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

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

| Delaware                                                                |   | 94-2672609                                    |
|-------------------------------------------------------------------------|--------|-----------------------------------------------|
| (State      or other jurisdiction ofincorporation      or organization) |   | (I.R.S.      EmployerIdentification      No.) |

| 490      N. McCarthy Boulevard #100 Milpitas, California |   | 95035           |
|----------------------------------------------------------|--------|-----------------|
| (Address      of principal executive offices)            |   | (Zip      Code) |

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| Large      accelerated filer  ¨ | Accelerated      filer  x | Non-accelerated      filer ¨             | Smaller      reporting company  ¨ |
|------------------------------------------------|-------------------------------------|----------------------------------------------------|--------------------------------------------------|
|                                           |                                | (Do      not check if a smaller reporting company) |                                             |

|   Exhibit      Index is on Page 82 |
|----------------------------------------------|
|  Total      number of pages is 107      |

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CALIFORNIA

|          |                                                                                                             |   | Page   |   |
|---------------|------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
|          | PART      I.                                                                                                     |   |   |   |
| Item 1.  | Business                                                                                                         |   |   | 1      |   |
| Item 1A. | Risk Factors                                                                                                     |   |   | 9      |   |
| Item 1B. | Unresolved Staff Comments                                                                                        |   |   | 24     |   |
| Item      2.  | Properties                                                                                                       |   |   | 24     |   |
| Item      3.  | Legal Proceedings                                                                                                |   |   | 24     |   |
| Item      4.  | Submission of Matters to a Vote of Security      Holders                                                         |   |   | 24     |   |
|          |                                                                                                             |   |   |   |   |
|          | PART      II.                                                                                                    |   |   |   |   |
| Item      5.  | Market for Registrant's Common Equity, Related Shareholder      Matters and Issuer Purchase of Equity Securities |   |   | 25     |   |
| Item      6.  | Selected Financial Data                                                                                          |   |   | 27     |   |
| Item      7.  | Management’s Discussion and Analysis of Financial Condition      and Results of Operations                 |   |   | 28     |   |
| Item      7A. | Quantitative and Qualitative Disclosures about Market      Risk                                                  |   |   | 44     |   |
| Item      8.  | Financial Statements and Supplementary    Data                                                                   |   |   | 45     |   |
| Item      9.  | Changes in and Disagreements with Accountants on Accounting      and Financial Disclosure                        |   |   | 79     |   |
| Item      9A. | Controls and Procedures                                                                                          |   |   | 79     |   |
| Item      9B. | Other Information                                                                                                |   |   | 80     |   |
|          |                                                                                                             |   |   |   |   |
|          | PART      III.                                                                                                   |   |   |   |   |
| Item      10. | Directors, Executive Officers and Corporate      Governance                                                      |   |   | 81     |   |
| Item      11. | Executive Compensation                                                                                           |   |   | 81     |   |
| Item      12. | Security Ownership of Certain Beneficial Owners and      Management and Related Shareholder Matters              |   |   | 81     |   |
| Item      13. | Certain Relationships and Related Transactions, and      Director Independence                                   |   |   | 81     |   |
| Item      14. | Principal Accountant Fees and Services                                                                           |   |   | 81     |   |
|          |                                                                                                             |   |   |   |   |
|          | PART      IV.                                                                                                    |   |   |   |   |
| Item      15. | Exhibits and Financial Statement    Schedules                                                                    |   |   | 82     |   |
|          | Signatures                                                                                                       |   |   | 85     |   |

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ITEM 1

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|   | • |   | Mobile handsets. There      were 1.2 billion mobile handsets sold globally in 2007, making mobile      handsets the most widely adopted mobile devices today. By 2010, the number      of mobile handsets sold globally is expected to grow to over 1.5 billion      units. |
|--------|---------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • |   | Digital consumer      electronics, which includes products such as digital televisions,      DVD players and recorders, and digital set top boxes. OEM shipments in      2007 for products in this market included 118 million digital televisions,      156 million DVD players and recorders and 124 million digital set top      boxes. By 2010, OEM shipments in these markets are expected to be 197      million digital televisions, 142 million DVD players and recorders and 193      million digital set top boxes. |
|--------|---------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • |   | Personal computers,      which includes notebook and desktop computers and peripherals such as      printers and flat panel monitors. Sales in 2007 for products in this      market included 261 million desktop and notebook computers, 123 million      printers and 149 million flat panel monitors. By 2010, these markets are      expected to grow to 340 million desktop and notebook computers, 142      million printers and 195 million flat panel  monitors. |
|--------|---------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | • |   | EMI filtering. EMI      refers to the interference of one electronic product with the operation of      another resulting from electromagnetic signals generated by the first and      picked up by the second. These signals emanate from and are picked up by      the internal and external data interfaces. High performance EMI filters      prevent the electromagnetic signals generated within a product from      interfering with its own operation and the operation of other products and      from being interfered with by external EMI  sources. |
|--------|---------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • |   | ESD protection. An ESD      event is the transfer of energy between two bodies at different      electrostatic potentials, either through direct contact or an air      discharge in the form of a spark. Many electronic products require ESD      protection for internal and external data interfaces to avoid damage or      disruption of their operation. Standard ESD protection devices typically      have relatively high capacitance levels that can distort high speed      signals, compromising their integrity and interfering with the accurate      transfer of information across those interfaces. The mobile handset,      digital consumer electronics and personal computer markets are employing      increasingly faster data interfaces to satisfy growing performance and      functionality requirements. These high speed data interfaces have created      the need for a new class of ESD protection devices that feature much lower      levels of capacitance than traditional solutions and, in some cases,      impedance matching to ensure that signal integrity is not      compromised. |
|--------|---------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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ITEM 1A

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|   | • |   | changes      in regulatory requirements; |
|--------|---------|--------|------------------------------------------|

|   | • |   | tariffs      and other barriers; |
|--------|---------|--------|----------------------------------|

|   | • |   | timing      and availability of exportlicenses; |
|--------|---------|--------|-------------------------------------------------|

|   | • |   | political      and economic instability; |
|--------|---------|--------|------------------------------------------|

|   | • |   | the      impact of regional and global illnesses such as severe acute respiratory      syndrome infections (SARS); |
|--------|---------|--------|--------------------------------------------------------------------------------------------------------------------|

|   | • |   | difficulties      in accounts receivable collections; |
|--------|---------|--------|-------------------------------------------------------|

|   | • |   | difficulties      in staffing and managing foreignoperations; |
|--------|---------|--------|---------------------------------------------------------------|

|   | • |   | difficulties      in managing distributors; |
|--------|---------|--------|---------------------------------------------|

|   | • |   | difficulties      in obtaining foreign governmental approvals, if those approvals should      become required for any of ourproducts; |
|--------|---------|--------|---------------------------------------------------------------------------------------------------------------------------------------|

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|   | • |   | limited      intellectual property protection; |
|--------|---------|--------|------------------------------------------------|

|   | • |   | foreign      currency exchange fluctuations; |
|--------|---------|--------|----------------------------------------------|

|   | • |   | the      burden of complying with and the risk of violating a wide variety of      complex foreign laws and treaties;and |
|--------|---------|--------|--------------------------------------------------------------------------------------------------------------------------|

|   | • |   | potentially      adverse tax consequences. |
|--------|---------|--------|--------------------------------------------|

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|   | • |   | reduced      control over delivery schedules andquality; |
|--------|---------|--------|----------------------------------------------------------|

|   | • |   | longer      lead times; |
|--------|---------|--------|-------------------------|

|   | • |   | the      impact of regional and global illnesses such as SARS or Avian flu      pandemic; |
|--------|---------|--------|-------------------------------------------------------------------------------------------|

|   | • |   | the      potential lack of adequate capacity during periods when industry demand      exceeds available capacity; |
|--------|---------|--------|-------------------------------------------------------------------------------------------------------------------|

|   | • |   | difficulties      finding and integrating newsubcontractors; |
|--------|---------|--------|--------------------------------------------------------------|

|   | • |   | limited      warranties on products supplied tous; |
|--------|---------|--------|----------------------------------------------------|

|   | • |   | potential      increases in prices due to capacity shortages, currency exchange      fluctuations and other factors; and |
|--------|---------|--------|--------------------------------------------------------------------------------------------------------------------------|

|   | • |   | potential      misappropriation of our intellectualproperty. |
|--------|---------|--------|--------------------------------------------------------------|

|   | • |   | political      and economic instability; |
|--------|---------|--------|------------------------------------------|

|   | • |   | changes      in our cost structure due to changes in local currency values relative to      the U.S. dollar; |
|--------|---------|--------|--------------------------------------------------------------------------------------------------------------|

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|   | • |   | potential      difficulty in enforcing agreements and recovering damages for their      breach; |
|--------|---------|--------|-------------------------------------------------------------------------------------------------|

|   | • |   | inability      to obtain and retain manufacturing capacity and priority for our business,      especially during industry-wide times of capacity    shortages; |
|--------|---------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • |   | exposure      to greater risk of misappropriation of intellectual    property; |
|--------|---------|--------|--------------------------------------------------------------------------------|

|   | • |   | disruption      to air transportation from Asia;and |
|--------|---------|--------|-----------------------------------------------------|

|   | • |   | changes      in tax laws, tariffs and freightrates. |
|--------|---------|--------|-----------------------------------------------------|

|   | • |   | rapidly      changing technologies; |
|--------|---------|--------|-------------------------------------|

|   | • |   | changing      customer needs; |
|--------|---------|--------|-------------------------------|

|   | • |   | evolving      industry standards; |
|--------|---------|--------|-----------------------------------|

|   | • |   | frequent      new product introductions andenhancements; |
|--------|---------|--------|----------------------------------------------------------|

|   | • |   | increased      integration with other functions;and |
|--------|---------|--------|-----------------------------------------------------|

|   | • |   | rapid      product obsolescence. |
|--------|---------|--------|----------------------------------|

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|   | • |   | significant      pricing pressures that occur because of competition or customer      demands; |
|--------|---------|--------|------------------------------------------------------------------------------------------------|

|   | • |   | sudden      shortages of raw materials or fabrication, test or assembly capacity      constraints that lead our suppliers to allocate available supplies or      capacity to other customers and, in turn, harm our ability to meet our      sales obligations; and |
|--------|---------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • |   | rescheduling      or cancellation of customer orders due to a softening of the demand for      our customers’ products, replacement of our parts by our competitors or      other reasons. |
|--------|---------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | • |   | our      anticipated or actual operatingresults; |
|--------|---------|--------|--------------------------------------------------|

|   | • |   | announcements      or introductions of new products by us or our  competitors; |
|--------|---------|--------|--------------------------------------------------------------------------------|
|   |    |   |                                                                           |
|   | • |   | decreased      market share of our majorcustomers;                             |

|   | • |   | technological      innovations or setbacks by us or our  competitors; |
|--------|---------|--------|-----------------------------------------------------------------------|

|   | • |   | conditions      in the semiconductor and passive components  markets; |
|--------|---------|--------|-----------------------------------------------------------------------|

|   | • |   | the      commencement of litigation; |
|--------|---------|--------|--------------------------------------|

|   | • |   | changes      in estimates of our performance by securities  analysts; |
|--------|---------|--------|-----------------------------------------------------------------------|

|   | • |   | announcements      of merger or acquisition transactions;and |
|--------|---------|--------|--------------------------------------------------------------|

|   | • |   | general      economic and market conditions. |
|--------|---------|--------|----------------------------------------------|

