SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, that relate to our plans, objectives, estimates and goals. Statements expressing expectations regarding our future and projections relating to products, sales, revenues and earnings are typical of such statements and are made under the Private Securities Litigation Reform Act of 1995. Words such as "expect," "anticipate," "intend," "plan," "believe," and "estimate," and variations of such words and similar expressions, identify such forward-looking statements. Our business is subject to numerous risks and uncertainties, including the following:

• The rate of growth and development of wireless markets;

• The risk that variability in consumer, enterprise, infrastructure and government spending resulting from negative global macroeconomic conditions could materially impact the demand for our products;

• The inability of certain of our customers to access their traditional sources of credit to finance the purchase of products from us, which could lead them to reduce their level of purchases or seek credit or other accommodations from us;

• The risk that certain of our suppliers may be unable to access their traditional sources of credit to finance their operations, which could lead them to reduce their level of support for us;

• Our ability to integrate acquired companies, including the risk that we may not realize expected synergies from our business combinations;

• The risks associated with the planned exit from our wireless systems business, including cellular transceivers and GPS solutions;

• The risks associated with the operation of our molecular beam epitaxy (MBE) facility, our wafer fabrication facilities, our assembly facility and our test and tape and reel facilities;

• Our ability to execute on our plans to consolidate or relocate manufacturing operations;

• The risk that the actual amount of our non-cash impairment charges may vary from estimates;

• Our ability to attract and retain skilled personnel and develop leaders for key business units and functions;

• Dependence on third parties, including wafer foundries, passive component manufacturers, assembly and packaging suppliers and test and tape and reel suppliers;

• Our reliance on inclusion in third party reference designs for a portion of our revenue;

• Variability in operating results;

• Variability in production yields, raw material costs and availability;

• Dependence on a limited number of customers for a substantial portion of our revenues;

• Dependence on gallium arsenide (GaAs) heterojunction bipolar transistor (HBT) for the majority of our products;

• Our ability to reduce costs and improve margins by implementing innovative technologies in response to declining average selling prices;

• Our ability to adjust production capacity in a timely fashion in response to changes in demand for our products;

• Our ability to bring new products to market in response to market shifts and to use technological innovation to shorten time-to-market for our products;

• Currency fluctuations, tariffs, trade barriers, taxes and export license requirements and health and security issues associated with our foreign operations;

• Our ability to maintain our existing material goodwill and long-lived assets, including finite-lived acquired intangible assets;

• Our ability to obtain patents, trademarks and copyrights, maintain trade secret protection and operate our business without infringing on the proprietary rights of other parties;

• Our ability to comply with changes in environmental laws;

• Our reliance on the methods, estimates and judgments that we use in applying our critical accounting policies and estimates;

• Negative conditions in the global credit markets, which could impair the liquidity of a portion of our investment portfolio; and

• Uncertainties related to the effectiveness of our internal control over financial reporting.

These and other risks and uncertainties, which are described in more detail in our most recent Annual Report on Form 10?K and in other reports and statements that we file with the Securities and Exchange Commission, could cause the actual results and developments to be materially different from those expressed or implied by any of these forward-looking statements. Forward-looking statements speak only as of the date they were made and we undertake no obligation to update or revise such statements, except as required by the federal securities laws.

OVERVIEW

The following Management's Discussion and Analysis ("MD&A") is intended to help the reader understand the results of operations and financial condition of RF Micro Devices, Inc. MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and accompanying notes.

We are a global leader in the design and manufacture of high-performance semiconductor components. Our products enable worldwide mobility, provide enhanced connectivity and support advanced functionality in the cellular handset, wireless infrastructure, wireless local area network (WLAN), CATV/broadband and aerospace and defense markets. We are recognized for our diverse portfolio of semiconductor technologies and RF systems expertise and we are a preferred supplier to the world's leading mobile device, customer premises and communications equipment providers. We believe our company is the world's largest manufacturer of compound semiconductors.

Critical Accounting Policies and Estimates

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," included in our Annual Report on Form 10-K for the fiscal year ended March 29, 2008.

