UNITED STATES
                       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, 2004

                                       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 ____

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

As of November 30, 2004, there were 18,655,000 shares of the registrant's common
stock outstanding.

<PAGE>
                        Standard Microsystems Corporation

                                    Form 10-Q
                     For the Quarter Ended November 30, 2004

                                Table of Contents


Part I    Financial Information

Item 1    Financial Statements (unaudited):
          Condensed  Consolidated  Balance  Sheets as of  November  30, 2004 and
          February 29, 2004
          Condensed Consolidated Statements of Operations for the Three and Nine
          Month Periods Ended November 30, 2004 and 2003
          Condensed  Consolidated  Statements  of Cash  Flows for the Nine Month
          Periods Ended November 30, 2004 and 2003
          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 29,
                                                   2004             2004
                                                   ----             ----
Assets
Current assets:
  Cash and cash equivalents                    $  119,767       $  135,161
  Short-term investments                           61,113           23,136
  Accounts receivable, net                         16,782           21,946
  Inventories                                      38,009           23,162
  Deferred income taxes                            14,648           15,064
  Other current assets                              8,840            8,549
----------------------------------------------------------------------------

     Total current assets                         259,159          227,018
----------------------------------------------------------------------------

Property, plant and equipment, net                 22,767           23,430
Long-term investments                                   -           15,600
Goodwill                                           29,435           29,595
Intangible assets, net                              3,849            4,697
Deferred income taxes                               5,971            6,493
Other assets                                        3,707            3,192
----------------------------------------------------------------------------

                                               $  324,888       $  310,025
============================================================================

Liabilities and shareholders' equity
Current liabilities:
  Accounts payable                             $   19,783       $   14,679
  Deferred income on shipments to
  distributors                                      6,808            7,972
  Accrued expenses, income taxes and other
  liabilities                                      14,367           13,168
----------------------------------------------------------------------------

     Total current liabilities                     40,958           35,819
----------------------------------------------------------------------------

Other liabilities                                  11,967           12,104

Shareholders' equity:
  Preferred stock                                       -                -
  Common stock                                      2,050            2,019
  Additional paid-in capital                      187,239          181,830
  Retained earnings                               103,430           99,010
  Treasury stock, at cost                         (23,799)         (23,454)
  Deferred stock-based compensation                (2,163)          (1,962)
  Accumulated other comprehensive income            5,206            4,659
----------------------------------------------------------------------------

     Total shareholders' equity                   271,963          262,102
----------------------------------------------------------------------------

                                               $  324,888       $  310,025
============================================================================

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,
                                                          ---------------------------------    ------------------------------------

                                                                2004              2003                 2004               2003
                                                                ----              ----                 ----               ----

<S>                                                       <C>                <C>                 <C>                <C>
Sales and revenues:
Product sales                                             $      48,026      $      52,282      $       145,611     $      142,751
Intellectual property revenues                                    2,729             20,467                8,354             21,008
-----------------------------------------------------------------------------------------------------------------------------------
                                                                 50,755             72,749              153,965            163,759

Cost of goods sold                                               27,483             30,350               80,128             79,192
-----------------------------------------------------------------------------------------------------------------------------------

Gross profit                                                     23,272             42,399               73,837             84,567

Operating expenses (income):
Research and development                                         10,390             10,244               32,472             28,625
Selling, general and administrative                              12,989             11,570               36,693             31,048
Amortization of intangible assets                                   265                317                  848                994
Gain on real estate transaction                                       -                  -                    -             (1,444)
-----------------------------------------------------------------------------------------------------------------------------------

Income (loss) from operations                                      (372)            20,268                3,824             25,344

Interest income                                                     704                617                1,726              1,451
Other expense, net                                                  (20)              (145)                 (58)              (890)
-----------------------------------------------------------------------------------------------------------------------------------

Income before provision for income taxes
   and minority interest                                            312             20,740                5,492             25,905

Provision for (benefit from) income taxes                          (301)             5,910                1,072              7,590

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

Income from continuing operations                                   613             14,787                4,420             18,176

Loss from discontinued operations (net of income tax
   benefits of $2 and $108)                                           -                 (3)                   -               (193)
-----------------------------------------------------------------------------------------------------------------------------------

Net income                                               $          613      $      14,784      $         4,420     $       17,983
===================================================================================================================================


Basic net income per share:
  Income from continuing operations                      $         0.03      $        0.84      $          0.24     $         1.06
  Loss from discontinued operations                                   -                  -                    -              (0.01)
-----------------------------------------------------------------------------------------------------------------------------------

  Basic net income per share                             $         0.03      $        0.84      $          0.24     $          1.05
===================================================================================================================================

Diluted net income per share:
  Income from continuing operations                      $         0.03      $        0.77      $          0.23     $         1.00
  Loss from discontinued operations                                   -                  -                    -              (0.01)
-----------------------------------------------------------------------------------------------------------------------------------

  Diluted net income per share                           $         0.03      $        0.77      $          0.23     $         0.99
===================================================================================================================================

Weighted average common shares outstanding:
  Basic                                                          18,395             17,577               18,321             17,120
  Diluted                                                        19,035             19,242               19,375             18,143

</TABLE>

See Notes to Condensed Consolidated Financial Statements.


<PAGE>
STANDARD MICROSYSTEMS CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)

                                               Nine Months Ended November 30,
                                            -----------------------------------

                                                  2004                2003
                                            ---------------      --------------


Cash flows from operating activities:
  Cash received from customers and
  licensees                                 $    158,732        $    164,609
  Cash paid to suppliers and employees          (156,309)           (131,263)
  Interest received                                1,486               1,361
  Interest paid                                     (108)                (51)
  Income taxes refunded (paid)                     6,703                (363)
-------------------------------------------------------------------------------

   Net cash provided by operating activities      10,504              34,293
-------------------------------------------------------------------------------

Cash flows from investing activities:
  Capital expenditures                            (7,335)             (7,563)
  Sales of property, plant and equipment           1,677               7,121
  Sales of long-term investments                   4,000               2,114
  Purchases of short-term investments            (46,030)            (36,675)
  Sales of short-term investments                 19,653              22,795
  Other                                               24                 139
-------------------------------------------------------------------------------

   Net cash used for investing activities        (28,011)            (12,069)
-------------------------------------------------------------------------------

Cash flows from financing activities:
  Proceeds from issuance of common stock           3,618              13,698
  Purchases of treasury stock                       (344)                  -
  Repayments of obligations under capital
  leases and notes payable                        (1,575)             (1,249)
-------------------------------------------------------------------------------

   Net cash provided by financing activities       1,699              12,449
-------------------------------------------------------------------------------

Effect of foreign exchange rate changes on
  cash and cash equivalents                          414                 789

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

Net increase (decrease) in cash and
  cash equivalents                               (15,394)             35,161

Cash and cash equivalents at beginning
  of period                                      135,161              90,025
-------------------------------------------------------------------------------

Cash and cash equivalents at end of period  $    119,767        $    125,186
===============================================================================


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

Income from continuing operations           $      4,420        $     18,176
Adjustments to reconcile income from
continuing operations to net cash
provided by operating activities:
  Depreciation and amortization                    8,586               7,329
  Stock-based compensation                         1,545                 813
  Tax benefits from employee stock plans             759               5,615
  Gains from sales of investments and
  property, net                                       (9)               (686)
  Other adjustments, net                             (23)               (197)
  Changes in operating assets and
  liabilities:
   Accounts receivable                            (4,576)              1,512
   Inventories                                   (14,713)             (3,444)
   Accounts payable, deferred income,
   accrued expenses and other liabilities          8,873               3,891
   Current and deferred income taxes               7,018               1,136
   Other changes, net                             (1,376)                148
-------------------------------------------------------------------------------

Net cash provided by operating activities   $     10,504        $     34,293
===============================================================================

See Notes to Condensed Consolidated Financial Statements.

