SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
            --------------------------------------------------------

                                    FORM 10-Q
             -------------------------------------------------------

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

                For the quarterly period ended November 30, 2003

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                          Commission file number 0-7422
        -----------------------------------------------------------------

                        STANDARD MICROSYSTEMS CORPORATION
        -----------------------------------------------------------------

             (Exact name of registrant as specified in its charter)

                         DELAWARE             11-2234952
        -----------------------------------------------------------------

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

             80 Arkay Drive, Hauppauge, New York           11788
        -----------------------------------------------------------------

            (Address of principal executive offices)     (Zip Code)

        Registrant's telephone number, including area code: 631-435-6000

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  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act). Yes _X_ No ____

As of November 30, 2003, there were 17,990,546 shares of the registrant's common
stock outstanding.
<PAGE>

                        Standard Microsystems Corporation
                                    Form 10-Q
                     For the Quarter Ended November 30, 2003

                                Table of Contents



Part I   Financial Information

Item 1   Financial Statements (unaudited):
         Condensed  Consolidated  Balance  Sheets as of  November  30,  2003 and
         February 28, 2003
         Condensed Consolidated  Statements of Operations for the Three and Nine
         Months Ended November 30, 2003 and 2002
         Condensed  Consolidated  Statements  of Cash Flows for the Nine  Months
         Ended November 30, 2003 and 2002
         Notes to Condensed Consolidated Financial Statements
Item 2   Management's   Discussion  and   Analysis  of Financial  Condition  and
         Results of Operations
Item 3   Quantitative and Qualitative Disclosures About Market Risk
Item 4   Controls and Procedures

Part II  Other Information

Item 1   Legal Proceedings
Item 6   Exhibits and Reports on Form 8-K

Signature
<PAGE>
                         PART I - FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS

STANDARD MICROSYSTEMS CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(In thousands)


                                                  November 30,      February 28,
                                                     2003              2003
                                                     ----              ----
Assets
Current assets:
  Cash and cash equivalents                       $   125,186       $    90,025
  Short-term investments                               36,752            22,872
  Accounts receivable, net                             21,544            22,738
  Inventories                                          21,600            17,644
  Deferred income taxes                                13,411             8,545
  Other current assets                                  5,164             8,710
--------------------------------------------------------------------------------

       Total current assets                           223,657           170,534
--------------------------------------------------------------------------------

Property, plant and equipment, net                     19,852            22,257
Goodwill                                               29,595            29,773
Intangible assets, net                                  5,014             6,008
Deferred income taxes                                   8,916            11,779
Other assets                                            5,760             7,598
--------------------------------------------------------------------------------

                                                  $   292,794       $   247,949
================================================================================

Liabilities and shareholders' equity
Current liabilities:
  Accounts payable                                $    11,648       $     9,114
  Deferred income on shipments to distributors          6,614             5,943
  Accrued expenses, income taxes
   and other liabilities                               11,675             9,838
--------------------------------------------------------------------------------

        Total current liabilities                      29,937            24,895
--------------------------------------------------------------------------------

Other liabilities                                       6,956             7,379

Minority interest in subsidiary                        11,802            11,663

Shareholders' equity:
  Preferred stock                                           -                 -
  Common stock                                          1,981             1,859
  Additional paid-in capital                          167,628           147,655
  Retained earnings                                    95,475            77,492
  Treasury stock, at cost                             (23,454)          (23,454)
  Deferred stock-based compensation                    (2,016)           (2,102)
  Accumulated other comprehensive income                4,485             2,562
--------------------------------------------------------------------------------

        Total shareholders' equity                    244,099           204,012
--------------------------------------------------------------------------------

                                                  $   292,794       $   247,949
================================================================================

See Notes to Condensed Consolidated Financial Statements.
<PAGE>
STANDARD MICROSYSTEMS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>


                                                                       Three Months Ended                Nine Months Ended
                                                                   ---------------------------     ---------------------------
                                                                          November 30,                     November 30,
                                                                   ---------------------------     ---------------------------
                                                                      2003             2002           2003             2002
                                                                      ----             ----           ----             ----

<S>                                                               <C>              <C>            <C>              <C>
Sales and revenues:
Product sales                                                     $   52,282       $   40,293     $  142,751       $  111,890
Intellectual property revenues                                        20,467              305         21,008            1,015
----------------------------------------------------------------------------------------------    ----------------------------
                                                                      72,749           40,598        163,759          112,905

Cost of goods sold                                                    30,350           22,653         79,192           62,777
----------------------------------------------------------------------------------------------    ----------------------------

Gross profit                                                          42,399           17,945         84,567           50,128

Operating expenses (income):
Research and development                                              10,244            8,037         28,625           22,662
Selling, general and administrative                                   11,570            9,534         31,048           26,387
Amortization of intangible assets                                        317              360            994              807
Gains on real estate transactions                                          -                -         (1,444)               -
----------------------------------------------------------------------------------------------    ----------------------------

Income from operations                                                20,268               14         25,344              272

Interest income                                                          617              496          1,451            1,610
Impairment of investments                                                  -          (16,306)             -          (16,306)
Other expense, net                                                      (145)             (78)          (890)            (100)
----------------------------------------------------------------------------------------------    ----------------------------

Income (loss) before provision for (benefit from) income
 taxes and minority interest                                          20,740          (15,874)        25,905          (14,524)

Provision for (benefit from) income taxes                              5,910           (6,854)         7,590           (6,503)

Minority interest in net income of subsidiary                             43               12            139               10
----------------------------------------------------------------------------------------------    ----------------------------

Income (loss) from continuing operations                              14,787           (9,032)        18,176           (8,031)

Loss from discontinued operations
 (net of income tax benefits of $2, $69, $108, and $260)                  (3)            (125)          (193)            (464)
----------------------------------------------------------------------------------------------    ----------------------------

Net income (loss)                                                 $   14,784       $   (9,157)    $   17,983       $   (8,495)
==============================================================================================    ============================

Basic net income (loss) per share:
 Income (loss) from continuing operations                         $     0.84       $    (0.54)    $     1.06       $    (0.49)
 Loss from discontinued operations                                         -            (0.01)         (0.01)           (0.03)
----------------------------------------------------------------------------------------------    ----------------------------

Basic net income (loss) per share                                 $     0.84       $    (0.55)    $     1.05       $    (0.52)
==============================================================================================    ============================

Diluted net income (loss) per share:
 Income (loss) from continuing operations                         $     0.77       $    (0.54)    $     1.00       $    (0.49)
 Loss from discontinued operations                                         -            (0.01)         (0.01)           (0.03)
----------------------------------------------------------------------------------------------    ----------------------------

Diluted net income (loss) per share                               $     0.77       $    (0.55)    $     0.99       $    (0.52)
==============================================================================================    ============================

Weighted average common shares outstanding:
 Basic                                                                17,577           16,718         17,120           16,472
 Diluted                                                              19,242           16,718         18,143           16,472

See Notes to Condensed Consolidated Financial Statements.
</TABLE>
<PAGE>
STANDARD MICROSYSTEMS CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)

<TABLE>
<CAPTION>
                                                                               Nine Months Ended November 30,
                                                                            -----------------------------------

                                                                                 2003                 2002
                                                                            --------------       --------------

<S>                                                                         <C>                  <C>
Cash flows from operating activities:
 Cash received from customers and licensees                                 $     164,609        $     112,542
 Cash paid to suppliers and employees                                            (131,263)            (108,203)
 Interest received                                                                  1,361                1,803
 Interest paid                                                                        (51)                (126)
 Income taxes paid                                                                   (363)                (390)
---------------------------------------------------------------------------------------------------------------

