2000annual report

the facesthat create our technology

By any measure, Microsemi’s Fiscal Year2000 provided a fitting conclusion to themillennium past, and a solid beginning forthe one ahead.

It was a year of convergence — a year inwhich the talents of our people, theexpansion of our technologies, and theneeds of the markets we serve cametogether so firmly that today some might betempted to call Microsemi reborn.

While Microsemi is not new, it mostcertainly is reinvigorated by thedemonstrable success of our nicheproduct/niche market growth strategy, inbalance with our high-value legacybusiness. Beyond any doubt we proved thewisdom of this approach in Fiscal Year2000, achieving an historic turning point forMicrosemi in the years ahead.

Today, Microsemi’s strategy is fullysupported by the key technologicalstrengths of Linfinity Microelectronics, theSemiconductor Operations of L3 NardaEast and the HBT Business ProductsGroup of Infinesse, all recent acquisitions.In this respect — combined with ourformation of the Microsemi MicroPoweroperations — Microsemi might, in fact, beconsidered “new.”

However grand our plans, success stillrelies ultimately on the minds, energy andmotivation of the Microsemi peopleresponsible for executing them. With that inmind, I am pleased that this year’s AnnualReport showcases the faces of manycontributors to our remarkable year. Theyrepresent all our employees worldwide

ABOVE:Philip Frey, Jr., Microsemi Chairman, andJames J. Peterson, President and CEO.

FACING PAGE:Fab leader Tuan Le and his production teamhelped our RF Products Division,Montgomeryville, PA, to grow more than50% this past year.

COVER:Linfinity’s George Henry takes pride in theRangeMAX® backlight inverter circuit thatpowers Compaq’s iPAQ color display.

president’s letterwhose efforts fueled Microsemi’sgrowth in Fiscal Year 2000.

For our shareholders, we are pleasedto report a year in which the value ofMicrosemi’s stock appreciated asmuch as 413%. While we are notimmune to broad-based stock marketfluctuations, the fundamental strengthof our diverse business directionremains positive and is trendingupward.

Microsemi’s vitality was affirmed inJune by the rapid success of aSecondary Offering of 2.3 millionshares of our common stock. With thenearly $50 million in proceeds, wewere able to retire all of our bank debt,leaving only real estate loans inplace. Our financial foundation isexceptionally sound.

Future Microsemi achievements andearnings growth will demandattracting and retaining qualityprofessionals. This is a particularlychallenging objective today. Thus itwas with enthusiasm that Microsemilaunched a new employee stockoption program during Fiscal Year2000. This is a necessary investmentfor success, particularly in thecompetitive realm of high technology.

On a personal note, Microsemi’sFiscal Year 2000 was the last undermy direct management. As you mayknow, after 28 years as President andChief Executive Officer, I was pleasedto be able to pass the reins of the

Company over to Jim Peterson inNovember. Jim joined ourmanagement team in 1999, with theacquisition of Linfinity, and has beena valued contributor ever since. Ibelieve his seasoned leadershipskills in the semiconductor industrybode well for the future of Microsemi,and I look forward to his futureachievements on behalf of all of us.

For now, let me again offer mypersonal thanks to all our customers,shareholders, suppliers andemployees for your long-term andongoing support of our company.I am confident there will be manyoutstanding opportunities for you toshare with Microsemi in the year2001 and beyond.

focusapplications & strategy

FACING PAGE:Paul Pickle and Roger Holliday sketch outa new system solution for PDAbacklighting being developed atMicrosemi’s Linfinity Power ManagementGroup, Garden Grove, CA.

TOP :Cheryl Reid, Bob Preston and Ken Philpotcheck the quality of microscopic MMSMflip chip devices produced for fixedmicrowave and wireless LAN applicationsat our Microwave Division, Lowell, MA.

ABOVE:Gary Warren, Dr. Jai Lai and Dr. Truc Vureview plans for the gallium arsenide waferfab expansion under way at Microsemi’sLinfinity Division.

BELOW :System engineering made Microsemi’sRangeMAX technology the choice formodules that power color displays in thePalm IIIc.

In Fiscal Year 2000 Microsemiemphasized three operational tactics —system-engineered solutions, innovativepackaging, and advanced processdevelopment – to strengthen itsfundamental business strategy ofcreating a balance between high-valueand high-growth products and markets.

System-engineered solutions derive fromclose customer interaction that enablesMicrosemi to anticipate next-generationdesign needs with must-have solutionsthat exceed the value of competitivecommodity products. Typifying thisapproach are Microsemi’s RangeMAXpower management solutions for backlitdisplays that reflect the most advancedideas from industry leaders in LCDpanels, fluorescent lamps and displaymicroprocessors. Likewise, system-engineered transient protection devicesfrom Microsemi provide solutions formedical defibrillator firing circuits.