<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 29, 2004 included in the Company's annual report on
     Form  10-K,  as filed on May 14,  2004  with the  Securities  and  Exchange
     Commission  (SEC).  The results of operations  for the three and nine-month
     periods  ended  November  30, 2004 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,
                                                                    -----------------------------------------------------
                                                                       2004         2003           2004        2003
                                                                    -----------------------------------------------------

<S>                                                                   <C>          <C>            <C>         <C>
       Net income - as reported                                       $   613      $  14,784      $  4,420    $  17,983
       Stock-based compensation expense included in net income,
       net of taxes - as reported                                         724            232         1,055          691
       Stock-based compensation expense determined using the
       fair value method for all awards, net of taxes                  (1,877)         2,916        (6,398)      (1,775)
      -------------------------------------------------------------------------------------------------------------------
       Net income (loss) - pro forma                                  $  (540)     $  17,932      $   (923)   $  16,899
      ===================================================================================================================

       Basic net income per share - as reported                       $  0.03      $    0.84      $   0.24    $    1.05
      ===================================================================================================================
       Diluted net income per share - as reported                     $  0.03      $    0.77      $   0.23    $    0.99
      ===================================================================================================================
       Basic net income (loss) per share - pro forma                  $ (0.03)     $    1.02      $  (0.05)   $    0.99
      ===================================================================================================================
       Diluted net income (loss) per share - pro forma                $ (0.03)     $    1.02      $  (0.05)   $    0.99
      ===================================================================================================================
</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, 2004       Feb. 29, 2004
     -----------------------------------------------------------------------

       Raw materials                      $         963       $         910
       Work in process                           21,756              13,202
       Finished goods                            15,290               9,050
     -----------------------------------------------------------------------

                                          $      38,009       $      23,162
     =======================================================================

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

                                          Nov. 30, 2004       Feb. 29, 2004
     -----------------------------------------------------------------------

       Land                               $         578       $       1,570
       Buildings and improvements                13,143              20,842
       Machinery and equipment                   91,053              90,195
     -----------------------------------------------------------------------
                                                104,774             112,607
       Less: accumulated depreciation            82,007              89,177
     -----------------------------------------------------------------------

                                          $      22,767       $      23,430
     =======================================================================


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  unvested
     restricted stock awards and 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):

                                    Three Months Ended     Nine Months Ended
                                       November 30,          November 30,
                                      2004       2003      2004       2003
                                   -------------------------------------------

     Average shares outstanding
      for basic net income per
      share                             18,395     17,577    18,321     17,120
     Dilutive effect of stock
      options and unvested
      restricted stock awards              640      1,665     1,054      1,023
     -------------------------------------------------------------------------

     Average shares outstanding for
      diluted net income per share      19,035     19,242    19,375     18,143
     =========================================================================

     Options  covering  1.8 million and 0.3 million  shares for the  three-month
     periods ended November 30, 2004 and 2003, respectively, and 1.0 million and
     1.6 million shares for the  nine-month  periods ended November 30, 2004 and
     2003,  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 for the three and nine-month periods ended
     November 30, 2004 and 2003 were as follows (in thousands):

                                    Three Months Ended     Nine Months Ended
                                      November 30,           November 30,
                                     2004       2003       2004       2003
                                  --------------------------------------------

     Net income                       $    613 $   14,784  $  4,420  $ 17,983
     Other comprehensive income:
     Change in foreign currency
      translation adjustment               568        995       558     1,211
     Change in unrealized gain
      (loss) on marketable
      equity securities, net of
      taxes                                  8         12       (11)       47
     Reclassification adjustment for
      loss on marketable equity
      security included in net
      income, net of taxes                   -          -         -       665
     -------------------------------------------------------------------------

     Total comprehensive income       $  1,189 $   15,791  $  4,967  $  19,906
     =========================================================================


     During the nine-month  period 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
     amount  presented as a  reclassification  adjustment in the preceding table
     represents the amount previously reported within Other comprehensive income
     as an unrealized  loss on this  investment,  net of income  taxes,  through
     February 28, 2003.


6.   Agreements with Intel Corporation

     In  1987,  the  Company  and  Intel  Corporation  (Intel)  entered  into an
     agreement   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  Input/Output  (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  relationship,  Intel  agreed to pay to the  Company an
     aggregate amount of $75 million,  of which $20 million and $2.5 million was
     recognized as  Intellectual  property  revenue,  and paid, in the third and
     fourth  quarters  of  fiscal  2004,  respectively,  and  $2.5  million  was
     recognized  as  Intellectual  property  revenue,  and paid,  in each of the
     first,  second and third  quarters  of fiscal  2005,  respectively.  Of the
     remaining  amount,  $2.5  million is payable  during the  balance of fiscal
     2005,  $10.25 million is payable in fiscal 2006,  $11.25 million is payable
     in fiscal 2007, $12.0 million is payable in fiscal 2008 and $9.0 million is
     payable in fiscal 2009. Such amounts are payable in quarterly  installments
     each 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 Restructuring

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

     The  Company's  reserve  related to this  restructuring  declined from $1.0
     million  at  February  29,  2004 to $0.6  million  at  November  30,  2004,
     reflecting  payments  against  previously  reserved   non-cancelable  lease
     obligations,  which will  continue  through  their  respective  lease terms
     through August 2008.


8.   Discontinued Operations

     The Company  had been  involved in an  arbitration  proceeding  with Accton
     Technology Corporation (Accton) and SMC Networks, Inc. (Networks), relating
     to claims  associated with the October 1997 purchase of a majority interest
     in Networks by Accton from SMSC.  This  divestiture  was accounted for as a
     discontinued operation, and accordingly, costs associated with this action,
     net of income taxes, were reported within Loss from discontinued operations
     on the Consolidated  Statements of Operations.  These costs were negligible
     for the  three-month  period  ended  November  30,  2003,  and totaled $0.2
     million for the nine-month period ended November 30, 2003, after applicable
     income tax benefits.  This action was settled  during the fourth quarter of
     fiscal 2004.