  Net cash provided by operating activities                                        34,293                5,626
---------------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
 Capital expenditures                                                              (7,563)              (4,346)
 Sales of property, plant and equipment                                             7,121                    -
 Acquisition of Gain Technology Corporation                                             -              (15,669)
 Sales of long-term investments                                                     2,114                    -
 Purchases of short-term investments                                              (36,675)             (30,292)
 Sales of short-term investments                                                   22,795               28,785
 Other                                                                                139                  180
---------------------------------------------------------------------------------------------------------------

  Net cash used for investing activities                                          (12,069)             (21,342)
---------------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
 Proceeds from issuance of common stock                                            13,698                4,716
 Purchases of treasury stock                                                            -              (10,375)
 Repayments of obligations under capital leases and notes payable                  (1,249)              (2,320)
---------------------------------------------------------------------------------------------------------------

  Net cash provided by (used for) financing activities                             12,449               (7,979)
---------------------------------------------------------------------------------------------------------------

Effect of foreign exchange rate changes on cash and cash equivalents                  789                  693

Cash used for discontinued operation                                                 (301)                (866)
---------------------------------------------------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents                               35,161              (23,868)

Cash and cash equivalents at beginning of period                                   90,025               98,065
---------------------------------------------------------------------------------------------------------------

Cash and cash equivalents at end of period                                  $     125,186        $      74,197
===============================================================================================================


Reconciliation of  income (loss) from continuing operations
to net cash provided by operating activities:

Income (loss) from continuing operations                                    $      18,176        $      (8,031)
Adjustments to reconcile income (loss) from continuing operations
 to net cash provided by operating activities:
  Depreciation and amortization                                                     8,142                7,822
  Tax benefits from employee stock plans                                            5,615                1,707
  Gains from sales of investments and property, net                                  (686)                 (43)
  Asset impairment charges                                                              -               16,306
  Other adjustments, net                                                             (197)                  36
  Changes in operating assets and liabilities:
   Accounts receivable                                                              1,512               (1,928)
   Inventories                                                                     (3,444)                (420)
   Accounts payable and accrued expenses and other liabilities                      3,891               (1,313)
   Current and deferred income taxes                                                1,136               (8,643)
   Other changes, net                                                                 148                  133
---------------------------------------------------------------------------------------------------------------

Net cash provided by operating activities                                   $      34,293        $       5,626
===============================================================================================================

See Notes to Condensed Consolidated Financial Statements.
</TABLE>
<PAGE>
STANDARD MICROSYSTEMS CORPORATION
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


1.   Basis of Presentation

     The accompanying  unaudited condensed consolidated financial information of
     Standard Microsystems  Corporation and subsidiaries,  referred to herein as
     "SMSC" or "the  Company",  has been prepared in accordance  with  generally
     accepted  accounting  principles  and  the  rules  and  regulations  of the
     Securities  and  Exchange   Commission,   and  reflects  all   adjustments,
     consisting  only of normal  recurring  adjustments,  which in  management's
     opinion are  necessary to state fairly the  Company's  financial  position,
     results of operations and cash flows for all periods presented.

     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
     the  disclosure of  contingent  assets and  liabilities  at the date of the
     financial statements, as well as the reported amounts of sales and revenues
     and expenses  during the reporting  period.  Actual results may differ from
     those  estimates,  and such  differences  may be material to the  financial
     statements.  These condensed  consolidated  financial  statements should be
     read in conjunction with the audited consolidated  financial statements for
     the year ended February 28, 2003 included in the Company's annual report on
     Form  10-K,  as filed on May 29,  2003  with the  Securities  and  Exchange
     Commission.  The results of operations  for the three and nine months ended
     November  30,  2003 are not  necessarily  indicative  of the  results to be
     expected for any future periods.


2.   Stock-Based Compensation

     The  Company has in effect  several  stock-based  compensation  plans under
     which incentive stock options,  non-qualified  stock options and restricted
     stock awards are granted to employees and directors.  All stock options are
     granted  with  exercise  prices  equal to the fair value of the  underlying
     shares on the date of grant.  The Company  accounts for stock option grants
     in  accordance  with  Accounting  Principles  Board  (APB)  Opinion No. 25,
     "Accounting  for Stock Issued to Employees" and  accordingly  recognizes no
     compensation  expense for the stock  option  grants.  Additional  pro forma
     disclosures as required under Statement of Financial  Accounting  Standards
     (SFAS) No. 123,  "Accounting for Stock-Based  Compensation",  as amended by
     SFAS No. 148,  "Accounting  for  Stock-Based  Compensation - Transition and
     Disclosure", are detailed below.

     For purposes of pro forma  disclosures,  the estimated fair market value of
     the Company's  options is amortized as an expense over the options' vesting
     periods.  The fair value of each option grant,  as defined by SFAS No. 123,
     is  estimated on the date of grant using the  Black-Scholes  option-pricing
     model. The Black-Scholes  model, as well as other currently accepted option
     valuation  models,  was  developed  to  estimate  the fair  value of freely
     tradable,  fully transferable  options without vesting  restrictions,  that
     significantly  differ from the Company's  stock option awards.  Because the
     Company's  employee  stock  options  have   characteristics   significantly
     different  from  those  of  traded  options,  and  because  changes  in the
     subjective input assumptions can materially affect the fair value estimate,
     in the  opinion  of  management,  the  existing  models do not  necessarily
     provide a  reliable  single  measure of the fair  value of  employee  stock
     options.
<PAGE>

     Had  compensation  expense been recorded  under the  provisions of SFAS No.
     123, the  Company's net income (loss) and net income (loss) per share would
     have been the pro forma amounts  indicated below (in thousands,  except per
     share data):
<TABLE>
<CAPTION>

                                                           Three Months Ended            Nine Months Ended
                                                              November 30,                  November 30,
                                                       ---------------------------------------------------------
                                                           2003           2002            2003         2002
                                                       ---------------------------------------------------------

       <S>                                               <C>           <C>              <C>          <C>
       Net income (loss) - as reported                   $  14,784     $  (9,157)       $  17,983    $  (8,495)
       Stock-based compensation expense included in
       net income, net of taxes - as reported                  232           200              691          548
       Stock-based compensation expense determined
       using fair value method, net of taxes                 2,916        (2,190)          (1,775)      (5,236)
       ---------------------------------------------------------------------------------------------------------
       Net income (loss) - pro forma                     $  17,932     $ (11,147)       $  16,899    $ (13,183)
       =========================================================================================================

       Basic net income  (loss) per share - as
       reported                                          $    0.84     $   (0.55)       $    1.05    $   (0.52)
       =========================================================================================================
       Diluted net income (loss) per share - as
       reported                                          $    0.77     $   (0.55)       $    0.99    $   (0.52)
       =========================================================================================================
       Basic net income (loss) per share - pro forma     $    1.02     $   (0.67)       $    0.99    $   (0.80)
       =========================================================================================================
       Diluted net income (loss) per share - pro
       forma                                             $    1.02     $   (0.67)       $    0.99    $   (0.80)
       =========================================================================================================
</TABLE>


3.   Balance Sheet Data

     Inventories  are valued at the lower of first-in,  first-out cost or market
     and consist of the following (in thousands):

                                             Nov. 30, 2003     Feb. 28, 2003
       -----------------------------------------------------------------------

       Raw materials                        $         502     $          761
       Work in process                              8,776              7,686
       Finished goods                              12,322              9,197
       -----------------------------------------------------------------------

                                            $      21,600     $       17,644
       =======================================================================

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

                                             Nov. 30, 2003      Feb. 28,2003
       -----------------------------------------------------------------------
       Land                                 $       1,571     $        3,434
       Buildings and improvements                  20,707             29,927
       Machinery and equipment                     84,410             81,562
       -----------------------------------------------------------------------
                                                  106,688            114,923
        Less: accumulated depreciation             86,836             92,666
       -----------------------------------------------------------------------

                                            $      19,852     $       22,257
       =======================================================================

     During the three  months  ended May 31,  2003,  the  Company  sold  certain
     portions  of its real estate  holdings,  further  details for which  appear
     within Note 11.


