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 September 27, 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 0-3698

                             SILICONIX INCORPORATED
             (Exact name of registrant as specified in its charter)


              Delaware                                   94-1527868
     (State or other jurisdiction                    (I.R.S. Employer
         of incorporation                            Identification No.)
         or organization)

               2201 Laurelwood Road, Santa Clara, California 95054
                    (Address of principal executive offices)

        Registrant's telephone number including area code (408) 988-8000

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                                   Yes X    No 
                                      ---      ---

         Indicate the number of shares  outstanding of each of the  registrant's
classes of common stock:

         COMMON  STOCK,  $0.01 PAR VALUE -- 9,959,680  outstanding  shares as of
November 10, 1998.




<PAGE>

                             SILICONIX INCORPORATED

                         TABLE OF CONTENTS TO FORM 10-Q


Part I.   Financial Information                                         Page No.

Item 1    Financial Statements

            Consolidated statements of operations for the
            three and nine months ended September 27, 1998
            and September 28, 1997                                             3

            Consolidated balance sheets as
            of September 27, 1998 and December 31, 1997                        4

            Consolidated statements of cash flows for the nine months
            ended September 27, 1998 and September 28, 1997                    5

            Notes to consolidated financial statements                         6

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


Part II. Other Information

Item 6            Exhibits and Reports on Form 8-K                            12

                  Signature                                                   13



                                       2
<PAGE>

<TABLE>
<CAPTION>


                                                            SILICONIX INCORPORATED

                                                     CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                    (Unaudited)

------------------------------------------------------------------------------------------------------------------------------------
                                                                Three Months Ended                      Nine Months Ended

                                                          September 27,    September 28,         September 27,         September 28,
(In thousands, except per share amounts)                       1998            1997                  1998                  1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>                <C>              <C>                    <C>            <C>    

                                                      
Net sales                                               $         70,118 $        80,960       $       205,739   $      231,196
Cost of sales                                                     45,126          48,848               134,545          141,779
                                                        ----------------------------------------------------------------------------
Gross profit                                                      24,992          32,112                71,194           89,417

Operating expenses:
Research and development                                           3,972           4,026                12,832           12,549
Selling, marketing, and administration                            13,202          16,748                42,993           45,546
Amortization of goodwill                                             126               -                   229                -
Restructuring                                                          -               -                19,751                -
                                                        ----------------------------------------------------------------------------

Operating income (loss)                                            7,692          11,338                (4,611)          31,322
Interest expense                                                  (1,090)           (590)               (2,372)          (1,750)
Other income (expense) - net                                        (580)            (12)               (1,662)               7
                                                        ----------------------------------------------------------------------------

Income (loss) before taxes and minority interest                   6,022          10,736                (8,645)          29,579
Income taxes                                                      (2,087)         (2,362)                3,066           (6,232)
Minority interest in income of consolidated subsidiary               (56)              -                  (114)               -
                                                        ----------------------------------------------------------------------------
Net income (loss)                                       $          3,879 $         8,374       $        (5,693)  $       23,347
                                                        ============================================================================

Net income (loss) per share (basic and diluted)         $           0.39 $          0.84       $         (0.57)  $         2.34
                                                        ============================================================================

Shares used to compute earnings per share                          9,960           9,960                 9,960            9,960
                                                        ============================================================================


</TABLE>

See accompanying notes to consolidated financial statements.



                                       3
<PAGE>

                         
                                              SILICONIX INCORPORATED

                                             CONSOLIDATED BALANCE SHEETS

                                                     (Unaudited)
<TABLE>
<CAPTION>


    -------------------------------------------------------------------------------------------------------
                                                                        September 27,          December 31,
    (In thousands)                                                              1998                  1997
    -------------------------------------------------------------------------------------------------------

    Assets
    -------------------------------------------------------------------------------------------------------
<S>                                                              <C>                  <C>


    Current assets:
      Cash and cash equivalents                                        $      27,977         $      10,249
      Short term investment with affiliate                                         -                 8,586
      Accounts receivable, less allowances                                    38,504                52,310
      Accounts receivable from affiliates                                      8,933                 8,247
      Inventories                                                             49,325                42,356
      Other current assets                                                     8,421                11,592
      Deferred income taxes                                                   10,865                 6,481
                                                                       ------------------------------------
        Total current assets                                                 144,025               139,821
                                                                       ------------------------------------