9.   Goodwill and Intangible Assets

     The  Company's  June  2002  acquisition  of  Tucson,   Arizona-based   Gain
     Technology   Corporation  included  the  acquisition  of  $7.1  million  of
     finite-lived  intangible  assets  and  $29.4  million  of  goodwill,  after
     adjustments.  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.

     As of November 30, 2004 and February 29, 2004,  the Company's  finite-lived
     intangible assets consisted of the following (in thousands):

                                 November 30, 2004          February 29, 2004
     --------------------------------------------------------------------------
                                            Accumulated            Accumulated
                                Cost       Amortization    Cost   Amortization
     --------------------------------------------------------------------------

     Existing technologies      $ 6,179        $  2,575    $ 6,179     $ 1,802
     Customer contracts             326              81        326          57
     Non-compete agreements           -               -        410         359
     --------------------------------------------------------------------------

                                $ 6,505        $  2,656    $ 6,915     $ 2,218
     ==========================================================================

<PAGE>
     Estimated future intangible asset amortization expense for the remainder of
     fiscal 2005 and thereafter is as follows (in thousands):

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

     Remainder of fiscal 2005                  $   266
     Fiscal 2006                                 1,063
     Fiscal 2007                                 1,063
     Fiscal 2008                                 1,062
     Fiscal 2009                                   290
     Fiscal 2010 and thereafter                    105
     =================================================


10.  Real Estate Transactions

     During the quarter ended  November 30, 2004, the Company sold its remaining
     parcel of unused real estate in  Hauppauge,  New York,  for net proceeds of
     $1.7 million,  after transaction  costs. This property had a carrying value
     of approximately $0.4 million. The contract of sale requires the Company to
     complete the remediation of certain soil  contamination of uncertain origin
     identified at this  property,  at its expense,  the  completion of which is
     subject  to  regulatory  approval.  The  completion  date  and cost of this
     remediation  project  are not  yet  determined,  but  based  upon  existing
     information,  management  expects to  complete  the project  within  twelve
     months at a cost no greater than $0.5 million.

     In a real estate  sale,  if a seller  retains  involvement  with a property
     after it is sold in any way that results in retention of substantial  risks
     or rewards of ownership, an "absence-of-continuing-involvement"  criterion,
     which is required  for the  seller's  recognition  of a gain,  has not been
     achieved.   As  a  result  of  the   arrangement   described   above,   the
     "absence-of-continuing-involvement"  criterion in this  transaction has not
     yet been satisfied and  accordingly  no gain has been reflected  within the
     Company's Consolidated Statement of Operations.  The $1.3 million excess of
     the net proceeds  from the sale over the carrying  value of the property is
     included within Accrued expenses, income taxes and other liabilities on the
     Company's November 30, 2004 Condensed  Consolidated Balance Sheet. Any gain
     on this transaction, net of costs incurred in the remediation project, will
     be recorded upon  satisfaction  of the  "absence-of-continuing-involvement"
     criterion.

     During the quarter ended May 31, 2003, 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  was  therefore  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. As of November 30, 2004, the
     Company's  remaining  rent  obligation  over  the  term  of this  lease  is
     approximately $0.3 million.


11.  Retirement Plans

     The Company maintains an unfunded Supplemental Executive Retirement Plan to
     provide senior  management with retirement,  disability and death benefits.
     The Company's subsidiary, SMSC Japan, also maintains an unfunded retirement
     plan, which provides its employees and directors with separation  benefits,
     consistent with customary practices in Japan.  Benefits under these defined
     benefit plans are based upon various service and compensation  factors. The
     following table sets forth the components of the  consolidated net periodic
     pension  expense for the three and  nine-month  periods ended  November 30,
     2004 and 2003, respectively (in thousands):


                                         Three Months Ended  Nine Months Ended
                                              November 30,     November 30,
                                        ---------------------------------------
                                          2004       2003     2004       2003
     --------------------------------------------------------------------------

      Service cost - benefits earned       $  71     $  65   $  214     $ 196
      Interest cost on projected benefit
      obligations                            107       102      320       305
      Net amortization and deferral           72        68      217       204
     --------------------------------------------------------------------------

      Net periodic pension expense         $ 250     $ 235   $  751     $ 705
     ==========================================================================


     Additionally,  the Company is the  beneficiary of life  insurance  policies
     that have been purchased as a method of partially  financing benefits under
     the Supplemental Executive Retirement Plan.


12.  Litigation

     In June  2003,  SMSC 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.   The  Company  is  vigorously  defending  the  lawsuit  and
     collecting  evidence  to  support  its  defenses  to  infringement  and its
     allegations of patent invalidity and unenforceability.  A trial date in the
     first quarter of calendar 2005 is expected to be scheduled.  Although it is
     premature  to assess the outcome of the  litigation,  the Company  believes
     that the allegations against it are without merit.


13.  Common Stock Repurchase Program

     The Company maintains a common stock repurchase program, as approved by its
     Board of Directors,  which authorizes the Company to repurchase up to three
     million  shares  of its  common  stock on the  open  market  or in  private
     transactions.  Under this program,  the Company  repurchased  approximately
     22,000  shares of its  common  stock at a cost of $0.3  million  during the
     second quarter of fiscal 2005. No shares were repurchased  during the third
     quarter of fiscal 2005. The Company currently holds  repurchased  shares as
     treasury  stock.  As of November 30, 2004,  the Company has  repurchased  a
     total of approximately 1.8 million shares of its common stock, at a cost of
     $23.8 million, under this program.


14.  Stock Appreciation Rights Plan

     In  September  2004,  the  Company's  Board of  Directors  approved a Stock
     Appreciation  Rights  (SAR)  Plan (the  Plan),  the  purpose of which is to
     attract,  retain,  reward and motivate employees and consultants to promote
     the Company's best interests and to share in its future  success.  The Plan
     authorizes  the Board's  Compensation  Committee to grant up to two million
     SAR awards to eligible  officers,  employees and  consultants.  Each award,
     when granted, provides the participant with the right to receive payment in
     cash,  upon exercise,  for the  appreciation  in market value of a share of
     SMSC common stock over the award's  exercise price. The exercise price of a
     SAR is  equal to the  closing  market  price  of SMSC  stock on the date of
     grant. SAR awards generally vest over four or five-year periods, and expire
     no later  than ten years  from the date of grant.  The  Company  recognizes
     compensation  expense for the  appreciation  of a SAR award's  market value
     over its exercise price over the term of the award.

     During  the  quarter  ended   November  30,  2004,   the  Company   awarded
     approximately  1.5  million  SARs,  which will vest  ratably  over four and
     five-year  periods on the anniversary date of the awards.  All of these SAR
     awards were granted on the same date and carry an exercise price of $17.10.
     The Company recorded $0.9 million of compensation  expense for these awards
     during the quarter ended November 30, 2004.


