**UNITED STATES**

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

**FORM 10-Q**

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

**For the quarterly period ended March 31, 2003**

**OR**

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

**For the transition period from ________to _________**

**Commission file number 333-98529**

**ZiLOG, INC.**
(Exact name of Registrant as specified in its charter)



|**Delaware**                                                   | **13-3092996**                         
|-------------------------------------------------------------- | ---------------------------------------
|(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number)

**532 Race StreetSan Jose, California   95126**(Address of principal executive offices)

**(408) 558-8500**(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X]    NO [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). YES [ ]    NO [X]

The Company has voluntarily filed all reports required by section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12 months in accordance
with terms agreed to in its previous indenture and its plan of reorganization.

As of April 30, 2003, there were 29,781,545 shares of the Company's Common
Stock, $.01 par value outstanding.

This Report on Form 10-Q and other oral and written statements we make
contain and incorporate forward-looking statements regarding future events and
our plans and expectations that involve risks and uncertainties.  When used in
this Report, the words "estimate," "project," "intend," "expect," "anticipate,"
"believe," "may," "will," and similar expressions
are intended to identify such forward-looking statements.  Forward-looking
statements in this report include, but are not limited to, those relating to the
general direction of our business, our expected liquidity, capital expenditures
and expense levels in future periods.  Although we believe our plans,
intentions, and expectations reflected in these forward-looking statements are
reasonable, we can give no assurance that these plans, intentions, or
expectations will be achieved.  Actual results, performance, or achievements
could differ materially from those contemplated, express or implied, by the
forward-looking statements contained in this report.  Factors that may cause or
contribute to differences include, but are not limited to: continued
availability of third-party foundry and assembly services at commercially
reasonable quality and prices; under-absorption of manufacturing costs in our
wafer fabrication facilities from under-utilization of production capacity; our
distributors and customers significantly reducing their existing inventories
before ordering new products; and those factors discussed in the sections
entitled "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Risk Factors," as well as those discussed elsewhere
in this Report and in other reports filed with the Securities and Exchange
Commission.  These factors are not intended to represent a complete list of the
general or specific factors that affect us.  Other factors, including general
economic factors and business strategies, may be significant, presently or in
the future, and the factors set forth in this report may affect us to a greater
extent than indicated.  We caution the reader not to place undue reliance on the
forward-looking statements contained herein, which reflect our position as of
the date of this report.  We undertake no obligation to publicly release updates
or revisions to these statements.

Based in San Jose, California, we were incorporated in California in October
1981 and reincorporated in Delaware in April 1997.  In this report,
"ZiLOG," "the Company," "our," "us,"
"we," and similar expressions refer to ZiLOG, Inc. and its
subsidiaries.  However, when these expressions are used throughout this report
in connection with ZiLOG, Inc.'s reorganization under Chapter 11 of the U.S.
bankruptcy code, they are referring only to the parent company, ZiLOG, Inc., and
not to any of its subsidiaries.  ZiLOG and Z80 are registered trademarks of
ZiLOG, Inc.



Extreme Connectivity © ZiLOG, Inc. 1999.







**ZiLOG, INC.
    QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 2003
                                TABLE OF CONTENTS**



|**PART I.   FINANCIAL INFORMATION**                                                                                                                           | **Page No.**
|------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------
|                                                                                                                                                              |             
|Item 1.   Interim Condensed Consolidated Financial Statements
                  (unaudited):                                                                  |             
|                                                                                                                                                              |             
|Unaudited Condensed Consolidated Statements of Operations for the
          
    three months ended March 31, 2003 and three months ended March 31, 2002      | **          
|                                                                                                                                                              |             
|Unaudited Condensed Consolidated Balance Sheets at March 31, 2003,
   and December 31, 2002                                                                   | **          
|                                                                                                                                                              |             
|Unaudited Condensed Consolidated Statements of Cash Flows for the
          
    three months ended March 31, 2003, and three months ended
    March 31, 2002 | **          
|                                                                                                                                                              |             
|Notes to Unaudited Condensed Consolidated Financial Statements                                                                                                | **          
|                                                                                                                                                              |             
|Item 2.   Management's Discussion and Analysis of Financial
                      Condition and Results of Operations                                         | **          
|                                                                                                                                                              |             
|Item 3.   Quantitative and Qualitative Disclosures About Market Risk                                                                                          | **          
|                                                                                                                                                              |             
|Item 4.   Controls and Procedures                                                                                                                             | **          
|                                                                                                                                                              |             
|**PART II.  OTHER INFORMATION**                                                                                                                               |             
|                                                                                                                                                              |             
|Item 1.   Legal Proceedings                                                                                                                                   | **          
|                                                                                                                                                              |             
|Item 6.   Exhibits and Reports on Form 8-K                                                                                                                    | **          
|                                                                                                                                                              |             
|**Signature**                                                                                                                                                 | **          

---

**PART I -- FINANCIAL INFORMATION**

**Item 1.  Financial Statements**

---

**ZiLOG, INC.

           UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                      (in millions except per share data)**

`Sucessor     Predecessor
                                                      Company       Company
                                                   ------------- -------------
                                                   Three Months  Three Months
                                                       Ended         Ended
                                                     March 31,     March 31,
                                                       2003          2002
                                                   ------------- -------------
Net sales.........................................        $25.2         $36.0
Cost of sales.....................................         14.9          20.3
                                                   ------------- -------------
Gross margin......................................         10.3          15.7

Operating expenses:
  Research and development........................          3.9           5.2
  Selling, general and administrative.............          6.2           8.1
  Special charges and reorganization items........          1.3           5.6
  Amortization of intangible assets...............          1.7          --
                                                   ------------- -------------
     Total operating expenses.....................         13.1          18.9
                                                   ------------- -------------
Operating loss....................................        ($2.8)        ($3.2)

Other income (expense):
  Interest income.................................          0.1           0.1
  Interest expense (1)............................         (0.1)         (5.0)
  Other, net......................................         --             0.1
                                                   ------------- -------------
Loss before reorganization items and provision
  for income taxes................................         (2.8)         (8.0)
Reorganization items..............................         --            (3.8)
Provision for income taxes........................          0.1           0.1
                                                   ------------- -------------
Net loss..........................................        ($2.9)       ($11.9)
                                                   ============= =============
Preferred stock dividends accrued.................         --             1.4
                                                   ------------- -------------
Net loss attributable to common stockholders......        ($2.9)       ($13.3)
                                                   ============= =============
Basic and diluted net income per share............       ($0.10)
                                                   =============
Weighted-average shares used in computing
  basic and diluted net income per share..........         28.7
                                                   =============

-----------------
(1) Excludes contractual interest of $2.1 in the period ended March 31, 2002 no
    recorded during reorganization.`

See accompanying notes to condensed consolidated financial statements.

---

**ZiLOG, INC.

                UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

                                 (in millions)**

`Sucessor Company
                                                     -----------------------
                                                      Mar. 31,    Dec. 31,
                                                        2003        2002
                                                     ----------- -----------
                                  ASSETS
Current assets:
  Cash and cash equivalents.........................      $23.0       $29.4
  Accounts receivable, less allowance for doubtful
    accounts of $0.3 at March 31, 2003, $0.5 at
    December 31, 2002...............................       12.3        10.8
  Inventories.......................................        9.8        10.6
  Prepaid expenses and other current assets.........        3.3         3.4
                                                     ----------- -----------
          Total current assets......................       48.4        54.2
                                                     ----------- -----------

MOD III assets held for sale........................       30.0        30.0
Net property, plant and equipment...................       20.9        21.9
Goodwill............................................       34.6        34.6
Intangible assets, net..............................       16.6        18.3
Other assets........................................        9.5         9.8
                                                     ----------- -----------
                                                         $160.0      $168.8
                                                     =========== ===========
        LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS'EQUITY
Current liabilities:
  Short-term debt...................................       $5.0        $6.9
  Accounts payable..................................       11.5        10.2
  Income taxes payable..............................        0.9       --
  Accrued compensation and employee benefits........        3.5         7.4
  Other accrued liabilities.........................        2.7         3.2
  Deferred income on shipments to distributors......        6.5         7.4
                                                     ----------- -----------
          Total current liabilities.................       30.1        35.1
                                                     ----------- -----------

Deferred income taxes...............................       21.1        22.4
Other non-current tax liabilities...................       14.5        14.5
                                                     ----------- -----------
          Total liabilities.........................       65.7        72.0
                                                     ----------- -----------

Minority interest in MOD III assets.................       30.0        30.0

Stockholders' equity:
  Common Stock......................................        0.3         0.3
  Additional paid-in capital........................       97.0        97.1
  Deferred stock compensation.......................       (4.1)       (4.6)
  Accumulated deficit...............................      (28.9)      (26.0)
                                                     ----------- -----------
          Total stockholders' equity................       64.3        66.8
                                                     ----------- -----------
Total liabilities and stockholders' equity..........     $160.0      $168.8
                                                     =========== ===========`

See accompanying notes to condensed consolidated financial statements.

---

**ZiLOG, INC.

           UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                  (in millions)**

`Sucessor     Predecessor
                                                                Company       Company
                                                             ------------- -------------
                                                             Three Months  Three Months
                                                                 Ended         Ended
                                                               March 31,     March 31,
                                                                 2003          2002
                                                             ------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss....................................................        ($2.9)       ($11.9)
Adjustments to reconcile net income (loss) to cash
     used by operating activities:
     Amortization of fresh-start intangible assets..........          1.7          --
     Depreciation and other amortization....................          1.5           1.9
     Impairment of long lived assets........................          0.2           2.5
     Stock-based compensation...............................          0.4           0.1
Changes in assets and liabilities:
     Accounts receivable....................................         (1.5)          0.5
     Inventories............................................          0.8           2.7
     Prepaid expenses and other current and
       noncurrent assets....................................          0.4          (0.4)
     Accounts payable.......................................          1.3          (0.2)
     Accrued compensation and employee benefits.............         (3.9)         (1.7)
     Liabilities subject to compromise......................         --             6.1
     Other accrued  liabilities, deferred income on
       shipments to distributors and deferred income
       taxes................................................         (1.8)         (6.9)
                                                             ------------- -------------
        Net cash used by operations before reorganization
           items............................................         (3.8)         (7.3)
Reorganization items - professional fees paid...............         --            (2.2)
                                                             ------------- -------------
        Net cash used by operating activities...............         (3.8)         (9.5)

CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures.....................................         (0.7)         (0.9)
                                                             ------------- -------------
        Cash used by investing activities...................         (0.7)         (0.9)

CASH FLOWS FROM FINANCING ACTIVITIES:
   Repayments of short-term debt............................         (1.9)         (2.8)
                                                             ------------- -------------
        Cash used by financing activities...................         (1.9)         (2.8)
                                                             ------------- -------------
Decrease in cash and cash equivalents.......................         (6.4)        (13.2)
Cash and cash equivalents at beginning of period............         29.4          30.7
                                                             ------------- -------------
Cash and cash equivalents at end of period..................        $23.0         $17.5
                                                             ============= =============`

See accompanying notes to condensed consolidated financial statements.

---

**ZiLOG, INC.

        NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

NOTE 1.	BASIS OF PRESENTATION

The accompanying interim financial information is unaudited.
In the opinion of ZiLOG, Inc.'s ("ZiLOG" or the "Company")
management, all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of interim results have been included.  The
results for interim periods are not necessarily indicative of results to be
expected for the entire year.  These condensed consolidated financial statements
and notes should be read in conjunction with the Company's annual consolidated
financial statements and notes thereto contained in the Company's 2002 Annual
Report filed on Form 10-K Commission File Number 333-98529 for the fiscal year
ended December 31, 2002, filed on April 1, 2003.



ZiLOG's interim results are based on fiscal quarters of
thirteen weeks in duration ending on the last Sunday of each calendar quarter.
The first and second fiscal month of each quarter is four weeks in duration and
the third month is five weeks.  Each of ZiLOG's interim periods end on Sunday
except for the last fiscal period of each year which ends on December 31.
However, for financial reporting purposes, interim fiscal periods are labeled as
ending on calendar month-end.  The operating results for any interim period are
not necessarily indicative of results for any subsequent period or the full
fiscal year.

The condensed consolidated balance sheet at December 31, 2002
has been derived from audited financial statements at that date, but does not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements.



