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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, 1998

                                       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 net of
shares held in treasury as of April 26, 1998 was 11,683,710.

                                            
<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, 1998 and 1997           3

                Consolidated Condensed Balance Sheets at March 31, 1998, and at December 31, 1997............            4

                Consolidated Condensed Statements of Cash Flows for the three months ended March 31, 1998 and
                1997,........................................................................................            5

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

    Item 2.     Management's Discussion and Analysis of Financial Condition and Results of Operations
                                                                                                                         9

    PART II.    OTHER INFORMATION

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

    Item 6.     Exhibits and Reports on Form 8-K.............................................................           14

    SIGNATURES................................................................................................          15
</TABLE>
                                                      3
<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> 
                                                                            1998                 1997
                                                                        --------------     -----------------
Net revenues...........................................................      $12,239               $16,137
Cost of revenues.......................................................        5,611                 6,955
                                                                        --------------     -----------------
   Gross profit........................................................        6,628                 9,182
                                                                        --------------     -----------------
Operating expenses:
   Research and development............................................        3,239                 2,557
   Selling, general and administrative.................................        2,795                 3,438
                                                                        --------------     -----------------
                                                                               6,034                 5,995
                                                                        --------------     -----------------
   Income from operations..............................................          594                 3,187
Interest and other income..............................................          363                   328
Interest expense.......................................................          (67)                  (71)
                                                                        --------------     -----------------
   Income before taxes.................................................          890                 3,444
Provision for income taxes.............................................          320                 1,240
                                                                        --------------     -----------------
   Net income..........................................................       $  570              $  2,204
                                                                        ==============     =================

Net Income Per Share:

Basic:
   Net income per share................................................         $0.05                 $0.18
                                                                        ==============     =================
   Weighted average number of shares used in per share computation.....        11,650                11,995
                                                                        ==============     =================
Diluted:
   Net income per share................................................         $0.05                 $0.17
                                                                        ==============     =================
   Weighted average number of shares used in per share computation.....        12,224                13,298
                                                                        ==============     =================


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

                                                    3
<PAGE>
<TABLE>
<CAPTION>

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

<S>                                                                                              <C>                   <C>
                                                                                           March 31,          December 31,
                                                                                              1998                1997
                                                                                         ---------------   -------------------
Assets
Current assets:
  Cash and cash equivalents..............................................................        $7,390                $5,210
  Short-term investments.................................................................        22,854                20,653
  Accounts receivable, net...............................................................         5,722                10,367
  Inventories............................................................................         8,236                 7,823
  Other current assets...................................................................         5,695                 5,768
                                                                                         ---------------   -------------------
     Total current assets................................................................        49,897                49,821
Property, plant and equipment, net.......................................................        21,314                21,523
Other assets.............................................................................           654                   681
                                                                                         ===============   ===================
          Total assets...................................................................       $71,865               $72,025
                                                                                         ===============   ===================

Liabilities and Stockholders' Equity
Current liabilities:
  Accounts payable.......................................................................        $3,828                $3,612
  Deferred income on shipments to distributors...........................................         2,936                 2,695
  Other accrued liabilities..............................................................         3,076                 3,592
                                                                                         ---------------   -------------------
     Total current liabilities...........................................................         9,840                 9,899
                                                                                         ---------------   -------------------
Long-term debt...........................................................................         2,752                 2,805
                                                                                         ---------------   -------------------
Stockholders' equity:
  Preferred stock........................................................................            --                    --
  Common stock...........................................................................            13                    13
  Additional paid-in capital.............................................................        53,283                52,890
  Retained earnings......................................................................        21,015                20,445
      Treasury stock.....................................................................       (15,038)              (14,027)
                                                                                         ---------------   -------------------
     Total stockholders' equity..........................................................        59,273                59,321
                                                                                         ===============   ===================
          Total liabilities and stockholders' equity.....................................       $71,865               $72,025
                                                                                         ===============   ===================
<FN>

Note: The balance sheet at December 31, 1997 has been derived from the audited consolidated financial
statements at that date.

