    |     |    | (149 | )  
|Other expense, net                                                              |                                                  |                           | (7   | )  |      |    | (30  | )    |     |    | (24  | )  
|                                                                                |                                                  |                           |      |    |      |    |      |      |    
|Loss before income taxes and minority interest in consolidated
    subsidiaries |                                                  |                           | (283 | )  |      |    | (129 | )    |     |    | (683 | )  
|Benefit for income taxes                                                        |                                                  |                           | (71  | )  |      |    | (53  | )    |     |    | (92  | )  
|                                                                                |                                                  |                           |      |    |      |    |      |      |    
|Loss before minority interest in consolidated subsidiaries                      |                                                  |                           | (212 | )  |      |    | (76  | )    |     |    | (591 | )  
|Minority interest in consolidated subsidiaries                                  |                                                  |                           | 1    |    |      |    | 3    |      |     |    | 18   |    
|                                                                                |                                                  | Net loss                  |      |    | (211 | )% |      |      | (73 | )% |      |     | (573 | )%
|                                                                                |                                                  |                           |      |    |      |    |      |      |    

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| |            
| | -----------
| | Net Revenue



|                    |                         |                            |        |          |         |  |      |        |          |   |                   |        |        |          |      |     |         |   |        |              |        |  |              |     |     |  |     |     |     |    |    |     |    |  
|------------------- | ----------------------- | -------------------------- | ------ | -------- | ------- |  | ---- | ------ | -------- | - | ----------------- | ------ | ------ | -------- | ---- | --- | ------- | - | ------ | ------------ | ------ |  | ------------ | --- | --- |  | --- | --- | --- | -- | -- | --- | -- | -
|                    |                         | 2005                       |        |          | 2004    |  |      | 2003   |          |   | Percentage Change |       
|                    |                         |                            |        |          |         |  |      |        |          |   |                   |       
|                    |                         |                            |        | % of Net |         |  |      |        | % of Net |   |                   |        |        | % of Net |      |     |        
|                    |                         | Amount                     |        |          | Revenue |  |      | Amount |          |   | Revenue           |        |        | Amount   |      |     | Revenue |   |        | 2005 vs 2004 |        |  | 2004 vs 2003 |    
|                    |                         |                            |        |          |         |  |      |        |          |   |                   |        |        |          |      |     |         |   |        |              |        |  |              |    
|Memory Segment:     |                         |                            |        |          |         |  |      |        |          |   |                   |        |        |          |      |     |         |   |        |              |        |  |              |     |     |  |     |     |     |    |    |    
|                    | SRAM                    |                            | $      | 10,211   |         |  |      | 43%    |          |   | $                 | 11,603 |        |          |      | 44% |         |   | $      | 7,600        |        |  |              | 41% |     |  |     | (12 | )%  |    |    | 53  | % 
|                    | DRAM                    |                            |        | 1,576    |         |  |      | 7%     |          |   |                   | 6,257  |        |          |      | 23% |         |   |        | 6,334        |        |  |              | 34% |     |  |     | (75 | )%  |    |    | (1  | )%
|                    |                         |                            |        |          |         |  |      |        |          |   |                   |        |        |          |      |     |         |   |        |              |        |  |              |    
|                    |                         | Memory Segment Revenue     |        |          | 11,787  |  |      |        | 50%      |   |                   |        | 17,860 |          |      |     | 67%     |   |        |              | 13,934 |  |              |     | 75% |  |     |     | (34 | )% |    |     | 28 | %
|                    |                         |                            |        |          |         |  |      |        |          |   |                   |        |        |          |      |     |         |   |        |              |        |  |              |    
|Non-Memory Segment: |                         |                            |        |          |         |  |      |        |          |   |                   |        |        |          |      |     |         |   |        |              |        |  |              |     |     |  |     |     |     |    |    |    
|                    | Analog and Mixed Signal |                            |        | 7,337    |         |  |      | 31%    |          |   |                   | 4,316  |        |          |      | 16% |         |   |        | 2,948        |        |  |              | 16% |     |  |     | 70  | %   |    |    | 46  | % 
|                    | System Solutions        |                            |        | 4,475    |         |  |      | 19%    |          |   |                   | 4,495  |        |          |      | 17% |         |   |        | 1,640        |        |  |              | 9%  |     |  |     |     |     |    |    | 174 | % 
|                    |                         |                            |        |          |         |  |      |        |          |   |                   |        |        |          |      |     |         |   |        |              |        |  |              |    
|                    |                         | Non-Memory Segment Revenue |        |          | 11,812  |  |      |        | 50%      |   |                   |        | 8,811  |          |      |     | 33%     |   |        |              | 4,588  |  |              |     | 25% |  |     |     | 34  | %  |    |     | 92 | %
|                    |                         |                            |        |          |         |  |      |        |          |   |                   |        |        |          |      |     |         |   |        |              |        |  |              |    
|Net revenue         |                         | $                          | 23,599 |          |         |  | 100% |        |          | $ | 26,671            |        |        |          | 100% |     |         | $ | 18,522 |              |        |  | 100%         |     |     |  | (12 | )%  |     |    | 44 | %  
|                    |                         |                            |        |          |         |  |      |        |          |   |                   |        |        |          |      |     |         |   |        |              |        |  |              |    









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|                                             |             |      |       |        |         |   |       |         |  |   |       |        | 
|-------------------------------------------- | ----------- | ---- | ----- | ------ | ------- | - | ----- | ------- |  | - | ----- | ------ | 
|                                             |             | 2005 |       |        | 2004(1) |   |       | 2003(1) | 
|                                             |             |      |       |        |         |   |       |         | 
|US                                           |             | $    | 8,160 |        |         | $ | 8,789 |         |  | $ | 5,919 |       
|Canada and Central America                   |             |      | 625   |        |         |   | 476   |         |  |   | 79    |       
|Taiwan                                       |             |      | 3,047 |        |         |   | 3,245 |         |  |   | 2,925 |       
|Japan                                        |             |      | 2,406 |        |         |   | 2,934 |         |  |   | 1,544 |       
|Hong Kong                                    |             |      | 3,132 |        |         |   | 2,041 |         |  |   | 680   |       
|Asia (excluding Taiwan, Japan and Hong Kong) |             |      | 2,971 |        |         |   | 2,617 |         |  |   | 3,096 |       
|United Kingdom                               |             |      | 1,834 |        |         |   | 2,652 |         |  |   | 2,345 |       
|Europe (excluding United Kingdom)            |             |      | 1,350 |        |         |   | 3,864 |         |  |   | 1,934 |       
|Rest of world                                |             |      | 74    |        |         |   | 53    |         |  |   | 0     |       
|                                             |             |      |       |        |         |   |       |         | 
|                                             | Net revenue |      | $     | 23,599 |         |   | $     | 26,671  |  |   | $     | 18,522 | 
|                                             |             |      |       |        |         |   |       |         | 






|    |                                                                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | For the years ended March 31, 2004 and 2003, the geographic
    revenue is presented based on ship-to country of customer to be
    consistent with 2005 presentation. These amounts had been
    previously reported based upon bill-to location of customer.







| |                    
| | -------------------
| | Gross Profit (Loss)



29



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|           |                     |      |        |        |      |            |       |              |  |  |      |      |   
|---------- | ------------------- | ---- | ------ | ------ | ---- | ---------- | ----- | ------------ |  |  | ---- | ---- | --
|           |                     |      |        |        |      | Percentage |      
|           |                     |      |        |        |      | Change     |      
|           |                     |      |        |        |      |            |      
|           |                     | 2005 |        |        | 2004 |            |       | 2005 vs 2004 | 
|           |                     |      |        |        |      |            |       |              | 
|Memory     |                     | $    | (6,186 | )      |      | $          | 2,056 |              |  |  | (401 | )%  
|Non-Memory |                     |      | 3,611  |        |      |            | 3,775 |              |  |  | (4   | )%  
|           |                     |      |        |        |      |            |       |              | 
|           | Gross Profit (loss) |      | $      | (2,575 | )    |            | $     | 5,831        |  |  |      | (144 | )%
|           |                     |      |        |        |      |            |       |              | 











| |                         
| | ------------------------
| | Research and Development



|            |                                            |      |        |    |      |   |        |                   |   |   |              |     |   |              |     |    |  |  |    |   | 
|----------- | ------------------------------------------ | ---- | ------ | -- | ---- | - | ------ | ----------------- | - | - | ------------ | --- | - | ------------ | --- | -- |  |  | -- | - | 
|            |                                            |      |        |    |      |   |        | Percentage Change |  
|            |                                            |      |        |    |      |   |        |                   |  
|            |                                            | 2005 |        |    | 2004 |   |        | 2003              |   |   | 2005 vs 2004 |     |   | 2004 vs 2003 |    
|            |                                            |      |        |    |      |   |        |                   |   |   |              |     |   |              |    
|Net revenue |                                            | $    | 23,599 |    |      | $ | 26,671 |                   |   | $ | 18,522       |     |   |              | (12 | )% |  |  | 44 | %
|            |                                            |      |        |    |      |   |        |                   |   |   |              |     |   |              |    
|R&D expense |                                            | $    | 19,569 |    |      | $ | 24,653 |                   |   | $ | 22,933       |     |   |              | (21 | )% |  |  | 8  | %
|            |                                            |      |        |    |      |   |        |                   |   |   |              |     |   |              |    
|            | R&D expense as a percentage of net revenue |      |        | 83 | %    |   |        | 92                | % |   |              | 124 | % |              |     |    |  |  |    |   | 
|            |                                            |      |        |    |      |   |        |                   |   |   |              |     |   |              |    

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|            |             |      |        |        |      |            |        |              |  |  |      |     |   
|----------- | ----------- | ---- | ------ | ------ | ---- | ---------- | ------ | ------------ |  |  | ---- | --- | --
|            |             |      |        |        |      | Percentage |       
|            |             |      |        |        |      | Change     |       
|            |             |      |        |        |      |            |       
|            |             | 2005 |        |        | 2004 |            |        | 2005 vs 2004 | 
|            |             |      |        |        |      |            |        |              | 
|Memory      |             |      | 4,156  |        |      |            | 6,035  |              |  |  | (31  | )% 
|Non-Memory  |             |      | 15,413 |        |      |            | 16,205 |              |  |  | (5   | )% 
|Unallocable |             |      |        |        |      |            | 2,413  |              |  |  | (100 | )% 
|            |             |      |        |        |      |            |        |              | 
|            | R&D expense |      |        | 19,569 |      |            |        | 24,653       |  |  |      | (21 | )%
|            |             |      |        |        |      |            |        |              | 









| |                    
| | -------------------
| | Goodwill Impairment



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| |                                    
| | -----------------------------------
| | Selling, General and Administrative



|             |                                             |      |        |    |      |   |        |      |   |   |              |    |   |              |     |    |  |  |     |    | 
|------------ | ------------------------------------------- | ---- | ------ | -- | ---- | - | ------ | ---- | - | - | ------------ | -- | - | ------------ | --- | -- |  |  | --- | -- | 
|             |                                             | 2005 |        |    | 2004 |   |        | 2003 |   |   | 2005 vs 2004 |    |   | 2004 vs 2003 |    
|             |                                             |      |        |    |      |   |        |      |   |   |              |    |   |              |    
|Net revenue  |                                             | $    | 23,599 |    |      | $ | 26,671 |      |   | $ | 18,522       |    |   |              | (12 | )% |  |  | 44  | % 
|             |                                             |      |        |    |      |   |        |      |   |   |              |    |   |              |    
|SG&A expense |                                             | $    | 12,455 |    |      | $ | 15,621 |      |   | $ | 17,846       |    |   |              | (20 | )% |  |  | (12 | )%
|             |                                             |      |        |    |      |   |        |      |   |   |              |    |   |              |    
|             | SG&A expense as a percentage of net revenue |      |        | 53 | %    |   |        | 59   | % |   |              | 96 | % |              |     |    |  |  |     |    | 
|             |                                             |      |        |    |      |   |        |      |   |   |              |    |   |              |    



|            |              |      |       |        |      |            |       |              |  |  |     |     |   
|----------- | ------------ | ---- | ----- | ------ | ---- | ---------- | ----- | ------------ |  |  | --- | --- | --
|            |              |      |       |        |      | Percentage |      
|            |              |      |       |        |      | Change     |      
|            |              |      |       |        |      |            |      
|            |              | 2005 |       |        | 2004 |            |       | 2005 vs 2004 | 
|            |              |      |       |        |      |            |       |              | 
|Memory      |              |      | 4,046 |        |      |            | 4,960 |              |  |  | (18 | )% 
|Non-Memory  |              |      | 8,066 |        |      |            | 8,657 |              |  |  | (7  | )% 
|Unallocated |              |      | 343   |        |      |            | 2,004 |              |  |  | (83 | )% 
|            |              |      |       |        |      |            |       |              | 
|            | SG&A expense |      |       | 12,455 |      |            |       | 15,621       |  |  |     | (20 | )%
|            |              |      |       |        |      |            |       |              | 







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| |                           
| | --------------------------
| | Gain/(Loss) on Investments



|                                            |                           |      |       |       |      |   |        |        |  |   |        |        | 
|------------------------------------------- | ------------------------- | ---- | ----- | ----- | ---- | - | ------ | ------ |  | - | ------ | ------ | 
|                                            |                           | 2005 |       |       | 2004 |   |        | 2003   | 
|                                            |                           |      |       |       |      |   |        |        | 
|Sale of UMC shares                          |                           | $    | 7,995 |       |      | $ | 29,473 |        |  | $ | 24,651 |       
|Sale of Broadcom shares                     |                           |      |       |       |      |   |        |        |  |   | 1,245  |       
|Sale of Magma shares                        |                           |      |       |       |      |   |        |        |  |   | 1,186  |       
|Sale of Adaptec shares                      |                           |      | (541  | )     |      |   | 1,098  |        |  |   | (5,423 | )     
|Sale of Chartered shares                    |                           |      |       |       |      |   |        |        |  |   | (5,788 | )     
|Sale of Vitesse shares                      |                           |      | 258   |       |      |   |        |        |  |   | (912   | )     
|Sale of PMC-Sierra shares                   |                           |      |       |       |      |   |        |        |  |   | (274   | )     
|Write-down of restricted cash               |                           |      |       |       |      |   | (1,284 | )      |  |   | (300   | )     
|Net hedging activities                      |                           |      |       |       |      |   |        |        |  |   | (739   | )     
|Realized gain on Solar investee disposition |                           |      |       |       |      |   |        |        |  |   | 497    |       
|                                            |                           |      |       |       |      |   |        |        | 
|                                            | Total gain on investments |      | $     | 7,712 |      |   | $      | 29,287 |  |   | $      | 14,143 | 
|                                            |                           |      |       |       |      |   |        |        | 







| |   |                                                                
| | - | ---------------------------------------------------------------
| |  | $8.0 million gain on the sale of 45.4 million shares
    of UMC
| |  | $258,000 gain on the sale of 95,417 shares of Vitesse          
| |  | $544,000 loss on the sale of 154,444 shares of Adaptec         





| |   |                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------
| |  | $29.5 million gain on the sale of 93.0 million common
    shares of UMC                                     
| |  | $1.3 million write-down of restricted cash related to our
    investment in Platys being acquired by Adaptec
| |  | $1.1 million gain on the sale of 362,173 common shares of
    Adaptec                                       





| |   |                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------
| |  | $24.7 million gain on the sale of 112.2 million common
    shares of UMC                                
| |  | $1.2 million gain on the sale of 75,000 common shares of
    Broadcom                                   
| |  | $1.2 million gain on the sale of 360,244 common shares of
    Magma                                     
| |  | $5.4 million loss on the sale of 924,000 common shares of
    Adaptec                                   
| |  | $5.8 million loss on the sale of 1.6 million shares of
    Chartered ADRs                               
| |  | $912,000 loss on the sale of 143,000 common shares of Vitesse                                           
| |  | $274,000 loss on the sale of 68,000 common shares of PMC-Sierra                                         
| |  | $300,000 write-down of restricted cash related to our investment
    in Platys being acquired by Adaptec
| |  | $739,000 losses related to our hedges on Adaptec, Broadcom and
    Vitesse                              
| |  | $497,000 realized gain on the sale of one of Solar Venture
    Partners investee companies             



| |                                                                
| | ---------------------------------------------------------------
| | Write-Down of Marketable Securities and Venture
    Investments





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|                                    |                                                                        |      |         |         |      |   |        |        |   |   |         |         |  
|----------------------------------- | ---------------------------------------------------------------------- | ---- | ------- | ------- | ---- | - | ------ | ------ | - | - | ------- | ------- | -
|                                    |                                                                        | 2005 |         |         | 2004 |   |        | 2003   |  
|                                    |                                                                        |      |         |         |      |   |        |        |  
|Chartered ADRs                      |                                                                        | $    |         |         |      | $ |        |        |   | $ | (16,212 | )      
|Vitesse common shares               |                                                                        |      |         |         |      |   |        |        |   |   | (673    | )      
|Tower ordinary shares               |                                                                        |      | (16,652 | )       |      |   |        |        |   |   | (14,083 | )      
|Alliance Ventures investments      |                                                                        |      | (2,686  | )       |      |   | (5,487 | )      |   |   | (19,035 | )      
|Solar Venture Partners investments |                                                                        |      | (473    | )       |      |   | (300   | )      |   |   | (5,789  | )      
|                                    |                                                                        |      |         |         |      |   |        |        |  
|                                    | Total write-downs of marketable securities and venture
    investments |      | $       | (19,811 | )    |   | $      | (5,787 | ) |   | $       | (55,792 | )
|                                    |                                                                        |      |         |         |      |   |        |        |  

