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                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 June 30, 1997

                                       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 0-24758

                            MICRO LINEAR CORPORATION
             (Exact name of Registrant as specified in its charter)

                     Delaware                         94-2910085
         (State or other jurisdiction of          (I.R.S. Employer
          incorporation or organization)        Identification Number)

               2092 Concourse Drive                      95131
               San Jose, California                   (Zip Code)
     (Address of principal executive offices)

       Registrant's telephone number, including area code: (408) 433-5200
           Securities registered pursuant to Section 12(g) of the Act:
                          Common Stock, $.001 Par Value

    Indicate by check mark whether the  Registrant  (1) has filed all reports 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 [ ]

    The number of shares of the Registrant's Common Stock outstanding as of June
30, 1997 was 11,902,730.


<PAGE>
<TABLE>
<CAPTION>


                                                 TABLE OF CONTENTS

                                                                                                    Page
         PART I.     FINANCIAL INFORMATION

         Item 1.     Financial Statements
<S>                                                                                                  <C>

                     Consolidated Condensed Statements of Income for the three and six months               
                     ended June 30, 1997 and 1996...............................................      3

                     Consolidated Condensed Balance Sheets at June 30, 1997 and December 31, 1996     4

                     Consolidated Condensed Statements of Cash Flows for the six months ended
                     June 30, 1997 and 1996......................................................     5

                     Notes to Consolidated Condensed Financial Statements........................     6

         Item 2.     Management's Discussion and Analysis of Financial Condition and Results of
                        Operations...............................................................     8

         PART II.    OTHER INFORMATION

         Item 1.     Legal Proceedings ..........................................................     14

         Item 4.     Submission of Matters to a Vote of Security Holders.........................     15

         Item 6.     Exhibits and Reports on Form 8-K............................................     15

         SIGNATURES..............................................................................     16
</TABLE>


<PAGE>
<TABLE>
<CAPTION>
                                                    
                                      PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

                                         MICRO LINEAR CORPORATION
                               CONSOLIDATED CONDENSED STATEMENTS OF INCOME
                                               (Unaudited)
                                 (In thousands, except per share amounts)

                                                                Three Months Ended           Six Months Ended
                                                             -------------------------   --------------------------
<S>                                                           <C>           <C>           <C>           <C>
                                                              June 30,      June 30,      June 30,      June 30,
                                                                1997          1996          1997          1996
                                                             -----------   -----------   ------------  ------------
Net revenues...........................................        $19,502       $13,631        $35,639       $28,958
Cost of revenues.......................................          9,439         4,684         16,394         9,781
                                                             -----------   -----------   ------------  ------------
   Gross profit........................................         10,063         8,947         19,245        19,177
Operating expenses:
   Research and development............................          3,274         3,214          5,831         5,871
   Selling, general and administrative.................          3,169         2,953          6,607         5,834
                                                             -----------   -----------   ------------  ------------
                                                                 6,443         6,167         12,438        11,705
                                                             -----------   -----------   ------------  ------------
   Income from operations..............................          3,620         2,780          6,807         7,472
Interest and other income..............................            335           358            663           717
Interest expense.......................................            (70)          (78)          (141)         (158)
                                                             -----------   -----------   ------------  ------------
   Income before taxes.................................          3,885         3,060          7,329         8,031
Provision for income taxes.............................          1,399         1,224          2,638         3,212
                                                             -----------   -----------   ------------  ------------
   Net income..........................................       $  2,486      $  1,836       $  4,691      $  4,819
                                                             ===========   ===========   ============  ============

Net income per share...................................      $    0.19     $    0.14      $    0.35     $    0.36
                                                             ===========   ===========   ============  ============

Shares used in computing net income per share                   13,394        13,495         13,363        13,518
                                                             ===========   ===========   ============  ============

<FN>
                              See accompanying notes to consolidated condensed financial statements.
</FN>
</TABLE>
                                                                 3

<PAGE>
<TABLE>
<CAPTION>

                                         MICRO LINEAR CORPORATION
                                  CONSOLIDATED CONDENSED BALANCE SHEETS
                                 (In thousands, except per share amounts)

<S>                                                                                         <C>                     <C>
                                                                                               June 30,              December 31,
                                                                                                 1997                    1996
                                                                                             (Unaudited)           (See note below)
Assets                                                                                   -------------------   ---------------------
Current assets:
   Cash and cash equivalents...........................................................      $2,773                  $4,385
   Short-term investments..............................................................      22,236                  20,798
   Accounts receivable, net of allowance for doubtful accounts of $273 and $243........       7,421                   4,372
   Inventories.........................................................................       9,997                  10,456
   Deferred tax assets.................................................................       3,930                   4,499
   Other current assets................................................................       1,117                   2,077
                                                                                         -------------------   ---------------------
     Total current assets..............................................................      47,474                  46,587
                                                                                         -------------------   ---------------------
Property, plant and equipment..........................................................      40,793                  38,095
Less accumulated depreciation and amortization.........................................     (18,635 )               (16,441  )
                                                                                         -------------------   ---------------------
                                                                                             22,158                  21,654
Other assets...........................................................................         736                     791
                                                                                         -------------------   ---------------------
       Total assets....................................................................     $70,368                 $69,032
                                                                                         ===================   =====================