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

                                                    4


<PAGE>
<TABLE>
<CAPTION>

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

                                                                                        Three Months Ended
                                                                                ------------------------------------
<S>                                                                                     <C>                  <C>
                                                                                  March 31,            March 31,
                                                                                    1998                  1997
                                                                                --------------       ---------------
Cash provided by operating activities.........................................       $  5,942              $  3,555

Investing activities:
   Capital expenditures.......................................................           (885 )              (1,126 )
   Purchases of short-term investments........................................        (12,798 )             (11,648 )
   Sales of short-term investments............................................         10,597                 9,028
                                                                                --------------       ---------------
     Net cash used in investing activities....................................         (3,086 )              (3,746 )

Financing activities:
   Principal payments on debt.................................................            (53 )                 (94 )
   Proceeds from issuance of common stock.....................................            388                   279
   Acquisition of treasury stock..............................................         (1,011 )              (3,088 )
                                                                                --------------       ---------------
     Net cash used in financing activities....................................           (676 )              (2,903 )
                                                                                --------------       ---------------
   Net increase (decrease) in cash and cash equivalents.......................          2,180                (3,095 )
   Cash and cash equivalents at beginning of period...........................          5,210                 4,385
                                                                                --------------       ---------------
   Cash and cash equivalents at end of period.................................         $7,390                $1,291
                                                                                ==============       ===============
<FN>
             See accompanying notes to unaudited 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.  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, 1997. 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 1997 ended on December 28, 1997.
     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 Company  exclusively  uses the U.S. dollar as its functional  currency.
     Foreign  currency  transaction  gains and losses are  included in income as
     they occur. The effect of foreign currency  exchange rate  fluctuations was
     not significant. The Company does not use derivative instruments.

     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, 1998,  two customers  accounted for
     20% and 10% of total sales, respectively.

5)   Supplemental Financial Information

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

<S>                                                                            <C>                 <C>
                                                                         March 31,        December 31,
                                                                            1998              1997
                                                                        -------------   -----------------
            Raw Materials..............................................      $  623          $  712
            Work-in-process............................................       4,911           5,100
            Finished Goods.............................................       2,702           2,011
                                                                             $8,236          $7,823

     Property, plant and equipment consist of the following (in thousands):


                                                                        March 31,       December 31,
                                                                             1998              1997
                                                                        -------------   -----------------
            Land.......................................................     $ 2,850         $ 2,850
            Buildings and improvements.................................       9,353           9,353
            Machinery and equipment....................................      31,078          30,193
                                                                             43,281          42,396
            Accumulated depreciation and amortization..................      21,967          20,873
            Net property, plant and equipment..........................     $21,314         $21,523
</TABLE>

<PAGE>

6)   Cash payments for income taxes and interest  expense  totaled  $954,000 and
     $67,000, respectively for the three months ended March 31, 1998.

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 1998 and 1997 was 36%, which differs from the statutory  income tax rate
     primarily due to state income taxes and federal research credits.

8)   From  January  1996  through  the end of the  first  quarter  of 1998,  the
     Company's Board of Directors had approved the repurchase of an aggregate of
     $16.5 million of the Company's  Common Stock.  Through March 29, 1998,  the
     Company had repurchased 1,642,000 shares for a total cost of $15.0 million.
     As of April 24, 1998, the Company had  authorization to repurchase up to an
     additional $1.5 million of the Company's Common Stock.

9)   In the fourth quarter of 1997, the Company adopted the net income per share
     calculation  methodology  prescribed  by Statement of Financial  Accounting
     Standards No. 128 ("SFAS 128"). SFAS 128 requires presentation of basic and
     diluted  net income per share.  Basic net income per share is  computed  by
     dividing net income  available to common  stockholders  (numerator)  by the
     weighted average number of common shares outstanding  (denominator)  during
     the period and excludes the dilutive  effect of stock options.  Diluted net
     income  per share  gives  effect to all  dilutive  potential  common  stock
     outstanding  during the period.  In computing diluted net income per share,
     the average stock price for the period is used in determining the number of
     shares assumed to be purchased  from exercise of stock  options.  All prior
     year net income per share  amounts in this Form 10-Q have been  restated in
     accordance with SFAS 128.