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| |                                                            
| | -----------------------------------------------------------
| | Loss in Investees Accounted for Under the Equity
    Method





Summary Financial Data


|                 |                         |                                   |   |         |         |   |   |         |        |   |       |         |         |      |   |         |         |   |   |         |        |   |      |         |        |       |   |          |         |   |   |         |        |   |   |         |        |  
|---------------- | ----------------------- | --------------------------------- | - | ------- | ------- | - | - | ------- | ------ | - | ----- | ------- | ------- | ---- | - | ------- | ------- | - | - | ------- | ------ | - | ---- | ------- | ------ | ----- | - | -------- | ------- | - | - | ------- | ------ | - | - | ------- | ------ | -
|                 |                         | 2005                              |   |         | 2004    |   |   | 2003    |       
|                 |                         |                                   |   |         |         |   |   |         |       
|                 |                         | Total                             |   |         | <20%    |   |   | >=20%   |        |   | Total |         |         | <20% |   |         | >=20%   |   |   | Total   |        |   | <20% |         |        | >=20% |  
|                 |                         |                                   |   |         |         |   |   |         |        |   |       |         |         |      |   |         |         |   |   |         |        |   |      |         |        |       |  
|Income Statement |                         |                                   |   |         |         |   |   |         |        |   |       |         |         |      |   |         |         |   |   |         |        |   |      |         |        |       |   |          |         |   |   |         |        |   |   |        
|                 | Revenue                 |                                   | $ | 42,335  |         |   | $ | 29,725  |        |   | $     | 12,610  |         |      | $ | 32,556  |         |   | $ | 16,097  |        |   | $    | 16,459  |        |       | $ | 12,246   |         |   | $ | 4,003   |        |   | $ | 8,243   |       
|                 | Gross profit            |                                   | $ | 23,416  |         |   | $ | 15,687  |        |   | $     | 7,729   |         |      | $ | 16,985  |         |   | $ | 9,020   |        |   | $    | 7,965   |        |       | $ | 5,670    |         |   | $ | 2,149   |        |   | $ | 3,521   |       
|                 | Net loss                |                                   | $ | (77,796 | )       |   | $ | (41,331 | )      |   | $     | (36,465 | )       |      | $ | (78,265 | )       |   | $ | (56,808 | )      |   | $    | (21,457 | )      |       | $ | (104,082 | )       |   | $ | (55,473 | )      |   | $ | (48,609 | )     
|Balance Sheet    |                         |                                   |   |         |         |   |   |         |        |   |       |         |         |      |   |         |         |   |   |         |        |   |      |         |        |       |   |          |         |   |   |         |        |   |   |        
|                 | Current assets          |                                   | $ | 80,534  |         |   | $ | 44,498  |        |   | $     | 36,036  |         |      | $ | 89,818  |         |   | $ | 53,670  |        |   | $    | 36,148  |        |       |   |          |         |   |   |         |        |   |   |         |       
|                 | Non-current assets      |                                   | $ | 16,486  |         |   | $ | 6,409   |        |   | $     | 10,077  |         |      | $ | 9,528   |         |   | $ | 2,633   |        |   | $    | 6,895   |        |       |   |          |         |   |   |         |        |   |   |         |       
|                 |                         | Total assets                      |   | $       | 97,020  |   |   | $       | 50,907 |   |       | $       | 46,113  |      |   | $       | 99,346  |   |   | $       | 56,303 |   |      | $       | 43,043 |       |   |          |         |   |   |         |        |   |   |         |        |  
|                 | Current liabilities     |                                   | $ | 29,056  |         |   | $ | 17,561  |        |   | $     | 11,495  |         |      | $ | 20,116  |         |   | $ | 8,814   |        |   | $    | 11,302  |        |       |   |          |         |   |   |         |        |   |   |         |       
|                 | Non-current Liabilities |                                   | $ | 4,217   |         |   | $ | 1,874   |        |   | $     | 2,343   |         |      | $ | 1,940   |         |   | $ | 604     |        |   | $    | 1,336   |        |       |   |          |         |   |   |         |        |   |   |         |       
|                 |                         | Total liabilities                 |   | $       | 33,273  |   |   | $       | 19,435 |   |       | $       | 13,838  |      |   | $       | 22,056  |   |   | $       | 9,418  |   |      | $       | 12,638 |       |   |          |         |   |   |         |        |   |   |         |        |  
|                 | Preferred stock         |                                   | $ | 358,641 |         |   | $ | 224,594 |        |   | $     | 134,047 |         |      | $ | 264,649 |         |   | $ | 184,569 |        |   | $    | 80,080  |        |       |   |          |         |   |   |         |        |   |   |         |       
|                 |                         | Total equity in loss of investees |   | $       | (16,936 | ) |   | $       | (5,595 | ) |       | $       | (11,341 | )    |   | $       | (15,355 | ) |   | $       | (8,990 | ) |      | $       | (6,365 | )     |   | $        | (16,597 | ) |   | $       | (8,169 | ) |   | $       | (8,428 | )
|                 | Number of companies     |                                   |   | 15      |         |   |   | 6       |        |   |       | 9       |         |      |   | 14      |         |   |   | 6       |        |   |      | 8       |        |       |   | 15       |         |   |   | 6       |        |   |   | 9       |       

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|                        |  |                   |  |            |      |  
|----------------------- |  | ----------------- |  | ---------- | ---- | -
|                        |  |                   |  | Ownership  |     
|2005 Investee Companies |  | Industry          |  | Percentage |     
|                        |  |                   |  |            |     
|Aperto Networks         |  | Networking        |  |            | 14.5 | %
|Active Optical Networks |  | Networking        |  |            | 33.6 | %
|Alta Analog             |  | Semiconductor     |  |            | 32.4 | %
|Apollo Biotechnology    |  | Semiconductor     |  |            | 15.3 | %
|Athena Semiconductor    |  | Semiconductor     |  |            | 41.4 | %
|Cavium Networks         |  | Semiconductor     |  |            | 15.4 | %
|Jazio                   |  | Semiconductor     |  |            | 5.1  | %
|Maranti Networks        |  | Networking        |  |            | 9.0  | %
|Nazomi Communications   |  | Semiconductor     |  |            | 23.6 | %
|Nethra Imaging          |  | Semiconductor     |  |            | 25.0 | %
|SiNett Corporation      |  | Semiconductor     |  |            | 21.6 | %
|Tharas Systems          |  | Design Automation |  |            | 15.1 | %
|Vianeta Communications  |  | Software          |  |            | 40.0 | %
|Xalted Networks         |  | Networking        |  |            | 22.8 | %
|Xceive Corporation      |  | Semiconductor     |  |            | 38.1 | %







| |                   
| | ------------------
| | Other Expense, Net





| |                                                                               
| | ------------------------------------------------------------------------------
| | Cumulative Effect of Change in Accounting
    Principle  Adoption of SFAS 133



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| |                         
| | ------------------------
| | Benefit for Income Taxes







| |                                       
| | --------------------------------------
| | Factors That May Affect Future Results



We may have difficulties meeting our cash needs.




The majority of our assets consist of securities that we have
a limited ability to sell and which have experienced significant
declines in value.




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Our financial results could be adversely impacted if we fail
to successfully develop, introduce, and sell new products which
we have had limited success in doing so to date.






| |   |                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our ability to anticipate and respond in a timely manner to
    changes in the requirements of our customers;                                                   
| |  | the significant research and development investment that we may
    be required to make before market acceptance, if any, of a
    particular product;          
| |  | the possibility that the semiconductor industry may not accept a
    new product after we have invested a significant amount of
    resources to develop it; and
| |  | new products introduced by our competitors.                                                                                                                     

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We are affected by a general pattern of product price
fluctuations, which has harmed, and may continue to harm, our
business.




Our results of operations and financial condition could be
harmed by efforts to comply with, or penalties associated with,
the Investment Company Act of 1940.




Failure to maintain effective internal controls could have a
material adverse effect on our business, operating results and
stock price.




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We face additional problems and uncertainties associated with
international operations that could seriously harm us.






| |   |                                                                                          
| | - | -----------------------------------------------------------------------------------------
| |  | political and economic instability and changes in diplomatic and
    trade relationships;
| |  | foreign currency fluctuations;                                                           
| |  | changes in regulatory requirements;                                                      
| |  | delays resulting from difficulty in obtaining export licenses
    for certain technology;
| |  | tariffs and other barriers and restrictions; and                                         
| |  | the burdens and complexities of complying with a variety of
    foreign laws.            



We rely on third parties to manufacture our products and
problems in their performance can seriously harm our financial
results.






| |   |                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------
| |  | constraints or delays in timely delivery of our products;                                                      
| |  | reduced control over delivery schedules;                                                                       
| |  | inability of these foundries to maintain or increase
    manufacturing capability and capacity as necessary;   
| |  | failure of these foundries to develop and implement new and
    competitive ways of manufacturing our products;
| |  | quality assurance and costs; and                                                                               
| |  | loss of production due to seismic activity, weather conditions
    and other factors.                          



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We must build products based on demand forecasts; if such
forecasts are inaccurate, we may incur significant losses, and
we have taken inventory write-downs recently.




We may not be able to compete successfully in a highly
competitive industry.






| |   |                                        
| | - | ---------------------------------------
| |  | our success in developing new products;
| |  | the quality and price of our products; 

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| |   |                                                                                            
| | - | -------------------------------------------------------------------------------------------
| |  | the diversity of our product line;                                                         
| |  | the cost effectiveness of our design, development, manufacturing
    and marketing efforts;
| |  | our customer service;                                                                      
| |  | our customer satisfaction;                                                                 
| |  | the pace at which customers incorporate our products into their
    systems;               
| |  | the number and nature of our competitors and general economic
    conditions; and          
| |  | our access to and availability of capital on terms acceptable to
    us.                   

Increases in raw materials prices may significantly harm our
results.




Our future results are likely to fluctuate and failure to
meet financial expectations for any period may cause our stock
price to decline.






| |   |                                                                                                
| | - | -----------------------------------------------------------------------------------------------
| |  | general economic conditions and conditions in the semiconductor
    industry generally;        
| |  | changes in our pricing policies as well as those of our
    competitors and suppliers;         
| |  | anticipated and unanticipated decreases in unit ASPs of our
    products;                      
| |  | the timing of new product announcements and introductions by us
    or our competitors;        
| |  | fluctuations in manufacturing yields, availability and cost of
    products from our suppliers;
| |  | increased research and development expense associated with new
    product introductions;      
| |  | changes in the mix of products sold;                                                           
| |  | the cyclical nature of the semiconductor industry;                                             
| |  | the gain or loss of significant customers;                                                     
| |  | market acceptance of new or enhanced versions of our products;                                 
| |  | seasonal customer demand; and                                                                  
| |  | the timing of significant orders.                                                              



We face periods of industry-wide semiconductor over-supply
that harm our results.




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We face risks related to sales of our products.




We may fail to successfully integrate businesses that we
acquire.




Our stock price may be volatile and could decline
substantially.






| |   |                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | variations between our operating results and the published
    expectations of securities analysts;                                                                                
| |  | changes in financial estimates or investment recommendations by
    securities analysts following our business;                                                                    
| |  | announcements by us or our competitors of significant contracts,
    new products or services, acquisitions, or other significant
    transactions;                                
| |  | sale of our common stock or other securities in the future;                                                                                                                        
| |  | the inclusion or exclusion of our stock in various indices or
    investment categories, especially as compared to the investment
    profiles of our stockholders at a given time;
| |  | changes in economic and capital market conditions;                                                                                                                                 
| |  | changes in business regulatory conditions; and                                                                                                                                     
| |  | the trading volume of our common stock.                                                                                                                                            



We are exposed to the risks associated with the slowdown in
the U.S. and worldwide economy.




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Quarterly shipments are typically weighted to the end of a
quarter.




If we are unable to successfully protect our intellectual
property through the issuance and enforcement of patents, our
business and results of operations could be harmed.






| |   |                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------
| |  | any current or future United States or foreign patent
    applications would be approved;                                                      
| |  | patents, if issued, would adequately protect our intellectual
    property and would not be challenged by third parties;                       
| |  | the validity of any issued patents would be upheld;                                                                                            
| |  | the patents of others will not have an adverse effect on our
    ability to conduct our business as we seek to conduct
    it; and             
| |  | others will not independently develop similar or competing
    intellectual property or design around any patents that may be
    issued to us.



If we are unable to protect and maintain the ownership of
intellectual property created by us, our business, and results
of operations could be harmed.




We may be unable to defend our intellectual property rights
and may face significant expense as a result of ongoing or
future litigation.




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Our operations could be severely harmed by natural disasters
or other disruptions to the foundries at which we subcontract
manufacturing.




Any guidance that we may provide about our business or
expected future results may prove to be inaccurate.




We depend on third parties to transport our products.




Compliance with changing regulation of corporate governance
and public disclosure may result in additional expense.




We may be unable to attract and retain key personnel who are
critical to the success of our business.




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| |                                
| | -------------------------------
| | Liquidity and Capital Resources









| |   |                                                                                                                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A decrease in our net deferred tax liability of
    $17.9 million. This is driven primarily by a decrease in
    the gross value of our short-term investments in UMC and Tower
    which results in a lower future tax liability upon liquidation
    of these investments.
| |  | An increase in inventory of $5.0 million which is driven by
    actual revenue not meeting the forecasted sales which drove
    additional inventory purchases.                                                                                                             
| |  | A decrease in accounts payable, accrued liabilities and income
    taxes payable of $4.4 million due to reductions in
    operating expenditures as well as more timely payments to
    vendors.                                                                            
| |  | A decrease in accounts receivable and other assets of
    $4.1 million which was due to improved cash collections on
    a smaller revenue base.                                                                                                                            





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| |                                        
| | ---------------------------------------
| | Contractual Obligations and Commitments



Balance Sheet


|                                               |  |           |   |  |       |   |   |       |  |   |         |  |  |       |  |  |  |   |   | 
|---------------------------------------------- |  | --------- | - |  | ----- | - | - | ----- |  | - | ------- |  |  | ----- |  |  |  | - | - | 
|                                               |  | Less than |   |  | 1-3   |   |   | 4-5   |  |   | After   |  |  |      
|                                               |  | 1 Year    |   |  | Years |   |   | Years |  |   | 5 Years |  |  | Total | 
|                                               |  |           |   |  |       |   |   |       |  |   |         |  |  |       | 
|Capital lease obligations (including interest) |  | $         | 4 |  |       | $ | 0 |       |  | $ |         |  |  | $     |  |  |  | $ | 4 | 
|                                               |  |           |   |  |       |   |   |       |  |   |         |  |  |       | 



Off-Balance Sheet


|                                       |                         |                               |        |        |        |   |        |        |        |   |         |        |        |       |        |        |        |   |        |        |        | 
|-------------------------------------- | ----------------------- | ----------------------------- | ------ | ------ | ------ | - | ------ | ------ | ------ | - | ------- | ------ | ------ | ----- | ------ | ------ | ------ | - | ------ | ------ | ------ | 
|                                       |                         | Less than                     |        |        | 1-3    |   |        | 4-5    |        |   | After   |        |        |      
|                                       |                         | 1 Year                        |        |        | Years  |   |        | Years  |        |   | 5 Years |        |        | Total |       
|                                       |                         |                               |        |        |        |   |        |        |        |   |         |        |        |       |       
|Operating leases (1)                   |                         | $                             | 2,041  |        |        | $ | 913    |        |        | $ |         |        |        | $     |        |        |        | $ | 2,954  |       
|Commitment to license in CAD tools (2) |                         |                               | 1,841  |        |        |   | 571    |        |        |   |         |        |        |       |        |        |        |   | 2,412  |       
|AVM commitments (3)                    |                         |                               | 10,000 |        |        |   | 20,000 |        |        |   | 20,000  |        |        |       | 29,200 |        |        |   | 79,200 |       
|Wafer Purchase commitments (4)         |                         |                               | 2,374  |        |        |   |        |        |        |   |         |        |        |       |        |        |        |   | 2,374  |       
|                                       |                         |                               |        |        |        |   |        |        |        |   |         |        |        |       |       
|                                       | Total off-balance sheet |                               |        | 16,256 |        |   |        | 21,484 |        |   |         | 20,000 |        |       |        | 29,200 |        |   |        | 86,940 |       
|                                       |                         |                               |        |        |        |   |        |        |        |   |         |        |        |       |       
|                                       |                         | TOTAL contractual obligations |        | $      | 16,260 |   |        | $      | 21,484 |   |         | $      | 20,000 |       |        | $      | 29,200 |   |        | $      | 86,944 | 
|                                       |                         |                               |        |        |        |   |        |        |        |   |         |        |        |       |       