15.  Recent Accounting Pronouncements

     In November 2004, the Financial  Accounting  Standards  Board (FASB) issued
     SFAS No. 151,  "Inventory  Costs,  An Amendment of ARB No. 43,  Chapter 4."
     SFAS No. 151 clarifies that abnormal  inventory costs such as costs of idle
     facilities,  excess  freight  and  handling  costs,  and  wasted  materials
     (spoilage)  are required to be recognized as current  period  charges.  The
     provisions of SFAS No. 151 are effective for fiscal years  beginning  after
     June 15, 2005.  The Company is currently  evaluating the provisions of SFAS
     No. 151 and does not expect that its adoption  will have a material  impact
     on its  consolidated  financial  position,  results of operations  and cash
     flows.

     In  December  2004,   the  FASB  issued  SFAS  No.  123R  (Revised   2004),
     "Share-Based  Payment". The scope of SFAS No. 123R includes a wide range of
     share-based compensation  arrangements including share options,  restricted
     share plans,  performance-based  awards,  share  appreciation  rights,  and
     employee  stock  purchase  plans.  SFAS No.  123R  replaces  SFAS No.  123,
     "Accounting for Stock-Based  Compensation,"  and supersedes APB Opinion No.
     25, "Accounting for Stock Issued to Employees." SFAS No. 123, as originally
     issued in 1995,  established  as  preferable a  fair-value-based  method of
     accounting for share-based  payment  transactions with employees.  However,
     that statement  permitted the option of continuing to apply the guidance in
     APB Opinion 25, provided that the footnotes to the  consolidated  financial
     statements  disclosed pro forma net income and net income per share,  as if
     the  preferable  fair-value-based  method had been  applied.  SFAS No. 123R
     requires  that   compensation   costs  relating  to   share-based   payment
     transactions  be  recognized  in  the  consolidated  financial  statements.
     Compensation  costs will be measured  based on the fair value of the equity
     or liability instruments issued. SFAS No. 123R is effective as of the first
     interim or annual  reporting  period that begins after June 15,  2005.  The
     Company is  currently  evaluating  the impact of SFAS No. 123R and believes
     that the  adoption of this  statement  could have a material  impact on its
     consolidated financial position, results of operations and cash flows.

     In  December  2004,  the FASB  issued  Statement  No.  153,  "Exchanges  of
     Nonmonetary  Assets",  an  amendment  of APB  Opinion  No. 29. SFAS No. 153
     addresses the measurement of exchanges of nonmonetary  assets and redefines
     the scope of  transactions  that should be measured based on the fair value
     of the assets  exchanged.  SFAS No. 153 is effective for nonmonetary  asset
     exchanges in fiscal periods beginning after June 15, 2005. The Company does
     not  believe  adoption  of SFAS No. 153 will have a material  effect on its
     consolidated financial position, results of operations or cash flows.



     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
     Condensed  Consolidated 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 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 and creditworthiness;  loss of
     key  customers,  order  cancellations  or reduced  bookings;  and excess or
     obsolete  inventory and  variations in inventory  valuation,  among others.
     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.

     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 (PCs) and peripheral devices, and reductions in
     the rate of growth of the PC,  consumer  electronics  and embedded  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  may not  inform,  or be  required  to
     inform, investors of such changes. 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 SEC.
     Investors are advised to read the Company's  Annual Report on Form 10-K and
     quarterly  reports  on Form 10-Q  filed  with the SEC,  particularly  those
     sections entitled "Other Factors That May Affect Future Operating Results,"
     for a more complete discussion of these and other risks and uncertainties.

     Recently enacted and proposed changes in the laws and regulations affecting
     public  companies,  including the provisions of the  Sarbanes-Oxley  Act of
     2002,   have   increased  the  Company's   expenses  as  it  evaluates  the
     implications of these new rules and devotes resources to respond to the new
     requirements.  The  Sarbanes-Oxley Act mandates,  among other things,  that
     companies adopt new corporate governance measures and imposes comprehensive
     reporting  and  disclosure  requirements,  sets stricter  independence  and
     financial  expertise  standards  for audit  committee  members  and imposes
     increased  civil and criminal  penalties for companies,  their officers and
     their directors for securities law violations.  In particular,  the Company
     is incurring additional  administrative  expenses and investing substantial
     management time to implement Section 404 of the  Sarbanes-Oxley  Act, which
     requires  management to report on, and  independent  auditors to attest to,
     internal controls over financial reporting. The Company currently is in the
     process  of   documenting   its  internal   controls   and  testing   their
     effectiveness.  While  management  currently  anticipates  implementing the
     requirements relating to internal controls and other aspects of Section 404
     in a timely  manner,  the  evaluation  and  attestation  process is new and
     neither the Company nor its auditors have  significant  experience  with it
     and have no precedent available by which to measure compliance adequacy. If
     the Company is unable to  implement  the  requirements  of Section 404 in a
     timely manner or with adequate compliance, it could be required to disclose
     deficiencies  and take  other  actions  which  could  result  in the use of
     significant financial and managerial resources and could also be subject to
     sanctions or investigation by regulatory authorities,  including the SEC or
     The Nasdaq  National  Market.  Any such action could  adversely  affect the
     Company's financial results and the market price of its common stock.

     In addition,  The Nasdaq  National  Market,  on which the Company's  common
     stock is  listed,  has also  adopted  comprehensive  rules and  regulations
     relating to corporate  governance.  These laws,  rules and regulations have
     increased,  and may continue to increase, the scope, complexity and cost of
     the Company's corporate governance,  reporting and disclosure practices. As
     a result,  the Company's  board members,  Chief  Executive  Officer,  Chief
     Financial  Officer and other corporate  officers could face increased risks
     of personal  liability in connection  with the performance of their duties.
     As a result,  the Company may have  difficultly  attracting  and  retaining
     qualified  board members and  officers,  which would  adversely  affect its
     business. Further, these developments could affect the Company's ability to
     secure  desired  levels of directors'  and officers'  liability  insurance,
     requiring  the  Company  to  accept  reduced  insurance  coverage  or incur
     substantially higher costs to obtain coverage.


     Overview
     ========

     Description of Business

     SMSC provides semiconductor systems solutions for high-speed  communication
     and  computing  applications.  Through  the  integration  of  its  digital,
     mixed-signal and analog design  capabilities and software  expertise,  SMSC
     delivers  complete  solutions that monitor and manage computing systems and
     connect peripherals to computers and to one another.

     The Company addresses  computing,  communications and consumer  electronics
     markets  through  world-leading   positions  in  Input/Output  and  non-PCI
     Ethernet  products,  innovations  in  USB2.0  and other  high-speed  serial
     solutions,  and integrated networking products employed in a broad range of
     applications.

     SMSC 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 based in  Hauppauge,  New York  with  operations  in North
     America,  Taiwan, Japan, Korea, China,  Singapore and Europe. SMSC operates
     engineering design centers in New York, Arizona and Texas.