Liabilities and Stockholders' Equity 
Current liabilities:
   Accounts payable....................................................................     $  3,944                $  2,732
   Accrued liabilities.................................................................        3,047                   3,580
   Deferred income on shipments to distributors........................................        1,587                   1,270
   Current portion of long-term debt...................................................          152                     209
                                                                                         -------------------   ---------------------
     Total current liabilities.........................................................        8,730                   7,791
                                                                                         -------------------   ---------------------
Long-term debt.........................................................................        2,898                   2,972
                                                                                         -------------------   ---------------------
Commitments and contingencies
Stockholders' equity:
   Preferred stock, $.001 par value
     Authorized shares 5,000,000
     None issued and outstanding..............................................                     -                       -
   Common stock, $.001 par value
     Authorized shares 30,000,000; issued shares 13,043,730 and 12,810,080; outstanding
       shares 11,902,730 and 12,054,080 ...............................................           13                      13
   Additional paid-in capital..........................................................       51,392                  50,501
   Retained earnings...................................................................       18,129                  13,435
   Treasury stock, 1,141,000 and 756,000 shares at cost................................      (10,794 )               (5,680)
                                                                                         -------------------   ---------------------
     Total stockholders' equity........................................................       58,740                  58,269
                                                                                         -------------------   ---------------------
       Total liabilities and stockholders' equity......................................      $70,368                 $69,032
                                                                                         ===================   =====================
<FN>
Note: The balance sheet at December 31, 1996 has been derived from the consolidated audited financial statements at that date.


                              See accompanying notes to consolidated condensed financial statements.
</FN>
</TABLE>
                                                                 4
<PAGE>
<TABLE>
<CAPTION>


                                         MICRO LINEAR CORPORATION
                             CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                               (Unaudited)
                                              (In thousands)

                                                                                         Six Months Ended
                                                                                ------------------------------------
<S>                                                                                    <C>                   <C>
                                                                                  June 30,              June 30,
                                                                                    1997                  1996
                                                                                --------------       ---------------
Cash provided by operating activities.........................................       $  6,878              $  2,475

Investing activities:
   Capital expenditures.......................................................         (2,698 )              (2,907 )
   Purchases of short-term investments........................................        (22,613 )             (13,938 )
   Sales of short-term investments............................................         21,175                16,194
                                                                                --------------       ---------------
     Net cash used in investing activities....................................         (4,136 )                (651 )

Financing activities:
   Principal payments under capital lease obligations and debt................           (131 )                (297 )
   Proceeds from issuance of common stock.....................................            891                   694
   Acquisition of treasury stock..............................................         (5,114 )              (2,691 )
                                                                                --------------       ---------------
     Net cash used in financing activities....................................         (4,354 )              (2,294 )
                                                                                --------------       ---------------

Net decrease in cash and cash equivalents.....................................         (1,612 )                (470 )
Cash and cash equivalents at beginning of period..............................          4,385                 4,175
                                                                                --------------       ---------------
Cash and cash equivalents at end of period....................................         $2,773                $3,705
                                                                                ==============       ===============
<FN>
                              See accompanying notes to consolidated condensed financial statements.
</FN>
</TABLE>
                                       
                                                                 5

<PAGE>

                            MICRO LINEAR CORPORATION

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)

1)   Micro Linear Corporation (the "Company") designs, develops and markets high
     performance  analog and mixed signal integrated  circuits for a broad range
     of applications within the communications,  computer and industrial markets
     for sale primarily in North America, Asia and Europe.

2)   The accompanying  interim financial  statements are unaudited and have been
     prepared by the Company in accordance  with generally  accepted  accounting
     principles  and contain all  adjustments  (consisting  of normal  recurring
     adjustments) to fairly present the financial  information  included.  While
     the  Company  believes  that  the  disclosures  are  adequate  to make  the
     information not misleading, it is suggested that these financial statements
     be read in  conjunction  with the Company's  Annual Report on Form 10-K for
     the year ended December 31, 1996. The results of operations for the interim
     periods shown in this report are not  necessarily  indicative of results to
     be expected for the fiscal year or any subsequent, interim period.

3)   For financial  reporting  purposes,  the Company's  fiscal year ends on the
     Sunday closest to December 31. Fiscal year 1996 ended on December 29, 1996.
     The Company's  fiscal quarters end on the Sunday closest to the end of each
     calendar quarter.  For presentation  purposes,  the accompanying  unaudited
     consolidated condensed financial statements refer to the quarters' calendar
     month end for convenience.

     The  preparation  of financial  statements  in  conformity  with  generally
     accepted  accounting  principles  requires management to make estimates and
     assumptions  that affect the reported amounts of assets and liabilities and
     disclosure  of  contingent  assets  and  liabilities  at  the  date  of the
     financial  statements  and the  reported  amounts of revenues  and expenses
     during  the  reporting  period.  Actual  results  could  differ  from those
     estimates.

4)   During the three months ended June 30, 1997, three customers  accounted for
     16%, 14% and 12% of total sales, respectively.  During the six months ended
     June 30,  1997,  three  customers  accounted  for 16%, 13% and 10% of total
     sales, respectively.

