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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 March 31, 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                          94-29100                
         (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  net of
shares held in treasury as of April 25, 1997 was 11,749,688.


<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 months ended March 31, 1997 and 1996           3

                Consolidated Condensed Balance Sheets at March 31, 1997, and at December 31, 1996............            4

                Consolidated Condensed Statements of Cash Flows for the three months ended March 31, 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............................................................................           13

    Item 6.     Exhibits and Reports on Form 8-K.............................................................           13

    SIGNATURES................................................................................................          14

</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 March 31,
                                                                        ------------------------------------
<S>                                                                         <C>                  <C> 
                                                                            1997                 1996
                                                                        --------------     -----------------
Net revenues...........................................................      $16,137               $15,327
Cost of revenues.......................................................        6,955                 5,097
                                                                        --------------     -----------------
   Gross profit........................................................        9,182                10,230
                                                                        --------------     -----------------
Operating expenses:
   Research and development............................................        2,557                 2,657
   Selling, general and administrative.................................        3,438                 2,881
                                                                        --------------     -----------------
                                                                               5,995                 5,538
                                                                        --------------     -----------------
   Income from operations..............................................        3,187                 4,692
Interest and other income..............................................          328                   359
Interest expense.......................................................          (71)                  (80)
                                                                        --------------     -----------------
   Income before taxes.................................................        3,444                 4,971
Provision for income taxes.............................................        1,240                 1,988
                                                                        --------------     -----------------
   Net income..........................................................     $  2,204              $  2,983
                                                                        ==============     =================

Net income per share...................................................    $    0.17             $    0.22
                                                                        ==============     =================

Shares used in computing net income per share..........................       13,298                13,532
                                                                        ==============     =================

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

<PAGE>

<TABLE>
<CAPTION>


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

<S>                                                                                                  <C>                      <C>
                                                                                               March 31,             December 31,
                                                                                                  1997                   1996
                                                                                              (Unaudited)          (See note below)
                                                                                          ---------------------  -------------------
Assets
Current assets:
   Cash and cash equivalents...........................................................                 $1,291               $4,385
   Short-term investments..............................................................                 23,419               20,798
     Accounts receivable, net of allowance for doubtful accounts of $258 and $243......                  6,258                4,372
   Inventories.........................................................................                 10,771               10,456
   Deferred tax assets.................................................................                  3,930                4,499
   Other current assets................................................................                  2,079                2,077
                                                                                          ---------------------  -------------------
     Total current assets..............................................................                 47,748               46,587
                                                                                          ---------------------  -------------------
Property, plant and equipment..........................................................                 39,221               38,095
Less accumulated depreciation and amortization.........................................                 17,543               16,441
                                                                                          ---------------------  -------------------
                                                                                                        21,678               21,654
Other assets...........................................................................                    764                  791
                                                                                          ---------------------  -------------------
       Total assets....................................................................                $70,190              $69,032
                                                                                          =====================  ===================

Liabilities and Stockholders' Equity Current liabilities:
   Accounts payable....................................................................               $  3,666             $  2,732
   Accrued compensation and benefits...................................................                  1,862                1,402
   Deferred income on shipments to distributors........................................                  1,432                1,270
   Accrued commissions.................................................................                    794                  555
   Other accrued liabilities...........................................................                  1,685                1,623
   Current portion of long-term debt...................................................                    152                  209
                                                                                          ---------------------  -------------------
     Total current liabilities.........................................................                  9,591                7,791
                                                                                          ---------------------  -------------------
Long-term debt.........................................................................                  2,935                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 12,861,510 and 12,810,080;
       outstanding shares 11,860,510 and 12,054,080....................................                     13                   13
   Additional paid-in capital..........................................................                 50,780               50,501
   Retained earnings...................................................................                 15,640               13,435
     Treasury stock, 1,001,000 and 756,000 shares at cost.                                              (8,769 )             (5,680)
                                                                                           ---------------------  ------------------
     Total stockholders' equity........................................................                 57,664               58,269
                                                                                          ---------------------  -------------------
       Total liabilities and stockholders' equity......................................                $70,190              $69,032
                                                                                          =====================  ===================

<FN>
Note: The balance sheet at December 31, 1996 has been derived from the audited consolidated financial
statements at that date.