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Future payments related to operating leases are primarily
    related to facilities rents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(2) | Future CAD tool commitments are payments related to CAD tool
    licenses under lease.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(3) | We have contractual funding commitments to the Alliance Venture
    Management (AVM) partnerships in our capacity as the
    sole limited partner in each of the five AVM partnerships. As
    the sole limited partner, we can exercise our right under the
    Limited Partnership Agreements to early terminate any of the
    Partnerships, which would then result in liquidation of the
    Partnerships in an orderly manner and would mean no additional
    funding obligations on our part. 
     The allocation of future AVM commitments is based on a forecast
    of funding commitments by investee company for fiscal 2006. The
    forecast for the years subsequent to fiscal 2006 is based on
    estimated funding requirements which are consistent with fiscal
    2005 actual investments and the fiscal 2006 forecast.
|   
|(4) | Wafer purchase commitments are future payments related to the
    delivery of wafers currently being processed in our contracting
    foundries.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                



| |                                                                                           
| | ------------------------------------------------------------------------------------------
| | Trading Activities Involving Non-Exchange Traded Contracts
    Accounted for at Fair Value





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| |                                                                  
| | -----------------------------------------------------------------
| | Effective Transactions with Related and Certain Other
    Parties











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|         |                                                           
|-------- | ----------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures About Market Risk





| |                
| | ---------------
| | Investment Risk





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| |                      
| | ---------------------
| | Foreign Currency Risk










|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data








|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on Accounting
    and Financial Disclosure



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|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures



| |                                                 
| | ------------------------------------------------
| | Evaluation of Disclosure Controls and Procedures









| |                                                                     
| | --------------------------------------------------------------------
| | Managements Report on Internal Control over
    Financial Reporting











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| |                                            
| | -------------------------------------------
| | Plan for Remediation of Material Weaknesses





| |                                                         
| | --------------------------------------------------------
| | Changes in Internal Control over Financial
    Reporting








|         |                  
|-------- | -----------------
|Item 9B. | Other Information



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PART III







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant





| |               
| | --------------
| | Code of Ethics








|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation








|         |                                                                   
|-------- | ------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management








|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions








|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services



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PART IV







|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules

The following documents are filed as part of this
report:




| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Financial Statements. Please see the accompanying Index
    to Consolidated Financial Statements, which appears on page F-1
    of the report. The Report of Independent Registered Public
    Accounting Firm, the Consolidated Financial Statements and the
    Notes to Consolidated Financial Statements listed in the Index
    to Consolidated Financial Statements, which appear beginning on
    page F-2 of this report, are incorporated by reference into Item
    8 above.
|
| | (2) | Financial Statement Schedules. Financial Statement
    Schedules have been omitted because the information required to
    be set forth therein is either not applicable or is included in
    the Consolidated Financial Statements or the notes thereto.                                                                                                                                                                                                                            



| |                                     
| | ------------------------------------
| | (3) Exhibits. See Items 15(b) below.



| |     |                                                                                                                                                                                                                 
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) | Exhibits. The exhibits listed on the accompanying Exhibit
    Index immediately following the signature page are filed as part
    of or are incorporated by reference into this Annual Report on
    Form 10-K.

Financial Statement Schedules.


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SIGNATURES






| |                                              
| | ---------------------------------------------
| | ALLIANCE SEMICONDUCTOR 
          CORPORATION



| |     |                     
| | --- | --------------------
| | By: | /s/ N. Damodar Reddy

| |                                     
| | ------------------------------------
| |                                     
| | N. Damodar Reddy                    
| | Chairman of the Board, President and
| | Chief Executive Officer             
| | (Principal Executive Officer)       





| |     |                 
| | --- | ----------------
| | By: | /s/ Jeff Parsons

| |                                              
| | ---------------------------------------------
| |                                              
| | Jeff Parsons                                 
| | Vice President Finance and Administration and
| | Chief Financial Officer                      
| | (Principal Financial and Accounting Officer) 



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POWER OF ATTORNEY






|                                           |  |                                                              |  |               |  | 
|------------------------------------------ |  | ------------------------------------------------------------ |  | ------------- |  | 
|Signature                                  |  | Title                                                        |  | Date         
|                                           |  |                                                              |  |              
|                                          
|/s/ N. Damodar ReddyN.
    Damodar Reddy   |  | Chairman of the Board, President and Chief Executive Officer |  | June 23 2005 
|                                          
|/s/ C. N. ReddyC.
    N. Reddy             |  | Director, Executive Vice President for Investments           |  | June 23, 2005
|                                          
|/s/ Juan A. BenitezJuan
    A. Benitez     |  | Director                                                     |  | June 23, 2005
|                                          
|/s/ Sanford L. KaneSanford
    L. Kane     |  | Director                                                     |  | June 23, 2005
|                                          
|/s/ Gregory E. BartonGregory
    E. Barton |  | Director                                                     |  | June 23, 2005

57



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##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


|                                                        |                                                                                                       |       |     |      | 
|------------------------------------------------------- | ----------------------------------------------------------------------------------------------------- | ----- | --- | ---- | 
|                                                        |                                                                                                       | Pages |    
|                                                        |                                                                                                       |       |    
|Report of Independent Registered Public Accounting Firm |                                                                                                       |       | F-2 |     
|Consolidated Financial Statements:                      |                                                                                                       |       |     |     
|                                                        | Consolidated Balance Sheets as of March 31, 2005 and 2004                                             |       |     | F-5  | 
|                                                        | Consolidated Statements of Operations for the years ended
    March 31, 2005, 2004 and 2003           |       |     | F-6  | 
|                                                        | Consolidated Statements of Stockholders Equity for the
    years ended March 31, 2005, 2004 and 2003 |       |     | F-7  | 
|                                                        | Consolidated Statements of Cash Flows for the years ended
    March 31, 2005, 2004 and 2003           |       |     | F-8  | 
|                                                        | Notes to Consolidated Financial Statements                                                            |       |     | F-9  | 
|Financial Statement Schedule:                           |                                                                                                       |       |     |     
|                                                        | Schedule II  Valuation and Qualifying Accounts                                                       |       |     | F-43 | 

F-1



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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








Consolidated financial statements and financial statement
schedule




Internal control over financial reporting


Internal
Control  Integrated Framework






F-2



---



##### Table of Contents

















F-3



---



##### Table of Contents







| |                                   
| | ----------------------------------
| | /s/ PricewaterhouseCoopers
    LLP





F-4



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##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


CONSOLIDATED BALANCE SHEETS


(in thousands, except per share amounts)


|                                                                          |                                                                                                                                                                                         |                                            |        |         |         |  |        |         |         | 
|------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------ | ------- | ------- |  | ------ | ------- | ------- | 
|                                                                          |                                                                                                                                                                                         | March 31,                                  |       
|                                                                          |                                                                                                                                                                                         |                                            |       
|                                                                          |                                                                                                                                                                                         | 2005                                       |        |         | 2004    | 
|                                                                          |                                                                                                                                                                                         |                                            |        |         |         | 
|ASSETS                                                                   
|Current assets:                                                           |                                                                                                                                                                                         |                                            |        |         |         |  |        |        
|                                                                          | Cash and cash equivalents                                                                                                                                                               |                                            | $      | 2,397   |         |  | $      | 6,107   |        
|                                                                          | Short-term investments                                                                                                                                                                  |                                            |        | 82,444  |         |  |        | 159,778 |        
|                                                                          | Accounts receivable, net                                                                                                                                                                |                                            |        | 1,677   |         |  |        | 4,081   |        
|                                                                          | Inventory                                                                                                                                                                               |                                            |        | 7,320   |         |  |        | 11,609  |        
|                                                                          | Related party receivables                                                                                                                                                               |                                            |        | 344     |         |  |        | 264     |        
|                                                                          | Other current assets                                                                                                                                                                    |                                            |        | 5,830   |         |  |        | 2,847   |        
|                                                                          |                                                                                                                                                                                         |                                            |        |         |         | 
|                                                                          |                                                                                                                                                                                         | Total current assets                       |        |         | 100,012 |  |        |         | 184,686 | 
|Property and equipment, net                                               |                                                                                                                                                                                         |                                            | 4,316  |         |         |  | 6,161  |        
|Investment in Tower Semiconductor Ltd. (excluding short-term
    portion) |                                                                                                                                                                                         |                                            | 8,780  |         |         |  | 21,208 |        
|Alliance Ventures and other investments                                   |                                                                                                                                                                                         |                                            | 24,865 |         |         |  | 36,082 |        
|Deferred tax assets                                                       |                                                                                                                                                                                         |                                            | 19,736 |         |         |  | 8,278  |        
|Other assets                                                              |                                                                                                                                                                                         |                                            | 542    |         |         |  | 5,307  |        
|Goodwill and intangible assets                                            |                                                                                                                                                                                         |                                            | 1,290  |         |         |  | 5,375  |        
|                                                                          |                                                                                                                                                                                         |                                            |        |         |         | 
|                                                                          |                                                                                                                                                                                         | Total assets                               |        | $       | 159,541 |  |        | $       | 267,097 | 
|                                                                          |                                                                                                                                                                                         |                                            |        |         |         | 
|                                                                         
|LIABILITIES AND STOCKHOLDERS EQUITY                                     
|Current liabilities:                                                      |                                                                                                                                                                                         |                                            |        |         |         |  |        |        
|                                                                          | Accounts payable                                                                                                                                                                        |                                            |        | 5,275   |         |  |        | 9,406   |        
|                                                                          | Accrued liabilities                                                                                                                                                                     |                                            |        | 1,645   |         |  |        | 2,881   |        
|                                                                          | Income taxes payable                                                                                                                                                                    |                                            |        | 34,855  |         |  |        | 33,766  |        
|                                                                          | Deferred income taxes                                                                                                                                                                   |                                            |        | 19,736  |         |  |        | 45,216  |        
|                                                                          | Current portion of long-term obligations                                                                                                                                                |                                            |        | 119     |         |  |        |         |        
|                                                                          | Other current liabilities                                                                                                                                                               |                                            |        | 4       |         |  |        | 33      |        
|                                                                          |                                                                                                                                                                                         |                                            |        |         |         | 
|                                                                          |                                                                                                                                                                                         | Total current liabilities                  |        |         | 61,634  |  |        |         | 91,302  | 
|Other liabilities                                                         |                                                                                                                                                                                         |                                            | 45     |         |         |  | 237    |        
|Long-term capital lease obligation                                        |                                                                                                                                                                                         |                                            |        |         |         |  | 4      |        
|                                                                          |                                                                                                                                                                                         |                                            |        |         |         | 
|                                                                          |                                                                                                                                                                                         | Total liabilities                          |        |         | 61,679  |  |        |         | 91,543  | 
|                                                                          |                                                                                                                                                                                         |                                            |        |         |         | 
|Commitments and contingencies (Notes 10 and 14)                           |                                                                                                                                                                                         |                                            |        |         |         |  |        |        
|Minority interest in subsidiary companies                                 |                                                                                                                                                                                         |                                            | 441    |         |         |  | 832    |        
|                                                                          |                                                                                                                                                                                         |                                            |        |         |         | 
|Stockholders equity:                                                     |                                                                                                                                                                                         |                                            |        |         |         |  |        |        
|                                                                          | Preferred stock, $0.01 par value; 5,000 shares
    authorized; none issued and outstanding                                                                                              |                                            |        |         |         |  |        |         |        
|                                                                          | Common stock, $0.01 par value; 100,000 shares
    authorized; 43,723 and 43,409 shares issued and 35,568 and
    35,254 shares outstanding at March 31, 2005 and 2004,
    respectively |                                            |        | 438     |         |  |        | 435     |        
|                                                                          | Additional paid-in capital                                                                                                                                                              |                                            |        | 201,551 |         |  |        | 200,670 |        
|                                                                          | Treasury stock (8,155 shares at cost at March 31, 2005
    and 2004, respectively)                                                                                                      |                                            |        | (68,524 | )       |  |        | (68,524 | )      
|                                                                          | (Accumulated deficit)/ Retained earnings                                                                                                                                                |                                            |        | (43,712 | )       |  |        | 6,099   |        
|                                                                          | Accumulated other comprehensive income                                                                                                                                                  |                                            |        | 7,668   |         |  |        | 36,042  |        
|                                                                          |                                                                                                                                                                                         |                                            |        |         |         | 
|                                                                          |                                                                                                                                                                                         | Total stockholders equity                 |        |         | 97,421  |  |        |         | 174,722 | 
|                                                                          |                                                                                                                                                                                         |                                            |        |         |         | 
|                                                                          |                                                                                                                                                                                         | Total liabilities and stockholders equity |        | $       | 159,541 |  |        | $       | 267,097 | 
|                                                                          |                                                                                                                                                                                         |                                            |        |         |         | 



F-5



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##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


CONSOLIDATED STATEMENTS OF OPERATIONS


(in thousands, except per share amounts)


|                                                                                |                                                           |                      |         |        |      |   |         |        |   |   |          |         |  
|------------------------------------------------------------------------------- | --------------------------------------------------------- | -------------------- | ------- | ------ | ---- | - | ------- | ------ | - | - | -------- | ------- | -
|                                                                                |                                                           | Year Ended March 31, |        
|                                                                                |                                                           |                      |        
|                                                                                |                                                           | 2005                 |         |        | 2004 |   |         | 2003   |  
|                                                                                |                                                           |                      |         |        |      |   |         |        |  
|Net revenue                                                                     |                                                           | $                    | 23,599  |        |      | $ | 26,671  |        |   | $ | 18,522   |        
|Cost of revenue                                                                 |                                                           |                      | 26,174  |        |      |   | 20,840  |        |   |   | 39,744   |        
|                                                                                |                                                           |                      |         |        |      |   |         |        |  
|                                                                                | Gross profit (loss)                                       |                      |         | (2,575 | )    |   |         | 5,831  |   |   |          | (21,222 | )
|Operating expense:                                                              |                                                           |                      |         |        |      |   |         |        |   |   |          |        
|                                                                                | Research and development                                  |                      |         | 19,569 |      |   |         | 24,653 |   |   |          | 22,933  |  
|                                                                                | Selling, general and administrative                       |                      |         | 12,455 |      |   |         | 15,621 |   |   |          | 17,846  |  
|                                                                                | Impairment of goodwill                                    |                      |         | 1,538  |      |   |         |        |   |   |          |         |  
|                                                                                | Write-off of acquired in-process research and development |                      |         |        |      |   |         |        |   |   |          | 1,610   |  
|                                                                                |                                                           |                      |         |        |      |   |         |        |  
|Loss from operations                                                            |                                                           |                      | (36,137 | )      |      |   | (34,443 | )      |   |   | (63,611  | )      
|Gain on investments                                                             |                                                           |                      | 7,712   |        |      |   | 29,287  |        |   |   | 14,143   |        
|Write-down of marketable securities and other investments                       |                                                           |                      | (16,652 | )      |      |   | (652    | )      |   |   | (45,029  | )      
|Losses related to equity method investments                                     |                                                           |                      | (20,095 | )      |      |   | (20,490 | )      |   |   | (27,360  | )      
|Other expense, net                                                              |                                                           |                      | (1,631  | )      |      |   | (7,893  | )      |   |   | (4,626   | )      
|                                                                                |                                                           |                      |         |        |      |   |         |        |  
|Loss before income taxes and minority interest in consolidated
    subsidiaries |                                                           |                      | (66,803 | )      |      |   | (34,191 | )      |   |   | (126,483 | )      
|Benefit for income taxes                                                        |                                                           |                      | (16,708 | )      |      |   | (14,083 | )      |   |   | (17,113  | )      
|                                                                                |                                                           |                      |         |        |      |   |         |        |  
|Loss before minority interest in consolidated subsidiaries                      |                                                           |                      | (50,095 | )      |      |   | (20,108 | )      |   |   | (109,370 | )      
|Minority interest in consolidated subsidiaries                                  |                                                           |                      | 284     |        |      |   | 697     |        |   |   | 3,322    |        
|                                                                                |                                                           |                      |         |        |      |   |         |        |  
|Net loss                                                                        |                                                           | $                    | (49,811 | )      |      | $ | (19,411 | )      |   | $ | (106,048 | )      
|                                                                                |                                                           |                      |         |        |      |   |         |        |  
|Net loss per share:                                                             |                                                           |                      |         |        |      |   |         |        |   |   |          |        
|                                                                                | Basic and diluted                                         |                      | $       | (1.41  | )    |   | $       | (0.55  | ) |   | $        | (2.85   | )
|                                                                                |                                                           |                      |         |        |      |   |         |        |  
|Weighted average number of common shares:                                       |                                                           |                      |         |        |      |   |         |        |   |   |          |        
|                                                                                | Basic and diluted                                         |                      |         | 35,402 |      |   |         | 35,093 |   |   |          | 37,160  |  
|                                                                                |                                                           |                      |         |        |      |   |         |        |  



F-6



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##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY


(in thousands, except per share amounts)


|                                    |  |              |        |  |            |   |     |          |  |               |         |  |          |          |         |       |               |   |          |        |  |   |          |   |  |   |          |  
|----------------------------------- |  | ------------ | ------ |  | ---------- | - | --- | -------- |  | ------------- | ------- |  | -------- | -------- | ------- | ----- | ------------- | - | -------- | ------ |  | - | -------- | - |  | - | -------- | -
|                                    |  |              |        |  |            |   |     |          |  | Accumulated   |         |  |          |          |        
|                                    |  |              |        |  |            |   |     | Other    |  |               |         |  |         
|                                    |  | Common Stock |        |  | Additional |   |     |          |  | Comprehensive |         |  | Retained |          |         | Total |              
|                                    |  |              |        |  | Paid-In    |   |     | Treasury |  |               | Income  |  |          | Earnings |         |       | Stockholders |  
|                                    |  | Shares       |        |  | Amount     |   |     | Capital  |  |               | Stock   |  |          | (Loss)   |         |       | (Deficit)     |   |          | Equity | 
|                                    |  |              |        |  |            |   |     |          |  |               |         |  |          |          |         |       |               |   |          |        | 
|Balances at March 31, 2002          |  |              | 42,967 |  |            | $ | 430 |          |  | $             | 199,200 |  |          | $        | (30,430 | )     |               | $ | 150,497  |        |  | $ | 131,558  |   |  | $ | 451,255  |  
|Issuance of common stock under ESPP |  |              | 165    |  |            |   | 2   |          |  |               | 499     |  |          |          |         |       |               |   |          |        |  |   |          |   |  |   | 501      |  
|Repurchase of common stock(1)       |  |              |        |  |            |   |     |          |  |               |         |  |          |          | (38,094 | )     |               |   |          |        |  |   |          |   |  |   | (38,094  | )
|Unrealized loss on investments, net |  |              |        |  |            |   |     |          |  |               |         |  |          |          |         |       |               |   | (148,394 | )      |  |   |          |   |  |   |          |  
|Net loss                            |  |              |        |  |            |   |     |          |  |               |         |  |          |          |         |       |               |   |          |        |  |   | (106,048 | ) |  |   |          |  
|Total comprehensive loss            |  |              |        |  |            |   |     |          |  |               |         |  |          |          |         |       |               |   |          |        |  |   |          |   |  |   | (254,442 | )
|                                    |  |              |        |  |            |   |     |          |  |               |         |  |          |          |         |       |               |   |          |        | 
|Balances at March 31, 2003          |  |              | 43,132 |  |            |   | 432 |          |  |               | 199,699 |  |          |          | (68,524 | )     |               |   | 2,103    |        |  |   | 25,510   |   |  |   | 159,220  |  
|Issuance of common stock under ESPP |  |              | 277    |  |            |   | 3   |          |  |               | 971     |  |          |          |         |       |               |   |          |        |  |   |          |   |  |   | 974      |  
|Unrealized gain on investments, net |  |              |        |  |            |   |     |          |  |               |         |  |          |          |         |       |               |   | 33,939   |        |  |   |          |   |  |   |          |  
|Net loss                            |  |              |        |  |            |   |     |          |  |               |         |  |          |          |         |       |               |   |          |        |  |   | (19,411  | ) |  |   |          |  
|Total comprehensive income          |  |              |        |  |            |   |     |          |  |               |         |  |          |          |         |       |               |   |          |        |  |   |          |   |  |   | 14,528   |  
|                                    |  |              |        |  |            |   |     |          |  |               |         |  |          |          |         |       |               |   |          |        | 
|Balances at March 31, 2004          |  |              | 43,409 |  |            |   | 435 |          |  |               | 200,670 |  |          |          | (68,524 | )     |               |   | 36,042   |        |  |   | 6,099    |   |  |   | 174,722  |  
|Issuance of common stock under ESPP |  |              | 314    |  |            |   | 3   |          |  |               | 881     |  |          |          |         |       |               |   |          |        |  |   |          |   |  |   | 884      |  
|Unrealized loss on investments, net |  |              |        |  |            |   |     |          |  |               |         |  |          |          |         |       |               |   | (28,374  | )      |  |   |          |   |  |   |          |  
|Net loss                            |  |              |        |  |            |   |     |          |  |               |         |  |          |          |         |       |               |   |          |        |  |   | (49,811  | ) |  |   |          |  
|Total comprehensive loss            |  |              |        |  |            |   |     |          |  |               |         |  |          |          |         |       |               |   |          |        |  |   |          |   |  |   | (78,185  | )
|                                    |  |              |        |  |            |   |     |          |  |               |         |  |          |          |         |       |               |   |          |        | 
|Balances at March 31, 2005          |  |              | 43,723 |  |            | $ | 438 |          |  | $             | 201,551 |  |          | $        | (68,524 | )     |               | $ | 7,668    |        |  | $ | (43,712  | ) |  | $ | 97,421   |  
|                                    |  |              |        |  |            |   |     |          |  |               |         |  |          |          |         |       |               |   |          |        | 






|    |                                                                                                                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | At March 31, 2003, 2004 and 2005, the Company held
    8,155 shares in treasury at each fiscal year end,
    respectively, which have not been retired. After taking into
    account these treasury shares, the net outstanding shares at
    March 31, 2003, 2004 and 2005 were 34,977 shares,
    35,254 shares and 35,568 shares, respectively.



F-7



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##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


CONSOLIDATED STATEMENTS OF CASH FLOWS


(in thousands)


|                                                   |                                                                                 |                                                         |                                                     |         |         |        |        |         |         |         |         |          |         |         |  
|-------------------------------------------------- | ------------------------------------------------------------------------------- | ------------------------------------------------------- | --------------------------------------------------- | ------- | ------- | ------ | ------ | ------- | ------- | ------- | ------- | -------- | ------- | ------- | -
|                                                   |                                                                                 | Year Ended March 31,                                    |                                                    
|                                                   |                                                                                 |                                                         |                                                    
|                                                   |                                                                                 | 2005                                                    |                                                     |         | 2004    |        |        | 2003    |        
|                                                   |                                                                                 |                                                         |                                                     |         |         |        |        |         |        
|Cash flows from operating activities:              |                                                                                 |                                                         |                                                     |         |         |        |        |         |         |         |         |         
|                                                   | Net loss                                                                        |                                                         | $                                                   | (49,811 | )       |        | $      | (19,411 | )       |         | $       | (106,048 | )      
|                                                   | Adjustments to reconcile net loss to net cash used in operating
    activities: |                                                         |                                                     |         |         |        |        |         |         |         |         |          |        
|                                                   |                                                                                 | Depreciation and amortization                           |                                                     |         | 5,461   |        |        |         | 6,737   |         |         |          | 5,837   |        
|                                                   |                                                                                 | Minority interest in subsidiary companies, net of tax   |                                                     |         | (284    | )      |        |         | (697    | )       |         |          | (3,322  | )      
|                                                   |                                                                                 | Write-down of in-process research and development       |                                                     |         |         |        |        |         |         |         |         |          | 1,610   |        
|                                                   |                                                                                 | Loss in investees accounted for under the equity method |                                                     |         | 20,095  |        |        |         | 20,490  |         |         |          | 27,360  |        
|                                                   |                                                                                 | Gain on investments                                     |                                                     |         | (7,712  | )      |        |         | (29,287 | )       |         |          | (14,143 | )      
|                                                   |                                                                                 | Other                                                   |                                                     |         | 345     |        |        |         | 1,162   |         |         |          | 457     |        
|                                                   |                                                                                 | Write-down of investments                               |                                                     |         | 16,652  |        |        |         | 652     |         |         |          | 45,029  |        
|                                                   |                                                                                 | Inventory write-down                                    |                                                     |         | 9,314   |        |        |         | 2,876   |         |         |          | 6,338   |        
|                                                   |                                                                                 | Write-down of goodwill                                  |                                                     |         | 1,538   |        |        |         |         |         |         |          |         |        
|                                                   |                                                                                 | Write-down of Tower wafer credits                       |                                                     |         |         |        |        |         |         |         |         |          | 9,479   |        
|                                                   |                                                                                 | Deferred income taxes                                   |                                                     |         | (17,895 | )      |        |         | (8,942  | )       |         |          | 857     |        
|                                                   |                                                                                 | Changes in assets and liabilities:                      |                                                     |         |         |        |        |         |         |         |         |          |         |        
|                                                   |                                                                                 |                                                         | Accounts receivable                                 |         |         | 2,404  |        |         |         | (2,023  | )       |          |         | 833     |  
|                                                   |                                                                                 |                                                         | Inventory                                           |         |         | (5,025 | )      |         |         | (11,623 | )       |          |         | 10,436  |  
|                                                   |                                                                                 |                                                         | Related party receivables                           |         |         | (80    | )      |         |         | 1,018   |         |          |         | 1,112   |  
|                                                   |                                                                                 |                                                         | Other assets                                        |         |         | 1,782  |        |         |         | (2,155  | )       |          |         | (1,670  | )
|                                                   |                                                                                 |                                                         | Accounts payable                                    |         |         | (4,131 | )      |         |         | 5,108   |         |          |         | 1,405   |  
|                                                   |                                                                                 |                                                         | Accrued liabilities and other long-term obligations |         |         | (1,309 | )      |         |         | (754    | )       |          |         | (1,701  | )
|                                                   |                                                                                 |                                                         | Income tax payable                                  |         |         | 1,089  |        |         |         | 29,246  |         |          |         | (17,567 | )
|                                                   |                                                                                 |                                                         |                                                     |         |         |        |        |         |        
|                                                   | Net cash used in operating activities                                           |                                                         |                                                     | (27,567 | )       |        |        | (7,603  | )       |         |         | (33,698  | )      
|                                                   |                                                                                 |                                                         |                                                     |         |         |        |        |         |        
|Cash flows from investing activities:              |                                                                                 |                                                         |                                                     |         |         |        |        |         |         |         |         |         
|                                                   | Purchase of property and equipment                                              |                                                         |                                                     | (764    | )       |        |        | (1,226  | )       |         |         | (4,126   | )      
|                                                   | Purchase of technology licenses                                                 |                                                         |                                                     | (650    | )       |        |        | (430    | )       |         |         | (3,150   | )      
|                                                   | Proceeds from sale of available-for-sale securities                             |                                                         |                                                     | 33,297  |         |        |        | 80,523  |         |         |         | 116,092  |        
|                                                   | Proceeds from sale of Alliance Ventures and other investments                   |                                                         |                                                     |         |         |        |        | 1,350   |         |         |         | 500      |        
|                                                   | Investment in Tower Semiconductor Ltd.                                          |                                                         |                                                     | 0       |         |        |        | (11,001 | )       |         |         | (25,976  | )      
|                                                   | Purchase of Alliance Ventures and other investments                             |                                                         |                                                     | (8,877  | )       |        |        | (20,031 | )       |         |         | (11,699  | )      
|                                                   |                                                                                 |                                                         |                                                     |         |         |        |        |         |        
|                                                   | Net cash provided by investing activities                                       |                                                         |                                                     | 23,006  |         |        |        | 49,185  |         |         |         | 71,641   |        
|                                                   |                                                                                 |                                                         |                                                     |         |         |        |        |         |        
|Cash flows from financing activities:              |                                                                                 |                                                         |                                                     |         |         |        |        |         |         |         |         |         
|                                                   | Net proceeds from the issuance of common stock                                  |                                                         |                                                     | 884     |         |        |        | 974     |         |         |         | 501      |        
|                                                   | Principal payments on lease obligations                                         |                                                         |                                                     | (33     | )       |        |        | (247    | )       |         |         | (369     | )      
|                                                   | Repurchase of common stock                                                      |                                                         |                                                     |         |         |        |        |         |         |         |         | (38,094  | )      
|                                                   | Repayments of short-term borrowings                                             |                                                         |                                                     |         |         |        |        | (43,560 | )       |         |         | (22,613  | )      
|                                                   | Release of restricted cash                                                      |                                                         |                                                     |         |         |        |        |         |         |         |         | 6,430    |        
|                                                   |                                                                                 |                                                         |                                                     |         |         |        |        |         |        
|                                                   | Net cash provided by (used in) financing activities                             |                                                         |                                                     | 851     |         |        |        | (42,833 | )       |         |         | (54,145  | )      
|                                                   |                                                                                 |                                                         |                                                     |         |         |        |        |         |        
|Net decrease in cash and cash equivalents          |                                                                                 |                                                         | (3,710                                              | )       |         |        | (1,251 | )       |         |         | (16,202 | )       
|Cash and cash equivalents at beginning of year     |                                                                                 |                                                         | 6,107                                               |         |         |        | 7,358  |         |         |         | 23,560  |         
|                                                   |                                                                                 |                                                         |                                                     |         |         |        |        |         |        
|Cash and cash equivalents at end of year           |                                                                                 | $                                                       | 2,397                                               |         |         | $      | 6,107  |         |         | $       | 7,358   |         
|                                                   |                                                                                 |                                                         |                                                     |         |         |        |        |         |        
|Supplemental disclosures of cash flow information: |                                                                                 |                                                         |                                                     |         |         |        |        |         |         |         |         |         
|                                                   | Cash refunded for taxes, net                                                    |                                                         | $                                                   | 42      |         |        | $      | 32,388  |         |         | $       | 401      |        
|                                                   |                                                                                 |                                                         |                                                     |         |         |        |        |         |        
|                                                   | Cash paid for interest                                                          |                                                         | $                                                   | 4       |         |        | $      | 1,820   |         |         | $       | 2,103    |        
|                                                   |                                                                                 |                                                         |                                                     |         |         |        |        |         |        



F-8



---



##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




|        |                                                                   
|------- | ------------------------------------------------------------------
|Note 1. | Alliance Semiconductor and our Significant Accounting
    Policies

tm




| |                            
| | ---------------------------
| | Principles of Consolidation







| |                 
| | ----------------
| | Use of Estimates





| |                      
| | ---------------------
| | Basis of Presentation





| |                          
| | -------------------------
| | Cash and Cash Equivalents





| |                       
| | ----------------------
| | Short-Term Investments



F-9



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##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








| |          
| | ---------
| | Inventory





| |                                             
| | --------------------------------------------
| | Investments in Non-Publicly-Traded Companies





| |                       
| | ----------------------
| | Property and Equipment





| |                  
| | -----------------
| | Long-Lived Assets



F-10



---



##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                    
| | -------------------
| | Revenue Recognition











| |                               
| | ------------------------------
| | Research and Development Costs





| |                               
| | ------------------------------
| | Goodwill and Intangible Assets









F-11



---



##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |             
| | ------------
| | Income Taxes





| |                       
| | ----------------------
| | Concentration of Risks











F-12



---



##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








| |                         
| | ------------------------
| | Stock-Based Compensation



|                                                                                                                                                    |                                 |      |         |       |      |   |         |       |   |   |          |       |  
|--------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------- | ---- | ------- | ----- | ---- | - | ------- | ----- | - | - | -------- | ----- | -
|                                                                                                                                                    |                                 | 2005 |         |       | 2004 |   |         | 2003  |  
|                                                                                                                                                    |                                 |      |         |       |      |   |         |       |  
|Net loss, as reported                                                                                                                               |                                 | $    | (49,811 | )     |      | $ | (19,411 | )     |   | $ | (106,048 | )    
|Deduct: Total stock-based employee compensation expense
    determined under fair value based method for all awards, net of
    related tax effects |                                 |      | (3,046  | )     |      |   | (3,050  | )     |   |   | (2,936   | )    
|                                                                                                                                                    |                                 |      |         |       |      |   |         |       |  
|Pro forma net loss:                                                                                                                                 |                                 | $    | (52,857 | )     |      | $ | (22,461 | )     |   | $ | (108,984 | )    
|                                                                                                                                                    |                                 |      |         |       |      |   |         |       |  
|Loss per share:                                                                                                                                     |                                 |      |         |       |      |   |         |       |   |   |          |      
|                                                                                                                                                    | Basic and diluted  as reported |      | $       | (1.41 | )    |   | $       | (0.55 | ) |   | $        | (2.85 | )
|                                                                                                                                                    |                                 |      |         |       |      |   |         |       |  
|                                                                                                                                                    | Basic and diluted  pro forma   |      | $       | (1.49 | )    |   | $       | (0.64 | ) |   | $        | (2.93 | )
|                                                                                                                                                    |                                 |      |         |       |      |   |         |       |  





| |                   
| | ------------------
| | Net Loss Per Share



F-13



---



##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                           |                   |      |         |        |      |   |         |        |   |   |          |        |  
|------------------------------------------ | ----------------- | ---- | ------- | ------ | ---- | - | ------- | ------ | - | - | -------- | ------ | -
|                                           |                   | 2005 |         |        | 2004 |   |         | 2003   |  
|                                           |                   |      |         |        |      |   |         |        |  
|Net loss available to common stockholders  |                   | $    | (49,811 | )      |      | $ | (19,411 | )      |   | $ | (106,048 | )     
|                                           |                   |      |         |        |      |   |         |        |  
|Weighted average common shares outstanding |                   |      |         |        |      |   |         |        |   |   |          |       
|                                           | Basic and diluted |      |         | 35,402 |      |   |         | 35,093 |   |   |          | 37,160 |  
|                                           |                   |      |         |        |      |   |         |        |  
|Net loss per share:                        |                   |      |         |        |      |   |         |        |   |   |          |       
|                                           | Basic and diluted |      | $       | (1.41  | )    |   | $       | (0.55  | ) |   | $        | (2.85  | )
|                                           |                   |      |         |        |      |   |         |        |  



| |                     
| | --------------------
| | Comprehensive Income





| |                                     
| | ------------------------------------
| | Recently Issued Accounting Standards