On February 28, 2002, ZiLOG and its subsidiary, MOD III,
Inc., filed the Reorganization Plan with the United States Bankruptcy Court for
the Northern District of California under Chapter 11 of the U.S. Bankruptcy
Code. The bankruptcy court subsequently confirmed the Reorganization Plan by its
order entered on April 30, 2002. The Reorganization Plan became effective on May
13, 2002. The Company prior to emergence from bankruptcy is referred to as the
"Predecessor Company" and the reorganized company is referred to as the
"Successor Company."

A black line has been drawn between the accompanying
financial statements to distinguish, for accounting purposes, between the
Successor Company and the Predecessor Company.  Our results of operations after
April 30, 2002 and our consolidated balance sheets at December 31, 2002 and
March 31, 2003 are not comparable to the results of operations prior to
April 30, 2002 and the historical balance sheet at December 31, 2001,
due to our adoption of "fresh-start" reporting upon our emergence from
bankruptcy.  However, such differences in our results of operations relate to
depreciation of property, plant and equipment, amortization of intangible
assets, interest expense and restructuring and reorganization expenses.
Additionally, these differences in our balance sheets relate to inventory, in-
process research and development, property, plant and equipment, intangible
assets, conversion of senior notes to common stock, and minority interest.
Certain figures, such as net sales and certain expenses were not affected by our
adoption of fresh-start accounting and, accordingly, we believe them to be
comparable.   Details of the events associated with the May 2002 reorganization
are included in the Company's 2002 Annual Report on Form 10-K.

NOTE 2.  	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition.  Revenue from product sales to OEM customers
is recognized upon transfer of legal title, which occurs at time of shipment or
upon delivery to the customer, depending upon the FOB terms.  Revenue on these
sales is reported net of appropriate allowances for returns and warranty costs
which are recorded at the time of revenue recognition and represent the
Company's only post-sale obligations. Revenue on shipments to distributors who
have rights of return and price protection on unsold merchandise held by them,
is deferred until products are resold by the distributors to end users. Although
revenue is deferred until resale, title of products sold to distributors
transfers upon shipment. Accordingly, shipments to distributors are reflected in
the consolidated balance sheets as accounts receivable and a reduction of
inventories at the time of shipment. Deferred revenue and the corresponding cost
of sales on shipments to distributors are reflected in the consolidated balance
sheet on a net basis as "Deferred income on shipments to distributors."



Goodwill and Intangible Assets.  Effective January 1, 2002, ZiLOG
adopted the provisions of FASB Statement of Financial Accounting Standards No.
142, "Goodwill and Other Intangible Assets" ("FAS 142").  Under FAS 142,
goodwill and intangible assets with indefinite lives are not amortized, but are
reviewed annually or more frequently if impairment indicators arise.  Separable
intangible assets that are deemed to have defined lives will continue to be
amortized over their useful lives (but with no maximum life).  Intangible assets
acquired prior to July 1, 2001 were being amortized on a straight-line basis
over lives ranging from three to five years.  In connection with the Company's
fresh-start reporting, separable intangible assets based on independent
valuations were created with deemed defined lives. These intangible assets are
being amortized utilizing the pattern-of-use method over their estimated useful
lives ranging from 5 to 10 years.



The separable intangible assets identified in connection with
fresh-start accounting and included in the consolidated balance sheet are as
follows (in millions):

`Current        Brand
                                              Technology       Name         Total
                                             ------------- ------------- -----------
Gross carrying amount.......................        $17.0          $9.2       $26.2
Accumulated amortization....................          8.2           1.4         9.6
                                             ------------- ------------- -----------
Book value March 31, 2003...................         $8.8          $7.8       $16.6
                                             ============= ============= ===========`



The anticipated remaining amortization schedule for these assets
is as follows (in millions):

`Current        Brand         Total
           Year        Technology       Name      Amortization
      -------------- -------------- ------------ --------------
           2003               $4.1         $1.0           $5.1
           2004                2.9          1.3            4.2
           2005                1.1          1.1            2.2
           2006                0.4          1.0            1.4
           2007                0.2          0.8            1.0
        Thereafter             0.1          2.6            2.7
                     -------------- ------------ --------------
          Total               $8.8         $7.8          $16.6
                     ============== ============ ==============`



Use of Estimates: The preparation of consolidated
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of financial statements and the reported amounts of
revenues and expenses during the reporting period. Significant estimates made in
preparing these financial statements include excess and obsolete inventories,
allowance for doubtful accounts and sales returns and allowances. Actual results
could differ from those estimates.

Research and Development Expenses.  ZiLOG's
policy is to record all research and development expenditures with no future
alternative use as period expenses when incurred.  In-process research and
development charges relate to partially developed semiconductor product designs
that had not reached technological feasibility and have no alternative future
use on the date they were acquired or valued for fresh-start reporting.

Fair Value of Financial Instruments and Concentration of Credit Risk.
 The carrying value of the Company's financial instruments, including
cash and cash equivalents, accounts receivable, accounts payable and short-term
debt, approximates fair value. Financial instruments that subject the Company to
concentrations of credit risk consist primarily of cash and cash equivalents,
investments and accounts receivable. The Company maintains its cash and cash
equivalents and investments with high quality financial institutions. The
Company's customer base consists of businesses in North America, Europe and
Asia. The Company performs ongoing credit evaluations of its customers and
generally does not require collateral on accounts receivable. The Company
maintains allowances for potential credit losses. As of
March 31, 2003, there were no individual customers with net accounts receivable
comprising more than 10% of total net accounts receivable.

Stock-based Compensation.  The Company accounts for employee
stock awards in accordance with Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," and related interpretations
including FASB Interpretation No. 44, "Accounting for Certain Transactions
Involving Stock Compensation--an Interpretation of APB No. 25", issued in March
2000, to account for its fixed plan options. Under this method, compensation
expense is recorded on the date of grant only if the current market price of the
underlying stock exceeds the exercise price. SFAS 123, "Accounting for Stock-
Based Compensation," as amended by SFAS 148, "Accounting for Stock-Based
Compensation -- Transition and Disclosure," established accounting and
disclosure requirements using a fair-value method of accounting described above.
The Company has adopted only the disclosure requirements of SFAS 148. For purposes
of both financial statement and pro forma disclosure, the amortization of the
stock-based compensation is allocated over the vesting period on a straight-line basis.
The table below illustrates the effect on net loss if the fair-value based method
had been applied to all outstanding and unvested awards in each period (in millions):

`Sucessor     Predecessor
                                                Company       Company
                                             ------------- -------------
                                             Three Months  Three Months
                                                 Ended         Ended
                                               Mar. 31,      Mar. 31,
                                                 2003          2002
                                             ------------- -------------
Net loss as reported........................        ($2.9)       ($11.9)
Add stock-based employee compensation
    expense included in reported net
    loss, net of tax........................          0.4           0.1
Deduct total stock-based employee
    compensation expense determined
    under fair-value-based method for
    all rewards, net of tax.................         (0.3)         (0.2)
                                             ------------- -------------
Pro forma net loss..........................        ($2.8)       ($12.0)
                                             ============= =============`

The fair value of options granted in 2002 and 2003 under the 2002 Omnibus
Stock Incentive Plan were estimated at the date of grant using the Black-Scholes
option pricing model.  The following weighted average assumptions were used:

`Sucessor     Predecessor
                                                Company       Company
                                             ------------- -------------
                                             Three Months  Three Months
                                                 Ended         Ended
                                               Mar. 31,      Mar. 31,
                                                 2003          2002
                                             ------------- -------------
Annual average risk free interest rate......          3.0%          3.0%
Estimated life in years.....................            5             5
Dividend yield..............................          0.0%          0.0%
Volatility..................................         89.9%          N/A`

Adoption of Accounting Standards.   In November
2002, the FASB issued Interpretation No. 45 (FIN 45), "Guarantor's Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others", which clarifies disclosure and recognition/measurement
requirements related to certain guarantees.  The disclosure requirements are
effective for financial statements issued after December 15, 2002 and the
recognition/measurement requirements are effective on a prospective basis for
guarantees issued or modified after December 31, 2002.  The application of the
requirements of FIN 45 did not have a material impact on the Company's financial
position or results of operations.Recent Accounting Pronouncements. In January 2003, the Financial
Accounting Standards Board issued FASB Interpretation No. 46, "Consolidation of
Variable Interest Entities," which addresses consolidation by a business of
variable interest entities in which it is the primary beneficiary.  The
Interpretation is effective immediately for certain disclosure requirements and
variable interest entities created after January 31, 2003, and will be effective
in the third quarter of 2003 for variable interest entities created before
February 1, 2003.  The Company is reviewing the provisions of the Interpretation
and complies with the disclosure requirements, but does not expect the
Interpretation to have a material impact on the Company's financial statements.

Effective prospectively for arrangements entered into in fiscal periods
beginning after June 15, 2003, Emerging Issues Task Force ("EITF") Issue 00-21,
"Revenue Arrangements with Multiple Deliverables," addresses the accounting, by
a vendor, for contractual arrangements in which multiple revenue-generating
activities will be performed by the vendor.  In some situations, the different
revenue-generating activities (deliverables) are sufficiently separable and
there exists sufficient evidence of fair values to account separately for the
different deliverables (that is, there are separate units of accounting).  In
other situations, some or all of the different deliverables are interrelated
closely or there is not sufficient evidence of fair value to account separately
for the different deliverables.  EITF Issue 00-21 addresses when and, if so, how
an arrangement involving multiple deliverables should be divided into separate
units of accounting.  The Company has not yet determined the impact of the
adoption of EITF Issue 00-21 on its consolidated financial
statements.

SFAS No. 146 revises the accounting for specified
employee and contract terminations that are part of restructuring activities.
Companies will be able to record a liability for a cost associated with an exit
or disposal activity only when the liability is incurred and can be measured at
fair value.  Commitment to an exit plan or a plan of disposal expresses only
management's intended future actions and therefore, does not meet the
requirement for recognizing a liability and related expense.  This statement
only applies to termination benefits offered for a specific termination event or
a specified period.  It will not affect accounting for the costs to terminate a
capital lease.  ZiLOG adopted this statement for exit and/or disposal activities
initiated on or after May 1, 2002.

NOTE 3.	INVENTORIES

Inventories are stated at the lower of cost on a first-in-first-out basis, or
market.  Provisions, when required, are made to reduce excess and obsolete
inventories to their estimated realizable values. It is possible that estimates
of realizable value can change in the short-term. Inventories, net of
provisions, consist of the following (in millions):

`Mar. 31,      Dec. 31,
                                               2003          2002
                                           ------------- -------------
     Raw materials........................         $0.4          $0.5
     Work-in-process......................          7.1           7.5
     Finished goods.......................          2.3           2.6
                                           ------------- -------------
                                                   $9.8         $10.6
                                           ============= =============`



NOTE 4.	SPECIAL CHARGES AND REORGANIZATION ITEMS

The components of special charges are as follows (in millions):

`Sucessor     Predecessor
                                              Company       Company
                                           ------------- -------------
                                           Three Months  Three Months
                                               Ended         Ended
                                             Mar. 31,      Mar. 31,
                                               2003          2002
                                           ------------- -------------
Asset impairments:
   Austin Texas assets....................      $ --             $1.7
   Internal use software..................        --              0.8
   Nampa, Idaho assets....................          0.2         --
Restructuring of operations:
   Employee severance and
     termination benefits.................          0.6           1.2
   MOD III closure costs..................          0.3           1.9
Professional fees for debt
   restructuring..........................          0.2         --
                                           ------------- -------------
                                                   $1.3          $5.6
                                           ============= =============`

The following table summarizes activity in accrued special charges (in
millions) which is included in other accrued liabilities in the condensed
consolidated balance sheet:

`Severance and   MOD III
                                                            Termination    Closure       Debt
                                                 Total       Benefits       Costs    Restructuring
                                             ------------- ------------- ----------- ------------
    Balance at December 31, 2002............         $0.6          $0.5        $0.1        $ --
    Total charge to special charges.........         $1.1           0.6         0.3          0.2
    Cash paid...............................        ($1.5)         (1.1)       (0.4)         --
                                             ------------- ------------- ----------- ------------
    Balance at March 31, 2003...............         $0.2        $ --          $ --         $0.2
                                             ============= ============= =========== ============`

During the first quarter of 2003, computer equipment with a net book value of
$0.2 million was retired in connection with an information system upgrade that
included new equipment purchases.  The redundant equipment was written-off to
special charges.