     New Brand Identity and Corporate Image

     On April 26,  2004,  SMSC was honored to open the Nasdaq  stock  market and
     concurrently  unveiled a new global brand  identity,  including a new logo,
     tagline - "Success  by  Design,"  and  website  design at its  www.smsc.com
     homepage. Through its communication  initiatives,  the Company has placed a
     renewed emphasis on building  awareness of its market  leadership  position
     and  capabilities  to serve its customers.  The "Success by Design" tagline
     underscores  the Company's  mission of being an essential  ingredient  that
     fuels its customers' success. This tagline highlights SMSC's culture, which
     is  deliberate  in the manner in which it seeks to ensure  success  for its
     customers and stakeholders.


     Critical Accounting Policies and Estimates
     ==========================================

     This  discussion  and analysis of the  Company's  financial  condition  and
     results of operations is based upon the  unaudited  condensed  consolidated
     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  29,  2004 filed with the SEC on May 14,  2004.
     During the  three-month  period  ended  November  30,  2004,  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, 2004 were $50.7
     million,  consisting  of $48.0 million of product sales and $2.7 million of
     intellectual  property  revenues,  compared to sales and  revenues of $72.7
     million for the  prior-year's  corresponding  quarter,  consisting of $52.3
     million  of  product  sales  and $20.4  million  of  intellectual  property
     revenues.  Sales and revenues  for the nine months ended  November 30, 2004
     were $154.0 million, consisting of $145.6 million of product sales and $8.4
     million of intellectual  property revenues,  compared to sales and revenues
     of $163.8 million,  consisting of $142.8 million of product sales and $21.0
     million of intellectual property revenues, for the year earlier period.

     The Company's  product  sales for the three months ended  November 30, 2004
     were lower than management's  expectations,  due to an accounts  receivable
     collectibility issue with one of the Company's  Taiwan-based  distributors.
     Specifically,  the Company  determined  that this  customer,  whose  credit
     history with the Company had consistently been excellent,  was experiencing
     financial distress and a lack of liquidity.

     Since the Company  recognizes  product sales and related cost of goods sold
     on  shipments to  distributors  only upon the  distributors'  resale of the
     products to end  customers,  a portion of the  accounts  receivable  from a
     distributor  at any  time  are  for  products  still  in the  distributor's
     inventory,  for which the Company  has not yet  recognized  product  sales.
     These  deferred  product  sales and related cost of goods sold are reported
     net as  Deferred  income on  shipments  to  distributors  on the  Company's
     Consolidated  Balance  Sheet.   Generally  accepted  accounting  principles
     preclude the recognition of revenue when  collectibility  is not reasonably
     assured.  The Company  concluded  that this  standard had not been met with
     respect to shipments  to this  distributor  that  remained  uncollected  at
     November 30, 2004. Therefore,  $4.2 million of product sales,  representing
     products  resold by the  distributor  during the third  fiscal  quarter but
     unpaid for by the distributor at November 30, 2004, were not recognized.

     The  original  SMSC  inventory  cost  of  those  products   resold  by  the
     distributor, but as yet unpaid for, as well as the inventory cost of unsold
     inventory held by the  distributor,  was $4.6 million at November 30, 2004.
     That  amount is  included  within  Other  current  assets on the  Condensed
     Consolidated  Balance Sheet at that date. The Company's current expectation
     is that this amount will be recovered.

     The Company is not currently  extending any credit to this  distributor and
     has  arranged  alternate  channels  for  delivery  of  products  to its end
     customers.  No credit will be extended  to this  distributor  in the future
     unless the Company  determines that the distributor's  financial  condition
     has improved to a point warranting consideration of credit terms.

     As any payments are received from this  distributor,  or if  collectibility
     otherwise becomes reasonably  assured,  product sales of up to $7.2 million
     from prior  shipments to this  distributor  could be recorded in the fourth
     quarter of fiscal 2005 or beyond. This includes the $4.2 million of product
     sales that were not  recognized in the third quarter,  as discussed  above,
     and  approximately  $3.0 million of  additional  product sales derived from
     sales of the  distributor's  unsold November 30, 2004 inventory.  As of the
     date of this filing,  $1.0 million of the $7.2 million has been paid to the
     Company and will be recognized  as product  sales in the fourth  quarter of
     fiscal 2005. Any additional  collections will also be recognized as product
     sales, in the period in which the collection occurs, or when collectibility
     from this distributor becomes reasonably assured, if earlier.

     The decline in product sales in the current  fiscal  year's third  quarter,
     compared to the prior  year's  third  quarter,  reflects  the impact of the
     above-referenced  $4.2  million of  product  sales not  recognized  in this
     year's third quarter.  When used in this paragraph,  the term "demand" will
     refer to the  Company's  current  period  product  sales  inclusive  of the
     unrecognized  product sales. As such, demand for the Company's  products in
     the third  quarter of fiscal 2005 was $52.2  million,  approximately  level
     with $52.3 million in the prior year's third quarter. Sequentially,  demand
     for the  Company's  products  increased  from  $47.3  million in the second
     quarter  of fiscal  2005 to $52.2  million  in the third  quarter of fiscal
     2005, an increase of 10%. Sequential growth was achieved in demand for both
     PC I/O and non-PC I/O products, on the strength of both new design-wins and
     the typical trend experienced during the holiday buying season.

     Compared to the prior  year's third  quarter,  in which non-PC I/O products
     contributed 35% of total product sales, the Company has experienced  strong
     growth in its non-PC I/O products,  which  contributed 44% of product sales
     for the three months ended November 30, 2004.  Non-PC I/O products  include
     networking,  connectivity and other products.  During the nine months ended
     November 30, 2004,  non-PC I/O products  contributed  42% of total  product
     sales,  compared  to 32% for the year  earlier  period.  These mix  changes
     reflect  the  impact  of  new  non-PC  I/O  design-wins,   broader  product
     offerings,  and the Company's ongoing focus on aggressively identifying and
     pursuing  market  opportunities  in its non-PC I/O  product  lines,  and is
     consistent with the Company's diversification goals.

     Product  sales  to  customers   outside  of  North  America  accounted  for
     approximately  84% and 85% of the Company's product sales for the three and
     nine-month  periods  ended  November  30, 2004,  respectively,  the largest
     portion of which was to the Asia and  Pacific Rim  region.  The  comparable
     percentages  for the three and nine-month  periods in the prior fiscal year
     were 95% and 93%,  respectively.  The Company  expects  that  international
     shipments,  particularly to the Asia and Pacific Rim region,  will continue
     to represent a significant portion of its product sales.

