**UNITED
      STATES****SECURITIES
      AND EXCHANGE COMMISSION**Washington,
      D.C. 20549**FORM
      10-Q**(MARK
      ONE)(x)
      Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934**For
      the quarterly period ended July 2, 2005**or( 
      ) Transition Report Pursuant to Section 13 or 15(d) of the Securities and
      Exchange Act of 1934 (No Fee Required)**Commission
      File No. 0-12718****SUPERTEX,
      INC.**(Exact
      name of Registrant as specified in its Charter)**California**
    **94-2328535**(State
      or other jurisdiction of incorporation or organization)
    (IRS
      Employer Identification #)**1235
      Bordeaux Drive****Sunnyvale,
      California 94089**(Address
      of principal executive offices)Registrant's
      Telephone Number, Including Area Code:**(408)
      222-8888**Indicate
      by check mark whether the Registrant (1) has filed all reports required to
      be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
      during the preceding 12 months (or for such shorter period that the
      Registrant was required to file such reports), and (2) has been subject to
      such filing requirements for the past 90 days.**Yes****X**
    No*Indicate
      by check mark whether the registrant is an accelerated filer (as defined
      in Rule 12b-2 of the Act).*******Yes****X**
    NoIndicate
      the number of shares outstanding of each of the issuer’s classes of common
      stock, as of the latest practicable date.Class
    Outstanding
      at August 5, 2005Common
      Stock, no par value
    13,184,902*Total
      number of pages: 27*








**SUPERTEX,
INC.**


**QUARTERLY
REPORT - FORM 10Q**








Table
      of Contents
    
    Page
      No.PART
      I - FINANCIAL INFORMATIONItem
      1.
    Financial
      StatementsUnaudited
      Condensed Consolidated Statements of Income
    3Unaudited
      Condensed Consolidated Balance Sheets
    4Unaudited
      Condensed Consolidated Statements of Cash Flows
    5Notes
      to Unaudited Condensed Consolidated Financial Statements
    6Item
      2.
    Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
    14Item
      3.
    Quantitative
      and Qualitative Disclosures About Market Risk and Interest Rate
      Risk
    22Item
      4.
    Controls
      and Procedures
    22PART
      II - OTHER INFORMATIONItem
      1.
    Legal
      Proceedings
    23Item
      2.
    Unregistered
      Sales of Equity Securities and Use of Proceeds
    23Item
      3.
    Defaults
      Upon Senior Securities
    23Item
      4.
    Submission
      of Matters to a Vote of Security Holders
    23Item
      5.
    Other
      Information
    23Item
      6.
    Exhibits
    24Signatures
    
    25




Page
2 of
27





**PART
I - FINANCIAL INFORMATION**





**Item
1. Financial Statements**





**SUPERTEX,
INC.**


**CONDENSED
CONSOLIDATED STATEMENTS OF INCOME**


*(unaudited)*


*(in
thousands, except per share amounts)*




****
    
    **Three Months Ended******
    
    
    **July
      2,**
      **2005**
    
    
    **July
      3,**
      **2004**Net
      sales
    
    $
    15,993
    
    $
    14,242Costs
      and expenses:Cost
      of sales
    
    
    6,806
    
    
    7,069Research
      and development
    
    
    2,759
    
    
    2,470Selling,
      general and administrative
    
    
    3,188
    
    
    2,402Total
      costs and expenses
    
    
    12,753
    
    
    11,941Income
      from operations
    
    
    3,240
    
    
    2,301Interest
      income
    
    
    627
    
    
    308Other
      income, net
    
    
    279
    
    
    87Income
      before provision for income taxes
    
    
    4,146
    
    
    2,696Provision
      for income taxes
    
    
    1,327
    
    
    836Net
      income
    
    $
    2,819
    
    $
    1,860Net
      income per share:Basic
    
    $
    0.22
    
    $
    0.14Diluted
    
    $
    0.21
    
    $
    0.14Shares
      used in per share computation:Basic
    
    
    13,078
    
    
    12,904Diluted
    
    
    13,215
    
    
    13,050See
      accompanying*Notes
      to Unaudited Condensed Consolidated Financial Statements*.










Page 3 of
27





**SUPERTEX,
INC.**


**CONDENSED
CONSOLIDATED BALANCE SHEETS**


*(unaudited,
in thousands)*








****
    
    
    **July
      2, 2005**
    
    **April
      2, 2005****ASSETS**Current
      assets:Cash
      and cash equivalents
    
    $
    10,759
    
    $                                   38,634Short-term
      investments
    
    
    80,139
    
    49,783Trade
      accounts receivable, net of allowances of $774 and $704
    
    
    9,103
    
    7,898Inventories
    
    
    13,110
    
    12,624Prepaid
      expenses and other current assets
    
    
    818
    
    917Deferred
      income taxes
    
    
    6,321
    
    6,322Total
      current assets
    
    
    120,250
    
    116,178Property,
      plant and equipment, net
    
    
    7,728
    
    7,992Other
      assets
    
    
    96
    
    
    96Deferred
      income taxes
    
    
    2,111
    
    2,111**TOTAL
      ASSETS**
    
    $
    130,185
    
    $                                 126,377**LIABILITIES
      AND SHAREHOLDERS' EQUITY**Current
      liabilities:Trade
      accounts payable
    
    $
    3,114
    
    $                                     3,280Accrued
      salaries and employee benefits
    
    
    9,360
    
    8,720Other
      accrued liabilities
    
    
    812
    
    634Deferred
      revenue
    
    
    3,181
    
    3,610Income
      taxes payable
    
    
    4,360
    
    3,038Total
      current liabilities
    
    
    20,827
    
    19,282*Commitments
      and Contingencies (See Note 7)*Shareholders’
      Equity:Preferred stock, no par value -*10,000
      shares authorized, none outstanding*
    
    
    --
    
    --Common
      stock, no par value - 30,000 shares authorized; issued and
      outstanding
      13,061 and 13,086 shares
    
    
    35,684
    
    35,343Retained
      earnings
    
    
    73,674
    
    71,752Total
      shareholders' equity
    
    
    109,358
    
    107,095**TOTAL
      LIABILITIES AND SHAREHOLDERS' EQUITY**
    
    $
    130,185
    
    $            
                        
       126,377See
      accompanying*Notes
      to Unaudited Condensed Consolidated Financial
    Statements.*








Page
4 of
27





**SUPERTEX,
INC.**


**CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS**


*(unaudited,
in thousands)*





**Three Months Ended,**CASH
      FLOWS FROM OPERATING ACTIVITIES
    
    
    **July,
      2 2005**
    
    
    **July
      3, 2004**Net
      income
    
    $
    2,819
    
    $
    1,860Non-cash
      adjustments to net income:Depreciation
    
    
    680
    
    
    784Reduction in provision for doubtful accounts and sales
    returns
    
    
    (398
    )
    
    (277
    )Provision
      for excess and obsolete inventories
    
    
    357
    
    
    518Changes
      in operating assets and liabilities:Short-term
      investments, categorized as trading
    
    
    (305
    )
    
    (98
    )Trade
      accounts receivable
    
    
    (807
    )
    
    (390
    )Inventories
    
    
    (843
    )
    
    281Prepaid
      expenses and other assets
    
    
    100
    
    
    146Trade
      accounts payable and accrued expenses
    
    
    644
    
    
    (2
    )Deferred
      revenue
    
    
    (428
    )
    
    (238
    )Income
      taxes payable
    
    
    1,322
    
    
    834Total adjustments
    
    
    322
    
    
    1,558Net
      cash provided by operating activities
    
    
    3,141
    
    
    3,418CASH
      FLOWS FROM INVESTING ACTIVITIESPurchases of property, plant and equipment
    
    
    (409
    )
    
    (355
    )Purchases of short-term investments, categorized as available for
      sale
    
    
    (218,100
    )
    
    (85,225
    )Sales of short-term investments, categorized as available for
      sale
    
    
    188,049
    
    
    73,025Net
      cash used in investing activities
    
    
    (30,460
    )
    
    (12,555
    )CASH
      FLOWS FROM FINANCING ACTIVITIESProceeds from exercise of stock options and employee stock purchase
      plan
    
    
    524
    
    
    489Repurchase of common stock
    
    
    (1,080
    )
    
