SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
                               -------------------

                                    FORM 10-Q
                                   (Mark One)

     [X]       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
                   OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 28, 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
August 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 six months ended June 28, 1998 and June 29, 1997         3

           Consolidated balance sheets as
           of June 28, 1998 and December 31, 1997                             4

           Consolidated statements of cash flows for the six months
           ended June 28, 1998 and June 29, 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                                    13

          Signature                                                           14


<PAGE>

<TABLE>   
<CAPTION>

                                                       SILICONIX INCORPORATED

                                                CONSOLIDATED STATEMENTS OF OPERATIONS

                                                             (Unaudited)


    -------------------------------------------------------------------------------------------------------------------------------
                                                                       Three Months Ended                 Six Months Ended

                                                                     June 28,      June 29,            June 28,            June 29,
    (In thousands, except per share amounts)                           1998          1997                1998              1997
    -------------------------------------------------------------------------------------------------------------------------------
 
<S>                                                               <C>           <C>                 <C>           <C>          
    Net sales                                                     $      70,371 $      80,024       $     135,621 $     150,236
    Cost of sales                                                        49,280        49,815              89,419        92,931
                                                                  -----------------------------------------------------------------

    Gross profit                                                         21,091        30,209              46,202        57,305

    Operating expenses:
    Research and development                                              3,831         4,394               8,860         8,523
    Selling, marketing, and administration                               13,079        14,889              29,791        28,798
    Amortization of goodwill                                                103            --                 103            --
    Restructuring                                                            --            --              19,751            --
                                                                  -----------------------------------------------------------------


    Operating income (loss)                                               4,078        10,926             (12,303)       19,984
    Interest expense                                                       (728)         (571)             (1,282)       (1,160)
    Other income (expense) - net                                           (553)         (187)             (1,082)           19
                                                                  -----------------------------------------------------------------

    Income (loss) before taxes and minority interest                      2,797        10,168             (14,667)       18,843
    Income taxes                                                           (959)       (2,135)              5,153        (3,870)
    Minority interest in income of consolidated subsidiary                  (58)           --                 (58)           --
                                                                  =================================================================
    Net income (loss)                                             $       1,780 $       8,033       $      (9,572)$      14,973
                                                                  =================================================================

    Net income (loss) per share (basic and diluted)               $        0.18 $        0.81       $       (0.96)$        1.50
                                                                  =================================================================

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

See accompanying notes to consolidated financial statements.

</TABLE>

                                        3

<PAGE>

                                                       SILICONIX INCORPORATED

                                                     CONSOLIDATED BALANCE SHEETS

                                                             (Unaudited)
<TABLE>
<CAPTION>

    --------------------------------------------------------------------------------------------------------
                                                                            June 28,           December 31,
    (In thousands)                                                            1998                 1997
    --------------------------------------------------------------------------------------------------------

    Assets
    --------------------------------------------------------------------------------------------------------

    Current assets:
<S>                                                                    <C>                    <C>          
      Cash and cash equivalents                                        $      31,569          $      10,249
      Short term investment with affiliate                                        --                  8,586
      Accounts receivable, less allowances                                    36,539                 52,310
      Accounts receivable from affiliates                                     17,885                  8,247
      Inventories                                                             54,308                 42,356
      Other current assets                                                    10,058                 11,592
      Deferred income taxes                                                   10,865                  6,481
                                                                       -------------------------------------
        Total current assets                                                 161,224                139,821
                                                                       -------------------------------------


    Property, plant, and equipment, at cost:
      Land                                                                     1,576                  1,174
      Buildings and improvements                                              45,749                 45,724
      Machinery and equipment                                                252,515                221,014
                                                                       -------------------------------------
                                                                             299,840                267,912
      Less accumulated depreciation                                          155,985                141,514
                                                                       -------------------------------------
        Net property, plant, and equipment                                   143,855                126,398
    Goodwill                                                                   9,060                     --
    Other assets                                                               2,599                 15,290
                                                                       -------------------------------------
        Total assets                                                   $     316,738          $     281,509
                                                                       =====================================

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

    Current liabilities:
      Accounts payable                                                 $      27,276          $      31,421
      Accounts payable to affiliates                                          19,271                 11,334
      Accrued payroll and related compensation                                 9,875                 13,970
      Accrued liabilities                                                     45,748                 32,877
                                                                       -------------------------------------
        Total current liabilities                                            102,170                 89,602

    Long-term related party debt                                              64,870                 34,570
    Long-term debt, less current portion                                       4,038                  3,887
    Deferred income taxes                                                      2,603                  3,900
    Minority interest                                                          3,000                     --
                                                                       -------------------------------------
        Total liabilities                                                    176,681                131,959
                                                                       -------------------------------------

    Shareholders' equity:
      Common stock                                                               100                    100
      Additional paid-in-capital                                              59,536                 59,482
      Retained earnings                                                       80,975                 90,547
      Accumulated other comprehensive income                                    (554)                  (579)
                                                                       -------------------------------------
        Total shareholders' equity                                           140,057                149,550
                                                                       -------------------------------------
        Total liabilities and shareholders' equity                     $     316,738          $     281,509
                                                                       =====================================
</TABLE>

See accompanying notes to consolidated financial statements.