     Following is a  reconciliation  of the numerators and  denominators  of the
     basic and diluted income per share  computations for the periods  presented
     below (in thousands except per share data):
<TABLE>
<CAPTION>

                                                  Three Months Ended March 31,
                          -----------------------------------------------------------------------------
                                          1998                                   1997
                          -------------------------------------  --------------------------------------
<S>                       <C>          <C>           <C>        <C>          <C>             <C>
                                                        Per-                                    Per-
                             Income        Shares     Share         Income         Shares     Share
                          (Numerator)  (Denominator)   Amount     (Numerator)  (Denominator)   Amount
   Basic Income Per
   Share:
   Net income available
     to common
     stockholders             $570         11,650       $0.05       $2,204         11,995      $0.18

   Effect of dilutive
   securities:                                
     Stock options                            574                                   1,303

   Diluted Income Per
   Share:
   Net income available
     to common
     stockholders assuming
     dilution                 $570         12,224       $0.05       $2,204         13,298      $0.17
     

</TABLE>


10)  In June  1997,  the FASB  issued  Statement  No.  130 (FAS 130)  "Reporting
     Comprehensive  Income".  FAS 130  establishes  standards  for reporting and
     display of comprehensive income and its components in a financial statement
     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.  For the three months
     ended  March  31,  1998 and 1997,  comprehensive  income  approximated  net
     income.
<PAGE>

11)  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,
     1998. The Company believes 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 $12.2  million  for the first  quarter  of 1998,  a 24%
decrease  over net revenues of $16.1 million for the first quarter of 1997 and a
19% decrease over net revenues of $15.1 million for the fourth  quarter of 1997.
The decline in net  revenues is the result of softness in business  demand which
resulted in lower than expected turns orders thus negatively  impacting  overall
revenue levels for the first quarter.

     The   Company   serves   three   principal   market   segments,   computer,
communications  and  industrial.  Net  revenues  for the first  quarter  of 1998
compared  to the  first  quarter  of 1997  decreased  24% in the  communications
market, decreased 63% in the computer market and increased 23% in the industrial
market. Net revenues for first quarter of 1998 compared to the fourth quarter of
1997 decreased 22%, 15% and 6% in the communications market, computer market and
industrial market, respectively.

     The  communications  market  includes  the  computer  networking  equipment
("networking")   sub-market.   Sales  of  products  to  the  networking   market
constitutes a substantial  majority of the Company's net revenues.  Net revenues
in the networking  sub-market,  in absolute dollars decreased 26% and 24% in the
first quarter of 1998  compared to the first quarter of 1997 and fourth  quarter
of 1997,  respectively.  Networking  segment net revenues  were 65% of total net
revenues  for the first  quarter  of 1998  compared  to 67% and 70% of total net
revenues for the first and fourth quarter of 1997,  respectively.  The quarterly
decline in networking  product  revenues is  principally  attributable  to lower
shipments  of ethernet  parts.  The  networking  submarket is  characterized  by
intense   competition,   relatively   short   product   life  cycles  and  rapid
technological  change.  In addition,  the networking  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 immediate 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.

     International  net  revenues  for the first  quarter of 1998  totaled  $5.2
million,  or  42% of net  revenues,  compared  to  $8.1  million,  or 50% of net
revenues,  for  the  first  quarter  of 1997  and  $7.0  million,  or 46% of net
revenues, for the fourth quarter of 1997. The decrease in international revenues
in first quarter of 1998, compared to the first and fourth quarters of 1997, was
due to the combination of lower direct product demand for the Company's products
in Asia and less Asia Pacific subcontract work for domestic  customers.  Despite
the lower  product  demand noted in Asia through the end of the first quarter of
1998, the Company had not  experienced any direct negative impact as a result of
the financial and stock market dislocations that occurred in the Asian financial
markets in 1997 and 1998.