THIRD QUARTER FISCAL 2009 FINANCIAL AND OPERATIONAL HIGHLIGHTS:

• Quarterly revenue decreased by 24.7% as compared to the corresponding quarter of fiscal 2008, primarily due to lower demand for our products attributable primarily to the overall global economic slowdown.

• Operating loss was $754.0 million for the third quarter of fiscal 2009 as compared to an operating loss of $24.4 million for the corresponding quarter of fiscal 2008. As a result of lower current and forecasted demand for our products attributable primarily to the overall global economic slowdown, we recorded an impairment charge of $673.0 million to goodwill and intangibles, tangible asset impairments of $46.1 million and a $6.6 million charge related to our exit from a leased facility during the third quarter of fiscal 2009. In addition, we recorded restructuring expenses of approximately $4.7 million during the third quarter of fiscal 2009 as a result of the restructuring initiated in the first quarter of fiscal 2009 to reduce investments in wireless systems.

• Gross margin for the quarter was 19.0% as compared to 26.2% in the corresponding quarter of fiscal 2008. This decrease was primarily due to an increase in amortization expense related to acquired intangibles, a $25.9 million increase in inventory reserves as well as lower factory utilization rates resulting from lower current and forecasted demand for our products attributable primarily to the overall global economic slowdown. These decreases were partially offset by a decrease in amortization for inventory step-up related to our acquisition of Sirenza and a shift in product mix to higher margin products and license fee revenue.

• Cash flow from operations was $45.8 million for the three months ended December 27, 2008.

• Capital expenditures totaled $5.6 million for the three months ended December 27, 2008 as compared to $42.6 million in the corresponding period of fiscal 2008.

• Inventory totaled $151.3 million at December 27, 2008, reflecting total inventory reserves of $50.3 million. Inventory reserves increased approximately $25.9 million in the third quarter of fiscal 2009 as a result of the significant reduction in current and forecasted demand for our products, attributable primarily to the overall global economic slowdown.

• Other income included a gain of approximately $10.7 million in the third quarter of fiscal 2009 as a result of our repurchase of $33.2 million par value convertible subordinated notes due 2010 and 2014.

The following table presents a summary of our results of operations for the three- and nine-months ended December 27, 2008 and December 29, 2007:

                                      Three Months Ended
(In thousands,  December 27, 2008    % of Revenue   December 29,    % of Revenue       Increase     Percentage
except                                                  2007                          (Decrease)      Change
percentages)

Revenue         $         202,025          100.0  %  $   268,182          100.0  %    $  (66,157)       (24.7) %
  Cost of                 163,613           81.0         197,872           73.8          (34,259)       (17.3)
goods sold
  Research and             38,617           19.1          53,921           20.1          (15,304)       (28.4)
development
  Marketing                15,511            7.7          14,371            5.4            1,140          7.9
and selling
  General and              10,613            5.2          11,015            4.1             (402)        (3.6)
administrative
  Other                   727,697          360.2          15,419            5.7          712,278      4,619.5
operating
expense

                                       Nine Months Ended
(In thousands,  December 27, 2008    % of Revenue   December 29,    % of Revenue       Increase     Percentage
except                                                  2007                          (Decrease)      Change
percentages)

Revenue         $         714,186          100.0  %  $   735,626          100.0  %    $  (21,440)        (2.9) %
  Cost of                 526,676           73.7         516,353           70.2            10,323         2.0
goods sold
  Research and            135,034           18.9         150,421           20.5          (15,387)       (10.2)
development
  Marketing                51,186            7.2          39,513            5.4            11,673        29.5
and selling
  General and              39,453            5.5          29,620            4.0             9,833        33.2
administrative
  Other                   774,611          108.5          17,788            2.4           756,823     4,254.7
operating
expense

REVENUE

Our revenue decreased during the three- and nine-months ended December 27, 2008, as compared to the corresponding periods of fiscal 2008, primarily due to lower demand for our products attributable primarily to the overall global economic slowdown.