                                        4

<PAGE>

<TABLE>    
<CAPTION>  
                                                       SILICONIX INCORPORATED

                                                CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                             (Unaudited)



    -------------------------------------------------------------------------------------------------------------------------
                                                                                            Six Months Ended
                                                                                     June 28,                June 29,
    (In thousands)                                                                     1998                     1997
    -------------------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>                      <C>          
    Cash flows from operating activities:

    Net income (loss)                                                          $      (9,572)           $      14,973
    Adjustments to reconcile net income (loss) to
      net cash provided by operating activities:
        Depreciation and amortization                                                 13,479                   10,599
        Deferred income taxes                                                         (5,681)                   1,000
        Undistributed earnings from joint venture                                       (970)                  (1,336)
        Payment of pension benefits                                                      (97)                    (410)
        Restructuring                                                                 12,788                       --
        Other non-cash expenses                                                          248                      291
        Changes in assets and liabilities, net of acquisitions
          Accounts receivable                                                         21,606                   (7,683)
          Accounts receivable from affiliates                                         (9,769)                  (1,581)
          Inventories                                                                (10,619)                    (390)
          Other assets                                                                  (189)                  (3,842)
          Accounts payable                                                            (4,470)                   2,221
          Accounts payable to affiliates                                               7,950                   (4,818)
          Accrued liabilities                                                         (2,783)                   1,258
                                                                               ---------------------------------------
    Net cash provided by operating activities                                         11,921                   10,282
                                                                               ---------------------------------------

    Cash flows from investing activities:
    Purchase of property, plant, and equipment                                       (14,726)                 (18,018)
    Cash acquired from purchase of business                                              977                       --
    Short term investment with affiliate                                               8,586                    2,020
    (Purchase) sale of other assets                                                       67                   (2,506)
                                                                               ---------------------------------------
    Net cash used by investing activities                                             (5,096)                 (18,504)
                                                                               ---------------------------------------

    Cash flows from financing activities:
    Proceeds from related party debt                                                  14,300                       --
                                                                               ---------------------------------------
    Net cash provided by financing activities                                         14,300                        0
                                                                               ---------------------------------------

    Effect of exchange rate changes on
      cash and cash equivalents                                                          195                     (365)
                                                                               ---------------------------------------

    Net increase (decrease) in cash and cash equivalents                              21,320                   (8,587)

    Cash and cash equivalents:
    Beginning of period                                                               10,249                   12,201
                                                                               ---------------------------------------
    End of period                                                              $      31,569            $       3,614
                                                                               =======================================

</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
six 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:

                                     June 28,               December 31,
                                         1998                       1997
                                     --------               -------------
                                             (In thousands)

         Finished goods             $  11,421                  $   11,758
         Work-in-process               34,412                      26,432
         Raw materials                  8,475                       4,166
                                    ---------                  ----------
                                    $  54,308                  $   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 an 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 June 28,  1998,  42  employees  have been  terminated  and $6.1
million of the termination costs were paid. Additionally,  $3.5 million has been
charged against the restructuring liability for the write-down of certain assets
and other expenses. Restructuring costs of $10.2 million are included in accrued
liabilities as of June 28, 1998.
         As of June 1998, the Company borrowed $10.0 million from Vishay to fund
part of these restructuring costs.

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.

                                       6

<PAGE>


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 PRONOUNCEMENT

         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 six
months ended June 28, 1998 and June 29, 1997, total comprehensive  income (loss)
amounted to $(9,547,000) and $14,862,000, 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 its interest in the Simconix joint venture
under the Equity Method of accounting.  The interest in Simconix 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.

NOTE 7.  SUPPLEMENTAL CASH FLOW INFORMATION

         The following are the effects of the non-cash  transactions relating to
the purchase of Simconix.

(In thousands)                            June 28, 1998           June 29,1997

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                   --

                                       7


<PAGE>




NOTE 8.           SUBSEQUENT EVENT

         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 second  quarter of 1998 were $70.4  million,  compared
with $80.0 million in the second quarter of 1997 and $65.3 million for the first
quarter of 1998.  The  decline of 12% over 1997 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.  The  Company  completed  the
integration of its sales force into the Vishay worldwide sales force and expects
that its distribution  business,  which has been slow in the first half of 1998,
particularly  in North  America,  will improve as a result of this  effort.  The
Company  continued  to focus on its  major  markets  in the  second  quarter  by
introducing  additional  Power MOSFETs  optimized for specific  applications  in
notebook computers and cellular telephones.

         Sales of Power IC  products  increased  30% from the first  quarter  of
1998, while sales of Power MOSFETs increased 12%. Sales of the Signal Processing
product line  decreased by 17%. In  comparison  to sales for the same quarter in
1997, the Power MOSFET and Signal Processing  product lines decreased by 12% and
33%,  respectively;  Power IC sales  increased by 32%

                                       9

<PAGE>


from the prior year. Asia Pacific experienced a 49% revenue increase compared to
the  second  quarter  of 1997.  Revenues  in North  America,  Europe,  and Japan
declined by 35%, 11%, and 64%, respectively, from the second quarter of 1997.