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ITEM 1B

ITEM 2

ITEM 3

ITEM 4

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ITEM 5

|             |   | Common      Stock |   |
|------------------|--------|-------------------|--------|
|             |   |              | Q1     |   |   |   | Q2 |   |   |   | Q3 |   |   |   | Q4 |   |
| Fiscal      2008 |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| High             |   | $                 | 5.24   |   |   | $ | 4.64 |   |   | $ | 4.80 |   |   | $ | 4.60 |   |
| Low              |   |              | 4.05   |   |   |   | 3.62 |   |   |   | 3.44 |   |   |   | 2.91 |   |
|             |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fiscal      2007 |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| High             |   |              | 8.10   |   |   |   | 5.49 |   |   |   | 5.72 |   |   |   | 5.42 |   |
| Low              |   | $                 | 3.92   |   |   | $ | 3.51 |   |   | $ | 4.18 |   |   | $ | 4.42 |   |

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|                                      |   |   | 3/03   |   |   |   | 3/04   |   |   |   | 3/05   |   |   |   | 3/06   |   |   |   | 3/07   |   |   |   | 3/08   |   |
|-------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| California      Micro Devices Corporation |   | $      | 100.00 |   |   | $      | 338.99 |   |   | $      | 127.85 |   |   | $      | 200.25 |   |   | $      | 118.48 |   |   | $      | 74.43  |   |
| NASDAQ      Composite                     |   |   | 100.00 |   |   |   | 151.01 |   |   |   | 152.38 |   |   |   | 181.06 |   |   |   | 189.63 |   |   |   | 177.49 |   |
| S&P      500                          |   |   | 100.00 |   |   |   | 135.12 |   |   |   | 144.16 |   |   |   | 161.07 |   |   |   | 180.13 |   |   |   | 170.98 |   |
| S&P      Information Technology       |   | $      | 100.00 |   |   | $      | 144.06 |   |   | $      | 140.47 |   |   | $      | 159.47 |   |   | $      | 164.42 |   |   | $      | 163.72 |   |

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|                                                   |   | Year      Ended March 31,                  |
|--------------------------------------------------------|--------|--------------------------------------------|
|                                                   |   | 2008                                       |   | 2007 |   | 2006 |   | 2005 |   | 2004 |
|                                                   |   | (in      thousands, except per share data) |   |   |
| Statement      of Operations Data:                     |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      sales                                         |   | $                                          | 59,217 |   |   |   |   | $ | 68,006 |   |   |   |   | $ | 70,241 |   |   |   |   | $ | 65,869 |   |   |   |   | $ | 59,560 |   |   |
| Income      (loss) before income taxes                 |   |                                       | (518 | ) | (1 | ) |   |   | 546 |   | (2 | ) |   |   | 7,460 |   |   |   |   |   | 4,167 |   | (4 | ) |   |   | 3,572 | (5 | ) |
| Net      income (loss)                                 |   |                                       | (1,414 | ) | (1 | ) |   |   | (81 | ) | (2 | ) |   |   | 10,035 |   | (3 | ) |   |   | 4,042 |   | (4 | ) |   |   | 3,572 | (5 | ) |
| Net      income (loss) per share:                      |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                  |   |                                       | (0.06 | ) |   |   |   |   | (0.00 | ) |   |   |   |   | 0.45 |   | (3 | ) |   |   | 0.19 |   |   |   |   |   | 0.20 |   |   |
| Diluted                                                |   | $                                          | (0.06 | ) |   |   |   | $ | (0.00 | ) |   |   |   | $ | 0.44 |   | (3 | ) |   | $ | 0.18 |   |   |   |   | $ | 0.19 |   |   |
|                                                   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      Sheet Data:                               |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash,      cash equivalents and short-term investments |   | $                                          | 51,596 |   |   |   |   | $ | 49,024 |   |   |   |   | $ | 49,746 |   |   |   |   | $ | 36,075 |   |   |   |   | $ | 20,325 |   |   |
| Working      capital                                   |   |                                       | 56,560 |   |   |   |   |   | 55,259 |   |   |   |   |   | 57,858 |   | (3 | ) |   |   | 40,562 |   |   |   |   |   | 19,621 |   |   |
| Total      assets                                      |   |                                       | 78,085 |   |   |   |   |   | 75,883 |   |   |   |   |   | 73,732 |   | (3 | ) |   |   | 57,677 |   |   |   |   |   | 41,127 |   |   |
| Long-term      obligations                             |   |                                       | 350 |   |   |   |   |   | 303 |   |   |   |   |   | 8 |   |   |   |   |   | 111 |   |   |   |   |   | 4,717 |   |   |
| Total      shareholders’ equity                  |   | $                                          | 67,414 |   |   |   |   | $ | 66,046 |   |   |   |   | $ | 61,872 |   |   |   |   | $ | 46,661 |   |   |   |   | $ | 22,118 |   |   |

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|                                       |   | Year      Ended March 31, |   |
|--------------------------------------------|--------|---------------------------|--------|
|                                       |   | 2008                      |   |   | 2007 |   |   | 2006 |   |
|                                       |   |                      |   |   | %      of |   |   |   |   |   | %      of |   |   |   |   |   | %      of |   |
|                                       |   |                      |   |   | Net |   |   |   |   |   | Net |   |   |   |   |   | Net |   |
|                                       |   | Amount                    |   |   | Sales |   |   | Amount |   |   | Sales |   |   | Amount |   |   | Sales |   |
| Net      sales                             |   | $                         | 59,217 |   |   |   | 100 | % |   | $ | 68,006 |   |   |   | 100 | % |   | $ | 70,241 |   |   |   | 100 | % |
| Cost      of sales                         |   |                      | 39,599 |   |   |   | 67 | % |   |   | 42,790 |   |   |   | 63 | % |   |   | 44,068 |   |   |   | 63 | % |
| Gross      margin                          |   |                      | 19,618 |   |   |   | 33 | % |   |   | 25,216 |   |   |   | 37 | % |   |   | 26,173 |   |   |   | 37 | % |
| Research      and development              |   |                      | 7,097  |   |   |   | 12 | % |   |   | 7,977 |   |   |   | 12 | % |   |   | 6,817 |   |   |   | 10 | % |
| Selling,      general and administrative   |   |                      | 15,264 |   |   |   | 26 | % |   |   | 16,757 |   |   |   | 25 | % |   |   | 13,387 |   |   |   | 19 | % |
| In-process      research and development   |   |                      | -      |   |   |   | 0 | % |   |   | 2,210 |   |   |   | 3 | % |   |   | - |   |   |   | 0 | % |
| Amortization      of intangible assets     |   |                      | 165    |   |   |   | 0 | % |   |   | 158 |   |   |   | 0 | % |   |   | - |   |   |   | 0 | % |
| Other      income, net                     |   |                      | (2,390 | ) |   |   | (4 | %) |   |   | (2,432 | ) |   |   | (4 | %) |   |   | (1,491 | ) |   |   | (2 | %) |
| Income      (loss) before income taxes     |   |                      | (518   | ) |   |   | (1 | %) |   |   | 546 |   |   |   | 1 | % |   |   | 7,460 |   |   |   | 10 | % |
| Provision      (benefit) for income taxes* |   |                      | 896    |   |   |   | 1 | % |   |   | 627 |   |   |   | 1 | % |   |   | (2,575 | ) |   |   | (4 | %) |
| Net      income (loss)                     |   | $                         | (1,414 | ) |   |   | (2 | %) |   | $ | (81 | ) |   |   | (0 | %) |   | $ | 10,035 |   |   |   | 14 | % |

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|                                                     |   | Year      ended March 31, |   |   |         |   |   |   |   |
|----------------------------------------------------------|--------|---------------------------|--------|--------|--------------|--------|--------|--------|--------|
|                                                     |   | 2008                      |   |   | 2007         |   |   |   |   |   |   |   |
|                                                     |   |                      |   |   | As      % of |   |   |   |   |   | As      % of |   |   |   |   |   |   |   |
|                                                     |   |                      |   |   | Total        |   |   |   |   |   | Total |   |   |   |   |   |   |   |
|                                                     |   | Amount                    |   |   | Sales        |   |   | Amount |   |   | Sales |   |   | $      Change |   |   | %      Change |   |
| Mobile      handset                                      |   | $                         | 37.3   |   |         |   | 63     | %      |   | $ | 48.1 |   |   |   | 71 | % |   | $ | (10.8 | ) |   |   | (22 | %) |
| Digital      consumer electronics and personal computers |   |                      | 21.9   |   |         |   | 37     | %      |   |   | 19.9 |   |   |   | 29 | % |   |   | 2.0 |   |   |   | 10 | % |
|    Total                                  |   | $                         | 59.2   |   |         |   | 100    | %      |   | $ | 68.0 |   |   |   | 100 | % |   | $ | (8.8 | ) |   |   | (13 | %) |

|                                                     |   | Year      ended March 31, |   |   |         |   |   |   |   |
|----------------------------------------------------------|--------|---------------------------|--------|--------|--------------|--------|--------|--------|--------|
|                                                     |   | 2007                      |   |   | 2006         |   |   |   |   |   |   |   |
|                                                     |   |                      |   |   | As      % of |   |   |   |   |   | As      % of |   |   |   |   |   |   |   |
|                                                     |   |                      |   |   | Total        |   |   |   |   |   | Total |   |   |   |   |   |   |   |
|                                                     |   | Amount                    |   |   | Sales        |   |   | Amount |   |   | Sales |   |   | $      Change |   |   | %      Change |   |
| Mobile      handset                                      |   | $                         | 48.1   |   |         |   | 71     | %      |   | $ | 53.4 |   |   |   | 76 | % |   | $ | (5.3 | ) |   |   | (10 | %) |
| Digital      consumer electronics and personal computers |   |                      | 19.9   |   |         |   | 29     | %      |   |   | 16.8 |   |   |   | 24 | % |   |   | 3.1 |   |   |   | 18 | % |
|    Total                                  |   | $                         | 68.0   |   |         |   | 100    | %      |   | $ | 70.2 |   |   |   | 100 | % |   | $ | (2.2 | ) |   |   | (3 | %) |

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|                                   |   | Year      Ended March 31, |   |
|----------------------------------------|--------|---------------------------|--------|
|                                   |   | 2008                      |   |   | 2007 |   |   | 2006 |   |
|                                   |   |                      |   |   | %      of |   |   |   |   |   | %      of |   |   |   |   |   | %      of |   |
|                                   |   | Amount                    |   |   | Total |   |   | Amount |   |   | Total |   |   | Amount |   |   | Total |   |
| United      States                     |   | $                         | 5.5    |   |   |   | 9 | % |   | $ | 4.4 |   |   |   | 6 | % |   | $ | 3.8 |   |   |   | 5 | % |
| Korea                                  |   |                      | 19.6   |   |   |   | 33 | % |   |   | 16.5 |   |   |   | 24 | % |   |   | 14.6 |   |   |   | 21 | % |
| China                                  |   |                      | 15.9   |   |   |   | 27 | % |   |   | 28.2 |   |   |   | 42 | % |   |   | 32.6 |   |   |   | 47 | % |
| Taiwan                                 |   |                      | 11.2   |   |   |   | 19 | % |   |   | 10.4 |   |   |   | 15 | % |   |   | 9.2 |   |   |   | 13 | % |
| Singapore                              |   |                      | 4.2    |   |   |   | 7 | % |   |   | 6.7 |   |   |   | 10 | % |   |   | 8.6 |   |   |   | 12 | % |
| Others                                 |   |                      | 2.8    |   |   |   | 5 | % |   |   | 1.8 |   |   |   | 3 | % |   |   | 1.4 |   |   |   | 2 | % |
|    Total      net sales |   | $                         | 59.2   |   |   |   | 100 | % |   | $ | 68.0 |   |   |   | 100 | % |   | $ | 70.2 |   |   |   | 100 | % |