    (275
    )Net
      cash (used in) provided by financing activities
    
    
    (556
    )
    
    214NET
      DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (27,875
    )
    
    (8,923
    )CASH
      AND CASH EQUIVALENTS:Beginning
      of period
    
    
    38,634
    
    
    57,717End
      of period
    
    $
    10,759
    
    $
    48,794Supplemental
      cash flow disclosures:Income
      taxes paid, net of refunds
    
    $
    5
    
    $
    2See
      accompanying*Notes
      to Unaudited Condensed Consolidated Financial
    Statements.*










Page
5 of
27


**SUPERTEX,
      INC.**
      **NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
      **(unaudited)**


**Note
1 - Organization and Basis of Presentation**





The
accompanying unaudited condensed consolidated financial statements of Supertex,
Inc. and its subsidiary, have been prepared in accordance with accounting
principles generally accepted in the United States of America. This financial
information reflects all adjustments, which are, in the opinion of the Company’s
management, of normal recurring nature and necessary to present fairly the
statements of financial position as of July 2, 2005 and April 2, 2005, results
of operations for the three-month periods ended July 2, 2005 and July 3, 2004,
and cash flows for the three months ended July 2, 2005 and July 3, 2004. The
April 2, 2005 balance sheet was derived from the audited financial statements
included in the 2005 annual report on Form 10-K. All significant intercompany
transactions and balances have been eliminated.





The
condensed consolidated financial statements included herein have been prepared
by the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in these financial statements have been condensed or omitted
pursuant to such rules and regulations, although the Company believes the
disclosures which are made are adequate to make the information presented not
misleading. These financial statements should be read in conjunction with the
audited condensed consolidated financial statements of Supertex, Inc. for the
fiscal year ended April 2, 2005, which were included in the annual report on
Form 10-K.





Interim
results are not necessarily indicative of results for the full fiscal year. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements as well as the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates, and such differences may be material to the financial statements. The
results of operations for the three-month periods ended July 2, 2005 are not
necessarily indicative of the results to be expected for any future
periods.





The
Company reports on a fiscal year basis and it operates and reports based on
quarterly periods ending on the Saturday nearest the end of the applicable
calendar quarter, except in a 53-week fiscal year, in which case the additional
week falls into the fourth quarter of the fiscal year. Fiscal 2006 will be a
52-week year. The three-month periods ended July 2, 2005 (“first quarter of
fiscal 2006”), July 3, 2004 (“first quarter of fiscal 2005”), and April 2, 2005
(“fourth quarter of fiscal 2005”) all consist of thirteen weeks.





**Note
2 - Inventories**





The
Company’s inventories consist of high technology semiconductor devices and
integrated circuits that are specialized in nature, subject to rapid
technological obsolescence and are sold in a highly competitive industry.
Inventory balances at the end of each period are adjusted to approximate the
lower of cost or market value.





Inventories
consisted of *(in
thousands)* :





****
    
    
    **July
      2, 2005**
    
    
    **April
      2, 2005**Raw
      materials
    
    $
    1,099
    
    $
    1,220Work-in-process
    
    
    8,359
    
    
    7,371Finished
      goods
    
    
    3,652
    
    
    4,033Inventories
    
    $
    13,110
    
    $
    12,624





The
Company wrote down inventory valued at $357,000 for the three months ended July
2, 2005. For the comparable periods in fiscal 2005, the Company wrote down
inventory valued at $518,000. The Company realized gross margin benefits of
$257,000 for the three-month period ended July 2, 2005, resulting from sale of
previously written down inventory. Such benefits were $285,000 for the
three-month period ended July 3, 2004.






Page
6 of 27




**SUPERTEX,
      INC.**
      **NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
      continued**
      **(unaudited)**




The
Company defers the recognition of revenue on shipments to distributors and the
related costs of sales until the distributors have sold the products to their
end-user customers because of the uncertainty associated with possible returns
and pricing concessions. Sales through the distributors are made primarily under
arrangements allowing limited rights of return, limited price protection and the
right of stock rotation on merchandise unsold by distributors. Deferred revenue
also includes a customer advance under a licensing agreement as well as upfront
payments received from customers.





Deferred
revenue consisted of *(in
thousands)* :





**July
      2, 2005**
    
    
    **April
      2, 2005**Shipments
      to distributors
    $2,787
    
    $
    3,306Technology
      license
    225
    
    
    262Others
    169
    
    
    42Deferred
      revenue
    $3,181
    
    $
    3,610





**Note
3 - Comprehensive Income**





Comprehensive
income, which includes all changes in equity during a period from non-owner
sources, did not differ from net income for any of the periods
presented.





**Note
4 - Net Income per Share**





Basic
earnings per share (“EPS”) is computed as net income divided by the weighted
average number of common shares outstanding for the period. Diluted EPS reflects
the potential dilution that could occur from common shares issuable through
stock options only, as the Company does not have any warrants or other
convertible securities outstanding. A reconciliation of the numerator and
denominator of basic and diluted earnings per share is provided as follows (in
thousands, except per share amounts):





****
    
    **Three
      Months Ended,******
    
    
    **July
      2, 2005**
    
    
    **July
      3, 2004**BASIC:Net
      income
    
    $
    2,819
    
    $
    1,860Weighted
      average shares outstanding for the period
    
    
    13,078
    
    
    12,904Net
      income per share
    
    $
    0.22
    
    $
    0.14DILUTED:Net
      income
    
    $
    2,819
    
    $
    1,860Weighted
      average shares outstanding for the period
    
    
    13,078
    
    
    12,904Dilutive
      effect of stock options
    
    
    137
    
    
    146Total
    
    
    13,215
    
    
    13,050Net
      income per share
    
    $
    0.21
    
    $
    0.14





Options
to purchase 749,689 shares of the Company’s common stock at an average price of
$17.39 per share, and 794,576 shares at an average price of $21.29 per share at
July 2, 2005 and July 3, 2004, respectively, were outstanding but were not
included in the computation of diluted earnings per share because their effect
would have been anti-dilutive.





Page 7 of
27
 
 ****





**SUPERTEX,
      INC.**
      **NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
      continued**
      **(unaudited)**




Note 5 - Income Taxes




Income
taxes for interim reporting purposes are computed using estimates of the
effective annual income tax rate for the entire fiscal year. The effective
income tax rate was 32% for the first quarter of fiscal 2006 while the effective
income tax rate was 31% for the same period last fiscal year. The provision for
income tax for the quarter ended July 2, 2005 and July 3, 2004 was $1,327,000
and $836,000, respectively.





The
American Jobs Creation Act of 2004 (the Jobs Act), enacted on October 22, 2004,
provides for a temporary 85% dividends received deduction on certain foreign
earnings repatriated during a one-year period. The deduction would result in
approximately 5.25% Federal tax rate on the repatriated earnings. To qualify for
the deduction, the earnings must be reinvested in the United States pursuant to
a domestic reinvestment plan established by the Company’s chief executive
officer and approved by the Company’s board of directors. Certain other criteria
in the Jobs Act must be satisfied as well.





The
Company does not anticipate it will apply the above provision to qualify for
earnings repatriations in fiscal 2006; however, as additional clarifying
language on key elements of the repatriation provision becomes available, the
Company will continue to analyze and assess whether such repatriation would be
practical.





**Note
6 - Stock-based Compensation**





The
Company accounts for stock-based employee compensation using the intrinsic value
method under the Financial Standards Board (“FASB”) Accounting Principles Board
Opinion No. 25, *Accounting
for Stock Issued to Employees* , (“APB
25”), and related interpretations, and complies with the disclosure provisions
of Statements of Financial Accounting Standards No. 123, Accounting for
Stock-Based Compensation, and Financial Accounting Standards No. 148, Accounting
for Stock-Based Compensation - Transition and Disclosure, (“SFAS 123”) and
(“SFAS 148”), respectively. SFAS 123 requires the disclosure of pro forma net
income and earnings per share. Under SFAS 123, the fair value of stock-based
awards to employees is calculated through the use of option pricing models, even
though such models were developed to estimate the fair value of freely tradable,
fully transferable options without vesting restrictions, which significantly
differ from the Company’s stock option awards. These models also require
subjective assumptions, including future stock price volatility and expected
time to exercise, which greatly affect the calculated values.