Restructuring of operations during the three-month period ended March 31,
2003 included severance and termination benefits of $0.6 million related to a
reduction-in-force at the Company's Nampa, Idaho manufacturing plant affecting
approximately 56 employees who were terminated during the quarter.
Approximately $0.3 million of special charges for the period relate to post-
closure maintenance costs of the MOD III eight-inch wafer fabrication facility
in Idaho consisting of utilities, taxes, insurance, and other maintenance costs
required to maintain the facility in a condition required for the sale of the
property.  Approximately $0.2 million of special charges during the first
quarter of 2003 relate to third-party professional service fees for legal and
financial advisors associated with actions required to be taken as a result of
the Company's May, 2002 debt and equity restructuring activities.

In connection with the closure of the Company's Austin, Texas design center
in the first quarter of 2002, furniture, fixtures, and equipment with a book
value of approximately $1.7 million were surrendered to the lessor in partial
exchange for lease termination considerations.  Also in connection with this
action and the streamlining of ZiLOG's sales force, severance and termination
benefits of approximately $1.2 million were paid in the first quarter of 2002.
Approximately $0.8 million of computer aided design software was impaired in the
first quarter of 2002 as a result of the Company's decision to cancel
development of its Cartezian family of 32-bit RISC microprocessors focused on
network routing and associated data packeting technologies.  Additionally, $1.9
million of special charges incurred during the first quarter of 2002 relate to
the closure of the MOD III eight-inch wafer fabrication facility in Idaho.
These costs include relocation of production activities to alternative
manufacturing sites and the closure of the MOD III facility.

In addition, professional fees of $3.8 million for debt restructuring were
recorded as reorganization items during the entire duration of the Company's
Chapter 11 proceedings.

NOTE 5.	GEOGRAPHIC AND SEGMENT INFORMATION

The Company operates in one operating segment and engages primarily in the
design, development, manufacture and marketing of semiconductor products.  The
Company sells its products to distributors and original equipment manufacturers
(OEMs) in a broad range of market segments, performs on-going credit evaluations
of its customers and generally requires no collateral.  The Company's operations
outside the United States consist of a final test facility in the Philippines,
sales and support centers and design centers in certain foreign countries.
Domestic operations are responsible for the design, development and wafer
fabrication of all products, as well as the coordination of production planning
and shipping to meet worldwide customer commitments.  The Philippine test
facility is reimbursed in relation to value added with respect to test
operations and other functions performed, and certain foreign sales offices
receive a commission on export sales within their territory.  Accordingly, for
financial statement purposes, it is not meaningful to segregate sales or
operating profits for the test and foreign sales office operations.

Prior to the consummation of the Company's reorganization, there were two
reportable business segments called communications and embedded control.  The
prior reporting structure was based on a previous operating and reporting
organization that was focused largely on development of new products targeted on
the communications and networking sectors.  ZiLOG is now organized and focused
on its core business, which is based on 8-bit micrologic product solutions.  The
Company operates in one reporting segment and engages primarily in the design,
development, manufacture and marketing of semiconductor products.  ZiLOG has two
broad business lines called embedded control and standard products.  The
following table represents the Net Sales by business line for each for the
periods indicated (dollars in millions):

`Sucessor     Predecessor
                                                Company       Company
                                             ------------- -------------
                                             Three Months  Three Months
                                                 Ended         Ended
                                               March 31,     March 31,
                  Products                       2003          2002
-------------------------------------------- ------------- --------------
Embedded control products
    Core 8-bit Microcontrollers and
    microprocessors.........................        $18.4         $23.2

Standard Products
    Serial Communications Controllers.......          3.4           3.7
    Modems..................................          0.4           3.7
    IrDA transceivers.......................          0.6           0.3
    Television, PC peripheral products
       and foundry services.................          2.4           5.1
                                             ------------- -------------
Net sales...................................        $25.2         $36.0
                                             ============= =============`

The following table summarizes ZiLOG's net sales by region and by channel (in
millions):

`Sucessor     Predecessor
                                                Company       Company
                                             ------------- -------------
                                             Three Months  Three Months
                                                 Ended         Ended
                                               March 31,     March 31,
                                                 2003          2002
                                             ------------- -------------
Net sales by region:
Americas....................................        $13.8         $19.8
Asia........................................          7.3          10.9
Europe......................................          4.1           5.3
                                             ------------- -------------
   Total....................................        $25.2         $36.0
                                             ============= =============

Net sales by channel:
OEM.........................................        $13.1         $19.9
Distributor.................................         12.1          16.1
                                             ------------- -------------
   Total....................................        $25.2         $36.0
                                             ============= =============`

Major customers: During the three months ended March 31, 2003,
two customers, Future Electronics, Inc. and Thomson Consumer Electronics
accounted for approximately 20.1% and 10.4% of net sales, respectively.  During
the three months ended March 31, 2002, one customer, Pioneer-Standard
Electronics accounted for approximately 10% of net sales.

NOTE 6.    SHORT-TERM DEBT

Upon consummation of the Reorganization Plan, ZiLOG entered into a senior
secured financing facility (the "Facility") with a commercial lender, dated May
13, 2002, for a new three-year $15.0 million senior secured revolving credit
facility.Borrowings on the Facility are secured primarily
against certain North American accounts receivable and bear interest at a rate
per annum equal, at ZiLOG's option, to the commercial lender's stated prime rate
or LIBOR, plus 2.5%.  At March 31, 2003, the Company had borrowings outstanding
of $5.0 million at a LIBOR-based rate of 3.9% and had additional borrowing
capacity available of $0.8 million. The Facility is scheduled to mature on
May 13, 2005.  As of March 31, 2003, the Company had $0.2 million of
standby letters of credit issued to vendors under the Facility.

The Company is subject to certain financial covenants under this Facility
including tangible asset and fixed charge coverage ratio only if the total of
the Company's cash, cash equivalents and availability on the revolver are less
than $7.5 million at any month end.

NOTE 7.	CONTINGENCIES

On July 29, 1996, ZiLOG filed an action in the Superior Court of the State of
California in and for Santa Clara against Pacific Indemnity Company, Federal
Insurance Company and Chubb & Son Inc.In that action, the
Company sought a declaration that its former insurers, Pacific and Federal, had
an unconditional duty to defend and indemnify it in connection with two lawsuits
brought in 1994:  (1) in Santana v. ZiLOG and, (2) in Ko v. ZiLOG.
ZiLOG's complaint in the Santa Clara County action also alleged that Chubb,
which handled the defense of Santana and Ko on behalf of Pacific
and Federal, was negligent.  Pacific cross-complained against the Company,
seeking reimbursement of defense costs for both underlying lawsuits and a
payment it contributed to the settlement of Ko.  On February 26, 2002,
ZiLOG agreed to pay $300,000 to fully settle these lawsuits.

On August 5, 2002, ZiLOG reached a settlement agreement, mutual release of
claims and indemnity agreement with one of its vendors relating to a 1997
purchase of wafer fabrication equipment that ZiLOG believed was defective.  The
Company had recorded accounts payable of $1.1 million as of May 1, 2002
reflecting this disputed liability.  Under the terms of the agreement, ZiLOG
received $200,000 in cash and was released from all claims by the vendor.

The Company is participating in other litigation and responding to claims
arising in the ordinary course of business.  ZiLOG intends to defend itself
vigorously in these matters.  The Company's management believes that it is
unlikely that the outcome of these matters will have a material adverse effect
on its financial statements, although there can be no assurance in this
regard.

NOTE 8.	INCOME TAXES



The Company's provision for income taxes during the three-month periods ended
March 31, 2003 and 2002 reflects the estimated income tax rate for the year,
including foreign income taxes for the jurisdictions in which the Company was
profitable as well as foreign withholding taxes and state minimum taxes.

In connection with the May, 2002  Reorganization Plan, the subsequent
cancellation of debt and issuance of new common shares to primarily new
stockholders, the Company generated significant income for book and tax
purposes. The taxable income was offset by the use of all available net
operating losses, both current and carryforward, with remaining taxable income
offset by the reduction in tax attributes of certain of the Company's non-
current assets. Deferred tax liabilities were recorded in the year ended
December 31, 2002 and reflect the net tax effect of assets that have a book
basis in excess of their tax basis. For the three months ended March 31, 2003
deferred tax liabilities of approximately $0.9 million were reclassified to
current income taxes payable to reflect estimated taxes payable for U.S. Federal
and State taxes based on taxable income generated  during the three-month period
ended March 31, 2003.

NOTE 9.	MINORITY INTEREST

Minority interest of approximately $30.0 million is recorded on the
consolidated balance sheet in order to reflect the share of MOD III, Inc. held
by minority investors. The minority interest share represents their entitlement
to receive an aggregate liquidation preference of the first $30.0 million plus
any accrued but unpaid dividends on the MOD III, Inc. series A preferred stock
from the net proceeds from the sale of the MOD III, Inc. assets currently held
for sale. The Company will be entitled to recoup from the net proceeds of any
sale all costs it has or will incur to sell the facility or to maintain the
facility in saleable condition subsequent to its closure and prior to transfer
of title.

NOTE 10.  	NET LOSS PER SHARE

The following table presents the calculation of basic and diluted net
loss per share of common stock (in millions, except per share data):

`Sucessor
                                              Company
                                           -------------
                                              Three
                                              Months
                                               Ended
                                             March 31,
                                               2003
                                           -------------
Net loss..................................        ($2.9)
                                           =============
Weighted-average shares outstanding.......         29.8
Less: Weighted-average shares subject
   to repurchase..........................          1.1
                                           -------------
Weighted-average shares used in
   computing basic and diluted
   net loss per share.....................         28.7
                                           -------------
Basic and diluted net loss per
   share..................................       ($0.10)
                                           =============`

At March 31, 2003, options to purchase approximately 2.3 million shares of
common stock at a weighted-average exercise price of $2.81
were excluded from the determination of diluted net loss per share,
as the effect of such shares are anti-dilutive.  At March 31, 2003, there were
29.8 million common shares issued and outstanding.

NOTE 11.  COMPREHENSIVE INCOME

The Company had no items of other comprehensive income to report in
either of the three-month periods ended March 31, 2003 or March 31, 2002.

NOTE 12.  SUBSEQUENT EVENT

Stock Repurchase Program:  On April 17, 2003, the Company's Board of
Directors approved a stock repurchase program authorizing the repurchase of up
to one million shares of its common stock.

The Company's common stock trades on the OTC bulletin
board with a ticker symbol of ZiLG. Purchases under the program may be made,
from time-to-time, in the open market, through block trades or otherwise.
Depending upon market conditions and other factors, these purchases may be
commenced or suspended at any time or from time-to-time without prior notice by
the Company.

On May 1, 2003, the Company repurchased 250,000 shares at $2.00 per share.
These shares will be reflected in the financial statements of the Company as
treasury stock in the period ending June 30, 2003.

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

Our actual results may differ materially from those anticipated in these
forward-looking statements as a result of various factors including those set
forth in the section entitled "Risk Factors" and in other sections of
this annual report.

Overview

The following is management's discussion and analysis of financial
condition and results of operations of the Company and its subsidiaries for the
three-month periods ended March 31, 2003 and 2002.  This discussion and analysis
should be read in conjunction with the section entitled the condensed
consolidated financial statements and notes thereto included elsewhere herein
and the Company's 2002 annual report on form 10-K. Management's discussion and
analysis provides information concerning our business environment, consolidated
results of operations and liquidity and capital resources.

We prepare and release quarterly unaudited financial statements prepared in
accordance with generally accepted accounting principles or GAAP. We also
disclose and discuss EBITDA as a measure of liquidity in our filings with the
Securities and Exchange Commission investor conference calls. We believe the
disclosure of such information helps investors more meaningfully evaluate the
results of our liquidity.  However, we recommend that investors carefully review
the GAAP financial information included as part of our Quarterly Reports on Form
10-Q, our Annual Reports on Form 10-K, and our quarterly earnings releases,
compare GAAP financial information with the pro forma financial results
disclosed in our quarterly earnings releases and investor calls, and read the
associated reconciliation.

Our interim results are based on fiscal quarters of thirteen weeks in
duration ending on the last Sunday of each calendar quarter.  However, for ease
of reading our financial reports, we have labeled our interim fiscal periods as
ending on calendar month-end.  The operating results for any interim period are
not necessarily indicative of results for any subsequent period or the full
fiscal year, which ends on December 31 of each year.

2002 Financial Restructuring and Reorganization

Prior to February 1998, our common stock had been publicly traded on the
New York Stock Exchange under the symbol "ZLG."  On
February 27, 1998, we consummated a merger with an affiliate of Texas
Pacific Group, and in connection with that transaction, we issued $280.0 million
of registered senior secured notes and we ceased having publicly traded equity.
Since 2000, our business and financial growth had been negatively affected by
the extremely difficult business climate in which we have been operating.  We
explored a number of strategic alternatives with the assistance of our financial
advisor, Lazard Frères & Co., LLC, and an informal group of holders
of our senior notes.

