<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

           [X] Quarterly report pursuant to Section 13 or 15(d) of the
         Securities Exchange Act of 1934 for the quarterly period ended
                               September 30, 2001.

                                       or

          [_] Transition report pursuant to Section 13 or 15(d) of the
         Securities Exchange Act of 1934 for the transition period from
                   _________________ to _____________________.

                        Commission File Number: 000-30615

                           SIRENZA MICRODEVICES, INC.

             (Exact name of registrant as specified in its charter)

                Delaware                                   77-0073042
    -------------------------------                   -------------------
    (State or other jurisdiction of                    (I.R.S.  Employer
     incorporation or organization)                   Identification No.)


      522 Almanor Avenue, Sunnyvale, CA                       94086
  ----------------------------------------                  ----------
  (Address of principal executive offices)                  (Zip Code)

                                 (408) 616-5400
                                 --------------

              (Registrant's telephone number, including area code)

      Stanford Microdevices, Inc., 726 Palomar Avenue, Sunnyvale, CA 94086
--------------------------------------------------------------------------------
         (Former name, former address and former fiscal year, if changed
                               since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) had been subject to such filing
requirements for the past 90 days. Yes [X] No [_]

As of October 28, 2001, there were 29,459,801 shares of registrant's Common
Stock outstanding.

<PAGE>

                           SIRENZA MICRODEVICES, INC.
                                      INDEX

Part I. Financial Information..............................................   3

     Item 1. Financial Statements..........................................   3

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

     Item 3. Qualitative and Quantitative Disclosures About Market Risk....  32

Part II. Other Information.................................................  32

     Item 1. Legal Proceedings.............................................  32

     Item 2. Changes in Securities and Use of Proceeds.....................  32

     Item 3: Defaults Upon Senior Securities...............................  33

     Item 4: Submission of Matters to a Vote of Security Holders...........  33

     Item 5: Other Information.............................................  33

     Item 6: Exhibits and Reports on Form 8-K..............................  33

Signatures.................................................................  33

                                       2

<PAGE>

                          Part 1. Financial Information

Item 1. Financial Statements

                           Sirenza Microdevices, Inc.
                     Condensed Consolidated Balance Sheets
                                 (In thousands)

<TABLE>
<CAPTION>
                                                      September 30,     December 31,
                                                          2001              2000
                                                          ----              ----
                                                       (unaudited)
<S>                                                     <C>              <C>
Assets
Current assets:
    Cash and cash equivalents                           $  17,775        $  37,683
    Short-term investments                                 37,204           13,444
    Accounts receivable, net                                1,446            3,946
    Inventories                                             2,068            7,107
    Deferred tax assets and other                           1,494            3,464
                                                        ---------        ---------
Total current assets                                       59,987           65,644

    Property and equipment, net                             7,593            8,388
    Long-term investments                                       -            7,204
    Other assets                                              191            1,070
                                                        ---------        ---------
Total assets                                            $  67,771        $  82,306
                                                        =========        =========

Liabilities and stockholders' equity
Current liabilities:
    Accounts payable                                    $   1,576        $   2,071
    Accrued expenses                                        1,972            2,912
    Deferred margin on distributor inventory                4,742            6,942
    Capital lease obligations, current portion                695              747
                                                        ---------        ---------
Total current liabilities                                   8,985           12,672


    Capital lease obligations                                 515            1,010

Stockholders' equity

    Common Stock                                               29               27
    Additional paid-in capital                            128,272          125,286
    Deferred stock compensation                            (2,472)          (3,619)
    Accumulated deficit                                   (67,558)         (53,070)
                                                        ---------        ---------
Total stockholders' equity                                 58,271           68,624
                                                        ---------        ---------

    Total liabilities and stockholders' equity          $  67,771        $  82,306
                                                        =========        =========
</TABLE>

                            See accompanying notes.

                                       3


<PAGE>

                           Sirenza Microdevices, Inc.
                 Condensed Consolidated Statements of Operations
                      (In thousands, except per share data)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                             Three Months Ended            Nine Months Ended
                                                                             ------------------            -----------------
                                                                         September 30,  September 30,  September 30,  September 30,
                                                                             2001           2000           2001          2000
                                                                             ----           ----           ----          ----
<S>                                                                      <C>            <C>            <C>            <C>
Net revenues                                                               $  3,188       $  8,857       $ 16,343       $ 23,993
Cost of revenues (exclusive of amortization of
  deferred stock compensation of $32, $106, $39 and $115
  for the three and nine months ended September 30, 2001 and
  three and nine months ended September 30, 2000, respectively)               7,468          3,982         15,084         10,252
                                                                           --------       --------       --------       --------
Gross profit (loss)                                                          (4,280)         4,875          1,259         13,741

Operating expenses:
    Research and development (exclusive of amortization of
      deferred stock compensation of $61, $204, $75 and $214
      for the three and nine months ended September 30, 2001 and
      three and nine months ended September 30, 2000, respectively)           3,116          2,458          7,619          5,584
    Sales and marketing (exclusive of amortization of
      deferred stock compensation of $65, $216, $76 and $224
      for the three and nine months ended September 30, 2001 and
      three and nine months ended September 30, 2000, respectively)           1,365          1,381          4,419          4,385
    General and administrative (exclusive of amortization of
      deferred stock compensation of $314, $621, $155 and $419
      for the three and nine months ended September 30, 2001 and
      three and nine months ended September 30, 2000, respectively)           1,111          1,286          3,340          3,398
    Amortization of deferred stock compensation                                 472            345          1,147            972
                                                                           --------       --------       --------       --------
Total operating expenses                                                      6,064          5,470         16,525         14,339
                                                                           --------       --------       --------       --------

Loss from operations                                                        (10,344)          (595)       (15,266)          (598)

Interest expense                                                                 26             39             99            152
Interest income and other, net                                                1,086            989          3,153          1,567
                                                                           --------       --------       --------       --------

Income (loss) before taxes                                                   (9,284)           355        (12,212)           817

Provision for income taxes                                                    3,154            105          2,276            243
                                                                           --------       --------       --------       --------

Net income (loss)                                                           (12,438)           250        (14,488)           574

Accretion of mandatorily redeemable
   convertible preferred stock                                                    -              -              -        (25,924)
                                                                           --------       --------       --------       --------

Net income (loss) applicable to common
   stockholders                                                            $(12,438)      $    250       $(14,488)      $(25,350)
                                                                           ========       ========       ========       ========
Net income (loss) per share applicable to common stockholders:
     Basic                                                                 $  (0.42)      $   0.01       $  (0.50)      $  (1.24)
                                                                           ========       ========       ========       ========
     Diluted                                                               $  (0.42)      $   0.01       $  (0.50)      $  (1.24)
                                                                           ========       ========       ========       ========

Shares used to compute net income (loss)
 applicable to common stockholders
     Basic                                                                   29,447         26,342         28,996         20,450
                                                                           ========       ========       ========       ========
     Diluted                                                                 29,447         31,323         28,996         20,450
                                                                           ========       ========       ========       ========
</TABLE>


                             See accompanying notes.

                                       4

<PAGE>

                           Sirenza Microdevices, Inc.
                 Condensed Consolidated Statements of Cash Flows
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                     Nine Months Ended
                                                                                     -----------------
                                                                         September 30, 2001      September 30, 2000
                                                                         ------------------      ------------------
                                                                                        (unaudited)
                                                                                        -----------
<S>                                                                      <C>                     <C>
Operating Activities
Net  income (loss)                                                            $   (14,488)            $      574
Adjustments to reconcile net income (loss) to net
 cash provided by (used in) operating activities:
              Depreciation and amortization                                         2,091                  1,136
              Reduction of equipment value                                          1,468                      -
              Compensation expense related to stock options                             -                     63
              Amortization of deferred stock  compensation                          1,147                    972
              Changes in operating assets and liabilities:
                Accounts receivable                                                 2,500                 (2,547)
                Inventories                                                         5,039                 (4,714)
                Deferred tax assets and other assets                                2,849                   (312)
                Accounts payable                                                     (495)                   669
                Accrued expenses                                                     (940)                 1,097
                Deferred margin on distributor inventory                           (2,200)                 3,402
                                                                              -----------             ----------
                   Net cash provided by (used in) operating activities             (3,029)                   340
Investing Activities
Sales/maturities (purchases) of available-for-sale securities, net                (16,556)               (44,341)
Purchases of property and equipment                                                (2,764)                (4,456)
Proceeds from the sale of property and equipment                                        -                    753
                                                                              -----------             ----------
Net cash used in investing activities                                             (19,320)               (48,044)
Financing Activities
Proceeds from issuance of common stock, net                                             -                 49,794
Principal payments on capital lease obligations                                      (547)                  (652)
Proceeds from employee stock plans                                                  2,988                    381
                                                                              -----------             ----------
Net cash provided by financing activities                                           2,441                 49,523
Increase (decrease) in cash                                                       (19,908)                 1,819
Cash at beginning of period                                                        37,683                 10,965
Cash at end of period                                                         $    17,775             $   12,784
                                                                              ===========             ==========
Supplemental disclosures of noncash investing and
  financing activities

Equipment acquired under capital Lease                                        $         -             $      612
Accretion of mandatorily redeemable convertible
     preferred stock                                                          $         -             $   25,924
Deferred stock compensation                                                   $         -             $      681
Net exercise of warrants                                                      $         -             $      688
Conversion of mandatorily redeemable convertible
  preferred stock into common stock                                           $         -             $   64,781
</TABLE>

                            See accompanying notes.