The fair
value of each option grant, as defined by SFAS No. 123, is estimated on the date
of grant using the Black-Scholes option-pricing model. The Black-Scholes model
was developed to estimate the fair value of freely tradable, fully transferable
options without vesting restrictions. However, options granted under the current
stock option plan are not freely tradable, or fully transferable, and have
vesting restrictions. The Black-Scholes model also requires highly subjective
assumptions, including future stock price volatility and expected time until
exercise, which greatly affect their fair value.





Had the
Company recorded compensation costs for stock options issued to employees under
the Company’s current and former stock option plans and stock sales under its
Employee Stock Purchase Plan (ESPP) based on the fair value at the grant date
for the awards consistent with the provisions of SFAS No. 123, the net income
and net income per share for the three-month period ended July 2, 2005 and July
3, 2004 would have been reduced to the pro forma amounts indicated as follows:





Page
8 of
27







**SUPERTEX,
INC.**
 **NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued**
 **(unaudited)**





**Three Months Ended***(in
      thousands except per share amounts)*
    **July
      2, 2005**
    
    **July
      3, 2004**Net
      income as reported
    $                                        
      2,819
    
    $                            
      1,860Add:
    Stock-based
      employee compensation expense included in reported net income, net of
      tax
    --
    
    --Deduct:
    Stock-based
      employee compensation expense determined under fair value based method,
      net of tax
    (365)
    
    (586)Pro
      forma net income
    $                                        
      2,454
    
    $                            
      1,274Basic
      earnings
      per
      share
    As
      reported
    $
                                               
      0.22
    
    $                              
      0.14Pro
      forma
    $
                                               
      0.19
    
    $                              
      0.10Diluted
      earnings per share
    As
      reported
    $                                          0.21
    
    $                               0.14Pro
      forma
    $                                       
        0.19
    
    $                             
       0.10





**Note
7 - Commitments and Contingencies**





FASB
Interpretation No. 45, or FIN 45, *Guarantor’s
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others,* requires
that upon issuance of a guarantee, the guarantor must recognize a liability for
the fair value of the obligation it assumes under that guarantee. In addition,
FIN 45 requires disclosures about the guarantees that an entity has issued,
including a roll forward of the entity’s product warranty
liabilities.





***Indemnification***





As is
customary in the Company’s industry, the Company has agreed to defend certain
customers, distributors, suppliers, and subcontractors against certain claims,
which third parties may assert that its products allegedly infringe certain of
their intellectual property rights, including patents, trademarks, trade
secrets, or copyrights. The Company has agreed to pay certain amounts of any
resulting damage awards and typically has the option to replace any infringing
product with non-infringing product. The terms of these indemnification
obligations are generally perpetual from the effective date of the agreement. In
certain cases, there are limits on and exceptions to the Company’s potential
liability for indemnification relating to intellectual property infringement
claims. The Company cannot estimate the amount of potential future payments, if
any, that it might be required to make as a result of these agreements. To date,
the Company has not paid any damage award or been required to defend any claim
related to its indemnification obligations, and accordingly, it has not accrued
any amount for indemnification obligations. However, there can be no assurances
that the Company will not have any financial exposure under those
indemnification obligations in the future.








Page 9 of
27


******


**


**SUPERTEX,
      INC.**
      **NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
      continued**
      **(unaudited)**


******


******


***Legal
Proceedings***





From time
to time the Company is subject to possible claims or assessments from third
parties arising in the normal course of business. Management has reviewed such
possible claims and assessments with legal counsel and believes that it is
unlikely that they will result in a material adverse impact on the Company’s
financial position or results of operations or cash flows. ******





***Product
Warranty***





The
Company’s policy is to replace defective products at its own expense for a
period of 90 days from date of shipment. This liability is limited to
replacement of the product and freight and delivery costs or refund or credit of
the purchase price. On certain occasions, the Company may pay for rework. The
Company usually provides a replaced/reworked product at resale value rather than
a refund or credit to meet the warranty obligations. This policy is necessary to
protect the Company’s distributors, to improve customer satisfaction, and for
competitive reasons. Additionally, it is the custom in Japan and Europe to
provide this benefit.





The
Company records a reduction to revenue for estimated product returns, including
warranty related returns, in the same period as the related revenues are
recorded. These estimates are based on historical experience, analysis of
outstanding Return Material Authorization and Allowance Authorization data and
any other form of notification received of pending returns.





The
reductions to revenue for estimated product returns for the three months ended
July 2, 2005 and July 3, 2004 are as follows *(in
thousands)* :





**Description**
    
    
    **Balance
      at Beginning of Period**
    
    
    **Additions****(1)**
    ****
    
    **Deductions****(2)**
    ****
    
    **Balance
      at**
      **End
      of Period**Three
      months ended July 2, 2005Allowance
      for sales returns
    
    $
    463
    
    $
    354
    
    $
    327
    
    $
    490Three
      months ended July 3, 2004Allowance
      for sales returns
    
    $
    186
    
    $
    208
    
    $
    271
    
    $
    123


______________


*(1)
Allowances for sales returns are charged as a reduction to revenue.*


*(2)
Represents amounts written off against the allowance for sales
returns.*





While the
Company’s sales returns have historically been within the expectations and the
allowance established, it cannot guarantee that it will continue to experience
the same return rates that it has had in the past. Any significant increase in
product failure rates and the resulting sales returns could have a material
adverse impact on the operating results for the period or periods in which such
returns materialize.








Page 10 of
27





****SUPERTEX,
INC.**
**NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued**
**(unaudited)****


****


**Contractual
Obligations**





The
following table summarizes the Company’s significant contractual cash
obligations at July 2, 2005, and the effect such obligations are expected to
have on liquidity and cash flow in future periods (in thousands):





****
    
    **Payment
      Due by Year****Contractual
      Obligations**
    
    
    **Total**
    
    
    **Less
      than 1 Year**
    
    
    **2-3
      Years**
    
    
    **4-5
      Years**
    
    
    **After
      5 Years**Operating
      lease obligations(1)
    
    $
    5,473
    
    $
    1,020
    
    $
    1,821
    
    $
    1,829
    
    $
    803Purchase
      obligations(2)
    
    
    4,847
    
    
    4,847
    
    
    --
    
    
    --
    
    
    --Total
      contractual cash obligations
    
    **$**
    **10,320**
    
    **$**
    **5,867**
    
    **$**
    **1,821**
    
    **$**
    **1,829**
    
    **$**
    **803**





*(1)
The Company leases facilities under non-cancelable lease agreements expiring at
various times through April 2011. Rental expense net of sublease income for the
quarter ending July 2, 2005, amounted to $199,000.*





*(2)
To obtain favorable pricing and resource commitment, the Company commits to
volume purchases from suppliers of manufacturing materials and
services.*





**Note
8 - Common Stock Repurchase**





Share
repurchase activities were as follows:





**Three
      Months Ended******
    
    
    **July
      2, 2005**
    
    
    **July
      3, 2004**Number
      of shares repurchased
    
    
    67,900
    
    
    18,900Cost
      of shares repurchased
    
    $
    1,080,000
    
    $
    275,000Average
      price per share
    
    $
    15.91
    
    $
    14.56





Since the
inception of the repurchase program in 1992 through July 2, 2005, the Company
has repurchased a total of 1,115,900 shares of the common stock for an aggregate
cost of $7,327,000. Upon their repurchase, shares are restored to the status of
authorized but unissued shares. At July 2, 2005, 784,100 shares remained
authorized for repurchases under the program.








Page 11 of
27




**SUPERTEX,
INC.**
 **NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued**
 **(unaudited)**


****


****


**Note
9 - Segment Information**





The
Company operates in one business segment comprising of the design, development,
manufacturing and marketing of high voltage semiconductor devices including
analog and mixed signal integrated circuits. The Company's principal markets are
in the United States, Europe, and Asia. The Company’s Chief Operating Officer,
the President, Principal Executive and Financial Officer, reviews financial
information presented on a consolidated basis for purposes of making operating
decisions and assessing financial performance. Below is a summary of sales by
major geographic area:





**Three
      Months Ended****Net
      Sales***(in
      thousands)*
    
    
    **July
      2, 2005**
    
    
    **July
      3, 2004**United
      States
    
    $
    7,350
    
    $
    8,215Europe
    
    
    1,305
    
    
    1,558Japan
    
    
    1,734
    
    
    1,641Asia
      (excluding Japan)
    
    
    3,641
    
    
    2,444Other
    
    
    1,963
    
    
    384Total
      revenue
    
    $
    15,993
    
    $
    14,242





The
Company does not segregate information related to operating income generated by
export sales. The Company’s assets are primarily located in the United States of
America.