    Property, plant, and equipment, at cost:
      Land                                                                     1,576                 1,174
      Buildings and improvements                                              46,517                45,724
      Machinery and equipment                                                257,238               221,014
                                                                       ------------------------------------
                                                                             305,331               267,912
      Less accumulated depreciation                                          159,557               141,514
                                                                       ------------------------------------
        Net property, plant, and equipment                                   145,774               126,398
    Goodwill                                                                   8,934                     -
    Other assets                                                               3,173                15,290
                                                                       ------------------------------------
        Total assets                                                   $     301,906         $     281,509
                                                                       ====================================

    Liabilities and Shareholders' Equity
    -------------------------------------------------------------------------------------------------------

    Current liabilities:
      Accounts payable                                                 $      17,938         $      31,421
      Accounts payable to affiliates                                          22,105                11,334
      Accrued payroll and related compensation                                10,815                13,970
      Accrued liabilities                                                     44,941                32,877
                                                                       ------------------------------------
        Total current liabilities                                             95,799                89,602

    Long-term related party debt                                              55,570                34,570
    Long-term debt, less current portion                                       1,025                 3,887
    Deferred income taxes                                                      2,603                 3,900
    Minority interest                                                          3,115                     -
                                                                       ------------------------------------
        Total liabilities                                                    158,112               131,959
                                                                       ------------------------------------
    Shareholders' equity:
      Common stock                                                               100                   100
      Additional paid-in-capital                                              59,536                59,482
      Retained earnings                                                       84,855                90,547
      Accumulated other comprehensive income                                    (697)                 (579)
                                                                       ------------------------------------
        Total shareholders' equity                                           143,794               149,550
                                                                       ------------------------------------
        Total liabilities and shareholders' equity                     $     301,906         $     281,509
                                                                       ====================================
</TABLE>


See accompanying notes to consolidated financial statements.



                                       4
<PAGE>

<TABLE>
<CAPTION>

                                                                              SILICONIX INCORPORATED

                                                                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                             (Unaudited)
    ----------------------------------------------------------------------------------------------------------------------
                                                                                        Nine Months Ended
                                                                               September 27,          September 28,
    (In thousands)                                                                1998                     1997
    ----------------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>                    <C>  

    Cash flows from operating activities:
    Net income (loss)                                                        $     (5,693)           $      23,347
    Adjustments to reconcile net income (loss) to
      net cash provided by operating activities: 
        Depreciation and amortization                                              19,607                   16,676
        Deferred income taxes                                                      (5,681)                   1,000
        Undistributed earnings from joint venture                                    (970)                  (2,265)
        Payment of pension benefits                                                   (96)                  (1,394)
        Restructuring                                                              12,530                        -
        Other non-cash expenses                                                       351                      481
        Changes in assets and liabilities, net of acquisitions
          Accounts receivable                                                      19,641                   (5,438)
          Accounts receivable from affiliates                                        (802)                  (1,791)
          Inventories                                                              (5,636)                  (5,822)
          Other assets                                                              1,344                   (8,326)
          Minority interest                                                           115
          Accounts payable                                                        (13,808)                   4,036
          Accounts payable to affiliates                                           10,800                   (1,240)
          Accrued liabilities                                                      (1,954)                   2,707
                                                                             --------------------------------------
    Net cash provided by operating activities                                      29,748                   21,971
                                                                             --------------------------------------

    Cash flows from investing activities:
    Purchase of property, plant, and equipment                                    (23,581)                 (24,610)
    Cash acquired from purchase of business                                           977                        -
    Short term investment with affiliate                                            8,586                    6,092
    (Purchase) sale of other assets                                                   111                   (3,750)
                                                                             --------------------------------------
    Net cash used by investing activities                                         (13,907)                 (22,268)
                                                                             --------------------------------------

    Cash flows from financing activities:
    Repayment of  debt                                                             (3,117)                    (999)
    Proceeds from related party debt                                                5,000                        -
                                                                             --------------------------------------
    Net cash provided (used) by financing activities                                1,883                     (999)
                                                                             --------------------------------------
    Effect of exchange rate changes on
      cash and cash equivalents                                                         4                     (328)
                                                                             --------------------------------------

    Net increase (decrease) in cash and cash equivalents                           17,728                   (1,624)

    Cash and cash equivalents:
    Beginning of period                                                            10,249                   12,201
                                                                             --------------------------------------
    End of period                                                            $     27,977            $      10,577
                                                                             ======================================

</TABLE>

See accompanying notes to consolidated financial statements.