                                       5

<PAGE>

Note 1: Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States for interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by accounting principles generally
accepted in the United States for complete financial statements. In the opinion
of management, all adjustments (consisting only of normal recurring adjustments)
considered necessary for a fair presentation have been included. Operating
results for the three and nine month periods ended September 30, 2001 are not
necessarily indicative of the results that may be expected for any later period.

On September 20, 2001 Stanford Microdevices, Inc. (the "Company") filed a
certificate of ownership and merger with the Delaware Secretary of State,
whereby a wholly-owned subsidiary of the Company was merged into the Company.
Immediately following this merger, the Company was the surviving corporation,
and the new name of the Company became Sirenza Microdevices, Inc.

The balance sheet at December 31, 2000 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by accounting principles generally accepted in the United
States for complete financial statements.

The accompanying unaudited condensed consolidated financial statements should be
read in conjunction with the audited consolidated financial statements of the
Company for the fiscal year ended December 31, 2000, which are included in the
Company's Annual Report on Form 10-K filed with the Securities and Exchange
Commission (SEC) on March 29, 2001.

The unaudited condensed consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries in Canada and the United
Kingdom. Intercompany balances and transactions have been eliminated.

The Company operates on thirteen week fiscal quarters ending on the Sunday
closest to the end of the calendar quarter, with the exception of the fourth
quarter, which ends on December 31. The Company's third quarter of fiscal year
2001 ended on September 30, 2001. The Company's third quarter of fiscal year
2000 ended on October 1, 2000. For

                                       6

<PAGE>

presentation purposes, the accompanying unaudited condensed consolidated
financial statements refer to the quarter's calendar month end for convenience.

Note 2: Inventories

The Company plans production based on orders received and forecasted demand and
must order wafers and build inventories well in advance of product shipments.
The valuation of inventories at the lower of cost or market requires the use of
estimates regarding the amounts of current inventories that will be sold. These
estimates are dependent on the Company's assessment of current and expected
orders from its customers, including consideration that orders are subject to
cancellation with limited advance notice prior to shipment. Because the
Company's markets are volatile, and are subject to technological risks and price
changes as well as inventory reduction programs by the Company's customers and
distributors, there is a risk that the Company will forecast incorrectly and
produce excess inventories of particular products. This inventory risk is
compounded because many of the Company's customers place orders with short lead
times. As a result, actual demand will differ from forecasts, and such a
difference has in the past and may in the future have a material adverse effect
on actual results of operations. In the third quarter of 2001, the Company
recorded a provision for excess inventories totaling $4.5 million. This
additional excess inventory charge was due to a significant decrease in
forecasted demand for the Company's products and was calculated in accordance
with the Company's policy, which is based on inventory levels in excess of
demand for each specific product.

Inventories consist of (in thousands):

                        September 30,      December 31,
                           2001               2000
                           ----               ----
                        (unaudited)

Raw materials           $         513    $       2,648
Work-in-process                 1,217            3,211
Finished goods                    338            1,248
                        ------------------------------
     Total              $       2,068    $       7,107
                        ==============================


Note 3: Net Income (Loss) Per Share

The Company computes net income (loss) per share in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings per Share" (FAS 128) and SEC
Staff Accounting Bulletin No. 98 (SAB 98). Under the provisions of FAS 128 and
SAB 98, basic net income (loss) per share is computed by dividing the net income
(loss) applicable to common stockholders for the period by the weighted average
number of shares of Common Stock outstanding during the period. Diluted net
income (loss) per share is computed by dividing the net income (loss) applicable
to common stockholders for the period by the weighted average number of shares
of Common Stock and potential Common Stock equivalents outstanding during the
period, if dilutive. Potential Common

                                       7

<PAGE>

Stock equivalents include incremental shares of Common Stock issuable upon the
exercise of stock options and warrants and upon conversion of Mandatorily
Redeemable Convertible Preferred Stock.

The following table sets forth the computation of basic and diluted net income
(loss) per share for the periods indicated (in thousands, except per share
data):

<TABLE>
<CAPTION>
                                                                Three Months ended            Nine Months ended
                                                                ------------------            -----------------
                                                          September 30,  September 30,  September 30,  September 30,
                                                              2001           2000           2001           2000
                                                              ----           ----           ----           ----
<S>                                                       <C>            <C>            <C>            <C>
Net income (loss) applicable to common stockholders         $(12,438)    $    250        $(14,488)     $  (25,350)
                                                          =========================================================

Weighted average common shares outstanding                    29,447       26,342          28,996          20,450
Effect of dilutive options outstanding                             -        4,981               -               -
Denominator for diluted earnings per share                    29,447       31,323          28,996          20,450
                                                          =========================================================

Net (income) loss per share applicable to common
     stockholders

      Basic                                                 $  (0.42)    $   0.01        $  (0.50)     $    (1.24)
      Diluted                                               $  (0.42)    $   0.01        $  (0.50)     $    (1.24)
</TABLE>

The effect of options to purchase 4,316,361 shares of Common Stock at an average
exercise price of $9.81 for the three and nine months ended September 30, 2001
has not been included in the computation of diluted net loss per share
applicable to common stockholders as its effect is antidilutive.

The effects of options to purchase 5,318,467 shares of Common Stock at an
average exercise price of $2.87 for the nine months ended September 30, 2000 has
not been included in the computation of diluted net loss per share applicable to
common stockholders as their effect is antidilutive.

Note 4: Comprehensive Income (Loss)

The Company has adopted Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" (FAS 130). FAS 130 requires that all items
required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. The Company's comprehensive
net income (loss) was the same as its net income (loss) for the three and nine
months ended September 30, 2001 and 2000.

Note 5: Segments of an Enterprise and Related Information

The Company has adopted Statement of Financial Accounting Standards No. 131,
"Disclosure about Segments of an Enterprise and Related Information" (FAS 131).
FAS 131 establishes standards for the way that public business enterprises
report information about operating segments in annual financial statements and
requires that those

                                       8

<PAGE>

enterprises report selected information about operating segments in interim
financial reports. FAS 131 also establishes standards for related disclosures
about products and services, geographic areas, and major customers.

In fiscal 2000, the Company added a Wireless Infrastructure Products business
unit that increased the number of operating segments from one to two. The
Company previously operated under one business segment, the sale of radio
frequency (RF) semiconductor components for communications network
infrastructures. The Company currently operates in two segments: (1) the
Standard Products segment and (2) the Wireless Infrastructure Products segment.
The Company's reportable segments are organized as separate functional units
with separate management teams and separate performance assessment and resource
allocation processes. The Standard Products segment produces standard
application RF components that consist primarily of integrated circuits and
discrete devices for communications network infrastructures. RF components
produced by the Standard Products segment are typically sold through
distribution. The Wireless Infrastructure Products segment is focused on
producing custom and semi-custom RF components that will consist primarily of
integrated circuits and multi-component modules for mobile wireless
infrastructure equipment manufacturers. Custom and semi-custom RF components
produced by the Wireless Infrastructure Products segment will be sold primarily
through our direct sales channels.

The accounting policies of the segments are the same as those described in Note
1: Organization and Summary of Significant Accounting Policies of the Notes to
Consolidated Financial Statements as reflected in the Company's Annual Report on
Form 10-K, filed with the SEC on March 29, 2001. The Company's chief operating
decision maker (CODM) evaluates performance and allocates resources based on
segment reporting operating income (loss). There are no intersegment sales.
Non-segment items include various corporate research and development expenses,
sales and marketing expenses, general and administrative expenses, amortization
of deferred stock compensation, depreciation and amortization expense, interest
income and other, net, interest expense, and the provision for (benefit from)
income taxes, as the aforementioned items are not allocated for purposes of the
CODM's review. With the exception of expenditures for long-lived assets, assets
and liabilities are not discretely reviewed by the CODM.