F-14



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##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










|        |                         
|------- | ------------------------
|Note 2. | Balance Sheet Components



| |                       
| | ----------------------
| | Short-Term Investments



|                                    |                              |           |         |  |            |   |        |        |  |   |           |        |  |            |         |  |        |   |        |        |  |   |         |         | 
|----------------------------------- | ---------------------------- | --------- | ------- |  | ---------- | - | ------ | ------ |  | - | --------- | ------ |  | ---------- | ------- |  | ------ | - | ------ | ------ |  | - | ------- | ------- | 
|                                    |                              | 2005      |         |  | 2004       |  
|                                    |                              | Number of |         |  | Adjusted   |   |        | Market |  |   | Number of |        |  | Adjusted   |         |  | Market |  
|                                    |                              | Shares    |         |  | Cost Basis |   |        | Value  |  |   | Shares    |        |  | Cost Basis |         |  | Value  |  
|                                    |                              |           |         |  |            |   |        |        |  |   |           |        |  |            |         |  |        |  
|United Microelectronics Corporation |                              |           | 128,146 |  |            | $ | 64,661 |        |  | $ | 77,505    |        |  |            | 161,461 |  |        | $ | 88,452 |        |  | $ | 139,179 |        
|Adaptec, Inc.                       |                              |           |         |  |            |   |        |        |  |   |           |        |  |            | 154     |  |        |   | 1,727  |        |  |   | 1,283   |        
|Tower Semiconductor Ltd.            |                              |           | 3,207   |  |            |   | 4,939  |        |  |   | 4,939     |        |  |            | 2,673   |  |        |   | 9,163  |        |  |   | 18,654  |        
|Vitesse Semiconductor Corporation   |                              |           |         |  |            |   |        |        |  |   |           |        |  |            | 95      |  |        |   | 66     |        |  |   | 662     |        
|                                    |                              |           |         |  |            |   |        |        |  |   |           |        |  |            |         |  |        |  
|                                    | Total short-term investments |           |         |  |            |   | $      | 69,600 |  |   | $         | 82,444 |  |            |         |  |        |   | $      | 99,408 |  |   | $       | 159,778 | 
|                                    |                              |           |         |  |            |   |        |        |  |   |           |        |  |            |         |  |        |  

F-15



---



##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                      
| | ---------------------
| | Long-Term Investments



|                              |                             |           |       |  |            |   |        |           |  |  |            |  |  |   |        |        | 
|----------------------------- | --------------------------- | --------- | ----- |  | ---------- | - | ------ | --------- |  |  | ---------- |  |  | - | ------ | ------ | 
|                              |                             | 2005      |       |  | 2004       |  
|                              |                             |           |       |  |            |  
|                              |                             | Number of |       |  | Adjusted   |   |        | Number of |  |  | Adjusted   | 
|                              |                             | Shares    |       |  | Cost Basis |   |        | Shares    |  |  | Cost Basis | 
|                              |                             |           |       |  |            |   |        |           |  |  |            | 
|Tower Semiconductor Ltd.      |                             |           | 5,701 |  |            | $ | 8,780  |           |  |  | 6,236      |  |  | $ | 21,208 |       
|Alliance Ventures investments |                             |           |       |  |            |   | 23,256 |           |  |  |            |  |  |   | 33,051 |       
|Solar Venture investments     |                             |           |       |  |            |   | 1,609  |           |  |  |            |  |  |   | 3,031  |       
|                              |                             |           |       |  |            |   |        |           |  |  |            | 
|                              | Total long-term investments |           |       |  |            |   | $      | 33,645    |  |  |            |  |  |   | $      | 57,290 | 
|                              |                             |           |       |  |            |   |        |           |  |  |            | 



| |                    
| | -------------------
| | Accounts Receivable



|                                                                 |                           |      |        |       |      |   |        |       | 
|---------------------------------------------------------------- | ------------------------- | ---- | ------ | ----- | ---- | - | ------ | ----- | 
|                                                                 |                           | 2005 |        |       | 2004 |  
|                                                                 |                           |      |        |       |      |  
|Trade receivables                                                |                           | $    | 2,974  |       |      | $ | 5,721  |      
|Less: allowance for doubtful accounts and sales related reserves |                           |      | (1,297 | )     |      |   | (1,640 | )    
|                                                                 |                           |      |        |       |      |  
|                                                                 | Total accounts receivable |      | $      | 1,677 |      |   | $      | 4,081 | 
|                                                                 |                           |      |        |       |      |  



| |          
| | ---------
| | Inventory



|                |                 |      |       |       |      |   |       |        | 
|--------------- | --------------- | ---- | ----- | ----- | ---- | - | ----- | ------ | 
|                |                 | 2005 |       |       | 2004 |  
|                |                 |      |       |       |      |  
|Work in process |                 | $    | 2,146 |       |      | $ | 6,768 |       
|Finished goods  |                 |      | 5,174 |       |      |   | 4,841 |       
|                |                 |      |       |       |      |  
|                | Total inventory |      | $     | 7,320 |      |   | $     | 11,609 | 
|                |                 |      |       |       |      |  



| |                       
| | ----------------------
| | Property and Equipment



|                               |                              |      |         |       |      |   |         |       | 
|------------------------------ | ---------------------------- | ---- | ------- | ----- | ---- | - | ------- | ----- | 
|                               |                              | 2005 |         |       | 2004 |  
|                               |                              |      |         |       |      |  
|Engineering and test equipment |                              | $    | 18,631  |       |      | $ | 18,203  |      
|Computers and software         |                              |      | 15,314  |       |      |   | 15,412  |      
|Furniture and office equipment |                              |      | 949     |       |      |   | 918     |      
|Leasehold improvements         |                              |      | 1,544   |       |      |   | 1,486   |      
|Land                           |                              |      | 274     |       |      |   | 274     |      
|Automobiles                    |                              |      | 14      |       |      |   | 14      |      
|                               |                              |      |         |       |      |  
|                               |                              |      | 36,726  |       |      |   | 36,307  |      
|Less: Accumulated depreciation |                              |      | (32,410 | )     |      |   | (30,146 | )    
|                               |                              |      |         |       |      |  
|                               | Total property and equipment |      | $       | 4,316 |      |   | $       | 6,161 | 
|                               |                              |      |         |       |      |  



F-16



---



##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                               
| | ------------------------------
| | Goodwill and Intangible Assets



|                     |                         |      |       |             |              |     |            |        |   |   |       |       | 
|-------------------- | ----------------------- | ---- | ----- | ----------- | ------------ | --- | ---------- | ------ | - | - | ----- | ----- | 
|                     |                         |      |       |             |              | Net |           
|                     |                         |      |       | Accumulated |              |     | Intangible |       
|                     |                         | Cost |       |             | Amortization |     |            | Assets |  
|                     |                         |      |       |             |              |     |            |        |  
|Developed technology |                         | $    | 1,592 |             |              | $   | (1,592     | )      |   | $ |       |      
|Technology license   |                         |      | 4,230 |             |              |     | (3,229     | )      |   |   | 1,001 |      
|Acquired workforce   |                         |      | 2,746 |             |              |     | (2,746     | )      |   |   |       |      
|Tradename            |                         |      | 109   |             |              |     | (109       | )      |   |   |       |      
|Patents              |                         |      | 1,403 |             |              |     | (1,114     | )      |   |   | 289   |      
|                     |                         |      |       |             |              |     |            |        |  
|                     | Total intangible assets |      | $     | 10,080      |              |     | $          | (8,790 | ) |   | $     | 1,290 | 
|                     |                         |      |       |             |              |     |            |        |  







|                     |                                      |      |       |             |              |     |            |        |   |   |       |       | 
|-------------------- | ------------------------------------ | ---- | ----- | ----------- | ------------ | --- | ---------- | ------ | - | - | ----- | ----- | 
|                     |                                      |      |       |             |              | Net |           
|                     |                                      |      |       | Accumulated |              |     | Intangible |       
|                     |                                      | Cost |       |             | Amortization |     |            | Assets |  
|                     |                                      |      |       |             |              |     |            |        |  
|Developed technology |                                      | $    | 1,592 |             |              | $   | (1,171     | )      |   | $ | 421   |      
|Technology license   |                                      |      | 3,580 |             |              |     | (1,934     | )      |   |   | 1,646 |      
|Acquired workforce   |                                      |      | 2,746 |             |              |     | (1,736     | )      |   |   | 1,010 |      
|Tradename            |                                      |      | 109   |             |              |     | (81        | )      |   |   | 28    |      
|Patents              |                                      |      | 1,403 |             |              |     | (671       | )      |   |   | 732   |      
|Goodwill             |                                      |      | 1,538 |             |              |     |            |        |   |   | 1,538 |      
|                     |                                      |      |       |             |              |     |            |        |  
|                     | Total goodwill and intangible assets |      | $     | 10,968      |              |     | $          | (5,593 | ) |   | $     | 5,375 | 
|                     |                                      |      |       |             |              |     |            |        |  



F-17



---



##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                     |                            |      |       |       |      |   |       |       |  |   |     |       | 
|-------------------- | -------------------------- | ---- | ----- | ----- | ---- | - | ----- | ----- |  | - | --- | ----- | 
|                     |                            | 2005 |       |       | 2004 |   |       | 2003  | 
|                     |                            |      |       |       |      |   |       |       | 
|Developed technology |                            | $    | 420   |       |      | $ | 531   |       |  | $ | 531 |      
|Technology license   |                            |      | 1,295 |       |      |   | 1,146 |       |  |   | 787 |      
|Acquired workforce   |                            |      | 1,011 |       |      |   | 1,488 |       |  |   | 248 |      
|Tradename            |                            |      | 28    |       |      |   | 36    |       |  |   | 36  |      
|Patents              |                            |      | 443   |       |      |   | 468   |       |  |   | 179 |      
|                     |                            |      |       |       |      |   |       |       | 
|                     | Total amortization expense |      | $     | 3,197 |      |   | $     | 3,669 |  |   | $   | 1,781 | 
|                     |                            |      |       |       |      |   |       |       | 



|                                  |  |   |       |  |  |  |  |  |  |  |  | 
|--------------------------------- |  | - | ----- |  |  |  |  |  |  |  |  | 
|2006                              |  | $ | 911   | 
|2007                              |  |   | 264   | 
|2008                              |  |   | 115   | 
|                                  |  |   |      
|Total future amortization expense |  | $ | 1,290 | 
|                                  |  |   |      



| |                    
| | -------------------
| | Accrued Liabilities



|                          |  |   |       |      |  |   |       |  |  |  |  | 
|------------------------- |  | - | ----- | ---- |  | - | ----- |  |  |  |  | 
|                          |  |   |       | 2005 |  |   | 2004  | 
|                          |  |   |       |      |  |   |       | 
|Accrued compensation      |  | $ | 889   |      |  | $ | 1,538 | 
|Accrued other             |  |   | 756   |      |  |   | 1,343 | 
|                          |  |   |       |      |  |  
|Total accrued liabilities |  | $ | 1,645 |      |  | $ | 2,881 | 
|                          |  |   |       |      |  |  



| |                                       
| | --------------------------------------
| | Accumulated Other Comprehensive Income



|                                    |  |            |        |  |            |     |            |      |  |   |       | 
|----------------------------------- |  | ---------- | ------ |  | ---------- | --- | ---------- | ---- |  | - | ----- | 
|                                    |  |            |        |  |            | Net |           
|                                    |  | Unrealized |        |  |            |     | Unrealized |     
|                                    |  | Gain       |        |  | Tax Effect |     |            | Gain | 
|                                    |  |            |        |  |            |     |            |      | 
|United Microelectronics Corporation |  | $          | 12,844 |  |            | $   | (5,176     | )    |  | $ | 7,668 | 
|                                    |  |            |        |  |            |     |            |      | 



|                                    |                                              |             |        |        |            |     |            |             |   |   |        |        | 
|----------------------------------- | -------------------------------------------- | ----------- | ------ | ------ | ---------- | --- | ---------- | ----------- | - | - | ------ | ------ | 
|                                    |                                              |             |        |        |            | Net |           
|                                    |                                              | Unrealized  |        |        |            |     | Unrealized |            
|                                    |                                              | Gain/(Loss) |        |        | Tax Effect |     |            | Gain/(Loss) |  
|                                    |                                              |             |        |        |            |     |            |             |  
|United Microelectronics Corporation |                                              | $           | 50,727 |        |            | $   | (20,443    | )           |   | $ | 30,284 |       
|Tower Semiconductor Ltd.            |                                              |             | 9,491  |        |            |     | (3,825     | )           |   |   | 5,666  |       
|Vitesse Semiconductor Corporation   |                                              |             | 596    |        |            |     | (240       | )           |   |   | 356    |       
|Adaptec, Inc.                       |                                              |             | (444   | )      |            |     | 180        |             |   |   | (264   | )     
|                                    |                                              |             |        |        |            |     |            |             |  
|                                    | Total accumulated other comprehensive income |             | $      | 60,370 |            |     | $          | (24,328     | ) |   | $      | 36,042 | 
|                                    |                                              |             |        |        |            |     |            |             |  

F-18



---



##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|        |                                                                
|------- | ---------------------------------------------------------------
|Note 3. | Write-Down of Marketable Securities and Venture
    Investments











|                                    |                                                                        |      |         |         |      |   |        |        |   |   |         |         |  
|----------------------------------- | ---------------------------------------------------------------------- | ---- | ------- | ------- | ---- | - | ------ | ------ | - | - | ------- | ------- | -
|                                    |                                                                        | 2005 |         |         | 2004 |   |        | 2003   |  
|                                    |                                                                        |      |         |         |      |   |        |        |  
|Chartered ADRs                      |                                                                        | $    |         |         |      | $ |        |        |   | $ | (16,212 | )      
|Vitesse common shares               |                                                                        |      |         |         |      |   |        |        |   |   | (673    | )      
|Tower ordinary shares               |                                                                        |      | (16,652 | )       |      |   |        |        |   |   | (14,083 | )      
|Alliance Ventures investments      |                                                                        |      | (2,686  | )       |      |   | (5,487 | )      |   |   | (19,035 | )      
|Solar Venture Partners investments |                                                                        |      | (473    | )       |      |   | (300   | )      |   |   | (5,789  | )      
|                                    |                                                                        |      |         |         |      |   |        |        |  
|                                    | Total write-downs of marketable securities and venture
    investments |      | $       | (19,811 | )    |   | $      | (5,787 | ) |   | $       | (55,792 | )
|                                    |                                                                        |      |         |         |      |   |        |        |  

F-19



---



##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                                                            
| | -----------------------------------------------------------
| | Loss in Investees Accounted for Under the Equity
    Method





|        |             
|------- | ------------
|Note 4. | Acquisitions



| |                   
| | ------------------
| | Chip Engines, Inc.





|                      |       |        |       |              |        |          | 
|--------------------- | ----- | ------ | ----- | ------------ | ------ | -------- | 
|                      |       |        |       | Amortization
|                      |       | Amount |       |              | Period
|                      |       |        |       |              |       
|Net assets acquired   |       | $      | (851  | )            |        | n/a     
|In-process technology |       |        | 1,610 |              |        | expensed
|Workforce             |       |        | 2,746 |              |        | 2 years 
|Patents               |       |        | 1,040 |              |        | 3 years 
|Licenses              |       |        | 250   |              |        | 3 years 
|                      |       |        |       |              |       
|                      | Total |        | $     | 4,795        |        |          | 
|                      |       |        |       |              |       





F-20



---



##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








| |             
| | ------------
| | API Networks





|        |                           
|------- | --------------------------
|Note 5. | Gain/(Loss) on Investments



|                                            |                           |      |       |       |      |   |        |        |  |   |        |        | 
|------------------------------------------- | ------------------------- | ---- | ----- | ----- | ---- | - | ------ | ------ |  | - | ------ | ------ | 
|                                            |                           | 2005 |       |       | 2004 |   |        | 2003   | 
|                                            |                           |      |       |       |      |   |        |        | 
|Sale of UMC shares                          |                           | $    | 7,995 |       |      | $ | 29,473 |        |  | $ | 24,651 |       
|Sale of Broadcom shares                     |                           |      |       |       |      |   |        |        |  |   | 1,245  |       
|Sale of Magma shares                        |                           |      |       |       |      |   |        |        |  |   | 1,186  |       
|Sale of Adaptec shares                      |                           |      | (541  | )     |      |   | 1,098  |        |  |   | (5,423 | )     
|Sale of Chartered shares                    |                           |      |       |       |      |   |        |        |  |   | (5,788 | )     
|Sale of Vitesse shares                      |                           |      | 258   |       |      |   |        |        |  |   | (912   | )     
|Sale of PMC-Sierra shares                   |                           |      |       |       |      |   |        |        |  |   | (274   | )     
|Write-down of restricted cash               |                           |      |       |       |      |   | (1,284 | )      |  |   | (300   | )     
|Net hedging activities                      |                           |      |       |       |      |   |        |        |  |   | (739   | )     
|Realized gain on Solar investee disposition |                           |      |       |       |      |   |        |        |  |   | 497    |       
|                                            |                           |      |       |       |      |   |        |        | 
|                                            | Total gain on investments |      | $     | 7,712 |      |   | $      | 29,287 |  |   | $      | 14,143 | 
|                                            |                           |      |       |       |      |   |        |        | 







| |   |                                                                
| | - | ---------------------------------------------------------------
| |  | $8.0 million gain on the sale of 45.4 million shares
    of UMC
| |  | $258,000 gain on the sale of 95,417 shares of Vitesse          
| |  | $544,000 loss on the sale of 154,444 shares of Adaptec         





| |   |                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------
| |  | $29.5 million gain on the sale of 93.0 million common
    shares of UMC                                     
| |  | $1.3 million write-down of restricted cash related to our
    investment in Platys being acquired by Adaptec

F-21



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##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |   |                                                                      
| | - | ---------------------------------------------------------------------
| |  | $1.1 million gain on the sale of 362,173 common shares of
    Adaptec





| |   |                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------
| |  | $24.7 million gain on the sale of 112.2 million common
    shares of UMC                                
| |  | $1.2 million gain on the sale of 75,000 common shares of
    Broadcom                                   
| |  | $1.2 million gain on the sale of 360,244 common shares of
    Magma                                     
| |  | $5.4 million loss on the sale of 924,000 common shares of
    Adaptec                                   
| |  | $5.8 million loss on the sale of 1.6 million shares of
    Chartered ADRs                               
| |  | $912,000 loss on the sale of 143,000 common shares of Vitesse                                           
| |  | $274,000 loss on the sale of 68,000 common shares of PMC-Sierra                                         
| |  | $300,000 write-down of restricted cash related to our investment
    in Platys being acquired by Adaptec
| |  | $739,000 losses related to our hedges on Adaptec, Broadcom and
    Vitesse                              
| |  | $497,000 realized gain on the sale of one of Solar Venture
    Partners investee companies             



|        |                                    
|------- | -----------------------------------
|Note 6. | Investment in Marketable Securities



| |                                    
| | -----------------------------------
| | United Microelectronics Corporation









| |                                  
| | ---------------------------------
| | Vitesse Semiconductor Corporation







| |              
| | -------------
| | Adaptec, Inc.