During the course of discussions, we concluded that the best vehicle to
achieve a restructuring of our senior notes was through consummation of a
voluntary pre-packaged plan of reorganization under Chapter 11 of the United
States Bankruptcy Code.

On February 28, 2002, we and our subsidiary, ZiLOG-MOD III, Inc., which we
call MOD III, Inc., filed voluntary petitions with the United States Bankruptcy
Court for the Northern District of California for reorganization under Chapter
11.  The bankruptcy court subsequently confirmed MOD III, Inc.'s and our joint
reorganization plan by its order entered on April 30, 2002.  The joint plan
of reorganization became effective on May 13, 2002, but for financial reporting
purposes we use May 1, 2002, as the date of emergence from bankruptcy.  We refer
to the company prior to emergence from bankruptcy as the "Predecessor
Company" and to the reorganized company as the "Successor
Company."

Pursuant to the joint reorganization plan, we extinguished $325.7 million of
liabilities, which included $280.0 million principal amount of our 9.5% Senior
Secured Notes due 2005, $27.2 million in accrued interest due on the notes and
$18.5 million of dividends payable on our former series A preferred stock.  The
former noteholders received substantially all of our new common stock and a
liquidation preference in the net proceeds on the sale of the assets held by MOD
III, Inc.  The former equity holders received an aggregate $200,000 in cash.
All debt and equity securities of the Predecessor Company were cancelled.  As a
consequence of these events, the Predecessor Company recorded a $205.7 million
net gain on discharge of debt.

On May 1, 2002, we adopted "fresh-start" reporting prescribed by
the American Institute of Certified Public Accountant's Statement of Position
90-7, "Financial Reporting by Entities in Reorganization Under the
Bankruptcy Code," or SOP 90-7.  Fresh-start reporting was appropriate
because our former noteholders received substantially all of our new common
stock and the reorganization value of the assets of the Successor Company were
less than the total pre-petition liabilities plus post-petition liabilities.

Critical Accounting Policies

We believe our critical accounting policies are as follows:

- fresh-start reporting;
- estimating sales returns and allowances;
- estimating allowance for doubtful accounts;
- estimating write-downs of excess and obsolete inventories; and
- asset impairments.

On an on-going basis, we evaluate our estimates, including those related to
sales returns, allowance for doubtful accounts, inventory write-downs and asset
impairments.  We base our estimates on historical trends and various other
assumptions that we believe to be reasonable at the time the estimates are made.
Actual results could differ from those estimates.  A brief description of each
of these policies is set forth below.

Fresh-start reporting.  Upon emerging from Chapter 11 proceedings, we
adopted fresh-start reporting in accordance with SOP 90-7. Accordingly, for
financial reporting purposes, we valued our assets and liabilities at fair
value. With the assistance of our independent financial advisor, Lazard Freres
& Co., LLC, and in reliance upon various valuation methods, and other
applicable ratios and economic industry information relevant to our industry and
through negotiations with various creditor parties in interest, we estimated our
equity value to be $90.0 million. This estimate of equity value was derived from
a weighted average of three valuations results based on comparable public
company, precedent transaction and discounted cash flow analyses. For the
purposes of the comparable public company analysis, Lazard analyzed the trading
multiples of numerous public companies in the semiconductor industry, including
Semtech, Globespan and Mitel, amongst others. The comparable public company
analysis yielded a valuation range of $70 - $87 million; Lazard weighted this
analysis 35% in its estimated valuation. The precedent transaction analysis
yielded a valuation range of $88 - $109 million; Lazard weighted this analysis
30% in its estimated valuation. The discounted cash flow analysis yielded a
valuation range of $82 - $106 million; Lazard weighted this analysis 35% in its
estimated valuation. These valuations were based on the underlying assumptions
and limitations set forth in their report. These assumptions include: the
successful reorganization of our business and finances in a timely manner; the
implementation of our business plan as a reorganized entity; the accuracy of
information supplied by management about our business and our prospects;
achievement of forecasted projections; market conditions as of December 31, 2001
continuing through an assumed effective date of March 31, 2002; and the plan of
reorganization becoming effective in accordance with the estimates and
assumptions upon which the valuation was based. 
In connection with the overall revaluation of the company, described above, we
recorded increases in the carrying value of our assets of $83.7 million to
reflect the fair value of those assets under SOP 90-7. These increases in the
carrying value of our intangible assets were based on three valuation
approaches, depending on the specific intangible asset to be valued: the income
approach, the cost approach and the market approach. These increases in carrying
value of our tangible assets were based on physical inspections and written
appraisals that included market data and cost approaches. Results would have
varied under different assumptions or conditions.

Estimating sales returns and allowances.  Our net sales from OEM
customers consist of gross product sales reduced by expected future sales
returns and allowances.  To estimate sales returns and price allowances, we
analyze historical returns and allowance activity to establish a baseline
reserve level.  Then we evaluate whether there are any underlying product
quality or other customer specific issues that require additional specific
reserves above the baseline level.  Because the reserve for sales returns and
allowances is based on our judgments and estimates, our reserves may not be
adequate to cover actual sales returns and other allowances.  If our reserves
are not adequate, our net revenues and accounts receivable could be adversely
affected.

Allowance for doubtful accounts.  We maintain an allowance for losses
we may incur as a result of our customers' inability to make required payments.
Any increase in the allowance results in a corresponding increase in our
selling, general and administrative expenses.  In establishing this allowance,
and then evaluating the adequacy of the allowance for doubtful accounts, we
consider the aging of our accounts receivable, historical bad debts, customer
concentrations, and customer credit-worthiness and, to a lesser extent, current
economic trends and changes in our customer payment terms.  Historically, we
have not experienced material bad debt write-offs.  If the financial condition
of one or more of our customers unexpectedly deteriorated, resulting in their
inability to make payments, or if we otherwise underestimate the losses we incur
as a result of our customers' inability to pay us, we could be required to
increase our allowance for doubtful accounts which could adversely affect our
operating results.

Estimating write-downs of excess and obsolete inventories.  Each
inventory component is assessed for excess or obsolescence by using an algorithm
that we established.  This algorithm is based on historical trends, demand
forecasts and inventory age.  We review the result of this algorithm and
generally write-off all work-in-process inventory more than one year old and
finished goods inventory quantities in excess of our current backlog.  Write-
offs of excess and obsolete inventories are reflected as a reduction to
inventory values in the accompanying consolidated balance sheets, and an
increase in cost of sales.  If actual market conditions or customer demand
patterns are less favorable than, or inconsistent with our assumptions, we may
be required to take further write-downs of our inventory value, which could
adversely impact our cost of sales and operating results.

Asset impairments.  We apply the provisions of Statement of Financial
Accounting Standards No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" and Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets."  We
assess the impairment of long-lived assets whenever events or changes in
circumstances indicate that the carrying value may not be recoverable.  Factors
we consider important which could trigger an impairment review include the
following:

- significant changes in the manner of our use of the acquired assets;
- significant changes in the strategy for our overall business; and
- significant negative industry or economic trends.

When we determine that the carrying value of long-lived assets may not be
recoverable based upon the existence of one or more of the above indicators of
impairment, and the undiscounted cash flows estimated to be generated by those
assets are less than the asset's carrying value, the carrying value of the
assets are reduced to their estimated fair value.  The estimated fair value is
usually determined based on an estimate of future discounted cash flows.  Asset
impairments are recorded as a reduction in the asset value in our consolidated
balance sheets and as special charges in our consolidated statements of
operations.

The intangible assets created by the adoption of fresh-start accounting on
our emergence from bankruptcy consist of existing technology, brand name as well
as excess enterprise value, or goodwill.  The existing technology and brand name
are being amortized based on a pattern-of-use method in proportion to the
discounted cash flows from such assets.  The goodwill is not subject to
amortization.

We evaluate the existing technology and brand name at each reporting period
to determine whether events and circumstances continue to support the current
carrying value as well as the remaining useful life.  Additionally, goodwill is
tested for impairment at least annually and more often if events and
circumstances indicate that its fair value may be less than its carrying value.
We expect to perform the annual impairment test for goodwill in the third
quarter of each year, unless the existence of triggering events indicates that
an earlier review should be performed.

Adjustments to record impairment of long-lived assets or intangible assets
could have a material adverse impact on our financial condition and results of
operations in the period or periods in which such impairment is identified.

Reporting Segments

Beginning in May 2002, we consolidated our business segments into one
reportable segment to reflect the manner in which our chief operating decision-
maker allocates resources and assesses the performance of our business.

Period Comparisons

Our results of operations after April 30, 2002 and our consolidated
balance sheets at December 31, 2002 and March 31, 2003 are not comparable to the
results of operations prior to April 30, 2002 and the historical balance
sheet at December 31, 2001, due to our adoption of "fresh-start"
reporting upon our emergence from bankruptcy.  However, such differences in our
results of operations relate to depreciation of property, plant and equipment,
amortization of intangible assets, interest expense and restructuring and
reorganization expenses.  Additionally, these differences in our balance sheets
relate to inventory, in-process research and development, property, plant and
equipment, intangible assets, conversion of senior notes to common stock, and
minority interest.  Certain figures, such as net sales and certain expenses were
not affected by our adoption of fresh-start accounting and, accordingly, we
believe them to be comparable.  To provide a more meaningful analysis, in the
following discussion we have compared results of our predecessor and successor
company's operations for the three months ended March 31, 2003 to the
predecessor company's results for the three months ended March 31,2002.

Results of Operations

Our net sales by
region, by channel, and by business line are summarized in dollars and as a
percentage of total net sales for each period indicated, as follows (in
millions):

`Sucessor     Predecessor
                                                Company       Company
                                             ------------- -------------
                                             Three Months  Three Months
                                                 Ended         Ended
                                               March 31,     March 31,
                                                 2003          2002
                                             ------------- -------------
Net sales by region:
Americas....................................        $13.8         $19.8
Asia........................................          7.3          10.9
Europe......................................          4.1           5.3
                                             ------------- -------------
   Total....................................        $25.2         $36.0
                                             ============= =============

Net sales by channel:
OEM.........................................        $13.1         $19.9
Distributor.................................         12.1          16.1
                                             ------------- -------------
   Total....................................        $25.2         $36.0
                                             ============= =============

Net sales by busines line:
Embedded control............................        $18.4         $23.2
Standard Products...........................          6.8          12.8
                                             ------------- -------------
   Total....................................        $25.2         $36.0
                                             ============= =============`

During the past two years, we have implemented a series of business
restructuring programs aimed at refocusing on our core 8-bit micrologic product
portfolio.  In connection with these actions, we have eliminated a significant
amount of fixed costs from our business operations.  Additionally, pursuant to
our plan of reorganization, which became effective on May 13, 2002, we
extinguished $280.0 in million principal value of our 9.5% Senior Secured Notes
due 2005, which required $13.3 million in interest payments each March 15 and
September 15.

Three Months Ended March 31, 2003 Compared to Three Months Ended March 31,
2002

Net Sales.  Overall, similar to the semiconductor industry as a whole,
we have experienced reduction in demand for many of our products that has
persisted into the first quarter of 2003.  Our net sales of $25.2 million in the
three months ended March 31, 2003 represents a decrease of 30% from net sales of
$36.0 million in the same period of 2002.

Net sales of our embedded control products declined 21% to $18.4 million in
the three months ended March 31, 2003 compared to $23.2 million in the three
months ended March 31, 2002.  This decrease reflects lower unit shipments in
both our microprocessor and microcontroller product families.  The decline
reflects the overall lower  market demand  as well as continued conversion of
our older Z80 microprocessors and Z8 microcontrollers to alternative
technologies, primarily microcontrollers with embedded flash technology. In
November 2002 and February 2003 we released our new Z8 Encore! and eZ80 Acclaim!
products that are focused on the embedded flash market, with a strategy of
recapturing sales to these customers and entering new markets.

Net sales of our standard products for the three months ended March 31, 2003
decreased $6.0 million or 47% to $6.8 million from $12.8 million in the same
period of 2002.  This decrease reflects:

1. a $3.3 million decrease in net sales of modem products, primarily reflecting
technology migration by our largest modem OEM customer from a hardware driven
solution to an internally developed software operated modem. This customer
accounted for $7.2 million of sales in 2002. We expect minimal net sales from
this customer with respect to modems in 2003; and
2. a $2.7 million decrease in net sales of our de-emphasized television
products and peripheral products. These products were de-emphasized prior to
2001 and have continued a steady decline as customers have migrated to
alternative solutions.