                                        5

<PAGE>

                             SILICONIX INCORPORATED

                   Notes to Consolidated Financial Statements
                                   (Unaudited)


Note 1.           Basis of Presentation

         The accompanying  unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-Q and Article 10 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements.

         In the  opinion of the  management  of the  Company,  the  consolidated
financial statements  appearing herein contain all adjustments  (consisting only
of normal recurring  accruals)  necessary for a fair presentation of the results
for,  and as of the end of, the  periods  indicated  therein.  These  statements
should be read in conjunction with the Company's  December 31, 1997 consolidated
financial  statements and notes thereto. The results of operations for the first
nine months of 1998 are not necessarily indicative of the results to be expected
for the full year.

Note 2.           Inventories

         The components of inventory consist of the following:

                                September 27,               December 31,
                                         1998                        1997
                                -------------               -------------
                                             (In thousands)

         Finished goods             $   8,470                  $   11,758
         Work-in-process               36,294                      26,432
         Raw materials                  4,561                       4,166
                                    ---------                  ----------
                                    $  49,325                  $   42,356
                                    ---------                  ----------

Note 3.           Restructuring Expense

         The Company  incurred a pre-tax  restructuring  charge of $19.8 million
relating to the acquisition on March 2, 1998 of 80.4% interest in the Company by
Vishay Intertechnology Inc. ("Vishay") of Malvern,  Pennsylvania.  Of the total,
approximately  $10.5  million  relates to employee  termination  costs  covering
approximately   five  key   executives   and  70  technical,   production,   and
administrative  employees.  The remaining $9.3 million of restructuring  expense
relates to provisions  for certain  assets,  contract  cancellations,  and other
expenses.  As of September 27, 1998, 47 employees have been  terminated and $6.3
million of the termination costs were paid. Additionally,  $4.0 million has been
charged against the restructuring liability for the write-down of certain assets
and other expenses.  Restructuring costs of $9.5 million are included in accrued
liabilities as of September 27, 1998.

         The Company  borrowed  $14.3  million from Vishay  during 1998 of which
$10.0 was used to fund part of the restructuring costs. During the third quarter
of 1998, $9.3 million was paid back to Vishay.


                                       6
<PAGE>

Note 4.           Contingencies

         The  Company  is  party to two  environmental  proceedings.  The  first
involves  property that the Company  vacated in 1972.  The  California  Regional
Water Quality Board  ("RWQCB")  issued a cleanup and abatement order to both the
Company and the current owner of the property.  The Company subsequently reached
a settlement  of this matter with the current  owner in which the current  owner
indemnifies  the  Company  against  any  liability  that  may  arise  out of any
governmental  agency  actions  brought  for  environmental  cleanup of the site,
including  liability arising out of the current cleanup and abatement order. The
second  proceeding  involves the Company's  current facility in Santa Clara. The
RWQCB  issued  a  clean  up  and  abatement  order  based  on the  discovery  of
contamination  of both the soil and the  groundwater  on the property by certain
chemical  solvents.  The Company is currently engaged in certain remedial action
and has accrued  $750,000 as its best  estimate of future costs  related to this
matter.

         In  management's  opinion,  based on discussion  with legal counsel and
other  considerations,  the ultimate resolution of the  above-mentioned  matters
will not have a material adverse effect on the Company's  consolidated financial
condition or results of operations.

         The Company is engaged in discussions  with various  parties  regarding
patent  licensing  and  cross  patent  licensing   issues.  In  the  opinion  of
management,  the outcome of these  discussions  will not have a material adverse
effect on the Company's  consolidated  financial  condition or overall trends in
the results of operations.

