<PAGE>   1
                                  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
                April 1, 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
                                                ---------

                           STANFORD MICRODEVICES, INC.
             (Exact name of registrant as specified in its charter)


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


      726 Palomar Avenue, Sunnyvale, CA                       94086
  ----------------------------------------                  ----------
  (Address of principal executive offices)                  (Zip Code)
</TABLE>

                                 (408) 616-5400
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

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

As of April 29, 2001, there were 29,239,832 shares of registrant's Common Stock
outstanding.


                                                                          Page 1
<PAGE>   2
                           STANFORD MICRODEVICES, INC.

                                      INDEX




<TABLE>
<S>                                                                         <C>
Part I. Financial Information.............................................

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

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

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

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

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

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

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

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

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

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

Signatures................................................................
</TABLE>


                                                                          Page 2
<PAGE>   3
                          Part I. Financial Information


Item 1. Financial Statements

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

<TABLE>
<CAPTION>
                                                       March 31,    December 31,
                                                         2001           2000
                                                      ---------       ---------
                                                      (unaudited)
<S>                                                   <C>             <C>
Assets
Current assets:
      Cash and cash equivalents                       $  56,897       $  37,683
      Short-term investments                              2,051          13,444
      Accounts receivable, net                            1,637           3,946
      Inventories                                         8,290           7,107
      Deferred tax assets and other                       3,156           3,464
                                                      ---------       ---------
Total current assets                                     72,031          65,644

      Property and equipment, net                         8,952           8,388
      Long-term investments                                   -           7,204
      Other assets                                        1,069           1,070
                                                      ---------       ---------
Total assets                                          $  82,052       $  82,306
                                                      =========       =========

Liabilities and stockholders' equity
Current liabilities:
      Accounts payable                                $   2,703       $   2,071
      Accrued expenses                                    1,660           2,912
      Deferred margin on distributor inventory            5,694           6,942
      Capital lease obligations, current portion            750             747
                                                      ---------       ---------
Total current liabilities                                10,807          12,672

      Capital lease obligations                             792           1,010

Stockholders' equity
      Common Stock                                           29              27
      Additional paid-in capital                        127,352         125,286
      Deferred stock compensation                        (3,278)         (3,619)
      Accumulated deficit                               (53,650)        (53,070)
                                                      ---------       ---------
Total stockholders' equity                               70,453          68,624
                                                      ---------       ---------

      Total liabilities and stockholders' equity      $  82,052       $  82,306
                                                      =========       =========
</TABLE>

                            See accompanying notes.

                                                                         Page 3
<PAGE>   4
                           Stanford Microdevices, Inc.
                 Condensed Consolidated Statements of Operations
                      (In thousands, except per share data)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                  Three Months Ended
                                                              ------------------------
                                                              March 31,      March 31,
                                                                 2001           2000
                                                              --------       ---------
<S>                                                           <C>            <C>
Net revenues                                                  $  7,800       $  7,264
Cost of revenues (exclusive of amortization of
  deferred stock compensation of $37 and $37 for the
  three months ended March 31, 2001 and
  three months ended March 31, 2000, respectively)               3,900          2,885
                                                              --------       --------
Gross profit                                                     3,900          4,379

Operating expenses:
    Research and development (exclusive of amortization of
      deferred stock compensation of $75 and $64 for the
      three months ended March 31, 2001 and
      three months ended March 31, 2000, respectively)           2,531          1,436
    Sales and marketing (exclusive of amortization of
      deferred stock compensation of $76 and $73 for the
      three months ended March 31, 2001 and
      three months ended March 31, 2000, respectively)           1,636          1,522
    General and administrative (exclusive of amortization of
      deferred stock compensation of $153 and $132 for the
      three months ended March 31, 2001 and
      three months ended March 30, 2000, respectively)           1,054            939
    Amortization of deferred stock compensation                    341            306
                                                              --------       --------
Total operating expenses                                         5,562          4,203
                                                              --------       --------

Income (loss) from operations                                   (1,662)           176