Packaging innovations are a Microsemihallmark. Our patented Powermite®concepts now extend to the latestPowermite 3 line that slashes the size ofthese devices to one fourth of competingproducts. Similarly, our MonolithicMicrowave Surface Mount (MMSMTM) flipchip design provides a high speed RFbreakthrough for wireless local areanetwork and fixed microwave wirelesscircuits, while our patented EPSMTM

packaging improves the switching speedand assembly of telecommunicationbase stations.

Process development often enablesbreakthroughs in semiconductordesigns. Fiscal Year 2000 sawMicrosemi make great strides in thischallenging arena, beginning with theacquisition from Infinesse of the III-Vcompound (gallium arsenide)semiconductor processes used tocreate integrated circuits for mobilehandsets, optical transponders andwireless LAN applications. To supportthis new capability, Microsemi hasbroken ground on a fab expansion thatwill add an internal gallium arsenidefoundry. The company also worksactively with alliance partners to developproducts based on sub 1Volt CMOS andII-VI compound (silicon carbide)technologies.

Microsemi’s focus on serving abalanced customer base also enablesus to support a competitive level ofresearch and development for growthproducts. With funds derived fromlegacy business relationships in themilitary/aerospace market, we can seedfuture revenues from products aimed atMicrosemi’s primary growth markets:mobile connectivity, telecommunicationsinfrastructure, and medical.

During FY2000, Microsemi leveragedour system-engineered solutions,innovative packaging, and processdevelopments to strengthen thefoundation for our future success in allthree markets. Our strategy works.

system engineered, innovativepackaging, process development

the marketsand customers we serve

Microsemi is diverse by design. No singlecustomer provided more than 4% of ourFiscal Year 2000 revenues. This diversitynot only assures more stable growth, butalso allows Microsemi to leverage itstechnologies for unique system-engineered product offerings to more thanone end market.

FY2000 was an excellent year forMicrosemi products created for mobileconnectivity customers. Today, ourPowermite devices are used in mobilephones made by Motorola, Samsung,Mitsubishi, and Qualcomm, to name a few.Our RangeMAX backlight inverter integratedcircuits power the bright, full-color displayshighlighted by Palm and Compaq at thelaunch of their new top-of-the-line PDAs.

Telecom became the most rapid growthsegment of our business during FY2000as an ever-larger share of customersturned to Microsemi for RF bipolartransistors, RF PIN switches, varactortuning diodes, and high-speed transientvoltage protection devices. Customers likeAlcatel and Ericsson launched new productlines this year featuring Microsemiproducts.

Microsemi supports new productdevelopment for these fast-growingmarkets with a base of steady high-valuebusiness from military/aerospace,communication/navigation satellite, andmedical application customers rangingfrom Medtronic and Guidant pacemakers toGE Medical MRI Systems. High volumeautomotive entertainment systems,computers and peripherals complete ourdiverse portfolio.

powermanagement

FACING PAGE:Donald Yu and Eric Campos review theintegrated circuit design for a new Class Daudio amplifier under development at theLinfinity Division. Microsemi increased itsdesign engineering staff by a factor of 10during Fiscal Year 2000.

TOP :Henry Sanchez and Jonas Weiland test anew power management system forcardioverter defibrillators that the twodeveloped at Microsemi’s MicroPowerDivision, Carlsbad, CA.

ABOVE:Lance Robertson, Rose Seeley andCarmen Isham lead the team of customerservice representatives that smoothlyhandled an increase in power managementbusiness of approximately 30% in FiscalYear 2000.

BELOW :RangeMAX backlight display modulesenable manufacturers of PDAs andwireless web tablets to increase playtimeby as much as 50%.

managing light, sound and powerIn Fiscal Year 2000 MicrosemiCorporation successfully completed itstransformation from a world classmanufacturer of discrete semiconductorproducts into a world class manufacturerof mixed signal and analog integratedcircuits as well. By the end of the fiscalyear, Microsemi’s Power Managementbusiness represented more than 30% ofour total sales — an approximate 30%growth from the prior year.

A significant contributor to this growth —and a door-opening catalyst for strongercustomer recognition of all Microsemiproducts — came from the successfulrollout of RangeMAX® backlight inverterICs. These breakthrough powermanagement circuits control thebrightness and efficiency of fluorescentlamps (CCFL) found in handheldinformation appliances and portabledigital assistants (PDAs).