Net
property, plant and equipment by country was as follows *(in
thousands):*





**Country**
    
    
    **July
      2, 2005**
    
    
    **April
      2, 2005**United
      States
    
    $
    6,955
    
    $
    7,234Hong
      Kong
    
    
    773
    
    
    758$
    7,728
    
    $
    7,992





**Note
10 - Significant Customers**





No single
customer accounted for more than 10% of our net sales for the three months ended
July 2, 2005. For the comparable period in fiscal 2005, sales to Microtek, Inc.,
the Company’s primary distributor in Japan, accounted for 10% of net sales. No
other customer accounted for more than 10% of net sales.





**Note
11 - Recent Accounting Pronouncements**





In May
2005, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 154, Accounting Changes and Error
Corrections. SFAS 154 replaces APB Opinion No. 20, Accounting Changes, and SFAS
3, Reporting Accounting Changes in Interim Financial Statements, and changes the
requirements for the accounting for and reporting of a change in accounting
principle. The Company is required to adopt SFAS 154 for accounting changes and
error corrections at the beginning of fiscal 2007. The Company’s results of
operations and financial condition will only be impacted by SFAS 154 if it
implements changes in accounting principle that are addressed by the standard or
corrects accounting errors in future periods.





Page
12 of 27








**SUPERTEX,
INC.**
**NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued**
**(unaudited)**





In March
2005, the FASB issued Interpretation No. 47, Accounting for Conditional Asset
Retirement Obligations, which clarifies that an entity is required to recognize
a liability for the fair value of a conditional asset retirement obligation if
the fair value can be reasonably estimated even though uncertainty exists about
the timing and (or) method of settlement. The Company is required to adopt
Interpretation No. 47 by the end of fiscal 2006. The Company is currently
assessing the impact of Interpretation No. 47 on its results of operations and
financial condition.





In
December 2004, the FASB issued SFAS No. 153, “ *Exchanges
of Non-monetary Assets, an amendment of APB Opinion No. 29* ” (SFAS
153). SFAS 153 replaces the exception from fair value measurement in APB Opinion
No. 29 for non-monetary exchanges of similar productive assets with a general
exception from fair value measurement for exchanges of non-monetary assets that
do not have commercial substance. A non-monetary exchange has commercial
substance if the future cash flows of the entity are expected to change
significantly as a result of the exchange. SFAS 153 is to be applied
prospectively and is effective for fiscal periods beginning after June 15, 2005.
The Company does not expect the adoption of SFAS 153 to have a material impact
on the overall results of operations or financial position.





In
December 2004, FASB issued Statement No. 123 (revised 2004), or SFAS 123R,
“Share-Based Payment.” This statement replaces SFAS 123, “Accounting for
Stock-Based Compensation” and supersedes Accounting Principles Board’s Opinion
No. 25 (ABP 25), “Accounting for Stock Issued to Employees”. SFAS 123R will
require the Company to measure the cost of its employee stock-based compensation
awards granted after the effective date based on the grant date fair value of
those awards and to record that cost as compensation expense over the period
during which the employee is required to perform services in exchange for the
award (generally over the vesting period of the award). In addition, it will be
required to record compensation expense (as previous awards continue to vest)
for the unvested portion of previously granted awards that remain outstanding at
the date of adoption. In April 2005, the U.S. Securities and Exchange Commission
(the “SEC”) announced a deferral of the effective date of SFAS 123R to the
registrant’s fiscal year beginning on or after June 15, 2005. The Company is
therefore required to implement the standard beginning in its fiscal year 2007.
In addition, the SEC issued Staff Accounting Bulletin No. 107, or (SAB 107) in
March 2005. SAB 107 includes interpretive guidance for the initial
implementation of SFAS 123R. The Company is currently evaluating the impact of
the SFAS 123R on its financial statements.





In
November 2004, the FASB issued SFAS No. 151, “ *Inventory
Costs,*  *an
amendment of ARB No.43, Chapter 4”* (SFAS
151). This statement amends the guidance in ARB No. 43, Chapter 4, “ *Inventory
Pricing* ” to
clarify the accounting for abnormal amounts of idle facility expense, freight,
handling costs, and wasted material (spoilage). SFAS 151 requires that those
items be recognized as current-period charges. In addition, this Statement
requires that allocation of fixed production overheads to costs of conversion be
based upon the normal capacity of the production facilities. The provisions of
SFAS 151 are effective for inventory cost incurred in fiscal years beginning
after June 15, 2005. As such, the Company is required to adopt these provisions
at the beginning of fiscal 2007. The Company is currently evaluating the impact
of SFAS 151 on its consolidated financial statements.










Page 13 of
27


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





The
following discussion and analysis should be read in conjunction with the
Condensed Consolidated Financial Statements and related Notes thereto contained
elsewhere in this Report. The information contained in this quarterly report on
Form 10-Q is not a complete description of the Company’s business or the risks
associated with an investment in the common stock. You are urged to carefully
review and consider the various disclosures made by us in this Report and in
other reports filed with the SEC, including the annual report on Form 10-K for
the year-ended April 2, 2005.





**Cautionary
Statement Regarding Forward Looking Statements**





*This
Form 10-Q includes forward-looking statements. These forward-looking statements
are not historical facts, and are based on current expectations, estimates, and
projections about the Company’s industry, its beliefs, its assumptions, and its
goals and objectives. Words such as "anticipates", "expects", "intends",
"plans", "believes", "seeks", “forecasts”, and "estimates", and variations of
these words and similar expressions, are intended to identify forward-looking
statements. Examples of such forward-looking statements in this Form 10-Q are
the Company’s expectations as to future revenues in the Medical Electronics,
Imaging, and Telecom markets and as to certain products within these markets;
the Company's revenue growth strategy; the Company's anticipation that it will
not apply the provision to qualify for earnings repatriation in fiscal 2006
under the Jobs Act; the expectation for depreciation expense to continue at its
current reduced level for the rest of fiscal 2006; anticipated R&D and
SG&A expenses during fiscal 2006; the belief that the impact of rising
interest rates on the fair value of the fixed rates securities would
be minimal; the plan to spend approximately $1,976,000 for capital
acquisitions for the remainder of fiscal 2006; the belief that the Company have
substantial production capacity in place to handle any projected increase in
business for this fiscal year; and the anticipation that the available funds and
expected cash generated from operations will be sufficient to meet the liquidity
and capital requirements through the next twelve months. These statements are
only predictions, not a guaranty of future performance, and are subject to
risks, uncertainties, and other factors, some of which are beyond the Company’s
control and are difficult to predict, and could cause actual results to differ
materially from those expressed or forecasted in the forward-looking statements.
These risks and uncertainties include that there are no material adverse changes
in the demand for our customer’s products in which the Company’s products are
used; competition to supply semiconductor devices in the markets in which the
Company competes does not increase and cause price erosion; demand materializes
and increases for recently released customer products incorporating the
Company’s products; that there are no unexpected manufacturing issues as
production ramps up; the demand for the Company’s products or results of its
product development change is such that it would be unwise not to decrease
research and development; and that some of the Company’s equipment will not be
unexpectedly damaged or obsoleted, thereby requiring replacement as well as
those described in "Factors Which May Affect Operating Results" under Item 7,
“Management’s Discussion and Analysis of Financial Condition and Results of
Operation” in the Company’s annual report of Form 10-K for the fiscal year ended
April 2, 2005. The information included in this Form 10-Q is provided as of the
filing date with the SEC and future events or circumstances could differ
significantly from the forward-looking statements included herein. Accordingly,
the readers are cautioned not to place undue reliance on such statements. Except
as required by law, the Company undertakes no obligation to update any
forward-looking statement, whether as a result of new information, future
events, or otherwise.*





**Critical
Accounting Policies**





The
Company’s critical accounting policies are those that both (1) are most
important to the portrayal of the financial condition and results of operations
and (2) require management’s most difficult, subjective, or complex judgments,
often requiring estimates about matters that are inherently uncertain. The
critical accounting policies are described in Item 7, “Management’s Discussion
and Analysis of Financial Condition and Results of Operations,” of the annual
report on Form 10-K for the year ended April 2, 2005.