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| Gross      margin increase (decrease) compared to prior period (in      millions): |   |   |   |
|------------------------------------------------------------------------------------|--------|--------|--------|
| Price      change of products based on a constant mix for target    markets        |   | $      | (7.5   | ) |
| Volume,      mix and other factors                                                 |   |   | (4.0   | ) |
| Cost      reductions of our products on a constant mix                             |   |   | 5.9    |   |
|                                                                               |   | $      | (5.6   | ) |

| Gross      margin increase (decrease) compared to prior period (in      millions): |   |   |   |
|------------------------------------------------------------------------------------|--------|--------|--------|
| Price      change of products based on a constant mix for target    markets        |   | $      | (10.3  | ) |
| Cost      reductions of our products on a constant mix                             |   |   | 6.9    |   |
| Volume,      mix and other factors                                                 |   |   | 2.9    |   |
| Employee      stock-based compensation expense                                     |   |   | (0.5   | ) |
|                                                                               |   | $      | (1.0   | ) |

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|                                                                                |   | Fiscal      2008 |   |   | Fiscal      2007 |   |
|-------------------------------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                                                                |   | compared      to |   |   | compared      to |   |
| Expense      increase (decrease) compared to prior fiscal year (in      thousands): |   | Fiscal      2007 |   |   | Fiscal      2006 |   |
| Engineering      supplies                                                           |   | $                | (658   | )      |             | $      | 282 |   |
| Product      related costs                                                          |   |             | (360   | )      |             |   | 363 |   |
| Salaries      and benefits, outside services and other costs                        |   |             | 222    |   |             |   | (168 | ) |
| Employee      stock-based compensation expense                                      |   |             | (84    | )      |             |   | 683 |   |
|                                                                                |   | $                | (880   | )      |             | $      | 1,160 |   |

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|                                                                                |   | Fiscal      2008 |   |   | Fiscal      2007 |   |
|-------------------------------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                                                                |   | compared      to |   |   | compared      to |   |
| Expense      increase (decrease) compared to prior fiscal year (in      thousands): |   | Fiscal      2007 |   |   | Fiscal      2006 |   |
| Outside      services                                                               |   | $                | (446   | )      |             | $      | 745 |   |
| Employee      stock-based compensation expense                                      |   |             | (531   | )      |             |   | 1,916 |   |
| Marketing      samples, travel and other expenses                                   |   |             | (246   | )      |             |   | 236 |   |
| Commissions,      salaries and benefits                                             |   |             | (270   | )      |             |   | 473 |   |
|                                                                                |   | $                | (1,493 | )      |             | $      | 3,370 |   |

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|                                                      |   | Year      Ended March 31, |   |
|-----------------------------------------------------------|--------|---------------------------|--------|
| (In      thousands)                                       |   | 2008                      |   |   | 2007 |   |   | 2006 |   |
| Cash      provided by operating activities                |   | $                         | 4,400  |   |   | $ | 6,725 |   |   | $ | 7,007 |   |
| Cash      provided by (used in) investing activities      |   |                      | 26,231 |   |   |   | (15,580 | ) |   |   | (16,048 | ) |
| Cash      provided by financing activities                |   |                      | 386    |   |   |   | 975 |   |   |   | 4,999 |   |
| Net      increase (decrease) in cash and cash equivalents |   | $                         | 31,017 |   |   | $ | (7,880 | ) |   | $ | (4,042 | ) |

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|                             |   | Payments      due by period |   |
|----------------------------------|--------|-----------------------------|--------|
|                             |   | Fiscal                      |   |   | Fiscal |   |   | Fiscal |   |   | Beyond |   |   |   |   |
|                             |   | 2009                        |   |   | 2010 |   |   | 2011 |   |   | 2011 |   |   | Total |   |
| Capital      lease obligations*  |   | $                           | 132    |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 132 |   |
| Operating      lease obligations |   |                        | 467    |   |   |   | 385 |   |   |   | 193 |   |   |   | - |   |   |   | 1,045 |   |
| Purchase      obligations        |   |                        | 467    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 467 |   |
|                             |   | $                           | 1,066  |   |   | $ | 385 |   |   | $ | 193 |   |   | $ | - |   |   | $ | 1,644 |   |

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ITEM 

| At      March 31, 2008:             |   |                     |   |                     |   |   |   |   |   |   |   |   |                  |                  |
|-------------------------------------|--------|--------------------------|--------|--------------------------|--------|--------|--------|--------|--------|--------|--------|--------|-----------------------|-----------------------|
|                                |   |                     |   | Periods      of Maturity |   |   |   |   |
|                                |   |                     |   | Fiscal                   |   |   | Beyond |   |   |   |   |   | Fair      Value as of |                  |
| (In      thousands)                 |   |                     |   | 2009                     |   |   | 2009   |   |   | Total  |   |   | March      31, 2008   |                  |
| Liabilities:                        |   |                     |   |                     |   |   |   |   |   |   |   |   |                  |                  |
| Capital      lease obligations      |   |                     |   | $                        | 132    |   |   | $      | -      |   |   | $      | 132                   |                  |   | $ | 132 |   |
| Weighted      average interest rate |   |                     |   |                     |   |   |   |   |   |   |   |   | 8                     | %                     |   |   |   |   |
|                                |   |                     |   |                     |   |   |   |   |   |   |   |   |                  |                  |   |   |   |   |
| At      March 31, 2007:             |   |                     |   |                     |   |   |   |   |   |   |   |   |                  |                  |   |   |   |   |
|                                |   | Periods      of Maturity |   |                     |   |   |   |
|                                |   | Fiscal                   |   | Fiscal                   |   |   | Beyond |   |   |   |   |   |                  | Fair      Value as of |   |
| (In      thousands)                 |   | 2008                     |   | 2009                     |   |   | 2009   |   |   | Total  |   |   | March      31, 2007   |                  |
| Liabilities:                        |   |                     |   |                     |   |   |   |   |   |   |   |   |                  |                  |   |   |   |   |
| Capital      lease obligations      |   | $132                     |   | $                        | 132    |   |   | $      | -      |   |   | $      | 264                   |                  |   | $ | 264 |   |
| Weighted      average interest rate |   |                     |   |                     |   |   |   |   |   |   |   |   | 8                     | %                     |   |   |   |   |

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ITEM 8

|                                                                                                    |   | Page    |   |
|---------------------------------------------------------------------------------------------------------|--------|---------|--------|
|                                                                                                    |   | Numbers |   |
| Consolidated Financial Statements:                                                                      |   |    |   |
| Report of Independent Registered Public Accounting      Firm                                            |   |    | 46     |   |
| Consolidated Balance Sheets as of March 31, 2008 and March 31,      2007                                |   |    | 48     |   |
| Consolidated Statements of Operations for years ended March 31,      2008, 2007 and 2006                |   |    | 49     |   |
| Consolidated Statement of Shareholders’ Equity for years      ended March 31, 2008, 2007 and 2006 |   |    | 50     |   |
| Consolidated Statements of Cash Flows for years ended March      31, 2008, 2007 and 2006                |   |    | 51     |   |
| Notes to Consolidated Financial    Statements                                                           |   |    | 52     |   |
|                                                                                                    |   |    |   |   |
| Consolidated      Financial Statement Schedule:                                                         |   |    |   |   |
| Schedule II, Valuation and Qualifying      Accounts                                                     |   |    | 84     |   |

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REPORT 

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| CALIFORNIA MICRO DEVICESCORPORATION |
|-------------------------------------|

| CONSOLIDATED      BALANCE SHEETS |
|----------------------------------|

| (amounts      in thousands, except share data) |
|------------------------------------------------|

|                                                                 |   | March      31, |    |   | March      31, |   |
|----------------------------------------------------------------------|--------|----------------|---------|--------|----------------|--------|
|                                                                 |   | 2008           |    |   | 2007           |   |
|                                                                 |   |           |    |   |           |   |
| ASSETS                                                               |   |           |    |   |           |   |
| Current      assets:                                                 |   |           |    |   |           |   |
| Cash      and cash equivalents                                       |   | $              | 32,925  |   |           | $      | 1,908 |   |
| Short-term      investments                                          |   |           | 18,671  |   |           |   | 47,116 |   |
| Accounts      receivable, net                                        |   |           | 6,155   |   |           |   | 7,514 |   |
| Inventories                                                          |   |           | 6,434   |   |           |   | 5,172 |   |
| Deferred      tax assets                                             |   |           | 1,508   |   |           |   | 2,201 |   |
| Prepaid      expenses and other current assets                       |   |           | 1,188   |   |           |   | 882 |   |
| Total      current assets                                            |   |           | 66,881  |   |           |   | 64,793 |   |
| Property,      plant and equipment, net                              |   |           | 5,596   |   |           |   | 4,840 |   |
| Goodwill                                                             |   |           | 5,258   |   |           |   | 5,258 |   |
| Intangible      assets, net                                          |   |           | 267     |   |           |   | 432 |   |
| Other      long-term assets                                          |   |           | 83      |   |           |   | 560 |   |
| TOTAL      ASSETS                                                    |   | $              | 78,085  |   |           | $      | 75,883 |   |
|                                                                 |   |           |    |   |           |   |   |   |
| LIABILITIES      AND SHAREHOLDERS' EQUITY                            |   |           |    |   |           |   |   |   |
| Current      liabilities:                                            |   |           |    |   |           |   |   |   |
| Accounts      payable                                                |   | $              | 6,120   |   |           | $      | 4,654 |   |
| Accrued      liabilities                                             |   |           | 2,165   |   |           |   | 3,269 |   |
| Deferred      margin on shipments to distributors                    |   |           | 1,904   |   |           |   | 1,479 |   |
| Current      maturities of capital lease obligations                 |   |           | 132     |   |           |   | 132 |   |
| Total      current liabilities                                       |   |           | 10,321  |   |           |   | 9,534 |   |
| Other      long-term liabilities                                     |   |           | 350     |   |           |   | 303 |   |
| Total      liabilities                                               |   |           | 10,671  |   |           |   | 9,837 |   |
| Commitments      and contingencies                                   |   |           |    |   |           |   |   |   |
| Shareholders'      equity:                                           |   |           |    |   |           |   |   |   |
| Preferred      stock - 10,000,000 shares authorized; none issued     |   |           |    |   |           |   |   |   |
| and      outstanding as of March 31, 2008 and March 31, 2007         |   |           | -       |   |           |   | - |   |
| Common      stock and additional paid-in capital - $0.001 par value; |   |           |    |   |           |   |   |   |
| 50,000,000      shares authorized; shares issued and outstanding:    |   |           |    |   |           |   |   |   |
| 23,302,274      and 23,151,103 as of March 31, 2008 and              |   |           |    |   |           |   |   |   |
| March      31, 2007, respectively                                    |   |           | 117,806 |   |           |   | 114,923 |   |
| Accumulated      other comprehensive income                          |   |           | 48      |   |           |   | - |   |
| Accumulated      deficit                                             |   |           | (50,440 | )      |           |   | (48,877 | ) |
| Total      shareholders' equity                                      |   |           | 67,414  |   |           |   | 66,046 |   |
| TOTAL      LIABILITIES AND SHAREHOLDERS' EQUITY                      |   | $              | 78,085  |   |           | $      | 75,883 |   |