International shipments (based on the "bill to" address of the customer) were $165.4 million and accounted for 81.9% of revenue for the three months ended December 27, 2008, compared to $243.2 million and 90.7% of revenue for the three months ended December 29, 2007. For the nine months ended December 27, 2008, international shipments were $575.2 million, or 80.5% of revenue, compared to $664.4 million, or 90.3% of revenue, for the nine months ended December 29, 2007.

OPERATING LOSS

We experienced operating losses of approximately $754.0 million and $812.8 million for the three- and nine-months ended December 27, 2008, respectively. As a result of the lower current and forecasted demand for our products attributable primarily to the overall global economic slowdown, we recorded an impairment charge of $673.0 million to goodwill and other intangibles, tangible asset impairments of $46.1 million and a $6.6 million charge related to our exit from a leased facility during the third quarter of fiscal 2009. In addition, we recorded restructuring expenses of approximately $4.7 million during the third quarter of fiscal 2009 as a result of the restructuring initiated in the first quarter of fiscal 2009 to reduce investments in wireless systems.

Our operating losses of approximately $24.4 million and $18.1 million for the three- and nine-months ended December 29, 2007, respectively, were attributable to increased expenses associated with the acquisition of Sirenza on November 13, 2007, including the $13.9 million charge to "other operating expense" related to the in-process research and development with no alternative future use.

Cost of Goods Sold

Our cost of goods sold for the three months ended December 27, 2008 decreased $34.3 million as compared to the corresponding period of fiscal 2008 due to decreased revenue, and increased to 81.0% of revenue as compared to 73.7% for the corresponding period of fiscal 2008. The increase in cost of goods sold as a percentage of revenue was directly attributable to the increase in amortization expense related to acquired intangibles and a $25.9 million increase in inventory reserves as well as the lower factory utilization rates that resulted from the lower current and forecasted demand for our products attributable primarily to the overall global economic slowdown. These increases were partially offset by a decrease in amortization expense for inventory step-up related to our acquisition of Sirenza and a shift in product mix to higher margin products in the third quarter of fiscal 2009.

Our cost of goods sold for the nine months ended December 27, 2008 increased primarily due to the amortization of acquired intangibles and the increase in inventory reserves. The increase in amortization expense of acquired intangibles resulted from our recent acquisitions of Sirenza in the third quarter of fiscal 2008, Filtronic in the fourth quarter of fiscal 2008, and UMC in the first quarter of fiscal 2009. The increase in the inventory reserves resulted from the lower current and forecasted demand for our products attributable primarily to the overall global economic slowdown.

Research and Development

The decrease in research and development expenses for the three- and nine-months ended December 27, 2008 was primarily a result of the restructuring initiated in the first quarter of fiscal 2009 to reduce investments in wireless systems.

Marketing and Selling

The increase in marketing and selling expenses for the three- and nine-months ended December 27, 2008 was primarily due to an increase in intangible amortization related to acquired customer relationships from Sirenza as well as an increase in headcount and related personnel expenses, which was attributable in part to our recent acquisitions.

General and Administrative

The increase in general and administrative expenses for the three- and nine-months ended December 27, 2008 was due to an increase in headcount and related personnel expenses attributable in part to both our recent acquisitions and an increase in share-based compensation expense.

Other Operating Expense

Goodwill Impairment

As a result of an interim impairment review, we subsequently concluded that as of November 22, 2008, the fair value of both of our reporting units was below their respective carrying values. As such, we began a preliminary step-two analysis in accordance with SFAS 142. Due to the complexities involved in determining the implied fair value of the goodwill of each reporting unit, the step-two analysis has not been completed. Based on the work performed and in accordance with paragraph 22 of SFAS 142, we recorded an estimated goodwill impairment charge in the amount of $609.0 million in "other operating expense" in the condensed consolidated statements of operations for the three- and nine-month periods ended December 27, 2008. We expect to finalize our goodwill impairment analysis during the fourth quarter of fiscal 2009. Material adjustments to the goodwill impairment charge could be made when the goodwill impairment test is completed. Any adjustments to our preliminary estimates as a result of completing this evaluation will be recorded in our financial statements for the quarter ending March 28, 2009 (see Note 7 to the Condensed Consolidated Financial Statements).