                                       9

<PAGE>

<TABLE>
<CAPTION>

                                                                       Wireless                         Non-
(In Thousands)                                          Standard    Infrastructure       Total        Segment        Total
(Unaudited)                                             Products       Products        Segments        Items        Company
                                                        --------       --------        --------        -----        -------
<S>                                                    <C>         <C>                <C>           <C>            <C>
For the three months ended September 30, 2001

Net revenues from external customers                   $  3,188    $           -      $  3,188      $      -       $  3,188
Operating loss                                           (5,665)          (1,434)       (7,099)       (3,245)       (10,344)
Expenditures for long-lived assets                           22               57            79         1,111          1,190

For the nine months ended September 30, 2001

Net revenues from external customers                   $ 16,343    $           -      $ 16,343      $      -       $ 16,343
Operating loss                                           (2,565)          (2,890)       (5,455)       (9,811)       (15,266)
Expenditures for long-lived assets                          248              215           463         2,301          2,764

For the three months ended September 30, 2000

Net revenues from external customers                   $  8,857    $           -      $  8,857      $      -       $  8,857
Operating income (loss)                                   3,749           (1,127)     $  2,622        (3,217)      $   (595)
Expenditures for long-lived assets                          763              372      $  1,135           686       $  1,821

For the nine months ended September 30, 2000

Net revenues from external customers                   $ 23,993    $           -      $ 23,993      $      -       $ 23,993
Operating income (loss)                                  10,656           (2,361)        8,295        (8,893)          (598)
Expenditures for long-lived assets                        1,327            1,156         2,483         2,586          5,069
</TABLE>


Note 6: Income Taxes

During the third quarter of 2001, the Company recorded a valuation allowance of
$2.3 million against the carrying value of its net deferred tax assets and
reversed 2001 previously recorded benefits of $878,000 as a result of a
reduction in the Company's projected future taxable income. Deferred tax assets
require a valuation allowance when, in the opinion of management, it is more
likely than not that some portion of the deferred tax assets may not be
realized. Whereas realization of the deferred tax assets is dependent upon the
timing and magnitude of future taxable income prior to the expiration of the
deferred tax attributes, management has recorded a full valuation allowance. The
amount

                                       10

<PAGE>

of deferred tax assets considered realizable, however, could change if estimates
of future taxable income during the carry-forward period are changed.

Note 7: Impact of Recently Issued Accounting Standards

On July 20, 2001 the Financial Accounting Standards Board (FASB) issued
Statement No. 141 (FAS 141) "Business Combinations" and Statement No. 142 (FAS
142) "Goodwill and Other Intangible Assets".

FAS 141 requires that all business combinations be accounted for under a single
method-the "purchase" method for all business combinations initiated after June
30, 2001. The Company adopted FAS 141 in the third quarter of 2001 and the
adoption of this statement did not have a material effect on the Company's
financial statements.

FAS 142 addresses financial accounting and reporting for acquired goodwill and
other intangible assets. Intangible assets that are acquired individually or
with a group of other assets (excluding those acquired in a business
combination) should be accounted for in financial statements upon their
acquisition. Goodwill and intangible assets that have indefinite useful lives
will not be amortized, but will be tested at least annually for impairment.
Intangible assets that have finite useful lives will continue to be amortized
over their useful lives. The Company expects to adopt the Statement effective
January 1, 2002. The Company does not believe the adoption of FAS 142 will have
a material impact on its future results of operations.

Note 8: Subsequent Events

The Company expects to take a restructuring charge in the fourth quarter of 2001
of between $1.7 million and $2.7 million related to a reduction in force of
approximately 20%-25%, and a consolidation of facilities.

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

Certain statements in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations" are forward-looking statements that involve
risks and uncertainties. These statements relate to future events or our future
financial performance. In some cases, forward-looking statements can be
identified by terminology such as "may," "will," "should," "expect,"
"anticipate," "intend," "plan," "believe," "estimate," "potential," or
"continue," the negative of these terms or other comparable terminology. These
statements involve a number of risks and uncertainties. Actual events or results
may differ materially from any forward-looking statement as a result of various
factors, including those described below under "Risk Factors."

Overview


                                       11

<PAGE>

We are a leading designer and supplier of high performance RF components for
communications equipment manufacturers. Our products are used primarily in
wireless communications equipment to enable and enhance the transmission and
reception of voice and data signals.

We derive a majority of our revenues from the sale of standard RF components,
which we develop from our own specifications and sell primarily through
distributors. In early 2000, we launched a separate business unit focused on
designing customized products for specific mobile wireless RF applications for
communications equipment manufacturers. These products are still in development
and we do not expect to generate material revenues from this business unit until
2002. We sell our products worldwide through U.S.-based distributors, through a
private label reseller who sells our products under its brand and through our
direct sales force. Our products are also sold through a worldwide network of
independent sales representatives whose orders are fulfilled either by
distributors or us. Significant portions of our distributors' end sales are made
to their customers overseas.

From 1986 to 1995, we generated revenues primarily from design services and
contract manufacturing services for RF components. Net revenues from contract
manufacturing services as a percentage of our total net revenues declined
significantly from 1996 to 2000. Contract manufacturing customers represented
less than 10% of our total net revenues in 2000, 1999 and 1998. In 1999, we made
the strategic decision to discontinue our contract manufacturing services
although we continued to fulfill our contractual obligations through March 31,
2000. There were no employee terminations, facilities charges, disposals of
assets or other costs associated with our decision to discontinue our contract
manufacturing services. This decision did not have a material impact on our
ongoing results of operations, liquidity or capital resources.

For our direct sales and private label sales, we recognize revenues when the
product has been shipped, title has transferred, and no further obligations
remain. Although we have never experienced a delay in customer acceptance of our
products, should a customer delay acceptance in the future, our policy is to
delay revenue recognition until the products are accepted by a customer.
Revenues for contract manufacturing services are recognized when the completed
assemblies are shipped and no further obligations remain. Provisions for product
returns are recorded upon shipment. Revenues from our distributors are deferred
until the distributors resell the products to their customers.

Two distributors, Avnet Electronics Marketing and Richardson Electronics
Laboratories, a private label reseller of our products, Minicircuits
Laboratories, and one direct customer, Pace Micro Technology PLC, accounted for
a substantial portion of our net revenues in the three months ended September
30, 2001 and 2000. Sales to Pace Micro Technology PLC represented 19% of net
revenues in the three months ended September 30, 2001 and 10% of net revenues in
the three months ended September 30, 2000. Sales to Minicircuits Laboratories
represented 7% of net revenues in the three months ended September 30, 2001 and
21% of net revenues in the three months ended September 30, 2000. Richardson
Electronics Laboratories represented 45% of net revenues in the three months
ended September 30, 2001 and 46% of net revenues in the three months ended
September 30, 2000. Avnet Electronics Marketing represented 5% of net revenues
in the

                                       12

<PAGE>

three months ended September 30, 2001 and 19% of net revenues in the three
months ended September 30, 2000. Richardson Electronics Laboratories and Avnet
Electronics Marketing distribute our products to a large number of end
customers. We anticipate that sales to these customers will continue to account
for a substantial portion of our net revenues.

Two of our product lines accounted for a significant portion of our net revenues
in the three months ended September 30, 2001 and 2000. Sales of our gallium
arsenide heterojunction bipolar transistor (GaAs HBT) products accounted for 44%
of our net revenues in the three months ended September 30, 2001 and 57% of our
net revenues in the three months ended September 30, 2000. Sales of our silicon
germanium (SiGe) heterojunction bipolar transistor products accounted for 41% of
our net revenues in the three months ended September 30, 2001 and 22% of our net
revenues in the three months ended September 30, 2000.

Cost of revenues consists primarily of the costs of wafers from our third-party
wafer fabs, costs of packaging performed by third-party vendors, costs of
testing, costs associated with procurement, production control, quality
assurance, manufacturing engineering, and provisions for excess and obsolete
inventory. We subcontract our wafer manufacturing and packaging and do only
final testing and tape and reel assembly at our facilities.

Historically, gross margins on our sales through our distributors, to private
label resellers and our direct customers have differed materially from each
other. As a result, the relative mix of these sales affects our gross margin. In
addition, we offer a broad range of products in multiple technologies that have
different gross margins. As a result, the relative mix of product sales by
technology and within each technology affects our gross margins.

We do not recognize revenue from our sales to distributors until shipment to the
distributor's customer. We record the deferred margin on distributor inventory
on our balance sheet. As a result, the level of inventory at our distributors
can affect our reported gross margin for any particular period.

The gross margin on sales to our private label reseller is traditionally lower
than that on our distributor or direct sales. We generally charge lower prices
to our private label reseller due to its commitment to higher volumes on
particular parts, its absorption of the risk of inventory obsolescence and its
agreement to incur the sales and marketing costs for the parts.

Through September 30, 2001, one packaging firm, MPI Corporation in Manila,
Philippines, packaged a substantial amount of our products. MPI also performed
substantially all of the manufacturing that related to our contract
manufacturing services. Relatives of our founding stockholders own MPI. Although
we utilized four additional packaging subcontractors in the three months ended
September 30, 2001, we anticipate that MPI will continue to account for a
significant amount of our packaging in the future.

Research and development expenses consist primarily of salaries and related
expenses for personnel engaged in research and development, material costs for
prototype and test

                                       13

<PAGE>

units and other expenses related to the design, development and testing of our
products and, to a lesser extent, fees paid to consultants and outside service
providers. We expense all of our research and development costs as they are
incurred.

Sales and marketing expenses consist primarily of salaries,
commissions and related expenses for personnel engaged in marketing, sales and
customer support functions, as well as costs associated with trade shows,
promotional activities, advertising and public relations. We pay and expense
commissions to our independent sales representatives when revenues from the
associated sale are recognized.

General and administrative expenses consist primarily of salaries and related
expenses for executive, finance, accounting, information technology, and human
resources personnel and professional fees.