5)   Inventories consist of the following (in thousands):
<TABLE>

<S>                                                        <C>                  <C>
                                                      June 30,         December 31,
                                                        1997               1996
                                                    -------------    -----------------
            Raw Materials........................      $  879            $ 1,688
            Work-in-process......................       7,181              6,398
            Finished Goods.......................       1,937              2,370
                                                      -------            -------
                                                       $9,997            $10,456
                                                       ======            =======
</TABLE>


6)    Cash used for the six months ended June 30, 1997 was $1,713,000 for 
      incomes taxes and $140,000 for interest.

7)   The  Company's  provision  for taxes on income is based on estimates of the
     levels of income and certain deductions  expected for the year which may be
     subject to change. The Company's  effective tax rate for the second quarter
     of 1997  was 36%  compared  to 40% for the  second  quarter  of  1996.  The
     effective tax rate for the second quarter of 1997 and the second quarter of
     1996 differs from the federal  statutory  income tax rate  primarily due to
     state income  taxes,  net of federal  research  credits and, for 1997,  the
     benefit from a foreign sales corporation.

                                       6

<PAGE>


       NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)
                                   (Unaudited)

8)   From  January  1996  through  the end of the second  quarter  of 1997,  the
     Company's Board of Directors has approved the repurchase of an aggregate of
     $11.0  million of the Company's  Common Stock in stock  repurchase 
     programs,  of which the  Company  had  repurchased  1,141,000  shares at an
     aggregate  cost of  $10.8  million  through  June  30,  1997.  The  Company
     repurchased  245,000  shares  at a cost of $3.1  million  during  the first
     quarter of 1997 and  140,000  shares at a cost of $2.0  million  during the
     second quarter of 1997. On July 22, 1997, the Company's  Board of Directors
     authorized  an additional  $2.5 million to be used for an additional  stock
     repurchase program.

9)   Statement of Financial  Accounting  Standards No. 128 (FAS 128),  "Earnings
     Per Share (EPS)",  was issued in February 1997.  Under FAS 128, the Company
     will be required to disclose  basic EPS and diluted EPS for all periods for
     which an income  statement  is  presented,  which will  replace  disclosure
     currently  being  made  for  primary  EPS and  fully-diluted  EPS.  FAS 128
     requires  adoption for fiscal  periods  ending after December 15, 1997. Pro
     forma disclosure of basic EPS and diluted EPS for the current reporting and
     comparable period in the prior year is as follows:

<TABLE>
<CAPTION>
                                Three Months Ended              Six Months Ended
                                      June 30,                      June 30,
                              ------------------------      -------------------------
<S>                             <C>            <C>            <C>             <C> 
Earnings Per Share:             1997           1996           1997            1996
                              ---------      ---------      ---------       ---------

Basic.....................    $   0.21       $   0.15       $   0.39        $   0.39
                              =========      =========      =========       =========
Diluted...................    $   0.19       $   0.14       $   0.35        $   0.36
                              =========      =========      =========       =========
</TABLE>


     In June 1997, FASB issued statement No.130 (FAS 130) "Reporting 
     Comprehensive Income". FAS 130 established standards for reporting and 
     display of comprehensive income and its components in a financial statemen
     that is displayed with a same prominence as other financial statements.
     Comprehensive income as defined includes all changes in equity (net assets)
     during a period from nonowner sources. An example of an item to be included
     in comprehensive income which is excluded in net income would be unrealized
     gains  and  losses  on  available  for  sale  securities.  The  disclosures
     prescribed by FAS 130 must be made beginning with the first period of 1998.

10)  A discussion of certain pending legal  proceedings is included in Item 1 of
     Part II of the  Company's  Form 10-Q for the fiscal  quarter ended June 30,
     1997.  The  Company  continues  to believe  that the final  outcome of such
     matters  discussed will not have a material adverse effect on the Company's
     consolidated financial position or results of operations.  No assurance can
     be given,  however, that these matters will be resolved without the Company
     becoming  obligated to make  payments or to pay other costs to the opposing
     party,  with the  potential  for having an adverse  effect on the Company's
     financial position or its results of operations.
                                       7
<PAGE>
Item 2.  Management's Discussion and Analysis of Financial Condition and 
         Results of Operations

    This  report on Form 10-Q  contains  forward-looking  statements  within the
meaning of Section  27A of the  Securities  Act of 1933 and  Section  21E of the
Securities Exchange Act of 1934. The forward-looking statements contained herein
are  subject  to  certain  factors  that could  cause  actual  results to differ
materially from those projected in the forward-looking  statements. Such factors
include,  but are not limited to, the factors set forth below and  elsewhere  in
this Form 10-Q.