Interest expense                                                    42             46
Interest and other income, net                                     875            164
                                                              --------       --------

Income (loss) before taxes                                        (829)           294

Provision for (benefit from) income taxes                         (249)            88
                                                              --------       --------

Net income (loss)                                                 (580)           206

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

Net loss applicable to common
   stockholders                                               $   (580)      $(25,718)
                                                              ========       ========


Net loss per share applicable to common stockholders:
     Basic                                                    $  (0.02)      $  (1.71)
                                                              ========       ========
     Diluted                                                  $  (0.02)      $  (1.71)
                                                              ========       ========

Shares used to compute net loss
 applicable to common stockholders
     Basic                                                      28,271         15,000
                                                              ========       ========
     Diluted                                                    28,271         15,000
                                                              ========       ========
</TABLE>

                                                                          Page 4

                            See accompanying notes.


<PAGE>   5
                           Stanford Microdevices, Inc.
                 Condensed Consolidated Statements of Cash Flows
                                 (In thousands)
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                       Three Months Ended
                                                                     -----------------------
                                                                     March 31,      March 31,
                                                                        2001           2000
                                                                     --------       --------
<S>                                                                  <C>            <C>
OPERATING ACTIVITIES
Net  income (loss)                                                   $   (580)      $    206
Adjustments to reconcile net income (loss) to net
     cash used in operating activities:
          Depreciation and amortization                                   634            329
          Compensation expense related to stock options                     -             63
          Amortization of deferred stock  compensation                    341            306
          Changes in operating assets and liabilities:
            Accounts receivable                                         2,309         (1,372)
            Inventories                                                (1,183)        (2,794)
            Deferred tax assets and other assets                          309           (370)
            Accounts payable                                              632             (6)
            Accrued expenses                                           (1,252)         1,519
            Deferred margin on distributor inventory                   (1,248)         1,173
                                                                     --------       --------
               Net cash used in operating activities                      (38)          (946)
INVESTING ACTIVITIES
Purchases of available-for-sale securities                                  -         (4,950)
Proceeds from sales/maturities of available-for-sale securities        18,597              -
Purchases of property and equipment                                    (1,198)        (1,325)
                                                                     --------       --------
Net cash provided by (used in) investing activities                    17,399         (6,275)
FINANCING ACTIVITIES
Principal payments on capital lease obligations                          (215)          (207)
Proceeds from employee stock plans                                      2,068            240
                                                                     --------       --------
Net cash provided by financing activities                               1,853             33
Increase (decrease) in cash                                            19,214         (7,188)
Cash at beginning of period                                            37,683         10,965
Cash at end of period                                                $ 56,897       $  3,777
                                                                     ========       ========

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
</TABLE>

                                                                          Page 5

                            See accompanying notes.


<PAGE>   6

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 month periods ended March 31, 2001 are not necessarily
indicative of the results that may be expected for the year ending December 31,
2001.

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
Stanford Microdevices, Inc. (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.

The unaudited condensed consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries, Stanford Microdevices, Canada
and Stanford Microdevices UK Limited. 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 first quarter of fiscal year
2001 ended on April 1, 2001. The Company's first quarter of fiscal year 2000
ended on April 2, 2000. For 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, demand will differ from forecasts, and such a difference may
have a material effect on actual results of operations.


Inventories consist of (in thousands):


                                                                          Page 6
<PAGE>   7
<TABLE>
<CAPTION>
                      MARCH 31,      DECEMBER 31,
                        2001             2000
                     ----------      ------------
                     (UNAUDITED)
<S>                  <C>             <C>
Raw materials          $2,872           $2,648
Work-in-process         3,488            3,211
Finished goods          1,930            1,248
                       ------           ------
     Total             $8,290           $7,107
                       ======           ======
</TABLE>

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 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 loss per
share for the periods indicated (in thousands, except per share data):

<TABLE>
<CAPTION>
                                                    Three Months Ended
                                                  -----------------------
                                                  March 31,     March 31,
                                                    2001          2000
                                                  ---------     ---------
<S>                                              <C>            <C>
Net loss applicable to common stockholders       $     (580)    $ (25,718)
                                                 ==========     =========