Gross Margin.  Our cost of sales primarily represents manufacturing
costs relating to wafer fabrication, package assembly and product testing
operations. Cost of sales fluctuates, depending on materials and services prices
from our vendors, manufacturing productivity, product mix, equipment utilization
and depreciation. Gross margin as a percent of net sales was 41% in the three
months ended March 31, 2003, down from 44% in the same period of 2002. During
the first quarter of 2003 our gross margin was adversely impacted by
underutilization of our MOD II wafer manufacturing facility, reflecting lower
demand for wafer capacity consistent with our decline in net sales.  We have
continued to rationalize our manufacturing cost structure in response to these
lower demand requirements, which included a reduction in force of approximately
55 positions in our MOD II facility in February 2003.  We continue to purchase
our wafer requirements for 0.35 micron wafer technologies from our foundry
partners primarily in Taiwan including our new embedded flash based Z8 Encore!
and eZ80 Acclaim! products.

Research and Development Expenses.  Research and development expenses
were $3.9 million in the three months ended March 31, 2003, reflecting a 25%
decrease from the $5.2 million of research and development expenses reported in
the three months ended March 31, 2002.  The decrease in research and development
expense primarily reflects lower payroll-related costs as a result of headcount
reductions in connection with the closing of our Austin, Texas design center and
the related termination of all product development activities in connection with
our CarteZian line of 32-bit network communications microprocessors.
Subsequent to January 2002, the primary focus of our research and development
has been product design efforts relating to our Z8Encore! and eZ80Acclaim!
flash-memory enabled microcontrollers offered in our core micrologic
business.

Selling, General and Administrative Expenses.  Selling, general and
administrative expenses decreased to $6.2 million in the three months ended
March 31, 2003 from $8.1 million in the three months ended March 31, 2002.  The
decrease in our selling, general and administrative spending reflects lower
payroll-related costs as a result of lower headcount and reduced incentive
compensation and commissions commensurate with lower sales levels.

Special Charges.  Special charges for each period indicated were as
follows (in millions):

`Sucessor     Predecessor
                                              Company       Company
                                           ------------- -------------
                                           Three Months  Three Months
                                               Ended         Ended
                                             Mar. 31,      Mar. 31,
                                               2003          2002
                                           ------------- -------------
Asset impairments:
   Austin Texas assets....................      $ --             $1.7
   Internal use software..................        --              0.8
   Nampa, Idaho assets....................          0.2         --
                                           ------------- -------------
                                                    0.2           2.5
                                           ------------- -------------
Restructuring of operations:
   Employee severance and
     termination benefits.................          0.6           1.2
   MOD III closure costs..................          0.3           1.9
                                           ------------- -------------
                                                    0.9           3.1
                                           ------------- -------------
Professional fees for debt
   restructuring..........................          0.2         --
                                           ------------- -------------
                                                   $1.3          $5.6
                                           ============= =============`

The following table summarizes activity in accrued special charges (in
millions):

`Severance and   MOD III
                                                            Termination    Closure       Debt
                                                 Total       Benefits       Costs    Restructuring
                                             ------------- ------------- ----------- ------------
    Balance at December 31, 2002............         $0.6          $0.5        $0.1        $ --
    Total charge to special charges.........         $1.1           0.6         0.3          0.2
    Cash paid...............................        ($1.5)         (1.1)       (0.4)         --
                                             ------------- ------------- ----------- ------------
    Balance at March 31, 2003...............         $0.2        $ --          $ --         $0.2
                                             ============= ============= =========== ============`

During the three months ended March 31, 2003, special charges totaled $1.3
million, which was comprised of $0.9 million of restructuring of operations
expenses, asset impairments of $0.2 million and professional fees of $0.2
million.  The restructuring of operations relates to severance and benefit costs
in connection with the reduction of approximately 56 positions that were
eliminated during the quarter in our MOD II wafer fabrication facility and the
ongoing costs of maintaining our MOD III facility which is being held for
sale.

During the three months ended March 31, 2002, special charges totaled $5.6
million, which were comprised of $2.5 million of asset impairments and $3.1
million of restructuring of operations expenses.  In connection with the closure
of our Austin, Texas design center in the first quarter of 2002, we surrendered
to the lessor in partial exchange for lease termination considerations,
furniture, fixtures and equipment with a book value of approximately $1.7
million.  Also in connection with this action and the streamlining of our sales
force, we paid severance and termination benefits of approximately $1.2 million
in the first quarter of 2002.  Approximately $0.8 million of computer aided
design software was impaired in the first quarter of 2002 as a result of our
decision to cancel development of the Cartezian family of 32-bit RISC
microprocessors. Additionally, we incurred $1.9 million in special charges
during the first quarter of 2002 associated with the closure of our Mod III
eight-inch wafer fabrication facility in Idaho. These charges included the costs
of relocation of production to alternative manufacturing sites and the closure
of the facility.

Stock-Based Compensation. We classify stock-based compensation within
the various operating expenses to which it relates, principally selling, general
and administrative expense.  Compensation expense for employee stock awards and
in-the-money stock option grants are measured on the grant date.  Compensation
expense is recognized over the vesting period for options or over the periods
that the restrictions lapse for restricted stock.

Amortization of Intangible Assets.  Effective January 1, 2002, we
adopted the provisions of FASB Statement of Financial Accounting Standards No.
142, "Goodwill and Other Intangible Assets" ("FAS 142").  Under FAS 142,
goodwill and intangible assets with indefinite lives are not amortized, but are
reviewed annually or more frequently if impairment indicators arise.  Separable
intangible assets that are deemed to have defined lives will continue to be
amortized over their useful lives (but with no maximum life).  Intangible assets
acquired prior to July 1, 2001 were being amortized on a straight-line basis
over lives ranging from three to five years.  In connection with the Company's
fresh-start reporting, separable intangible assets based on independent
valuations were created with deemed defined lives. These intangible assets are
being amortized utilizing the pattern-of-use method over their estimated useful
lives ranging from 5 to 10 years.

The separable intangible assets identified in connection with fresh-start
accounting and included in the consolidated balance sheet are as follows (in
millions):

`Current        Brand
                                              Technology       Name         Total
                                             ------------- ------------- -----------
Gross carrying amount.......................        $17.0          $9.2       $26.2
Accumulated amortization....................          8.2           1.4         9.6
                                             ------------- ------------- -----------
Book value March 31, 2003...................         $8.8          $7.8       $16.6
                                             ============= ============= ===========`

The anticipated remaining amortization schedule for these assets
is as follows (in millions):

`Current        Brand         Total
           Year        Technology       Name      Amortization
      -------------- -------------- ------------ --------------
           2003               $4.1         $1.0           $5.1
           2004                2.9          1.3            4.2
           2005                1.1          1.1            2.2
           2006                0.4          1.0            1.4
           2007                0.2          0.8            1.0
        Thereafter             0.1          2.6            2.7
                     -------------- ------------ --------------
          Total               $8.8         $7.8          $16.6
                     ============== ============ ==============`

Interest Expense.  In the first quarter of 2002, our
interest expense was primarily accrued in connection with our 9.5% senior
secured notes payable, which notes and accrued interest were extinguished in
connection with our reorganization effective May 13, 2002.

Income Taxes.   Our provision for income taxes during the three-month
periods ended March 31, 2003 and 2002 reflects the estimated income tax rate for
the year, including foreign income taxes for the jurisdictions in which our
business was profitable as well as foreign withholding taxes and state minimum
taxes.  In connection with the May, 2002 Reorganization Plan, the subsequent
cancellation of debt and issuance of new common shares to primarily new
stockholders, we generated significant income for book and tax purposes. This
taxable income was offset by the use of all available net operating losses, both
current and carryforward, with remaining taxable income offset by the reduction
in tax attributes of certain of our non-current assets. Deferred tax liabilities
were recorded in the year ended December 31, 2002 and reflect the net tax effect
of our assets that have a book basis in excess of their tax basis. For the three
months ended March 31, 2003 deferred tax liabilities of approximately $0.9
million were reclassified to current income taxes payable to reflect our
estimated taxes payable for U.S. Federal and State taxes based on taxable income
generated  during the three-month period ended March 31, 2003.

Liquidity and Capital Resources

As a result of the economic downturn and decline in our results of operations
that began in 2000, we became unable to continue servicing the interest on our
debt.  As noted previously, on February 28, 2002, we filed a voluntary
prepackaged plan of reorganization pursuant to Chapter 11 of the United States
Bankruptcy Code.  The bankruptcy court confirmed our reorganization plan on
April 30, 2002.  The plan of reorganization became effective on May 13, 2002 and
resulted in the extinguishment of $325.7 million of liabilities.

Upon emergence from bankruptcy, we entered into a new credit facility with
the same commercial lender as our previous credit facility.  The new facility is
a three-year $15.0 million senior secured revolving credit facility.  The new
facility is on substantially similar terms as our previous revolving credit
facility, except that borrowings bear interest at a rate per annum equal, at our
option, to the commercial lender's stated prime rate or LIBOR, plus 2.5%.  We
have elected the LIBOR interest rate option, which, as of December 31, 2002 was
4.4%.  The previous revolving credit facility and capital expenditure line was
cancelled.  As of March 31, 2003, we had outstanding borrowings of
$5.0 million and standby letters of credit of $0.2 million.  Our ability to
borrow under the facility is based on a monthly borrowing base calculation that
is determined as a percentage of eligible accounts receivable.  If we decide to
pay the necessary fee to qualify certain foreign accounts receivable in our
borrowing base, we could borrow up to an additional $2.6 million under our
revolving credit facility as of March 31, 2003.

We are subject to certain financial covenants under this facility, including
tangible net asset balance and fixed charge coverage ratios only if the total of
our cash, cash equivalents and availability on the revolving credit facility are
less than $7.5 million at any month end.

At March 31, 2003, we had cash and cash equivalents of $23.0 million,
compared to $29.4 million at December 31, 2002.  Cash used by operating
activities was $3.8 million for the three months ended March 31, 2003, compared
to $9.5 million of cash used by operating activities in the first quarter of
2002.

During the three-month period ended March 31, 2003, cash used by operating
activities of $3.8 million primarily reflects our net loss of $2.9 million
offset by non-cash charges of $3.8 million. Non-cash charges include $1.7
million for amortization of Fresh Start Intangible assets, $1.5 million in
depreciation and other amortization charges, impairment of long lived assets of
$0.2 million and stock-based compensation expense of $0.4 million. The primary
use of cash for operating activities was a result of changes in working capital
driven by:

- payout of the 2002 annual employee incentive bonuses of $3.3 million;
- payments pertaining to prior quarter accrued special charges of $0.5
million; and
- payment of vacation accruals reflecting shut-downs and mandatory time-off
taken by employees during the quarter totaling $0.7 million.

The use of cash by operating activities in the first quarter of 2002
primarily reflects our net loss of $11.9 million, adjusted for depreciation and
amortization of $1.9 million. During the three-month period ended March 31,
2002, our significant use of operating cash included cash payments for special
charges of $10.1 million.

Cash used by investing activities was $0.7 million and $0.9 million for the
three-month periods ended March 31, 2003 and 2002, respectively. Cash used for
investing activities in both the 2003 and 2002 first quarter periods reflects
capital expenditures.

Cash used by financing activities was $1.9 million and $2.8 million for the
three-month periods ended March 31, 2003 and 2002, respectively. Cash used for
financing activities in both periods reflects repayments of borrowings under our
revolving line of credit.

The EBITDA figures presented below reflect a non-GAAP measure of our
liquidity.  These figures reflect our net income adjustment for non-cash items,
interest and income taxes.  Our management uses separate "adjusted
EBITDA" calculations for purposes of determining certain employees'
incentive compensation and, subject to meeting specified adjusted EBITDA
amounts, for accelerating the vesting of EBITDA-linked stock options. This
measure of adjusted EBITDA was approved as part of our plan of reorganization.
Adjusted EBITDA, as we define it, excludes interest, income taxes, effects of
changes in accounting principles and equity adjustments and non-cash charges
such as depreciation, amortization, in-process research and development, and
stock-based compensation expense.  It also excludes cash and non-cash charges
associated with reorganization items and special charges, which represent
operational restructuring charges, including asset write-offs, employee
termination costs, and lease termination costs.  EBITDA is presented because
management uses EBITDA as a measure of cash earnings for budgeting and financial
performance measurement.  Adjusted EBITDA is presented because it is a defined
measure for determining employee incentive compensation and potentially for
acceleration of certain stock option vesting.