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|                                                        |   | Year      Ended March 31, |   |
|-------------------------------------------------------------|--------|---------------------------|--------|
|                                                        |   | 2008                      |   |   | 2007 |   |   | 2006 |   |
| Net      sales                                              |   | $                         | 59,217 |   |   | $ | 68,006 |   |   | $ | 70,241 |   |
| Cost      of sales                                          |   |                      | 39,599 |   |   |   | 42,790 |   |   |   | 44,068 |   |
| Gross      margin                                           |   |                      | 19,618 |   |   |   | 25,216 |   |   |   | 26,173 |   |
| Operating      expenses:                                    |   |                      |   |   |   |   |   |   |   |   |   |   |
| Research      and development                               |   |                      | 7,097  |   |   |   | 7,977 |   |   |   | 6,817 |   |
| Selling,      general and administrative                    |   |                      | 15,264 |   |   |   | 16,757 |   |   |   | 13,387 |   |
| In-process      research and development                    |   |                      | -      |   |   |   | 2,210 |   |   |   | - |   |
| Amortization      of intangible assets                      |   |                      | 165    |   |   |   | 158 |   |   |   | - |   |
| Total      operating expenses                               |   |                      | 22,526 |   |   |   | 27,102 |   |   |   | 20,204 |   |
| Operating      income (loss)                                |   |                      | (2,908 | ) |   |   | (1,886 | ) |   |   | 5,969 |   |
| Other      income, net                                      |   |                      | 2,390  |   |   |   | 2,432 |   |   |   | 1,491 |   |
| Income      (loss) before income taxes                      |   |                      | (518   | ) |   |   | 546 |   |   |   | 7,460 |   |
| Provision      (benefit) for income taxes                   |   |                      | 896    |   |   |   | 627 |   |   |   | (2,575 | ) |
| Net      income (loss)                                      |   | $                         | (1,414 | ) |   | $ | (81 | ) |   | $ | 10,035 |   |
|                                                        |   |                      |   |   |   |   |   |   |   |   |   |   |
| Net      income (loss) per share–basic                |   | $                         | (0.06  | ) |   | $ | (0.00 | ) |   | $ | 0.45 |   |
| Weighted      average common shares outstanding–basic |   |                      | 23,233 |   |   |   | 23,027 |   |   |   | 22,128 |   |
| Net      income (loss) per share–diluted              |   | $                         | (0.06  | ) |   | $ | (0.00 | ) |   | $ | 0.44 |   |
| Weighted      average common shares and share               |   |                      |   |   |   |   |   |   |   |   |   |   |
| equivalents      outstanding – diluted                |   |                      | 23,233 |   |   |   | 23,027 |   |   |   | 22,777 |   |

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|                                                               |   |              |   |   |        |   |    |          |   |   | Accumulated        |   |   |   |   |
|--------------------------------------------------------------------|--------|-------------------|--------|--------|-------------|--------|---------|---------------|--------|--------|--------------------|--------|--------|--------|--------|
|                                                               |   |              |   |   |        |   |    |          |   |   | Other              |   |   |   |   |
|                                                               |   | Common      Stock |   |   | Accumulated |   |    | Comprehensive |   |   |               |   |
|                                                               |   | Shares            |   |   | Amount      |   |    | Deficit       |   |   | Income      (Loss) |   |   | Total  |   |
| Balance      at March 31, 2005                                     |   |              | 21,605 |   |        | $      | 105,494 |          |   | $      | (58,831            | )      |   | $      | (2     | ) |   | $ | 46,661 |   |
| Exercise      of stock options                                     |   |              | 908    |   |        |   | 3,905   |          |   |   | -                  |   |   |   | -      |   |   |   | 3,905 |   |
| Exercise      of common stock warrants                             |   |              | 236    |   |        |   | 837     |          |   |   | -                  |   |   |   | -      |   |   |   | 837 |   |
| Issuance      of common stock through employee stock purchase plan |   |              | 106    |   |        |   | 365     |          |   |   | -                  |   |   |   | -      |   |   |   | 365 |   |
| Stock-based      compensation                                      |   |              | -      |   |        |   | 29      |          |   |   | -                  |   |   |   | -      |   |   |   | 29 |   |
| Tax      benefit to equity                                         |   |              | -      |   |        |   | 43      |          |   |   | -                  |   |   |   | -      |   |   |   | 43 |   |
| Components      of comprehensive income:                           |   |              |   |   |        |   |    |          |   |   |               |   |   |   |   |   |   |   |   |   |
| Net      income                                                    |   |              | -      |   |        |   | -       |          |   |   | 10,035             |   |   |   | -      |   |   |   | 10,035 |   |
| Unrealized      loss on available-for-sale securities              |   |              | -      |   |        |   | -       |          |   |   | -                  |   |   |   | (3     | ) |   |   | (3 | ) |
| Comprehensive      income                                          |   |              |   |   |        |   |    |          |   |   |               |   |   |   |   |   |   |   | 10,032 |   |
| Balance      at March 31, 2006                                     |   |              | 22,855 |   |        | $      | 110,673 |          |   | $      | (48,796            | )      |   | $      | (5     | ) |   | $ | 61,872 |   |
| Exercise      of stock options                                     |   |              | 208    |   |        |   | 688     |          |   |   | -                  |   |   |   | -      |   |   |   | 688 |   |
| Issuance      of common stock through employee stock purchase plan |   |              | 88     |   |        |   | 412     |          |   |   | -                  |   |   |   | -      |   |   |   | 412 |   |
| Stock-based      compensation                                      |   |              | -      |   |        |   | 3,143   |          |   |   | -                  |   |   |   | -      |   |   |   | 3,143 |   |
| Tax      benefit to equity                                         |   |              | -      |   |        |   | 7       |          |   |   | -                  |   |   |   | -      |   |   |   | 7 |   |
| Components      of comprehensive loss:                             |   |              |   |   |        |   |    |          |   |   |               |   |   |   |   |   |   |   |   |   |
| Net      loss                                                      |   |              | -      |   |        |   | -       |          |   |   | (81                | )      |   |   | -      |   |   |   | (81 | ) |
| Unrealized      gain on available-for-sale securities              |   |              | -      |   |        |   | -       |          |   |   | -                  |   |   |   | 5      |   |   |   | 5 |   |
| Comprehensive      loss                                            |   |              |   |   |        |   |    |          |   |   |               |   |   |   |   |   |   |   | (76 | ) |
| Balance      at March 31, 2007                                     |   |              | 23,151 |   |        | $      | 114,923 |          |   | $      | (48,877            | )      |   | $      | 0      |   |   | $ | 66,046 |   |
| Exercise      of stock options                                     |   |              | 25     |   |        |   | 80      |          |   |   | -                  |   |   |   | -      |   |   |   | 80 |   |
| Issuance      of common stock through employee stock purchase plan |   |              | 126    |   |        |   | 436     |          |   |   | -                  |   |   |   | -      |   |   |   | 436 |   |
| Stock-based      compensation                                      |   |              | -      |   |        |   | 2,365   |          |   |   | -                  |   |   |   | -      |   |   |   | 2,365 |   |
| Tax      benefit to equity                                         |   |              | -      |   |        |   | 2       |          |   |   | -                  |   |   |   | -      |   |   |   | 2 |   |
| Cumulative      effect related to the initial adoption of FIN 48   |   |              | -      |   |        |   | -       |          |   |   | (149               | )      |   |   | -      |   |   |   | (149 | ) |
| Components      of comprehensive loss:                             |   |              |   |   |        |   |    |          |   |   |               |   |   |   |   |   |   |   |   |   |
| Net      loss                                                      |   |              | -      |   |        |   | -       |          |   |   | (1,414             | )      |   |   | -      |   |   |   | (1,414 | ) |
| Unrealized      gain on available-for-sale securities              |   |              | -      |   |        |   | -       |          |   |   | -                  |   |   |   | 48     |   |   |   | 48 |   |
| Comprehensive      loss                                            |   |              |   |   |        |   |    |          |   |   |               |   |   |   |   |   |   |   | (1,366 | ) |
| Balance      at March 31, 2008                                     |   |              | 23,302 |   |        | $      | 117,806 |          |   | $      | (50,440            | )      |   | $      | 48     |   |   | $ | 67,414 |   |

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|                                                                                               |   |                      |     |   |   |   |     |   |   |
|----------------------------------------------------------------------------------------------------|--------|---------------------------|----------|--------|--------|--------|----------|--------|--------|
|                                                                                               |   | Year      Ended March 31, |     |
|                                                                                               |   | 2008                      |     |   | 2007   |   |     | 2006   |   |
| Cash      flows from operating activities:                                                         |   |                      |     |   |   |   |     |   |   |
| Net      income (loss)                                                                             |   | $                         | (1,414   | )      |   | $      | (81      | )      |   | $ | 10,035 |   |
| Adjustments      to reconcile net income (loss) to net cash provided by operating      activities: |   |                      |     |   |   |   |     |   |   |   |   |   |
| Depreciation      and amortization                                                                 |   |                      | 2,095    |   |   |   | 1,582    |   |   |   | 1,279 |   |
| Accretion      of investment purchase discounts                                                    |   |                      | (1,144   | )      |   |   | (1,495   | )      |   |   | (866 | ) |
| Amortization      of intangible assets                                                             |   |                      | 165      |   |   |   | 158      |   |   |   | - |   |
| In-process      research and development                                                           |   |                      | -        |   |   |   | 2,210    |   |   |   | - |   |
| Stock-based      compensation                                                                      |   |                      | 2,365    |   |   |   | 3,143    |   |   |   | 29 |   |
| Tax      benefit from share-based payment arrangement                                              |   |                      | (2       | )      |   |   | (7       | )      |   |   | - |   |
| Deferred      tax assets                                                                           |   |                      | 693      |   |   |   | 510      |   |   |   | (2,711 | ) |
| Changes      in assets and liabilities:                                                            |   |                      |     |   |   |   |     |   |   |   |   |   |
| Accounts      receivable, net                                                                      |   |                      | 1,359    |   |   |   | 3,106    |   |   |   | (3,093 | ) |
| Inventories                                                                                        |   |                      | (1,262   | )      |   |   | 130      |   |   |   | 1,024 |   |
| Accounts      payable and other current liabilities                                                |   |                      | 1,194    |   |   |   | (1,617   | )      |   |   | 844 |   |
| Deferred      margin on shipments to distributors                                                  |   |                      | 425      |   |   |   | (1,205   | )      |   |   | 164 |   |
| Other      assets and liabilities                                                                  |   |                      | (74      | )      |   |   | 291      |   |   |   | 302 |   |
| Net      cash provided by operating activities                                                     |   |                      | 4,400    |   |   |   | 6,725    |   |   |   | 7,007 |   |
|                                                                                               |   |                      |     |   |   |   |     |   |   |   |   |   |
| Cash      flows from investing activities:                                                         |   |                      |     |   |   |   |     |   |   |   |   |   |
| Purchases      of short-term investments                                                           |   |                      | (112,680 | )      |   |   | (168,947 | )      |   |   | (174,045 | ) |
| Sales      and maturities of short-term investments                                                |   |                      | 142,317  |   |   |   | 163,289  |   |   |   | 157,195 |   |
| Payments      for acquisition, net of cash acquired                                                |   |                      | (1,031   | )      |   |   | (6,994   | )      |   |   | - |   |
| Capital      expenditures                                                                          |   |                      | (2,375   | )      |   |   | (2,928   | )      |   |   | (1,103 | ) |
| Proceeds      from sale of fixed assets                                                            |   |                      | -        |   |   |   | -        |   |   |   | 1,905 |   |
| Net      cash provided by (used in) investing activities                                           |   |                      | 26,231   |   |   |   | (15,580  | )      |   |   | (16,048 | ) |
|                                                                                               |   |                      |     |   |   |   |     |   |   |   |   |   |
| Cash      flows from financing activities:                                                         |   |                      |     |   |   |   |     |   |   |   |   |   |
| Repayments      of capital lease obligations                                                       |   |                      | (132     | )      |   |   | (132     | )      |   |   | (108 | ) |
| Proceeds      from exercise of common stock warrants                                               |   |                      | -        |   |   |   | -        |   |   |   | 837 |   |
| Proceeds      from employee stock compensation plans                                               |   |                      | 516      |   |   |   | 1,100    |   |   |   | 4,270 |   |
| Tax      benefit from share-based payment arrangement                                              |   |                      | 2        |   |   |   | 7        |   |   |   | - |   |
| Net      cash provided by financing activities                                                     |   |                      | 386      |   |   |   | 975      |   |   |   | 4,999 |   |
|                                                                                               |   |                      |     |   |   |   |     |   |   |   |   |   |
| Net      increase (decrease) in cash and cash equivalents                                          |   |                      | 31,017   |   |   |   | (7,880   | )      |   |   | (4,042 | ) |
| Cash      and cash equivalents at beginning of period                                              |   |                      | 1,908    |   |   |   | 9,788    |   |   |   | 13,830 |   |
| Cash      and cash equivalents at end of period                                                    |   | $                         | 32,925   |   |   | $      | 1,908    |   |   | $ | 9,788 |   |
|                                                                                               |   |                      |     |   |   |   |     |   |   |   |   |   |
| Supplemental      disclosures of cash flow information:                                            |   |                      |     |   |   |   |     |   |   |   |   |   |
| Cash      paid during the period for:                                                              |   |                      |     |   |   |   |     |   |   |   |   |   |
| Interest                                                                                           |   | $                         | 11       |   |   | $      | 13       |   |   | $ | 16 |   |
| Income      taxes                                                                                  |   | $                         | 47       |   |   | $      | 139      |   |   | $ | 94 |   |
| Supplemental      disclosure of non-cash investing activity:                                       |   |                      |     |   |   |   |     |   |   |   |   |   |
| Fixed      asset acquired under capital lease                                                      |   | $                         | -        |   |   | $      | 396      |   |   | $ | - |   |