Page
14 of 27


Critical
accounting policies affecting the Company, the critical estimates made when
applying them, and the judgments and uncertainties affecting their application
have not changed materially since April 2, 2005.





**Overview**





Supertex
designs, develops, manufactures, and markets high voltage semiconductor devices,
including analog and mixed signal integrated circuits utilizing state-of-the-art
high voltage DMOS, HVCMOS and HVBiCMOS analog and mixed signal technologies. The
Company supplies standard and custom high voltage interface products primarily
for use in the telecommunications (telecom), imaging, medical electronics, and
industrial markets. The Company also supplies custom integrated circuits for
customers using customer-owned designs and mask toolings with the Company’s
process technologies.





**Results
of Operations**





**Net
Sales**





The
Company operates in one business segment comprising the design, development,
manufacturing and marketing of high voltage semiconductor devices including
analog and mixed signal integrated circuits ( IC s).  Net sales
for the three months ended July 2, 2005 were $15,993,000, a 12%increase compared
to $14,242,000 for the same period of prior fiscal year. Net sales increased 35%
sequentially in the first quarter of fiscal 2006 from $11,843,000 in the fourth
quarter of fiscal 2005. The year-over-year and sequential quarterly growth in
sales is primarily attributed to increased units;  there was no material
sales price erosion in the current quarter.






Our
estimate of the breakdown of net sales to customers in the Medical Electronics,
Imaging, Telecom and Other markets for the three-month period ended July 2,
2005, as well as year-over-year and quarterly sequential percentage changes are
shown in the below table. The Company has a broad base of customers, who in some
cases manufacture end products spanning multiple markets. As such, the
assignments of revenue to the aforementioned markets require the use of
estimates, judgment, and extrapolation. Actual results may differ from those
reported.




**Three
      Months Ended******
      **Markets**
    
    
    **July 2,**
      **2005**
    
    **July
      3,**
      **2004**
    
    **April 2,**
      **2005**
    
    **Year-Over-Year
      Change**
    
    **Sequential
      Change**Medical
      Electronics
    
    
    37
    %
    37
    %
    40
    %
    13
    %
    24
    %Imaging
    
    
    35
    %
    25
    %
    27
    %
    57
    %
    75
    %Telecom
    
    
    20
    %
    26
    %
    25
    %
    -15
    %
    7
    %Other
    
    
    8
    %
    12
    %
    8
    %
    -30
    %
    30
    %Total
      Sales
    
    
    100
    %
    100
    %
    100
    %
    12
    %
    34
    %




Sales to
the Medical Electronics market for the three months ended July 2, 2005 increased
13% compared to same period in prior fiscal year, and 24% sequentially. 
The increase in the three-month period was due primarily to strong shipments of
the pulser circuits and chipsets. We believe that sales to this market for the
remainder of the fiscal year will continue to hold at this increased level due
to the shipments of high-voltage pulsers for the new portable and transportable
systems. New therapeutic applications for ultrasound should also add to the sales in the
second and third fiscal quarters of the current year. We believe that sales to
the Medical Electronic market will show a cyclical strength during our second
fiscal quarter.






Sales to
the Imaging market increased 57% for the three months ended July 2, 2005
compared to the same period a year ago, and increased 75% sequentially. 
The increase in sales year-over-year and sequentially is primarily attributed to
strong shipments of EL backlighting products to cell phone customers augmented
by shipments of driver IC s  to
high-end printer market. The Company forecasts continued strong sales of the EL
backlighting products in backlighting keypads both in cellular phones and in
audio/video remote controllers and other handheld devices in the second and
third fiscal quarters of 2006.




Page
15 of 27




Sales to
the Telecom market decreased 15% during the three months ended July 2, 2005 when
compared to the same period a year ago but increased 7% sequentially.   The
year-over-year decrease in sales is primarily attributed to the reduced demand
for our legacy products. The sequential improvement in sales is attributed to
increased demand of our HotSwap products despite the decline in demand for our
legacy products. We believe that sales of the HotSwap products will remain
strong as customers ramp up their programs into volume production and from
shipments of chip sets for telecom line protection.






Sales to
other markets decreased 30% during the three months ended July 2, 2005 compared
to the same period a year ago, but increased 30% sequentially.  The
decrease in sales year-over-year is due to the decline in foundry business,
partially offset by the sequential increase in sales of the new LED driver ICs
for the industrial market.






The
Company’s current growth strategy relies on the successful transition of its new
products, and its ability to continuously and successfully introduce and market
the new products and technologies that meet its customers’
requirements.




The
Company's principal markets are in the United States, Europe, and Asia. Sales by
geography as well as year-over-year and sequential percentage change, were as
follows, where international sales include sales to U.S. based customers if the
product is delivered outside the United States:





**Three
      Months Ended***(Dollars
      in thousands)*
    
    
    **July
      2, 2005**
    
    
    **July
      3, 2004**
    
    
    **April
      2, 2005**
    
    
    **Year-Over-Year
      Change**
    
    
    **Sequential
      Change**United
      States
    
    $
    7,350
    
    $
    8,215
    
    $
    6,214
    
    
    -11
    %
    
    18
    %Europe
    
    
    1,305
    
    
    1,558
    
    
    1,176
    
    
    -16
    %
    
    11
    %Japan
    
    
    1,734
    
    
    1,641
    
    
    1,494
    
    
    6
    %
    
    16
    %Asia
      (excluding Japan)
    
    
    3,641
    
    
    2,444
    
    
    2,571
    
    
    49
    %
    
    42
    %Other
    
    
    1,963
    
    
    384
    
    
    388
    
    
    411
    %
    
    406
    %Total
      Sales
    
    $
    15,993
    
    $
    14,242
    
    $
    11,843
    
    
    12
    %
    
    35
    %Domestic
      Sales
    
    $
    7,350
    
    $
    8,215
    
    $
    6,214
    
    
    -11
    %
    
    18
    %International
      Sales
    
    
    8,643
    
    
    6,027
    
    
    5,629
    
    
    43
    %
    
    54
    %Total
      Sales
    
    $
    15,993
    
    $
    14,242
    
    $
    11,843
    
    
    12
    %
    
    35
    %




Net sales
to international customers for the three months ended July 2, 2005 were
$8,643,000 or 54% of the Company’s net sales as compared to $6,027,000 or 42% of
net sales for the same period of the prior fiscal year and $5,629,000 or 48% in
the three months ended April 2, 2005 . 
Sales to
international customers for the three-month period ended July 2, 2005 increased
43% year-over-year and 54% sequentially, primarily due to shipments of EL
backlighting and HotSwap products to customers whose contract manufacturing
vendors are located in China as well as the continuing transfer of end customer
manufacturing from North America to international locations. Sales to domestic
customers decreased 11% year-over-year primarily from the decline in sales of
our foundry products. The 18% sequential increase in sales to domestic customers
in the quarter ended July 2, 2005 compared to the quarter ended April 2, 2005 is
primarily attributed to increase in sales to Medical Electronics
customers.






The
Company's assets are primarily located in the United States.




Page
16 of 27


***Gross
Profit***





Gross
profit represents net sales less cost of sales. Cost of sales includes the cost
of purchasing raw silicon wafers, cost associated with assembly, packaging,
test, quality assurance and product yields, the cost of personnel, facilities,
and equipment associated with manufacturing support and charges for excess
inventory. Gross profit for the quarter ended July 2, 2005 was $9,187,000,
compared to $7,173,000 for the same period of fiscal 2005, and $5,841,000 of the
prior quarter.