Weighted average common shares outstanding           28,271        15,000
                                                 ==========     =========

Basic and diluted net loss per share applicable
     to common stockholders                      $    (0.02)    $   (1.71)
                                                 ==========     =========
</TABLE>

The effect of options to purchase 3,651,040 and 5,266,530 shares of Common Stock
at average exercise prices of $9.86 and $1.59 for the three months ended March
31, 2001 and 2000, respectively, has not been included in the computation of
diluted net loss per share applicable to common stockholders as its 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 loss was the same as its net loss for the three months ended March 31, 2001
and 2000.


                                                                          Page 7
<PAGE>   8
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 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 Mobile Wireless 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 Mobile Wireless 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 of
primarily integrated circuits and discrete devices for communications network
infrastructures. RF components produced by the Standard Products segment are
typically sold through distribution. The Mobile Wireless 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 Mobile Wireless Products segment will be sold primarily though
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 Securities and Exchange Commission (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.


                                                                          Page 8
<PAGE>   9
<TABLE>
<CAPTION>
                                                 Mobile                     Non-
(In Thousands)                   Standard       Wireless      Total       Segment       Total
                                 Products       Products    Segments       Items       Company
                                 --------       --------    --------      -------      -------
<S>                              <C>            <C>         <C>           <C>          <C>
For the three months
 ended March 31, 2001

Net revenues from external
  customers                      $ 7,800        $   -       $ 7,800      $     -       $ 7,800
Operating income (loss)            2,670         (703)        1,967       (3,629)       (1,662)
Expenditures for long-lived
  assets                             222          130           352          846         1,198

For the three months
 ended March 31, 2000

Net revenues from external
  customers                        7,264            -         7,264            -         7,264
Operating income (loss)            3,471         (598)        2,873       (2,697)          176
Expenditures for long-lived
  assets                             137          643           780        1,157         1,937
</TABLE>

NOTE 6: CONTINGENCY

On March 17, 2000, Stanford University filed a complaint against the Company in
the United States District Court for the Northern District of California
alleging, among other things, infringement by the Company of its trademarks by
the Company's use of the name "Stanford" and by use of a logo containing the
letter "S" and the color red. Stanford University has requested preliminary and
permanent injunctions prohibiting the Company from using trademarks that
infringe or dilute its trademarks, and seeks compensatory damages, exemplary and
punitive damages, costs and attorneys' fees. A hearing on Stanford University's
request for a preliminary injunction was held by the District Court on May 8,
2000 and Stanford University was denied the preliminary injunction. Stanford
University then filed a motion with the District Court for an emergency
injunction pending appeal and on May 15, 2000 Stanford University was denied the
emergency injunction. Stanford University filed a notice of appeal to the United
States Court of Appeals for the Ninth Circuit from the denial of the preliminary
injunction and filed a motion with the Court of Appeals for an emergency
injunction pending the appeal. On May 22, 2000, the Court of Appeals denied the
motion for an emergency injunction. On June 5, 2000, Stanford University filed a
motion with the United States Court of Appeals for the Ninth Circuit for
reconsideration of its motion for an emergency injunction pending appeal. On
June 28, 2000, the United States Court of Appeals for the Ninth Circuit denied
Stanford University's motion for reconsideration. On September 21, 2000, the
Court of Appeals affirmed the District Court's denial of a preliminary
injunction, but stated that its order does not preclude Stanford University from
renewing its motion for a preliminary injunction based on only the claims of
dilution. As of December 31, 2000, Stanford University had not renewed its
motion. A trial date was set for July 10, 2001 but the trial date has been
vacated and discovery has been suspended pending mediation. The Company has
entered into mediation with Stanford University, with a view toward resolving
the case.