F-22



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##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|        |                                       
|------- | --------------------------------------
|Note 7. | Investment in Tower Semiconductor Ltd.





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 30% of all of our Tower shares (including shares acquired or to
    be acquired in exchange for payments made in accordance with the
    original Share Purchase Agreement and subsequent amendments,
    shares acquired as a result of Towers rights offering in
    September 2002, and shares which may be acquired upon exchange
    of certain wafer credits) are unrestricted and
    available-for-sale;
|
| |  | the remaining 70% of all of our Tower shares are restricted from
    sale, transfer, or disposition until January 2006; and                                                                                                                                                                                                                                                                                      
|
| |  | between January 2006 and January 2008 we may transfer no more
    than 6% of our total shares in any quarter on a cumulative basis
    and no more than 48% of our total shares by the end of this
    period.                                                                                                                                                                                                   









F-23



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##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|            |  |             |           |       |       |   |            |           |  |               |               |  |       |            |       |   |  |   |      | 
|----------- |  | ----------- | --------- | ----- | ----- | - | ---------- | --------- |  | ------------- | ------------- |  | ----- | ---------- | ----- | - |  | - | ---- | 
|            |  |             |           | Share |       |   | Investment |           |  | Investment in |               |  | Total |           
|Period      |  | # of Shares |           |       | Price |   |            | in Shares |  |               | Wafer Credits |  |       | Investment |      
|            |  |             |           |       |       |   |            |           |  |               |               |  |       |            |      
|FY 2001     |  |             | 1,233,241 |       |       | $ | 13.24      |           |  | $             | 16.3          |  |       |            | 14.7  |   |  | $ | 31.0 | 
|FQ1 2002    |  |             | 366,690   |       |       |   | 12.50      |           |  |               | 4.6           |  |       |            | 6.4   |   |  |   | 11.0 | 
|FQ2 2002(a) |  |             | 1,255,848 |       |       |   | 12.75      |           |  |               | 16.0          |  |       |            | (16.0 | ) |  |   | 0.0  | 
|FQ1 2003    |  |             | 1,071,497 |       |       |   | 6.16       |           |  |               | 6.6           |  |       |            | 4.4   |   |  |   | 11.0 | 
|FQ3 2003    |  |             | 1,344,829 |       |       |   | 4.91       |           |  |               | 6.6           |  |       |            | 4.4   |   |  |   | 11.0 | 
|(b)         |  |             | 794,995   |       |       |   | 5.03       |           |  |               | 4.0           |  |       |            |       |   |  |   | 4.0  | 
|FQ1 2004    |  |             | 1,206,839 |       |       |   | 2.98       |           |  |               | 3.6           |  |       |            |       |   |  |   | 3.6  | 
|FQ2 2004    |  |             | 228,546   |       |       |   | 2.98       |           |  |               | 0.7           |  |       |            |       |   |  |   | 0.7  | 
|FQ3 2004    |  |             | 777,295   |       |       |   | 2.98       |           |  |               | 2.3           |  |       |            |       |   |  |   | 2.3  | 
|FQ4 2004    |  |             | 628,611   |       |       |   | 7.00       |           |  |               | 4.4           |  |       |            |       |   |  |   | 4.4  | 
|            |  |             |           |       |       |   |            |           |  |               |               |  |       |            |      
|Totals      |  |             | 8,908,391 |       |       |   |            |           |  | $             | 65.1          |  |       | $          | 13.9  |   |  | $ | 79.0 | 
|            |  |             |           |       |       |   |            |           |  |               |               |  |       |            |      






|    |                                               
|--- | ----------------------------------------------
|(a) | Conversion of wafer credits to ordinary shares
|   
|(b) | Tower rights offering                         



|        |                           
|------- | --------------------------
|Note 8. | Private Equity Investments



| |                                 
| | --------------------------------
| | Alliance Venture Management, LLC







F-24



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##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)
















F-25



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##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








| |                                         
| | ----------------------------------------
| | Investment in Solar Venture Partners, LP









| |                          
| | -------------------------
| | Equity Method Investments



F-26



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##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                       
| | ----------------------
| | Summary Financial Data

|                 |                     |                                   |        |         |         |   |        |         |        |   |        |         |         |      |        |         |         |   |        |         |        |   |        |         |        |       |        |          |         |   |       |         |        |   |       |         |        |  
|---------------- | ------------------- | --------------------------------- | ------ | ------- | ------- | - | ------ | ------- | ------ | - | ------ | ------- | ------- | ---- | ------ | ------- | ------- | - | ------ | ------- | ------ | - | ------ | ------- | ------ | ----- | ------ | -------- | ------- | - | ----- | ------- | ------ | - | ----- | ------- | ------ | -
|                 |                     | 2005                              |        |         | 2004    |   |        | 2003    |       
|                 |                     |                                   |        |         |         |   |        |         |       
|                 |                     | Total                             |        |         | <20%    |   |        | >=20%   |        |   | Total  |         |         | <20% |        |         | >=20%   |   |        | Total   |        |   | <20%   |         |        | >=20% |       
|                 |                     |                                   |        |         |         |   |        |         |        |   |        |         |         |      |        |         |         |   |        |         |        |   |        |         |        |       |       
|Income Statement |                     |                                   |        |         |         |   |        |         |        |   |        |         |         |      |        |         |         |   |        |         |        |   |        |         |        |       |        |          |         |   |       |         |        |   |       |        
|Revenue          |                     | $                                 | 42,335 |         |         | $ | 29,725 |         |        | $ | 12,610 |         |         | $    | 32,556 |         |         | $ | 16,097 |         |        | $ | 16,459 |         |        | $     | 12,246 |          |         | $ | 4,003 |         |        | $ | 8,243 |        
|                 | Gross profit        |                                   | $      | 23,416  |         |   | $      | 15,687  |        |   | $      | 7,729   |         |      | $      | 16,985  |         |   | $      | 9,020   |        |   | $      | 7,965   |        |       | $      | 5,670    |         |   | $     | 2,149   |        |   | $     | 3,521   |       
|                 | Net loss            |                                   | $      | (77,796 | )       |   | $      | (41,331 | )      |   | $      | (36,465 | )       |      | $      | (78,265 | )       |   | $      | (56,808 | )      |   | $      | (21,457 | )      |       | $      | (104,082 | )       |   | $     | (55,473 | )      |   | $     | (48,609 | )     
|Balance Sheet    |                     |                                   |        |         |         |   |        |         |        |   |        |         |         |      |        |         |         |   |        |         |        |   |        |         |        |       |        |          |         |   |       |         |        |   |       |        
|                 | Current assets      |                                   | $      | 80,534  |         |   | $      | 44,498  |        |   | $      | 36,036  |         |      | $      | 89,818  |         |   | $      | 53,670  |        |   | $      | 36,148  |        |       |        |          |         |   |       |         |        |   |       |         |       
|                 | Non-current assets  |                                   | $      | 16,486  |         |   | $      | 6,409   |        |   | $      | 10,077  |         |      | $      | 9,528   |         |   | $      | 2,633   |        |   | $      | 6,895   |        |       |        |          |         |   |       |         |        |   |       |         |       
|                 |                     | Total assets                      |        | $       | 97,020  |   |        | $       | 50,907 |   |        | $       | 46,113  |      |        | $       | 99,346  |   |        | $       | 56,303 |   |        | $       | 43,043 |       |        |          |         |   |       |         |        |   |       |         |        |  
|                 | Current liabilities |                                   | $      | 29,056  |         |   | $      | 17,561  |        |   | $      | 11,495  |         |      | $      | 20,116  |         |   | $      | 8,814   |        |   | $      | 11,302  |        |       |        |          |         |   |       |         |        |   |       |         |       
|                 | Non-current         |                                   |        |         |         |   |        |         |        |   |        |         |         |      |        |         |         |   |        |         |        |   |        |         |        |       |        |          |         |   |       |         |        |   |       |         |       
|                 |                     | Liabilities                       |        | $       | 4,217   |   |        | $       | 1,874  |   |        | $       | 2,343   |      |        | $       | 1,940   |   |        | $       | 604    |   |        | $       | 1,336  |       |        |          |         |   |       |         |        |   |       |         |        |  
|                 |                     | Total liabilities                 |        | $       | 33,273  |   |        | $       | 19,435 |   |        | $       | 13,838  |      |        | $       | 22,056  |   |        | $       | 9,418  |   |        | $       | 12,638 |       |        |          |         |   |       |         |        |   |       |         |        |  
|                 | Preferred stock     |                                   | $      | 358,641 |         |   | $      | 224,594 |        |   | $      | 134,047 |         |      | $      | 264,649 |         |   | $      | 184,569 |        |   | $      | 80,080  |        |       |        |          |         |   |       |         |        |   |       |         |       
|                 |                     | Total equity in loss of investees |        | $       | (16,936 | ) |        | $       | (5,595 | ) |        | $       | (11,341 | )    |        | $       | (15,355 | ) |        | $       | (8,990 | ) |        | $       | (6,365 | )     |        | $        | (16,597 | ) |       | $       | (8,169 | ) |       | $       | (8,428 | )
|                 | Number of companies |                                   |        | 15      |         |   |        | 6       |        |   |        | 9       |         |      |        | 14      |         |   |        | 6       |        |   |        | 8       |        |       |        | 15       |         |   |       | 6       |        |   |       | 9       |       

|                        |  |                   |  |            |       | 
|----------------------- |  | ----------------- |  | ---------- | ----- | 
|                        |  |                   |  | Ownership  |      
|2005 Investee Companies |  | Industry          |  | Percentage |      
|                        |  |                   |  |            |      
|Aperto Networks         |  | Networking        |  |            | 14.5% | 
|Active Optical Networks |  | Networking        |  |            | 33.6% | 
|Alta Analog             |  | Semiconductor     |  |            | 32.4% | 
|Apollo Biotechnology    |  | Semiconductor     |  |            | 15.3% | 
|Athena Semiconductor    |  | Semiconductor     |  |            | 41.4% | 
|Cavium Networks         |  | Semiconductor     |  |            | 15.4% | 
|Jazio                   |  | Semiconductor     |  |            | 5.1%  | 
|Maranti Networks        |  | Networking        |  |            | 9.0%  | 
|Nazomi Communications   |  | Semiconductor     |  |            | 23.6% | 
|Nethra Imaging          |  | Semiconductor     |  |            | 25.0% | 
|SiNett Corporation      |  | Semiconductor     |  |            | 21.6% | 
|Tharas Systems          |  | Design Automation |  |            | 15.1% | 
|Vianeta Communications  |  | Software          |  |            | 40.0% | 
|Xalted Networks         |  | Networking        |  |            | 22.8% | 
|Xceive Corporation      |  | Semiconductor     |  |            | 38.1% | 



F-27



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##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|        |                                              
|------- | ---------------------------------------------
|Note 9. | Derivative Instruments and Hedging Activities













F-28



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##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










|         |                                      
|-------- | -------------------------------------
|Note 10. | Leases, Commitments and Contingencies



| |                 
| | ----------------
| | Operating Leases





|               |  |   |       | 
|-------------- |  | - | ----- | 
|Fiscal Year    |  |  
|               |  |  
|2006           |  | $ | 2,041 | 
|2007           |  |   | 779   | 
|2008           |  |   | 134   | 
|               |  |   |      
|Total payments |  | $ | 2,954 | 
|               |  |   |      





| |               
| | --------------
| | Capital Leases



F-29



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##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                    |  |   |    |  
|----------------------------------- |  | - | -- | -
|Fiscal Year                         |  |  
|                                    |  |  
|2006                                |  | $ | 4  |  
|                                    |  |   |   
|Total minimum lease payments        |  |   | 4  |  
|Less current portion                |  |   | (4 | )
|                                    |  |   |   
|Long-term capital lease obligations |  | $ | 0  |  
|                                    |  |   |   



| |                               
| | ------------------------------
| | Investment Company Act of 1940









F-30



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##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                              
| | -----------------------------
| | Commitments and Contingencies



Off-Balance Sheet


|                |  |           |        |  |       |   |        |       |  |   |         |  |  |       |        |  |  |   |        | 
|--------------- |  | --------- | ------ |  | ----- | - | ------ | ----- |  | - | ------- |  |  | ----- | ------ |  |  | - | ------ | 
|                |  | Less than |        |  | 1-3   |   |        | 4-5   |  |   | After   |  |  |      
|                |  | 1 Year    |        |  | Years |   |        | Years |  |   | 5 Years |  |  | Total |       
|                |  |           |        |  |       |   |        |       |  |   |         |  |  |       |       
|AVM Commitments |  | $         | 10,000 |  |       | $ | 20,000 |       |  | $ | 20,000  |  |  | $     | 29,200 |  |  | $ | 79,200 | 







| |                            
| | ---------------------------
| | Indemnification Obligations





F-31



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##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                   
| | ------------------
| | Product Warranties





|                    |                                                     |      |        |      |      |  |        |      |   |  |        |      |  
|------------------- | --------------------------------------------------- | ---- | ------ | ---- | ---- |  | ------ | ---- | - |  | ------ | ---- | -
|                    |                                                     | 2005 |        |      | 2004 |  |        | 2003 |  
|                    |                                                     |      |        |      |      |  |        |      |  
|Beginning Balance   |                                                     |      | $1,292 |      |      |  | $1,253 |      |   |  | $1,302 |     
|                    | Accruals for warranties issued during the year      |      |        | 86   |      |  |        | 415  |   |  |        | 453  |  
|                    | Settlements on warranty claims made during the year |      |        | (430 | )    |  |        | (376 | ) |  |        | (502 | )
|                    |                                                     |      |        |      |      |  |        |      |  
|Balance at March 31 |                                                     |      | $948   |      |      |  | $1,292 |      |   |  | $1,253 |     
|                    |                                                     |      |        |      |      |  |        |      |  



|         |                         
|-------- | ------------------------
|Note 11. | Benefit for Income Taxes



|          |                     |               |         |         |         |   |         |        |         |   |         |         |         |  
|--------- | ------------------- | ------------- | ------- | ------- | ------- | - | ------- | ------ | ------- | - | ------- | ------- | ------- | -
|          |                     | 2005          |         |         | 2004    |   |         | 2003   |        
|          |                     |               |         |         |         |   |         |        |        
|Current:  |                     |               |         |         |         |   |         |        |         |   |         |        
|          | Federal             |               | $       |         |         |   | $       | (3,475 | )       |   | $       | (17,644 | )      
|          | State               |               |         | 4       |         |   |         | 4      |         |   |         | (326    | )      
|          | Foreign             |               |         | 304     |         |   |         |        |         |   |         |         |        
|          |                     |               |         |         |         |   |         |        |        
|          |                     |               | 308     |         |         |   | (3,471  | )      |         |   | (17,970 | )      
|          |                     |               |         |         |         |   |         |        |        
|Deferred: |                     |               |         |         |         |   |         |        |         |   |         |        
|          | Federal             |               |         | (24,567 | )       |   |         | (7,212 | )       |   |         | (34,475 | )      
|          | State               |               |         | (5,708  | )       |   |         | (1,771 | )       |   |         | (3,474  | )      
|          | Valuation allowance |               |         | 13,259  |         |   |         | (1,629 | )       |   |         | 38,806  |        
|          |                     |               |         |         |         |   |         |        |        
|          |                     |               | (17,016 | )       |         |   | (10,612 | )      |         |   | 857     |        
|          |                     |               |         |         |         |   |         |        |        
|          |                     | Total benefit |         | $       | (16,708 | ) |         | $      | (14,083 | ) |         | $       | (17,113 | )
|          |                     |               |         |         |         |   |         |        |        



