SECURITIES AND EXCHANGE COMMISSION
                        Washington, D.C. 20549
                            ______________

                             Form 10-QSB
(Mark One)
              [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934

                 For the quarterly period ended July 4, 1998

                                     OR

                [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
                              OF THE EXCHANGE ACT

             For the transition period from _________ to __________

                        Commission file number 0-11880
 
                           HYTEK MICROSYSTEMS, INC.
       (Exact name of small business issuer as specified in its charter)

             California                             94-2234140  
(State or other jurisdiction of                  (I.R.S. Employer
 incorporation or organization)                 Identification No.)

               400 Hot Springs Road, Carson City, Nevada 89706
                  (Address of principal executive offices)

                   Issuer's telephone number: (702) 883-0820

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

                          Yes __X___ No _____

As of July 31, 1998, the issuer had outstanding 3,039,758 shares of Common 
Stock, no par value.

                                    1

<PAGE>

                         HYTEK MICROSYSTEMS, INC.
                      QUARTERLY REPORT ON FORM 10-QSB
                     FOR THE QUARTER ENDED JULY 4, 1998

                                  INDEX

                                                                           Page
                                                                          Number
                                                                          ------

Part I.  FINANCIAL INFORMATION:

Item 1.  Financial Statements:

                  Balance Sheet at July 4, 1998 (unaudited) and
                  January 3, 1998   .  .  .  .  .  .  .  .  .  .  .  .  .  .   3

                  Statement of Income   (unaudited) for the Quarters and Six
                  Months ended July 4, 1998 and June 28, 1997  .  .  .  .  .   4

                  Statement of Cash Flows (unaudited) for the Quarters and Six
                  Months ended July 4, 1998 and June 28, 1997.  .  .  .  .  .  5

                  Notes to Interim Financial Statements (unaudited)  .  .  .   6

Item 2.           Management's Discussion and Analysis or
                  Plan of Operation .  .  .  .  .  .  .  .  .  .  .  .  .  .  .7


Part II. OTHER INFORMATION:

Item 4. Submission of Matters to a Vote of Security Holders   .  .  .  .  .   11

Item 5.  Other Information . .  .  .  .  .  .  .  .  .  .  .  .  .  .  . .  . 12

Item 6.  Exhibits and Reports on Form 8-K   .  .  .  .  .  .  .  .  .  .  .   12

Signatures  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  13

Exhibit Index  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  14

                                    2
<PAGE>
PART 1. - FINANCIAL INFORMATION
Item 1.   Financial Statements
<TABLE>
                         HYTEK MICROSYSTEMS, INC.
                             BALANCE SHEET

                                               July 4, 1998      January 3, 1998
 Assets                                        (Unaudited)
                                               ------------      ---------------
<S>                                            <C>               <C>

Current assets:
  Cash and cash equivalents                    $2,971,955        $1,189,519
  Trade accounts receivable - net of
      allowance for doubtful accounts 
      of $50,000 at 7/4/98 and 1/3/98           2,110,876         2,513,668

  Inventories                                   1,983,202         2,581,389
  Prepaid expenses and deposits                    80,271            50,035
                                                ---------         ---------

     Total current assets                       7,146,304         6,334,611
                                                

Deferred income taxes                             200,000           200,000

 Plant and equipment, at cost, less
 accumulated depreciation and amortization        820,306           755,845
                                                  -------           -------

      Total  assets                            $8,166,610        $7,290,456
                                               ==========        ==========                                          

      Liabilities and Shareholders' Equity

Current liabilities:
  Accounts payable                              $539,713         $1,308,335
  Accrued employee compensation and benefits     333,091            349,725
  Accrued warranty, commissions and other        167,541            206,569
  Customer deposits                               28,464             28,464
  Current portion of long-term debt               48,333             43,951
  Current obligations under capital leases        70,823             82,752
                                                --------         ----------

     Total current liabilities                 1,187,965          2,019,796

Long-term debt, less current portion              72,000            101,049
Long-term obligations under capital lease         91,478            123,041

Shareholders' equity:
   Common Stock, no par value: 7,500,000 shares
      authorized, 3,019,758 shares and 2,941,424
      shares issued and outstanding at 7/4/98
      and 1/3/98, respectively                 4,998,893          4,974,676
  Retained earnings                            1,816,274             71,894
                                               ---------          ---------

     Total shareholders' equity                6,815,167          5,046,570
                                               ---------          ---------

Total liabilities and shareholders' equity    $8,166,610         $7,290,456
                                              ==========         ==========
</TABLE>                                                                        
                           See accompanying notes.
                                  
