Introduction

You should read the following discussion and analysis in conjunction with our condensed consolidated financial statements and the related notes thereto included in this Report on Form 10-Q and with Management's Discussion and Analysis of Financial Condition and Results of Operations contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2008. The discussion in this Report contains forward-looking statements including statements regarding fundamental drivers of long-term growth in the handset market, functional price erosion in the handset market, continued government funding, participation in government programs and expansion of programs in the future, future acquisitions or investments in strategic partners, projected working capital and capital expenditures, potential investment needs, and other statements preceded by terminology such as "believes," "continue," "could," "estimates," "expects," "goal," "hope," "intends," "may," "our future success depends," "plans," "potential," "predicts," "projects," "reasonably," "should," "thinks," "will" or the negative of these terms or other comparable terminology. These statements are only predictions. In addition, historical information should not be considered an indicator of future performance.

A number of factors affect our operating results and could cause our actual future results to differ materially from any forward-looking statements made below, including, but not limited to, those related to expected demand and growth in the wireless handset, broadband, base station, networks, networking and defense & aerospace markets; changes in our critical accounting estimates; the reasonableness of our estimates; the ability to enter into defense & aerospace contracts; our ability to meet our revenue guidance and penetrate our market; expected operating expenses, gross margins and per share earnings; transactions affecting liquidity; expected capital expenditures and other factors and risks referenced in Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2008. In addition, historical information should not be considered an indicator of future performance.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we do not guarantee future results, levels of activity, performance or achievements. Moreover, we do not intend to update any of the forward-looking statements after the date of this Report on Form 10-Q to conform these statements to actual results. These forward-looking statements are made in reliance upon the safe harbor provision of The Private Securities Litigation Reform Act of 1995.

Overview

We are a supplier of high performance modules, components and foundry services for communications applications. Our focus is on the specialized expertise, materials and know-how of RF and other high and intermediate frequency applications. We enjoy diversity in our markets, applications, products, technology and customer base. Our products are designed on various wafer substrates, including compound semiconductor materials such as gallium arsenide ("GaAs"), gallium nitride on silicon carbide ("GaN"), and piezoelectric crystals such as LiTaO3. We use a variety of process technologies using GaAs substrates including heterojunction bipolar transistors ("HBT") and pseudomorphic high electron mobility transistors ("pHEMT"). Using various other substrates we also manufacture surface acoustic wave ("SAW") and bulk acoustic wave ("BAW") products. Using these materials and our proprietary technology, we believe our products can offer key advantages such as steeper selectivity, lower distortion, higher power and power-added efficiency, reduced size and weight and more precise frequency control. For example, GaAs has inherent physical properties that allow its electrons to move up to five times faster than those of silicon. This higher electron mobility permits the manufacture of GaAs integrated circuits that operate at higher levels of performance than silicon devices. We believe that these advantages are a tremendous benefit to our customers, which include major communication companies worldwide.

We are incorporated under the laws of the State of Delaware. Our principal executive offices are located at 2300 N.E. Brookwood Parkway, Hillsboro, Oregon 97124 and our telephone number at that location is (503) 615-9000. Information about the company is also available at our website at www.triquint.com, which includes links to reports we have filed with the Securities and Exchange Commission ("SEC"). The contents of our website are not incorporated by reference in this Report on Form 10-Q.

Strategy and Industry Considerations

Our business strategy is to provide our customers with high-performance, low-cost solutions to applications in the handset, networks and defense & aerospace markets. Our mission is, "Connecting the Digital World to the Global Network™," and we accomplish this through a diversified product portfolio within the communications and defense & aerospace industries. In the handset market, we primarily provide transmit and power amplifier modules. In the networks markets, we are a supplier of both active GaAs and passive SAW components. We provide the defense & aerospace market with phased-array radar antenna components and in 2005 were chosen to be the prime contractor on a Defense Advanced Research Projects Agency ("DARPA") contract to develop high power wide band amplifiers in GaN, a next generation GaAs-derived technology. Subsequently, we have obtained additional funding from DARPA and other government and defense industry sources for development of future generation materials and technologies.