Results of Operations

   Net Revenues

    Net  revenues  were  $19.5  million  for the second  quarter of 1997,  a 43%
increase over net revenues of $13.6 million for the second quarter of 1996 and a
21% increase  over net revenues of $16.1  million for the first quarter of 1997.
Net revenues were $35.6 million for the first six months of 1997, a 23% increase
over net revenues of $29.0 million for the first six month of 1996. Net revenues
for the second  quarter of 1997 compared to the second quarter of 1996 increased
59% in the  communications  market,  28% in the industrial market and 19% in the
computer  market.  Net revenues for the second  quarter of 1997  compared to the
first quarter of 1997  increased 18% in the  communications  market,  46% in the
industrial market and 12% in the computer market. Net revenues for the first six
months of 1997  compared  to the first six months of 1996  increased  31% in the
communications  market,  14% in the  industrial  market and 10% in the  computer
market. The  communications  market includes the computer  networking  equipment
("networking")  sub-market. Net revenues in the networking sub-market were $12.7
million for the second quarter of 1997, a 71% increase over net revenues of $7.4
million in the  networking  sub-market  for the second quarter of 1996 and a 18%
increase over net revenues of $10.8 million for the first quarter of 1997. Sales
of networking products constitutes a substantial  majority of the Company's net 
revenues. Sales of the Company's  networking products accounted for 
approximately 66%, 57% and 47% of net revenues in the first half of 1997, 1996 
and 1995,  respectively. The networking  sub-market is characterized by intense 
competition,  relatively short  product life cycles and rapid  technological  
change.  In  addition,  the network  sub-market  has undergone a period of rapid
growth,  price erosion and consolidation in recent years. Although the Company 
has expanded its product mix and  customer  base,  the  Company  expects its  
dependency  on sales to network equipment  manufacturers to continue for the 
near future. The Company's business and results of  operations  would be 
materially  and  adversely  affected in the event of a significant slowdown in 
the computer networking equipment market.

    The  Company's  bookings  rate  decreased  by  $6.6  million,  or 29% of net
bookings,  in the  second  quarter of 1997  compared  to net  bookings  of $22.6
million for the first  quarter of 1997.  The  bookings in the second  quarter of
1997 in the communications  market segment decreased  approximately 41% compared
to the first  quarter of 1997.  The decrease in  communications  market  segment
orders were for both domestic and Taiwan  customers.  The bookings in the second
quarter of 1997 in the  computer  market  segment  decreased  approximately  48%
compared  to the first  quarter of 1997.  The  decrease in the  computer  market
segment was mainly due to lower orders for hard disk drive parts, primarily from
a single Japanese  customer.  The Company  currently expects the reduced booking
rates to  continue  through at least the third  quarter of 1997.  These  reduced
bookings will have a material  adverse  effect on the  Company's  revenues and
results of operations in the second half of fiscal 1997.

    During the three months ended June 30, 1997,  three customers  accounted for
16%, 14% and 12% of total sales, respectively.  During the six months ended June
30,  1997,  three  customers  accounted  for 16%,  13% and 10% of  total  sales,
respectively.

    The Company's markets are characterized by intense  competition,  relatively
short product life cycles and rapid technological  changes.  In addition,  these
markets have undergone rapid growth and consolidation in the last few years. The
Company's  net  revenues  and  results of  operations  would be  materially  and
adversely  affected  in  the  event  of a  market  slowdown,  especially  in the
networking segment.

    International net revenues were $11.6 million, or 60% of net revenues, for
the second quarter of 1997, compared to $6.1 million, or 45% of net revenues,  
for the second quarter of 1996 and $8.1 million, or 50% of net revenues, for the
first quarter of 1997. International revenues were $19.7 million, or 55% of net 
revenues, for the first six months of 1997, compared to $11.1 million, or 38% of
net revenues, for the first six months of 1996. The increase in  international 
revenues for the second  quarter of 1997 compared to the second quarter of 1996 
and first quarter of 1997 and also the first half of 1997 compared to the first 
half of 1996 was due to the combination of stronger demand for the  Company's 
products in Asia and Europe and more Asia Pacific subcontract work for domestic 
customers.
                                       8
<PAGE>
    Domestic distributor revenues were approximately 13% of net revenues for the
second quarter of 1997, 17% of net revenues for the second quarter of 1996 and
17%  for  the  first  quarter  of  1997.  Domestic   distributor  revenues  were
approximately  15% and 16% of net  revenues for the first six months of 1997 and
first six months of 1996, respectively. Domestic  distributor  revenues  as a
percent of net revenues for the second quarter of 1997 were lower than those for
the second quarter of 1996 and the first quarter of 1997 primarily due to OEM 
net revenues increasing more than domestic distributor net revenues and a short 
term adjustment in inventory profiles of some of the larger domestic distributor
customers. The Company currently expects net revenues to domestic  distributors 
as a percentage of total net revenues to remain at approximately  the same level
as the first quarter of 1997. The Company defers  recognition of revenue derived
from sales to domestic distributors until such distributors resell the products 
to their customers; however, revenue is recognized by the Company upon shipment 
to international representatives.

   Gross Margin

    The  Company's  gross  margin is  affected  by the volume of product  sales,
price,  product  mix,  manufacturing  utilization,   product  yields,  inventory
obsolescence  and the mix of sales to OEM's and to  distributors.  The Company's
gross margin has been and will continue to be periodically  affected by expenses
incurred  in  connection   with  start-up  and   installation   of  new  process
technologies at outside manufacturing foundries.