Early in March of 2000, we announcedthat Palm Computing had chosen theRangeMAX integrated circuit to power itsfirst color display, on the Palm IIIc. Thatwas followed in April with news thatMicrosemi also would supply thebacklight inverter solution for Compaq’sflagship iPAQ Pocket PC. Since then, inaddition to a number of other specificcustomer wins, Microsemi’s RangeMAXtechnology earned one very importantreference design win – for the IntelStrongArm processor reference designkit. Microsemi’s solution was chosen byIntel as the product of choice for

manufacturers of any futurehandheld information appliancesthat will use their StrongArm®processor.

The year also marked the firstApplication Specific Integrated Circuit(ASIC) design wins for our advancedmicro-powered Class-D audioamplifier circuits for hearing aids. Byusing this innovative Microsemipower management technology,manufacturers can create hearingaids that for the first time are able tooperate for up to 6 months withoutchanging batteries.

Microsemi also marked 2000 as theyear that we turned the corner onnew product development, releasingsome ten key power managementsemiconductor devices forapplication in handheld appliances,computers, peripherals, andtelecommunications circuits. Ourplan for FY2001 is to quadruple thenumber of key power managementproducts.

need to take a picture ofLance for this square

RF/microwaveoptoelectronics

Fiscal Year 2000 provided anotherlandmark for Microsemi as weaccelerated the growth of our RF/Microwave business, while addingoptoelectronic components to thisdynamic thrust. Today, our RF, microwaveand optoeletronic products comprise acomplete set of discrete semiconductorand integrated circuit solutions fortransmitting and receiving wired,wireless, and optoelectronic signals.

In January, the Microwave Products Groupsuccessfully launched its high frequencymicro-miniature surface mount RF PINantenna switching diodes and varactortuning diodes. The significance of thisintroduction was underscored in shortorder by the announcement that Ericssonhad chosen the new Microsemi parts forthe base stations in their 3rd Generationmobile phone systems.

In the area of power PIN diodes,Microsemi saw strong growth in magneticresonant imaging (MRI) and chemicalvapor deposition (CVD) heating systemapplications, where our high-temperature,high-power semiconductor solutionsreplace mechanical switches.

Microsemi’s Power RF Products Groupdoubled its sales in Fiscal 2000. Most ofthis growth came from mobile radioapplications where we supply high-powerRF transistors. Many of these devicespreviously were manufactured byMotorola. When they chose to exit thisbusiness, Motorola recommendedMicrosemi to their customers for a

continuing supply of these criticalsemiconductor components.

In March, Microsemi acquired the HBTBusiness Products Group of InfinesseCorporation, a designer andmanufacturer of gallium arsenidepower amplifiers – the single mostimportant component in transmittingmobile phone calls. Soon thereafter,we announced Microsemi’s firstgallium arsenide product — a majorturning point for the future of theCompany. Our roadmap for releasingmore of these RF integrated circuits inFiscal 2001 includes WCDMA, GSM,CDMA, and ISM Band poweramplifiers, all at the very core of futuremobile communications.

With Infinesse (now called MicroWaveSys) we also gained expertisethat complemented Microsemi’sexisting optoelectronic technology.From this combination we were able toannounce our first GaAs PINphotodetector for use in 850nm short-haul (“last mile”) terrestrial opticalapplications. These new products,released at fiscal year end, promisefurther expansion of the growthMicrosemi witnessed in long-haulwave division multiplexing (WDM)applications like global crossingundersea networks.

FACING PAGE:Leo Wu, Bob Mai and Dr. Michael Kim(from left) joined Microsemi in March 2000with the acquisition of the HBT Productsgroup of Infinesse. This team isdeveloping InGaP HBT RF integratedcircuits for 3G mobile phones, wirelessLAN and optical transponders.

TOP :Robert Bokum sets up a mobile radiotransistor for testing at Microsemi’s PowerRF Products group, Mongomeryville, PA.This business doubled in Fiscal Year 2000.

ABOVE:Dr. Braham Barwadj and Dr. Soo Shinevaluate Microsemi’s new GaAs andInGaAs/InP photodetectors for terrestrialand DWDM optical applications.

BELOW :Microsemi’s first InGaP HBT RF integratedcircuits shown in this module wereintroduced in July 2000.

transmit and receive power and light

transientprotection

FACING PAGE:Cyril Poliakoff assembles aninnovative TVS flip chip array atMicrosemi’s Santa Ana Division.These devices protect criticalimplantable medical electronic circuits.

TOP :Marsha Anderson inspects TVS chipsused to protect high-speedtelecommunication circuits atMicrosemi’s Scottsdale, AZ, Division.