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

                                                    5
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<TABLE>
<CAPTION>


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

                                                                                        Three Months Ended
                                                                                ------------------------------------
<S>                                                                                     <C>                  <C>
                                                                                  March 31,            March 31,
                                                                                    1997                  1996
                                                                                --------------       ---------------
Cash provided by operating activities.........................................       $  3,555              $  2,429

Investing activities:
   Capital expenditures.......................................................         (1,126 )              (2,245 )
   Purchases of short-term investments........................................        (11,648 )              (7,961 )
   Sales of short-term investments............................................          9,028                 7,840
                                                                                --------------       ---------------
     Net cash used in investing activities....................................         (3,746 )              (2,366 )

Financing activities:
   Principal payments under capital lease obligations and debt................            (94 )                (181 )
   Proceeds from issuance of common stock.....................................            279                   200
   Acquisition of treasury stock..............................................         (3,088 )              (2,304 )
                                                                                --------------       ---------------
     Net cash used in financing activities....................................         (2,903 )              (2,285 )
                                                                                --------------       ---------------
   Net decrease in cash and cash equivalents..................................         (3,095 )              (2,222 )
   Cash and cash equivalents at beginning of period...........................          4,385                 4,175
                                                                                --------------       ---------------
   Cash and cash equivalents at end of period.................................         $1,291                $1,953
                                                                                ==============       ===============

<FN>

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

<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.  Where
     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.

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  March  31,  1997,  three  customers  
     accounted  for 16%,  15% and 12% of total  sales, respectively.

5)   Inventories consist of the following (in thousands):

<TABLE>
<S>                                                        <C>                  <C>
                                                     March 31,         December 31,
                                                        1997               1996
                                                    -------------    -----------------
            Raw Materials........................     $ 1,546            $ 1,688
            Work-in-process......................       6,981              6,398
            Finished Goods.......................       2,244              2,370
                                                      -------            -------
                                                      $10,771            $10,456
                                                      =======            =======
</TABLE>

6)    Cash used for the three months ending March 31, 1997 was $60,000 for 
      incomes taxes and $70,000 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 first quarter
     of 1997 was 36%  compared to 40% for the first  quarter of 1996 and 13% for
     the fourth quarter of 1996. The effective tax rate for the first quarter of
     1997 and the first and fourth  quarters of 1996 differs from the  statutory
     income  tax  rate  primarily  due to state  income  taxes,  net of  federal
     research credits.

8)   Since  January  1996,  the  Company's  Board of Directors  has approved the
     repurchase of an aggregate of $11.0 million of the Company's  Common Stock,
     of which the Company had repurchased $8.8 million through the first quarter
     of 1997.  Subsequent to the end of the first  quarter of 1997,  the Company
     repurchased a total of 140,000 shares of its Common Stock for $2.0 million.
     As of April 25, 1997, the Company had remaining authorization to repurchase
     up to an additional $175,000 of the Company's Common Stock.


<PAGE>


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


9)   Statement of Financial  Accounting  Standards No. 128 (FAS 128),  "Earnings
     Per Shares (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
                                     March 31,
                              ------------------------
<S>                             <C>            <C> 
Earnings Per Share:             1997           1996
                              ---------      ---------

Basic.....................    $   0.18       $   0.24
                              =========      =========
Diluted...................    $   0.17       $   0.22
                              =========      =========
</TABLE>


10)  A discussion of a certain pending legal proceeding is included in Item 1 of
     Part II of the Company's  Form 10-Q for the fiscal  quarter ended March 31,
     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.



<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.  Actual results could differ  materially  from
those  projected  in the  forward-looking  statements  as a  result  of the risk
related factors set forth below and elsewhere in this Form 10-Q.