Prior to the effectiveness of the registration statement covering the shares
sold in the Company's initial public offering, one of the Company's officers
provided written materials to certain individuals the Company had designated as
potential purchasers of shares through a directed share program. If the
distribution of these materials by the Company were held to be a violation of
the Securities Act of 1933, the recipients of these materials who purchase
shares in the Company's initial public offering would have the right, for a
period of one year from the date of their purchase of the shares, to obtain
recovery from the Company of the consideration paid. The Company estimates that
the potential liability resulting from this matter that might be incurred upon
the completion of its initial public offering to be from zero to $444,000.

                                                                          Page 9
<PAGE>   10
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

     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. We do not expect this decision to 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, and a private label reseller of our products, Minicircuits
Laboratories, accounted for a substantial portion of our net revenues in the
three months ended March 31, 2001 and 2000. Sales to Minicircuits Laboratories
represented 29% of net revenues in the three months ended March 31, 2001 and 31%
of net revenues in the three months ended March 31, 2000. Richardson Electronics
Laboratories represented 31% of net revenues in the three months ended March 31,
2001 and 39% of net revenues in the three months ended March 31, 2000. Avnet
Electronics Marketing represented 21% of net revenues in the three months ended
March 31, 2001 and 24% of net revenues in the three months ended March 31, 2000.
Richardson Electronics


                                                                         Page 10
<PAGE>   11
Laboratories and Avnet Electronics Marketing distribute our products to a large
number of end customers. We anticipate that sales through distributors and to
one or more private label resellers will continue to account for a substantial
portion of our net revenues.

     Three of our product lines accounted for a significant portion of our net
revenues in the three months ended March 31, 2001 and 2000. Sales of our gallium
arsenide heterojunction bipolar transistor (GaAs HBT) products accounted for 63%
of our net revenues in the three months ended March 31, 2001 and 80% of our net
revenues in the three months ended March 31, 2000. Sales of our silicon
germanium (SiGe) heterojunction bipolar transistor products accounted for 16% of
our net revenues in the three months ended March 31, 2001 and 6% of our net
revenues in the three months ended March 31, 2000. Sales of our heterojunction
field effect transistor (Hfet) discrete devices accounted for 13% of our net
revenues in the three months ended March 31, 2001 and 6% of our net revenues in
the three months ended March 31, 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 March 31, 2001, one packaging firm, MPI Corporation in Manila,
Philippines, packaged a significant 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
March 31, 2001, we anticipate that MPI will continue to account for a
significant amount of our packaging in the near 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 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


                                                                         Page 11
<PAGE>   12
an administrative organization. Our full-time employees increased to 130 at
March 31, 2001 from 91 at March 31, 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 MARCH 31, 2001 AND MARCH 31, 2000

Net Revenues

Net revenues increased to $7.8 million for the three months ended March 31, 2001
from $7.3 million for the three months ended March 31, 2000. This increase was
the result of increased sales of new products. Sales through our distributors
were 52% of net revenues for the three months ended March 31, 2001 and 63% of
net revenues for the three months ended March 31, 2000. Sales to our direct
customers comprised 48% of net revenues for the three months ended March 31,
2001, of which 29% of net revenues was to our private label reseller and 19% of
net revenues was to our factory direct customers. Sales to our direct customers
comprised 37% of net revenues for the three months ended March 31, 2000, of
which 31% of net revenues was to our private label reseller, 3% of net revenues
was to our factory direct customers and 3% of net revenues was from contract
manufacturing services. Sales to our major infrastructure original equipment
manufacturers (OEM) was approximately 7% of net revenues for the three months
ended March 31, 2001 compared to approximately 6% of net revenues for the three
months ended March 31, 2000. Sales of our new SiGe and indium gallium phosphide
(InGaP) products were approximately 22% of our total net revenues for the three
months ended March 31, 2001 compared to 8% for the three months ended March 31,
2000.

Cost of Revenues

Cost of revenues increased to $3.9 million for the three months ended March 31,
2001 from $2.9 million for the three months ended March 31, 2000 primarily as a
result of increased provisions for excess and obsolete inventories, which added
costs of approximately $1.7 million. This increase was partially offset by lower
costs related to the mix of products sold in the three months ended March 31,
2001 compared to the three months ended March 31, 2000. Operations personnel
increased to 43 at March 31, 2001 from 28 at March 31, 2000.