In recent years we have incurred substantial costs to develop our technology and
products, to recruit and train personnel for our engineering, sales and
marketing and technical support departments, and to establish an administrative
organization. Our full-time employees increased to 123 at September 30, 2001
from 116 at September 30, 2000.

In October 1999, we issued 5,647,839 shares of mandatorily redeemable
convertible preferred stock at $3.01 per share for net proceeds of approximately
$17.0 million. The holders of the mandatorily redeemable convertible preferred
stock had various rights and preferences, including, but not limited to,
redemption rights. In the first quarter of 2000 and the fourth quarter of 1999,
we recorded an increase to our accumulated deficit of $25.9 million and $21.9
million, respectively, related to the accretion of the mandatorily redeemable
convertible preferred stock to our estimate of its fair value to reflect its
redemption value. As a result, net income available to common stockholders was
reduced. Upon the completion of our initial public offering, the mandatorily
redeemable convertible preferred stock was converted into shares of common stock
and, accordingly, we did not incur any additional accretion charges. We believe
the mandatorily redeemable convertible preferred stock is presented at
redemption value as of December 31, 1999.

Comparison of the Three Months Ended September 30, 2001 and September 30, 2000

Net Revenues

Net revenues decreased to $3.2 million for the three months ended September 30,
2001 from $8.9 million for the three months ended September 30, 2000. This
decrease was the result of the general economic slowdown, the resulting softness
in the wireless infrastructure markets, changes in buying patterns by equipment
manufacturers worldwide and delays in the next generation wireless
infrastructure build-out. Sales through our distributors were 50% of net
revenues for the three months ended September 30, 2001 and 65% of net revenues
for the three months ended September 30, 2000. Sales to our direct customers
comprised 50% of net revenues for the three months ended September 30, 2001, of
which 7% of net revenues was to our private label reseller and 43% of net
revenues was to our factory direct customers. Sales to our direct customers

                                       14

<PAGE>

comprised 35% of net revenues for the three months ended September 30, 2000, of
which 21% of net revenues was to our private label reseller. Sales of our SiGe
products were approximately 41% of our total net revenues for the three months
ended September 30, 2001 compared to 22% for the three months ended September
30, 2000.

Cost of Revenues

Cost of revenues increased to $7.5 million for the three months ended September
30, 2001 from $4.0 million for the three months ended September 30, 2000,
primarily as a result of increased provisions for excess inventories, which
added costs of approximately $4.3 million and lower absorption of fixed overhead
costs due to lower production volumes. This increase was partially offset by
lower variable costs as a result of our decrease in unit shipments in the three
months ended September 30, 2001 compared to the three months ended September 30,
2000. Operations personnel increased to 42 at September 30, 2001 from 37 at
September 30, 2000.

Gross Profit

We experienced a negative gross profit of $4.3 million for the three months
ended September 30, 2001 compared to a gross profit of $4.9 million for the
three months ended September 30, 2000. This decrease is primarily attributable
to the increase in inventory reserves and lower production volumes.

Operating Expenses

Research and Development. Research and development expenses increased to $3.1
million for the three months ended September 30, 2001 from $2.5 million for the
three months ended September 30, 2000. This increase is primarily the result of
the abandonment and obsolescence of certain research and development equipment
and software, which added costs of approximately $1.2 million. This increase was
partially offset by lower expenses for engineering materials. Research and
development personnel increased to 41 at September 30, 2001 from 35 at September
30, 2000.

Sales and Marketing. Sales and marketing expenses totaled $1.4 million for the
three months ended September 30, 2001 and the three months ended September 30,
2000. Sales and marketing personnel decreased to 22 at September 30, 2001 from
25 at September 30, 2000.

General and Administrative. General and administrative expenses decreased to
$1.1 million for the three months ended September 30, 2001 from $1.3 million for
the three months ended September 30, 2000. This decrease is primarily the result
of reduced salaries and salary related expenses and lower professional fees.
General and administrative personnel decreased to 18 at September 30, 2001 from
19 at September 30, 2000.

Amortization of Deferred Stock Compensation. In connection with the grant of
stock options to employees prior to our initial public offering, we recorded
deferred stock compensation within stockholders' equity of approximately
$681,000 in 2000 and $4.5 million in 1999, representing the difference between
the deemed fair value of the common stock for accounting purposes and the
exercise price of these options at the date

                                       15

<PAGE>

of grant. During the three months ended September 30, 2001 and 2000, we
amortized $472,000 and $345,000, respectively, of this deferred stock
compensation. We will amortize the remaining deferred stock compensation over
the vesting period of the related options, generally four years. The amount of
deferred stock compensation expense to be recorded in future periods could
decrease if options for which accrued but unvested compensation has been
recorded are forfeited.

Interest and Other Income (Expense), Net

Interest and other income (expense), net includes income from our cash and cash
equivalents and available-for-sale securities, interest expense from capital
lease financing obligations and other miscellaneous items. We had net interest
and other income of $1.1 million for the three months ended September 30, 2001
and $950,000 for the three months ended September 30, 2000. The increase in net
interest and other income for the three months ended September 30, 2001 compared
to September 30, 2000 is attributable to proceeds from the settlement of a
trademark dispute partially offset by a reduction in our cash equivalents and
available-for-sale securities and lower interest rates.

Provision for Income Taxes

Our provision for income taxes was $3.2 million for the three months ended
September 30, 2001 and our provision for income taxes was $105,000 for the three
months ended September 30, 2000. During the third quarter of 2001, we recorded a
valuation allowance of $2.3 million against the carrying value of our net
deferred tax assets and reversed 2001 previously recorded benefits of $878,000
as a result of a reduction in our projected future taxable income. Deferred tax
assets require a valuation allowance when, in the opinion of management, it is
more likely than not that some portion of the deferred tax assets may not be
realized. Whereas realization of the deferred tax assets is dependent upon the
timing and magnitude of future taxable income prior to the expiration of the
deferred tax attributes, management has recorded a full valuation allowance. The
amount of deferred tax assets considered realizable, however, could change if
estimates of future taxable income during the carry-forward period are changed.

The provision for income taxes for the third quarter of 2000 was based on our
estimated tax rate for the year of 30%.

Results of Operations - Nine Months Ended September 30, 2001 and September 30,
2000

Net Revenues

Net revenues decreased to $16.3 million for the nine months ended September 30,
2001 from $24.0 million for the nine months ended September 30, 2000. This
decrease was the result of the general economic slowdown, the resulting softness
in the wireless infrastructure markets, changes in buying patterns by equipment
manufacturers worldwide and delays in the next generation wireless
infrastructure build-out. Sales through our distributors were 52% of net
revenues for the nine months ended September 30, 2001 and 65% of net revenues
for the nine months ended September 30, 2000. Sales to our direct customers
(excluding contract manufacturing) comprised 48% of net

                                       16

<PAGE>

revenues for the nine months ended September 30, 2001, of which 23% of net
revenues was to our private label reseller and 25% was to our factory direct
customers. Sales to our direct customers (excluding contract manufacturing)
comprised 35% of net revenues for the nine months ended September 30, 2000, of
which 26% of net revenues was to our private label reseller. Sales of our SiGe
products were approximately 26% of our total net revenues for the nine months
ended September 30, 2001 compared to approximately 16% for the nine months ended
September 30, 2000.

Cost of Revenues

Cost of revenues increased to $15.1 million for the nine months ended September
30, 2001 from $10.3 million for the nine months ended September 30, 2000
primarily as a result of increased provisions for excess inventories, which
added costs of approximately $6.3 million and lower absorption of fixed overhead
costs due to lower production volumes. This increase was partially offset by
lower variable costs as a result of our decrease in unit shipments in the nine
months ended September 30, 2001 compared to the nine months ended September 30,
2000.

Gross Profit

Gross profit decreased to $1.3 million for the nine months ended September 30,
2001 from $13.7 million for the nine months ended September 30, 2000. Gross
margin decreased to 8% for the nine months ended September 30, 2001 from 57% for
the nine months ended September 30, 2000. This decrease is primarily
attributable to the increase in inventory reserves and lower production volumes.

Operating Expenses

Research and Development. Research and development expenses increased to $7.6
million for the nine months ended September 30, 2001 from $5.6 million for the
nine months ended September 30, 2000. This increase is primarily the result of
the abandonment and obsolescence of certain research and development equipment
and software, which added costs of approximately $1.2 million, and salaries and
salary related expenses.

Sales and Marketing. Sales and marketing expenses totaled $4.4 million for the
nine months ended September 30, 2001 and the nine months ended September 30,
2000.

General and Administrative. General and administrative expenses decreased to
$3.3 million for the nine months ended September 30, 2001 from $3.4 million for
the nine months ended September 30, 2000. This decrease is primarily
attributable to lower professional fees.