4.   Net Income Per Share

     Basic net income per share is calculated using the weighted-average  number
     of common  shares  outstanding  during the  period.  Diluted net income per
     share is  calculated  using the  weighted-average  number of common  shares
     outstanding during the period,  plus the dilutive effect of shares issuable
     through stock options.
<PAGE>

     The shares used in  calculating  basic and diluted net income per share for
     the Condensed  Consolidated  Statements of Operations  included within this
     report are reconciled as follows (in thousands):
<TABLE>
<CAPTION>

                                                        Three Months Ended          Nine Months Ended
                                                           November 30,               November 30,
                                                    --------------------------------------------------------
                                                       2003          2002          2003           2002
                                                    --------------------------------------------------------

     <S>                                                 <C>           <C>           <C>            <C>
     Average shares outstanding for
      basic net income (loss) per share                  17,577        16,718        17,120         16,472

     Dilutive effect of stock options                     1,665             -         1,023              -
     -------------------------------------------------------------------------------------------------------

     Average shares outstanding for
      diluted net income (loss) per share                19,242        16,718        18,143         16,472
     =======================================================================================================
</TABLE>

     Options  covering  0.3 million and 1.4 million  shares for the  three-month
     periods ended November 30, 2003 and 2002, respectively, and 1.6 million and
     0.8 million shares for the  nine-month  periods ended November 30, 2003 and
     2002,  respectively,  were excluded from the  computation of average shares
     outstanding  for  diluted  net income per share  because  their  effect was
     antidilutive.


5.   Comprehensive Income

     The  Company's  other  comprehensive  income  consists of foreign  currency
     translation  adjustments from those  subsidiaries not using the U.S. dollar
     as their  functional  currency,  and unrealized  gains and losses on equity
     investments  classified  as  available-for-sale.   The  components  of  the
     Company's  comprehensive  income (loss) for the three and nine months ended
     November 30, 2003 and 2002 were as follows (in thousands):
<TABLE>
<CAPTION>


                                                      Three Months Ended             Nine Months Ended
                                                         November 30,                  November 30,
                                                ------------------------------------------------------------
                                                    2003            2002           2003            2002
                                                ------------------------------------------------------------

     <S>                                          <C>             <C>            <C>             <C>
     Net income (loss)                            $  14,784       $  (9,157)     $  17,983       $  (8,495)
     Other comprehensive income (loss):
     Change in foreign currency
      translation adjustment                            995            (509)         1,211           1,209
     Change in unrealized gain (loss) on
      marketable equity securities, net of taxes         12              22             47             (18)
     Reclassification adjustment for loss on
      marketable equity security included in net
      income, net of taxes                                -           3,542            665             432
     -------------------------------------------------------------------------------------------------------

     Total comprehensive income (loss)            $  15,791       $  (6,102)     $  19,906       $  (6,872)
     =======================================================================================================
</TABLE>

     During the nine months  ended  November  30,  2003,  the  Company  sold its
     remaining equity investment in Chartered Semiconductor Manufacturing,  Ltd.
     This investment was classified as available-for-sale, and temporary changes
     in its  market  value,  net of  income  taxes,  were  included  within  the
     Company's Other comprehensive income, and were presented cumulatively as an
     unrealized  gain or loss,  net of income taxes,  within  Accumulated  other
     comprehensive  income on the Company's  Consolidated  Balance  Sheets.  The
     amounts  presented as  reclassification  adjustments in the preceding table
     represent the amounts previously reported within Other comprehensive income
     as an unrealized loss on this investment,  net of income taxes, through the
     applicable reporting dates.


6.   Agreements with Intel Corporation

     As previously  reported,  the Company and Intel Corporation (Intel) entered
     into an agreement  in 1987  providing  for,  among other  things,  a broad,
     worldwide,  non-exclusive  patent  cross-license,   covering  manufacturing
     processes  and  products,  thereby  providing  each  company  access to the
     other's current and future patent portfolios.

     In September  2003, the Company and Intel  announced that they had enhanced
     their intellectual property and business relationship. The companies agreed
     to collaborate on certain future I/O and sensor products,  and Intel agreed
     to use the Company's  devices on certain current and future  generations of
     Intel products.  In addition,  the Company agreed to limit its rights under
     its  1987  patent   cross-license   with  Intel  to  manufacture  and  sell
     Northbridge  products and Intel  Architecture  Microprocessors on behalf of
     third parties.  The companies also terminated an Investor Rights  Agreement
     between them,  which had been entered into in connection  with Intel's 1997
     acquisition of 1,543,000 shares of the Company's  common stock.  Under this
     agreement,  Intel had certain  information,  corporate governance and other
     rights with respect to the activities of the Company.

     In  respect  of this new  relationship,  Intel  will pay to the  Company an
     aggregate  amount  of $75  million,  of  which  $20  million  was  paid and
     recognized  as  intellectual  property  revenue in the third quarter of the
     Company's  fiscal 2004,  $10 million will be paid in each of calendar years
     2004 and 2005,  $11  million  will be paid in calendar  year 2006,  and $12
     million will be paid in each of calendar years 2007 and 2008.  Such amounts
     are payable in equal quarterly  installments within each calendar year, and
     are  subject  to  possible  reduction,  in a manner  and to an extent to be
     agreed by the parties,  based upon the companies'  collaboration and sales,
     facilitated by Intel, of certain future new products of the Company.


7.   Business Acquisition

     In June 2002, the Company  acquired all of the outstanding  common stock of
     Gain Technology Corporation (Gain), a developer and supplier of high-speed,
     high-performance analog and mixed-signal communications integrated circuits
     and proprietary  intellectual property cores, based in Tucson, Arizona, for
     $36.1 million.

     The unaudited  pro forma  results of  operations  for the nine months ended
     November 30, 2002 set forth below give effect to the acquisition of Gain as
     if it had  occurred  at the  beginning  of fiscal  2003.  Pro forma data is
     subject  to  certain  assumptions  and  estimates,  and  is  presented  for
     informational purposes only. This data does not purport to be indicative of
     the results that would have actually occurred had the acquisition  occurred
     on the basis  described  above,  nor do they  purport to be  indicative  of
     future operating results.
<PAGE>

                                                         Nine Months Ended
                                                         November 30, 2002
                                                    ----------------------------
     (in thousands, except per share data)              Autual       Pro forma
                                                    --------------  ------------

     Sales and revenues                             $ 112,905       $ 114,143
     Net loss                                          (8,495)         (9,338)
     ===========================================================================

     Basic and diluted net loss per share           $   (0.52)      $   (0.54)
     ===========================================================================


8.   Business Restructuring

     In December 2001, the Company  announced a restructuring  plan for its exit
     from the PC chipset business.

     A summary of the activity in the reserve related to this  restructuring for
     the nine months ended November 30, 2003 is as follows (in thousands):


                                            Non-cancelable
                                                lease        Other
                                             obligations    Charges     Total
     ---------------------------------------------------------------------------
      Business restructuring reserve at
      February 28, 2003                      $  1,374       $  45      $ 1,419
      Cash payments                              (309)          -         (309)
     ---------------------------------------------------------------------------
      Business restructuring reserve at
      November 30, 2003                      $  1,065       $  45      $ 1,110
     ===========================================================================

     Payments related to  non-cancelable  lease  obligations are being paid over
     their respective terms through August 2008.