Note 5.           Recently Issued Accounting Pronouncements

         As of January 1, 1998,  the  Company  adopted  Statement  of  Financial
Accounting Standards ("SFAS") No. 130, "Reporting  Comprehensive  Income".  SFAS
No. 130 establishes  rules for the reporting and  presentation of  comprehensive
income  and its  components.  SFAS  No.  130  requires  accumulated  translation
adjustments  to be  included  in other  comprehensive  income.  The  accumulated
translation  adjustments  as of  December  31,  1997 have been  reclassified  to
conform to the  requirements  of SFAS No. 130.  The adoption of SFAS No. 130 did
not impact the Company's net income or total stockholders'  equity. For the nine
months ended  September  27, 1998 and September  28, 1997,  total  comprehensive
income (loss) amounted to $(5,811,000) and $23,214,000, respectively.

Note 6.           Acquisition of additional interest in Joint Venture

          On April 1, 1998,  Vishay  acquired for  $16,000,000 a 40% interest in
Simconix, a back-end  manufacturing  facility in Shanghai,  China. This interest
was  transferred to Siliconix,  which had a 50% interest in Simconix dating from
1993.  The Company  previously  reported  their  interest in the Simconix  joint
venture under the Equity Method of accounting.  The  acquisition is now reported
under the Purchase Method of accounting,  and the operating  results of Simconix
are included in the consolidated financial statements of the Company as of April
1,  1998.  As a  result  of the  purchase,  the  Company  recorded  goodwill  of
$9,163,000. The goodwill will be amortized over 20 years.



                                       7
<PAGE>

Note 7.  Supplemental Cash Flow Information

         The  following is the effect of the non-cash  transactions  relating to
the purchase of Simconix.

<TABLE>
<CAPTION>

<S>                                               <C>                       <C>    

(In thousands)                                            September 27, 1998      September 28,1997
Net non-cash assets acquired
   by related party                                       $   15,023                    -
Investment in joint venture
   converting to consolidated subsidiary                      11,872                    -
Long-term related party loan related
   to non-cash assets acquired                                16,000                    -

</TABLE>

         The Company  repaid  floating  rate notes with a  principal  balance of
$3,117,000 and accrued interest of $143,187 on August 28, 1998.  Interest on the
notes were based on the London  interbank rate, and was due annually on December
1. The floating rate notes were  originally  issued on December 10, 1990, with a
maturity date of December 10, 2005.

Note 8. CHANGE OF ACCOUNTANTS

         Effective July 31, 1998, the Board of Directors of the Company selected
Ernst & Young LLP to replace  KPMG Peat  Marwick LLP  ("KPMG") as the  Company's
independent  accountant.   KPMG's  audit  reports  on  the  Company's  financial
statements for the fiscal years ended December 31, 1997 and 1996 did not contain
an adverse  opinion or  disclaimer of opinion and were not qualified or modified
as to uncertainty,  audit scope or accounting  principles.  Furthermore,  during
fiscal 1996 and 1997 and the subsequent interim period preceding the replacement
of KPMG there were no  disagreements  between the Company and KPMG on any matter
of  accounting  principles  or  practices,  financial  statement  disclosure  or
auditing scope or procedures.



                                       8
<PAGE>

Item 2.

Management's Discussion and Analysis of Financial
Condition and Results of Operations

Overview

         Siliconix   designs,   markets,   and  manufactures  power  and  analog
semiconductor products. The Company focuses on technologies and products for the
computer, data storage,  communications,  and automotive markets. The Company is
organized  into  three  business  units:  Power  MOSFET,  Power IC,  and  Signal
Processing.  Power MOSFET is the producer of  low-voltage,  surface-mount  Power
MOSFET products primarily used for the communication,  computer,  and automotive
markets. Power IC focuses on Power Integrated Circuits used in communication and
data  storage  applications.  Signal  Processing  manufactures  a wide  array of
commodity  products such as Analog  Switches,  Low Power MOSFETS,  and JFETs for
industrial and consumer markets.