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CALI

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| Machinery      and equipment                 |   2      to 7 years |
|----------------------------------------------|-------------------------------|
| Computer      equipment and related software | 2      to 5 years             |

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|                                                                                                                |   | Year      Ended March 31,                     |   |
|---------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|--------|
|                                                                                                                |   | 2008                                          |   |   | 2007 |   |   | 2006 |   |
|                                                                                                                |   | (In      thousands, except per share amounts) |   |
|                                                                                                                |   |                                          |   |   |   |   |   |   |   |
| Net      income (loss)                                                                                              |   | $                                             | (1,414 | ) |   | $ | (81 | ) |   | $ | 10,035 |   |
|                                                                                                                |   |                                          |   |   |   |   |   |   |   |   |   |   |
| Weighted      average common shares outstanding used in calculation of  net      income (loss) per share: |   |                                          |   |   |   |   |   |   |   |   |   |   |
| Basic      shares                                                                                                   |   |                                          | 23,233 |   |   |   | 23,027 |   |   |   | 22,128 |   |
|                                                                                                                |   |                                          |   |   |   |   |   |   |   |   |   |   |
| Effect      of dilutive securities:                                                                                 |   |                                          |   |   |   |   |   |   |   |   |   |   |
| Employee      stock options                                                                                         |   |                                          | -      |   |   |   | - |   |   |   | 603 |   |
| Warrants                                                                                                            |   |                                          | -      |   |   |   | - |   |   |   | 46 |   |
|    Effect      of dilutive securities                                                                |   |                                          | -      |   |   |   | - |   |   |   | 649 |   |
| Dilutive      shares                                                                                                |   |                                          | 23,233 |   |   |   | 23,027 |   |   |   | 22,777 |   |
|                                                                                                                |   |                                          |   |   |   |   |   |   |   |   |   |   |
| Net      income (loss) per share:                                                                                   |   |                                          |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                               |   | $                                             | (0.06  | ) |   | $ | (0.00 | ) |   | $ | 0.45 |   |
| Diluted                                                                                                             |   | $                                             | (0.06  | ) |   | $ | (0.00 | ) |   | $ | 0.44 |   |

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|                                 |   | March      31, |   |
|--------------------------------------|--------|----------------|--------|
|                                 |   | 2008           |   |   | 2007 |   |
| Cash                                 |   | $              | 602    |   |   | $ | - |   |
| Money      market funds              |   |           | 32,323 |   |   |   | 1,908 |   |
| Total      cash and cash equivalents |   | $              | 32,925 |   |   | $ | 1,908 |   |

|                              |   | March      31, |   |
|-----------------------------------|--------|----------------|--------|
|                              |   | 2008           |   |   | 2007 |   |
| U.S.      Agency notes            |   | $              | 12,061 |   |   | $ | - |   |
| Corporate      bonds              |   |           | -      |   |   |   | 9,280 |   |
| Commercial      paper             |   |           | 1,486  |   |   |   | 31,327 |   |
| Asset-backed      securities      |   |           | 5,124  |   |   |   | 4,009 |   |
| Certificate      of deposits      |   |           | -      |   |   |   | 2,500 |   |
| Total      short-term investments |   | $              | 18,671 |   |   | $ | 47,116 |   |

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| Goodwill                                                                                  |   | $      | 5,258 |   |
|-------------------------------------------------------------------------------------------|--------|--------|-------|--------|
| IPR&D                                                                                 |   |   | 2,210 |   |
| Developed      and core technology                                                        |   |   | 520   |   |
| Net      book value of acquired assets and liabilities which approximates fair      value |   |   | 387   |   |
| Distributor      relationships                                                            |   |   | 70    |   |
| Total                                                                                     |   | $      | 8,445 |   |

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|                           |   | March      31, |   |   | March      31, |   |
|-------------------------------------|--------|----------------|--------|--------|----------------|--------|
|                                |   | 2008           |   |   | 2007           |   |
| Developed      and core technology: |   |           |   |   |           |   |
| Gross      carrying amount          |   | $              | 520    |   |           | $      | 520 |   |
| Less      accumulated amortization  |   |           | (255   | )      |           |   | (125 | ) |
| Net      carrying amount            |   | $              | 265    |   |           | $      | 395 |   |
|                                |   |           |   |   |           |   |   |   |
| Distributor      relationships:     |   |           |   |   |           |   |   |   |
| Gross      carrying amount          |   | $              | 70     |   |           | $      | 70 |   |
| Less      accumulated amortization  |   |           | (68    | )      |           |   | (33 | ) |
| Net      carrying amount            |   | $              | 2      |   |           | $      | 37 |   |
|                                |   |           |   |   |           |   |   |   |
| Intangible      assets, net         |   | $              | 267    |   |           | $      | 432 |   |

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|                                                            |   | March      31, |    |   | March      31, |   |
|-----------------------------------------------------------------|--------|----------------|---------|--------|----------------|--------|
|                                                            |   | 2008           |    |   | 2007           |   |
| Accounts      receivable, net:                                  |   |           |    |   |           |   |
| Accounts      receivable                                        |   | $              | 6,265   |   |           | $      | 7,904 |   |
| Less      allowance for doubtful accounts                       |   |           | (19     | )      |           |   | (320 | ) |
| Less      sales allowances and return reserves                  |   |           | (91     | )      |           |   | (70 | ) |
|                                                            |   | $              | 6,155   |   |           | $      | 7,514 |   |
|                                                            |   |           |    |   |           |   |   |   |
| Inventories:                                                    |   |           |    |   |           |   |   |   |
| Work      in process                                            |   | $              | 1,819   |   |           | $      | 2,161 |   |
| Finished      goods                                             |   |           | 4,615   |   |           |   | 3,011 |   |
|                                                            |   | $              | 6,434   |   |           | $      | 5,172 |   |
|                                                            |   |           |    |   |           |   |   |   |
| Property,      plant and equipment:                             |   |           |    |   |           |   |   |   |
| Machinery      and equipment                                    |   | $              | 11,370  |   |           | $      | 8,971 |   |
| Computer      equipment and related software                    |   |           | 4,518   |   |           |   | 3,805 |   |
| Construction      in progress                                   |   |           | 405     |   |           |   | 1,008 |   |
|                                                            |   |           | 16,293  |   |           |   | 13,784 |   |
| Less:      accumulated depreciation  and amortization |   |           | (10,697 | )      |           |   | (8,944 | ) |
|                                                            |   | $              | 5,596   |   |           | $      | 4,840 |   |
|                                                            |   |           |    |   |           |   |   |   |
| Accrued      liabilities:                                       |   |           |    |   |           |   |   |   |
| Accrued      salaries and benefits                              |   | $              | 1,183   |   |           | $      | 1,366 |   |
| Other      accrued liabilities                                  |   |           | 982     |   |           |   | 1,903 |   |
|                                                            |   | $              | 2,165   |   |           | $      | 3,269 |   |

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|                           |   | March      31, |   |
|--------------------------------|--------|----------------|--------|
|                           |   | 2008           |   |   | 2007 |   |
|                           |   | Carrying       |   |   | Estimated |   |   | Carrying |   |   | Estimated |   |
|                           |   | Value          |   |   | Fair      Value |   |   | Value |   |   | Fair      Value |   |
| Capital      Lease Obligations |   | $              | 132    |   |   | $ | 132 |   |   | $ | 264 |   |   | $ | 264 |   |

|                           |   | March      31, |   |   | March      31, |   |
|--------------------------------|--------|----------------|--------|--------|----------------|--------|
|                           |   | 2008           |   |   | 2007           |   |
| Capital      lease obligations |   | $              | 132    |   |           | $      | 264 |   |
| Less      current maturities   |   |           | (132   | )      |           |   | (132 | ) |
| Long      term obligation      |   | $              | -      |   |           | $      | 132 |   |

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|                             |   | Payments      due by period |   |
|----------------------------------|--------|-----------------------------|--------|
|                             |   | Fiscal      2009            |   |   | Beyond      2009 |   |   | Total |   |
| Capital      lease obligations * |   | $                           | 132    |   |   | $ | - |   |   | $ | 132 |   |

|                          |   | March      31, |   |   | March      31, |   |
|-------------------------------|--------|----------------|--------|--------|----------------|--------|
|                          |   | 2008           |   |   | 2007           |   |
| Capitalized      cost         |   | $              | 396    |   |           | $      | 396 |   |
| Accumulated      amortization |   |           | (187   | )      |           |   | (55 | ) |
| Net      book value           |   | $              | 209    |   |           | $      | 341 |   |

|                             |   | Payments      due by period |   |
|----------------------------------|--------|-----------------------------|--------|
|                             |   |  Fiscal                |   |   | Fiscal |   |   | Fiscal |   |   | Beyond |   |   |   |   |
|                             |   | 2009                        |   |   | 2010 |   |   | 2011 |   |   | 2011 |   |   | Total |   |
| Operating      lease obligations |   | $                           | 467    |   |   | $ | 385 |   |   | $ | 193 |   |   | $ | - |   |   | $ | 1,045 |   |

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|                      |   | Payments      due by period |   |
|---------------------------|--------|-----------------------------|--------|
|                      |   | Fiscal      2009            |   |   | Beyond      2009 |   |   | Total |   |
| Purchase      obligations |   | $                           | 467    |   |   | $ | - |   |   | $ | 467 |   |