                                    3
<PAGE>

                           HYTEK MICROSYSTEMS, INC.
                             STATEMENT OF INCOME 
                                 (Unaudited)

        Quarters and six months ended July 4, 1998 and June 28, 1997
<TABLE>
                                    Quarter ended             Six months ended
                                    -------------             ----------------
                                 7/4/98      6/28/97       7/4/98        6/28/97
                                 ------      -------       ------        -------
<S>                            <C>         <C>          <C>           <C> 
Net revenues                   $3,689,794  $2,181,844   $7,277,087    $3,768,639

Costs and expenses:
  Cost of sales                 2,364,362   1,480,574    4,545,085     2,624,847
  Engineering and development     239,082     183,848      463,541       358,409
  Selling, general and
    administrative                250,059     174,348      521,986       332,400
                                ---------   ---------    ---------     ---------
    Total costs and expenses    2,853,503   1,838,770    5,530,612     3,315,656
                                ---------   ---------    ---------     ---------

Operating income                  836,291     343,074    1,746,475       452,983

Interest income                    15,612       7,744       27,529        19,756
Interest expense                    5,225         871        9,824         2,847
                                   ------       -----    ---------       -------
Income before provision
  for income taxes                846,678     349,947    1,764,180       469,892
Provision for income taxes         19,800      15,000       19,800        40,000
                                  -------     -------    ---------       -------

Net income                       $826,878    $334,947   $1,744,380      $429,892
                                =========   =========   ==========     =========



Basic earnings per share            $0.28       $0.11        $0.59         $0.15

Diluted earnings share              $0.26       $0.11        $0.55         $0.14


Shares used in calculating basic
  earnings per share            2,992,480   2,941,424    2,968,860     2,941,424

Shares used in calculating diluted
  earnings per share            3,176,803   3,075,538    3,152,407     3,083,361

</TABLE>
                         See accompanying notes
                            
                                    4
<PAGE>
<TABLE>

                                               HYTEK MICROSYSTEMS, INC.
                                               STATEMENT OF  CASH FLOWS 
                                                    (unaudited)
                             Quarters and Six Months Ended July 4, 1998 and June 28, 1997
                                   Increase (decrease) in cash and cash equivalents
                          

                                             
                                                                  Quarter Ended                              Six Months  Ended
                                                     -----------------------------------             -------------------------------
                                                         July 4, 1998      June 28, 1997             July 4, 1998      June 28, 1997
                                                         ------------      -------------             ------------      -------------
<S>                                                   <C>                   <C>                     <C>                <C>     

Cash flows from operating activities:
    Net income                                        $826,878             $334,947                 $1,744,380         $429,892

    Adjustments to reconcile net income to
    cash flow provided by (used in) operations:
       Depreciation and amortization                    48,883               31,516                    101,955           61,400
       Accounts receivable                             318,160               70,587                    402,792         (310,216)
       Inventories                                     150,040              428,168                    598,187           37,879
       Prepaid expenses and deposits                    (2,974)              (6,992)                   (30,236)         (12,617)
       Accounts payable                                199,983             (328,675)                  (768,622)          13,772
       Accrued employee compensation and benefits       35,939               77,344                    (16,634)        (171,663)
       Accrued warranty, commissions and other         (23,201)               1,516                    (39,028)         (31,709)
       Customer pre-payments                                 0              (57,932)                         -         (107,295)
                                                     ----------             --------                 ----------        ---------
       Net cash provided by (used in) operating      1,553,708              550,479                  1,992,794          (90,557)
       activities

Cash flows from investing activities:
     Purchases of equipment                            (73,361)             (98,386)                  (166,416)        (126,610)
                                                       --------             --------                  ---------        ---------
        