F-32



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##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                |                           |      |         |         |      |   |         |         |  
|------------------------------- | ------------------------- | ---- | ------- | ------- | ---- | - | ------- | ------- | -
|                                |                           | 2005 |         |         | 2004 |  
|                                |                           |      |         |         |      |  
|Alliance Ventures investments   |                           | $    | 34,499  |         |      | $ | 27,945  |        
|Inventory reserves              |                           |      | 5,056   |         |      |   | 6,453   |        
|Investment in Tower             |                           |      | 20,706  |         |      |   | 10,170  |        
|Accrued expenses and reserves   |                           |      | 793     |         |      |   | 767     |        
|Net operating loss carryforward |                           |      | 8,991   |         |      |   |         |        
|Tax credit carryforward         |                           |      | 1,226   |         |      |   |         |        
|Other                           |                           |      | 4,100   |         |      |   | 2,837   |        
|                                |                           |      |         |         |      |  
|                                | Gross deferred tax assets |      |         | 75,371  |      |   |         | 48,172  |  
|Valuation allowance             |                           |      | (50,436 | )       |      |   | (37,177 | )      
|                                |                           |      |         |         |      |  
|                                | Net deferred tax assets   |      |         | 24,935  |      |   |         | 10,995  |  
|                                |                           |      |         |         |      |  
|Investment in UMC               |                           |      | (24,293 | )       |      |   | (46,577 | )      
|Investment in Adaptec           |                           |      |         |         |      |   | (292    | )      
|Investment in Vitesse           |                           |      |         |         |      |   | (209    | )      
|Fixed assets                    |                           |      | (642    | )       |      |   | (855    | )      
|                                |                           |      |         |         |      |  
|                                | Deferred tax liabilities  |      |         | (24,935 | )    |   |         | (47,933 | )
|                                |                           |      |         |         |      |  
|Net deferred tax liabilities    |                           | $    |        |         |      | $ | (36,938 | )      
|                                |                           |      |         |         |      |  



|                                    |       |      |         |         |      |   |         |         |   |   |         |         |  
|----------------------------------- | ----- | ---- | ------- | ------- | ---- | - | ------- | ------- | - | - | ------- | ------- | -
|                                    |       | 2005 |         |         | 2004 |   |         | 2003    |  
|                                    |       |      |         |         |      |   |         |         |  
|Federal statutory rate              |       |      | 35      | %       |      |   | 35      | %       |   |   | 35      | %      
|Tax at federal statutory rate       |       | $    | (23,381 | )       |      | $ | (11,966 | )       |   | $ | (44,270 | )      
|State taxes, net of federal benefit |       |      | (5,706  | )       |      |   | (1,771  | )       |   |   | (5,904  | )      
|Change in valuation allowance       |       |      | 13,259  |         |      |   | (1,629  | )       |   |   | 38,806  |        
|Other, net                          |       |      | (880    | )       |      |   | 1,283   |         |   |   | (5,745  | )      
|                                    |       |      |         |         |      |   |         |         |  
|                                    | Total |      | $       | (16,708 | )    |   | $       | (14,083 | ) |   | $       | (17,113 | )
|                                    |       |      |         |         |      |   |         |         |  







F-33



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ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|         |                   
|-------- | ------------------
|Note 12. | Stock Option Plans



| |                       
| | ----------------------
| | 1992 Stock Option Plan







| |                             
| | ----------------------------
| | Directors Stock Option Plan



F-34



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##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                          |                   |                   |           |                     |        |  |           |                         |   |   |       |       | 
|------------------------- | ----------------- | ----------------- | --------- | ------------------- | ------ |  | --------- | ----------------------- | - | - | ----- | ----- | 
|                          |                   |                   |           | Options Outstanding |       
|                          |                   | Options Available |           |                     |        | 
|                          |                   | for Grant         |           |                     | Shares |  |           | Weighted Average Prices |  
|                          |                   |                   |           |                     |        |  |           |                         |  
|Balance at March 31, 2002 |                   |                   | 4,384,837 |                     |        |  | 2,516,887 |                         |   | $ | 10.65 |      
|                          | Options granted   |                   |           | (649,000            | )      |  |           | 649,000                 |   |   | $     | 6.36  | 
|                          | Options canceled  |                   |           | 548,040             |        |  |           | (548,040                | ) |   | $     | 12.85 | 
|                          | Options exercised |                   |           |                    |        |  |           | (20,585                 | ) |   | $     | 2.81  | 
|                          |                   |                   |           |                     |        |  |           |                         |  
|Balance at March 31, 2003 |                   |                   | 4,283,877 |                     |        |  | 2,597,262 |                         |   | $ | 9.18  |      
|                          | Options granted   |                   |           | (1,643,900          | )      |  |           | 1,643,900               |   |   | $     | 5.94  | 
|                          | Options canceled  |                   |           | 588,450             |        |  |           | (588,450                | ) |   | $     | 9.77  | 
|                          | Options exercised |                   |           |                    |        |  |           | (152,230                | ) |   | $     | 3.08  | 
|                          |                   |                   |           |                     |        |  |           |                         |  
|Balance at March 31, 2004 |                   |                   | 3,228,427 |                     |        |  | 3,500,482 |                         |   | $ | 7.82  |      
|                          | Options granted   |                   |           | (849,500            | )      |  |           | 849,500                 |   |   | $     | 3.94  | 
|                          | Options canceled  |                   |           | 824,583             |        |  |           | (824,583                | ) |   | $     | 7.05  | 
|                          | Options exercised |                   |           |                    |        |  |           | (130,249                | ) |   | $     | 2.83  | 
|                          |                   |                   |           |                     |        |  |           |                         |  
|Balance at March 31, 2005 |                   |                   | 3,203,510 |                     |        |  | 3,395,150 |                         |   | $ | 7.23  |      
|                          |                   |                   |           |                     |        |  |           |                         |  





F-35



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ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Outstanding and Exercisable by Price Range


As of March 31, 2005


|                         |       |             |         |           |                  |  |          |          |  |           |             |      |          |          |         |           |  |   |       |      | 
|------------------------ | ----- | ----------- | ------- | --------- | ---------------- |  | -------- | -------- |  | --------- | ----------- | ---- | -------- | -------- | ------- | --------- |  | - | ----- | ---- | 
|                         |       |             |         | Weighted  |                  |  |          |          |  |           |            
|                         |       |             |         | Average   |                  |  | Weighted |          |  | Number of |             |      | Weighted |         
|                         |       | Number of   |         |           | Remaining        |  |          | Average  |  |           | Vested and  |      |          | Average  |        
|                         |       | Options     |         |           | Contractual Life |  |          | Exercise |  |           | Exercisable |      |          | Exercise |        
|Range of Exercise Prices |       | Outstanding |         |           | in Years         |  |          | Price    |  |           | Options     |      |          | Price    |        
|                         |       |             |         |           |                  |  |          |          |  |           |             |      |          |          |        
|$ 2.81 - $3.32           |       |             | 343,100 |           |                  |  | 9.03     |          |  | $         | 3.12        |      |          |          | 18,025  |           |  | $ | 3.10  |     
|$ 3.38 - $3.92           |       |             | 473,700 |           |                  |  | 8.32     |          |  | $         | 3.64        |      |          |          | 41,375  |           |  | $ | 3.79  |     
|$ 3.99 - $4.34           |       |             | 527,400 |           |                  |  | 4.37     |          |  | $         | 4.25        |      |          |          | 175,090 |           |  | $ | 4.25  |     
|$ 4.39 - $6.79           |       |             | 346,000 |           |                  |  | 4.21     |          |  | $         | 5.33        |      |          |          | 164,625 |           |  | $ | 5.27  |     
|$ 6.85 - $7.86           |       |             | 343,675 |           |                  |  | 5.32     |          |  | $         | 7.10        |      |          |          | 91,825  |           |  | $ | 7.10  |     
|$ 7.94 - $9.19           |       |             | 446,925 |           |                  |  | 5.20     |          |  | $         | 8.65        |      |          |          | 145,150 |           |  | $ | 8.51  |     
|$ 9.31 - $11.84          |       |             | 440,220 |           |                  |  | 1.15     |          |  | $         | 11.29       |      |          |          | 385,070 |           |  | $ | 11.26 |     
|$11.89 - $13.02          |       |             | 420,380 |           |                  |  | 1.74     |          |  | $         | 12.71       |      |          |          | 288,580 |           |  | $ | 12.66 |     
|$13.50 - $26.69          |       |             | 50,750  |           |                  |  | 1.29     |          |  | $         | 19.23       |      |          |          | 42,100  |           |  | $ | 19.19 |     
|$27.25 - $27.25          |       |             | 3,000   |           |                  |  | 1.21     |          |  | $         | 27.25       |      |          |          | 2,400   |           |  | $ | 27.25 |     
|                         |       |             |         |           |                  |  |          |          |  |           |             |      |          |          |        
|                         | Total |             |         | 3,395,150 |                  |  |          | 4.79     |  |           | $           | 7.23 |          |          |         | 1,354,240 |  |   | $     | 9.29 | 
|                         |       |             |         |           |                  |  |          |          |  |           |             |      |          |          |        



|                           |  |            |  |            |  |           
|-------------------------- |  | ---------- |  | ---------- |  | ----------
|                           |  | 2005       |  | 2004       |  | 2003      
|                           |  |            |  |            |  |           
|Expected life(1)           |  | 5.00 years |  | 5.00 years |  | 5.00 years
|Risk-free interest rate(1) |  | 3.4%-4.3%  |  | 2.4%-3.2%  |  | 2.6%-4.2% 
|Volatility(1)              |  | 88%-91%    |  | 92%-94%    |  | 95%-96%   
|Dividend yield             |  | 0.0%       |  | 0.0%       |  | 0.0%      






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | For the years ended March 31, 2004 and 2003, expected life,
    risk-free interest rate and volatility have been revised from
    those previously reported, consistent with the method used for
    fiscal year ended March 31, 2005. These revisions resulted
    in an increase of pro-forma net loss of $1.4 million and
    $1.3 million, and an increase in net loss per share of
    $0.04 cents and $0.03 cents, for the years ended
    March 31, 2004 and 2003, respectively.



| |                             
| | ----------------------------
| | Employee Stock Purchase Plan



F-36



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ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|                           |  |             |  |             |  |            
|-------------------------- |  | ----------- |  | ----------- |  | -----------
|                           |  | 2005        |  | 2004        |  | 2003       
|                           |  |             |  |             |  |            
|Expected life(1)           |  | 6-12 months |  | 6-12 months |  | 6-12 months
|Risk-free interest rate(1) |  | 1.1%-2.5%   |  | 1.1%-1.7%   |  | 1.2%-1.93% 
|Volatility(1)              |  | 62%-65%     |  | 64%-67%     |  | 75%-76%    
|Dividend yield             |  | 0.0%        |  | 0.0%        |  | 0.0%       






| |     |                                                                                                    
| | --- | ---------------------------------------------------------------------------------------------------
| | (1) | See (1) on previous page under Stock Option Assumptions for
    revision of assumptions discussion.





|         |                           
|-------- | --------------------------
|Note 13. | 401(k) Salary Savings Plan





|         |              
|-------- | -------------
|Note 14. | Legal Matters



F-37



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##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)














|         |                           
|-------- | --------------------------
|Note 15. | Related Party Transactions





F-38



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ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)
















F-39



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##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










|         |                                   
|-------- | ----------------------------------
|Note 16. | Segment and Geographic Information







|                      |  |        |         |   |            |   |         |             |  |   |       |   |  |   |         |  
|--------------------- |  | ------ | ------- | - | ---------- | - | ------- | ----------- |  | - | ----- | - |  | - | ------- | -
|Fiscal Year 2005      |  | Memory |         |   | Non-Memory |   |         | Unallocated |  |   | Total |  
|                      |  |        |         |   |            |   |         |             |  |   |       |  
|Revenue               |  | $      | 11,787  |   |            | $ | 11,812  |             |  | $ |       |   |  | $ | 23,599  |  
|Cost of goods sold    |  |        | 17,973  |   |            |   | 8,201   |             |  |   |       |   |  |   | 26,174  |  
|                      |  |        |         |   |            |   |         |             |  |   |       |  
|Gross profit/(loss)   |  |        | (6,186  | ) |            |   | 3,611   |             |  |   |       |   |  |   | (2,575  | )
|R&D expense           |  |        | 4,156   |   |            |   | 15,413  |             |  |   |       |   |  |   | 19,569  |  
|SGA expense           |  |        | 4,046   |   |            |   | 8,066   |             |  |   | 343   |   |  |   | 12,455  |  
|Write-off of goodwill |  |        | 0       |   |            |   | 1,538   |             |  |   |       |   |  |   | 1,538   |  
|                      |  |        |         |   |            |   |         |             |  |   |       |  
|Operating expense     |  |        | 8,202   |   |            |   | 25,017  |             |  |   | 343   |   |  |   | 33,562  |  
|                      |  |        |         |   |            |   |         |             |  |   |       |  
|Operating loss        |  | $      | (14,388 | ) |            | $ | (21,406 | )           |  | $ | (343  | ) |  | $ | (36,137 | )
|                      |  |        |         |   |            |   |         |             |  |   |       |  

F-40



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##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                   |  |        |        |   |            |   |         |             |  |   |        |   |  |   |         |  
|------------------ |  | ------ | ------ | - | ---------- | - | ------- | ----------- |  | - | ------ | - |  | - | ------- | -
|Fiscal Year 2004   |  | Memory |        |   | Non-Memory |   |         | Unallocated |  |   | Total  |  
|                   |  |        |        |   |            |   |         |             |  |   |        |  
|Revenue            |  | $      | 17,860 |   |            | $ | 8,811   |             |  | $ |        |   |  | $ | 26,671  |  
|Cost of goods sold |  |        | 15,804 |   |            |   | 5,036   |             |  |   |        |   |  |   | 20,840  |  
|                   |  |        |        |   |            |   |         |             |  |   |        |  
|Gross profit       |  |        | 2,056  |   |            |   | 3,775   |             |  |   |        |   |  |   | 5,831   |  
|R&D expense        |  |        | 6,035  |   |            |   | 16,205  |             |  |   | 2,413  |   |  |   | 24,653  |  
|SGA expense        |  |        | 4,960  |   |            |   | 8,657   |             |  |   | 2,004  |   |  |   | 15,621  |  
|                   |  |        |        |   |            |   |         |             |  |   |        |  
|Operating expense  |  |        | 10,995 |   |            |   | 24,862  |             |  |   | 4,417  |   |  |   | 40,274  |  
|                   |  |        |        |   |            |   |         |             |  |   |        |  
|Operating loss     |  | $      | (8,939 | ) |            | $ | (21,087 | )           |  | $ | (4,417 | ) |  | $ | (34,443 | )
|                   |  |        |        |   |            |   |         |             |  |   |        |  





|            |                         |                            |   |        |        |  |   |        |        |  |              |        |        |              |  |     |     |    |  |     |    |  
|----------- | ----------------------- | -------------------------- | - | ------ | ------ |  | - | ------ | ------ |  | ------------ | ------ | ------ | ------------ |  | --- | --- | -- |  | --- | -- | -
|            |                         | 2005                       |   |        | 2004   |  |   | 2003   |        |  | 2005 to 2004 |        |        | 2004 to 2003 | 
|            |                         |                            |   |        |        |  |   |        |        |  |              |        |        |              | 
|Memory:     |                         |                            |   |        |        |  |   |        |        |  |              |        |        |              |  |     |     |    |  |    
|            | SRAM                    |                            | $ | 10,211 |        |  | $ | 11,603 |        |  | $            | 7,600  |        |              |  | (12 | )%  |    |  | 53  | % 
|            | DRAM                    |                            |   | 1,576  |        |  |   | 6,257  |        |  |              | 6,334  |        |              |  | (75 | )%  |    |  | (1  | )%
|            |                         |                            |   |        |        |  |   |        |        |  |              |        |        |              | 
|            |                         | Memory Segment Revenue     |   |        | 11,787 |  |   |        | 17,860 |  |              |        | 13,934 |              |  |     | (34 | )% |  |     | 28 | %
|Non Memory: |                         |                            |   |        |        |  |   |        |        |  |              |        |        |              |  |     |     |    |  |    
|            | Analog and Mixed Signal |                            |   | 7,337  |        |  |   | 4,316  |        |  |              | 2,948  |        |              |  | 70  | %   |    |  | 46  | % 
|            | System Solutions        |                            |   | 4,475  |        |  |   | 4,495  |        |  |              | 1,640  |        |              |  |     |     |    |  | 174 | % 
|            |                         |                            |   |        |        |  |   |        |        |  |              |        |        |              | 
|            |                         | Non-Memory Segment Revenue |   |        | 11,812 |  |   |        | 8,811  |  |              |        | 4,588  |              |  |     | 34  | %  |  |     | 92 | %
|            |                         |                            |   |        |        |  |   |        |        |  |              |        |        |              | 
|            | Net revenue             |                            | $ | 23,599 |        |  | $ | 26,671 |        |  | $            | 18,522 |        |              |  | (12 | )%  |    |  | 44  | % 
|            |                         |                            |   |        |        |  |   |        |        |  |              |        |        |              | 



|                                             |             |      |       |        |         |   |       |         |  |   |       |        | 
|-------------------------------------------- | ----------- | ---- | ----- | ------ | ------- | - | ----- | ------- |  | - | ----- | ------ | 
|                                             |             | 2005 |       |        | 2004(1) |   |       | 2003(1) | 
|                                             |             |      |       |        |         |   |       |         | 
|US                                           |             | $    | 8,160 |        |         | $ | 8,789 |         |  | $ | 5,919 |       
|Canada and Central America                   |             |      | 625   |        |         |   | 476   |         |  |   | 79    |       
|Taiwan                                       |             |      | 3,047 |        |         |   | 3,245 |         |  |   | 2,925 |       
|Japan                                        |             |      | 2,406 |        |         |   | 2,934 |         |  |   | 1,544 |       
|Hong Kong                                    |             |      | 3,132 |        |         |   | 2,041 |         |  |   | 680   |       
|Asia (excluding Taiwan, Japan and Hong Kong) |             |      | 2,971 |        |         |   | 2,617 |         |  |   | 3,096 |       
|United Kingdom                               |             |      | 1,834 |        |         |   | 2,652 |         |  |   | 2,345 |       
|Europe (excluding United Kingdom)            |             |      | 1,350 |        |         |   | 3,864 |         |  |   | 1,934 |       
|Rest of world                                |             |      | 74    |        |         |   | 53    |         |  |   |       |       
|                                             |             |      |       |        |         |   |       |         | 
|                                             | Net revenue |      | $     | 23,599 |         |   | $     | 26,671  |  |   | $     | 18,522 | 
|                                             |             |      |       |        |         |   |       |         | 






|   |                                                                                                                                                                                                                                                               
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1) | For the years ended March 31, 2004 and 2003, the geographic
    revenue is presented based on ship-to country of customer to be
    consistent with 2005 presentation. These amounts had been
    previously reported based upon bill-to location of customer.