Results of Operations


   Net Revenues

   Net revenues  were $16.1 million for the first quarter of 1997, a 5% increase
over net  revenues  of $15.3  million  for the first  quarter  of 1996 and a 21%
increase over net revenues of $13.4 million for the fourth  quarter of 1996. Net
revenues  for the first  quarter of 1997  compared to the first  quarter of 1996
increased 8% in the communications  market,  increased 9% in the computer market
and decreased 10% in the  industrial  market.  Net revenues for first quarter of
1997 compared to the fourth quarter of 1996 increased 37% in the  communications
market,  increased 6% in the computer market and decreased 16% in the industrial
market. The communications  market includes the networking segment. Net revenues
in this segment in the first  quarter of 1997  increased 12% and 42% in absolute
dollars in the first  quarter of 1997  compared to the first quarter of 1996 and
fourth quarter of 1996,  respectively.  Networking segment net revenues were 67%
of total net revenues for the first  quarter of 1997  compared to 63% and 57% of
total net revenues for the first and fourth quarter of 1996,  respectively.  The
computer  market includes the hard disk drive ("HDD")  segment.  Net revenues in
this segment in the first  quarter of 1997  decreased 4% and  increased  100% in
absolute  dollars in the first  quarter of 1997 compared to the first quarter of
1996 and fourth quarter of 1996, respectively.  HDD segment net revenues were 6%
of total net  revenues  for the first  quarter of 1997  compared to 7% and 4% of
total net revenues for the first and fourth quarter of 1996,  respectively.  The
Company expects net revenue from HDD products to continue to represent less than
10% of future  revenues.  The  Company's  markets are  characterized  by intense
competition,  relatively  short  product  life  cycles  and rapid  technological
changes.  In addition,  certain of 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.

   During the three months ended March 31, 1997,  three customers  accounted for
16%, 15% and 12% of total sales, respectively.

   International  net  revenues  for the  first  quarter  of 1997  totaled  $8.1
million,  or 50% of net  revenues,  as compared to $4.9  million,  or 32% of net
revenues,  for  the  first  quarter  of 1996  and  $5.6  million,  or 42% of net
revenues, for the fourth quarter of 1996. The increase in international revenues
in first  quarter of 1997  compared to the first and fourth  quarter 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.

   Domestic  distributor  net revenues  for the first  quarter of 1997 were $2.8
million,  or  17% of net  revenues,  compared  to  $2.4  million,  or 16% of net
revenues for the first quarter of 1996 and $2.2 million,  or 17% of net revenues
for  the  fourth  quarter  of  1996.  The  Company  expects  sales  to  domestic
distributors to increase in the future as a percentage of total net revenues due
to anticipated  shifts in the sales channel mix. In this regard,  several of the
Company's  OEM  (Original  Equipment  Manufacturer)  customers  have moved their
manufacturing  operations to subcontractors and in turn are placing their orders
through  distributors.  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

   Gross margin is affected by the volume of product sales, price,  product mix,
manufacturing  utilization,  product yields and the mix of sales to OEM's and to
distributors.  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 was 57% in the first quarter of 1997, a decrease
of 10% and an increase of 5% when  compared to 67% in the first  quarter of 1996
and 52% in the fourth quarter of 1996,  respectively.  Gross margin was lower in
the first quarter of 1997 compared to the first quarter of 1996 primarily due to
higher  per  unit  manufacturing   costs  resulting  from  lower   manufacturing
utilization  and  product  mix.  The  product  mix in the first  quarter of 1997
included a lower  percentage  of net  revenues  attributable  to the  relatively
higher-margin  communications  market  segment  compared to the first quarter of
1996, thereby  contributing to a lower gross margin.  Gross margin was higher in
the first quarter of 1997 compared to the fourth  quarter of 1996  primarily due
to lower  per unit  manufacturing  costs  resulting  from  higher  manufacturing
utilization  and  product  mix.  The  product  mix in the first  quarter of 1997
contained  a  greater   percentage   of  net   revenues   attributable   to  the
communications  market segment  compared to the fourth quarter of 1996,  thereby
contributing to a higher 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 effect on gross margin in the future.

   The  Company  currently  purchases  its wafers  from ten 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.
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.

   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.  In  addition,  research  and  development  expenses
include test  development  and  prototype  assembly  costs  associated  with new
product  development.  The  Company  also  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
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 $2.6 million for the first quarter of
1997, or 16% of net revenues,  compared to $2.7 million,  or 17% of net revenues
for the first quarter of 1996 and $2.6  million,  or 20% of net revenues for the
fourth  quarter of 1996.  The decrease in research and  development  in absolute
dollars in the first  quarter of 1997  compared to the first  quarter of 1996 is
primarily  attributable  to lower  prototype  product costs  associated with new
product development being offset by increased  compensation costs for engineers.
The  decrease  in research  and  development  in  absolute  dollars in the first
quarter of 1997 compared to the fourth quarter of 1996 is primarily attributable
to lower prototype  product costs associated with new product  development being
offset by increased mask and compensation  costs. In the fourth quarter of 1996,
the Company  announced  its intention to establish a design center in Cambridge,
England.  The first  managing  director for the Cambridge  location was hired in
December  1996 and 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.