         Net cash used in investing activities         (73,361)             (98,386)                  (166,416)        (126,610)

Cash flows from financing activities:
    Principal payments on long-term debt               (12,584)                   -                    (24,667)               -
    Payment of capital lease obligations               (21,183)              (5,665)                   (43,492)         (19,828)
    Proceeds from exercise of stock options             17,050                    -                     24,217           12,000
                                                      ---------              -------                   --------         --------
         Net cash used in financing activities         (16,717)              (5,665)                   (43,942)          (7,828)

Net increase (decrease) in cash and cash equivalents 1,463,630              446,428                  1,782,436         (224,995)
Cash and cash equivalents at beginning of period     1,508,325              755,293                  1,189,519        1,426,716
                                                     ---------              -------                  ---------        ---------

Cash and cash equivalents at end of period          $2,971,955           $1,201,721                 $2,971,955       $1,201,721
                                                    ==========           ==========                 ==========       ==========
</TABLE>                                                  
                                                     See accompanying notes.

                                                              5
<PAGE>

                            HYTEK MICROSYSTEMS, INC.
                      NOTES TO INTERIM FINANCIAL STATEMENTS
                                  JULY 4, 1998
                                  (Unaudited)

     1. In the  opinion of  management,  the  accompanying  unaudited  financial
statements  include  all  adjustments   (consisting  of  only  normal  recurring
adjustments)  that are  necessary  in order  to make  the  financial  statements
contained herein not misleading.  These financial statements, notes and analyses
should be read in conjunction with the financial  statements for the fiscal year
ended January 3, 1998, and notes  thereto,  which are contained in the Company's
Annual  Report on Form 10-KSB for such fiscal year.  The results for the quarter
ended July 4, 1998 are not  necessarily  indicative  of the results  that may be
expected for the entire year ending January 2, 1999.  The Company  operates on a
52/53 week fiscal year, which approximates the calendar year.

     2. The Company  leases its Carson City  facility  pursuant to a  continuing
lease  expiring in 2005. The aggregate  future minimum rental  commitments as of
July 4, 1998 for this lease were:

 
                      1998                    $81,210
                      1999                    164,856
                      2000                    169,800
                      2001 to 2005            828,678
                                              -------
                                           $1,244,544
                                           ----------

     3.  Inventories  are  stated  at the  lower of cost  (determined  using the
first-in, first-method) or market. Inventories consisted of:

                                7-4-98                 1-3-98

        Raw Material           $912,407              $1,261,612
        Work-In-Process       1,001,897               1,287,720
        Finished Goods           68,898                  32,057
                              ---------              ----------
                             $1,983,202              $2,581,389
                             ----------              ----------
                        

     4.  Plant  and  equipment  are  stated  at  cost  and   depreciated   on  a
straight-line  basis over the  estimated  useful life of the  assets,  generally
three to eight years.

                                    6
<PAGE>
Item 2.            Management's Discussion and Analysis or
                               Plan of Operation

     For the  purposes of the  following  discussion,  dollar  amounts have been
rounded to the  nearest  $1,000  and all  percentages  have been  rounded to the
nearest 1%.

     This  interim  report  on  Form  10-QSB  contains  certain  forward-looking
statements  within the meaning of Section 27A of the  Securities Act of 1933 and
Section 21E of the Securities  Exchange Act of 1934. Actual results could differ
materially from those projected in the forward-looking statements as a result of
various  factors,  including  the risk factors set forth below.  The Company has
attempted  to  identify  forward-looking   statements  by  placing  an  asterisk
immediately  following  the sentence or phrase  containing  the  forward-looking
statement(s).

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

     Net revenues for the second  quarter ended July 4, 1998  increased 69% from
net revenues for the quarter  ended June 28, 1997.  Net revenues for the quarter
ended July 4, 1998 were  $3,690,000  as compared to  $2,182,000  for the quarter
ended  June 28,  1997.  Net  revenues  for the six  months  ended  July 4,  1998
increased  93% from net revenues  for the six months  ended June 28,  1997.  Net
revenues  for  the  two  six-month   periods  were  $7,277,000  and  $3,769,000,
respectively.