     Domestic  distributor  net revenues for the first quarter of 1998 were $2.6
million,  or  21% of net  revenues,  compared  to  $2.8  million,  or 17% of net
revenues,  for  the  first  quarter  of 1997  and  $3.0  million,  or 20% of net
revenues,  for the fourth quarter of 1997. 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.  Revenue  is  recognized  by  the  Company  upon  shipment  to
international  representatives,  but the  gross  margin  on these  shipments  is
deferred until international distributors notify the Company of product sales to
end users.

<PAGE>
   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 54% in the first quarter of 1998,  compared
to 57% in the first quarter of 1997 and 55% in the fourth quarter of 1997. Gross
margin was lower in the first  quarter of 1998  compared to the first quarter of
1997  primarily  due to  slightly  lower  production  output  levels  and higher
manufacturing  cost.  Gross margin was essentially  flat in the first quarter of
1998  compared  to the  fourth  quarter  of  1997.  It has  been  the  Company's
experience  that  communication  products have higher average selling prices and
more  favorable  margins than computer and  industrial  products.  However,  the
Company has recently  seen  increased  competition  and pricing  pressure on its
newer  products  in  the   communications   segment.   Communications   products
represented  at least 70% of the  Company's  total  shipments  in both the first
quarter of 1998 and the fourth quarter of 1997.  Future gross margin levels will
continue to be a function of product mix and levels of manufacturing.

     The Company's  gross margin is 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 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.
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 expect to be significantly  impacted by this pricing agreement and as a
result does not enter into foreign currency hedging  arrangements.  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 swings in
currency 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  payroll  and  other  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 the cost of
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.  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.  The Company  believes that the  development  and  introduction  of new
products is critical to its future success.

     Research and  development  expenses were $3.2 million for the first quarter
of  1998,  or 26% of net  revenues,  compared  to  $2.6  million,  or 16% of net
revenues for the first quarter of 1997 and $3.2 million, or 21% of net revenues,
for the fourth  quarter of 1997.  The  increase in research and  development  in
absolute  dollars in the first  quarter of 1998 compared to the first quarter of
1997 is primarily  attributable to higher  prototype  product costs, new product
mask costs and the  addition of  personnel  associated  with the  Company's  new
design  center in  Cambridge,  England.  Research  and  development  expenses in
absolute  dollars  remained  flat for the first  quarter of 1998 compared to the
<PAGE>
fourth quarter of 1997 with increases in prototype product costs associated with
new product  development being offset by decreased mask and compensation  costs.
The Company expects the second quarter research & development  cost, in absolute
dollars,  to be flat with first  quarter  levels as new  product  tape-outs  are
expected to remain at a high level.  The Company  established a design center in
Cambridge, England during 1997. Through the end of the first quarter of 1998 the
company has added a managing design director and a staff of five, of which three
are design engineers.  Further selective headcount additions are expected during
1998. The Company  believes that the timely  development and introduction of new
products is critical to its future success.

   Selling, General and Administrative

     Selling,  general and  administrative  expenses  were $2.8  million for the
first quarter of 1998, or 23% of net revenues,  compared to $3.4 million, or 21%
of net revenues,  in the first  quarter of 1997 and $2.9 million,  or 19% of net
revenues, in the fourth quarter of 1997. The decrease in absolute dollars in the
first  quarter  of 1998  compared  to the  first  quarter  of 1997 is  generally
attributable  to  decreases in sales  commissions  due to lower net revenues and
decreases in payroll and business conference expenses being partially offsetting
by increased  professional  fees. The slight decrease in absolute dollars in the
first  quarter  of 1998  compared  to the fourth  quarter  of 1997 is  generally
attributable to a decrease in sales  commissions due to lower net revenues being
partially  offset by increased  payroll and legal expenses.  The Company expects
selling,  general and administrative expense to generally fluctuate with revenue
in the future.

   Interest and Other Income and Interest Expense

     Interest and other  income was $0.4  million for first  quarter of 1998 and
$0.3  million  for the first and fourth  quarters of 1997.  The  increase in the
first  quarter  of 1998  compared  to the first and fourth  quarters  of 1997 is
attributable   primarily  to  higher  cash   balances.   Interest   expense  was
insignificant for the first quarter of 1998 and the first and fourth quarters of
1997.