9.   Discontinued Operations

     The Company  had been  involved in an  arbitration  with Accton  Technology
     Corporation  (Accton) and SMC Networks,  Inc.  (Networks) related to claims
     associated  with the  purchase  of an 80.1%  interest in Networks by Accton
     from  SMSC  in  October  1997.  This  divestiture  was  accounted  for as a
     discontinued operation, and accordingly, costs associated with this action,
     net of income taxes, are reported as a Loss from discontinued operations on
     the Consolidated Statements of Operations.  These costs were nominal during
     the three months ended November 30, 2003,  compared to $0.1 million for the
     three months ended November 30, 2002, after applicable income tax benefits.
     These costs totaled $0.2 million and $0.5 million in the nine-month periods
     ended November 30, 2003 and 2002, respectively, after applicable income tax
     benefits.

     In  September  2003,  the  arbitration  panel  issued its  decision in this
     action, which directed the release of a $2.5 million escrow account to SMSC
     and awarded certain other payments among the parties.

     In December  2003,  the parties  reached a final  settlement  of the award,
     resulting in SMSC  receiving  $2.7 million in cash and  realizing a gain of
     $0.1  million,  after  income  taxes,  which will be  reported as a Gain on
     discontinued operations in the quarter ending February 29, 2004.


10.  Goodwill and Intangible Assets

     The Company's June 2002 acquisition of Gain Technology Corporation included
     the acquisition of $7.1 million of finite-lived intangible assets and $29.6
     million  of  goodwill,  after  adjustments.  During the nine  months  ended
     November 30, 2003, the Company  reduced the amount of goodwill  relating to
     this  transaction  from $29.8  million  to $29.6  million,  reflecting  the
     resolution of certain  contingencies  at amounts  different than originally
     estimated. In accordance with the provisions of SFAS No. 142, this goodwill
     is not amortized,  but is tested for impairment in value annually,  as well
     as when an event or circumstance occurs indicating a possible impairment in
     its value.

     All finite-lived  intangible  assets are being amortized on a straight-line
     basis  over  their  estimated  useful  lives.  Existing  technologies  were
     assigned an estimated  useful life of six years.  Customer  contracts  were
     assigned useful lives of between one and ten years (with a weighted average
     life  of  approximately  seven  years),  and  non-compete  agreements  were
     assigned useful lives of two years. The weighted average useful life of all
     intangible assets is approximately six years.
<PAGE>

     As of November 30,  2003,  the  Company's  finite-lived  intangible  assets
     consisted of the following (in thousands):

                                                Accumulated
                                    Cost        Amortization            Net
     -----------------------------------------------------------------------

     Existing technologies       $  6,179       $      1,545       $  4,634
     Customer contracts               326                 49            277
     Non-compete agreements           410                307            103
     -----------------------------------------------------------------------

                                 $  6,915       $      1,901       $  5,014
     =======================================================================

     Estimated future intangible asset amortization expense for the remainder of
     fiscal 2004,  and for the five fiscal years  thereafter,  is as follows (in
     thousands):

     Period                                     Amount
     --------------------------------------------------

     Remainder of fiscal 2004                   $  317
     Fiscal 2005                                 1,114
     Fiscal 2006                                 1,062
     Fiscal 2007                                 1,062
     Fiscal 2008                                 1,062
     Fiscal 2009                                   290
     ==================================================


11.  Real Estate Transactions

     During the first quarter of fiscal 2004, the Company sold certain  portions
     of its Hauppauge,  New York real estate holdings, for aggregate proceeds of
     $7.0 million,  net of transaction costs. These transactions  resulted in an
     aggregate  gain of $1.7 million,  $1.4 million of which related to property
     in which the Company has no continued  interest and was  recognized  within
     the Company's fiscal 2004 first quarter operating results, and $0.3 million
     of which  related to  property  that the  Company  has leased back from the
     purchaser  and has  therefore  been  deferred.  This deferred gain is being
     recognized  within the Company's  operating  results as a reduction of rent
     expense on a straight-line  basis over a 30-month period  beginning in June
     2003,  consistent with the term of the lease. The Company's  remaining rent
     obligation over the term of this lease is approximately $0.7 million.


12.  Sales of Equity Investment

     During the three months ended May 31, 2003,  the Company sold its remaining
     equity investment in Chartered Semiconductor Manufacturing, Ltd., realizing
     a loss of $0.7 million, which is included within Other expense, net.


13.  Litigation

     In June 2003, Standard Microsystems Corporation was named as a defendant in
     a patent  infringement  lawsuit filed by Analog Devices,  Inc. (ADI) in the
     United  States  District  Court for the District of  Massachusetts  (Analog
     Devices,  Inc. v.  Standard  Microsystems  Corporation,  Case Number 03 CIV
     11216).  The  Complaint,  as amended,  alleges  that some of the  Company's
     products  infringe  one or  more of  three  of  ADI's  patents,  and  seeks
     injunctive relief and unspecified  damages.  In September 2003, the Company
     filed an Answer in the  lawsuit,  denying  ADI's  allegations  and  raising
     affirmative defenses and counterclaims.  Although it is premature to assess
     the outcome of the  litigation,  the Company  believes that the allegations
     against it are without merit.


14.  Recent Accounting Pronouncements

     In  November  2002,  the  Emerging  Issues  Task  Force  (EITF),  reached a
     consensus on EITF Issue No.  00-21,  "Revenue  Arrangements  with  Multiple
     Deliverables."  EITF Issue No. 00-21  requires  revenue  arrangements  with
     multiple  deliverables  to be divided into separate  units of accounting if
     the   deliverables  in  the   arrangement   meet  certain   criteria.   The
     arrangement's consideration should be allocated among the separate units of
     accounting  based  on  their  relative  fair  values.   Applicable  revenue
     recognition  criteria  should be considered  separately  for each unit. The
     provisions of EITF Issue No. 00-21 are  effective for revenue  arrangements
     entered into in fiscal periods  beginning after June 15, 2003. The adoption
     of this standard did not have a material impact on the Company's  financial
     condition or results of operations.

     In  December  2002,  the FASB  issued  Statement  of  Financial  Accounting
     Standards  (SFAS) No.  148,  "Accounting  for  Stock-Based  Compensation  -
     Transition  and  Disclosure  - an  Amendment  of SFAS  No.  123",  which is
     effective for financial  statements  for fiscal years ending after December
     15, 2002, with early adoption permitted. SFAS No. 148 will enable companies
     that choose to adopt the fair value based  method to report the full effect
     of employee stock options in their financial  statements  immediately  upon
     adoption,  and to make  available  to  investors  better and more  frequent
     disclosure  about the cost of employee  stock  options.  The  Company  will
     continue to apply the  disclosure-only  provisions of both SFAS No. 123 and
     SFAS No. 148.

     In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
     Derivative  Instruments and Hedging Activities".  This statement amends and
     clarifies  financial  accounting and reporting for derivative  instruments,
     including certain derivative  instruments embedded in other contracts,  and
     for hedging  activities  under SFAS No. 133.  SFAS No. 149 is effective for
     contracts  entered into or modified  after June 30,  2003.  The adoption of
     this  standard did not have a material  impact on the  Company's  financial
     condition or results of operations.

     In May  2003,  the  FASB  issued  SFAS No.  150,  "Accounting  for  Certain
     Financial Instruments with Characteristics of both Liabilities and Equity".
     SFAS  No.  150  establishes  standards  for how an  issuer  classifies  and
     measures  certain  financial   instruments  with  characteristics  of  both
     liabilities  and equity,  and requires that an issuer  classify a financial
     instrument that is within its scope as a liability (or as an asset, in some
     circumstances).  Many of those  instruments  were previously  classified as
     equity. SFAS No. 150 is effective for financial instruments entered into or
     modified  after May 31, 2003.  It is to be  implemented  by  reporting  the
     cumulative  effect of a change in an  accounting  principle  for  financial
     instruments  created  before  the  issuance  date of SFAS No. 150 and still
     existing at the beginning of the interim  period of adoption.  The adoption
     of this standard did not have a material impact on the Company's  financial
     condition or results of operations.


ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS


The  following  discussion  should  be read in  conjunction  with the  Company's
consolidated  condensed financial statements and notes thereto contained in this
report.

Portions of this report may contain  forward-looking  statements  about expected
future  events and  financial  and  operating  results  that  involve  risks and
uncertainties.  These include,  among others,  the timely development and market
acceptance of new products;  the impact of competitive products and pricing; the
effect of changing economic  conditions in domestic and  international  markets;
changes in customer  order  patterns,  including  loss of key  customers,  order
cancellations  or  reduced  bookings;  and  excess  or  obsolete  inventory  and
variations  in  inventory   valuation.   Words  such  as  "believe,"   "expect,"
"anticipate" and similar expressions identify forward-looking  statements.  Such
statements   are  qualified  in  their   entirety  by  the  inherent  risks  and
uncertainties  surrounding future expectations and may not reflect the potential
impact of any future acquisitions, mergers or divestitures.

Standard  Microsystems  Corporation  (the  Company  or  SMSC)  competes  in  the
semiconductor  industry,  which has historically  been  characterized by intense
competition, rapid technological change, cyclical market patterns, price erosion
and periods of mismatched supply and demand.  In addition,  sales of many of the
Company's  products depend largely on sales of personal computers and peripheral
devices, and reductions in the rate of growth of the PC and non-PC markets could
adversely  affect its  operating  results.  SMSC conducts  business  outside the
United  States and is subject to tariff  and  import  regulations  and  currency
fluctuations,  which  may have an effect on its  business.  All  forward-looking
statements  speak only as of the date hereof and are based upon the  information
available to SMSC at this time. Such  information is subject to change,  and the
Company  will not  necessarily  inform  investors  of such  changes,  except  as
required by law. These and other risks and  uncertainties,  including  potential
liability resulting from pending or future litigation, are detailed from time to
time in the Company's reports filed with the Securities and Exchange  Commission
(SEC).  Investors are advised to read the  Company's  Annual Report on Form 10-K
filed with the SEC,  particularly  the section  entitled "Other Factors That May
Affect Future Operating  Results",  for a more complete  discussion of these and
other risks and uncertainties.


Overview
--------

Description of Business

SMSC is a designer and worldwide supplier of advanced digital,  mixed-signal and
analog semiconductor solutions for a broad range of communications and computing
applications  in the areas of Advanced  Input/Output  (I/O),  USB  connectivity,
networking and embedded  communications  and control  systems.  The Company is a
fabless  semiconductor  supplier whose products are  manufactured by world-class
third-party  semiconductor  foundries  and  assemblers.  To ensure  the  highest
product quality, the Company conducts a significant portion of its final testing
requirements in the Company's own state-of-the-art testing operation.

The Company is  prominent  as the  world's  leading  supplier  of  Advanced  I/O
integrated  circuits  for desktop and mobile  personal  computers.  Advanced I/O
circuits contain a variety of individual functions ranging from legacy PC I/O to
leading edge system management,  including flash memory, infrared communications
support, a real-time clock, and power management.

The Company serves the networking and connectivity  markets with its families of
integrated  Ethernet  and USB 2.0  products,  along  with other  products,  that
provide solutions for the needs of network printers, set-top boxes, home gateway
products,  automobile navigation systems, cellular base stations, USB peripheral
devices and a variety of other machine-to-machine communications applications.

The Company's headquarters are located in Hauppauge, New York, and SMSC operates
design and validation centers in New York, Austin,  Texas,  Tucson,  Arizona and
Phoenix,  Arizona, and has sales offices in the United States,  Europe,  Taiwan,
Korea and China.  The Company  conducts  most of its  business  in the  Japanese
market through its majority-owned subsidiary, SMSC Japan.


Strategic Business Agreement

As previously  reported,  the Company and Intel Corporation (Intel) entered into
an agreement in 1987  providing  for,  among other things,  a broad,  worldwide,
non-exclusive  patent  cross-license,   covering  manufacturing   processes  and
products,  thereby  providing  each  company  access to the other's  current and
future patent portfolios.

In September  2003, the Company and Intel announced that they had enhanced their
intellectual  property  and  business  relationship.  The  companies  agreed  to
collaborate on certain future I/O and sensor  products,  and Intel agreed to use
the  Company's  devices  on certain  current  and  future  generations  of Intel
products.  In  addition,  the Company  agreed to limit its rights under its 1987
patent cross-license with Intel to manufacture and sell Northbridge products and
Intel  Architecture  Microprocessors  on behalf of third parties.  The companies
also  terminated  an Investor  Rights  Agreement  between  them,  which had been
entered into in connection with Intel's 1997  acquisition of 1,543,000 shares of
the Company's common stock. Under this agreement, Intel had certain information,
corporate  governance  and other  rights with respect to the  activities  of the
Company.

In respect of this new relationship,  Intel will pay to the Company an aggregate
amount  of $75  million,  of  which  $20  million  was paid  and  recognized  as
intellectual property revenue in the third quarter of the Company's fiscal 2004,
$10 million  will be paid in each of calendar  years 2004 and 2005,  $11 million
will be paid in  calendar  year 2006,  and $12  million  will be paid in each of
calendar  years 2007 and 2008.  Such  amounts  are  payable  in equal  quarterly
installments  within each calendar year, and are subject to possible  reduction,
in a manner  and to an  extent  to be  agreed  by the  parties,  based  upon the
companies'  collaboration and sales, facilitated by Intel, of certain future new
products of the Company.


Critical Accounting Policies and Estimates
------------------------------------------

This discussion and analysis of the Company's financial condition and results of
operations  is  based  upon  the  unaudited   consolidated  condensed  financial
statements included in this report,  which have been prepared in accordance with
accounting principles for interim financial statements generally accepted in the
United  States.  The  preparation  of financial  statements in  conformity  with
generally accepted  accounting  principles requires management to make estimates
and  assumptions  that affect the reported  amount of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements and the reported amount of sales and revenues and expenses during the
reporting period.

The Company believes that the critical  accounting policies and estimates listed
below are important to the portrayal of the  Company's  financial  condition and
operating results, and require critical management judgments and estimates about
matters that are inherently  uncertain.  Although  management  believes that its
judgments and estimates are appropriate  and  reasonable,  actual future results
may differ from these  estimates,  and to the extent that such  differences  are
material, future reported operating results may be affected.

o    Revenue recognition
o    Inventory valuation
o    Determination of the allowance for doubtful accounts receivable
o    Valuation of long-lived assets
o    Accounting for deferred income tax assets
o    Legal contingencies

Further  information  regarding these policies appears within the  "Management's
Discussion  and  Analysis of  Financial  Condition  and  Results of  Operations"
included in the  Company's  annual report on Form 10-K for the fiscal year ended
February  28,  2003 filed with the SEC on May 29,  2003.  During the  nine-month
period  ended  November  30,  2003,  there  were no  significant  changes to any
critical  accounting policies or to the related estimates and judgments involved
in applying these policies.