     The increase in revenues in both the quarter and six-month periods of 1998,
as opposed to 1997,  is primarily a result of higher unit volume of shipments to
Chesapeake Sciences Corp., the Company's largest customer.

     The Company's  backlog of customer orders was $8,490,000 at July 4, 1998 as
compared to  $6,052,000  at June 28, 1997,  and  $7,676,000  at January 3, 1998.
Approximately  $4,885,000,  or 57% of the total backlog,  relates to orders from
Chesapeake  Sciences  Corp.  Because  customers may place orders for delivery at
various  times  throughout  the year,  and due to the  possibility  of  customer
changes in  delivery  schedules  or  cancellation  of orders  with  little or no
penalty,  the Company's  backlog as of any particular date may not be indicative
of actual future sales.*

     Cost of sales was $2,364,000, or 64% of net revenues, for the quarter ended
July 4, 1998, as compared to $1,481,000, or 68% of net revenues, for the quarter
ended June 28,  1997.  Cost of sales for the six  months  ended July 4, 1998 was
$4,545,000,  or 62% of net revenues,  as compared to  $2,625,000,  or 70% of net
revenues, for the six months ended June 28, 1997. This decrease in cost of sales
as a percentage  of net revenues is primarily a result of spreading  fixed costs
over a much larger revenue base, combined with manufacturing efficiencies gained
from higher volume production.

     Engineering and development expenses were $239,000,  or 6% of net revenues,
for the  quarter  ended July 4, 1998,  as  compared  to  $184,000,  or 8% of net
revenues  for the  quarter  ended June 28,  1998.  Engineering  and  development
expenses for the six months ended July 4, 1998 were $464,000, or 6% of net

                                    7
<PAGE>

revenues,  as compared to  $358,000,  or 10% of net  revenues,  for the six 
months ended June 28, 1997.  This increase in the dollar  amount of  engineering
and development  expenses for the quarter and six-month periods is the result of
increased staffing and compensation levels required to satisfy customer delivery
and technical requirements. The Company is expanding its technology resources to
provide  better service to existing  customers and be in a stronger  position to
capture new business opportunities.

     Selling,  general and administrative  expenses increased to $250,000, or 7%
of net revenues, for the quarter ended July 4, 1998, as compared to $174,000, or
8% of net revenues,  for the quarter ended June 28, 1997.  Selling,  general and
administrative  expenses for the six months ended July 4, 1998 were $522,000, or
7% of net revenues, as compared to $332,000, or 9% of net revenues,  for the six
months ended June 28, 1997. The increase in selling,  general and administrative
expense for the quarter and six-month period is attributable to the expansion of
our  sales  and  marketing  efforts  and  the  overall  growth  of the  Company.
Compensation,  sales  commissions,  travel expenses and general  operating costs
have all increased.

     The Company had an operating  profit of $836,000 for the quarter ended July
4, 1998, as compared to operating  profit of $343,000 for the quarter ended June
28, 1997.  The Company had an operating  profit of $1,746,000 for the six months
ended July 4, 1998,  as compared to an operating  profit of $453,000 for the six
months ended June 28, 1997.  The increase in quarterly and six-month  profit was
primarily attributable to increased sales volume.

     Net  interest  income was  $10,000  for the quarter and $18,000 for the six
months  ended July 4, 1998 as  compared  to $7,000 and  $17,000  for each of the
comparable prior year periods.

     Income tax expense of $20,000 was  recognized in the quarter and six months
ended  July 4, 1998 as a result  of the  alternative  minimum  tax.  Income  tax
expense in the prior year quarter and six- month period was $15,000 and $40,000,
respectively.  The Company has remaining net operating loss  carryforwards  for
federal  income tax purposes at January 3, 1998 of  approximately  $2.5 million.
These carryforwards will expire between 2004 and 2008.

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

     The Company had $2,972,000 in cash and cash equivalents at July 4, 1998, as
compared to $1,190,000 at January 3, 1998. This increase of $1,782,000 from year
end is comprised of $1,993,000  generated from operating  activities  (primarily
net income),  $166,000  used for the purchase of capital  equipment  and $44,000
used in financing activities.