Gross Profit

Gross profit decreased to $3.9 million for the three months ended March 31, 2001
from $4.4 million for the three months ended March 31, 2000. Gross margin
decreased to 50% for the three months ended March 31, 2001 from 60% for the
three months ended March 31, 2000. This decrease is primarily attributable to
the $1.7 million increase in inventory reserves as a result of a reduction in
demand for certain of our SiGe parts.

Operating Expenses

Research and Development. Research and development expenses increased to $2.5
million for the three months ended March 31, 2001 from $1.4 million for the
three months ended March 31, 2000. This increase is primarily the result of
salaries and salary related expenses, which added costs of approximately
$628,000


                                                                         Page 12
<PAGE>   13
and increased expenses for engineering materials, which added costs of
approximately $330,000. Research and development personnel increased to 46 at
March 31, 2001 from 27 at March 31, 2000.

Sales and Marketing. Sales and marketing expenses increased to $1.6 million for
the three months ended March 31, 2001 from $1.5 million for the three months
ended March 31, 2000. This increase is primarily attributable to an increase in
depreciation and commissions to outside sales representatives. Sales and
marketing personnel totaled 22 at both March 31, 2001 and March 31, 2000.

General and Administrative. General and administrative expenses increased to
$1.1 million for the three months ended March 31, 2001 from $939,000 for the
three months ended March 31, 2000. This increase is primarily attributable to
increased salaries and salary related expenses, which added costs of
approximately $47,000 and higher insurance costs. General and administrative
personnel increased to 19 at March 31, 2001 from 14 at March 31, 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 of grant. During the three months
ended March 31, 2001 and 2000, we amortized $341,000 and $306,000, 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 and interest expense from capital
lease financing obligations. We had net interest and other income of $833,000
for the three months ended March 31, 2001 and $118,000 for the three months
ended March 31, 2000. The increase in net interest and other income for the
three months ended March 31, 2001 compared to March 31, 2000 is attributable to
higher cash and cash equivalents and available-for-sale securities, resulting
from proceeds received upon completion of our initial public offering.

Benefit from Income Taxes

Our benefit from income taxes was $249,000 for the three months ended March 31,
2001 and our provision for income taxes was $88,000 for the three months ended
March 31, 2000. The benefit from income taxes for the first quarter of fiscal
2001 is based on our estimated tax rate for the year.

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 March 31, 2001, we
had cash and cash equivalents of $56.9 million and working capital of $61.2
million.

     Our operating activities used cash of $38,000 in the three months ended
March 31, 2001 and $946,000 in the three months ended March 31, 2000. In the
three months ended March 31, 2001, cash used in operating activities was
primarily attributable to our net loss of $580,000, an increase in inventory of
$1.2 million and decreases in accrued expenses of $1.3 million and deferred
margin on distributor inventory of $1.2 million. These were partially offset by
depreciation and amortization of $634,000 and a decrease in accounts receivable
of $2.3 million. In the three months ended March 31, 2000, cash used in
operating activities was primarily attributable to increases in accounts
receivable of $1.4 million and inventories of $2.8 million. These were partially
offset by increases in accrued expenses of $1.5 million and deferred margin on
distributor inventory of $1.2 million.


                                                                         Page 13
<PAGE>   14
     Our investing activities provided cash of $17.4 million in the three months
ended March 31, 2001 and used cash of $6.3 million in the three months ended
March 31, 2000. Our investing activities reflect purchases and sales of
available-for-sale securities and fixed assets.

     Our financing activities provided cash of $1.9 million in the three months
ended March 31, 2001 and $33,000 in the three months ended March 31, 2000. In
the three months ended March 31, 2001 and 2000, cash provided by financing
activities was the result of proceeds from employee stock plans partially offset
by principal payments on capital lease obligations.

     Our March 31, 2000 net loss applicable to common stockholders 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 maintain an unsecured credit facility with a financial institution that
includes a $10.0 million line of credit that expires in June of 2001. Borrowings
under the revolving credit line may be made and repaid from time to time and
bear interest at the base rate, as announced by the lender, minus 0.5%, or at
LIBOR plus 2.25%. At March 31, 2001, there were no outstanding amounts under
this credit facility.