   Provision for Income Taxes

     The  Company's  effective  tax rate for the first  quarter  of 1998 and the
first and  fourth  quarters  of 1997 was 36% which  differs  from the  statutory
income  tax rate  primarily  due to state  income  taxes  and  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 $5.9 million of
net cash during the first  quarter of 1998, an increase of $2.4 million over the
first quarter of 1997. The increase in the first quarter of 1998 compared to the
first quarter of 1997 is primarily attributable to lower accounts receivable.

     Cash  used  in  investing  activities  for  the  first  quarter  of 1998 is
attributable  to capital  expenditures  of $0.9  million and the net purchase of
short-term investments of $2.2 million.

     Financing activities for the first quarter of 1998 consist primarily of the
repurchase  of the Company's  Common Stock for $1.0  million.  From January 1996
through  the  first  quarter  of 1998,  the  Board  of  Directors  approved  the
repurchase  of an aggregate of $16.5  million of the  Company's  Common Stock in
stock repurchase  programs.  Through March 28, 1998, the Company has repurchased
1,642,000  shares at an aggregate cost of $15.0  million.  As of April 24, 1998,
the Company had remaining  authorization to repurchase  additional shares of the
Company's Common Stock costing up to $1.5 million.

     Working capital amounted to $40.0 million as of March 31, 1998, compared to
$39.9  million as of  December  31,  1997.  Working  capital  at March 31,  1998
includes cash and cash equivalents of $7.4 million and short-term investments of
$22.9 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
<PAGE>
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

     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 65% of
the  Company's  net revenues in the first quarter of 1998 and accounted for 7 of
the  Company's 10 top selling  products for the first  quarter of 1998.  These 7
products  constituted  approximately 40% 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 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 or if such pricing pressure will lessen.  Such pricing  pressures will have
an adverse  affect on the  Company's  results of  operations  unless they can be
offset by higher margins on other products or reduced operating expenses.

     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. Competitive pricing pressures
are expected to continue in the future, especially in the communications market,
and may have a  material  adverse  effect on the  Company's  gross  margin.  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  noncancellable
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'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.
<PAGE>

     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.  The
Company  may  experience  substantial  period-to-period  fluctuations  in future
operating  results due to general  semiconductor  industry  conditions  or other
factors.

Year 2000 Disclosure

     The "Year 2000 issue"  arises  because most  computer  systems and programs
were designed to handle only a two-digit  year, not a four-digit  year. When the
Year 2000 begins,  these computers may interpret "00" as the year 1900 and could
either  stop  processing   date-related   computations  or  could  process  them
incorrectly.  The Company has commenced,  for all of its information  systems, a
year 2000 date conversion project to address all necessary code changes, testing
and  implementation  and accordingly  does not anticipate any internal Year 2000
issues from its own  information  systems,  databases or  programs.  The Company
could be  adversely  impacted by Year 2000 issues  faced by major  distributors,
suppliers, customers, vendors and financial service organizations with which the
Company  interacts.  The  Company  is in the  process  of  developing  a plan to
determine the impact that third parties who are not Year 2000 compliant may have
on the operations of the Company. At this time, the Year 2000 compliance expense
and related  potential  effect of the  Company's  earnings  are  estimated to be
insignificant.  As of April 26,  1998 the Company  has not  identified  any loss
contingencies related to the year 2000 issues for products it has sold.



<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.

     On February 24,  1997, a former  employee of Micro Linear filed a complaint
in the 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.  As of April 26,
1998, no arbitration  date had been scheduled.  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.

     From time to time,  the  Company  has  received,  and in the  future it may
receive,  correspondence  from  certain  vendors,  distributors,   customers  or
end-users of its products  regarding  disputes with respect to contract  rights,
product  performance  or other  matters  that  occur in the  ordinary  course of
business.  There  can  be no  assurance  that  any of  such  disputes  will  not
eventually  result in litigation or other actions involving the Company or as to
the outcome of such disputes.

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

<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 12, 1998              By: /s/ J. Philip Russell
                                    J. Philip Russell
                                    Chief Financial Officer
                                    (Principal Financial and Accounting Officer)
<PAGE>