     Accounts  receivable  were  $2,111,000  at July 4,  1998,  as  compared  to
$2,514,000  at January 3, 1998.  This decrease is primarily  attributable  to an
improved payment cycle time by the Company's largest customer.

     Inventories  were  $1,983,000 at July 4, 1998, as compared to $2,581,000 at
January 3, 1998. This decrease is attributable to improvements in the scheduling
of raw material  procurement and reductions in the production  cycle time on the
Company's largest program.

                                    8
<PAGE>

     Accounts payable were $540,000 at July 4, 1998 as compared to $1,308,000 at
January 3, 1998. This change is attributable  raw material  scheduling  combined
with a faster vendor payment cycle.
 
     Accrued  employee  compensation and benefits were $333,000 at July 4, 1998,
as  compared  to $350,000 at January 3, 1998.  This  decrease is  primarily  the
result of variances in amounts currently accrued for employee profit sharing and
the timing differences in payroll periods.

     Accrued warranty,  commissions and other accrued  liabilities were $168,000
at July 4, 1998, as compared to $207,000 at January 3, 1998.  This  reduction is
the net effect of normal ongoing  accruals for sales commission  expense,  legal
and audit fees and  shareholder  related  expenses,  combined  with the  payment
during the first six months of 1998 of expenses accrued in 1997.

     At July 4,  1998,  the  Company  had  Promissory  Note  and  capital  lease
obligations,  for the purpose of financing production equipment, with SierraWest
Bank, in the amount of $283,000.  The current  portion of this  indebtedness  is
$119,000 at July 4, 1998, with the remaining  portion of $164,000  classified as
long-term debt. These obligations bear annual interest rates of 9.5% to 10.75%.

     The Company also has a line of credit for $400,000  with  SierraWest  Bank,
which expires in October 1998 and bears interest at the prime rate plus 1.5%. At
July 4, 1998,  the Company was in  compliance  with all of the covenants of this
loan agreement and no amounts were outstanding.

Future Outlook
--------------

     The first six months of fiscal 1998 has shown  significant  growth over the
results from the prior year period.  New customer orders and increased  activity
from existing  customers are the driving forces behind these  improved  results.
The Company's investment in expanding both our sales and technical  capabilities
and resources is beginning to pay off. Our expanded  presence in the marketplace
is generating  new potential  customers in markets  previously not served by the
Company.  We will continue to expand our  capability,  as prudent  opportunities
arise,  so that we are  solidly  positioned  to continue  our recent  pattern of
growth in both revenues and earnings.*

     With  our  six-month   results,   current  backlog  and  customer  delivery
requirements,  1998  looks  to be a  very  strong  year  for  both  revenue  and
earnings.*  Current  projections  indicate  that  1998  will  yield  significant
improvement over the prior year.* In addition,  and in spite of fluctuations and
uncertainties in the global oil markets, our geophysical  exploration  customers
advise us that they  currently have a positive  outlook for continuing  business
over the next two years.*

     The  Company  relies  on an  internal  computer  network  for  much  of its
day-to-day operating and financial information. The software for this network is
a commercial  'off-the-shelf'  package  provided and  maintained  by a reputable
supplier.  As of the date of this  filing,  the  supplier  has  installed at the
Company  software  revisions  that have  eliminated  any  anticipated  potential
problems with the year 2000.

                                    9
<PAGE>

     In addition,  the Company believes that its major customers,  suppliers and
financial  institutions have, or are in process, of taking actions sufficient to
protect  the  Company  from  adverse  effects  of the  "year  2000" in their own
internal  systems.*  While the Company  believes  its  efforts  are  adequate to
address its "year 2000"  concerns,  there can be no  guarantee  that "year 2000"
issues will not have a material effect on future Company operations.*

     Management  believes that ongoing  operations during the remainder of 1998,
together with its line of credit,  will provide  sufficient  cash to meet normal
operating needs without additional financing activities through the remainder of
the current  fiscal  year.*  However,  since the  Company  desires to expand its
technological base and production capacity,  investments in resources, requiring
additional new equity or debt financing,  may be necessary.* In such case, there
can be no assurance that such financing will be available on terms acceptable to
the Company or at all.