The differences between the EBITDA figures below and our adjusted EBITDA
relate to the following cash-settled reorganization and special items that are
added-back in our adjusted EBITDA computations:

- Employee retention bonuses, severance pay and termination benefits;
- Professional fees for debt restructuring;
- Lease termination costs;
- Termination and exit charges, and
- MOD III closure costs.

Our EBITDA, reconciled to cash provided (used) by operations (the most
directly comparable measure of liquidity under generally accepted accounting
principles) for each period presented, is as follows (in millions):

`Sucessor     Predecessor
                                                Company       Company
                                             ------------- -------------
                                             Three Months  Three Months
                                                 Ended         Ended
                                               March 31,     March 31,
                                                 2003          2002
                                             ------------- -------------
Reconciliation of cash used by operations
   to EBITDA:
   Cash flow from operations................        ($3.8)        ($9.5)
   Interest paid............................          0.1           0.1
   Income taxes paid........................          0.1           0.1
   Change in operating assets and
      liabilities...........................          4.6           6.9
                                             ------------- -------------
EBITDA......................................         $1.0         ($2.4)
                                             ============= =============`

Our cash needs for 2003 include working capital, professional fees in
connection with the finalization of our registration statement on Form S-1 and
capital expenditures.  In March 2003, we announced and completed a further
restructuring of our MOD II wafer fabrication operations that resulted in the
elimination of approximately 55 positions and cost approximately $0.6 million in
severance benefits.  This action was intended to more closely align our
production output capacity with current customer demand.  The 2003 business
climate is expected to continue to be difficult.  However, we currently
anticipate that available cash and cash provided by operating activities will be
adequate to satisfy our cash requirements for at least the next twelve
months.

We expect fiscal 2003 capital expenditures will total approximately $2.0
million, primarily for test equipment, building improvements and internal use
software.  Decisions related to  cash requirements  for investing activities are
influenced by our expected cash provided by operations. Additionally, the
Company has used approximately $0.5 million in cash to repurchase 250,000 shares
of stock during the current quarter. Further cash may be used for stock
repurchases in the future in accordance with the program approved by the Board
of Directors although the maximum number of shares that may be repurchased is
one million.

Effects of Inflation and Changing Prices

We believe that inflation and/or deflation had a minimal impact on our
overall operations during the periods included in these financial
statements.

Seasonality

Sales typically increase in the second quarter and peak in the third quarter
driven by increased holiday demand from our customers in the home entertainment
and consumer products markets.  Our revenues are generally lower in the first
and fourth quarters compared to the rest of the year.  We believe that this
historical seasonal trend could be impacted by general economic conditions and
reduction in sales of our previously de-emphasized products.  Additionally,
general world-wide economic, political and regional instabilities may impact our
results of operations in any given period.

Recent Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board issued FASB
Interpretation No. 46, "Consolidation of Variable Interest Entities," which
addresses consolidation by a business of variable interest entities in which it
is the primary beneficiary.  The Interpretation is effective immediately for
certain disclosure requirements and variable interest entities created after
January 31, 2003, and will be effective in the third quarter of 2003 for
variable interest entities created before February 1, 2003.  The Company is
reviewing the provisions of the Interpretation and complies with the disclosure
requirements, but does not expect the Interpretation to have a material impact
on the Company's financial statements. 
Effective prospectively for arrangements entered into in fiscal periods
beginning after June 15, 2003, Emerging Issues Task Force ("EITF") Issue 00-21,
"Revenue Arrangements with Multiple Deliverables," addresses the accounting, by
a vendor, for contractual arrangements in which multiple revenue-generating
activities will be performed by the vendor.  In some situations, the different
revenue-generating activities (deliverables) are sufficiently separable and
there exists sufficient evidence of fair values to account separately for the
different deliverables (that is, there are separate units of accounting).  In
other situations, some or all of the different deliverables are interrelated
closely or there is not sufficient evidence of fair value to account separately
for the different deliverables.  EITF Issue 00-21 addresses when and, if so, how
an arrangement involving multiple deliverables should be divided into separate
units of accounting.  The Company has not yet determined the impact of the
adoption of EITF Issue 00-21 on its consolidated financial
statements.

SFAS No. 146 revises the accounting for specified
employee and contract terminations that are part of restructuring activities.
Companies will be able to record a liability for a cost associated with an exit
or disposal activity only when the liability is incurred and can be measured at
fair value.  Commitment to an exit plan or a plan of disposal expresses only
management's intended future actions and therefore, does not meet the
requirement for recognizing a liability and related expense.  This statement
only applies to termination benefits offered for a specific termination event or
a specified period.  It will not affect accounting for the costs to terminate a
capital lease.  We adopted this statement for exit and/or disposal activities
initiated on or after May 1, 2002.

RISK FACTORS

Risks Related to the Restructuring

We recently effectuated a reorganization pursuant to a prepackaged plan under
Chapter 11 of the United States Bankruptcy Code, which does not assure our
continued success.

On February 28, 2002, we filed a voluntary petition for reorganization
under Chapter 11 of the United States Bankruptcy Code.  The United States
Bankruptcy Court for the Northern District of California confirmed our
prepackaged plan of reorganization on April 30, 2002 and we emerged from
bankruptcy on May 13, 2002.  Pursuant to the financial restructuring, our
formerly publicly traded 9.5% Senior Secured Notes due 2005, accrued interest
related to such notes, and all of our previously existing equity securities were
canceled.  Our completion of bankruptcy proceedings does not assure our
continued success.

Our new revolving credit facility restricts our ability to take certain
actions that we may determine to be in our best interests.

In connection with our reorganization, we replaced our previous credit
facility with a three-year $15.0 million senior secured revolving credit
facility.  Borrowings under this credit facility are secured by substantially
all of our assets.  This facility places various restrictions on us, including,
but not limited to, restrictions on our ability to incur indebtedness and engage
in certain corporate transactions, and requires us to maintain financial ratios.
As of March 31, 2003, we had additional borrowing capacity of $0.8 million under
this facility.  This credit facility is scheduled to expire on May 13, 2005, at
which time we may be required to renew, refinance, or modify the credit facility
with our lender or locate alternative financing.  These restrictions and
provisions could have an adverse impact on our future liquidity and ability to
implement our business plan.

Our reorganization may have negatively affected some of our relationships
with our customers, suppliers and employees.

The effect, if any, of our Chapter 11 case and plan of reorganization
may have had, and may continue to have, upon our continued operations cannot be
predicted or quantified.  Some entities may be uncomfortable doing business with
a company that has recently emerged from bankruptcy.  Our Chapter 11 case could
adversely affect our relationships with our customers, suppliers and
employees.

As a result of the adoption of "fresh-start" accounting, you will not be
able to compare our historical financial statements with the financial results
disclosed in this quarterly report.

As a result of the consummation of our plan of reorganization and the
transactions contemplated thereby, we are operating our business under a new
capital structure.  In addition, we adopted fresh-start reporting in accordance
with the American Institute of Certified Public Accountants Statement of
Position 90-7 upon emerging from bankruptcy.  Because SOP 90-7
requires us to reset our assets and liabilities to current fair values, our
financial condition and results of operations disclosed in future filings will
not be comparable to the financial condition or results of operations reflected
in our historical financial statements contained in this quarterly report.

Risk Related to Our Business and Industry

Our quarterly operating results are likely to fluctuate and may fail to meet
expectations, which may cause the price of our securities to decline.

Our quarterly operating results have fluctuated in the past and will
likely continue to fluctuate in the future.  Our future operating results will
depend on a variety of factors and they may fail to meet expectations.  Any
failure to meet expectations could cause the price of our securities to
fluctuate or decline significantly.  In addition, high proportions of our costs
are fixed, due in part to our significant sales, research and development and
manufacturing costs.  Therefore, small declines in revenue could
disproportionately affect our operating results in a quarter.  A variety of
factors could cause our quarterly operating results to fluctuate, including:

- our ability to introduce and sell new products and technologies on a timely
basis, such as our eZ80 and Z8 product families and extensions of these product
families;
- any shortage of wafer or assembly manufacturing capacity at our third-party
vendors;
- changes in the prices of our products;
- technological change and product obsolescence;
- changes in product mix or fluctuations in manufacturing yields;
- variability of our customers' product life cycles;
- the level of orders that we receive and can ship in a quarter, customer
order patterns and seasonality;
- increases in the cost or availability of raw materials; and
- gain or loss of significant customers.

We are currently experiencing a downturn in the business cycle and our
revenues, cash generation and profitability are being adversely affected.

The semiconductor industry is highly cyclical and has experienced significant
economic downturns at various times in the last three decades, characterized by
diminished product demand, erosion of average selling prices and production
over-capacity.  In the fourth quarter of 2000, another downturn in our business
cycle began and continues today.  The terrorist acts of September 2001 in New
York City, Washington, D.C. and Pennsylvania, and the United States' military
response, have exacerbated the downturn and created an uncertain economic
environment.  We cannot predict the impact of these events, any subsequent
terrorist acts or of any related military action, on our customers or business.
We believe that, in light of these events, some of our customers have curtailed
and may in the future delay or further curtail spending on technology, which
could also negatively affect our quarterly results or financial condition in the
future.

We are experiencing a decline in revenues, as our customers are not ordering
product from us in the quantities that they previously ordered in 2000 and 2001.
This decline in revenue has been accentuated by our decision in 2000 to de-
emphasize certain product offerings in the television and PC peripheral markets.
We are uncertain how long this decline will last.  Additionally, we may be
required to reduce selling prices in response to competition, which could lower
our gross margin.  Such a decline in selling prices would have a negative impact
on our financial condition.  As a result of our under-utilization of our
manufacturing capacity, in January 2002 we closed one of our two wafer
fabrication facilities.  We are currently, and will likely in the future
experience substantial period-to-period fluctuations in future operating results
that are attributable to general industry conditions or events occurring in the
general economy.  Any economic downturn could pressure us to reduce our prices
and decrease our revenues, cash generation and profitability.

We have a history of losses, and we may not be profitable in the future.

We have a history of losses including for the three-month period ended March
31, 2003 and for each of the years in the five-year period ended December 31,
2002, excluding the accounting effects of our reorganization.  If our new
business plan is not successful, we may not be profitable in the future.

We have implemented significant cost cutting measures, and we may be
required to implement additional cost cutting measures depending upon our future
revenues and operating results.

Similar to other semiconductor companies, we have implemented significant
cost cutting measures in the past.  These cost cutting efforts have
included:

- restructuring our manufacturing operations, which included consolidating our
wafer fabrication facilities, outsourcing significant wafer and assembly
operations and consolidating probe and final test operations at our Philippines
site;
- refocusing of strategic priorities;
- reallocating personnel and responsibilities to better utilize human
resources;
- reducing research and development and capital expenditure spending;
- reducing our workforce; and
- instituting temporary office and facility shutdowns.

Cost cutting measures may not increase our efficiency or future profitability
and our reduction in research and development spending could harm our ability to
introduce new products in the future.  If our revenue or operating results
significantly decline in the future, we may be required to institute further
cost reduction measures.

If we are unable to implement our business strategy, our revenues and
future profitability may be harmed materially.

Our future financial performance and success are largely dependent on our
ability to implement our business strategy.  In third quarter of 2001 we revised
our business strategy to refocus on our core 8-bit micrologic business and to
increase our use of external wafer fabrication facilities.  We may be unable to
implement this new business strategy, including planning for and responding to
lack of external wafer fabrication capacity and dealing with unforeseen quality
issues, and, even if we do implement our strategy successfully, our results of
operations may fail to improve.

In addition, although the semiconductor micrologic market has grown in prior
years, it is currently in a significant downturn.  Our revenues and future
profitability could be harmed seriously.  It is uncertain for how long this
slowdown will last.

We may not be able to introduce and sell new products, and our inability
to do so may harm our business materially.

Our operating results depend on our ability to introduce and sell new
products.  Rapidly changing technologies and industry standards, along with
frequent new product introductions, characterize the industries that are
currently the primary end-users of semiconductors.  As these industries evolve
and introduce new products, our success will depend on our ability to adapt to
such changes in a timely and cost-effective manner by designing, developing,
manufacturing, marketing and providing customer support for new products and
technologies.  Our ability to introduce new products successfully depends on
several factors, including:

- development of support tools and collateral literature that make complex
products easy for engineers to understand and use;
- proper new product selection;
- timely completion and introduction of new product designs;
- support from foundry services;
- complexity of the new products to be designed and manufactured; and
- market acceptance of our products and our customers' products.