     Intellectual  property revenues for the three and nine-month  periods ended
     November  30,  2004  were  $2.7  million  and $8.4  million,  respectively,
     compared  to  $20.5  million  and  $21.0  million,  respectively,  for  the
     corresponding  prior-year periods. As more fully described within Note 6 to
     the Condensed  Consolidated  Financial  Statements,  intellectual  property
     revenues for both the current and prior fiscal years include  payments from
     Intel  Corporation  pursuant  to the  terms of a  September  2003  business
     agreement. Revenues for the current fiscal year include payments under this
     agreement of $2.5 million in each of the year's three fiscal quarters,  and
     in the prior fiscal year  include the  agreement's  initial  payment of $20
     million in the quarter ended November 30, 2003.

     Gross Profit

     Gross profit for the quarter ended November 30, 2004 was $23.3 million,  or
     45.9% of sales and revenues,  compared to $42.4 million,  or 58.3% of sales
     and  revenues,  for the three  months ended  November  30, 2003.  Excluding
     intellectual  property revenues,  gross profit from product sales was $20.5
     million,  or 42.8% of product  sales,  for the quarter  ended  November 30,
     2004,  compared to $21.9 million,  or 41.9% of product  sales,  for quarter
     ended November 30, 2003.

     For the nine-month  period ended November 30, 2004,  gross profit was $73.8
     million,  or 48.0% of sales and  revenues,  compared to $84.6  million,  or
     51.6% of sales and revenues,  for the nine-month  period ended November 30,
     2003. Excluding  intellectual property revenues,  gross profit from product
     sales was $65.5 million,  or 45.0% of product  sales,  for the current year
     nine-month  period,  compared to $63.6 million,  or 44.5% of product sales,
     for the prior year nine-month period.

     During  fiscal 2005,  the Company has  experienced  a change in its product
     mix, with more of its product sales being derived from non-PC I/O products,
     as  compared to the  year-earlier  periods.  While in the past,  non-PC I/O
     products  traditionally  produced  higher gross profit  margins than PC I/O
     products,  the  Company  has  introduced  new USB2.0  products  into a very
     competitive  market that currently generate lower gross profit margins than
     other non-PC I/O products.  Accordingly, while gross profit as a percentage
     of product  sales has  increased  modestly  for both the current  three and
     nine-month  periods,  as compared to the corresponding  prior-year periods,
     the Company is not currently  realizing the overall  increased gross profit
     percentage  at the level that would  otherwise  be  expected  from a higher
     product  sales mix of non-PC  I/O  products.  The  Company  is  working  on
     increasing its margins through design changes,  enhanced product  features,
     and cost saving  initiatives,  as it  continues  expanding  its new product
     offerings in these competitive markets.

     Research and Development Expenses

     Research and development  (R&D) expenses consist  primarily of salaries and
     related  costs of  employees  engaged in research,  design and  development
     activities,   costs  related  to  engineering  design  tools  and  computer
     hardware,  subcontracting  costs and prototyping costs. The Company intends
     to continue its efforts to develop innovative new products and technologies
     and  believes  that an ongoing  commitment  to R&D is essential in order to
     maintain product leadership and compete effectively. Therefore, the Company
     expects to continue to make significant R&D investments in the future.

     R&D  expenses  were  $10.4  million,  or  approximately  20% of  sales  and
     revenues,  for the three months ended November 30, 2004,  compared to $10.2
     million,  or approximately 14% of sales and revenues,  for the three months
     ended  November 30, 2003.  The increase in the current  year's  three-month
     period,  compared to the prior year's  three-month  period,  includes  $0.6
     million of higher  depreciation  expenses  associated  with  investments in
     advanced  semiconductor  design tools,  partially  offset by lower costs in
     several other  categories.  The increase in R&D expenses as a percentage of
     sales and revenues in the current three-month period, compared to the prior
     year's three-month  period,  results primarily from the higher intellectual
     property revenue in the prior year period.

     For the nine months  ended  November  30,  2004,  R&D  expenses  were $32.5
     million,  or  approximately  21% of sales and  revenues,  compared to $28.6
     million,  or approximately  17% of sales and revenues,  for the nine months
     ended  November 30, 2003.  The  increase in the current  year's  nine-month
     period,  compared to the prior  year's  nine-month  period,  includes  $1.7
     million of higher  compensation  and benefit  costs  driven by  engineering
     staff additions,  $1.7 million of higher  depreciation  expense  associated
     with investments in advanced  semiconductor  design tools,  $0.6 million of
     higher device prototype costs and $0.2 million of stock-based  compensation
     expense  associated with the Company's SAR Plan. The largest portion of the
     increase  in R&D  expenses  as a  percentage  of sales and  revenues in the
     current nine-month period,  compared to the prior year's nine-month period,
     results from the higher  intellectual  property  revenue in the  prior-year
     period.

     Selling, General and Administrative Expenses

     Selling,  general  and  administrative  expenses  were  $13.0  million,  or
     approximately 26% of sales and revenues, for the quarter ended November 30,
     2004,  compared  to  $11.6  million,  or  approximately  16% of  sales  and
     revenues,  for the quarter  ended  November 30,  2003.  The increase in the
     current year's three-month period, compared to the prior year's three-month
     period,  includes  $0.9  million  of  higher  legal  fees  associated  with
     litigation,  $0.4 million of expenses  associated  with projects to achieve
     compliance  with  provisions of the  Sarbanes-Oxley  Act of 2002,  and $0.6
     million of stock-based  compensation  expense associated with the Company's
     SAR  Plan,  partially  offset  by the  impact of $0.8  million  of  special
     incentives paid in the prior year's third quarter. The increase in expenses
     as a percentage  of sales and revenues in the current  three-month  period,
     compared to the prior year's three-month period, results primarily from the
     higher intellectual property revenue in the prior year period.

     For the current  nine-month  period,  selling,  general and  administrative
     expenses were $36.7 million,  or  approximately  24% of sales and revenues,
     compared to $31.0 million,  or approximately 19% of sales and revenues,  in
     the prior year  nine-month  period.  The  increase  in the  current  year's
     nine-month period, compared to the prior year's nine-month period, includes
     $1.9 million of higher legal fees associated with litigation,  $1.9 million
     of higher expenses  associated with expanded  worldwide  resources in sales
     and marketing,  $0.5 million of higher publicity and advertising  expenses,
     $0.8 million of expenses  associated  with  projects to achieve  compliance
     with  provisions  of the  Sarbanes-Oxley  Act of 2002,  and $0.6 million of
     stock-based  compensation  expense  associated with the Company's SAR Plan,
     partially  offset by the impact of $0.8 million of special  incentives paid
     in the prior year period.

     Amortization of Intangible Assets

     For the three and  nine-month  periods ended November 30, 2004, the Company
     recorded   amortization   expenses  of  $0.3  million  and  $0.8   million,
     respectively,   for  intangible   assets  associated  with  the  June  2002
     acquisition of Gain.  Comparable  amortization expense was $0.3 million and
     $1.0 million for the three and nine-month periods ended November 30, 2003.