**Three
      Months Ended***(Dollars
      in thousands)*
    
    
    **July
      2, 2005**
    
    
    **July
      3, 2004**
    
    
    **April
      2, 2005**Gross
      Margin Percentage
    
    
    57
    %
    
    50
    %
    
    49
    %*Included
      in Gross Margin Percentage Above*Gross
      Margin Benefit from Sale of Previously
      Written
      Down Inventory
    
    
    $   
      257
    
    
    $    285
    
    
    $   
      251Percentage
      of Net Sales
    
    
    2
    %
    
    2
    %
    
    2
    %





Gross
margin, which is gross profit as a percent of sales, was 57% for the three
months ended July 2, 2005 compared to 50% for the same period of the prior
fiscal year and 49%, sequentially. The improvement in gross margin for the
three-month period ended July 2, 2005 over the comparable period in the prior
fiscal year was primarily attributed to the increase in plant capacity
utilization, and to a lesser degree from favorable product mix which consisted
of higher sales of our newer proprietary products replacing declining sales of
the lower margin foundry products.  During the quarter, our manufacturing
activities increased due to increased sales and a build up of inventory to
support an even stronger expected second and third quarter sales.




***Research
and Development (R&D) Expenses***


****


**Three
      Months Ended***(**Dollars
      in thousands)*
    
    
    **July
      2, 2005**
    
    
    **July
      3, 2004**
    
    
    **April
      2, 2005**
    
    
    **Year-Over-Year
      Change**
    
    
    **Sequential
      Change**R&D
      Expenses
    
    
    2,759
    
    
    2,470
    
    
    2,538
    
    
    12
    %
    
    9
    %**
      Percentage
      of Net Sales
    
    
    17
    %
    
    17
    %
    
    21
    %





R&D
expenses, which include payroll and benefits, as well as expensed material and
facility costs associated with the development of new processes and new
products, increased 12% to $2,759,000 for the three months ended July 2, 2005 as
compared to $2,470,000 for the same period of the prior fiscal year, and
increased 9% sequentially from $2,538,000.





Page
17 of 27


The
increase in R&D expenses in absolute dollars year-over-year is primarily
from higher payroll and benefits expenses due to additional headcount, an
increase in data processing expenses and increased manufacturing activity of
prototype products.





As a
percentage of Net Sales, R&D expenses for the quarter ended July 2, 2005 and
for the comparable period of the fiscal 2005 remained at 17%. The Company
expects to keep R&D spending throughout fiscal 2006 at approximately 17% of
net sales.





***Selling,
General and Administrative (SG&A*** **)
Expenses**





**Three
      Months Ended***(Dollars
      in thousands)*
    
    
    **July
      2, 2005**
    
    
    **July
      3, 2004**
    
    
    **April
      2, 2005**
    
    
    **Year-Over-Year
      Change**
    
    
    **Sequential
      Change**SG&A
      Expenses
    
    
    3,188
    
    
    2,402
    
    
    3,183
    
    
    33
    %
    
    <1
    %Percentage
      of Net Sales
    
    
    20
    %
    
    17
    %
    
    27
    %





SG&A
expenses consist primarily of employee-related expenses, commissions to sales
representatives, occupancy expenses including expenses associated with the
Company’s regional sales offices, cost of advertising and publications, and
outside services such as legal, auditing, tax, and Sarbanes-Oxley compliance
services. SG&A expenses for the three months ended July 2, 2005 were
$3,188,000 or 20% of net sales compared to $2,402,000 or 17% of net sales for
the comparable period of fiscal 2005, and $3,183,000 or 27% of net sales for the
three months ended April 2, 2005.





The
$786,000 year-over-year increase in SG&A expenses is primarily attributed to
a $454,000 increase in payroll-related expenses due to increased headcount; an
increase in  commissions
and salesmen’s bonus of $250,000 and an increase in travel and entertainment
expenses of $66,000 resulting from increased sales activities; and a $62,000
increase in expenses for professional services which were partially offset by a
decrease in bad debt expense of $25,000. The comparable quarter of the prior
fiscal year did not reflect the substantial cost of compliance work associated
with the requirements of the Sarbanes-Oxley (SOX) Act of 2002 which was incurred
during the remainder of fiscal 2005. The Company anticipates total SOX cost in
fiscal 2006 to be lower than fiscal 2005.





SG&A
expenses are expected to increase in absolute dollars as the Company expands
sales and marketing presence worldwide. SG&A expenses may fluctuate as a
percentage of sales during each quarter of the current fiscal year.





***Interest
Income and Other Income, Net***





**Three
      Months Ended***(Dollars
      in thousands)*
    
    
    **July
      2, 2005**
    
    
    **July
      3, 2004**
    
    
    **April
      2, 2005**
    
    
    **Year-Over-Year
      Change**
    
    
    **Sequential
      Change**Interest
      Income and Other Income, Net
    
    
    906
    
    
    395
    
    
    444
    
    
    129
    %
    
    104
    %Percentage
      of Net Sales
    
    
    6
    %
    
    3
    %
    
    4
    %





Interest
income, which consists primarily of interest income from our cash, cash
equivalents and short-term investments, was $627,000 and $308,000 for the three
months ended July 2, 2005 and July 3, 2004, respectively. The significant
increases in interest income for the three-month period are primarily due to
increases in cash, cash equivalents and short-term investments and higher
interest rates in the current period compared to the same period of the prior
fiscal year.





Page
18 of 27


Other
income, net, for the three months ended July 2, 2005, was $279,000 and consisted
primarily of an increase in fair market value of investments held by the
Company’s Supplemental Employee Retirement Plan of $186,000. For the comparable
period in fiscal 2005, other income, net, was $87,000 and consisted primarily of
foreign currency exchange gains of $126,000 offset by a decrease in fair market
value of investments held by the Company’s Supplemental Employee Retirement Plan
of $55,000.





***Provision
for Income Taxes***





Provision
for income taxes represents federal, state and foreign taxes. The provision for
income taxes for the three months ended July 2, 2005 was $1,327,000 at the
effective tax rate of 32%, compared to $836,000 and 31% for the same period in
the prior fiscal year.





**Financial
Condition**





***Overview***





The
Company ended the first quarter of fiscal 2006 with $90,898,000 in cash, cash
equivalents, and short-term investments. This represents an increase of
$2,481,000 when compared with the amount of $88,417,000 on April 2, 2005. As of
July 2, 2005, the working capital was $99,423,000, an increase of $2,527,000
from $96,896,000 as of April 2, 2005. Working capital is defined as current
assets less current liabilities. The increase in working capital was mostly the
result of cash generated by operations.





***Liquidity
and Capital Resources***


******


The
Company’s cash and cash equivalents decreased $27,875,000 during the three
months ended July 2, 2005 to $10,759,000 from $38,634,000 at April 2, 2005. The
decrease in cash and cash equivalents during the three-month period is due to
cash used in investing activities of $30,460,000, as we moved cash into
short-term investments and cash used in financing activities of $556,000, as
offset by positive cash flows from operating activities of
$3,141,000.





The
Company’s operating activities generated cash of $3,141,000 for the three months
ended July 2, 2005, compared to $3,418,000, for the same period in the prior
fiscal year. The positive cash flows from operating activities were primarily
attributable to net income, adjusted for non-cash items. Net operating cash
flows for the three months ended July 2, 2005 were favorably impacted by
non-cash charges for depreciation of $680,000, non-cash charges for provisions
relating to inventory of $357,000, offset by non-cash reduction in provisions
for doubtful accounts and sales returns totaling $398,000.  Working
capital sources of cash included an increase in income taxes payable of
$1,322,000 due to higher income and an increase in accounts payable and accrued
expenses of $644,000 primarily from timing of payments and increased accruals
for employee benefits payable. Working capital uses of cash included an increase
of inventories of $843,000 to support higher projected second and third fiscal
quarter sales, an increase in accounts receivable of $807,000 due primarily to
higher sales, a decrease in deferred revenue of $428,000, and an increase in
short-term investments categorized as trading securities of
$305,000.





Net cash
used in investing activities in the three months ended July 2, 2005 was
$30,460,000, primarily for purchases of short-term investments categorized as
available for sale of $218,100,000 and purchases of property, plant and
equipment of $409,000, partially offset by $188,049,000, proceeds from sales of
short-term investments categorized as available for sale. In the comparable
period in fiscal 2005, net cash used in investing activities was $12,555,000,
primarily for purchases of short-term investments categorized as available for
sale of $85,225,000 and purchases of property of $355,000, partially offset by
$73,025,000 proceeds from sales of short-term investments categorized as
available for sale.