We cannot assure you that the design and introduction schedules for any new
products or any additions or modifications to our existing products will be met,
that these products will achieve market acceptance or that we will be able to
sell these products at prices that are favorable to us.

Acts of war or terrorism could harm our business.

The September 11, 2001 terrorist attacks on the United States created
immediate significant economic and political uncertainty.  The long-term effects
of such attacks on the world economy and our business are unknown, but could be
material to our business.  Further terrorists acts or acts of war, whether in
the United States or abroad, also could cause damage or disruption to our
business, our suppliers, our freight carriers, or our customers, or could create
political or economic instability, any of which could have a material adverse
effect on our business.  Escalated tensions between India and Pakistan
particularly pose an increased risk to our design operations in India, which
could be disrupted in the event of the outbreak of war between the two
countries.

Our industry is highly competitive and we cannot assure you that we will be
able to compete effectively.

The semiconductor industry is intensely competitive and is characterized by
price erosion, rapid technological change and heightened competition in many
markets.  The industry consists of major domestic and international
semiconductor companies, many of which have substantially greater financial and
other resources than we do with which to pursue engineering, manufacturing,
marketing and distribution of their products.  Emerging companies are also
increasing their participation in the semiconductor industry.  Our current and
future products compete with, or may compete with, products offered by Advanced
Micro Devices, ARM, Atmel, Conexant, Intel, Lucent Technologies, Microchip,
Motorola, NEC, Philips, Sharp, ST Microelectronics, Texas Instruments and
Toshiba, among others.  Some of our principal products such as the Z80
microprocessor are licensed by our competitors or are in the public domain and
can be manufactured and sold to our customers by our competitors, possibly with
added features or at lower prices than we charge.  Our ability to compete
successfully in our markets depends on factors both within and outside of our
control, including:

- our ability to design and manufacture new products that implement new
technologies, including our eZ80 and Z8 product families;
- our ability to protect our products by effectively utilizing intellectual
property laws;
- our product quality, reliability, ease of use and price;
- the diversity of product line and our efficiency of production;
- the pace at which customers incorporate our devices into their products;
and
- the success of our competitors' products and general economic
conditions.

To the extent that our products achieve market acceptance, competitors
typically seek to offer competitive products or embark on pricing strategies,
which, if successful, could harm our results of operations and financial
condition materially.

Unless we maintain manufacturing efficiency and avoid manufacturing
difficulties, our future profitability could be harmed.

Our semiconductors are highly complex to manufacture and our production
yields are sensitive.  Our production yields may be inadequate in the future to
meet our customers' demands.  Production yields are sensitive to a wide variety
of factors, including the level of contaminants in the manufacturing
environment, impurities in the materials used and the performance of personnel
and equipment.  From time to time, we have experienced difficulties in effecting
transitions to new manufacturing processes and have suffered delays in product
deliveries or reduced yields.  We may experience similar difficulties or suffer
similar delays in the future, and our operating results could be harmed as a
result.

For example, we may experience problems that make it difficult to manufacture
the quantities of our products that we anticipate producing in our wafer
fabrication facility.  These difficulties may include:

- equipment not performing as expected;
- process technology changes not operating as expected;  and
- production personnel not operating equipment as expected.

If we are unable to obtain adequate production capacity, our business will
be harmed.

We rely on independent third-party foundry manufacturers to fabricate an
increasing percentage of our products.  Industry-wide shortages in foundry
capacity could harm our financial results.  For example, a significant amount of
our sales are of products which cannot be manufactured at our Nampa, Idaho wafer
fabrication facility.   Should we be unable to obtain the requisite foundry
capacity to manufacture our complex new products, or should we have to pay high
prices to foundries in periods of tight capacity, our ability to increase our
revenues might be impaired.  Any delay in initiating production at third-party
facilities, any inability to have new products manufactured at foundries or any
failure to meet our customers' demands could damage our relationships with our
customers and may decrease our sales.

Other significant risks associated with relying on these third-party
manufacturers include:

- reduced control over the cost of our products, delivery schedules and
product quality;
- the warranties on wafers or products supplied to us are limited;
- increased exposure to potential misappropriation of our intellectual
property; and
- the cost and consumption of time associated with switching
foundries.

We depend on third-party assemblers and the failure of these third parties
to continue to provide services to us on sufficiently favorable terms could harm
our business.

We use outside contract assemblers for packaging our products.  If we are
unable to obtain additional assembly capacity on sufficiently favorable terms,
our ability to achieve continued revenue growth might be impaired.  Shortages in
contract assembly capacity could cause shortages in our products and could also
result in the loss of customers.  Because we rely on these third parties, we
also have less control over our costs, delivery schedules and quality of our
products and our intellectual property is at greater risk of
misappropriation.

Our international operations subject us to risks inherent in doing
business in foreign countries that could impair our results of operations.

Approximately 66% of our net sales for the three-month period ended March 31,
2003 were made to foreign customers and we expect that international sales will
continue to represent a significant portion of our net sales in the future.  We
maintain significant operations or rely on a number of contract manufacturers in
the Philippines, Indonesia, Taiwan and India.  We cannot assure you that we will
be successful in overcoming the risks that relate to or arise from operating in
international markets.  Risks inherent in doing business on an international
level include:

- economic and political instability;
- changes in regulatory requirements, tariffs, customs, duties and other trade
barriers;
- transportation delays;
- power supply shortages and shutdowns;
- difficulties in staffing and managing foreign operations and other labor
problems;
- existence of language barriers and cultural distinctions;
- acts of God, including floods, typhoons and earthquakes;
- taxation of our earnings and the earnings of our personnel; and
- other uncertainties relating to the administration of, or changes in, or new
interpretation of, the laws, regulations and policies of the jurisdictions in
which we conduct our business.

In addition, our activities outside the United States are subject to risks
associated with fluctuating currency values and exchange rates, hard currency
shortages and controls on currency exchange.  While our sales are primarily
denominated in U.S. dollars, worldwide semiconductor pricing is influenced by
currency rate fluctuations, and such fluctuations could harm our operating
results materially.

The risks inherent in our international operations have been increased by the
terrorist attacks of September 2001.  These attacks, coupled with the
international military response, have created an uncertain economic environment
and we cannot predict the impact of these events, any subsequent terrorist acts
or of any related military action, on our customers or our business.

The lease of the facility housing our Philippines operations expires in
March 2004; if we are unable to negotiate an extension of this lease or relocate
these operations on commercially reasonable terms, our results of operations
could be harmed.

The majority of our final product testing, inventory warehousing and
logistics operations reside in a 54,000 square foot facility located in the
Philippines.  We have occupied this site with inexpensive rental payments since
1979 and the lease is presently due to expire on March 31, 2004.  Accordingly,
if we are unable to negotiate an extension of the lease or effectively relocate
these operations to another site on commercially reasonable terms, our results
of operations could be harmed.

We have changed our North American distributors, and we may lose some of
our customers as a result.

In September 2002, we announced our intention to terminate our existing
relationship with our Pioneer Standard, our full-service distributor in North
America.  We completed the termination of our relationship with Pioneer Standard
in the fourth quarter of 2002.  For the year ended December 31, 2002, Pioneer
Standard purchased approximately $17.9 million of our products. In their place,
we have franchised Future Electronics as our sole exclusive full-service
distributor in North America. For three months ended March 31, 2003, Future
Electronics purchased approximately $5.1 million of our products. We expect that
Future Electronics will take over the majority of the business that we
previously conducted with Pioneer Standard, but this transition may not occur
smoothly.   Pioneer Standard may try to direct their customers to purchase
competing products instead of ours.  Other customers may not wish to transfer
their business to Future Electronics.  As a result, we may lose some of the
business that we used to sell through our prior distributor, which could harm
our operating results materially.  Future Electronics also distributes products
of our competitors that may directly compete with our product offerings.  If
Future electronics chooses to promote those products over our products, our
operating results could be harmed significantly.  In addition, if Future
Electronics were to terminate our distribution agreement, we could experience a
period of significant interruption of our business while we obtained other
distribution channels.

A significant amount of our revenues comes from relatively few of our
customers and distributors, and any decrease of revenues from these customers
and distributors, or the loss of their business, could significantly harm our
financial results.

Historically we have been, and we expect to continue to be, dependent on a
relatively small number of customers and distributors for a significant portion
of our revenues.  We depend on third-party distributors to market and sell our
products and these third-party distributors accounted for approximately 44% of
our net sales for the year ended December 31, 2002 and 48% of our net sales for
the three month period ended March 31, 2003.  Our distributors may not continue
to effectively market, sell or support our products.  Our ten largest customers,
including our distributors, accounted for approximately 54% of our net sales for
the year ended December 31, 2002, and 61% of our net sales for the three month
period ended March 31, 2003.  Future Electronics, Inc. and Thompson
Conumer Electronics accounted for approximately 20% and 10%
of our net sales for the three-month period ended March 31,
2003.  Concentration of net sales to particular customers may change from period
to period, but we expect that sales to a limited number of customers will
continue to account for a significant percentage of our revenues in any
particular period for the foreseeable future.  The loss of one or more major
customers or any reduction, delay or cancellation of orders by any of these
customers or our failure to market successfully to new customers could harm our
business materially.

We have very few long-term contracts with our customers and, like us, our
customers typically compete in cyclical industries.  In the future, these
customers may decide not to purchase our products at all, to purchase fewer
products than they did in the past, or to alter their purchasing patterns,
particularly because substantially all of our sales are made on a purchase order
or sales order acknowledgment basis, which permits our customers to cancel,
change or delay product purchase commitments upon 30 days notice for standard
products and 60 days notice for custom products.  Customers may still cancel or
reschedule within these time periods, however they routinely incur a
cancellation or rescheduling charge.  This risk is increased because our
customers can purchase some similar products from our competitors.

Changes in technologies or consumption patterns could reduce the demand
for our products

As a result of technological changes, from time to time our customers design
our products out of some devices.  Any resulting decreased sales could reduce
our profitability.  For example, in 1999 and 2000, a number of our customers
changed the designs of computer mouse pointing devices that they manufacture,
and as a result, these devices no longer contain our products.  Because we do
not have long-term supply contracts with most of our customers, changes in the
designs of their products can have sudden and significant impacts on our sales.
For example, net sales of our computer mouse pointing devices and other computer
peripheral products decreased substantially from approximately $15.4 million in
2000 to approximately $4.9 million in 2001, to approximately $2.4 million
for the year ended December 31, 2002 and to approximately $0.4 million for the
three month period ended March 31, 2003. These reduced sales due
to design changes have harmed us in the past and additional design changes could
harm our operating results in the future.

We depend on key personnel, and the loss of our current personnel or our
failure to hire and retain additional personnel could affect our business
negatively.

We depend on our ability to attract and retain highly skilled technical and
managerial personnel.  We believe that our future success in developing
marketable products and achieving a competitive position will depend in large
part on our ability to identify, recruit, hire, train, retain and motivate
highly skilled technical, executive, managerial, marketing and customer service
personnel.  Competition for these personnel is intense, especially in Northern
California, where our headquarters are located, and we may not be able to
successfully recruit, assimilate or retain sufficiently qualified personnel.
Our failure to recruit and retain necessary technical, executive, managerial,
merchandising, marketing and customer service personnel could harm our business
and our ability to obtain new customers and develop new products.  In addition,
our current financial condition could have a negative impact on our ability to
recruit and retain employees.

In January 2002, we entered into an employment agreement with James M.
Thorburn, our Chairman and Chief Executive Officer, pursuant to which we will
make grants of stock options on each of May 13, 2003, and restricted stock
grants on May 13, 2004 and May 13, 2005.  We intended to loan Mr. Thorburn the
funds to pay the income taxes due with respect to these grants, as we have done
with other employees that received grants of restricted stock.  In July 2002,
however, Congress enacted the Sarbanes-Oaxley Act of 2002, which prohibits these
loans.  As a result of this development, we have converted Mr. Thorburn's May
13, 2003 restricted stock grant to stock options and will need to revisit the
terms of our employment arrangement with Mr. Thorburn. There can be no assurance
that we will be able to reach a mutually satisfactory arrangement.

We may fail to protect our proprietary rights and the cost of protecting
those rights, whether we are successful or not, may harm our ability to
compete.