Amortization of Deferred Stock Compensation. In connection with the grant of
stock options to employees prior to our initial public offering, we recorded
deferred stock compensation within stockholders' equity of approximately
$681,000 in 2000 and $4.5 million in 1999, representing the difference between
the deemed fair value of the common stock for accounting purposes and the
exercise price of these options at the date of grant. During the nine months
ended September 30, 2001 and 2000, we amortized $1.1 million and $972,000,
respectively, of this deferred stock compensation. We will amortize the
remaining deferred stock compensation over the vesting period of the related

                                       17

<PAGE>

options, generally four years. The amount of deferred stock compensation expense
to be recorded in future periods could decrease if options for which accrued but
unvested compensation has been recorded are forfeited.

Interest and Other Income (Expense), Net

Interest and other income (expense), net includes income from our cash and cash
equivalents and available-for-sale securities, interest expense from capital
lease financing obligations and other miscellaneous items. We had net interest
and other income of $3.1 million for the nine months ended September 30, 2001
and $1.4 million for the nine months ended September 30, 2000. The increase in
net interest and other income for the nine months ended September 30, 2001
compared to September 30, 2000 is attributable to proceeds from the settlement
of a trademark dispute and higher cash and cash equivalents and
available-for-sale securities, resulting from proceeds received upon completion
of our initial public offering.

Provision for Income Taxes

Our provision for income taxes was $2.3 million for the nine months ended
September 30, 2001 and our provision for income taxes was $243,000 for the nine
months ended September 30, 2000. During the third quarter of 2001, we recorded a
valuation allowance of $2.3 million against the carrying value of our net
deferred tax assets as a result of a reduction in our projected future taxable
income. Deferred tax assets require a valuation allowance when, in the opinion
of management, it is more likely than not that some portion of the deferred tax
assets may not be realized. Whereas realization of the deferred tax assets is
dependent upon the timing and magnitude of future taxable income prior to the
expiration of the deferred tax attributes, management has recorded a full
valuation allowance. The amount of deferred tax assets considered realizable,
however, could change if estimates of future taxable income during the
carry-forward period are changed.

The provision for income taxes for the nine months of 2000 was based on our
estimated tax rate for the year of 30%.

Liquidity and Capital Resources

We have financed our operations primarily through cash generated from
operations, equipment lease financing, the private sale of mandatorily
redeemable convertible preferred stock and from the net proceeds received upon
completion of our initial public offering in May 2000. As of September 30, 2001,
we had cash and cash equivalents of $17.8 million and working capital of $51.0
million.

Our operating activities used cash of $3.0 million in the nine months ended
September 30, 2001 and provided cash of $340,000 in the nine months ended
September 30, 2000. In the nine months ended September 30, 2001, cash used in
operating activities was primarily attributable to our net loss of $14.5 million
and a decrease in deferred margin on distributor inventory of $2.2 million.
These were partially offset by depreciation and amortization of $2.1 million,
amortization of deferred stock compensation of $1.1 million, a reduction of our
equipment value of $1.5 million and decreases in accounts receivable of $2.5
million, inventories of $5.0 million and deferred tax assets and other

                                       18

<PAGE>

assets of $2.8 million. In the nine months ended September 30, 2000, cash
provided by operating activities was primarily attributable to increases in
deferred margin on distributor inventory of $3.4 million and accrued expenses of
$1.1 million and depreciation and amortization of $1.1 million. These were
partially offset by increases in inventory of $4.7 million and accounts
receivable of $2.5 million.

Our investing activities used cash of $19.3 million in the nine months ended
September 30, 2001 and used cash of $48.0 million in the nine months ended
September 30, 2000. Our investing activities reflect purchases and sales of
available-for-sale securities and fixed assets.

Our financing activities provided cash of $2.4 million in the nine months ended
September 30, 2001 and $49.5 million in the nine months ended September 30,
2000. In the nine months ended September 30, 2001, cash provided by financing
activities was the result of proceeds from employee stock plans partially offset
by principal payments on capital lease obligations. In the nine months ended
September 30, 2000, cash provided by financing activities was primarily
attributable to net proceeds from the issuance of common stock in our initial
public offering of $49.8 million.

Our net loss applicable to common stockholders for the nine months ended
September 30, 2000 includes $25.9 million of accretion charges to increase the
carrying amount of our mandatorily redeemable convertible preferred stock to the
amount we would be required to pay if this preferred stock were to be redeemed.
Upon the completion of our initial public offering, the mandatorily redeemable
convertible preferred stock was converted into shares of common stock and,
accordingly, we did not incur any additional accretion charges.

We currently anticipate that our current available cash and cash equivalents
will be sufficient to meet our anticipated cash needs for working capital and
capital expenditures for at least the next 12 months, although no assurance can
be given in this regard. If we require additional capital resources to grow our
business, execute our operating plans, or acquire complimentary technologies or
businesses at any time in the future, we may seek to secure lines of credit or
sell additional equity or debt securities, which may result in additional
dilution to our stockholders.

Industry Trends and Market Conditions

In the first nine months of 2001, companies throughout the worldwide
telecommunication industry announced slowdowns or delays in the build out of new
wireless and wireline infrastructure. This resulted in lower equipment
production volumes by our customers and efforts to lower their component
inventory levels. These actions by our customers have resulted in a slowdown in
our shipments and reduced our visibility regarding future sales. The revenue
decline has occurred across our channels, customer categories, products, and
technologies.

As a result of these trends, in the third quarter of 2001 we recorded a
provision for excess inventories of $4.5M, incurred charges related to the
abandonment and obsolescence of certain equipment of $1.3 million, recorded a
valuation allowance of $2.3 million against our net deferred tax assets,
reversed previously recorded tax benefits of $878,000, and expect to incur a
restructuring charge in the fourth quarter of 2001 of between $1.7M and $2.7M
related to a reduction in force and consolidation of facilities.

If the economic trends described above were to continue or worsen it would
likely result in lower sales for our products. Significantly lower sales would
likely lead to further provisions for excess inventories and further actions by
us to reduce our operating expenses. These actions could include, but would not
be limited to, further abandonment or obsolescence of equipment, further
consolidation of facilities, and a further reduction in force. Any or all of
these actions could have a material adverse effect on the results of our
operations and the market price of common stock.

                                       19

<PAGE>

RISK FACTORS

Set forth below and elsewhere in this quarterly report on Form 10-Q and in other
documents we file with the SEC are risks and uncertainties that could cause
actual results to differ materially from the results contemplated by the
forward-looking statements contained in this quarterly report on Form 10-Q.

We may not meet quarterly financial expectations, which could cause our stock
price to decline.

Our quarterly operating results have varied significantly in the past and are
likely to vary significantly in the future based upon a number of factors
related to our industry and the markets for our products, over many of which we
have little or no control. We operate in a highly dynamic industry and future
results could be subject to significant fluctuations, particularly on a
quarterly basis. These fluctuations could cause us to fail to meet quarterly
financial expectations, which could cause our stock price to decline rapidly and
significantly. For example, on October 9, 2001 and March 12, 2001, we publicly
announced our revised expectations of financial results for the quarters ending
September 30, 2001 and March 31, 2001, respectively, and the fiscal year ending
December 31, 2001. Subsequently, the trading price of our common stock declined
rapidly and significantly, which had a substantial negative effect on the value
of any investment in such stock.

Factors contributing to the volatility of our stock price include:

- general economic growth or decline;

- wireless and wireline industry growth generally and demand for products
containing RF components specifically;

- changes in customer purchasing cycles and component inventory levels;

- the timing and success of new product and technology introductions by us or
our competitors;

- availability of raw materials, semiconductor wafers and manufacturing capacity
or fluctuations in our manufacturing yields;

- changes in selling prices for our integrated circuits due to competitive or
currency exchange rate pressures;

- changes in our product mix;

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<PAGE>

- changes in the relative percentage of products sold through distributors as
compared to direct sales; and

- market acceptance of our products.

Due to the factors discussed above, investors should not rely on
quarter-to-quarter comparisons of our results of operations as indicators of
future performance.

Our stock price may be extremely volatile.

Our stock price has been highly volatile since our initial public offering. We
expect that this volatility will continue in the future due to factors such as:

- general market and economic conditions;

- actual or anticipated variations in operating results;

- announcements of technological innovations, new products or new services by us
or by our competitors or customers;

- changes in financial estimates or recommendations by stock market analysts
regarding us or our competitors;

- announcements by us or our competitors of significant acquisitions, strategic
partnerships, joint ventures or capital commitments; - additions or departures
of key personnel; and

- future equity or debt offerings or our announcements of these offerings.

In addition, in recent years, the stock market in general, and the Nasdaq
National Market and the securities of technology companies in particular, have
experienced extreme price and volume fluctuations. These fluctuations have often
been unrelated or disproportionate to the operating performance of individual
companies. These broad market fluctuations have in the past and may in the
future materially adversely affect our stock price, regardless of our operating
results.

Our growth depends on the growth of the infrastructure for wireless and wireline
communications. If the growth of this market does not resume, or if the growth
resumes at a slow rate, demand for our products will continue to diminish or
could fail to recover.