    The Company's  gross margin  decreased to 52% in the second  quarter of 1997
from 66% in the second quarter of 1996 primarily due to a change in product mix.
The Company's gross margin decreased to 54% for the first six months of 1997 
from 66% for the first six months of 1996. The Company's gross margin  decreased
to 52% in the second quarter of 1997 from 57% in the second quarter of 1996. The
Company's  products in the  communications  market generally have higher margins
than the Company's  other products,  however  shipments in the second quarter of
1997 included a larger portion of lower margin communications products. In 
addition, a recent increase in pricing pressure, particularly in the 
communication market has had negative impact on gross margin. 

    The Company's gross margins are adversely  impacted by the costs associated 
with installing  new  processes at its  foundries.  Although the Company has 
recently been able to mitigate  the adverse  impact on gross margin  associated 
with new wafer manufacturing  process costs by relying upon process technologies
existing at its outside wafer foundries,  there can be no assurance that the 
Company will not be required  to incur  significant  expenses  in the future to 
develop,  or obtain access to, advanced process technologies and to transfer 
and install such technologies  at one or more  of its  foundries,  which  could 
have a  material adverse  affect on the  Company's  gross  margin in the future.
Any delays or interruptions due to such factors as inadequate capacity or 
unavailable  raw materials in the Company's wafer suppliers or assembly  vendors
could materially and adversely affect product shipments and operating results. 
The Company currently purchases its wafers from six wafer suppliers. A 
substantial majority of the Company's  wafer supply is obtained from three wafer
suppliers.  The Company's  products are assembled and packaged by four vendors. 
The majority of the Company's products are assembled and packaged by one vendor.
Any delays or interruptions due to such factors as inadequate capacity or 
unavailable raw materials in the Company's wafer suppliers or assembly  vendors 
could materially and adversely affect product shipments. The Company purchases 
nearly all of its BiCMOS wafers from two wafer foundries, the majority of which 
are supplied by one wafer foundry in Taiwan. Although both wafer foundries are 
qualified to supply the Company with BiCMOS wafers, the Company's short-term  
BiCMOS wafer supply could be materially and adversely affected if the wafer 
foundry in Taiwan is unable to meet the Company's wafer supply requirements.  
Approximately one-third of the Company's bipolar wafers are purchased from a 
wafer foundry in Japan and have pricing contracts that are tied to currency  
fluctuations of the yen. Wafer pricing for this foundry is adjusted every 6 
months, either up or down, depending on the movement of the yen. The Company 
does not anticipate that this pricing agreement will have a material effect on 
the Company's results of operations; however, due to the  uncertainty of the
currency markets and the recent fluctuations of the yen versus the U.S. dollar, 
there can be no assurance that significant fluctuations in currency values will 
not have a material adverse effect on gross margin in the future due to the 
impact of such  fluctuations on this contract or other contracts the Company has
with foundries in Japan. See "Other Factors Affecting Operating Results".  

   Research and Development Expenses

    Research  and  development   expenses  include  costs  associated  with  the
definition,  design and development of standard and semi-standard products, tile
arrays  and  standard  cells.  The  Company  expenses  prototype  wafers and new
production mask sets related to new products as research and  development  costs
until products based on new designs are fully  characterized  by the Company and
                                      9
<PAGE>
are demonstrated to support published data sheets and satisfy reliability tests.
The Company  believes that the development  and  introduction of new products is
critical to its future success.  Research and development  expenses such as mask
and  silicon  costs that are  related to the  development  of new  products  can
fluctuate  from  quarter to  quarter  due to the  timing of the  product  design
process.

    Research and development expenses were $3.3 million, or 17% of net revenues,
for  the  second  quarter  of  1997,  compared  to $3.2  million,  or 24% of net
revenues,  for the  second  quarter  of 1996  and  $2.6  million,  or 16% of net
revenues,  for the first quarter of 1997. Research and development expenses were
$5.8 million, or 16% of net revenues, for the first six months of 1997, compared
to $5.9 million,  or 20% of net revenues,  in the first six months of 1996.  The
slight increase in research and development  expenses in absolute dollars in the
second  quarter  of 1997  compared  to the second  quarter of 1996 is  primarily
attributable  to an increase in staffing  levels,  and mask  expenses  offset by
fewer  purchases  of expensed  inventory  and  foundry  charges for  expedited
processing. The slight decrease in research and development expenses in absolute
dollars  in the  first  half  of  1997  compared  to the  first  half of 1996 is
primarily  attributable  to lower  prototype  product costs  associated with new
product  development,  mask,  fabrication  and foundry charges for expedited 
processing being  offset by increased  compensation  costs.  In the  fourth  
quarter  of 1996,  the  Company announced the establishment of a design center 
in Cambridge,  England. The first managing director for the Cambridge  location 
was hired in December 1996 and two design  engineers were hired in the first 
half of 1997.  The Company  expects to add  additional  design  engineers in  
Cambridge  throughout  1997.  The Company believes that the  development  and  
introduction of new products is critical to its future  success and expects that
research and development expenses will increase in the future in absolute 
dollars.