Page
19 of 27


Net cash
used in financing activities during the three months ended July 2, 2005, was
$556,000, which consisted primarily of common stock repurchase of $1,080,000,
partially offset by proceeds from employee exercises of stock options under the
current and former option plans of $373,000 and proceeds from employee purchases
of stocks under the ESPP of $151,000. During the three-month period, the Company
bought back 67,900 shares of the Company’s common stock in open market for the
total amount of $1,080,000. The repurchase prices ranged from $15.45 to $17.05
with a weighted average price of $15.91. Such repurchases were made under the
repurchase program, which was approved by the Board of Directors. ** In the
comparable ** period in
fiscal 2005, net cash provided by financing activities was $214,000, which
consisted of proceeds from employee exercises of stock options under the stock
option plans of $336,000, proceeds from employee purchases of stocks under the
ESPP of $153,000, offset by cash used in common stock repurchases of $275,000
for the purchase 18,900 shares of common stock with a weighted average price of
$14.56.





The
Company expects to spend approximately $1,976,000 for capital acquisitions for
the remainder of fiscal 2006. Planned capital expenditure for fiscal 2006 is
slightly less than prior fiscal years. The Company believes that it has
substantial production capacity in place to handle any projected increase in
business for this fiscal year. The Company also believes that existing cash,
cash equivalents and short-term investments, together with cash flow from
operations, will be sufficient to meet liquidity and capital requirements
through the next twelve months.





***Off-Balance
Sheet Arrangements***





The
Company does not have and never had any off-balance sheet arrangements that
have, or are reasonably likely to have, a current or future effect upon the
financial condition, revenues, expenses, results of operations, liquidity,
capital expenditures or capital resources that are material to investors.





***Contractual
Obligations***





The
following table summarizes the Company’s significant contractual cash
obligations at July 2, 2005, and the effect such obligations are expected to
have on liquidity and cash flow in future periods (in thousands):





**Payment
      Due by Year****Contractual
      Obligations**
    
    
    **Total**
    
    
    **Less
      than 1 Year**
    
    
    **2-3
      Years**
    
    
    **4-5
      Years**
    
    
    **After
      5 Years**Operating
      lease obligations(1)
    
    $
    5,473
    
    $
    1,020
    
    $
    1,821
    
    $
    1,829
    
    $
    803Purchase
      obligations(2)
    
    
    4,847
    
    
    4,847
    
    
    --
    
    
    --
    
    
    --Total
      contractual cash obligations
    
    **$**
    **10,320**
    
    **$**
    **5,867**
    
    **$**
    **1,821**
    
    **$**
    **1,829**
    
    **$**
    **803**





*(1)
The Company leases facilities under non-cancelable lease agreements expiring at
various times through April 2011. Rental expense net of sublease income for the
quarter ending July 2, 2005, amounted to $199,000.*





*(2)
To obtain favorable pricing and resource commitment, the Company commits to
volume purchases from suppliers of manufacturing materials and
services.*





***Recent
Accounting Pronouncements***





In May
2005, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 154, Accounting Changes and Error
Corrections. SFAS 154 replaces APB Opinion No. 20, Accounting Changes, and SFAS
3, Reporting Accounting Changes in Interim Financial Statements, and changes the
requirements for the accounting for and reporting of a change in accounting
principle. The Company is required to adopt SFAS 154 for accounting changes and
error corrections at the beginning of fiscal 2007. The Company’s results of
operations and financial condition will only be impacted by SFAS 154 if it
implements changes in accounting principle that are addressed by the standard or
corrects accounting errors in future periods.





Page
20 of 27


In March
2005, the FASB issued Interpretation No. 47, Accounting for Conditional Asset
Retirement Obligations, which clarifies that an entity is required to recognize
a liability for the fair value of a conditional asset retirement obligation if
the fair value can be reasonably estimated even though uncertainty exists about
the timing and (or) method of settlement. The Company is required to adopt
Interpretation No. 47 by the end of fiscal 2006. The Company is currently
assessing the impact of Interpretation No. 47 on its results of operations and
financial condition.





In
December 2004, the FASB issued SFAS No. 153, “ *Exchanges
of Non-monetary Assets, an amendment of APB Opinion No. 29* ” (SFAS
153). SFAS 153 replaces the exception from fair value measurement in APB Opinion
No. 29 for non-monetary exchanges of similar productive assets with a general
exception from fair value measurement for exchanges of non-monetary assets that
do not have commercial substance. A non-monetary exchange has commercial
substance if the future cash flows of the entity are expected to change
significantly as a result of the exchange. SFAS 153 is to be applied
prospectively and is effective for fiscal periods beginning after June 15, 2005.
The Company does not expect the adoption of SFAS 153 to have a material impact
on the overall results of operations or financial position.





In
December 2004, FASB issued Statement No. 123 (revised 2004), or SFAS 123R,
“Share-Based Payment.” This statement replaces SFAS 123, “Accounting for
Stock-Based Compensation” and supersedes Accounting Principles Board’s Opinion
No. 25 (ABP 25), “Accounting for Stock Issued to Employees”. SFAS 123R will
require the Company to measure the cost of its employee stock-based compensation
awards granted after the effective date based on the grant date fair value of
those awards and to record that cost as compensation expense over the period
during which the employee is required to perform services in exchange for the
award (generally over the vesting period of the award). In addition, it will be
required to record compensation expense (as previous awards continue to vest)
for the unvested portion of previously granted awards that remain outstanding at
the date of adoption. In April 2005, the U.S. Securities and Exchange Commission
(the “SEC”) announced a deferral of the effective date of SFAS 123R to the
registrant’s fiscal year beginning on or after June 15, 2005. The Company is
therefore required to implement the standard beginning in its fiscal year 2007.
In addition, the SEC issued Staff Accounting Bulletin No. 107, or (SAB 107) in
March 2005. SAB 107 includes interpretive guidance for the initial
implementation of SFAS 123R. The Company is currently evaluating the impact of
the SFAS 123R on its financial statements.





In
November 2004, the FASB issued SFAS No. 151, “ *Inventory
Costs,*  *an
amendment of ARB No.43, Chapter 4”* (SFAS
151). This statement amends the guidance in ARB No. 43, Chapter 4, “ *Inventory
Pricing* ” to
clarify the accounting for abnormal amounts of idle facility expense, freight,
handling costs, and wasted material (spoilage). SFAS 151 requires that those
items be recognized as current-period charges. In addition, this Statement
requires that allocation of fixed production overheads to costs of conversion be
based upon the normal capacity of the production facilities. The provisions of
SFAS 151 are effective for inventory cost incurred in fiscal years beginning
after June 15, 2005. As such, the Company is required to adopt these provisions
at the beginning of fiscal 2007. The Company is currently evaluating the impact
of SFAS 151 on its consolidated financial statements.





***Available
Information***





The
Company files electronically with the SEC its annual reports on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments, if
any, to those reports pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934. The SEC maintains an Internet site at http://sec.gov that
contains reports, proxy and information statements and other information
regarding the Company. The Company makes available free of charge and through
its Internet website at www.supertex.com copies
of these reports as soon as reasonably practicable after filing or furnishing
the information to the SEC. Copies of such documents may be requested by
contacting the Company’s Investor Relations department at (408)
222-4887.








Page 21 of
27





**Item
3. - Quantitative and Qualitative Disclosures About Market Risk and Interest
Rate Risk.**





The
Company is exposed to financial market risks due primarily to changes in
interest rates. The Company does not use derivatives to alter the interest
characteristics of its investment securities. The Company has no holdings of
derivative or commodity instruments, and its holdings are for purposes other
than trading purposes. The Company's portfolio is primarily comprised of fixed
rate securities.  The fair value of these fixed rate securities may be
affected by a rise in interest rates; however, the Company believes that the
impact would be minimal since the maturities of these securities are short,
typically no more than 35 days.





To date,
our international customer agreements have been denominated solely in U.S.
dollars, and accordingly, we have not been exposed to foreign currency exchange
rate fluctuations related to customer agreements, and do not currently engage in
foreign currency hedging transactions. However, the functional currency of our
operations in Hong Kong is the U.S. dollar and as the local expenditures are
denominated in the local currency of Hong Kong, we are subject to foreign
currency exchange rate fluctuations associated with remeasurement to U.S.
dollars. We do not enter into forward exchange contracts as a hedge against
foreign currency exchange risk on transactions denominated in foreign currencies
or for speculative or trading purposes. A hypothetical change of 10% in the
foreign currency exchange rates would not have a material impact on our
consolidated financial position or results of operations.