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| The      1995E Plan was administered by a compensation committee consisting of not      less than two independent directors. The 1995D Plan was administered by      not less than three members of the Board of Directors and the amount of      shares granted to the directors on an annual basis were fixed in amount,      as approved by the shareholders. |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                               |   | Shareholder         |   |   | Non-Shareholder    |   |   |            |   |   |     |   |   |            |   |
|------------------------------------|--------|---------------------|--------|--------|--------------------|--------|--------|-----------------|--------|--------|----------|--------|--------|-----------------|--------|
|                               |   | Approved      Plans |   |   | Approved      Plan |   |   | All      Plans  |
|                               |   |                |   |   |               |   |   |            |   |   |     |   |   |            |   |   |   |   | Weighted |   |   |
|                               |   |                |   |   |               |   |   |            |   |   |     |   |   |            |   |   |   |   | Average |   |   |
|                               |   |                |   |   | Weighted           |   |   |            |   |   | Weighted |   |   |            |   |   | Weighted |   | Remaining |   |   |
|                               |   |                |   |   | Average            |   |   |            |   |   | Average  |   |   |            |   |   | Average |   | Contractual |   | Aggregate |
|                               |   | Shares      (in     |   |   | Exercise           |   |   | Shares      (in |   |   | Exercise |   |   | Shares      (in |   |   | Exercise |   | Term |   | Intrinsic |
|                               |   | thousands)          |   |   | Price              |   |   | thousands)      |   |   | Price    |   |   | thousands)      |   |   | Price |   |  (in      years) |   |   Value |
| Balance      at March 31, 2005     |   |                | 3,058  |   |               | $      | 6.33   |            |   |   | 573      |   |   | $               | 5.28   |   |   |   | 3,631 |   |   | $ | 6.17 |   |   |   |   |
| Granted                            |   |                | 1,131  |   |               |   | 6.79   |            |   |   | 125      |   |   |            | 9.19   |   |   |   | 1,256 |   |   |   | 7.02 |   |   |   |   |
| Exercised                          |   |                | (788   | )      |               |   | 4.33   |            |   |   | (120     | )      |   |            | 4.07   |   |   |   | (908 | ) |   |   | 4.30 |   |   |   |   |
| Canceled      / forfeited          |   |                | (414   | )      |               |   | 9.04   |            |   |   | -        |   |   |            | 0.00   |   |   |   | (414 | ) |   |   | 9.04 |   |   |   |   |
| Balance      at March 31, 2006     |   |                | 2,987  |   |               | $      | 6.66   |            |   |   | 578      |   |   | $               | 6.38   |   |   |   | 3,565 |   |   | $ | 6.61 |   |   |   |   |
| Granted                            |   |                | 1,378  |   |               |   | 4.42   |            |   |   | 371      |   |   |            | 7.18   |   |   |   | 1,749 |   |   |   | 5.14 |   |   |   |   |
| Exercised                          |   |                | (142   | )      |               |   | 3.49   |            |   |   | (67      | )      |   |            | 2.90   |   |   |   | (208 | ) |   |   | 3.30 |   |   |   |   |
| Canceled      / forfeited          |   |                | (730   | )      |               |   | 6.37   |            |   |   | (64      | )      |   |            | 5.03   |   |   |   | (795 | ) |   |   | 6.26 |   |   |   |   |
| Balance      at March 31, 2007     |   |                | 3,493  |   |               | $      | 5.96   |            |   |   | 818      |   |   | $               | 7.42   |   |   |   | 4,311 |   |   | $ | 6.24 |   |   |   |   |
| Granted                            |   |                | 1,156  |   |               |   | 3.80   |            |   |   | 150      |   |   |            | 3.36   |   |   |   | 1,306 |   |   |   | 3.75 |   |   |   |   |
| Exercised                          |   |                | (25    | )      |               |   | 3.18   |            |   |   | -        |   |   |            | -      |   |   |   | (25 | ) |   |   | 3.18 |   |   |   |   |
| Canceled      / forfeited          |   |                | (396   | )      |               |   | 5.03   |            |   |   | (250     | )      |   |            | 7.81   |   |   |   | (646 | ) |   |   | 6.11 |   |   |   |   |
| Balance      at March 31, 2008     |   |                | 4,228  |   |               | $      | 5.48   |            |   |   | 718      |   |   | $               | 6.43   |   |   |   | 4,946 |   |   | $ | 5.61 |   | 7.28 |   | $5,770 |
|                               |   |                |   |   |               |   |   |            |   |   |     |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Exercisable      at March 31, 2008 |   |                |   |   |               |   |   |            |   |   |     |   |   |            |   |   |   |   | 2,625 |   |   | $ | 6.63 |   | 5.95 |   | $5,770 |

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|                |   | Options      Exercisable |   |
|---------------------|--------|--------------------------|--------|
|                |   |                     |   |   | Weighted- |   |
|                |   | Number                   |   |   | Average |   |
|                |   | Exercisable              |   |   | Exercise |   |
|                |   | (in      thousands)      |   |   | Price |   |
| March      31, 2006 |   |                     | 1,909  |   |   | $ | 6.89 |   |
| March      31, 2007 |   |                     | 1,963  |   |   |   | 7.06 |   |
| March      31, 2008 |   |                     | 2,625  |   |   | $ | 6.63 |   |

|                                 |   |        |   |   |   |   | Options      Outstanding |   |   | Options      Exercisable |        |
|--------------------------------------|--------|-------------|--------|--------|--------|--------|--------------------------|--------|--------|--------------------------|-------------|
|                                 |   |        |   |   |   |   |                     |   |   | Weighted                 |        |   |   |   |   |   |   |   |   |   |
|                                 |   |        |   |   |   |   |                     |   |   | Average                  |        |   | Weighted |   |   |   |   |   | Weighted |   |
|                                 |   |        |   |   |   |   | Number                   |   |   | Remaining                |        |   | Average |   |   | Number |   |   | Average |   |
|                                 |   |        |   |   |   |   | Outstanding              |   |   | Contractual              |        |   | Exercise |   |   | Exercisable |   |   | Exercise |   |
|        Range of Exercise Prices |   | (thousands) |   |   | Life   |   |                     | Price  |   |                     | (thousands) |   |   | Price |   |
| $                                    | 2.75   |        | -      |   | $      | 4.00   |                     |   |   | 1,405                    |        |   |   | 8.99 |   |   | $ | 3.62 |   |   |   | 175 |   |   | $ | 3.35 |   |
|                                 | 4.01   |        | -      |   |   | 6.00   |                     |   |   | 1,636                    |        |   |   | 7.42 |   |   |   | 4.91 |   |   |   | 931 |   |   |   | 5.16 |   |
|                                 | 6.01   |        | -      |   |   | 8.00   |                     |   |   | 1,481                    |        |   |   | 6.05 |   |   |   | 6.74 |   |   |   | 1,095 |   |   |   | 6.69 |   |
|                                 | 8.01   |        | -      |   |   | 10.00  |                     |   |   | 272                      |        |   |   | 5.62 |   |   |   | 8.69 |   |   |   | 272 |   |   |   | 8.69 |   |
|                                 | 10.01  |        | -      |   |   | 22.50  |                     |   |   | 152                      |        |   |   | 4.86 |   |   |   | 15.21 |   |   |   | 152 |   |   |   | 15.21 |   |
| $                                    | 2.75   |        | -      |   | $      | 22.50  |                     |   |   | 4,946                    |        |   |   | 7.28 |   |   | $ | 5.61 |   |   |   | 2,625 |   |   | $ | 6.63 |   |

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|                          |   | Year      Ended March 31, |    |
|-------------------------------|--------|---------------------------|---------|
|                          |   | 2008                      |    |   | 2007 |   |   | 2006 |   |
| Aggregate      purchase price |   | $                         | 436,000 |   |   | $ | 412,000 |   |   | $ | 365,000 |   |
| Shares      purchased         |   |                      | 126,021 |   |   |   | 87,565 |   |   |   | 106,065 |   |
| Employee      participants    |   |                      | 43      |   |   |   | 39 |   |   |   | 38 |   |

|                                                      |   | Year      Ended March 31, |   |
|-----------------------------------------------------------|--------|---------------------------|--------|
|                                                      |   | 2008                      |   |   | 2007 |   |
| Cost      of sales                                        |   | $                         | 349    |   |   | $ | 472 |   |
| Research      and development                             |   |                      | 599    |   |   |   | 683 |   |
| Selling,      general and administrative                  |   |                      | 1,385  |   |   |   | 1,916 |   |
| Stock-based      compensation expense before income taxes |   |                      | 2,333  |   |   |   | 3,071 |   |
| Tax      benefit                                          |   |                      | 2      |   |   |   | 7 |   |
| Stock-based      compensation expense, net of tax         |   | $                         | 2,331  |   |   | $ | 3,064 |   |

|                                          |   | Year      Ended March 31, |   |
|-----------------------------------------------|--------|---------------------------|--------|
|                                          |   | 2008                      |   |   | 2007 |   |
| Income      before income taxes               |   | $                         | (2,333 | ) |   | $ | (3,071 | ) |
| Net      income                               |   |                      | (2,331 | ) |   |   | (3,064 | ) |
| Basic      and diluted net earnings per share |   | $                         | (0.10  | ) |   | $ | (0.13 | ) |

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|                                                                                                                                            |   | Year      Ended     |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|--------|
|                                                                                                                                            |   | March      31, 2006 |   |
|  Net      income                                                                                                                           |   |                |   |
| As      reported                                                                                                                                |   | $                   | 10,035 |   |
| Add:      stock-based consultant compensation expense included in reported      results                                                         |   |                | 29     |   |
| Deduct:      total stock-based employee compensation expense determined under fair      value method for all awards, net of related tax effects |   |                | (3,740 | ) |
| Pro      forma net income                                                                                                                       |   | $                   | 6,324  |   |
|                                                                                                                                            |   |                |   |   |
|  Basic      net income per share                                                                                                           |   |                |   |   |
| As      reported                                                                                                                                |   | $                   | 0.45   |   |
| Pro      forma                                                                                                                                  |   | $                   | 0.29   |   |
|                                                                                                                                            |   |                |   |   |
|  Diluted      net income per share                                                                                                         |   |                |   |   |
| As      reported                                                                                                                                |   | $                   | 0.44   |   |
| Pro      forma                                                                                                                                  |   | $                   | 0.28   |   |

|                                        |   | Employee      Stock Options |   |   | Employee      Stock Purchase Plan |   |
|---------------------------------------------|--------|-----------------------------|--------|--------|-----------------------------------|--------|
|                                        |   | Fiscal                      |   |   | Fiscal                            |   |   | Fiscal |   |   | Fiscal |   |   | Fiscal |   |   | Fiscal |   |
|                                        |   | 2008                        |   |   | 2007                              |   |   | 2006 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
| Weighted      average grant date fair value |   | $                           | 1.85   |   |                              | $      | 2.92 |   |   | $ | 3.91 |   |   | $ | 1.23 |   |   | $ | 1.57 |   |   | $ | 1.90 |   |
| Expected      life in years                 |   |                        | 4.11   |   |                              |   | 4.03 |   |   |   | 4.11 |   |   |   | 0.50 |   |   |   | 0.50 |   |   |   | 0.50 |   |
| Volatility                                  |   |                        | 0.64   |   |                              |   | 0.70 |   |   |   | 0.70 |   |   |   | 0.48 |   |   |   | 0.48 |   |   |   | 0.57 |   |
| Risk-free      interest rate                |   |                        | 4.05   | %      |                              |   | 4.81 | % |   |   | 4.14 | % |   |   | 4.61 | % |   |   | 5.09 | % |   |   | 3.69 | % |
| Dividend      Yield                         |   |                        | 0      | %      |                              |   | 0 | % |   |   | 0 | % |   |   | 0 | % |   |   | 0 | % |   |   | 0 | % |

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|                                                         |   | Year      Ended March 31, |   |
|--------------------------------------------------------------|--------|---------------------------|--------|
|                                                         |   | 2008                      |   |   | 2007 |   |   | 2006 |   |
| Net      income (loss)                                       |   | $                         | (1,414 | ) |   | $ | (81 | ) |   | $ | 10,035 |   |
| Unrealized      gain (loss) on available for sale securities |   |                      | 48     |   |   |   | 5 |   |   |   | (3 | ) |
| Comprehensive      income (loss)                             |   | $                         | (1,366 | ) |   | $ | (76 | ) |   | $ | 10,032 |   |