Our success will depend in large part on the growth of the telecommunications
industry in general and, in particular, the market for wireless and wireline
infrastructure components. We cannot assure you that the market for these
infrastructure products will grow at all. We have recently observed continued
softness of the wireless and wireline infrastructure markets related to a
general economic slowdown, which has impacted our entire segment. There have
been announcements throughout the worldwide telecommunications industry of
current and planned reductions in component inventory levels and equipment
production volumes, and of delays in the build-out of new wireless and wireline
infrastructure. These trends have had an adverse effect on our operations and
caused us on October 9, 2001 and March 12, 2001 to lower our previously
announced expectations for our financial

                                       21

<PAGE>

results in the quarters ending September 30, 2001 and March 31, 2001,
respectively, and for the fiscal year ending December 31, 2001. Subsequently,
the market price of our common stock decreased.

As a result of these trends, in the third quarter of 2001 we recorded a
provision for excess inventories of $4.5M, incurred charges related to the
abandonment and obsolescence of certain equipment of $1.3 million, recorded a
valuation allowance of $2.3 million against our net deferred tax assets,
reversed previously recorded tax benefits of $878,000, and expect to incur a
restructuring charge in the fourth quarter of 2001 of between $1.7M and $2.7M
related to a reduction in force and consolidation of facilities.

If the economic trends described above were to continue or worsen it would
likely result in lower sales for our products. Significantly lower sales would
likely lead to further provisions for excess inventories and further actions by
us to reduce our operating expenses. These actions could include, but would not
be limited to, further abandonment or obsolescence of equipment, further
consolidation of facilities, and a further reduction in force. Any or all of
these actions could have a material adverse effect on the results of our
operations and the market price of common stock.

Fluctuations in supply and demand for semiconductor products could
adversely impact our business.

The semiconductor industry has historically been characterized by wide
fluctuations in supply and demand for semiconductor products. From time to time,
demand for semiconductor products has decreased, often in connection with, or in
anticipation of, major additions of wafer fabrication capacity or maturing
product cycles or due to general economic conditions, as is the case currently.

As a result of these trends, in the third quarter of 2001 we recorded a
provision for excess inventories of $4.5M, incurred charges related to the
abandonment and obsolescence of certain equipment of $1.3 million, recorded a
valuation allowance of $2.3 million against our net deferred tax assets,
reversed previously recorded tax benefits of $878,000, and expect to incur a
restructuring charge in the fourth quarter of 2001 of between $1.7M and $2.7M
related to a reduction in force and consolidation of facilities.

If the economic trends described above were to continue or worsen it would
likely result in lower sales for our products. Significantly lower sales would
likely lead to further provisions for excess inventories and further actions by
us to reduce our operating expenses. These actions could include, but would not
be limited to, further abandonment or obsolescence of equipment, further
consolidation of facilities, and a further reduction in force. Any or all of
these actions could have a material adverse effect on the results of our
operations and the market price of common stock.

The timing of the adoption of industry standards may negatively impact
widespread market acceptance of our products.

The markets in which we and our customers compete are characterized by rapidly
changing technology, evolving industry standards and continuous improvements in
products and services. If technologies or standards supported by us or our
customers' products, such as 2.5G and 3G, fail to gain widespread commercial
acceptance, our business will be significantly damaged. In addition, while
historically the demand for wireless and wireline communications has exerted
pressure on standards bodies worldwide to adopt new standards for these
products, such adoption generally only occurs following extensive investigation
of, and deliberation over, competing technologies. The delays inherent in the
standards approval process have in the past and may in the future cause the
cancellation, postponement or rescheduling of the installation

                                       22

<PAGE>

of communications systems by our customers.

As a result of these delays, in the third quarter of 2001 we recorded a
provision for excess inventories of $4.5M, incurred charges related to the
abandonment and obsolescence of certain equipment of $1.3 million, recorded a
valuation allowance of $2.3 million against our net deferred tax assets,
reversed previously recorded tax benefits of $878,000, and expect to incur a
restructuring charge in the fourth quarter of 2001 of between $1.7M and $2.7M
related to a reduction in force and consolidation of facilities.

If the economic trends described above were to continue or worsen it would
likely result in lower sales for our products. Significantly lower sales would
likely lead to further provisions for excess inventories and further actions by
us to reduce our operating expenses. These actions could include, but would not
be limited to, further abandonment or obsolescence of equipment, further
consolidation of facilities, and a further reduction in force. Any or all of
these actions could have a material adverse effect on the results of our
operations and the market price of common stock.

Our reliance on third-party wafer fabs to manufacture our semiconductor wafers
may cause a significant delay in our ability to fill orders and limits our
ability to assure product quality and to control costs.

We do not own or operate a semiconductor fabrication facility. We currently rely
on five third-party wafer fabs to manufacture substantially all of our
semiconductor wafers. A majority of our products sold in the third quarter of
2001 were manufactured in GaAs by TRW and SiGe by Atmel (Temic), our sole source
supplier. The supply agreement with TRW provides us with a guaranteed supply of
wafers through December 31, 2001. We may not be able to negotiate an extension
of this agreement on favorable terms, if at all. Despite the recent addition of
a second source supplier, we may not be successful in obtaining a sufficient
supply of GaAs wafers in the event that we do not negotiate an extension with
TRW. The loss of one of our third-party wafer fabs, in particular TRW or Atmel
(Temic), or any delay or reduction in wafer supply, will impact our ability to
fulfill customer orders, perhaps materially, and could damage our relationships
with our customers, either of which would significantly harm our business and
operating results. Because there are limited numbers of third-party wafer fabs
that use the particular process technologies we select for our products and that
have sufficient capacity to meet our needs, using alternative or additional
third-party wafer fabs would require an extensive qualification process that
could prevent or delay product shipments.

Our reliance on these third-party wafer fabs involves several additional risks,
including reduced control over the manufacturing costs, delivery times,
reliability and quality of our components produced from these wafers. The
fabrication of semiconductor wafers is a highly complex and precise process.
Minute impurities, difficulties in the fabrication process, defects in the masks
used to print circuits on a wafer, wafer breakage or other factors can cause a
substantial percentage of wafers to be rejected or numerous die on each wafer to
be nonfunctional. We expect that our customers will continue to establish
demanding specifications for quality, performance and reliability that must be
met by our products. Our third-party wafer fabs may not be able to achieve and
maintain acceptable production yields in the future. These risks are heightened
with respect to our newer third-party wafer fabs, particularly Global
Communication Semiconductor (GCS), which has not yet produced wafers in volume
for us. To the extent our third-party wafer fabs suffer failures or defects, we
could experience lost revenues, increased costs, and delays in, cancellations or
rescheduling of orders or shipments, any of which would harm our business.

In the past, we have experienced delays in product shipments from our third-
party wafer fabs, quality issues and poor manufacturing yields, which in turn
delayed product

                                       23

<PAGE>

shipments to our customers. We may in the future experience similar delays or
other problems, such as inadequate wafer supply.

Our reliance on subcontractors to package our products could cause a delay in
our ability to fulfill orders or could increase our cost of revenues.

We do not package the RF components that we sell but rather rely on
subcontractors to package our products. Packaging is the procedure of
electrically bonding and encapsulating the integrated circuit into its final
protective plastic or ceramic casing. We provide the wafers containing the
integrated circuits and, in some cases, packaging materials to third-party
packagers. Although we currently work with five packagers, a substantial amount
of our products were packaged by one subcontractor, MPI Corporation of Manila,
Philippines, in the third quarter of 2001. A relative of one of our founding
stockholders controls MPI. We do not have long-term contracts with our
third-party packagers stipulating fixed prices or packaging volumes. Therefore,
in the future we may be unable to obtain sufficient high quality or timely
packaging of our products. The loss or reduction in packaging capacity of any of
our current packagers, particularly MPI, would significantly damage our
business. In addition, increased packaging costs will adversely affect our
profitability.

The fragile nature of the semiconductor wafers that we use in our components
requires sophisticated packaging techniques and can result in low packaging
yields. If our packaging subcontractors fail to achieve and maintain acceptable
production yields in the future, we could experience increased costs, including
warranty expense and costs associated with customer support, delays in or
cancellations or rescheduling of orders or shipments, product returns or
discounts and lost revenues, any of which would harm our business.

We depend on two distributors for a significant portion of our sales, the loss
of any one of which would limit our ability to sustain and grow our revenues.

Historically, two distributors, Avnet Electronics Marketing and Richardson
Electronics Laboratories, have accounted for a significant portion of our sales.
In the third quarter of 2001, sales through Richardson Electronics Laboratories
represented 45% of our net revenues and sales through Avnet Electronics
Marketing represented 5% of our net revenues. These distributors principally
purchase our standard components for resale to their customers. Our contracts
with these distributors do not require them to purchase our products and may be
terminated by them at any time without penalty. If our distributors fail to
successfully market and sell our products, our revenues could be materially
adversely affected. The loss of either of our current distributors and our
failure to develop new and viable distribution relationships would limit our
ability to sustain and grow our revenues.

We depend on Minicircuits Laboratories for a substantial portion of our
revenues. The loss of Minicircuits as a customer or a decrease in purchases by
Minicircuits has in the past and may in the future adversely affect our
revenues.