Intangible Assets

We performed an impairment analysis of our finite-lived intangible assets based on a comparison of the undiscounted cash flows to the recorded carrying value of the intangible assets and it was determined that an impairment indicator was present. As a result of the impairment indicator, we were required to determine the fair value of our finite-lived intangible assets and compare the fair value to the carrying value. The value of acquired developed technology was determined by discounting forecasted cash flow directly related to the developed technology, net of returns on contributory assets. The value of acquired customer relationships is based on the benefit derived from the incremental revenue and related cash flow as a direct result of the customer relationship. These forecasted cash flows are discounted to present value using an appropriate discount rate. As a result, the carrying value exceeded the fair value and we recorded impairments of $31.9 million related to developed technology and $32.2 million related to customer relationships. The impairment charges were recorded in "other operating expense" in the condensed consolidated statements of operations for the three- and nine-month periods ended December 27, 2008 (see Note 7 to the Condensed Consolidated Financial Statements).

Restructuring and Impairment of Property and Equipment

In the third quarter of fiscal 2009, we initiated a restructuring to reduce our manufacturing capacities and costs due to lower demand for our products in the quarter as well as lower forecasted demand attributable primarily to the overall global economic slowdown. The restructuring will decrease our workforce in our fabrication facilities and impair certain related fabrication assets. As a result of these restructuring activities, we recorded $53.3 million of expenses for the three- and nine-month periods ended December 27, 2008 (see Note 10 to the condensed Consolidated Financial Statements).

In the first quarter of fiscal 2009, we initiated a restructuring to reduce investments in wireless systems, including cellular transceivers and GPS solutions, in order to focus on our RF component opportunities. Additionally, we have consolidated our production test facilities in an effort to reduce cycle time, better serve our customer base and improve our overall profitability. As a result of these restructuring activities, we recorded $4.7 million and $48.4 million of expenses for the three- and nine-month periods ended December 27, 2008, respectively (see Note 10 to the Condensed Consolidated Financial Statements).

Other

In the third quarter of fiscal 2009, we recorded $3.5 million in "other operating expense" for the sale of patents related to certain of our products. In addition, in the first quarter of fiscal 2009 we recorded $1.4 million in expenses related to the in-process research and development with no alternative future use that we acquired from UMC to "other operating expense" at the acquisition date in accordance with SFAS 141, "Business Combinations" (see Note 11 to the Condensed Consolidated Financial Statements).

In the third quarter of fiscal 2008, in-process research and development with no alternative future use that we acquired from Sirenza ($13.9 million) was charged to "other operating expense" at the acquisition date in accordance with SFAS 141, "Business Combinations."

OTHER (EXPENSE) INCOME AND INCOME TAXES

                                  Three Months Ended               Nine Months Ended
                             December 27,    December 29,     December 27,    December 29,
                                 2008            2007             2008            2007

Interest expense             $     (2,501)    $    (2,639)    $     (7,765)    $    (7,625)
Interest income                       943           6,955            4,329          24,754
Gain on the retirement of
convertible  subordinated
notes                              10,667              -            10,667              -
Other (expense) income             (5,294)          1,654           (3,783)          2,282
Income tax (expense)              (63,132)          3,369          (39,919)         21,645
benefit

Interest Expense
Interest expense remained relatively consistent for the three- and nine-month periods ended December 27, 2008 as compared to the three- and nine-month periods ended December 29, 2007.

Interest Income
Interest income decreased primarily because of the decrease in cash, cash equivalents and investment balances. During the first nine months of fiscal 2008, interest income was higher due to the increase in cash, cash equivalents and investment balances that resulted from the issuance of the two series of convertible subordinated notes for which we received proceeds totaling $366.2 million. A portion of these proceeds were subsequently used during the third quarter of fiscal 2008 for the purchase of Sirenza. In addition, interest income decreased due to our more conservative investment strategy coupled with lower prevailing interest rates.

Gain on the retirement of convertible subordinated notes

In the third quarter of fiscal 2009 we repurchased $33.2 million par value convertible subordinated notes due 2010 and 2014, which resulted in a gain of approximately $10.7 million.