   Selling, General and Administrative

    Selling,  general and administrative  expenses were $3.3 million,  or 16% of
net revenues,  for the second quarter of 1997,  compared to $3.2 million, or 24%
of net revenues,  for the second quarter of 1996 and $3.4 million, or 21% of net
revenues,  for the first quarter of 1997.  Selling,  general and  administrative
expenses were $6.6 million, or 19% of net revenues,  for the first six months of
1997 compared to $5.9 million, or 20% of net revenues,  for the first six months
of 1996. The increase in absolute dollars in the second quarter of 1997 compared
to the second  quarter  of 1996 is  primarily  attributable  to an  increase  in
staffing  levels.  The increases in absolute  dollars in the first half of 1997
compared to the first half of 1996 is primarily  attributable  to an increase in
staffing  levels,  increased  commissions  due  to  higher  revenues,   business
conference  expenses,  and legal fees  being  offset by lower  advertising,  and
databook expenses. The Company expects additional spending increases in absolute
dollars in selling, general and administrative expenses in the future.

   Interest and Other Income and Interest Expense

    Interest and other income was $ 0.3 million for the second quarter of 1997, 
the second quarter of 1996 and the first quarter of 1997. Interest expense was  
insignificant for the second quarter of 1997, the second quarter of 1996 and the
first quarter of 1997.

    New Accounting Pronouncements

    In February 1997, the FASB issued  statement No. 128 (FAS 128) "Earning Per
Share". In June 1997, the FASB issued statement No. 130 (FAS 130) "Reporting  
Comprehensive Income". For a description of the statements see note 9 in the 
notes to Consolidated Financial Statements. FAS 128 requires adoption for fiscal
periods ending after December 15, 1997. The disclosures prescribed by FAS 130 
must be made beginning with the first quarter of 1998.

   Provision for Income Taxes

    The  Company's  provision  for taxes on income is based on estimates of the
levels of income and certain deductions  expected for the year which may be 
subject to change. The Company's  effective tax rate for the second quarter of 
1997 was 36% compared to 40% for the second quarter of 1996. The effective tax 
rate for the second quarter of 1997 and the second quarter of 1996 differs from 
the federal statutory income tax rate primarily due to state income  taxes, net
of federal research credits and, for 1997, the benefit from a foreign sales 
corporation.
                                       10
<PAGE>
Liquidity and Capital Resources

    During the last several  years,  the Company has financed its operations and
capital requirements  principally through cash flow from operations.  Operations
provided  $6.9 million of net cash during the first half of 1997, an increase of
$4.4 million over the first half of 1996. The increase in the first half of 1997
compared  to  the  first  half  of  1996  is  primarily  attributable  to  lower
inventories  and  prepaid  expenses  offset by higher  accounts  receivable  and
accrued liabilities.

    Cash used in investing  activities for the first half of 1997 is 
attributable to capital  expenditures of $2.7 million and net purchase of 
short-term investments of $1.4 million.

    Financing  activities for the first half of 1997 consisted  primarily of the
repurchase of the Company's Common Stock for an aggregate of $5.1 million.  From
January 1996 through the end of the second quarter of 1997, the Company's  Board
of Directors has approved the repurchase of an aggregate of $11.0 million of the
Company's  Common  Stock in  several  stock  repurchase  programs,  of which the
Company had repurchased  1,141,000  shares at an aggregate cost of $10.8 million
through June 30, 1997. The Company  repurchased 245,000 shares at a cost of $3.1
million  during the first  quarter of 1997 and 140,000  shares at a cost of $2.0
million during the second quarter of 1997. On July 22, 1997, the Company's Board
of Directors  authorized an additional $2.5 million to be used for an additional
stock repurchase program.

    Working  capital was $38.7  million as of June 30,  1997,  compared to $38.8
million as of December 31, 1996 and includes cash and cash  equivalents  of $2.8
million and short-term investments of $22.2 million as of June 30, 1997.

    The  Company's  liquidity  is affected  by many  factors,  including,  among
others,  the extent to which the Company pursues  additional  wafer  fabrication
capacity from existing foundry suppliers or new suppliers,  and the level of the
Company's  product  development  efforts,  and  other  factors  related  to  the
uncertainties of the industry and global economies.  Although the Company's cash
requirements will fluctuate based on the timing and extent of these factors, the
Company  anticipates  that its existing cash  resources and cash  generated from
operations  will fund  necessary  purchases  of capital  equipment  and  provide
adequate working capital for at least the next twelve months. However, there can
be no  assurance  that events in the future will not require the Company to seek
additional  capital  sooner  or,  if so  required,  that  such  capital  will be
available on terms acceptable to the Company.