Results of Operations
---------------------

Sales and Revenues

Sales and  revenues  for the three  months  ended  November  30, 2003 were $72.7
million,  an increase of approximately 79% compared to $40.6 million reported in
the third quarter of the prior fiscal year.  For the nine months ended  November
30, 2003, sales and revenues were $163.8 million,  compared to $112.9 million in
the prior year nine-month period, an increase of 45%. Sales and revenues for the
three- and nine-month  periods ended November 30, 2003 include the initial $20.0
million  payment  from Intel under the  above-described  agreement.  The Company
received no similar payment in the prior-year periods. Without that payment, the
increase in sales and revenues over the  comparable  year-earlier  periods would
have been 30% for the  three-month  period  and 27% for the  nine-month  period.
These increases  reflect higher product sales in the current year periods in all
of the Company's major product  categories,  in terms of both units and dollars,
compared to the corresponding prior year periods. Increased PC demand has helped
drive increased unit PC I/O shipments.  The Company's non-PC products, which are
primarily  focused in networking  and USB  connectivity  applications,  achieved
higher  product  sales from  recent new  product  introductions,  as well as the
Company's  ongoing  focus on  aggressively  identifying  and pursuing new market
opportunities in these product lines.

Sales and  revenues  from  customers  outside  of North  America  accounted  for
approximately  68% and 81% of the Company's sales and revenues for the three and
nine- month periods ended November 30, 2003,  respectively,  the largest portion
of which was to the Asia and Pacific Rim region.  These percentages were 94% and
92%, respectively,  excluding the $20 million intellectual property payment. The
comparable percentages for the three- and nine-month periods in the prior fiscal
year were 91% and 90%,  respectively.  The Company  expects  that  international
shipments,  particularly  to the Asia and Pacific Rim region,  will  continue to
represent a significant portion of its sales and revenues.


Gross Profit

Gross profit for the three months ended November 30, 2003 was $42.4 million,  or
58.3% of sales and revenues,  compared to $17.9  million,  or 44.2% of sales and
revenues,  for the three  months ended  November  30, 2002.  For the nine months
ended November 30, 2003,  gross profit was $84.6 million,  or 51.6% of sales and
revenues,  compared to $50.1  million,  or 44.4% of sales and  revenues,  in the
prior year nine-month period.  Without the $20.0 million  intellectual  property
payment  from Intel,  gross  profit would have been 42.5% and 44.9% of sales and
revenues  for the  three-  and  nine-month  periods  ended  November  30,  2003,
respectively.

The gross profit  percentage in the current  year's third  quarter,  without the
$20.0 million  payment,  was impacted by  significant  shipments of a low-margin
part that is no longer  shipping in  significant  volumes.  For the current year
nine-month period, the improvement in gross profit percentage reflects the $20.0
million intellectual property payment.


Research and Development Expenses

The  semiconductor  industry,  and the  individual  markets in which the Company
currently competes,  are highly  competitive,  and the Company believes that the
continued   investment  in  research  and  development  (R&D)  is  essential  to
maintaining  and  improving  its  competitive  position,   and  to  driving  its
opportunities for future growth.

The Company's  research and  development  activities  are performed by a team of
highly-skilled  and  experienced  engineers and  technicians,  and are primarily
directed towards the design of new integrated  circuits,  the development of new
software  design tools and blocks of logic,  as well as ongoing cost  reductions
and performance improvements in existing products.

R&D expenses were $10.2 million, or approximately 14% of sales and revenues (19%
without the $20 million  intellectual  property  payment),  for the three months
ended November 30, 2003, compared to $8.0 million, or approximately 20% of sales
and revenues, for the three months ended November 30, 2002. This dollar increase
reflects the impact of  engineering  staff  additions,  investments  in advanced
semiconductor  design tools and costs  associated with  development  programs in
advanced semiconductor geometries.

For the nine months ended  November 30, 2003,  R&D expenses were $28.6  million,
compared to $22.7  million for the nine months ended  November  30, 2002,  which
equaled approximately 20% of sales and revenues in both periods, after excluding
the $20.0 million intellectual  property payment from sales and revenues for the
current-year  period.  This increase reflects the impact of the factors noted in
the three-month discussion within the preceding paragraph, as well as the impact
of the Company's June 2002  acquisition of Gain Technology  Corporation  (Gain),
which added 35 highly skilled engineers and designers to the Company's staff.


Selling, General and Administrative Expenses

Selling,   general  and   administrative   expenses  were  $11.6   million,   or
approximately 16% of sales and revenues, for the three months ended November 30,
2003, compared to $9.5 million, or approximately 23% of sales and revenues,  for
the three months ended  November 30, 2002.  For the current  nine-month  period,
selling,   general  and   administrative   expenses  were  $31.0   million,   or
approximately  19%  of  sales  and  revenues,  compared  to  $26.4  million,  or
approximately  23% of sales and revenues,  in the prior year nine-month  period.
The dollar increases  reflect the impact of additional staff added to expand the
Company's  sales and  marketing  capabilities,  as well as  incremental  selling
costs,  primarily  sales  commissions  and  incentives,  associated  with higher
product  sales in the current  year  periods.  The  increases  also reflect $0.8
million of expenses  associated  with  completion of the  agreement  with Intel.
Excluding  those  expenses and excluding the $20 million  intellectual  property
payment from sales and revenues,  selling,  general and administrative  expenses
would have been 20% and 21% of sales and revenues for the three- and  nine-month
periods ended November 30, 2003, respectively.


Amortization of Intangible Assets

For the three and nine months  ended  November 30,  2003,  the Company  recorded
amortization  expenses  of $0.3  million  and $1.0  million,  respectively,  for
intangible assets associated with the June 2002 acquisition of Gain.  Comparable
amortization  expense was $0.4 million and $0.8  million,  respectively,  in the
three and nine months ended November 30, 2002.


Gains on Real Estate Transactions

During the first  quarter of fiscal 2004,  the Company sold certain  portions of
its Hauppauge,  New York real estate  holdings,  for aggregate  proceeds of $7.0
million,  net of transaction costs. These transactions  resulted in an aggregate
gain of $1.7  million,  $1.4  million of which  related to property in which the
Company has no continued interest and was recognized within the Company's fiscal
2004 first  quarter  operating  results,  and $0.3  million of which  related to
property  that the Company has leased back from the  purchaser and has therefore
been  deferred.  This  deferred  gain is being  recognized  within the Company's
operating results as a reduction in rent expense on a straight-line basis over a
30-month period  beginning in June 2003,  consistent with the term of the lease.
The  Company's  remaining  rent  obligation  over  the  term  of this  lease  is
approximately $0.7 million.


Other Income and Expense

During the first quarter of fiscal 2004,  the Company sold its remaining  equity
investment in Chartered Semiconductor Manufacturing, Ltd. (Chartered), realizing
losses of $0.7 million,  which are included  within Other expense,  net, for the
nine months ended November 30, 2003.


Provision For Income Taxes

The Company's provision for income taxes from continuing operations in the third
quarter of fiscal 2004 was $5.9  million,  resulting in an effective  income tax
rate of 28.5%.  The benefit from income taxes from continuing  operations in the
prior fiscal year's third  quarter was $6.9  million,  resulting in an effective
income tax benefit rate of 43.2%.  For the nine months ended  November 30, 2003,
the provision for income taxes from continuing  operations was $7.6 million, for
an  effective  rate of 29.3%,  compared  to a benefit  of $6.5  million,  for an
effective  income tax benefit rate of 44.8%, in last year's  nine-month  period.
The Company expects its effective tax rate on income from continuing  operations
to be  approximately  20.0% in fiscal 2004,  excluding the income tax effects of
special real estate and equity investment sales, special  intellectual  property
revenues  and  tax  benefits  related  to  prior  years.  Income  taxes  on  the
aforementioned  special  transactions  are  recorded  when  they  occur,  at the
Company's  incremental  income  tax rate of  approximately  36.0%.  The  overall
expected  fiscal 2004 effective tax rate on income from  continuing  operations,
including all special transactions, is expected to be between 27.0% and 28.0%.