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|                     |   | Year      Ended March 31, |   |
|--------------------------|--------|---------------------------|--------|
|                     |   | 2008                      |   |   | 2007 |   |   | 2006 |   |
| Interest      income     |   | $                         | 2,465  |   |   | $ | 2,511 |   |   | $ | 1,575 |   |
| Other      expenses, net |   |                      | (75    | ) |   |   | (79 | ) |   |   | (84 | ) |
| Net      other income    |   | $                         | 2,390  |   |   | $ | 2,432 |   |   | $ | 1,491 |   |

|                                      |   | Year      Ended March 31, |   |
|-------------------------------------------|--------|---------------------------|--------|
|                                      |   | 2008                      |   |   | 2007 |   |   | 2006 |   |
| Current:                                  |   |                      |   |   |   |   |   |   |   |
| Federal                                   |   | $                         | 18     |   |   | $ | 92 |   |   | $ | 128 |   |
| State                                     |   |                      | 4      |   |   |   | (2 | ) |   |   | 8 |   |
| Foreign                                   |   |                      | 80     |   |   |   | 26 |   |   |   | - |   |
|                                      |   | $                         | 102    |   |   | $ | 116 |   |   | $ | 136 |   |
| Deferred:                                 |   |                      |   |   |   |   |   |   |   |   |   |   |
| Federal                                   |   | $                         | 683    |   |   | $ | 469 |   |   | $ | (2,491 | ) |
| State                                     |   |                      | 111    |   |   |   | 42 |   |   |   | (220 | ) |
| Foreign                                   |   |                      | -      |   |   |   | - |   |   |   | - |   |
|                                      |   | $                         | 794    |   |   | $ | 511 |   |   | $ | (2,711 | ) |
|                                      |   |                      |   |   |   |   |   |   |   |   |   |   |
| Provision      (benefit) for income taxes |   | $                         | 896    |   |   | $ | 627 |   |   | $ | (2,575 | ) |

|                                           |   | Year      Ended March 31, |   |
|------------------------------------------------|--------|---------------------------|--------|
|                                           |   | 2008                      |   |   | 2007 |   |   | 2006 |   |
| Income      tax expense at U.S. statutory rate |   | $                         | (176   | ) |   | $ | 185 |   |   | $ | 2,523 |   |
| IPR&D                                      |   |                      | -      |   |   |   | 751 |   |   |   | - |   |
| Valuation      allowance                       |   |                      | 903    |   |   |   | (700 | ) |   |   | (5,260 | ) |
| Other                                          |   |                      | 169    |   |   |   | 391 |   |   |   | 162 |   |
| Provision      (benefit) for income taxes      |   | $                         | 896    |   |   | $ | 627 |   |   | $ | (2,575 | ) |

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|                                            |   | Year      Ended March 31, |    |
|-------------------------------------------------|--------|---------------------------|---------|
|                                            |   | 2008                      |    |   | 2007 |   |
| Deferred      Tax Assets:                       |   |                      |    |   |   |   |
| Net      operating losses                       |   | $                         | 19,651  |   |   | $ | 20,660 |   |
| Research      and other credits                 |   |                      | 1,170   |   |   |   | 1,290 |   |
| Write      down of inventory                    |   |                      | 199     |   |   |   | 390 |   |
| Stock-based      compensation                   |   |                      | 1,779   |   |   |   | 1,080 |   |
| Other      non-deductible accruals and reserves |   |                      | 1,740   |   |   |   | 1,531 |   |
| Total      deferred tax assets                  |   |                      | 24,539  |   |   |   | 24,951 |   |
| Valuation      allowance                        |   |                      | (23,031 | ) |   |   | (22,160 | ) |
| Net      deferred tax assets                    |   |                      | 1,508   |   |   |   | 2,791 |   |
| Deferred      tax liabilities:                  |   |                      |    |   |   |   |   |   |
| Tax      over book depreciation                 |   |                      | 165     |   |   |   | 430 |   |
| Intangible      assets                          |   |                      | 96      |   |   |   | 160 |   |
| Total      net deferred tax assets              |   | $                         | 1,247   |   |   | $ | 2,201 |   |

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|                                             |   | Year      Ended     |   |
|--------------------------------------------------|--------|---------------------|--------|
|                                             |   | March      31, 2008 |   |
| Unrecognized      tax benefits at April 1, 2007  |   | $                   | 126    |   |
| Increases      in tax positions for current year |   |                | 53     |   |
| Increases      in tax positions for prior years  |   |                | 3      |   |
| Lapse      in statute of limitations             |   |                | (15    | ) |
| Unrecognized      tax benefits at March 31, 2008 |   | $                   | 167    |   |

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|                                   |   | Year      Ended March 31, |   |
|----------------------------------------|--------|---------------------------|--------|
|                                   |   | 2008                      |   |   | 2007 |   |   | 2006 |   |
| Original      Equipment Manufacturers: |   |                      |   |   |   |   |   |   |   |
| Customer      A                        |   |                      | 25     | % |   |   | 17 | % |   |   | * |   |
| Customer      B                        |   |                      | 16     | % |   |   | 37 | % |   |   | 40 | % |
|                                   |   |                      |   |   |   |   |   |   |   |   |   |   |
| Distributors:                          |   |                      |   |   |   |   |   |   |   |   |   |   |
| Distributor      A                     |   |                      | 13     | % |   |   | * |   |   |   | 13 | % |
| Distributor      B                     |   |                      | 12     | % |   |   | 10 | % |   |   | * |   |

|                                   |   | Year      Ended March 31, |   |
|----------------------------------------|--------|---------------------------|--------|
|                                   |   | 2008                      |   |   | 2007 |   |   | 2006 |   |
|                                   |   |                      |   |   | %      of |   |   |   |   |   | %      of |   |   |   |   |   | %      of |   |
|                                   |   | Amount                    |   |   | Total |   |   | Amount |   |   | Total |   |   | Amount |   |   | Total |   |
| United      States                     |   | $                         | 5.5    |   |   |   | 9 | % |   | $ | 4.4 |   |   |   | 6 | % |   | $ | 3.8 |   |   |   | 5 | % |
| Korea                                  |   |                      | 19.6   |   |   |   | 33 | % |   |   | 16.5 |   |   |   | 24 | % |   |   | 14.6 |   |   |   | 21 | % |
| China                                  |   |                      | 15.9   |   |   |   | 27 | % |   |   | 28.2 |   |   |   | 42 | % |   |   | 32.6 |   |   |   | 47 | % |
| Taiwan                                 |   |                      | 11.2   |   |   |   | 19 | % |   |   | 10.4 |   |   |   | 15 | % |   |   | 9.2 |   |   |   | 13 | % |
| Singapore                              |   |                      | 4.2    |   |   |   | 7 | % |   |   | 6.7 |   |   |   | 10 | % |   |   | 8.6 |   |   |   | 12 | % |
| Others                                 |   |                      | 2.8    |   |   |   | 5 | % |   |   | 1.8 |   |   |   | 3 | % |   |   | 1.4 |   |   |   | 2 | % |
|    Total      net sales |   | $                         | 59.2   |   |   |   | 100 | % |   | $ | 68.0 |   |   |   | 100 | % |   | $ | 70.2 |   |   |   | 100 | % |

|     |   |   | Net      Book Value  |   |
|----------|--------|--------|----------------------|--------|
|     |   |   | as      of March 31, |   |
|     |   |   | 2008                 |   |   | 2007 |   |
| USA      |   |   | $                    | 2.0    |   |   | $ | 2.1 |   |
| India    |   |   |                 | 1.9    |   |   |   | 0.6 |   |
| Thailand |   |   | 1.2                  |   |   |   | 1.9 |   |
| Others   |   |   | 0.5                  |   |   |   | 0.2 |   |
|     | Total  |   | $                    | 5.6    |   |   | $ | 4.8 |   |

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| Fiscal      2008, for the Quarter Ended |   | June      30                                      |   |   | September      30 |   |   | December      31 |   |   | March      31 |   |
|-----------------------------------------|--------|---------------------------------------------------|--------|--------|-------------------|--------|--------|------------------|--------|--------|---------------|--------|
|                                    |   | (In      thousands, except for per share amounts) |   |
| Net      sales                          |   | $                                                 | 13,123 |   |              | $      | 16,122 |             |   | $      | 14,955        |   |   | $ | 15,017 |   |
| Gross      margin                       |   |                                              | 4,087  |   |              |   | 5,269  |             |   |   | 4,850         |   |   |   | 5,412 |   |
| Net      income (loss)                  |   |                                              | (1,056 | )      |              |   | 557    |             |   |   | 230           |   |   |   | (1,145 | ) |
| Net      income (loss) per share:       |   |                                              |   |   |              |   |   |             |   |   |          |   |   |   |   |   |
| Basic                                   |   |                                              | (0.05  | )      |              |   | 0.02   |             |   |   | 0.01          |   |   |   | (0.05 | ) |
| Diluted                                 |   | $                                                 | (0.05  | )      |              | $      | 0.02   |             |   | $      | 0.01          |   |   | $ | (0.05 | ) |
|                                    |   |                                              |   |   |              |   |   |             |   |   |          |   |   |   |   |   |
| Fiscal      2007, for the Quarter Ended |   | June      30                                      |   |   | September      30 |   |   | December      31 |   |   | March      31 |   |
|                                    |   | (In      thousands, except for per share amounts) |   |
| Net      sales                          |   | $                                                 | 16,072 |   |              | $      | 18,733 |             |   | $      | 17,736        |   |   | $ | 15,465 |   |
| Gross      margin                       |   |                                              | 6,083  |   |              |   | 7,505  |             |   |   | 6,343         |   |   |   | 5,285 |   |
| Net      income (loss)                  |   |                                              | (2,075 | )      |              |   | 1,377  |             |   |   | 673           |   |   |   | (56 | ) |
| Net      income (loss) per share:       |   |                                              |   |   |              |   |   |             |   |   |          |   |   |   |   |   |
| Basic                                   |   |                                              | (0.09  | )      |              |   | 0.06   |             |   |   | 0.03          |   |   |   | (0.00 | ) |
| Diluted                                 |   | $                                                 | (0.09  | )      |              | $      | 0.06   |             |   | $      | 0.03          |   |   | $ | (0.00 | ) |

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ITEM 10

ITEM 11

ITEM 12.

ITEM 13

ITEM 14.