The measures we take to protect our intellectual property rights may be
inadequate to protect our proprietary technologies and processes from
misappropriation, and these measures may not prevent independent third party
development of competitive products.  We may not be able to detect the
unauthorized use of, or take appropriate steps to enforce our intellectual
property rights.  Despite our efforts to protect our proprietary rights in both
the United States and in foreign countries, existing intellectual property laws
in the United States provide only limited protection and, in some cases, the
laws of foreign countries provide even less protection.

Litigation may be necessary in the future to enforce our intellectual
property rights, to protect our trade secrets or to determine the validity and
scope of our proprietary rights or the proprietary rights of others.  Any such
litigation could require us to incur substantial costs and divert significant
valuable resources, including the efforts of our technical and management
personnel, which may harm our business materially.

We could be subject to claims of infringement of third-party intellectual
property rights, which could be time-consuming and expensive for us to
defend.

The semiconductor industry is characterized by frequent claims and related
litigation regarding patent and other intellectual property rights.  Third
parties may assert claims or initiate litigation against us, our licensors, our
foundries, our service providers, or our customers with respect to existing or
future products.  Any intellectual property litigation initiated against us
could subject us to significant liability for damages and attorneys' fees,
invalidation of our proprietary rights, injunctions or other court orders that
could prevent us from using specific technologies or engaging in specific
business activities.  These lawsuits, regardless of their success, would likely
be time-consuming and expensive to resolve and would divert management's time
and attention from our business.  Any potential intellectual property litigation
could also force us to do one or more of the following:

- pay substantial damages;
- cease using key aspects of our technologies or processes that incorporate
the challenged intellectual property;
- cease the manufacture, use, sale, offer for sale and importation of
infringing products;
- alter our designs around a third party's patent;
- obtain licenses to use the technology that is the subject of the litigation
from a third party;
- expend significant resources to develop or obtain non-infringing
technology;
- create new brands for our services and establish recognition of these new
brands; or
- make significant changes to the structure and the operation of our
business.

Implementation of any of these alternatives could be costly and time-
consuming and might not be possible at all.  An adverse determination in any
litigation to which we were a party could harm our business, our results of
operations and financial condition. In addition, we may not be able to develop
or acquire the technologies we need, and licenses to such technologies, if
available, may not be obtainable on commercially reasonable terms.  Any
necessary development or acquisition could require us to expend substantial time
and other resources.

If an infringement against us is successful and we are unable to license the
infringed technology, our business and operating results would be harmed
significantly.

We may engage in acquisitions that could adversely affect our operating
results, dilute our stockholders' equity, or cause us to incur additional debt
or assume contingent liabilities.

To grow our business and maintain our competitive position, we have made
acquisitions in the past and may do so in the future.  For example, in April
1999, we acquired substantially all of the assets and assumed the operating
liabilities of Seattle Silicon Corporation and in July 2000, we acquired
Calibre, Inc.

Acquisitions involve a number of risks that could harm our business and
result in the acquired business not performing as expected, including:

- insufficient experience with technologies and markets in which the acquired
business is involved that may be necessary to successfully operate and integrate
the business;
- problems integrating the acquired operations, personnel, technologies or
products with the existing business and products;
- diversion of management time and attention from our core business and to the
acquired business;
- potential failure to retain key technical, management, sales and other
personnel of the acquired business;
- difficulties in retaining relationships with suppliers and customers of the
acquired business; and
- acquired assets, including intangible assets, may subsequently become
impaired.

In addition, acquisitions could require investment of significant financial
resources and may require us to obtain additional equity financing, which may
dilute our stockholders' equity, or to incur additional indebtedness.

Our reported financial results may be adversely affected by changes in
accounting principles generally accepted in the United States.

We prepare our financial statements in conformity with accounting principles
generally accepted in the United States. These accounting principles are subject
to interpretation by the Financial Accounting Standards Board, the American
Institute of Certified Public Accountants, the Securities and Exchange
Commission and various bodies formed to interpret and create appropriate
accounting policies. A change in these policies or interpretations could have a
significant effect on our reported financial results, and could affect the
reporting of transactions completed before the announcement of a change. For
example, while current accounting rules allow us to exclude the expense of stock
options from our financial statements, influential business policy groups,
including the Financial Accounting Standards Board, have suggested that the
rules be changed to require these options to be expensed. Technology companies
generally, and our company, specifically, rely heavily on stock options as a
major component of our employee compensation packages. If we are required to
expense options, we may be less likely to achieve profitability or we may have
to decrease or eliminate options grants. Decreasing or eliminating option grants
may negatively impact our ability to attract and retain qualified employees.



We are subject to a variety of environmental laws and regulations and our
failure to comply with present or future laws and regulations could harm our
business materially.

Our manufacturing processes require us to use various hazardous substances
and, as a result, we are subject to a variety of governmental laws and
regulations related to the storage, use, emission, discharge and disposal of
such substances. Specifically, the existing process of manufacturing silicon
wafers is based on use of large amounts of corrosive chemicals and huge
quantities of distilled, de-ionized water. Our failure to comply with present or
future laws and regulations or the loss of any permit required to conduct our
business could result in fines being imposed on us, the limitation or suspension
of production or cessation of our operations.  Compliance with any future
environmental laws and regulations could require us to acquire additional
equipment or to incur substantial other expenses.  Any failure by us to control
the use of, or adequately restrict the discharge of, hazardous materials could
subject us to future liabilities that could materially harm our business.  In
addition, we may be required to incur significant expense in connection with
governmental investigations and/or environmental employee health and safety
matters.

Recently enacted and proposed changes in securities laws regulations will
increase our costs.

The Sarbanes-Oxley Act of 2002 that became law in July 2002 requires changes
in some of our corporate governance practices.  The Act also requires the SEC to
promulgate new rules on a variety of subjects.  In addition to final rules and
rule proposals already made by the SEC, NASDAQ has proposed revisions to its
requirements for companies such as us that are OTCBB-listed.  We expect these
new rules and regulations to increase our legal and financial compliance costs,
and to make some activities more difficult, time consuming and/or more costly.
We also expect that these new rules and regulations may make it more costly to
obtain director and officer liability insurance coverage, and we may be required
to accept reduced coverage or incur substantially higher costs to obtain
coverage.  These new rules and regulations could also make it more difficult for
us to attract and retain qualified members of our board of directors,
particularly to serve on our audit committee, and qualified executive
officers.

Risks Related to Our Capital Structure



The agreements governing our credit facility may limit our ability to
finance future operations or capial needs or engage in business activities that
may be in our interest.

The terms of our credit facility contain restrictive covenants that may
impair our ability to take corporate actions that we believe to be in the best
interests of our stockholders, including restricting the ability to:

- dispose of assets;
- incur additional debt;
- prepay other debts or amend some debt instruments;
- pay dividends or repurchase stock;
- create liens on assets;
- enter into sale-leaseback transactions;
- make investments, loans or advances;
- make acquisitions or engage in mergers or consolidations;
- change the business activities conducted by us or our subsidiaries;
- make capital expenditures or engage in specific transactions with
affiliates; and
- otherwise restrict corporate activities.

Item 3.  Quantitative and Qualitative Disclosure About Market Risk

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates primarily
to our short-term investment portfolio and borrowings under our revolving credit
facility.  We do not use derivative financial investments in our investment
portfolio.  Our  primary investment objectives are to preserve capital and
maintain liquidity.  These objectives are met by investing in high-quality
credit issuances and limiting the amount of credit exposure to any one company.
Our policy is to mitigate default risk by investing in only the highest quality
securities and monitoring the credit ratings of such investments.  As of March
31, 2003, our cash equivalents were invested in bank time deposits and money
market funds.  We have no significant cash flow exposure due to rate changes for
our cash equivalents as these instruments have very short maturities.

The table below presents principal amounts and related average rates by year
of maturity for our cash equivalents and debt obligations as of March 31, 2003
(dollars in millions):

`Carrying
                                                       Value      Fair Value
                                                   ------------- -------------
Cash Equivalents:
  Fixed rate .....................................        $19.3         $19.3
  Average interest rate ..........................         0.98%      --

Short Term Debt:
  Variable-rate debt..............................         $5.0          $5.0
  Interest rate...................................          3.9%      --`

Item 4. Controls and Procedures

Evaluation of Controls and Procedures

We maintain disclosure controls and procedures, which we have designed to
ensure that material information related to the Company, including our
consolidated subsidiaries, is made known to the persons preparing our periodic
reports on a regular basis.

Within 90 days before the filing of this report, the Company's
management carried out an evaluation, under the supervision and with the
participation of the Company's Chief Executive Officer, James Thorburn, and the
Company's Chief Financial Officer, Perry Grace, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures.  Based
upon that evaluation, Mr. Thorburn and Mr. Grace concluded that the Company's
disclosure controls and procedures are effective in causing material information
to be collected, communicated and analyzed by management of the Company on a
timely basis and to ensure that the quality and timeliness of the Company's
public disclosures complies with its SEC disclosure obligations.

Changes in Controls and Procedures

There were no significant changes in the Company's internal controls or in
other factors that could significantly affect these internal controls after the
date of our most recent evaluation.

PART II



OTHER INFORMATION

Item 1.  Legal Proceedings

We are participating in litigation and responding to claims
arising in the ordinary course of business.  We intend to defend ourselves
vigorously in these matters.  Our management believes that it is unlikely that
the outcome of these matters will have a material adverse effect on our
financial statements, although there can be no assurance in this regard.

Item 6.  Exhibits and Reports on Form 8-K

`a) Exhibits are filed or incorporated herein by reference as indicated below:

 Exhibit
  Number                          Description
---------- ------------------------------------------------------------------------------
 2.1 (a)   Joint Reorganization Plan, as confirmed by order of the U.S. Bankruptcy
           Court for the Nothern District of California, dated April 30, 2002.

 3.1 (b)   Amended and Restated Certificate of Incorporation of ZiLOG, Inc.

 3.2 (b)   Amended and Restated Bylaws of ZiLOG, Inc.

 4.1 (c)   Form of Restricted Stock Purchase Agreement.

 4.2 (c)   Form of Non-Qualified EBITDA-Linked Option Grant Agreement.

 4.3 (c)   Form of Non-Qualified Non-EBITDA-Linked Option Grant Agreement.

99.1       Certification pursuant to Section 906 of the Sarbanes-Oxley Act.

-----------------------------
(a) Incorporated herein by reference to Exhibit 99.1 to the Company's current report
    on Form 8-K filed with the Commission on May 15, 2002.

(b) Incorporated herein by reference to the item of the same name filed as an exhibit
    to the Company's registration statement on Form S-8 (File No. 333-88416) filed
    with the Commission on May 15, 2002.

(c) Incorporated herein by reference to the item of the same name filed as an exhibit
    to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2002.`

b)   Reports on Form 8-K:





- On April 23, 2003, ZiLOG, Inc. filed a Current Report on Form 8-K announcing
a stock repurchase program.

- On April 24, 2003, ZiLOG, Inc. furnished a Current Report on
Form 8-K announcing its financial results for the quarter ended March 31,
2003.

---

**ZiLOG, INC.

                                   SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



| |            
| | -----------
| | ZiLOG, INC.

| |             
| | ------------
| | (Registrant)



| |     |                   
| | --- | ------------------
| | By: | /s/ Perry J. Grace

| |                                           
| | ------------------------------------------
| |                                           
| | Perry J. Grace                            
| | Vice President and Chief Financial Officer
| | (Duly Authorized Officer)                 



| |     |                      
| | --- | ---------------------
| | By: | /s/ James M. Thorburn

| |                                               
| | ----------------------------------------------
| |                                               
| | James M. Thorburn                             
| | Chairman, Chief Executive Officer and Director
| | (Duly Authorized Officer)                     

Date: May 14, 2003

---

CERTIFICATIONS

I, James M. Thorburn, certify that:

1. 	I have reviewed this quarterly report on Form 10-Q of ZiLOG, Inc.:

2. 	Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

3. 	Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. 	The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5. 	The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and

6. 	The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date:      May 14, 2003

/s/James M. Thorburn

James  M. Thorburn

Chairman and Chief Executive Officer



CERTIFICATIONS

I, Perry J. Grace, certify that:

1. 	I have reviewed this quarterly report on Form 10-Q of ZiLOG, Inc.;

2. 	Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

3. 	Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. 	The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5. 	The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and

6. 	The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date:      May 14, 2003

/s/ Perry J. Grace

Perry J. Grace

Vice President and Chief Financial Officer