     Real Estate Transactions

     During the quarter ended  November 30, 2004, the Company sold its remaining
     parcel of unused real estate in  Hauppauge,  New York,  for net proceeds of
     $1.7 million,  after transaction  costs. This property had a carrying value
     of approximately $0.4 million. The contract of sale requires the Company to
     complete the remediation of certain soil  contamination of uncertain origin
     identified at this  property,  at its expense,  the  completion of which is
     subject  to  regulatory  approval.  The  completion  date  and cost of this
     remediation  project  are not  yet  determined,  but  based  upon  existing
     information,  management  expects to  complete  the project  within  twelve
     months at a cost no greater than $0.5 million.

     In a real estate  sale,  if a seller  retains  involvement  with a property
     after it is sold in any way that results in retention of substantial  risks
     or rewards of ownership, an "absence-of-continuing-involvement"  criterion,
     which is required  for the  seller's  recognition  of a gain,  has not been
     achieved.   As  a  result  of  the   arrangement   described   above,   the
     "absence-of-continuing-involvement"  criterion in this  transaction has not
     yet been satisfied and  accordingly  no gain has been reflected  within the
     Company's Consolidated Statement of Operations.  The $1.3 million excess of
     the net proceeds  from the sale over the carrying  value of the property is
     included within Accrued expenses, income taxes and other liabilities on the
     Company's November 30, 2004 Condensed  Consolidated Balance Sheet. Any gain
     on this transaction, net of costs incurred in the remediation project, will
     be recorded upon  satisfaction  of the  "absence-of-continuing-involvement"
     criterion.

     During the quarter ended May 31, 2003, 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  was  therefore  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. As of November 30, 2004, the
     Company's  remaining  rent  obligation  over  the  term  of this  lease  is
     approximately $0.3 million.

     Other Income and Expense

     During the  quarter  ended May 31,  2003,  the Company  sold its  remaining
     equity investment in Chartered Semiconductor Manufacturing, Ltd., realizing
     losses of $0.7 million,  which are included within Other expense,  net, for
     the nine-month period ended November 30, 2003.

     Provision For Income Taxes

     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.

     The Company's  $1.1 million  provision for income taxes for the  nine-month
     period ended  November 30, 2004 reflects an expected  fiscal 2005 effective
     tax rate of 24.5%,  as well as a $0.3 million tax benefit  related to prior
     fiscal years, primarily due to better than expected settlements of open tax
     audits.  The 24.5%  effective  tax rate for  fiscal  2005 is lower than the
     26.5% effective rate which was expected as of August 31, 2004, reflecting a
     higher  proportionate  impact of income tax credits and tax-exempt interest
     income against a reduced pre-tax income projection. The $0.3 million income
     tax benefit  recorded for the three months ended November 30, 2004 reflects
     the cumulative  impact of this lower expected  effective income tax rate as
     well as the $0.3 million tax benefit related to prior fiscal years.

     The $7.6 million provision for income taxes for the nine-month period ended
     November  30, 2003  resulted in an  effective  income tax rate of 29.3% for
     that period.  This  provision for income taxes  included the tax effects of
     certain special  transactions,  including real estate and equity investment
     sales, and $20 million of special  intellectual  property revenues,  income
     taxes on all of which  are  recorded  when  they  occur,  at the  Company's
     incremental  income  tax rate of  approximately  36.0%.  The  prior  year's
     provision for income taxes also reflected a $0.8 million income tax benefit
     related  to prior  fiscal  years,  primarily  due to better  than  expected
     settlements of open tax audits.

     Discontinued Operations

     The Company  had been  involved in an  arbitration  proceeding  with Accton
     Technology Corporation (Accton) and SMC Networks, Inc. (Networks), relating
     to claims  associated with the October 1997 purchase of a majority interest
     in Networks by Accton from SMSC.  The  divestiture  was  accounted for as a
     discontinued operation, and accordingly, costs associated with this action,
     net of income taxes, were reported within Loss from discontinued operations
     on the Consolidated  Statements of Operations.  These costs were negligible
     for the quarter ended  November 30, 2003,  and totaled $0.2 million for the
     nine-month  period ended  November 30, 2003,  after  applicable  income tax
     benefits. This action was settled during the fourth quarter of fiscal 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 liquid  investments  (including
     marketable  securities  with  maturities in excess of one year) were $180.9
     million at November  30, 2004,  compared to $173.9  million at February 29,
     2004,  an increase of $7.0  million.  The  Company's  operating  activities
     provided $10.5 million of cash during the first nine months of fiscal 2005,
     compared to $34.3  million for the first nine  months of fiscal  2004.  The
     higher net cash provided from operating activities in the first nine months
     of fiscal 2004,  compared to the fiscal 2005  nine-month  period,  reflects
     $12.5 million of higher  intellectual  property revenue payments from Intel
     Corporation  in the prior  year  period and the  impact of an  increase  in
     inventories during the current period,  partially offset by $6.7 million of
     income tax refunds, net of income taxes paid, in the current period.

     The  Company's  inventories  were $38.0  million at November 30,  2004,  an
     increase of $14.8  million  compared to $23.2 million at February 29, 2004.
     This increase resulted from the replenishment of depleted buffer stocks, as
     well as accelerated  purchases of high-volume parts in response to apparent
     shortages in the supply chain earlier in fiscal 2005. The Company currently
     estimates that its inventories  will be below $35 million by the end of the
     fiscal year and should return to normal  turnover  levels by the end of the
     first quarter of fiscal 2006.

     Accounts  receivable  declined  from $21.9  million at February 29, 2004 to
     $16.8  million at  November  30,  2004,  a decrease  of $5.1  million.  The
     majority of this  decline  reflects  the impact of an  accounts  receivable
     collectibility  issue with one customer,  as discussed in detail within the
     "Sales and Revenues"  portion of this  analysis.  Partially  offsetting the
     impact of the  collectibility  issue has been the impact of a reduction  in
     unclaimed pricing credits by distributors  during fiscal 2005. SMSC accrues
     a liability for distributor  pricing credits when the distributor ships the
     Company's  products and earns such credits,  but the issuance of the actual
     credit  memo  to  the  distributor  is  dependent  upon  the  distributor's
     submission of an appropriate claim to SMSC. Delays in distributors'  claims
     for  these  credits  typically  results  in lower  than  expected  accounts
     receivable  balances,  since  the  delays  result in full  collections  for
     certain invoices against which the distributor is actually entitled to, but
     has not yet claimed, a pricing credit. It has been the Company's experience
     that all such  pricing  credits  are  claimed,  although  the timing of the
     claims varies by  distributor.  Pricing credits are recorded as a reduction
     of product sales when accrued.

     Other than the collectibility issue with one customer as discussed earlier,
     the  remainder of the  Company's  accounts  receivable  portfolio is almost
     entirely current.

     Capital expenditures for the nine-month period ended November 30, 2004 were
     $7.3  million,  and  were  predominantly  for  production  test  equipment,
     investments in intellectual  property used in product design activities and
     facility improvements. Capital expenditures for the nine-month period ended
     November  30, 2003 were $8.6  million,  including  $4.3 million in advanced
     design tools that were financed on a short-term  basis by the supplier with
     payment terms which extended  through fiscal 2004. As of November 30, 2003,
     the $1.1 million  remaining  obligation under this arrangement was reported
     within Accounts payable.