Wafer and semiconductor manufacturing facilities require a significant level of fixed cost due to investments in plant and equipment, labor costs, and repair and maintenance costs. During periods of low demand, selling prices also tend to decrease which, when combined with high fixed manufacturing costs, can create an adverse impact on operating results. During the fourth quarter of

2008 and the first quarter of 2009, demand slowed and as a result, we experienced a corresponding decrease in factory utilization which created downward pressure on gross margins. Demand increased in the second quarter of 2009 resulting in an increase in factory utilization which improved gross margins. The increase in gross margins was offset by inefficiencies associated with the high sequential growth in the second quarter of 2009 after the low demand in the first quarter of 2009 and the ramping of our new BAW filter line.

We experienced 33% overall revenue growth in the second quarter of 2009 compared to the second quarter of 2008, lead by handset growth of 77% and defense & aerospace growth of 41%. The handset growth is primarily attributable to strong growth in 3G and EDGE product revenues with an increase of 195% for the second quarter of 2009 compared to 2008. We produce a highly integrated transmit modules built using our copper flip interconnect technology which allows us to build small, robust and power efficient solutions. The current demand for increased RF content required for the higher data rates and increased functionality of 3G handset devices has allowed average selling prices to stabilize. Our opportunity in a 3G phone, which is quad band capable in the GPRS/GSM/EDGE mode and supports 3 bands in the wideband code division multiple access ("WCDMA") mode, is $6.00 to $8.00 per unit. By comparison, our content for a low cost dual-band GSM/GPRS phone is $0.90 to $1.50 per unit. Typical functional price erosion is 10-15% per year, offset by increasing content. We believe the fundamental drivers of continued long-term growth in the handset market remain solid as the number of new users in developed countries grows and existing users are adopting 3G enabled handsets that offer additional features and functionality compared to a traditional 2G handset. These more sophisticated handsets, sometimes called Smartphones, which incorporate a variety of features, and offer wireless broadband access enabled by 3G technologies, represent one of the fastest growing portions of the handset market. This transition to more sophisticated handsets increases the RF content in each device, increasing our addressable market. Further, China, India and other emerging countries with improving economies are growing the traditional 2G as well as the new 3G market by introducing a new customer base. In the past, however, during times of growing demand we have also experienced significant selling price pressure on some of our highest volume products.

Networks revenue decreased 27% in the second quarter of 2009 compared to 2008 with large declines in most submarkets offset slightly by growth in 3G infrastructure. The decrease was primarily driven by a decline in WLAN revenue due to high inventory buildup in the channel in the third quarter of 2008 that cleared in the second quarter of 2009 with shipments of WLAN products resuming late in the second quarter. This decrease was partially offset by increases in revenue from point-to-point radio and 3G basestation products. Revenue from our networks submarkets are gradually recovering from the softness in the fourth quarter of 2008 and first quarter of 2009 when companies delayed build outs and capital purchases due to the economic conditions. Our networks market includes products that support the transfer of data at high rates across wireless or fixed line networks. Our products for this market include those related to base station, wireless client, transport, and emerging markets. Wireless client includes submarkets such as wireless local area networks ("WLANs"), worldwide interoperability for microwaved access ("WiMAX") and global positioning system ("GPS"). Transport includes submarkets such as cable, microwave radio, satellite, groundstation, and optical communications. We also support emerging wireless markets such as automotive and radio-frequency identification ("RFID"). We include our multi-market standard products in the emerging markets category.