     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 sell additional equity or debt securities, which may result in additional
dilution to our stockholders, or secure additional lines of credit.

INDUSTRY TRENDS AND MARKET CONDITIONS

     In the first quarter of 2001, companies throughout the worldwide
telecommunication industry announced anticipated 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 current shipment levels and reduced our visibility regarding
forecasted shipments for the remainder of 2001. The revenue decline appears to
be having an effect across our channels, customer categories, products and
technologies. If the macro-industry trends described above were to continue or
worsen, it would likely result in lower sales for our products, increased
provisions for excess and obsolete inventories, as was the case in the first
quarter of 2001, and further actions to reduce our operating expenses, all of
which could have a material adverse effect on our results of operations and the
market price of our common stock.

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 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 March 12, 2001, we publicly announced our revised expectations of


                                                                         Page 14
<PAGE>   15
financial results for the quarter ending March 31, 2001, 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:

     - 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;

     - general economic growth or decline;

     - 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;

     - 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.


                                                                         Page 15
<PAGE>   16
      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 THIS MARKET DOES NOT CONTINUE TO GROW, OR IF IT GROWS AT A
SLOW RATE, DEMAND FOR OUR PRODUCTS WILL DIMINISH.

     Our success will depend in large part on the continued 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 continue to grow at historical
rates or at all. We have recently observed continued softness of the wireless
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 infrastructure. These trends have had an adverse
effect on our operations and caused us on March 12, 2001 to lower our previously
announced expectations for our financial results in the quarter ending March 31,
2001, and for the fiscal year ending December 31, 2001. Subsequently, the market
price of our common stock decreased. Any of these trends, if continued, could
result in lower than expected demand for our products and increased provisions
for excess inventories on our part, as was the case in the first quarter of
2001, which could have a material adverse effect on our revenues and results of
operations generally, and cause the market price of our common stock to further
decline. In addition, even if the demand for infrastructure grows, we will need
to complete new product designs that meet the needs of our customers at a rate
consistent with the growth of the market. Our product and process development
efforts may not be successful in this regard.

INDUSTRY-WIDE 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. These fluctuations can and
have in the past resulted in increased inventory levels and increased provisions
for excess inventories. In the past, diminished product demand, production
overcapacity and subsequent accelerated price erosion have lasted for extended
periods of time. If the current trend of decreased demand for semiconductor
products continues, we may again increase our provisions for excess inventories
or write-off inventories, both of which would harm our results of operations and
may cause our stock price to decline.

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,
the increasing demand for wireless and wireline communications has exerted
pressure on standards bodies worldwide to adopt new standards for these
products, generally 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 of communications systems by our customers.
These delays have in the past and may in the future negatively impact the sale
of products by us, result in increased inventory levels and possibly write-offs
or additional provisions for


                                                                         Page 16
<PAGE>   17
excess inventories, any of which would have a material adverse effect on our
business financial condition and results of operations.

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 first quarter of
2001 were manufactured in GaAs by TRW and SiGe by Atmel (Temic). 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. We may not be successful in forming an
alternative supply arrangement that provides us with a sufficient supply of GaAs
wafers. In addition, we have only recently begun working with one of our five
principal third-party wafer fabs. 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.
We have entered into negotiations with several other foundries.

     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 GCS, our newest third-party wafer fab, 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 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 significant amount
of our net revenues in the first quarter of 2001 were attributable to products
packaged by one subcontractor, MPI Corporation of Manila, Philippines. 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.


                                                                         Page 17
<PAGE>   18
     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 first quarter of 2001, sales through Richardson Electronics Laboratories
represented 31% of our net revenues and sales through Avnet Electronics
Marketing represented 21% 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
AND THE LOSS OF MINICIRCUITS AS A CUSTOMER OR A DECREASE IN PURCHASES BY
MINICIRCUITS WOULD ADVERSELY AFFECT OUR REVENUES.