         With 1997 worldwide sales of $321.6 million,  the Company's  facilities
include  Class 1,  six-inch  wafer fabs  dedicated to the  manufacture  of power
products in Santa Clara,  California and Itzehoe,  Germany.  Analog switches and
multiplexers are fabricated in the Company's four-inch wafer fab in Santa Clara.
A  subcontractor  in  Beijing,  China  manufactures  small  signal  transistors.
Assembly and test  facilities  include  Company-owned  facilities  in Taiwan and
Shanghai, China, as well as subcontractors in the Philippines, India and Taiwan.

         For  the  past  four  years,  Siliconix  has  been a  member  of  TEMIC
Semiconductors,  a unit  of the  Daimler-Benz  microelectronics  consortium.  In
December 1997,  Daimler-Benz  announced it had agreed to sell the  Semiconductor
Division of TEMIC,  which  included its 80.4%  interest in Siliconix,  to Vishay
Intertechnology,  Inc. ("Vishay") of Malvern,  Pennsylvania. The acquisition was
completed  on March 2, 1998,  and on that  date,  Vishay  became  the  Company's
largest shareholder.

         Vishay,  a Fortune 1000 company with 1997 revenues of $1.1 billion,  is
the largest U.S.  and European  manufacturer  of passive  electronic  components
(resistors,   capacitors,   and   inductors)   and  a   producer   of   discrete
semiconductors.  These  components  are  vital to the  operation  of  everything
electronic  and can be  found  in  products  manufactured  in a broad  range  of
industries worldwide. With headquarters in Malvern, Pennsylvania, Vishay employs
over 20,000 people in 60 facilities in the U.S., Mexico,  Germany,  Austria, the
United Kingdom,  France,  Portugal,  the Czech Republic,  Israel,  Japan, Taiwan
(R.O.C.), China, and the Philippines.


Results of Operations

         Revenues  for the third  quarter of 1998 were $70.1  million,  compared
with $81.0 million in the third quarter of 1997 and $70.4 million for the second
quarter of 1998.  The decline  from the third  quarter of 1997 of 13% was driven
primarily by weaker  bookings,  which began during the end of the fourth quarter
of 1997, and persisted  throughout the first half of 1998. The Company  believes
that the major  reasons  for the  decline in  bookings  were  initiated  by high
inventory  levels of its commodity  products at its customers and  distributors,
followed by an overall  worldwide decline in demand for  semiconductors.  In the
third  quarter,  we continued to focus on our major markets by  introducing  the
first  products  in our new LITTLE  FOOT PLUS  (trademark)  family.  These are a
combination  of a power  MOSFET and a  Schottky  diode  that are  optimized  for
specific  applications in notebook  computers and cellular  telephones.  We also
introduced  the  industry's  first  power  MOSFET  rated at 1.8 volts,  also for
notebook  computer  and  cellular  telephone   applications.   In  addition,  we
introduced  the first  product  in our new  family of  200-volt  rated  MOSFETs,
targeted at the wired telecommunications market.


                                       9

<PAGE>

         Sales of Power IC  products  decreased  19% from the second  quarter of
1998,  while  sales of the  Power  MOSFET  increased  2%.  Sales  of the  Signal
Processing  product line  increased by 8%. In  comparison  to sales for the same
quarter in 1997, the Power MOSFET and Signal Processing  product lines decreased
by 12% and 31%  respectively;  Power IC sales  increased  by 17% from the  prior
year.  Asia Pacific  experienced  a 34% revenue  increase  compared to the third
quarter of 1997.  Revenues in North America,  Europe, and Japan declined by 36%,
29%, and 22%, respectively, from the third quarter of 1997.

         Gross  profit of 36% for the third  quarter of 1998  declined  by 4% in
comparison to the third  quarter of 1997.  The decrease in margin is primarily a
result of the substantial price pressures worldwide,  especially in Japan, along
with  under-utilization of existing  manufacturing  capacity due to a decline in
demand.  After  experiencing   significant  front-end   manufacturing   capacity
shortages during 1997, the Company executed its strategy of increasing capacity.
A new 6-inch wafer fabrication facility was started in Itzehoe, Germany, and the
capacity of the existing Santa Clara site was increased.  However, this capacity
was increased just as the worldwide  slowdown in  semiconductor  demand impacted
the  Company.  The net effect of the overall  decrease  in demand and  resulting
increased  depreciation  and  other  capacity  related  fixed  costs  has  had a
significant  adverse  impact on gross margins.  While the increased  capacity is
causing  pressure on gross margins in the short-term,  management  believes that
the  Company  is now well  positioned  to  respond  to  customer  needs when the
slowdown in the semiconductor market subsides.