Revenues from the defense & aerospace market are generally for products in large scale programs with long lead-times. Once a component has been designed into an end-use product for a defense & aerospace application, the same component is generally used during the entire production life of the end-use product. Currently, we are actively engaged with multiple defense & aerospace industry contractors in the development of next-generation phased-array systems and have key design wins in major projects such as the F-35 Joint Strike Fighter ("JSF") and Active Electronically Scanned Array ("AESA") airborne radar. In addition, in 2005 we entered into a multi-year contract with DARPA to develop high power, wide band amplifiers in GaN. We are currently executing phase III of our DARPA GaN contract which represents approximately $16 million of revenue over 2 years. From the Office of Naval Research, we were awarded a $4.5 million, 2 year contract to advance manufacturing methods in the production of GaAs technologies. We expect to continue to win government funding for advanced technologies in the future and to participate in other large projects such as the B-2 radar upgrade. In 2008, we launched a new family of GaN power amplifier products and PowerBand, a disruptive new technology enabling wide bandwidth with output power and efficiency performance previously restricted to narrow band amplifiers. These products also have crossover application in our aerospace and networks markets. During the second quarter of 2009 we received increased contract-based revenue for research sponsored by the US government and defense industry as compared to the same period in 2008 when we saw a pause in funding between phases of a major program.

On an ongoing basis, we review acquisition and investment opportunities that would strengthen our product lines, expand our market presence and complement our technologies. We will continue to evaluate strategic opportunities available to us and we may pursue product, technology or business acquisitions or investments in strategic partners.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires us to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Some of our accounting policies require us to make difficult and subjective

judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Our accounting policies involve critical accounting estimates because they are particularly dependent on estimates and assumptions made by management about matters that are highly uncertain at the time the accounting estimates are made. While we have used our best estimates based on facts and circumstances available to us at the time, different estimates reasonably could have been used. Changes in the accounting estimates we use are reasonably likely to occur from time to time, which may have a material impact on the presentation of our financial condition and results of operations. Our most critical accounting estimates include revenue recognition; the valuation of inventory, which impacts gross margin; assessment of recoverability of long-lived assets, which primarily impacts operating expense when we impair assets or accelerate depreciation; valuation of investments and debt in privately held companies, which impacts net income when we record impairments; valuation of deferred income tax assets and liabilities, which impacts our tax provision; and stock-based compensation, which impacts cost of goods sold and operating expenses. We also have other policies that we consider to be key accounting policies, such as our policies for the valuation of accounts receivable, reserves for sales returns and allowances, reserves for warranty costs and our reserves for commitments and contingencies; however, these policies either do not meet the definition of critical accounting estimates described above or are not currently material items in our financial statements. We review our estimates, judgments, and assumptions periodically and reflect the effects of revisions in the period in which they are deemed to be necessary. We believe that these estimates are reasonable; however, actual results could differ from these estimates.

Revenue Recognition

We derive revenues primarily from the sale of standard and customer-specific products and foundry services in the handset, networks and defense & aerospace markets. We also receive revenues from non-recurring engineering fees and cost-plus contracts for research and development work, which collectively are between 5% and 10% of consolidated revenues for any period. Our handset distribution channels include our direct sales staff, manufacturers' representatives and independent distributors. The majority of our shipments are made directly to our customers. Revenues from the sale of standard and customer-specific products are recognized when title to the product passes to the buyer.

We receive periodic reports from customers who utilize inventory hubs and recognize revenues when the customers acknowledge they have pulled inventory from our hub, which is the point at which title to the product passes to the customer.

Revenues from foundry services and non-recurring engineering fees are recorded when the service is completed. Revenues from cost plus contracts are recognized as costs are incurred.

Revenues from our distributors are recognized when the product is sold to the distributors. Our distributor agreements provide for selling prices that are fixed at the date of sale, although we offer price protections, which are specific, of a fixed duration and for which we reserve. Further, the distributors are obligated to pay the amount and the price or payment obligation is not contingent on reselling the product. The distributors take title to the product and bear substantially all of the risks of ownership; the distributors have economic substance; and we have no significant obligations for future performance to bring about resale. We can reasonably estimate the amount of future returns. Sales to our distributors were less than 10% of our total revenues for the three and six months ended June 27, 2009 and approximately 20% for the same period in 2008. We allow our distributors to return products for warranty reasons and give them stock rotation rights, within certain limitations, and reserve for such instances. Customers that are not distributors can only return products for warranty reasons. If we are unable to repair or replace products returned under warranty, we will issue a credit for a warranty return.