The Company's effective income tax rate primarily reflects statutory Federal and
state income tax rates,  adjusted for the impact of tax-exempt  interest  income
and  anticipated  income  tax  credits.  Excluding  the tax  effect  of  special
transactions in both fiscal years, the higher effective rate expected for fiscal
2004,  compared  to fiscal  2003,  recognizes  the impact of higher  income from
continuing  operations  expected in the current year,  which in turn dilutes the
percentage  impact of income tax credits and tax-exempt  interest  income on the
Company's provision for income taxes.

The  provision  for income taxes from  continuing  operation for the nine months
ended  November 30, 2003 has not been reduced by  approximately  $5.6 million of
income tax  benefits  related to the  Company's  stock  option  plans.  This tax
benefit has been credited to additional paid-in capital.


Discontinued Operations

The  Company  has  been  involved  in  an  arbitration  with  Accton  Technology
Corporation  (Accton)  and SMC  Networks,  Inc.  (Networks)  related  to  claims
associated  with the  purchase  of an 80.1%  interest in Networks by Accton from
SMSC in October 1997.  This  divestiture  was  accounted  for as a  discontinued
operation,  and accordingly,  costs  associated with this action,  net of income
taxes, are reported as a Loss from  discontinued  operations on the Consolidated
Statements of Operations. These costs were nominal during the three months ended
November 30, 2003,  compared to $0.1 million for the three months ended November
30, 2002, after applicable income tax benefits. These costs totaled $0.2 million
and $0.5 million in the  nine-month  periods  ended  November 30, 2003 and 2002,
respectively, after applicable income tax benefits.

In September  2003,  the  arbitration  panel issued its decision in this action,
which  directed the release of a $2.5 million escrow account to SMSC and awarded
certain other payments among the parties.

In December 2003, the parties reached a final settlement of the award, resulting
in SMSC  receiving  $2.7 million in cash and  realizing a gain of $0.1  million,
after income taxes, which will be reported as a Gain on discontinued  operations
in the quarter ending February 29, 2004.


Liquidity and Capital Resources
-------------------------------

The Company currently  finances its operations through a combination of existing
resources and cash generated by operations.

The Company's cash, cash  equivalents  and short-term  investments  increased to
$161.9  million as of November 30, 2003,  compared to $112.9 million at February
28, 2003. This increase reflects, among other things, receipt of a $20.0 million
intellectual  property  payment,  $13.7 million of proceeds from stock issuances
under the Company's  stock option plans,  $7.0 million of cash provided by sales
of real  estate and $2.1  million  of cash  provided  by sales of the  Company's
investment in Chartered.

Operating  activities  generated  $34.3  million  of cash,  including  the $20.0
million intellectual property payment, during the nine months ended November 30,
2003.  Investing  activities consumed $12.1 million of cash for the same period,
due  principally  to $13.9 million of net  purchases of short-term  investments.
Financing activities provided $12.4 million of cash during the first nine months
of fiscal 2004,  including  $13.7 million of proceeds from the issuance of stock
under the Company's stock option plans.

The Company's  inventories were $21.6 million at November 30, 2003,  compared to
$17.6 million at February 28, 2003,  commensurate  with expected  demand for the
Company's products.

Accounts  receivable  decreased from $22.7 million at February 28, 2003 to $21.5
million at November 30, 2003,  despite the increase in sales and revenues in the
three-month  periods  preceding  those  dates,  due to strong  collections.  The
Company's accounts receivable portfolio remains almost entirely current.

Capital  expenditures  for the nine  months  ended  November  30, 2003 were $8.7
million,  of which $7.6  million was paid in cash.  The current  year's  capital
investments  include an expenditure  of $4.3 million for advanced  design tools,
which is being financed on a short-term basis by the supplier with payment terms
extending through March 1, 2004. As of November 30, 2003, this obligation totals
$1.1 million,  which is reported within Accounts payable. There were no material
commitments for capital expenditures as of November 30, 2003.

During the first nine  months of fiscal  2004,  the  Company did not acquire any
additional  treasury stock through its common stock  repurchase  program,  under
which  approximately 1.2 million shares remain authorized for repurchase.  As of
November 30, 2003, the Company held approximately 1.8 million shares of treasury
stock, at a cost of $23.5 million.

The Company has considered in the past,  and will continue to consider,  various
possible  transactions  to  secure  necessary  foundry  manufacturing  capacity,
including equity investments in, prepayments to, or deposits with foundries,  in
exchange  for  guaranteed  capacity  or other  arrangements  which  address  the
Company's  manufacturing  requirements.  The Company may also consider utilizing
cash to acquire or invest in  complementary  businesses or products or to obtain
the right to use complementary technologies.  From time to time, in the ordinary
course of  business,  the  Company may  evaluate  potential  acquisitions  of or
investment in such businesses, products or technologies owned by third parties.

The Company expects that its cash,  cash  equivalents,  short-term  investments,
cash flows from  operations  and its  borrowing  capacity  will be sufficient to
finance the Company's  operating and capital  requirements for at least the next
12 months.


Recent Accounting Pronouncements
---------------------------------

In November 2002,  the Emerging  Issues Task Force (EITF) reached a consensus on
EITF Issue No. 00-21,  "Revenue  Arrangements with Multiple  Deliverables." EITF
Issue No. 00-21 requires revenue  arrangements with multiple  deliverables to be
divided into separate units of accounting if the deliverables in the arrangement
meet certain criteria. The arrangement's consideration should be allocated among
the separate units of accounting based on their relative fair values. Applicable
revenue recognition criteria should be considered  separately for each unit. The
provisions  of EITF  Issue No.  00-21 are  effective  for  revenue  arrangements
entered into in fiscal  periods  beginning  after June 15, 2003. The adoption of
this  standard  did  not  have a  material  impact  on the  Company's  financial
condition or results of operations.

In December 2002, the FASB issued  Statement of Financial  Accounting  Standards
(SFAS) No. 148,  "Accounting  for  Stock-Based  Compensation  -  Transition  and
Disclosure - an Amendment of SFAS No.  123",  which is effective  for  financial
statements for fiscal years ending after December 15, 2002,  with early adoption
permitted.  SFAS No. 148 will  enable  companies  that  choose to adopt the fair
value based method to report the full effect of employee  stock options in their
financial  statements  immediately  upon  adoption,  and to  make  available  to
investors  better and more frequent  disclosure about the cost of employee stock
options.  The Company will continue to apply the  disclosure-only  provisions of
both SFAS No. 123 and SFAS No. 148.

In April 2003,  the FASB issued SFAS No. 149,  "Amendment  of  Statement  133 on
Derivative  Instruments  and  Hedging  Activities".  This  statement  amends and
clarifies  financial  accounting  and  reporting  for  derivative   instruments,
including certain derivative  instruments  embedded in other contracts,  and for
hedging  activities  under SFAS No. 133. SFAS No. 149 is effective for contracts
entered into or modified  after June 30, 2003. The adoption of this standard did
not have a material  impact on the Company's  financial  condition or results of
operations.

In May 2003,  the FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
Instruments with  Characteristics of both Liabilities and Equity".  SFAS No. 150
establishes  standards  for  how  an  issuer  classifies  and  measures  certain
financial  instruments with  characteristics of both liabilities and equity, and
requires that an issuer classify a financial instrument that is within its scope
as a  liability  (or  as  an  asset,  in  some  circumstances).  Many  of  those
instruments were previously  classified as equity. SFAS No. 150 is effective for
financial  instruments  entered into or modified after May 31, 2003. It is to be
implemented  by reporting  the  cumulative  effect of a change in an  accounting
principle for financial instruments created before the issuance date of SFAS No.
150 and still existing at the beginning of the interim  period of adoption.  The
adoption  of this  standard  did not have a  material  impact  on the  Company's
financial condition or results of operations.