         Research  and  development  expenses  were flat at $4.0 million for the
third quarter of 1998 and 1997.  However, faster time to market due to increased
throughput of research and development  wafers will allow the Company to release
more new products in 1998 compared to 1997.

         Selling,  marketing,  and administration expenses were reduced to $13.2
million for the third quarter of 1998 from $16.7 million for the same quarter of
1997. Due to cost reduction  programs  implemented in the first quarter of 1998,
spending for selling,  marketing,  and administration  expenses declined by $3.5
million  compared to the third quarter of 1997. Even in light of lower revenues,
these  expenses  declined  from 20.7% of revenue in the third quarter of 1997 to
18.8% of  revenue  for the third  quarter  of 1998,  reflecting  the  successful
implementation of the restructuring plan.

         The Company incurred a pre-tax restructuring charge of $19.8 million in
the  first  quarter  of 1998.  See Note 3 of  Notes  to  Consolidated  Financial
Statements for additional details.

         Restructuring costs of $9.5 million are included in accrued liabilities
as of September 27, 1998.  When fully  implemented,  the  restructuring  plan is
expected to reduce the Company's  operating costs by approximately $10.0 million
per year. In 1998,  the Company  borrowed $10.0 million from Vishay to fund part
of these restructuring costs.

         Income tax expense  for the third  quarter of 1998  decreased  by 11.6%
from the same quarter of 1997 due to the decrease in earnings before taxes.


Liquidity and Capital Resources

         Cash and cash  equivalents  and  short-term  investment  with affiliate
increased by $17.7 million from December 31, 1997. The consolidation of Simconix
accounted  for $9.1 million of the increase in the cash  balance.  In 1998,  the
Company   borrowed   $30.3  million  from  Vishay  to  fund  a  portion  of  the
restructuring costs, capital investments as well as the acquisition of Simconix.
The  Company  repaid  $9.3  million of the $30.3  million  loan during the third
quarter of 1998.  Management  expects  that 1998 cash flow from  operations  and
existing  lines of credit  with  Vishay  will be  sufficient  to meet its normal
operating  requirements and to fund its research and development,  capital,  and
restructuring expenditures.

         Accounts  receivable  decreased by $13.8 million or 26.4% from December
31, 1997  primarily  due to the  decrease in  revenues.  Revenues  for the third
quarter of 1998 were $70.1  million,  compared with $90.4 million for the fourth
quarter of 1997.

         Net affiliate  accounts  receivable/payable  increased by $10.1 million
from  December  31,  1997  mainly  due to  the  timing  of  cash  received  from
unconsolidated affiliates.


                                       10

<PAGE>

         Inventories  increased by $7.0 million or 16.4% from  December 31, 1997
due to  the  addition  of  manufacturing  capacity,  including  the  fabrication
facility in Itzehoe, Germany.

         Capital  expenditures  were $23.6  million in the first nine  months of
1998,  compared  to  $24.6  million  in the  first  nine  months  of  1997.  The
expenditures  were  related  to the  capacity  expansion  program  for  the  new
technology  products  initiated in 1997. Driven by the overall market conditions
and reduced growth  expectations for 1998, the Company decided during the second
quarter to delay further  capacity  expansion.  However,  based on recent market
development the Company expects capital expenditures to be flat over 1997.  

         On April 1, 1998,  Vishay  acquired for $16.0 million an additional 40%
interest in Simconix, a back-end manufacturing facility in Shanghai,  China. The
total  interest of  ownership  of Simconix by the Company is 90%.  See Note 6 of
Notes to Consolidated Financial Statements for additional details.