<PAGE>



   Selling, General and Administrative

   Selling,  general and administrative expenses were $3.4 million for the first
quarter of 1997, or 21% of net revenues, compared to $2.9 million, or 19% of net
revenues, in the first quarter of 1996 and $3.0 million, or 23% of net revenues,
in the fourth  quarter of 1996.  The  increase in absolute  dollars in the first
quarter of 1997 compared to the first quarter of 1996 is generally  attributable
to an increase in staffing levels, increased commissions due to higher revenues,
business  conferences and higher legal fees associated with a litigation  matter
being  partially  offset by decreased  advertising  and databook  expenses.  The
increases  in  absolute  dollars in the first  quarter of 1997  compared  to the
fourth  quarter  of 1996 is  generally  attributable  to an  increase  in  sales
commissions  due to higher net  revenues,  higher  staffing  levels and business
conferences being partially offset by decreased databook and legal 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 first  quarter of 1997,  $0.4
million for the first quarter of 1996 and $0.3 million for the fourth quarter of
1996. The decrease in the first quarter of 1997 compared to the first and fourth
quarters of 1996 is attributable primarily to lower cash balances.

   Provision for Income Taxes

   The  Company's  effective  tax rate  for the  first  quarter  of 1997 was 36%
compared to 40% for the first quarter of 1996 and 13% for the fourth  quarter of
1996.  The  effective  tax rate for the first  quarter of 1997 and the first and
fourth quarters of 1996 differs from the statutory income tax rate primarily due
to state income taxes, net of federal research credits.

Liquidity and Capital Resources

   Since 1992, the Company has financed its operations and capital  requirements
principally  through cash flow from operations and the proceeds from its initial
public  offering in October 1994.  Operations  provided $3.4 million of net cash
during the first  quarter of 1997,  an increase of $1.0  million  over the first
quarter of 1996. The increase in the first quarter of 1997 compared to the first
quarter of 1996 is  primarily  attributable  to lower  accrued  liabilities  and
inventory partially offset by lower net income and higher payables .

   Cash  used  in  investing  activities  for  the  first  quarter  of  1997  is
attributable  to capital  expenditures  of $1.1  million and the net purchase of
short-term investments of $2.6 million.

   Financing  activities for the first quarter of 1997 consist  primarily of the
repurchase of the Company's  Common Stock for $3.1 million.  Since January 1996,
the Company's  Board of Directors has approved the repurchase of an aggregate of
$11.0  million  of  the  Company's  Common  Stock,  of  which  the  Company  had
repurchased  $8.8  million of Common  Stock  through the first  quarter of 1997.
Subsequent  to the end of the first quarter of 1997,  the Company  repurchased a
total of 140,000  shares of its Common Stock for $2.0  million.  As of April 25,
1997, the Company had remaining  authorization to repurchase up to an additional
$175,000 of the Company's Common Stock.

   Working  capital  amounted to $38.2 million as of March 31, 1997,  compare to
$38.8 million as of December 31, 1996 and includes cash and cash  equivalents of
$1.3 million and short-term investments of $23.4 million.

   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, capital expenditures,  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  semiconductor  industry  conditions.  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, there can be no assurance that the average selling prices of the Company's
products will not be subject to significant pricing pressures in the future. 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.

    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.

    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.

    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 70% of
the Company's net revenues in the first three months of 1997 and accounted for 7
of the 10 top  selling  products  for the first  three  months of 1997.  These 7
products  contributed  50%  of  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
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 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.

    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.

    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.



<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.

     Although the Company  believes that the  resolution of this action will not
have a material adverse effect on the Company's  finanical  condition or results
of operations, there can be no assurance that such actio 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.

Item 6.  Exhibits and Reports on Form 8-K

    (a) Exhibits

        11.1       - Statement Regarding Computation of Earnings Per Share.

    (b)  Reports on Form 8-K

        Changes in Registrant's Certifying Accountant Dated March 28, 1997


<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: May 15, 1997            By:  /s/ J. PHILIP RUSSELL
                                   ---------------------
                                   J. Philip Russell
                                   Chief Financial Officer
                                  (Principal Financial and Accounting Officer)

<PAGE>