Other Income

The decrease in other income is primarily related to foreign currency exchange rate impact on our denominated Euro and Sterling accounts as the rates weakened against the U.S. dollar.

Income Taxes

In accordance with APB Opinion No. 28, "Interim Financial Reporting," our provision for income taxes for the reporting periods ended December 27, 2008 has been calculated by applying an estimate of the annual effective tax rate for the full fiscal year to "ordinary" income or loss (pre-tax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period. For the reporting periods ended December 29, 2007, in accordance with paragraph 13 of FASB interpretation No. 18, "Accounting for Income Taxes in Interim Periods" ("FIN 18"), we computed our provision for income taxes limiting the tax benefit recognized to the amount determined by treating our year-to-date "ordinary" loss as the anticipated "ordinary" loss for the fiscal year. We applied this provision as the year-to-date "ordinary" loss exceeded the anticipated "ordinary" loss for the fiscal year.

In accordance with FASB Statement 109, "Accounting for Income Taxes," as of the end of the reporting period ended December 27, 2008 the Company evaluated the realizability of its deferred tax assets and increased the valuation reserves for the deferred tax assets in the United Kingdom, China, and the United States. This increase in the deferred tax asset valuation reserves was made after management determined that it is "more likely than not" that those deferred tax assets will not be realized. The increase in valuation reserve for deferred tax assets resulted in a non-cash expense during the three- and nine-month periods ended December 27, 2008.

Income tax expense for the three months ended December 27, 2008 was $63.1 million, which is comprised primarily of a tax expense related to domestic and international operations, and a tax expense related to an increase in the United States, the United Kingdom, and the China deferred tax asset valuation reserves. Income tax expense for the nine months ended December 27, 2008 was $39.9 million, which is comprised primarily of a tax benefit related to domestic operations, offset by a tax expense related to international operations, and a tax expense related to an increase in the United States, the United Kingdom, and the China deferred tax asset valuation reserves. Income tax benefit for the three months ended December 29, 2007 was $3.4 million, comprised primarily of a tax benefit related to an increase in federal income tax credits and a tax benefit related to international and domestic operations. Income tax benefit for the nine months ended December 29, 2007 was $21.6 million, which is comprised primarily of a tax benefit related to a reduction in the federal and state deferred tax asset valuation reserve, tax benefit from the revaluation of China related deferred tax assets, tax expense related to an Internal Revenue Service examination, and tax expense related to income taxes on international and domestic operations.

LIQUIDITY AND CAPITAL RESOURCES

We have funded our operations to date through sales of equity and debt securities, bank borrowings, capital equipment leases and revenue from product sales. Through public and Rule 144A securities offerings, we have raised approximately $1,053.3 million, net of offering expenses. As of December 27, 2008, we had working capital of approximately $405.7 million, including $145.4 million in cash and cash equivalents, compared to working capital at December 29, 2007 of $639.6 million, including $195.2 million in cash and cash equivalents. The decrease in working capital of $233.9 million as of December 27, 2008, as compared to December 29, 2007, was primarily due to the total cash paid of approximately $46.2 million for the acquisitions of Filtronic and UMC and repurchases of shares of our common stock valued at approximately $98.7 million during the fourth quarter of fiscal 2008, as well as total cash paid of approximately $22.2 million for the retirement of a portion of our convertible subordinated notes in the third quarter of fiscal 2009.

The recent and unprecedented disruption in the credit markets has had a significant adverse impact on a number of financial institutions that provide capital, as well as on our customers and suppliers that depend on borrowing such capital to fund their liquidity requirements. Because we rely primarily on cash on hand and cash generated from operations to fund our business (as opposed to revolving credit or similar borrowing facilities), our liquidity has not been materially impacted by the current credit environment and management does not expect that it will be materially impacted during the fourth quarter of fiscal 2009. Our management plans to continue to closely monitor our liquidity and developments in the credit markets.

Cash Flows from Operating Activities
Operating activities for the nine months ended December 27, 2008 generated cash of $82.5 million, compared to $99.0 million for the nine months ended December 29, 2007. During the third quarter of fiscal 2009, we experienced lower demand . . .