F-41



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##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|              |       |      |       |       |      |   |       |       | 
|------------- | ----- | ---- | ----- | ----- | ---- | - | ----- | ----- | 
|              |       | 2005 |       |       | 2004 |  
|              |       |      |       |       |      |  
|North America |       | $    | 2,795 |       |      | $ | 4,459 |      
|India         |       |      | 1,314 |       |      |   | 1,433 |      
|Taiwan        |       |      | 199   |       |      |   | 264   |      
|Rest of world |       |      | 8     |       |      |   | 5     |      
|              |       |      |       |       |      |  
|              | Total |      | $     | 4,316 |      |   | $     | 6,161 | 
|              |       |      |       |       |      |  

F-42



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##### Table of Contents



ALLIANCE SEMICONDUCTOR CORPORATION


SCHEDULE II: VALUATION AND QUALIFYING ACCOUNTS


|                          |                                 |                |   |     |           |  |   |            |            |  |        |     |   |  |   |     | 
|------------------------- | ------------------------------- | -------------- | - | --- | --------- |  | - | ---------- | ---------- |  | ------ | --- | - |  | - | --- | 
|                          |                                 | Balance at     |   |     |           |  |   |            | Balance at | 
|                          |                                 | Beginning      |   |     |           |  |   |            | End of     | 
|Description               |                                 | of Period      |   |     | Additions |  |   | Reductions |            |  | Period |    
|                          |                                 |                |   |     |           |  |   |            |            |  |        |    
|                          |                                 | (In thousands) |  
|Year ended March 31, 2005 |                                 |                |   |     |           |  |   |            |            |  |        |     |   |  |   |    
|                          | Allowance for doubtful accounts |                | $ | 125 |           |  | $ |            |            |  | $      | (7  | ) |  | $ | 118 | 
|Year ended March 31, 2004 |                                 |                |   |     |           |  |   |            |            |  |        |     |   |  |   |    
|                          | Allowance for doubtful accounts |                | $ | 99  |           |  | $ | 26         |            |  | $      |     |   |  | $ | 125 | 
|Year ended March 31, 2003 |                                 |                |   |     |           |  |   |            |            |  |        |     |   |  |   |    
|                          | Allowance for doubtful accounts |                | $ | 86  |           |  | $ | 50         |            |  | $      | (37 | ) |  | $ | 99  | 

F-43



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##### Table of Contents






EXHIBIT INDEX


|        |    |                      |  |                                                                                                                                                                                                                   
|------- | -- | -------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                     
|Number  |    | Document Description
|        |    |                     
|        | 3  | .01(A)               |  | Registrants Certificate of Incorporation                                                                                                                                                                         
|        | 3  | .02(A)               |  | Registrants Certificate of Elimination of Series A
    Preferred Stock                                                                                                                                           
|        | 3  | .03(E)               |  | Registrants Certificate of Amendment of Certificate of
    Incorporation                                                                                                                                         
|        | 3  | .04(A)               |  | Registrants Bylaws                                                                                                                                                                                               
|        | 4  | .01(A)               |  | Specimen of Common Stock Certificate of Registrant                                                                                                                                                                
|        | 10 | .01                  |  | Registrants Stock Option Plan adopted by Registrant on
    April 7, 1992 and amended through September 19, 1996,
    and related documents (superseded by Exhibit 10.44)                                         
|        | 10 | .02(A)              |  | Form of Indemnity Agreement used between Registrant and certain
    of its officers and directors                                                                                                                 
|        | 10 | .03(J)              |  | Form of Indemnity Agreement used between the Registrant and
    certain of its officers                                                                                                                           
|        | 10 | .04*(H)              |  | Subscription Agreement dated February 17, 1995, by and
    among Registrant, Singapore Technology Pte. Ltd. and Chartered
    Semiconductor Manufacturing Pte. Ltd.                                               
|        | 10 | .05*(H)              |  | Manufacturing Agreement dated February 17, 1995, between
    Registrant and Chartered Semiconductor Manufacturing Pte. Ltd.                                                                                       
|        | 10 | .06(C)               |  | Supplemental Subscription Agreement dated March 15, 1995,
    by and among Registrant, Singapore Technology Pte. Ltd. and
    Chartered Semiconductor Manufacturing Pte. Ltd.                                     
|        | 10 | .7*(C)               |  | Supplemental Manufacturing Agreement dated March 15, 1995,
    between Registrant and Chartered Semiconductor Manufacturing
    Pte. Ltd.                                                                         
|        | 10 | .8*(D)               |  | Foundry Venture Agreement dated July 8, 1995, by and among
    Registrant, S3 Incorporated and United Microelectronics
    Corporation                                                                            
|        | 10 | .9*(D)               |  | Foundry Capacity Agreement dated July 8, 1995, by and among
    Registrant, Fabco, S3 Incorporated and United Microelectronics
    Corporation                                                                    
|        | 10 | .10*(E)              |  | Foundry Venture Agreement dated September 29, 1995, between
    Registrant and United Microelectronics Corporation                                                                                                
|        | 10 | .11*(E)              |  | Foundry Capacity Agreement dated September 29, 1995, by and
    among Registrant, FabVen and United Microelectronics Corporation                                                                                  
|        | 10 | .12*(E)              |  | Written Assurances Re: Foundry Venture Agreement dated
    September 29, 1995 by and among Registrant, FabVen and
    United Microelectronics Corporation                                                         
|        | 10 | .13*(F)              |  | Letter Agreement dated June 26, 1996 by and among
    Registrant, S3 Incorporated and United Microelectronics
    Corporation                                                                                     
|        | 10 | .14(G)               |  | Stock Purchase Agreement dated as of June 30, 1996 by and
    among Registrant, S3 Incorporated, United Microelectronics
    Corporation and United Semiconductor Corporation                                     
|        | 10 | .15*(G)              |  | Amendment to Fabco Foundry Capacity Agreement dated as of
    July 3, 1996 by and among Registrant, S3 Incorporated,
    United Microelectronics Corporation and United Semiconductor
    Corporation             
|        | 10 | .16(G)               |  | Side Letter dated July 11, 1996 by and among Registrant, S3
    Incorporated, United Microelectronics Corporation and United
    Semiconductor Corporation                                                        
|        | 10 | .17(H)              |  | 1996 Employee Stock Purchase Plan                                                                                                                                                                                 
|        | 10 | .18(I)               |  | Letter Agreement dated December 23, 1996 by and among
    Registrant, S3 Incorporated, United Microelectronics Corporation
    and United Semiconductor Corporation                                               
|        | 10 | .19(J)               |  | Trademark License Agreement dated as of October 17, 1996
    between Registrant and Alliance Semiconductor International
    Corporation, a Delaware corporation, as amended through
    May 31, 1997             
|        | 10 | .20(J)               |  | Restated Amendment to FabCo Foundry Venture Agreement dated as
    of February 28, 1997 by and among Registrant, S3
    Incorporated, United Microelectronics Corporation and United
    Semiconductor Corporation
|        | 10 | .21(J)               |  | Letter Agreement dated April 25, 1997 by and among
    Registrant, S3 Incorporated, United Microelectronics Corporation
    and United Semiconductor Corporation                                                  



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##### Table of Contents



|        |    |                      |  |                                                                                                                                                                                                                                                              
|------- | -- | -------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                     
|Number  |    | Document Description
|        |    |                     
|        | 10 | .22*(J)              |  | Restated DRAM Agreement dated as of February 28, 1996
    between Registrant and United Microelectronics Corporation                                                                                                                                         
|        | 10 | .23*(J)              |  | First Amendment to Restated DRAM Agreement dated as of
    March 26, 1996 between Registrant and United
    Microelectronics Corporation                                                                                                                     
|        | 10 | .24*(J)              |  | Second Amendment to Restated DRAM Agreement dated as of
    July 10, 1996 between Registrant and United
    Microelectronics Corporation                                                                                                                     
|        | 10 | .26*(K)              |  | Sale and Transfer Agreement dated as of March 4, 1998                                                                                                                                                                                                        
|        | 10 | .27(L)               |  | Alliance Venture Management, LLC Limited Liability Company
    Operating Agreement dated October 15, 1999                                                                                                                                                    
|        | 10 | .28(L)               |  | Alliance Venture Management, LLC Amended Limited Liability
    Company Operating Agreement dated February 28, 2000                                                                                                                                           
|        | 10 | .29(L)               |  | Alliance Ventures I, LP Agreement of Limited Partnership
    dated November 12, 1999                                                                                                                                                                         
|        | 10 | .30(L)               |  | Alliance Ventures II, LP Agreement of Limited Partnership
    dated November 12, 1999                                                                                                                                                                        
|        | 10 | .31(L)               |  | Alliance Ventures III, LP Agreement of Limited Partnership
    dated February 28, 2000                                                                                                                                                                       
|        | 10 | .32(M)               |  | Share Purchase Agreement, dated as of July 4, 2000, by and
    between SanDisk Corporation and Tower Semiconductor Ltd.                                                                                                                                      
|        | 10 | .33(M)               |  | Additional Purchase Obligation Agreement, dated as of
    July 4, 2000, by and between SanDisk Corporation and Tower
    Semiconductor Ltd.                                                                                                                  
|        | 10 | .34(M)               |  | Registration Rights Agreement, dated as of January 18,
    2001, by and between Tower Semiconductor Ltd., SanDisk
    Corporation, The Israel Corporation, Registrant, Macronix
    International Co., Ltd. and QuickLogic Corporation.                      
|        | 10 | .35(M)               |  | Consolidated Shareholders Agreement, dated as of
    January 18, 2001 by and among SanDisk Corporation, The
    Israel Corporation, Registrant and Macronix International Co.,
    Ltd.                                                                      
|        | 10 | .36(M)               |  | Alliance/ Tower Joinder Agreement, dated August 29, 2000,
    by and between Registrant and Tower Semiconductor Ltd.                                                                                                                                         
|        | 10 | .37(M)               |  | Alliance/ TIC Joinder Agreement, dated August 29, 2000, by
    and between Registrant and The Israel Corporation                                                                                                                                             
|        | 10 | .38(N)               |  | Alliance Venture Management, LLC Amended Limited Liability
    Company Operating Agreement dated January 23, 2001                                                                                                                                            
|        | 10 | .39(N)               |  | Alliance Ventures IV, LP Agreement of Limited Partnership dated
    January 23, 2001                                                                                                                                                                         
|        | 10 | .40(N)               |  | Alliance Ventures V, LP Agreement of Limited Partnership
    dated January 23, 2001                                                                                                                                                                          
|        | 10 | .41(N)               |  | Loan Agreement dated May 17, 2001, by and between
    Registrant and Citibank, N.A.                                                                                                                                                                          
|        | 10 | .42(N)               |  | Share Pledge Agreement dated May 17, 2001, by and between
    Registrant and Citibank, N.A.                                                                                                                                                                  
|        | 10 | .43(O)               |  | Asset Purchase Agreement dated January 17, 2002 by and
    between Registrant and PulseCore, Inc.                                                                                                                                                            
|        | 10 | .44(P)               |  | Registrants 2002 Stock Option Plan                                                                                                                                                                                                                          
|        | 10 | .45(Q)               |  | Tower Semiconductor Agreement; Amendment No. 3 to payment
    schedule of Series A-5 additional purchase obligations,
    waiver of Series A-5 conditions, conversion of
    Series A-4 wafer credits and other provisions, dated as of
    November 11, 2003
|        | 10 | .46                  |  | Form of Stock Option Agreement under Registrants 2002
    Stock Option Plan                                                                                                                                                                                 
|        | 14 | .01(R)               |  | Code of Ethics                                                                                                                                                                                                                                               
|        | 21 | .01                  |  | Subsidiaries of Registrant                                                                                                                                                                                                                                   
|        | 23 | .01                  |  | Consent of PricewaterhouseCoopers LLP (San Jose, California)                                                                                                                                                                                                 
|        | 24 | .01                  |  | Power of Attorney, (See page 57)                                                                                                                                                                                                                             
|        | 31 | .01                  |  | Certification Pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002 of our Chief Executive Officer                                                                                                                                                   
|        | 31 | .02                  |  | Certification Pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002 of our Chief Financial Officer                                                                                                                                                   



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##### Table of Contents



|        |    |                      |  |                                                                                                                                                              
|------- | -- | -------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                     
|Number  |    | Document Description
|        |    |                     
|        | 32 | .01                  |  | Certification Pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002 of our Chief Executive Officer
|        | 32 | .02                  |  | Certification Pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002 of our Chief Financial Officer






|    |  |                                                                                                                                                                                                                 
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |  | Management contract or compensatory plan or arrangement required
    to be filed as an Exhibit to this Form 10-K.                                                                                               
|   
|*   |  | Confidential treatment has been granted with respect to certain
    portions of this document.                                                                                                                  
|   
|(A) |  | The document referred to is hereby incorporated by reference
    from Registrants Registration Statement on Form SB-2
    (File No. 33-69956-LA) declared effective by the Commission
    on November 30, 1993.
|   
|(B) |  | The document referred to is hereby incorporated by reference
    from Registrants Registration Statement on Form SB-2
    (File No. 33-90346-LA) declared effective by the Commission
    on March 28, 1995.   
|   
|(C) |  | The document referred to is hereby incorporated by reference
    from Registrants Current Report on Form 8-K filed
    with the Commission on April 28, 1995.                                                  
|   
|(D) |  | The document referred to is hereby incorporated by reference
    from Registrants Current Report on Form 8-K filed
    with the Commission on July 24, 1995.                                                   
|   
|(E) |  | The document referred to is hereby incorporated by reference
    from Registrants Current Report on Form 8-K filed
    with the Commission on October 23, 1995.                                                
|   
|(F) |  | The document referred to is hereby incorporated by reference
    from Registrants Quarterly Report on Form 10-Q filed
    with the Commission on August 13, 1996.                                              
|   
|(G) |  | The document referred to is hereby incorporated by reference
    from Registrants Quarterly Report on Form 10-Q filed
    with the Commission on November 12, 1996.                                            
|   
|(H) |  | The document referred to is hereby incorporated by reference
    from Registrants Registration Statement on Form S-8
    (File No. 333-13461) filed with the Commission on
    October 4, 1996.                
|   
|(I) |  | The document referred to is hereby incorporated by reference
    from Registrants Quarterly Report on Form 10-Q filed
    with the Commission on February 11, 1997.                                            
|   
|(J) |  | The document referred to is hereby incorporated by reference
    from Registrants Annual Report on Form 10-K filed
    with the Commission on June 27, 1997.                                                   
|   
|(K) |  | The document referred to is hereby incorporated by reference
    from Registrants Current Report on Form 8-K filed
    with the Commission on March 19, 1998.                                                  
|   
|(L) |  | The document referred to is hereby incorporated by reference
    from Registrants Annual Report on Form 10-K filed
    with the Commission on June 30, 2000.                                                   
|   
|(M) |  | The document referred to is hereby incorporated by reference
    from Registrants Quarterly Report on Form 10-Q filed
    with the Commission on February 13, 2001.                                            
|   
|(N) |  | The document referred to is hereby incorporated by reference
    from Registrants Annual Report on Form 10-K filed
    with the Commission on June 29, 2001.                                                   
|   
|(O) |  | The document referred to is filed hereby incorporated by
    reference from Registrants Quarterly Report on
    Form 10-Q filed with the Commission on February 12,
    2002.                                  
|   
|(P) |  | The document referred to is hereby incorporated by reference
    from Registrants Annual Report on Form 10-K filed
    with the Commission on July 15, 2002.                                                   
|   
|(Q) |  | The document referred to is hereby incorporated by reference
    from Registrants Quarterly Report on Form 10-Q filed
    with the Commission on February 10, 2004.                                            
|   
|(R) |  | The document referred to is hereby incorporated by reference
    from Registrants Annual Report on Form 10-K filed
    with the Commission on June 10, 2004.