Other Factors Affecting Future Operating Results

    The Company's  quarterly and annual operating results are affected by a wide
variety of factors  that could  materially  and  adversely  affect  revenues and
profitability,  including the Company's access to advanced process technologies,
the timing and extent of process  development  costs,  the Company's  ability to
introduce  new  products  on a timely  basis,  the  volume  and timing of orders
received,  market acceptance of the Company's and its customers'  products,  the
timing of new  product  announcements  and  introductions  by the Company or its
competitors,  changes  in the mix of  products  sold,  the  timing and extent of
research and  development  expenses,  the  availability  and cost of wafers from
outside  foundries,  fluctuations in manufacturing  yields,  fluctuations in the
relative  exchange  rate of the yen and the  U.S.  dollar,  competitive  pricing
pressures and cyclical market conditions in the overall  semiconductor  industry
and in the communications,  industrial and computer segments of such industry in
which the Company sells its  products.  A majority of the Company's net revenues
are derived from sales of a limited  number of products.  Historically,  average
selling prices in the semiconductor industry have decreased over the life of any
particular product.  Although the Company has not generally experienced material
decreases  in its average  selling  prices over time,  the  Company's  products,
especially those in the computer  networking  equipment market, have encountered
significant  pricing pressures that have affected the Company's gross margins in
recent quarters.  The Company's  business is characterized by short-term  orders
and  shipment  schedules,  and  customer  orders  typically  can be  canceled or
rescheduled without  significant penalty to the customer.  Due to the absence of
substantial  non-cancelable  backlog, the Company typically plans its production
and inventory levels based on internal  forecasts of customer demand,  which are
highly unpredictable and can fluctuate  substantially.  In addition, the Company
is limited in its  ability to reduce  costs  quickly in  response to any revenue
shortfalls.  As a result  of the  foregoing  or other  factors,  there can be no
assurance that the Company will not experience  material  fluctuations in future
operating  results on a quarterly  or annual  basis which would  materially  and
adversely  affect the  Company's  business,  financial  condition and results of
operations.
                                       11
<PAGE>
    The  markets  for  the  Company's   products  are   characterized  by  rapid
technological  change  and  frequent  new  product   introductions.   To  remain
competitive, the Company must develop or obtain access to advanced semiconductor
process  technologies in order to reduce die size,  increase die performance and
functional  complexity,  and improve  yields.  Semiconductor  design and process
methodologies  are  subject  to  rapid  technological  change,  requiring  large
expenditures for research and  development.  If the Company is unable to develop
or obtain  access to  advanced  wafer  processing  technologies  as they  become
needed, or is unable to define,  design,  develop and introduce  competitive new
products on a timely basis, its future operating  results will be materially and
adversely  affected.  In  addition,  if the  Company is unable to  transfer  and
install  such new  process  technologies  to one or more of its  foundries  in a
timely  manner,  its business and results of operations  could be materially and
adversely affected.

    A  substantial  portion of the Company's net revenues are derived from sales
of  products  for  computer  networking  applications.  Sales  of the  Company's
products to network equipment  manufacturers  accounted for approximately 66% of
the  Company's  net revenues in the first six months of 1997 and accounted for 8
of the 10 top  selling  products  for the  first  six  months  of 1997.  These 8
products  constituted  54% of the  Company's  revenues for the same period.  The
computer  networking  equipment market is characterized by intense  competition,
relatively  short  product  life  cycles  and  rapid  technological  change.  In
addition,  the computer network equipment market has undergone a period of rapid
growth and experienced  consolidation  among the competitors in the market-place
in recent years.  Although the Company has expanded its product mix and customer
base,  the  Company  expects  its  dependency  on  sales  to  network  equipment
manufacturers to continue for the remainder of 1997 and into 1998. The Company's
business and results of operations would be materially and adversely affected in
the event of a significant slowdown in the computer networking equipment market.
In  addition,  as a result of  competitive  pricing  pressures,  the Company has
experienced  lower  margins in certain of its existing  and recently  introduced
products for computer networking applications.  There can be no assurance as to
when such or if such pricing pressures will lessen. Such pricing pressures will
have an adverse affect in the Company's results of operations unless they can be
offset by higher margins on other products or reduced operation expenses.

    The Company does not own or operate a full wafer fabrication  facility,  and
all of the  Company's  wafer  requirements  are  currently  supplied  by outside
foundries. In particular,  a substantial portion of the Company's bipolar wafers
are  manufactured  by one  foundry  in Japan and a  substantial  portion  of the
Company's  BiCMOS wafers are  manufactured  by one foundry in Taiwan.  There are
certain  significant  risks  associated  with the Company's  reliance on outside
foundries,  including the lack of assured wafer supply and control over delivery
schedules,  the  unavailability  of or delays in obtaining access to key process
technologies and limited control over manufacturing yields and production costs.
Although the Company has  undertaken  measures to diversify its sources of wafer
supply and works  closely  with its  foundries  to minimize  the  likelihood  of
reduced  manufacturing  yields,  the Company's  foundries have from time to time
experienced  lower  than  anticipated  manufacturing  yields,   particularly  in
connection  with the  introduction  of new  products  and the  installation  and
start-up  of new  process  technologies.  Such  reduced  yields  have  at  times
materially and adversely affected the Company's  operating results. In addition,
the Company's  reliance upon offshore foundries subjects the Company to risks of
exchange rate  fluctuations,  export and import  restrictions,  trade sanctions,
tariff increases and political instability.

    The Company purchases wafers from its outside foundries pursuant to purchase
orders  and does not have a  guaranteed  level of wafer  capacity  at any of its
foundries.  Therefore,  the Company's wafer suppliers could choose to prioritize
capacity  for other uses or reduce or  eliminate  deliveries  to the  Company on
short notice.  Accordingly,  there is no assurance that the Company's  foundries
will allocate  sufficient wafer capacity to satisfy the Company's  requirements.
Any  sudden  demand for an  increased  amount of wafers or sudden  reduction  or
elimination  of any  existing  source or  sources  of wafers  could  result in a
material  delay in the  shipment  of the  Company's  products.  There  can be no
assurance that material disruptions in supply, which have occurred  periodically
in the past, will not occur in the future.  Any such disruption could materially
and adversely affect the Company's  operating results.  In the event of any such
disruption,  if the  Company  were unable to qualify  alternative  manufacturing
sources for existing or new products in a timely  manner or if such sources were
unable to produce wafers with  acceptable  manufacturing  yields,  the Company's
business and operating results would be materially and adversely affected.