Inventories

We state our inventories at the lower of cost or market. We use a combination of standard cost and moving average cost methodologies to determine our cost basis for our inventories. This methodology approximates actual cost on a first-in, first-out basis. In addition to stating our inventory at the lower of cost or market, we also evaluate it each period for excess quantities and obsolescence. We analyze forecasted demand versus quantities on hand and reserve for the excess.

Long-Lived Assets

We evaluate long-lived assets for impairment of their carrying value when events or circumstances indicate that the carrying value may not be recoverable. Factors we consider in deciding when to perform an impairment review include significant negative industry or economic trends, significant changes or planned changes in our use of the assets, plant closure or production line discontinuance, technological obsolescence, or other changes in circumstances which indicate the carrying value of the assets may not be recoverable. If such an event occurs, we evaluate whether the sum of the estimated undiscounted cash flows attributable to the assets in question is less than their carrying value. If this is the case, we recognize an impairment loss to the extent that carrying value exceeds fair value. Fair value is determined based on market prices or discounted cash flow analysis, depending on the nature of the asset and the availability of market data. Any estimate of future cash flows is inherently uncertain. The factors we take into consideration in making estimates of future cash flows include product life cycles, pricing trends, future capital needs, cost trends, product development costs, competitive factors and technology trends as they each affect cash inflows and outflows. If an asset is written down to fair value, that value becomes the asset's new carrying value and is depreciated over the remaining useful life of the asset.

Investments in Privately Held Companies

In previous years, we made a number of investments in small, privately held technology companies in which we held less than 20% of the capital stock or held notes receivable. We account for all of these investments at cost unless their value has been determined to be other than temporarily impaired, in which case we write the investment down to its estimated fair value. We review these investments periodically for impairment and make appropriate reductions in carrying value when an other-than-temporary decline is evident; however, for non-marketable equity securities, the impairment analysis requires significant judgment. During our review, we evaluate the financial condition of the issuer, market conditions, and other factors providing an indication of the fair value of the investments. Adverse changes in market conditions or operating results of the issuer that differ from expectation could result in additional other-than-temporary losses in future periods.

In addition, as a result of the sale of our former optoelectronics operations, we received as partial consideration $4.5 million of preferred stock in CyOptics, Inc. ("CyOptics") and an unsecured promissory note from CyOptics for $5.6 million, that was discounted by $2.3 million to reflect the current market rate for similar debt of comparable companies. CyOptics paid $0.7 million towards the promissory note for the six months ended June 27, 2009 and $0.9 million for the six months ended June 28, 2008. On October 9, 2007, we participated in an additional bridge financing where we purchased $0.5 million of a subordinated convertible promissory note from CyOptics which converted into preferred stock on July 24, 2008. In December 2008, we received a letter of intent from Millennium Partners ("Millennium") and signed a definitive agreement to sell the preferred stock and debt to Millennium for approximately $3.8 million, inclusive of certain purchase adjustments. On February 13, 2009, we received notice from Millennium indicating that it no longer wished to pursue completion of the purchase of our preferred stock and that it believed it had the right to purchase the note for $1.0 million. We dispute Millennium's interpretation of the agreement and do not believe any transaction with them is probable. The carrying value of the investments is $2.4 million as of June 27, 2009.