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<PAGE>

Sales to Minicircuits Laboratories, a private label reseller of our products,
have historically accounted for a significant portion of our revenues. For
example, 21% of our net revenues in the third quarter of 2000 were attributable
to sales to Minicircuits. However, in the third quarter of 2001, only 7% of our
net revenues were attributable to sales to Minicircuits. If sales to
Minicircuits continued at this reduced level, or if we were to lose Minicircuits
as a customer, or if Minicircuits substantially reduced its purchases, as was
the case in the third quarter of 2001, our business and operating results would
be adversely affected. In addition to reselling our products and those of other
RF component suppliers, Minicircuits also designs and supplies their own RF
components. Our current contract with Minicircuits does not require Minicircuits
to purchase our products in the future.

We depend on Pace Micro Technology PLC for a significant portion of our
revenues. The loss of Pace Micro Technology PLC as a customer or a decrease in
purchases by Pace Micro Technology PLC may adversely affect our revenues.

Sales to Pace Micro Technology PLC, a direct customer, have accounted for a
significant portion of our revenues. For example, 19% of our net revenues in the
third quarter of 2001 and 10% of our net revenues in the third quarter of 2000
were attributable to sales to Pace Micro Technology PLC. We expect that we will
rely on sales to Pace Micro Technology PLC for a significant portion of our
future revenues. If we were to lose Pace Micro Technology PLC as a customer, or
if Pace Micro Technology PLC substantially reduced its purchases from us, our
business and operating results would be adversely affected.

Intense competition in our industry could prevent us from increasing revenues
and sustaining profitability.

The RF semiconductor industry is intensely competitive and is characterized by
the following:

- rapid technological change;

- rapid product obsolescence;

- shortages in wafer fabrication capacity;

- price erosion; and

- unforeseen manufacturing yield problems.

We compete primarily with other suppliers of high-performance RF components used
in the infrastructure of communications networks such as Agilent, Alpha
Industries, Anadigics, Conexant, Infineon, M/A-COM, Minicircuits Laboratories,
NEC, RF Micro Devices, TriQuint Semiconductor and WJ Communications. We also
compete with communications equipment manufacturers who manufacture RF
components internally such as Ericsson, Lucent, Motorola and Nortel Networks. We
expect increased competition both from existing competitors and from a number of
companies that may

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<PAGE>

enter the RF component market, as well as future competition from companies that
may offer new or emerging technologies. In addition, many of our current and
potential competitors have significantly greater financial, technical,
manufacturing and marketing resources than we have. As a result, communications
equipment manufacturers may decide not to buy from us due to their concerns
about our size, financial stability or ability to interact with their logistics
systems. Our failure to successfully compete in our markets would have a
material adverse effect on our business, financial condition and results of
operations.

If we fail to introduce new products in a timely and cost-effective manner, our
ability to sustain and increase our revenues could suffer.

The markets for our products are characterized by frequent new product
introductions, evolving industry standards and changes in product and process
technologies. Because of this, our future success will in large part depend on:

- our ability to continue to introduce new products in a timely fashion;

- our ability to improve our products and to adapt to new process technologies
in a timely manner;

- our ability to adapt our products to support emerging and established industry
standards; and

- market acceptance of our products.

We estimate that the development cycles of our products from concept to
production could last up to 18 months. We have in the past experienced delays in
the release of new products. We may not be able to introduce new products in a
timely and cost-effective manner which would impair our ability to sustain and
increase our revenues.

Product quality, performance and reliability problems could disrupt our business
and harm our financial condition.

Our customers demand that our products meet stringent quality, performance and
reliability standards. RF components such as those we produce may contain
undetected defects or flaws when first introduced or after commencement of
commercial shipments. We have from time to time experienced product quality,
performance or reliability problems. In addition, some of our products are
manufactured using process technologies that are relatively new and for which
long-term field performance data are not available. As a result, defects or
failures may occur in the future relating to our product quality, performance
and reliability. If these failures or defects occur, we could experience lost
revenues, increased costs, including inventory write-offs, warranty expense and
costs associated with customer support, delays in or cancellations or
rescheduling of orders or shipments and product returns or discounts, any of
which would harm our business.

Sources for certain components and materials are limited, which could result in
delays or reductions in product shipments.

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<PAGE>

The semiconductor industry from time to time is affected by limited supplies of
certain key components and materials. For example, we rely on limited sources
for certain packaging materials. If we, or our packaging subcontractors, are
unable to obtain these or other materials in the required quantity and quality,
we could experience delays or reductions in product shipments, which would
materially and adversely affect our profitability. Although we have not
experienced any significant difficulty to date in obtaining these materials,
these shortages may arise in the future. We cannot guarantee that we would not
lose potential sales if key components or materials are unavailable, and as a
result, we are unable to maintain or increase our production levels.

If communications equipment manufacturers increase their internal production of
RF components, our revenues would decrease and our business would be harmed.

Currently, communications equipment manufacturers obtain their RF components by
either developing them internally or by buying RF components from third-party
distributors or merchant suppliers. We have historically generated a majority of
our revenues through sales of components to these manufacturers through our
distributors and direct sales force. If communications equipment manufacturers
increase their internal production of RF components and reduce purchases of RF
components from third parties, our revenues would decrease and our business
would be harmed.

We have established a business unit focused on designing RF components for
wireless equipment manufacturers. Our failure to grow this business unit would
impair our ability to sustain and increase our revenues.

Communications equipment manufacturers have begun to work directly with
component suppliers such as us to design and build customized products for
specific needs. In fiscal 2000, we established a business unit focused on
designing RF components to meet these needs. Our business strategy is dependent
in part on this business unit to sustain and increase our revenues. This
business unit shipped its first products in the third quarter of 2001, but we
cannot guarantee that we will be successful in developing this business unit.
Development of this business unit will require us to expand our internal sales
force and successfully install logistic and supply chain software and processes
to manage this business unit. Each of these tasks will require significant
management attention and expenditure of resources. Even with this attention and
these expenditures, we may be unsuccessful in operating this business unit and
this business unit may not generate significant revenues.

We may spend considerable sums developing components for a particular
application or a potential customer. We do not expect that these customers will
have any contractual obligation to purchase these products and we may never
realize any revenues from sales of these products. In addition, if the recent
trend of outsourcing the design and manufacture of customized components to
third parties is reversed, we would not be able to execute this element of our
business strategy.

Third-party wafer fabs who manufacture the semiconductor wafers for our products
may compete with us in the future.

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<PAGE>

Several third-party wafer fabs independently produce and sell RF components
directly to communications equipment manufacturers. We currently rely on certain
of these third-party wafer fabs to produce the semiconductor wafers for our
products. These third-party wafer fabs possess confidential information
concerning our products and product release schedules. We cannot guarantee that
they would not use our confidential information to compete with us. Competition
from these third-party wafer fabs may result in reduced demand for our products
and could damage our relationships with these third- party wafer fabs, thereby
harming our business.

Perceived risks relating to process technologies we may adopt in the future to
manufacture our products could cause reluctance among potential customers to
purchase our products.

We may adopt new process technologies in the future to manufacture our products.
Prospective customers of these products may be reluctant to purchase these
products based on perceived risks of these new technologies. These risks could
include concerns related to manufacturing costs and yields and uncertainties
about the relative cost-effectiveness of products produced using these new
technologies. If our products fail to achieve market acceptance, our business,
financial condition and results of operations would be materially adversely
affected.

We may encounter difficulties managing our business in an economic downturn.

We are currently experiencing a slowdown in the economy and in the
telecommunications industry, in particular. Our net revenues decreased from $8.9
million for the three months ended September 30, 2000 to $3.2 million for the
three months ended September 30, 2001. As a result of this downturn, we are
expecting to incur a restructuring charge in the fourth quarter of 2001 of
between $1.7 and $2.7 million related to a reduction in force and a
consolidation of facilities. If the current economic conditions continue or
worsen, we may experience difficulties maintaining employee morale, retaining
employees, completing research and development initiatives, maintaining
relationships with our customers and vendors and obtaining financing on
favorable terms or at all. In addition, we may have to take further actions to
restructure our operations, including, but not limited to, further reductions in
force, further consolidation of facilities, eliminating product lines or
disposing of certain equipment, any of which would have a material adverse
effect on our results of operations.

If we lose our key personnel or are unable to attract and retain key personnel,
we may be unable to pursue business opportunities or develop our products.

We believe that our future success will depend in large part upon our continued
ability to recruit, hire, retain and motivate highly skilled technical,
marketing and managerial personnel, who are in great demand. Competition for
these employees, particularly RF integrated circuit design engineers, is
intense. Our failure to hire needed qualified personnel in a timely manner and
on reasonable terms could adversely affect our business and profitability. In
addition, from time to time we may recruit and hire employees from our
customers, suppliers and distributors, which could damage our business
relationship with these parties. Our success also depends on the continuing
contributions of our senior

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<PAGE>

management and technical personnel, all of whom would be difficult to replace.
The loss of key personnel could adversely affect our ability to execute our
business strategy, which could cause our results of operations and financial
condition to suffer. We may not be successful in retaining these key personnel.

Our limited ability to protect our proprietary information and technology may
adversely affect our ability to compete.