     Sales to Minicircuits Laboratories, a private label reseller of our
products, account for a significant portion of our revenues. For example, 29% of
our net revenues in the first quarter of 2001 were attributable to sales to
Minicircuits. We expect that we will continue to rely on sales to Minicircuits
for a significant portion of our future revenues. 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. If we were
to lose Minicircuits as a customer, or if Minicircuits substantially reduced its
purchases, our business and operating results would be adversely affected.

STANFORD UNIVERSITY HAS FILED A LAWSUIT AGAINST US ALLEGING TRADEMARK
INFRINGEMENT. IF THIS LAWSUIT IS DECIDED AGAINST US, WE COULD BE FORCED TO
CHANGE OUR CORPORATE NAME, LOSE BRAND RECOGNITION, PAY DAMAGES AND INCUR
SIGNIFICANT LITIGATION COSTS.

     On March 17, 2000, Stanford University filed a complaint against us in the
United States District Court for the Northern District of California alleging,
among other things, infringement by us of its trademarks by our use of the name
"Stanford" and by use of a logo containing the letter "S" and the color red.
Stanford University has requested preliminary and permanent injunctions
prohibiting us from using trademarks that infringe or dilute its trademarks, and
seeks compensatory damages, exemplary and punitive damages, costs and attorneys'
fees. A hearing on Stanford University's request for a preliminary injunction
was held by the District Court on May 8, 2000 and Stanford University was denied
the preliminary injunction. Stanford University then filed a motion with the
District Court for an emergency injunction pending appeal and on May 15, 2000
Stanford University was denied the emergency injunction. Stanford University
filed a notice of appeal to the United States Court of Appeals for the Ninth
Circuit from the denial of the preliminary injunction and filed a motion with
the Court of Appeals for an emergency injunction pending the appeal. On May 22,
2000 the Court of Appeals denied the motion for an emergency injunction. On June
5, 2000, Stanford University filed a motion with the United States Court of
Appeals for the Ninth Circuit for reconsideration of its motion for an emergency
injunction pending appeal. On June 28, 2000 the United States Court of Appeals
for the Ninth Circuit denied Stanford University's motion for reconsideration.
On September 21, 2000, the Court of Appeals affirmed the District Court's denial
of a preliminary injunction, but stated that its order does not preclude
Stanford University from renewing its motion for a preliminary injunction based
on only the claims of dilution. As of February 15, 2001, Stanford University had
not renewed its motion. A trial date was set for July 10, 2001, but the trial
date has been vacated and discovery


                                                                         Page 18
<PAGE>   19
has been suspended pending mediation. We have entered into mediation with
Stanford University, with a view toward resolving the case. Even though we have
thus far successfully defeated requests for injunctions, if Stanford University
is successful in any further motions for preliminary injunction or if we lose
the lawsuit, we may be prohibited from using our "S" logo and/or the "Stanford
Microdevices" trademark and trade name. If we are prohibited from using our name
or logo, our brand recognition that we have built over several years could be
significantly impaired, which could severely damage our business and operating
results. We would also need to invest significant capital in rebranding our
products and, in general, our company. In addition, we may be liable for
monetary damages and other costs of litigation. Even if we are entirely
successful in defending the lawsuit, we may incur significant legal expenses and
our management may expend significant time in the defense.

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 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.


                                                                         Page 19
<PAGE>   20
     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.

     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 widely available
standard RF components from third-party distributors. We have historically
generated a majority of our revenues through sales of standard components to
these manufacturers through our distributors. 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 RECENTLY ESTABLISHED A BUSINESS UNIT FOCUSED ON DESIGNING RF COMPONENTS
FOR SPECIFIC 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 has not yet shipped any products and 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 any revenues.


                                                                         Page 20
<PAGE>   21
     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 many 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.

     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 IN MANAGING OUR GROWTH.