    The Company's market diversification and product development activities have
placed,  and could  continue to place,  a  significant  strain on the  Company's
limited  personnel  and other  resources.  The  Company's  ability to manage any
future growth  effectively  will require it to integrate its new employees  into
its overall  operations,  to continue to improve its operational,  financial and
management  systems and to attract,  train,  motivate  and manage its  employees
successfully.   If  the   Company's   management  is  unable  to  manage  growth
effectively,   the  Company's  business  and  results  of  operations  could  be
materially and adversely affected.
                                       12

    The  semiconductor  industry is  characterized  by rapid  technological  
change, cyclical market patterns,  significant  price erosion,  periods of over-
capacity and  production  shortages,  variations  in  manufacturing  costs and 
yields and significant  expenditures  for capital  equipment and product  
development.  The industry has from time to time experienced  depressed  
business  conditions.  In this regard, since early 1996, the industry has 
experienced significant softness in demand  for many types of  products.  The  
Company  expects  to  continue  to experience substantial period-to-period 
fluctuations in future operating results due to general semiconductor industry 
conditions,  variations in product mix, or other factors.

                                       13
<PAGE>


PART II. OTHER INFORMATION
Item 1.  Legal Proceedings

    In December 1995,  Pioneer Magnetics,  Inc.  ("Pioneer") filed a complaint 
in the Federal District Court for the Central District of California  alleging 
that certain of the Company's  integrated circuits violate a Pioneer patent.  
Pioneer is seeking  monetary  damages and an  injunction  against  such  alleged
patent violation.  The Company has denied any  infringement  and filed a  
counter-claim seeking  invalidity of the patent. The Company's motion for 
summary judgment was denied.  The  Company  has filed a motion for  
reconsideration  of the denial of summary judgment or , in the alternative, for 
leave to appeal such denial.

    On February 24, 1997, a former employee of Micro Linear filed a complaint 
in Superior Court of California, County of Santa Clara, alleging breach of 
contract and employment discrimination.  On June 5, 1997 the case was dismissed
and the parties agreed to submit the dispute to arbitration.  The Company denies
all liability and intends to vigorously defend its actions in the arbitration.

    Although the Company believes that the resolution of these actions will not 
have a material  adverse  effect on the Company's  financial  condition or 
results of operations,  there can be no assurance that such actions will be 
resolved in the Company's favor or that an unfavorable resolution would not 
materially adversely effect the Company's financial condition or results of 
operations.

                                       14
<PAGE>


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

The  following  matters  were  approved  at  the  Company's  Annual  Meeting  of
Stockholders held on May 28, 1997:
<TABLE>
<CAPTION>

    (a)  The following Directors were elected:

                Directors                     Votes For         %
------------------------------------------- -------------- -------------
<S>                                            <C>                 <C> 
Arthur B. Stabenow                             11,002,456          95.4
Roger A. Smullen                               11,006,891          95.5
Jeffrey D. West                                10,995,770          95.3
Joseph D. Rizzi                                10,999,905          95.4

</TABLE>

<TABLE>
<CAPTION>

    (b) The stockholders approved the following proposals:

                                                                Number of Common Shares Voted
                  <S>                                 <C>           <C>        <C>           <C>
                  Proposal                                For           %        Against      Abstain
                  ----------------------------------- ------------- ---------- ------------- -----------

                  1) Amendment to increase the
                     number of shares of  the
                     Company's Common stock
                     reserved for future issuance        4,280,035       59.4     2,913,132      15,337
                     under the Company's 1991 Stock
                     Option Plan by 834,000 shares

                  2) Amendment of the Company's
                     1991 Stock Option Plan for an
                     annual increase in the number       3,892,849       53.8     3,320,817      20,837
                     of shares available for
                     issuance thereunder.

                  3) Amendment to increase the
                     number of shares of the
                     Company's Common Stock
                     reserved for future issuance        6,847,767       91.5       615,638      17,237
                     under the Company's 1994 Stock
                     Option Plan by 175,000 shares.

                  4) Ratification of the
                     appointment of Price
                     Waterhouse LLP as the
                     Company's independent              11,407,504       98.9       111,916      11,507
                     accountants.
</TABLE>

Item 6.  Exhibits and Reports on Form 8-K

    (a) Exhibits

        11.1     Statement Regarding Computation of Earnings Per Share.

        27.1     Financial Data Schedule

    (b)  Reports on Form 8-K

        None

                                       15
<PAGE>










                                   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.

































                             MICRO LINEAR CORPORATION

Date: August 12, 1997        By:  /s/ J. PHILIP RUSSELL
                                  ---------------------
                                  J. Philip Russell
                                  Chief Financial Officer
                                  (Principal Financial and Accounting Officer)



                                       16