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ITE

|   | 2.   See      Item 8 for a list of financial statement schedules filed. All other      schedules have been omitted because they are not applicable or the      required information is shown in the Consolidated Financial Statements or      the notes thereto. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.   | Exhibit      Index: |
|----------------|---------------------|

| Exhibit      No. |   | Description                                                                                                                                                                             |    | Incorporated      by reference from                                                                                                 |
|------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------|-------------------------------------------------------------------------------------------------------------------------------------|
| 3(i)             |   | Amended      and Restated Certificate of Incorporation.                                                                                                                                 |    | Exhibit      3.1 to our Current Report on Form 8-K dated September 15, 2006, filed on      September 21, 2006.                      |
|             |   |                                                                                                                                                                                    |
| 3(ii)            |   | Amended      and Restated By-laws.                                                                                                                                                      |    | Exhibit      3.2 to our Current Report on Form 8-K dated September 15, 2006, filed on      September 21, 2006.                      |
|             |   |                                                                                                                                                                                    |
| 4.1*             |   | 1995      Employee Stock Option Plan and 1995 Non-Employee Directors’      Stock Option Plan, both as most recently amended August      8, 2003 and August 7, 2002, respectively. |    | Exhibit      4.1 to Registration Statement on Form S-8, filed on September 2,      2003.                                            |
|             |   |                                                                                                                                                                                    |
| 4.2*             |   | 1995      Employee Stock Purchase Plan, as most recentlyamended      August 8, 2003                                                                                                     |    | Exhibit      4.2 to Registration Statement on Form S-8, filed on September 2,      2003.                                            |
|             |   |                                                                                                                                                                                    |
| 4.3              |   | Sample      Common Stock Certificate of Registrant                                                                                                                                      |    | Exhibit      4.1 to our Current Report on Form 8-K dated April 27, 2004, filed on April      28, 2004.                              |
|             |   |                                                                                                                                                                                    |
| 4.4*             |   | 2004      Omnibus Incentive Compensation Plan                                                                                                                                           |    | Exhibit      4.1 to our Registration Statement on Form S-8, filed on November 9,      2004.                                         |
|             |   |                                                                                                                                                                                    |
| 10.12            |   | Wafer      Manufacturing Agreement between the Company and Advanced Semiconductor      Manufacturing Corporation, dated February 20, 2002.**                                            |    | Exhibit      10.12 to the Company’s Annual Report on Form 10-K for the year ended March      31, 2002 filed on June 25, 2002. |
|             |   |                                                                                                                                                                                    |
| 10.18            |   | Wafer      Manufacturing Agreement with Sanyo Electric Co., Ltd. Semiconductor      Company**                                                                                           |    | Exhibit      10.18 to our Quarterly Report on Form 10-Q for the quarter ended June 30,      2004, filed on August 6, 2004.          |
|             |   |                                                                                                                                                                                    |
| 10.20            |   | Amended      and Restated Loan and Security Agreement with Silicon Valley Bank dated      September 30, 2004.**                                                                         |    | Exhibit      10.20 to our Quarterly Report on Form 10-Q for the quarter ended September      30, 2004, filed on November 8, 2004.   |
|             |   |                                                                                                                                                                                    |
| 10.21            |   | Purchase      Agreement between Registrant and Microchip Technology Incorporated dated      May 20, 2005, as amended effective June 15, 2005                                            |    | Exhibit      10.21 to our Quarterly Report on Form 10-Q for the quarter ended June 30,      2005, filed on November 9, 2005.        |
|             |   |                                                                                                                                                                                    |         |                                                                                                                                |
| 10.22            |   | Exhibit      10.22, First Amendment to Loan and Security Agreement between Registrant      and Silicon Valley Bank entered into on October 24, 2005.                                    |         | Exhibit      10.22 to our Current Report on Form 8-K dated October 24, 2005, filed on      October 27, 2005.                        |
|             |   |                                                                                                                                                                                    |

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| Exhibit      No. |                                                                                                                                                                        | Description                                                                                                                                                                                                                   |                                                                                                                            | Incorporated      by reference from                                                                                             |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------|
| 10.23            |                                                                                                                                                                        | Agreement      and Plan of Merger dated March 16, 2006 by and among the Registrant,      Arques Technology, Inc., ARQ Acquisition Corporation and, for purposes of      Article 11 only, Gerome Tseng, as the Representative. |                                                                                                                       | Exhibit      10.23 to our Current Report on Form 8-K dated March 16, 2006, filed on      March 22, 2006.                        |
|             |                                                                                                                                                                        |                                                                                                                                                                                                                          |
| 10.24*           |                                                                                                                                                                        | Consulting      Agreement dated as of March 17, 2006, between Registrant and Kevin      Berry.                                                                                                                           |                                                                                                                       | Exhibit      10.24 to our Current Report on Form 8-K dated March 17, 2006, filed on      March 23, 2006.                        |
|             |                                                                                                                                                                        |                                                                                                                                                                                                                          |
| 10.25*           |                                                                                                                                                                        | Memo      to Employees and Consultants, including David Casey and David Sear,      Accelerating Their Underwater Unvested Options and Imposing Resale      Restrictions.                                                      |                                                                                                                       | Exhibit      10.25 to our Current Report on Form 8-K dated March 28, 2006, filed on      April 3, 2006.                         |
|             |                                                                                                                                                                        |                                                                                                                                                                                                                          |
| 10.26*           |                                                                                                                                                                        | Letter      Agreement dated as of July 7, 2006, between Registrant and Kevin      Berry.                                                                                                                                      |                                                                                                                       | Exhibit      10.26 to our Current Report on Form 8-K dated July 7, 2006, filed on July      10, 2006.                           |
|             |                                                                                                                                                                        |
| 10.27*           |                                                                                                                                                                        | Supplemental      Employment Terms Agreement during November      2006 between Registrant      and an employee of      the registrant                                                                                         |                                                                                                                       | Exhibit      10.27 to our Quarterly Report on Form 10-Q for the quarter ended December      31, 2006, filed on February 9, 2007 |
|             |                                                                                                                                                                        |                                                                                                                                                                                                                          |
| 10.28*           |                                                                                                                                                                        | Executive      Severance Plan dated November 9, 2006                                                                                                                                                                          | Exhibit      10.28 to our Quarterly Report on Form 10-Q for the quarter ended December      31, 2006, filed on February 9, 2007 |                                                                                                                            |
|             |                                                                                                                                                                        |                                                                                                                                                                                                                          |
| 10.29**          |     Equipment      Acquisition Agreement, as amended,     and      Post-Consignment Services      Pricing      Agreement, with SPEL | Exhibit      10.29 to our Quarterly Report on Form 10-Q for the quarter ended September      30, 2007 filed on November 9, 2007                                                                                               |

| 10.30* |   | Amendment      to Supplemental Employment Terms Agreement dated February 6, 2008 is filed      herewith.                                  |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                      |
| 10.31* |   | Amended      and Restated Executive Severance Plan dated February 6, 2008 is filed      herewith.                                         |
|   |   |                                                                                                                                      |
| 21.1   |   | List      of Subsidiaries is filed herewith.                                                                                         |
| 23.1   |   | Consent      of Grant Thornton LLP, Independent Registered Public Accounting Firm,      dated June 11, 2008 is filed herewith.            |
|   |   |
| 24     |   | Power      of attorney is filed herewith.                                                                                                 |
|   |   |
| 31.1   |   | Certification      of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-      Oxley Act of 2002 is filed herewith. |
|   |   |
| 31.2   |   | Certification      of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-      Oxley Act of 2002 is filed herewith.      |
|   |   |
| 32.1   |   | Certifications      under Section 906 of the Sarbanes-Oxley Act of 2002 are filed      herewith.                                          |

| * | Denotes      a management contract or compensatory plan or  arrangement. |
|---|--------------------------------------------------------------------------|

| ** | Portions      were omitted pursuant to a request for confidential    treatment. |
|----|---------------------------------------------------------------------------------|

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SCHE

|                                             |   | Balance      at   |   |   | Charged      to     |   |   |              |   |   | Balance      at  |   |
|--------------------------------------------------|--------|-------------------|--------|--------|---------------------|--------|--------|-------------------|--------|--------|------------------|--------|
|                                             |   | beginning      of |   |   | expenses      or    |   |   | Deductions        |   |   | end      of      |   |
|                                             |   | fiscal      year  |   |   | other      accounts |   |   | or      write off |   |   | fiscal      year |   |
| Valuation      allowance for deferred tax assets |   |              |   |   |                |   |   |              |   |   |             |   |
| Fiscal      2008                                 |   | $                 | 22,160 |   |                | $      | 871    |              |   | $      | -                |   |   | $ | 23,031 |   |
| Fiscal      2007                                 |   |              | 18,961 |   |                |   | 3,199  |              |   |   | -                |   |   |   | 22,160 |   |
| Fiscal      2006                                 |   |              | 24,763 |   |                |   | -      |              |   |   | (5,802           | )      |   |   | 18,961 |   |
|                                             |   |              |   |   |                |   |   |              |   |   |             |   |   |   |   |   |
| Allowance      for doubtful accounts             |   |              |   |   |                |   |   |              |   |   |             |   |   |   |   |   |
| Fiscal      2008                                 |   |              | 320    |   |                |   | -      |              |   |   | (301             | )      |   |   | 19 |   |
| Fiscal      2007                                 |   |              | 146    |   |                |   | 174    |              |   |   | -                |   |   |   | 320 |   |
| Fiscal      2006                                 |   |              | 74     |   |                |   | 73     |              |   |   | (1               | )      |   |   | 146 |   |
|                                             |   |              |   |   |                |   |   |              |   |   |             |   |   |   |   |   |
| Sales      allowances and return reserve         |   |              |   |   |                |   |   |              |   |   |             |   |   |   |   |   |
| Fiscal      2008                                 |   |              | 70     |   |                |   | 21     |              |   |   | -                |   |   |   | 91 |   |
| Fiscal      2007                                 |   |              | 112    |   |                |   | -      |              |   |   | (42              | )      |   |   | 70 |   |
| Fiscal      2006                                 |   | $                 | 117    |   |                | $      | -      |              |   | $      | (5               | )      |   | $ | 112 |   |

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CALIFOR

|   |   |   |   | CALIFORNIA      MICRO DEVICES CORPORATION           |
|--------|--------|--------|--------|-----------------------------------------------------|
|   |   |   |   | (Registrant)                                        |
|   |   |   |   |                                                |
|   |   | By:    |   | /S/      ROBERT V. DICKINSON                        |
|   |   |   |   | __________________________________________________  |
|   |   |   |   | Robert      V. Dickinson                            |
|   |   |   |   | President,      Chief Executive Officer andDirector |

| By:    |   |                                           |   |                                                 |   |   |
|--------|--------|------------------------------------------------|--------|------------------------------------------------------|--------|--------|
|   |   | /S/      ROBERT V. DICKINSON                   |   | President,      Chief Executive Officer and Director |   |   |
|   |   | _________________________________________      |   | (Principal      Executive Officer)                   |   |   |
|   |   | Robert      V. Dickinson                       |   |                                                 |   |   |
|   |   |                                           |   |                                                 |   |   |
|   |   | /S/    KEVIN      J. BERRY |   | Chief      Financial Officer                         |   |   |
|   |   | _________________________________________      |   | (Principal      Financial and Accounting Officer)    |   |   |
|   |   | Kevin      J. Berry                            |   |                                                 |   |   |
|   |   |                                           |   |                                                 |   |   |
|   |   | /S/      WADE F. MEYERCORD                     |   | Chairman      of the Board                           |   |   |
|   |   | _________________________________________      |   |                                                 |   |   |
|   |   | Wade      F. Meyercord                         |   |                                                 |   |   |
|   |   |                                           |   |                                                 |   |   |
|   |   | /S/      EDWARD C. ROSS                        |   | Director                                             |   |   |
|   |   | _________________________________________      |   |                                                 |   |   |
|   |   | Edward      C. Ross                            |   |                                                 |   |   |
|   |   |                                           |   |                                                 |   |   |
|   |   | /S/      JOHN L. SPRAGUE                       |   | Director                                             |   |   |
|   |   | _________________________________________      |   |                                                 |   |   |
|   |   | John      L. Sprague                           |   |                                                 |   |   |
|   |   |                                           |   |                                                 |   |   |
|   |   | /S/      DAVID L. WITTROCK                     |   | Director                                             |   |   |
|   |   | _________________________________________      |   |                                                 |   |   |
|   |   | David      L. Wittrock                         |   |                                                 |   |   |
|   |   |                                           |   |                                                 |   |   |
|   |   | /S/      DAVID W. SEAR                         |   | Director                                             |   |   |
|   |   | _________________________________________      |   |                                                 |   |   |
|   |   | David      W. Sear                             |   |                                                 |   |   |