         Current  liabilities  increased by $6.2 million or 7% from December 31,
1997 mainly due to the restructuring  costs relating to the Vishay  acquisition.
As of September 27, 1998,  $9.5 million of  restructuring  costs are included in
accrued liabilities.

         Many computer systems and  applications  experience  problems  handling
dates beyond the year 1999 and will need to be modified  before the year 2000 in
order to remain functional.  As for many other companies, the year 2000 computer
issue  poses a  potential  risk for the  Company  both as a user of  information
systems in the  operation of its business and as a supplier of computer  systems
and related software, including operating system software to customers.

         The  Company  has   completed  an   assessment  of  its  core  business
information systems,  many of which are provided by outside suppliers,  for year
2000  readiness and is extending  that review to include a wide variety of other
information  systems and related business processes used in its operations.  The
Company  plans to have  changes to  critical  systems  implemented  by the first
quarter of calendar  1999.  Although  its  assessment  is  ongoing,  the Company
currently beleives that resolving these matters will not have a material adverse
effect on its financial condition or results of operations.

         The Company is also assessing the possible  effect on its operations of
the year 2000  readiness of critical  suppliers of products  and  services.  The
Company's reliance on its key suppliers, and therefore on the proper functioning
of their information  systems and software,  is increasing,  and there can be no
assurance that another  company's  failure to address year 2000 issues could not
have an adverse effect on the Company.

         The Company is  currently  in the process of  estimating  its year 2000
project costs as part of its annual budget process. The Company believes that it
is unlikely to experience a material  adverse impact on its financial  condition
or results of operations due to year 2000 compliance issues.  However, since the
assessment process is ongoing,  year 2000 complications are not fully known, and
potential  liability issues are not clear, the full potential impact of the year
2000 on the Company is not known at this time.


SAFE HARBOR STATEMENT

         "Safe Harbor" Statement under the Private Securities  Litigation Reform
Act of 1995: With the exception of historical information, the matters discussed
in this  Form  10-Q  are  forward-looking  statements  that  involve  risks  and
uncertainties including, but not limited to, economic conditions, product demand
and  industry  capacity,   competitive   products  and  pricing,   manufacturing
efficiencies,  new  product  development,  availability  of  raw  materials  and
critical  manufacturing  equipment,  the regulatory and trade  environment,  and
other risks indicated in filings with the Securities and Exchange Commission.


                                       11

<PAGE>

PART II - OTHER INFORMATION

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

         (a)      The  registrant's  Annual  Meeting  of  Stockholders  was held
                  on September 10, 1998.

         (b)      Not applicable.

         (c)      There  were  two  matters  voted  on at the  Meeting.  A brief
                  description of each of these  matters,  and the results of the
                  votes thereon, are as follows:

                  1.       Election of Directors


                           Nominee          For                        Abstain
                           -------          ---                        -------

                           Owyang           9,766,317                  58,942
                           Arndt            9,764,100                  61,159
                           Lipcaman         9,764,100                  61,159
                           Smith            9,764,215                  61,044


                  2.       Ratification  of the appointment of Ernst & Young LLP
                           as the  registrant's  auditors  for the  fiscal  year
                           ending December 31, 1998
<TABLE>
<CAPTION>

<S>            <C>            <C>                  <C>                     <C>    
                                                                                         Broker
                     For                 Against               Abstain                  Nonvotes
                     ---                 -------               -------                  --------

                   9,815,924              4,231                 3,104                       -0-
</TABLE>



         (d)      Not applicable.


Item 6.  Exhibits and Reports on Form 8-K

         (a)      Not applicable.

         (b) There was one  report on Form 8-K filed  during the  quarter  ended
September 27, 1998. The only item reported was Item  4--Changes in  Registrant's
Certifying Accountant. No financial statements were filed.
The date of this report is July 31, 1998.


                  The following exhibits are filed herewith:

                  27       Financial Data Schedule



                                       12
<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.


                                     SILICONIX INCORPORATED




Date: November 11, 1998              By: /s/King Owyang
                                         --------------
                                         King Owyang
                                         President and Chief Executive Officer



                                     By:  /s/Jens Meyerhoff
                                         ------------------
                                         Jens Meyerhoff
                                         Chief Financial Officier



                                       13