     The  Company  anticipates  that  capital  expenditures  in fiscal 2006 will
     exceed those expected to be incurred during fiscal 2005, due in part to the
     Company's plan to begin construction of an addition to its primary facility
     in  Hauppauge,  New York,  during the fourth  quarter of fiscal  2005.  The
     current plan is to expand the facility from its current  80,000 square feet
     to  approximately  200,000  square  feet,  allowing  consolidation  of  the
     Company's  Hauppauge  operations into a single facility during fiscal 2007.
     The  Company  currently  expects  that the cost of this  expansion  will be
     between $15 million and $20 million. There were no material commitments for
     capital expenditures as of November 30, 2004.

     Proceeds from the issuance of common stock of $13.7 million reported in the
     prior year's nine-month period represents proceeds from common stock issued
     under the Company's  stock option  plans,  compared to $3.6 million of such
     proceeds  during  the  current  year's  nine-month  period.  The prior year
     period's  activity  was  driven by  increases  in the  market  price of the
     Company's common stock during that period.

     During the quarter ended August 31, 2004, the Company filed claims for $7.3
     million of Federal income tax refunds which resulted from the carry back of
     several  capital losses  realized  during fiscal 2004 against capital gains
     reported in previous  fiscal  years.  Refunds of $6.9 million were received
     against  these  claims  during  the  second  quarter,  and  receipt  of the
     remaining $0.4 million  refund is dependent upon  completion of the related
     I.R.S. audit.

     For  federal  income tax  purposes,  the  Company  has $7.2  million of net
     operating loss  carryforwards that are available to offset ordinary taxable
     income generated in fiscal 2005 and beyond.

     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 twelve months and for the foreseeable future thereafter.



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

     In  November  2004,  the FASB issued SFAS No.  151,  "Inventory  Costs,  An
     Amendment of ARB No. 43,  Chapter 4." SFAS No. 151 clarifies  that abnormal
     inventory  costs  such as  costs of idle  facilities,  excess  freight  and
     handling  costs,  and  wasted  materials  (spoilage)  are  required  to  be
     recognized as current  period  charges.  The provisions of SFAS No. 151 are
     effective for fiscal years  beginning  after June 15, 2005.  The Company is
     currently  evaluating  the  provisions  of SFAS No. 151 and does not expect
     that its adoption will have a material impact on its consolidated financial
     position, results of operations and cash flows.

     In  December  2004,   the  FASB  issued  SFAS  No.  123R  (Revised   2004),
     "Share-Based  Payment". The scope of SFAS No. 123R includes a wide range of
     share-based compensation  arrangements including share options,  restricted
     share plans,  performance-based  awards,  share  appreciation  rights,  and
     employee  stock  purchase  plans.  SFAS No.  123R  replaces  SFAS No.  123,
     "Accounting for Stock-Based  Compensation,"  and supersedes APB Opinion No.
     25, "Accounting for Stock Issued to Employees." SFAS No. 123, as originally
     issued in 1995,  established  as  preferable a  fair-value-based  method of
     accounting for share-based  payment  transactions with employees.  However,
     that statement  permitted the option of continuing to apply the guidance in
     APB Opinion 25, provided that the footnotes to the  consolidated  financial
     statements  disclosed pro forma net income and net income per share,  as if
     the  preferable  fair-value-based  method had been  applied.  SFAS No. 123R
     requires  that   compensation   costs  relating  to   share-based   payment
     transactions  be  recognized  in  the  consolidated  financial  statements.
     Compensation  costs will be measured  based on the fair value of the equity
     or liability instruments issued. SFAS No. 123R is effective as of the first
     interim or annual  reporting  period that begins after June 15,  2005.  The
     Company is currently  evaluating  the impact of SFAS No. 123R, and believes
     that the  adoption of this  statement  could have a material  impact on its
     consolidated financial position, results of operations and cash flows.

     In  December  2004,  the FASB  issued  Statement  No.  153,  "Exchanges  of
     Nonmonetary  Assets",  an  amendment  of APB  Opinion  No. 29. SFAS No. 153
     addresses the measurement of exchanges of nonmonetary  assets and redefines
     the scope of  transactions  that should be measured based on the fair value
     of the assets  exchanged.  SFAS No. 153 is effective for nonmonetary  asset
     exchanges in fiscal periods beginning after June 15, 2005. The Company does
     not  believe  adoption  of SFAS No. 153 will have a material  effect on its
     consolidated financial position, results of operations or cash flows.


     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 SMSC'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,  2004,  the  Company's  $61.1  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, 2004,  the Company  estimates  that the
     fair value of these short-term and long-term  investments  would decline by
     an  immaterial   amount.  The  Company  generally  expects  to  hold  these
     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.

     Equity  Price Risk - The  Company  has no  material  investments  in equity
     securities  of other  companies  on its  Consolidated  Balance  Sheet as of
     November 30, 2004.

     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
     and the Pacific Rim region. 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.  Most  transactions  in  the  Japanese  market  made  by the
     Company's  subsidiary,  SMSC Japan,  are  denominated in Japanese yen. SMSC
     Japan  purchases a significant  amount of its products for resale from SMSC
     in U.S.  dollars,  and from time to time has entered into forward  exchange
     contracts to hedge  against  currency  fluctuations  associated  with these
     product  purchases.  No such contracts  were executed  during either fiscal
     2004 or the first nine months of fiscal 2005,  and there are no obligations
     under any such contracts as of November 30, 2004.

     The Company has never received a cash dividend  (repatriation of cash) from
     SMSC Japan.
<PAGE>
     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  changes  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  29,  2004  filed with the  Securities  and  Exchange
     Commission on May 14, 2004.


     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,  2004,  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,  SMSC 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.   The  Company  is  vigorously  defending  the  lawsuit  and
     collecting  evidence  to  support  its  defenses  to  infringement  and its
     allegations of patent invalidity and unenforceability.  A trial date in the
     first quarter of calendar 2005 is expected to be scheduled.  Although it is
     premature  to assess the outcome of the  litigation,  the Company  believes
     that the allegations against it are without merit.



     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 22, 2004, SMSC filed a report on Form 8-K pursuant to which it
     furnished a press release  announcing the Company's  operating  results for
     the second quarter of fiscal 2005.

     On October 1, 2004,  SMSC filed a report on Form 8-K  pursuant  to which it
     announced  the  adoption  of the  Standard  Microsystems  Corporation  2004
     Employee  Stock  Appreciation  Rights  Plan,  which  was  approved  by  the
     Company's Board of Directors on September 28, 2004.

<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 10, 2005                    By: /s/ Andrew M. Caggia
                                           -------------------------
                                                  (Signature)

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