Income Taxes

We are subject to taxation from federal, state and international jurisdictions. A significant amount of management judgment is involved in preparing our annual provision for income taxes and the calculation of resulting deferred tax assets and liabilities. We evaluate liabilities for estimated tax exposures in jurisdictions of operation which include federal, state and international tax jurisdictions. Significant income tax exposures include potential challenges on foreign entities, merger, acquisition and disposition transactions and intercompany pricing. Exposures are settled primarily through the completion of audits within these tax jurisdictions, but can also be affected by other factors. Changes could cause management to find a revision of past estimates appropriate. The liabilities are frequently reviewed by management for their adequacy and appropriateness. As of June 27, 2009, we were not under audit by U.S. income taxing authorities. We have previously concluded federal income tax audits for the U.S. consolidated tax group on earlier years, most recently for the years 2000 and 2001. During the first quarter of 2009, a 2004 to 2007 German tax audit of our subsidiary, TriQuint Semiconductor GmbH, was completed, with no adjustments. Tax periods within the statutory period of limitations not previously audited are potentially open for examination by the taxing authorities. Potential liabilities associated with these years will be resolved when an event occurs to warrant closure, primarily through the completion of audits by the taxing jurisdictions and/or the expiration of the statutes of limitation. To the extent audits or other events result in a material adjustment to the accrued estimates, the effect would be recognized during the period of the event. Management believes that an appropriate estimated liability has been established for potential exposures.

In January 2008, we made a $63.3 million dividend distribution from our Costa Rica subsidiary. Of the $63.3 million dividend, the majority was from previously taxed income with the remainder taxed in 2008 on which a deferred tax liability was established in prior years. No provision has been made for the U.S, state or additional foreign income taxes related to approximately $99.0 million of undistributed earnings of foreign subsidiaries which have been, or are, intended to be permanently reinvested.

In 2002, we determined that a valuation allowance should be recorded against all of our deferred tax assets based on the criteria of Statement of Financial Accounting Standards ("SFAS") No. 109, Accounting for Income Taxes. We record the valuation allowance to reduce deferred tax assets when it is more likely than not that some portion, or all of the deferred tax assets may not be realized. We consider future taxable income and prudent and feasible tax planning strategies in determining the need for a valuation allowance and evaluate the need for a valuation allowance on a regular basis.

In assessing the realizability of our deferred tax assets, we considered the four sources of taxable income. Because we have no carryback ability and have not identified any viable tax planning strategies, two of the sources are not available. Reversing taxable temporary differences have been properly considered as the deferred tax liabilities reverse in the same period as existing deferred tax assets. However, reversing the deferred tax liabilities is insufficient to fully recover existing deferred tax assets. Therefore, future taxable income, the most subjective of the four sources, is the remaining source available for realization of our net deferred tax assets.

Significant operating losses in the first quarter of 2009, the years ended 2008, 2005 and prior years, modest earnings levels in other recent years that are highly sensitive to changes in the business environment, instances of missed projections, the cyclical nature of our industry and the recent significant economic uncertainties in the market have been important in concluding that projected future taxable income is too uncertain to be used as justification for the realization of deferred tax assets. For example, the pre-tax loss for the year ended 2008 was below earlier projections. Subsequently, a number of events have made forecasting taxable income even more difficult. The substantial slow down in the world economy has also heightened the risk of a material reduction in business levels. Our customers and competitors have noted similar uncertainties regarding the performance of our industry. In addition, during the second and third quarters of 2008, we added significant capacity and fixed costs to respond to growth in demand, adding more risk to taxable income should sales decline. Finally, our third quarter 2008 earnings were negatively impacted by the unpredictable volatility in platinum pricing which resulted in higher costs that could not be passed on to customers. Our first quarter of 2009 operating loss combined with a highly uncertain economic environment indicates continued need for the valuation reserve.

Stock-Based Compensation

There were no significant changes to our stock-based compensation accounting estimates and assumptions in the three and six months ended June 27, 2009. Refer to our most recent Annual Report on Form 10-K for a complete description of our stock-based compensation accounting estimates and assumptions.

Results of Operations

The following table sets forth the results of our operations expressed as a
percentage of revenues for the three and six months ended June 27, 2009 and
June 28, 2008:



                                                 Three Months Ended           Six Months Ended
                                               June 27,      June 28,      June 27,       June 28,
                                                 2009          2008          2009           2008
Revenues                                          100.0 %       100.0 %       100.0 %        100.0 %
Cost of goods sold                                 67.7          65.4          73.0           65.4

Gross profit                                       32.3          34.6          27.0           34.6
. . .