1130866--2/27/2009--HITTITE_MICROWAVE

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The current global recession and related credit crisis are likely to adversely affect our business, results of operations and financial condition. We do not expect revenue growth in the near term. Our efforts to control operating expenses during the current global recession may limit our ability to maintain our competitive position and meet operational challenges, which could harm our business and financial results. Our quarterly revenue and operating results are difficult to predict accurately and may fluctuate significantly from period to period. As a result, we may fail to meet the expectations of investors, which could cause our stock price to decline. Our gross margins fluctuate from period to period, and such fluctuation could affect our results of operations. If we fail to develop new products that achieve market acceptance or fail to introduce new products that enable us to address additional markets, our operating results could be adversely affected. We depend on third-party suppliers, including our foundries and packaging subcontractors, for components, materials and services that are critical to the manufacture of our products, which makes us susceptible to shortages, price fluctuations and quality risks that could adversely affect our operating results. Operations at our Chelmsford, Massachusetts facility that are critical to our business are subject to disruption from a variety of causes, including those that may be beyond our control. We design and manufacture products in our standard product line based upon our internal assessment and forecasts of market requirements, and our results of operations will be adversely affected if we fail to assess market requirements accurately. We design custom products to meet specific requirements of our customers. The amount and timing of revenue from such products can cause fluctuations in our quarterly operating results. We rely on a small number of customers for a significant percentage of our revenue, and the loss of, or a reduction in, orders from these customers could result in a decline in revenue. Our failure to continue to keep pace with new or improved semiconductor process technologies could impair our competitive position. Our business depends on international customers, suppliers and operations, and as a result we are subject to regulatory, operational, financial and political risks which could adversely affect our financial results. The segment of the semiconductor industry in which we participate is intensely competitive, and our inability to compete effectively would harm our business. We rely on the significant experience and specialized expertise of our senior management and engineering staff and must retain and attract qualified engineers and other highly skilled personnel in order to grow our business successfully. Our business could be adversely affected if we experience product returns, product liability and defects claims. Our new test and measurement instrument products are more complex than our core IC, module and subsystem products, and as a result, present quality, regulatory and product liability risks that differ from those we have faced in our core IC business and module business. We could be subject to claims that we are infringing third-party intellectual property rights, which could result in costly and lengthy litigation that could harm our business. We use specialized technologies and know-how to design, develop and manufacture our products. Our inability to protect our intellectual property could hurt our competitive position, harm our reputation and adversely affect our results of operations. We generate a portion of our revenue from sales made by third parties, including our independent sales representatives and our distributor, and the failure to manage successfully our relationships with these third parties could cause our revenue to decline and harm our business. We may pursue acquisitions and investments in new businesses, products or technologies that involve numerous risks, which could disrupt our business and may harm our financial results. Our financial results are exposed to the cyclicality of the semiconductor industry. If our principal end markets fail to grow or experience declines, our revenue may suffer. If we fail to comply with export control regulations we could be subject to substantial fines or other sanctions. If we fail to comply with government contracting regulations, we could suffer a loss of revenue or incur price adjustments or other penalties. Some of our long-term contracts may be terminated for the convenience of the customer and may involve significant expenditures on our part that, if the contract is terminated early, we may be unable to recover. If we fail to comply with environmental regulations we could be subject to substantial fines or be required to suspend production, alter manufacturing processes or cease operations. Dr. Ayasli, our founder and a principal stockholder, controls approximately 30% of our voting power, and is able to exert significant control over the outcome of director elections and other matters requiring stockholder approval, including a change in corporate control. Our financial results may be adversely affected by increased tax rates and exposure to additional tax liabilities. We are required to evaluate our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002, and any adverse results from such evaluation could result in a loss of investor confidence in our financial reports and have an adverse effect on our stock price. We could be the subject of securities class action litigation due to stock price volatility, which could divert management's attention and adversely affect our financial position or results of operations. Anti-takeover provisions in our charter documents and Delaware law could prevent or delay a change in control of our Company that stockholders may consider beneficial and may adversely affect the price of our stock.

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1130866--2/27/2009--HITTITE_MICROWAVE_CORP