Our future success and ability to compete is dependent in part upon our
proprietary information and technology. None of our technology is currently
patented, however, we do have current patent applications pending. Instead, we
rely on a combination of contractual rights and copyright, trademark and trade
secret laws and practices to establish and protect our proprietary technology.
We generally enter into confidentiality agreements with our employees,
consultants, resellers, wafer suppliers, customers and potential customers, and
strictly limit the disclosure and use of other proprietary information. The
steps taken by us in this regard may not be adequate to prevent misappropriation
of our technology. Additionally, our competitors may independently develop
technologies that are substantially equivalent or superior to our technology.
Despite our efforts to protect our proprietary rights, unauthorized parties may
attempt to copy or otherwise obtain or use our products or technology. In
addition, the laws of some foreign countries do not protect our proprietary
rights to the same extent as do the laws of the United States.

Our products could infringe the intellectual property rights of others, and
resulting claims against us could be costly and require us to enter into
disadvantageous license or royalty arrangements.

The semiconductor industry is characterized by the existence of a large number
of patents and frequent litigation based on allegations of patent infringement
and the violation of intellectual property rights. Although we attempt to avoid
infringing known proprietary rights of third parties in our product development
efforts, we expect that we may be subject to legal proceedings and claims for
alleged infringement by us or our licensees of third-party proprietary rights,
such as patents, trade secrets, trademarks or copyrights, from time to time in
the ordinary course of business. Any claims relating to the infringement of
third-party proprietary rights, even if not meritorious, could result in costly
litigation, divert management's attention and resources, or require us to enter
into royalty or license agreements which are not advantageous to us. In
addition, parties making these claims may be able to obtain an injunction, which
could prevent us from selling our products in the United States or abroad. We
may increasingly be subject to infringement claims as the number of our products
grows.

Our reliance on foreign suppliers and manufacturers exposes us to the economic
and political risks of the countries in which they are located.

Independent third parties in other countries package all of our products and
supply some of our wafers and substantially all of the packaging materials used
in the production of our components. Due to our reliance on foreign suppliers
and packagers, we are subject to the risks of conducting business outside the
United States. These risks include:

                                       29

<PAGE>

- unexpected changes in, or impositions of, legislative or regulatory
requirements;

- shipment delays, including delays resulting from difficulty in obtaining
export licenses;

- tariffs and other trade barriers and restrictions;

- political, social and economic instability; and

- potential hostilities and changes in diplomatic and trade relationships.

In addition, we currently transact business with our foreign suppliers and
packagers in U.S. dollars. Consequently, if the currencies of our suppliers'
countries were to increase in value against the U.S. dollar, our suppliers may
attempt to raise the cost of our wafers, packaging materials, and packaging
services, which could have an adverse effect on our profitability.

A significant portion of our products are sold to international customers either
through our distributors or directly by us, which exposes us to risks that may
adversely affect our results of operations.

A significant portion of our direct sales and sales through our distributors
were to foreign purchasers, particularly in countries located in Asia and
Europe. International direct sales approximated 73% of our total direct sales in
the third quarter of 2001, representing approximately 35% of our net revenues.
Based on information available from our distributors, products representing
approximately 61% of our total distribution revenues, representing approximately
32% of our net revenues, were sold by our distributors to international
customers in the third quarter of 2001. Demand for our products in foreign
markets could decrease, which could have a materially adverse effect on our
results of operations. Therefore, our future operating results may depend on
several economic conditions in foreign markets, including:

- changes in trade policy and regulatory requirements;

- fluctuations in currency;

- duties, tariffs and other trade barriers and restrictions;

- trade disputes; and

- political instability.

Any future acquisitions of companies or technologies may result in distraction
of our management and disruptions to our business.

We may acquire or make investments in complementary businesses, technologies,
services or products if appropriate opportunities arise. From time to time, we
may engage in discussions and negotiations with companies regarding our
acquiring or investing in their businesses, products, services or technologies.
We may not be able to identify suitable acquisition or investment candidates in
the future, or if we do identify suitable candidates, we may not be able to make
such acquisitions or investments on commercially acceptable terms or at all. If
we acquire or invest in another company, we

                                       30

<PAGE>

could have difficulty assimilating that company's personnel, operations,
technology or products and service offerings. In addition, the key personnel of
the acquired company may decide not to work for us. These difficulties could
disrupt our ongoing business, distract our management and employees, increase
our expenses and adversely affect our results of operations. Furthermore, we may
incur indebtedness or issue equity securities to pay for any future
acquisitions. The issuance of equity securities could be dilutive to our
existing stockholders. In addition, the accounting treatment for any acquisition
transaction may result in significant goodwill, which, if impaired, will
negatively affect our results of operations.

Information that we may provide to investors from time to time is accurate only
as of the date we disseminate it and we undertake no obligation to update the
information.

From time to time we may publicly disseminate forward-looking
information or guidance in compliance with Regulation FD promulgated by the SEC.
This information or guidance represents our outlook only as of the date that we
disseminated it, and we undertake no obligation to provide updates to this
information or guidance in our filings with the SEC or otherwise.

Some of our existing stockholders can exert control over us, and they may not
make decisions that reflect the interests of the Company or its stockholders.

Our officers, directors and principal stockholders (greater than 5%
stockholders) together have historically controlled a majority of our
outstanding common stock and our two founding stockholders have historically
controlled a significant amount of our outstanding common stock. As a result,
these stockholders, if they act together, and our founding stockholders acting
alone, will be able to exert a significant degree of influence over our
management and affairs and control matters requiring stockholder approval,
including the election of all of our directors and approval of significant
corporate transactions. In addition, this concentration of ownership may delay
or prevent a change in control of the Company and might affect the market price
of our common stock. In addition, the interests of these stockholders may not
always coincide with the interests of the Company or the interests of other
stockholders.

Our charter and bylaws and Delaware law contain provisions that
may delay or prevent a change of control.

Provisions of our charter and bylaws may have the effect of making it more
difficult for a third party to acquire, or of discouraging a third party from
attempting to acquire, control of us. These provisions could limit the price
that investors might be willing to pay in the future for shares of our common
stock. These provisions include:

- division of the board of directors into three separate classes;

- elimination of cumulative voting in the election of directors;

- prohibitions on our stockholders from acting by written consent and calling
special meetings;

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<PAGE>

- procedures for advance notification of stockholder nominations and proposals;
and

- the ability of the board of directors to alter our bylaws without stockholder
approval.

In addition, our board of directors has the authority to issue up to 5,000,000
shares of preferred stock and to determine the price, rights, preferences,
privileges and restrictions, including voting rights, of those shares without
any further vote or action by the stockholders. The issuance of preferred stock,
while providing flexibility in connection with possible financings or
acquisitions or other corporate purposes, could have the effect of making it
more difficult for a third party to acquire a majority of our outstanding voting
stock. We are also subject to Section 203 of the Delaware General Corporation
Law that, subject to exceptions, prohibits a Delaware corporation from engaging
in any business combination with any interested stockholder for a period of
three years following the date that this stockholder became an interested
stockholder. The preceding provisions of our charter and bylaws, as well as
Section 203 of the Delaware General Corporation Law, could discourage potential
acquisition proposals, delay or prevent a change of control and prevent changes
in our management.


Item 3. Qualitative and Quantitative Disclosures About Market Risk

Our sales have been made to predominantly U.S.-based customers and distributors
in U.S. dollars. As a result, we have not historically had any material exposure
to factors such as changes in foreign currency exchange rates. However, we
continue to and expect in future periods to expand selling into foreign markets,
including Europe and Asia. Because our sales are denominated in U.S. dollars, a
strengthening of the U.S. dollar could make our products less competitive in
foreign markets, thereby decreasing our sales to foreign customers and our
distributors.

At September 30, 2001, our cash and cash equivalents consisted primarily of bank
deposits, commercial paper and money market funds and our short-term investments
consisted of commercial paper and federal agency and related securities. We did
not hold any derivative financial instruments. Our interest income and expense
are sensitive to changes in the general level of interest rates. In this regard,
changes in interest rates can affect the interest earned on our cash equivalents
and short-term investments. However, due to the short-term nature of our cash
equivalents and short-term investments, a 1% increase or decrease in interest
rates would not have a material impact on our future interest income.


Part II - Other Information


Item 1. Legal Proceedings

None

Item 2. Changes in Securities and Use of Proceeds

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None

Item 3. Defaults Upon Senior Securities

None

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

None

Item 5: Other Information

None

Item 6: Exhibits and Reports on Form 8-K

(a) Exhibits:

(b) Reports on Form 8-K.

No reports on Form 8-K were filed during the three months ended September 30,
2001.

SIGNATURES

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

                                     SIRENZA MICRODEVICES, INC.

            DATE: November 14, 2001  /s/  Robert Van Buskirk
                                     ------------------------------

                                     ROBERT VAN BUSKIRK
                                     President, Chief Executive
                                     Officer and Director

            DATE: November 14, 2001  /s/ Thomas Scannell
                                     ------------------------------

                                     THOMAS SCANNELL
                                     Vice President, Finance and
                                     Administration, Chief Financial
                                     Officer and Assistant Treasurer

                                       33