<PAGE>

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


Financial Market Risks
----------------------

Interest  Rate Risk - The  Company's  exposure  to  interest  rate risk  relates
primarily to its investment  portfolio.  The primary  objective of the Company's
investment  portfolio  management is to invest  available cash while  preserving
principal  and  meeting  liquidity  needs.  In  accordance  with  the  Company's
investment policy,  investments are placed with high credit-quality  issuers and
the amount of credit exposure to any one issuer is limited.

As of November 30, 2003, the Company's  $36.8 million of short-term  investments
consisted  primarily of  investments  in  corporate,  government  and  municipal
obligations  with  maturities  of  between  three and twelve  months.  If market
interest  rates were to increase  immediately  and  uniformly by 10 percent from
levels at November 30, 2003, the Company  estimates that the fair value of these
short-term  investments  would  decline by an  immaterial  amount.  The  Company
generally  expects to hold its fixed  income  investments  until  maturity  and,
therefore,  would not expect  operating  results or cash flows to be affected to
any significant degree by a sudden change in market interest rates on short-term
investments.

Equity Price Risk - The Company has no material investments in equity securities
of other companies on its Consolidated Balance Sheet as of November 30, 2003.

Foreign Currency Risk - The Company has international sales and expenditures and
is,  therefore,  subject to certain foreign currency rate exposure.  The Company
conducts a  significant  amount of its business in Asia.  In order to reduce the
risk from fluctuation in foreign exchange rates,  most of the Company's  product
sales and all of its  arrangements  with its foundry,  test and assembly vendors
are denominated in U.S. dollars. Transactions in the Japanese market made by the
Company's  majority-owned  subsidiary,  SMSC Japan,  are denominated in Japanese
yen. SMSC Japan  purchases a significant  amount of its products for resale from
Standard Microsystems  Corporation in U.S. dollars, and from time to time enters
into  forward  exchange   contracts  to  hedge  against  currency   fluctuations
associated with these product purchases.  During fiscal 2003, SMSC Japan entered
into a contract with a Japanese  financial  institution to purchase U.S. dollars
to meet a portion of its U.S. dollar denominated product purchase  requirements.
Gains  and  losses on this  contract,  which  expired  in March  2003,  were not
significant.

The Company has never received a cash dividend  (repatriation of cash) from SMSC
Japan.


Other Factors That May Affect Future Operating Results
------------------------------------------------------

As a supplier of semiconductors,  the Company competes in a challenging business
environment,  which is characterized by intense competition, rapid technological
change and cyclical  business  patterns.  Except for the historical  information
contained  herein,  the matters  discussed  in this  report are  forward-looking
statements. The Company faces a variety of risks and uncertainties in conducting
its business,  some of which are out of its control, and any of which, were they
to occur, could impair the Company's operating performance.  For a more detailed
discussion of risk factors,  please refer to the Company's annual report on Form
10-K for the fiscal year ended  February 28, 2003 filed with the  Securities and
Exchange Commission on May 29, 2003.


ITEM 4.   CONTROLS AND PROCEDURES

The Company has carried out an  evaluation  under the  supervision  and with the
participation of the Company's management, including the Chief Executive Officer
and Chief Financial Officer, of the effectiveness of the design and operation of
the Company's disclosure controls and procedures. There are inherent limitations
to the  effectiveness  of any  system of  disclosure  controls  and  procedures,
including the possibility of human error and the  circumvention or overriding of
the controls and procedures. Accordingly, even effective disclosure controls and
procedures  can only provide  reasonable  assurance of achieving  their  control
objectives. Based upon the Company's evaluation, the Chief Executive Officer and
Chief  Financial  Officer have  concluded  that,  as of November  30, 2003,  the
disclosure controls and procedures are effective to provide reasonable assurance
that information required to be disclosed in the reports the Company files under
the  Exchange Act is recorded,  processed,  summarized  and reported as and when
required.

There  has been no change  in the  Company's  internal  control  over  financial
reporting  during the Company's  fiscal quarter  covered by this report that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.


<PAGE>

PART II - OTHER INFORMATION


ITEM 1.   Legal Proceedings

In June 2003,  Standard  Microsystems  Corporation was named as a defendant in a
patent  infringement  lawsuit filed by Analog Devices,  Inc. (ADI) in the United
States District Court for the District of Massachusetts (Analog Devices, Inc. v.
Standard Microsystems Corporation,  Case Number 03 CIV 11216). The Complaint, as
amended,  alleges that some of the  Company's  products  infringe one or more of
three of ADI's patents,  and seeks injunctive relief and unspecified damages. In
September  2003,  the  Company  filed an Answer in the  lawsuit,  denying  ADI's
allegations and raising affirmative  defenses and counterclaims.  Although it is
premature to assess the outcome of the litigation, the Company believes that the
allegations against it are without merit.

The  Company  had  been  involved  in  an  arbitration  with  Accton  Technology
Corporation  (Accton)  and SMC  Networks,  Inc.  (Networks)  related  to  claims
associated  with the  purchase  of an 80.1%  interest in Networks by Accton from
SMSC in October 1997.  This  divestiture  was  accounted  for as a  discontinued
operation,  and accordingly,  costs  associated with this action,  net of income
taxes, are reported as a Loss from  discontinued  operations on the Consolidated
Statements of Operations. These costs were nominal during the three months ended
November 30, 2003,  compared to $0.1 million for the three months ended November
30, 2002, after applicable income tax benefits. These costs totaled $0.2 million
and $0.5 million in the  nine-month  periods  ended  November 30, 2003 and 2002,
respectively, after applicable income tax benefits.

In September  2003,  the  arbitration  panel issued its decision in this action,
which  directed the release of a $2.5 million escrow account to SMSC and awarded
certain other payments among the parties.

In December 2003, the parties reached a final settlement of the award, resulting
in SMSC  receiving  $2.7 million in cash and  realizing a gain of $0.1  million,
after income taxes, which will be reported as a Gain on discontinued  operations
in the quarter ending February 29, 2004.


ITEM 6.   Exhibits and Reports on Form 8-K

(a)  Exhibits

     31.1 - Certification of Chief Executive  Officer pursuant to Rule 13a-14(a)
     (17  CFR  240.13a-14(a)),  as  adopted  pursuant  to  Section  302  of  the
     Sarbanes-Oxley Act of 2002.

     31.2 - Certification of Chief Financial  Officer pursuant to Rule 13a-14(a)
     (17  CFR  240.13a-14(a)),  as  adopted  pursuant  to  Section  302  of  the
     Sarbanes-Oxley Act of 2002.

     32.1 -  Certifications  of Chief  Executive  Officer  and  Chief  Financial
     Officer pursuant to 18 U.S.C.  Section 1350, as adopted pursuant to Section
     906 of the Sarbanes-Oxley Act of 2002.

(b)  Reports on Form 8-K

     On  September  25,  2003,  SMSC filed a report on Form 8-K  relating to its
     arbitration with Accton Technology Corporation and SMC Networks, Inc.

     On  September  18, 2003 SMSC filed a report on Form 8-K relating to a press
     release  issued on September  16, 2003,  announcing  the  Company's  second
     quarter fiscal 2004 operating results.

     On  September  9,  2003,  SMSC filed a report on Form 8-K  relating  to its
     September 8, 2003 announcement that Standard  Microsystems  Corporation and
     Intel  Corporation have enhanced their  intellectual  property and business
     relationship.
<PAGE>


                                    SIGNATURE


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.


                                             STANDARD MICROSYSTEMS CORPORATION


DATE:  January 13, 2004                      /s/     Andrew M. Caggia
                                             -------------------------
                                             (Signature)

                                             Andrew M. Caggia
                                             Senior Vice President - Finance
                                             (duly authorized officer) and
                                             Chief Financial Officer
                                             (principal financial officer)