         Gross  profit of 30% for the second  quarter of 1998  declined by 8% in
comparison to the second  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 $3.8  million for the second
quarter of 1998,  which marks a decrease of 13% from $4.4  million in the second
quarter of 1997.  Research  and  development  expenditures  as a  percentage  of
revenue  remained  constant at 5% from the same quarter in the previous year. In
light of low  production  volumes,  the  throughput of research and  development
wafers has been significantly  improved which results in shorter cycle times for
new product  releases.  Therefore  the Company will release more new products in
1998 compared to 1997, at overall reduced spending levels.

         Selling,  marketing,  and administration expenses were reduced to $13.1
million for the second  quarter of 1998 from $14.9  million for the same quarter
of 1997. Due to cost reduction  efforts,  spending for selling,  marketing,  and
administration expenses declined by $3.6 million from the first quarter of 1998.
As a percentage of revenue,  this expense category  declined from 26% of revenue
for the first  quarter of 1998 to 19% of revenue for the second  quarter of this
year. Selling,  marketing,  and administration expenses for 1998 are expected to
further decline as a result of the  restructuring  plan,  initiated in the first
quarter of this year.

         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  $10.2   million  are   included  in  accrued
liabilities as of June 28, 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 second quarter of 1998 decreased by 55% from
the same quarter of 1997 due to the decrease in earnings before taxes.

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

                                       10

<PAGE>




Liquidity and Capital Resources

         Cash and cash  equivalents  and  short-term  investment  with affiliate
increased by $12.7 million from December 31, 1997. The consolidation of Simconix
accounted for $5.8 million of the increase in the cash balance. The Company also
received $14.3 million this quarter from a revolving credit note with Vishay. In
1998,  the  Company  borrowed  a total of $30.3  million  from  Vishay to fund a
portion  of  the  restructuring  costs,  capital  investments  as  well  as  the
acquisition of Simconix.  Management expects 1998 cash flows from operations and
existing  lines of credit with Vishay to be  sufficient  to fund  investment  in
capital expenditures and research and development.

         Accounts receivable decreased by $15.8 million or 30% from December 31,
1997 primarily due to the decrease in revenues.  Revenues for the second quarter
of 1998 were $70.4  million,  compared with $90.4 million for the fourth quarter
of 1997.

         Net  affiliate  accounts  receivable/payable  increased by $1.7 million
from  December  31,  1997  mainly  due to  the  timing  of  cash  received  from
unconsolidated affiliates.

         Inventories  increased by $12.0  million or 28% from  December 31, 1997
due to the addition of manufacturing capacity,  including the leased fabrication
facility in Itzehoe, Germany.

         Capital  expenditures  were  $14.7  million  in the first six months of
1998,  compared  to  $18.0  million  in  the  first  six  months  of  1997.  The
expenditures  were related to additions  for plant  capacity  initiated in 1997,
expansion and new technology capability. Driven by the overall market conditions
and reduced growth  expectations for 1998, the Company decided during the second
quarter  to  cancel  further   capacity   expansion   which  will  keep  capital
expenditures below 1997 levels.

         Current liabilities increased by $12.6 million or 14% from December 31,
1997 mainly due to the restructuring  costs relating to the Vishay  acquisition.
As of June 28, 1998, $10.2 million of restructuring costs is included in accrued
liabilities.

         Although  the Company  believes  that its products and systems are Year
2000 compliant, the Company utilizes third-party equipment and software that may
not be  compliant.  Many  currently  installed  computer  sysytems  and software
products  are coded to accept  only two digit  entries  in the date code  field.
These date code  fields will need to accept  four digit  entries to  distinguish
21st century dates from 20th century dates.  As a result,  software and computer
systems  may need to be  upgraded or replaced in order to comply with such "Year
2000"  requirements.  Failure of third  party  equipment  or software to operate
properly with regard to the Year 2000 and  thereafter  could require the Company
to  incur  unanticipated  expenses  to  remedy  any  problem.  Furthermore,  the
purchasing  patterns of customers or potential customers may be affected by Year
2000 issues as companies expend  significant  resources to correct their current
systems for Year 2000  compliance.  These issues  could have a material  adverse
effect on the Company's business and operating results.

                                       11

<PAGE>


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 previous  filings  with the  Securities  and Exchange
Commission.

                                       12

<PAGE>




PART II - OTHER INFORMATION


ITEM     6:       EXHIBITS AND REPORTS ON FORM 8-K

                  The following exhibit is filed herewith:

                      27            Financial Data Schedule

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<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: August 12, 1998                 By: /s/King Owyang
                                          --------------
                                          King Owyang
                                          President and Chief Executive Officer



                                      By:  /s/Jens Meyerhoff
                                           -----------------
                                          Jens Meyerhoff
                                          Principal Financial and Accounting
                                          Officer


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