     We have experienced rapid growth and expansion in the past that placed a
significant strain on our management and other resources, and we expect this to
be a recurring issue in the future. The number of our employees has increased to
130 at March 31, 2001 from 91 at March 31, 2000. To accommodate this growth, we
must implement a variety of new and upgraded operational and financial systems,
procedures and controls, including the improvement of the accounting and other
internal management systems. This may require substantial managerial and
financial effort, and our efforts in this regard may not be successful. Our
current systems, procedures and controls may not be adequate to support our
operations. If we fail to improve our operational, financial and management
information systems, or fail to effectively motivate or manage our new and
future employees, our business could be harmed.

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 additional 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 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.

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<PAGE>   22
     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:

     - 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.


                                                                         Page 22
<PAGE>   23
     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 32% of our total direct
sales in the first quarter of 2001. Based on information available from our
distributors, products representing approximately 41% of our total distribution
revenues, representing approximately 21% of our net revenues, were sold by our
distributors to international customers in the first 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 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 net income.

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 STANFORD MICRODEVICES OR OTHER
STOCKHOLDERS.

     As of February 15, 2001, our officers, directors and principal stockholders
(greater than 5% stockholders) together controlled approximately 65.0% of our
outstanding common stock and our two founding stockholders controlled
approximately 49.0% 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 Stanford Microdevices and might affect the market price
of our common stock. In addition, the interests of these


                                                                         Page 23
<PAGE>   24
stockholders may not always coincide with the interests of Stanford Microdevices
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;

     - 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 had any material exposure
to factors such as changes in foreign currency exchange rates. However, in
future periods, we expect 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.

     At March 31, 2001, our cash and cash equivalents consisted primarily of
bank deposits and money market funds and our short-term investments consisted of
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


                                                                         Page 24
<PAGE>   25
ITEM 1. LEGAL PROCEEDINGS

     On March 17, 2000, Stanford University filed a complaint against us in the
United States District Court for the Northern District of California alleging,
among other things, infringement by us of its trademarks by our use of the name
"Stanford" and by use of a logo containing the letter "S" and the color red.
Stanford University has requested preliminary and permanent injunctions
prohibiting us from using trademarks that infringe or dilute its trademarks, and
seeks compensatory damages, exemplary and punitive damages, costs and attorneys'
fees. A hearing on Stanford University's request for a preliminary injunction
was held by the District Court on May 8, 2000 and Stanford University was denied
the preliminary injunction. Stanford University then filed a motion with the
District Court for an emergency injunction pending appeal and on May 15, 2000
Stanford University was denied the emergency injunction. Stanford University
filed a notice of appeal to the United States Court of Appeals for the Ninth
Circuit from the denial of the preliminary injunction and filed a motion with
the Court of Appeals for an emergency injunction pending the appeal. On May 22,
2000 the Court of Appeals denied the motion for an emergency injunction. On June
5, 2000, Stanford University filed a motion with the United States Court of
Appeals for the Ninth Circuit for reconsideration of its motion for an emergency
injunction pending appeal. On June 28, 2000 the United States Court of Appeals
for the Ninth Circuit denied Stanford University's motion for reconsideration.
On September 21, 2000, the Court of Appeals affirmed the District Court's denial
of a preliminary injunction, but stated that its order does not preclude
Stanford University from renewing its motion for a preliminary injunction based
on only the claims of dilution. As of February 15, 2000, Stanford University had
not renewed its motion. A trial date was set for July 10, 2001, but the trial
date has been vacated and discovery has been suspended pending mediation. We
have entered into mediation with Stanford University, with a view toward
resolving the case.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

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
March 31, 2001.


                                                                         Page 25
<PAGE>   26
                                   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.


<TABLE>
<S>                        <C>
                           STANFORD MICRODEVICES, INC.



DATE: May 15, 2001         /s/  Robert Van Buskirk
                           -----------------------------------------
                           ROBERT VAN BUSKIRK
                           President, Chief Executive Officer and
                           Director

DATE: May 15, 2001         /s/   Thomas Scannell
                           -----------------------------------------
                           THOMAS SCANNELL
                           Vice President, Finance and
                           Administration, Chief Financial
                           Officer and Assistant Treasurer
</TABLE>


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