**Item
4. - Controls and Procedures.**





**(a)
Disclosure Controls and Procedures.**





*Disclosure
Controls and Procedures* *.* The
Company’s disclosure controls and procedures are designed to ensure that
information required to be disclosed in the Company’s reports filed under the
Securities Exchange Act of 1934 is recorded, processed, summarized, and reported
within the time periods specified in the SEC’s rules and forms, including,
without limitation, that such information is accumulated and communicated to
Company management, including the Company’s principal executive and financial
officer, as appropriate to allow timely decisions regarding required
disclosures.





*Limitations
on the Effectiveness of Disclosure Controls* *.* In
designing and evaluating the Company’s disclosure controls and procedures,
management recognized that disclosure controls and procedures, no matter how
well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the disclosure controls and procedures are met.
Additionally, in designing disclosure controls and procedures, Company
management necessarily was required to apply its judgment in evaluating the
cost-benefit relationship of possible disclosure controls and procedures. The
design of any disclosure controls and procedures also is based in part upon
certain assumptions about the likelihood of future events, and there can be no
assurance that any design will succeed in achieving its stated goals under all
potential future conditions.





*Evaluation
of Disclosure Controls and Procedures.* The
Company’s principal executive and financial officer has evaluated the
effectiveness of the design and operation of the Company’s disclosure controls
and procedures as defined in Exchange Act Rules 13a-14(c) as of July 2, 2005,
and has determined that they are reasonably effective, taking into account the
totality of the circumstances, including the limitations described
above.








**(b)
Internal Control over Financial Reporting.**





Our
internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) is designed to provide reasonable assurance regarding
the reliability of our financial reporting and preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles. There were no significant changes in the Company’s
internal control over financial reporting that occurred during the first quarter
of fiscal 2006 that have materially affected, or are reasonably likely to
materially affect, such control.








Page 22 of
27





**PART
II - OTHER INFORMATION**





**Item
1. - Legal Proceedings**





From time
to time the Company is subject to possible claims or assessments from third
parties arising in the normal course of business. Management has reviewed such
possible claims and assessments with legal counsel and believes that it is
unlikely that they will result in a material adverse impact on the Company’s
financial position or results of operations. ******





**Item
2.** **-** **Unregistered
Sales of Equity Securities and Use of Proceeds**




The
following is a summary of share repurchase activity by the issuer during the
first quarter ended July 2, 2005:




**Issuer Purchases of Equity Securities**


**Period**
    
    
    **Total
      Number of Shares Purchased****(1)**
    ****
    
    **Average
      Price**
      **Paid
      Per Share**
    
    
    **Total
      Number of Shares Purchased as Part of Publicly Announced****Plans
      or Programs(2)**
    ****
    
    **Maximum
      Number of Shares that May Yet be Purchased Under the****Plans
      or Programs**04/03/05-
      04/30/05
    
    
    --
    
    
    --
    
    
    --
    
    
    852,00005/01/05-
      05/28/05
    
    
    53,400
    
    $
    15.60
    
    
    --
    
    
    798,60005/29/05-
      07/02/05
    
    
    14,500
    
    $
    17.04
    
    
    --
    
    
    784,100**Total**
    
    
    **67,900**
    
    **$**
    **15.91**
    
    
    **--**
    
    
    **784,100**





*(1)*
    *Our
      current share repurchase program, under which we repurchased these 67,900
      shares, has been in place since 1999. We are not certain but do not
      believe we publicly announced this program, although our financial
      statements have reflected purchases from time to time under this program.
      These 67,900 shares were purchased in open market
      transactions.*





*(2)*
    *We
      adopted a share repurchase program in 1992 authorizing the repurchase of
      1,000,000 shares. Our board of directors terminated this program in 1999
      after 938,000 shares had been repurchased and adopted a share repurchase
      program authorizing the repurchase of 900,000 shares plus the 62,000
      shares authorized for repurchase under the 1992 program whose repurchase
      had not been affected. As described in footnote (1), we are not certain
      but do not believe that we publicly announced our 1999 repurchase plan.
      The 1999 repurchase program has no expiration date, other than, unless
      extended, when an aggregate of 962,000 shares have been repurchased.
      Neither this program nor any other repurchase program or plan has expired
      during our first quarter ended July 2, 2005, nor has the Company decided
      to terminate any repurchase plan or program prior to its expiration. There
      are no existing repurchase plans or programs under which the Company does
      not intend to make further purchases.*


****
 **Item
3. - Defaults Upon Senior Securities**
 
 None
 
 **Item
4. - Submission of Matters to a Vote of Security Holders**
 
 None
 
 **Item
5. - Other Information**
 
 None


Page
23 of 27


****
 **Item
6. - Exhibits**





Exhibit
31 - Certification of Chief Executive Officer and Chief Financial Officer
pursuant to Securities and Exchange Act Rules 13a-14(a) and 15d-14(a), as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.





Exhibit
32 - Certification of Chief Executive Officer and Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.

















Page 
24 of
27


SIGNATURE





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.








**


****SUPERTEX,
      INC.**
      *(Registrant)***Date: August 9,
2005
    By:
    /s/ Henry C. PaoHenry
      C. Pao, Ph.D.
      President
      (Principal
      Executive and Financial Officer)








Page
25 of
27





**Exhibit
31**




**Certifications
Under Rule 13a-14(a)/l5d-14(a)**





I, Henry
C. Pao, certify that:





1.  I have
reviewed this quarterly report on Form 10-Q of Supertex, Inc., a California
corporation;





2.  Based on
my knowledge, this quarterly report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly report;





3.  Based on
my knowledge, the financial statements, and other financial information included
in this quarterly report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this quarterly report;





4.  I am
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the registrant and I have:





(a)  designed
such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under my supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to me by others within those entities, particularly during the
period in which this quarterly report is being prepared;





(b)
designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under my supervision, to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles ;





(c)  evaluated
the effectiveness of the registrant's disclosure controls and procedures and
presented in this report my conclusion about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report
based on such evaluation; and





(d)  disclosed
in this report any change in the registrant’s internal control over financial
reporting that occurred during the registrant’s most recent fiscal quarter that
has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and





5.  I have
disclosed, based on my most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent function):





(a)  all
significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to
adversely affect the registrant's ability to record, process, summarize, and
report financial data and have identified for the registrant's auditors any
material weaknesses in internal controls; and





(b)  any
fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant's internal control  over
financial reporting.











Date: August 9,
2005
    
    /s/ Henry C. PaoHenry
      C. Pao, Ph.D.
      Chief
      Executive Officer and Chief Financial Officer
      (Principal Executive and Financial
Officer)





Page
26 of 27


**Exhibit
32**





**Statement
of Chief Executive Officer and Chief Financial Officer under 18 U.S.C.
§ 1350**











I, Henry
C. Pao, the chief executive officer and chief financial officer of Supertex,
Inc., a California corporation (the “Company”), certify pursuant to Section 1350
of Chapter 63 of Title 18 of the United States Code, that to my
knowledge:





(i)
    the
      quarterly report of the Company on Form 10-Q for the period ended
      July 2, 2005, as filed with the Securities and Exchange Commission (the
      “Report”), fully complies with the requirements of Section 13(a) or 15(d),
      whichever is applicable, of the Securities Exchange Act of 1934, and





(ii)
    the
      information contained in the Report fairly presents, in all material
      respects, the financial condition and results of operations of the Company
      at the dates and for the periods indicated.








Date: August 9,
2005
    
    /s/ Henry C. PaoHenry
      C. Pao, Ph.D.
      Chief
      Executive Officer and Chief Financial
Officer








*The
material contained in this Exhibit 32 is not deemed “filed” with the SEC and is
not to be incorporated by reference into any filing of the Company under the
Securities Act of 1933 or the Securities Exchange Act of 1934, whether made
before or after the date hereof and irrespective of any general incorporation
language contained in such filing.*





Page
27 of 27