     The Company's  backlog of unfilled orders  increased  during the six months
ended July 4, 1998. Orders from Chesapeake  Sciences Corp. continue to represent
the largest  portion of the  Company's  current  backlog.  Any  cancellation  or
delayed  delivery  of orders by, or  disruption  of  operations  at,  Chesapeake
Sciences  Corporation or any other major customer would have a material  adverse
impact on the Company's future operating results.
 
     The foregoing  discussion  contains  statements  that are  forward-looking.
Actual results could differ  materially.  The primary factors that could cause a
material   difference  in  actual  results  include  customer   cancellation  or
rescheduling  of orders,  problems  affecting  delivery of  vendor-supplied  raw
materials  and  components  or the  inability  to  attract  qualified  personnel
sufficient   to  meet   customer   requirements.   The  Company   disclaims  any
responsibility to update the forward-looking statements contained herein, except
as may be required by law.

                                    10
<PAGE>
 

                        PART II - OTHER INFORMATION


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

         (a)  The Annual Meeting of Shareholders of the Company was held on 
              May 15, 1998 (the "Meeting").

         (b)  The following directors were elected at the Meeting:

              Shou-Chen Yih
              Charles S. Byrne
              Robert Boschert
              Edward W. Moose
              Edward Y. Tang

         (c)  The results of the vote on each matter submitted to the
              shareholders at the Meeting were as follows:

              Election of Directors:     For          Withheld
                                         ---          --------
                  Shou-Chen Yih       2,526,693         2,800
                                      ---------         -----
                  Charles S. Byrne    2,526,693         2,800
                                      ---------         -----
                  Robert Boschert     2,526,693         2,800
                                      ---------         -----
                  Edward W. Moose     2,526,693         2,800
                                      ---------         -----
                  Edward Y. Tang      2,526,693         2,800
                                      ---------         -----

              Approval of Amendment to 1991 Directors Stock Option Plan:
                  For                         2,394,188
                                              ---------
                  Against                       132,855
                                              ---------
                  Abstained                       2,450
                                              ---------
                  Broker Non-Votes                    0
                                              ---------
 
              Ratification of the selection of Ernst & Young to serve
              as auditors for fiscal 1998:
                  For -                       2,528,193
                                              ---------
                  Against -                         800
                                              ---------
                  Abstained -                       500
                                              ---------
                  Broker Non-Votes -                  0
                                              ---------

         (d)  Not applicable.


     The  foregoing  matters  are  described  in  more  detail  in the  issuer's
definitive proxy statement dated April 6, 1998 relating to the Annual Meeting of
Shareholders held on May 15, 1998.

                                    11
<PAGE>

Item 5.  Other Information
         -----------------

         On July 27, 1998, the Company's Common Stock was re-listed for trading 
         on the Nasdaq Small Cap Market under the symbol "HTEK".



Item 6.  Exhibits and Reports on Form 8-K.
         ---------------------------------

         (a)  Exhibits.

              27.1  Financial Data Schedule

         (b)  Reports on Form 8-K.

              No Reports on Form 8-K were filed during the quarter ended 
              July 4, 1998.

                                    12
<PAGE>

                              SIGNATURES



     In accordance  with the  requirements  of the Exchange Act, the  Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                                HYTEK MICROSYSTEMS, INC.
                                                     (Registrant)



Date:  August 3, 1998                           By:  /s/ Sally B. Chapman
                                                     --------------------
                                                       Sally B. Chapman
                                                       Chief Financial Officer
                                                       (Principal Financial and
                                                        Accounting Officer)



                                    13
<PAGE>

                           HYTEK MICROSYSTEMS, INC.


                        Quarterly Report on Form 10-QSB
                       for the Quarter ended July 4, 1998


                                EXHIBIT INDEX

          Exhibit
          Number                     Exhibit Description
          ------                     -------------------

           27.1                    Financial Data Schedule.


 


                                    14