ABOVE:Katherine Muller of Microsemi’sScottsdale, AZ manufacturing team,produces a high reliability TVS devicefor lightning protection modules usedon aircraft.

BELOW :Sales of Microsemi’s TVSarraydevices grew by more than 8X duringFiscal Year 2000, with most of thisgrowth for applications protecting high-speed internet infrastructure.

Perhaps a perfect example of thechanging face of Microsemi is found inthe transformation of our transientvoltage protection business during FiscalYear 2000. While this technologycontinued to support military/aerospaceand industrial applications, its mostdramatic growth came from newapplication-engineered devices.

Today, the innovative packaging and highreliability capabilities that Microsemideveloped for military/aerospacecustomers also make it a leader inprotecting high-speed commercialcommunications circuits from thedamaging voltage spikes created byelectrostatic discharge (ESD), loadswitching and induced lightning strikes.

New transient voltage suppression (TVS)products from Microsemi focus onapplications found in set-top boxes,optical communication circuits, wirelesslocal area networks, cable modems andxDSL routers and switches. Ourinnovative high-speed TVSarray®technology for commercial applicationsin telecommunication infrastructure grewby more than 8X in FY 2000.

Significantly, the Transient ProtectionProducts Group teamed up with both thePower Management and RF/Microwave/Optoelectronics Groups in Fiscal Year2000 to identify design advantagesMicrosemi TVS devices could bring tospecific market segments each serves.Armed with this combination of newelectrical features, application specific

protecting high speed circuits

solutions and a leveraged productmarketing focus, Microsemirepeatedly outpaced the competition.

Microsemi’s unique flip chip expertisereduces circuit size and improvesthermal performance of pacemakersand defibrillators, protecting themfrom external transients like surgicallaser tools and external defibrillation.

A new type of TVS protection devicebased on unique Microsemi polymertechnology operates 10 times fasterthan competing devices in high-speed communications applicationsfor optical transponders, cablemodem chip sets, and wireless localarea networks. Introduced late inFiscal Year 2000, these new deviceshave virtually no effect on high-speedcommunication chip set performance,activating only when a transient surgerequires the immediate protection ofsensitive components.

Microsemi’s ability to create protectivedevices of extreme durability comesinto play with our transient protectivedevices for undersea fiber opticnetworks that must serve in the oceanfor 25 years, unaffected by lightningstrikes on the ocean surface, brokencables and even shark bites.Microsemi’s reputation for high-reliability devices used in space andimplanted medical systems makes ita leading choice among WaveDivision Multiplexing systemdesigners.

powerconditioning

FACING PAGE:Steve Kelly and John Marinelli evaluate thehigh-speed manufacturing equipmentMicrosemi’s Watertown, MA Divisionbrought on line in FY 2000 to producepatented Powermite 3 semiconductordevices for higher-powered circuits.

TOP :Yevgeniy Zhlopak checks out Microsemi’snew Powermite 3 manufacturing line, whichbegan volume production in the first quarterof FY2000. Powermite 3 devices providebreakthrough power density in their patentedthree-lead surface mount package.

ABOVE:Surendra Shahpatel is a manager in theSatellite Products group in Santa Anaresponsible for products that provide powerto satellites and aerospace systems.

BELOW :Representing Microsemi’s discretesemiconductor lines are a Powermite 3device, a three-lead military diode and abattery bypass module for satellites.

harnessing and conditioning powerPower conditioning and discretesemiconductors remain the largest singlesource of revenue for Microsemi. Theseproducts include a broad base of devicescommonly found in military/aerospaceand industrial applications, as well asbattery bypass products for satellites,power Schottky diodes for laser amplifierpower supplies, and new Powermiteproducts for handheld informationappliances and mobile phones.

Organizationally, Microsemi producespower conditioning and discretesemiconductors at many facilitiesworldwide, a factor that in Fiscal Year2000 led the Corporation to revise itsproduct offerings and consolidate theproduction of others to form a strongerbusiness enterprise. Products andoperations that did not offer favorableprospects for growth and profitabilitywere sold or consolidated to reducemanufacturing and marketing costs.Thus, the Chatsworth group that marketslow-margin commodity semiconductorproducts was sold in June.

In contrast, Powermite-packaged devicesexperienced strong growth duringFY2000. Some 20% of all mobile phonesmanufactured during the year wereequipped with Powermite devices. Ourability to reduce component sizecontinues to give Microsemi an edge indesign wins for mobile communicationsproducts.

Manufacturers of military/aerospaceequipment use a substantial portion ofour power conditioning and discretesemiconductor products. For the most

part, this business depends onMicrosemi’s well-established highreliability manufacturing capabilities,and requires less research anddevelopment activity. Instead, we areable to channel its potential R&Dfunding toward development of higher-growth products.

Demand for high value Microsemiproducts in the commercial satellitemarket bottomed early in the fiscalyear, then rebounded. Orders returnedto historic growth trends forcommercial satellites by year end.This business is enhanced greatly byMicrosemi’s system-engineeredsatellite battery by-pass protectioncircuits, a patented system that cutslift-off weight by as much as 20pounds – reducing launch costs by asmall fortune.

Consistent with other Microsemibusiness thrusts, the PowerConditioning segment also focuseson packaging and advanced processdevelopment. New variations on thePowermite concept, for instance, canaccommodate higher powerapplications and optical photodetectordevices. This technology also createda new Microsemi RF componentpackage called the “Gigamite™”.

Pursuing creative solutions for muchhigher powered Schottky diodes,Microsemi is funding research into theapplication of silicon carbide processtechnology. Even in this corebusiness, our strategies are hard atwork.

financialsummary

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($ Millions)

Financial Highlights FY 1999 FY 2000 Percent

(000) (000) Change

Net Sales $185,081 $247,557 34%

Operating Income $5,089 $15,445 203%

Provision for Income Taxes $442 $4,042 814%

Net Income $1,499 $8,207 447%

Weighted-Average

Common Shares Outstanding

Basic 11,131 12,009

Diluted 11,244 12,600

Basic Earnings Per share $0.13 $0.68 423%

Diluted Earnings Per share $0.13 $0.66 408%

Working Capital $43,050 $80,118 86%

Current Ratio 1.7 2.7 59%

Long-term Debt to Equity 0.4 0.06 -85%

Stockholders' Equity $82,444 $149,651 82%

Equity per Share 7.55 10.85 44%

FACING PAGE:

David R. Sonksen, Executive VicePresident and CFOBELOW :Microsemi completed a SecondaryOffering in June 2000 of 2.3 millionshares.

revenues($ Millions)

equity per share($)

wherewe’re going

Technology on the Move

John Holtrust, VP of HumanResources, previews the entrystaircase to an Irvine, Californiafacility that will house Microsemi’scorporate staff and a newadvanced design center in thespring of 2001.

Located in the heart of OrangeCounty’s technology corridor, thenew site will help John attractsuperior engineering talent toMicrosemi — as will the prospectof working on breakthroughprojects like RangeMAXautomotive display products andthe InGaP/InP HBT RF poweramplifiers for 3G WCMA mobileinformation appliances, shownabove.

TOP :

Proliferation of mobilecommunication appliances andcolor displays provide growthopportunities for a wide range ofMicrosemi integrated circuits,transient protection andPowermite products worldwide.

of directorsDirectors and Corporate Officers

Philip Frey, Jr. Chairman of the BoardJames J. Peterson President and Chief Executive OfficerDavid R. Sonksen Executive Vice President, Chief Financial Officer, Treasurer and SecretaryRobert B. Phinizy Director, Private Investor; ConsultantMartin H. Jurick DirectorH.K. Desai Director, Chairman and CEO of QLogicJoseph M. Scheer Director, Private Investor; ConsultantBrad Davidson Director, President of Securities Pricing and Research, Inc.Andy T.S. Yuen Vice President International OperationsJohn Holtrust Vice President Human ResourcesManuel Lynch Vice President Marketing and Business Development

Independent Accountants

PricewaterhouseCoopers LLPIrvine, California

General Counsel

Stradling Yocca Carlson & RauthNewport Beach, California

Registrar and Transfer Agent

Mellon Investor Services LLC400 South Hope StreetLos Angeles, California 90017

Subsidiaries

Microsemi Corp. - Scottsdale Microsemi Corp. - Colorado Micro UPSD, Inc.Scottsdale, Arizona Broomfield, Colorado Watertown, Massachusetts

Linfinity Microelectronics, Inc. Microsemi RF Products, Inc. Micro (Bermuda), Ltd.Garden Grove, California Montgomeryville, Pennsylvania Ennis, Ireland

Microsemi Microwave Products Microsemi (H.K.) Ltd Semcon Electronics Pvt., Ltd.Lowell, Massachusetts Hong Kong Mumbai, India

Annual Meeting

The annual shareholders’ meeting will be held at the Corporate Headquarters, 2830 South Fairview Street, Santa Ana,California, on February 28, 2001 at 10:00 a.m.

board

Microsemi CorporationInvestor Relations

2830 S. Fairview St.Santa Ana, CA 92704

(714) 979-8220