882508--3/17/2006--QUICKLOGIC

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We expect the announced end-of-life of our pASIC1 and pASIC2 products will result in a decline in our revenue If we fail to successfully develop, introduce and sell new products, we may be unable to compete effectively in the future We may be unable to accurately estimate quarterly revenue, which could adversely affect the trading price of our stock Our future results depend on our relationship with Tower We will be unable to compete effectively if we fail to anticipate product opportunities based upon emerging technologies and standards and fail to develop products that incorporate these technologies and standards in a timely manner Our customers may cancel or change their product plans after we have expended substantial time and resources in the design of their products We are expending substantial time and effort to develop solutions with partners that depend on the availability and success of technology owned by the partner We depend upon third parties to fabricate, assemble, test and program our products, and they may discontinue manufacturing our products, fail to give our products priority, be unable to successfully manufacture our products to meet performance, volume or cost targets, or inaccurately report inventory to us We may not have the liquidity to support our future operations and capital requirements If we fail to adequately forecast demand for our products, we may incur product shortages or excess product inventory Fluctuations in our manufacturing processes and product yields and quality, especially for new products, may increase our costs We have significant customers and limited visibility into the long-term demand for our products from these customers We have a history of losses and cannot assure you that we will remain profitable in the future We depend upon third party distributors to market and sell our products, and they may discontinue sale of our products, fail to give our products priority or be unable to successfully market, sell and support our products Our future operating results are likely to fluctuate and therefore may fail to meet expectations, which could cause our stock price to decline We may encounter periods of industry-wide semiconductor oversupply, resulting in pricing pressure, as well as undersupply, resulting in a risk that we could be unable to fulfill our customers requirements Customers may cancel or defer significant purchase orders or our distributors may return our products, which would cause our inventory levels to increase and our revenue to decline Problems associated with international business operations could affect our ability to manufacture and sell our products Many system manufacturers may be unwilling to switch to our products because of their familiarity with the products offered by our direct competitors, such as Xilinx and Altera, which dominate the programmable logic market We may be unable to successfully grow our business if we fail to compete effectively with others to attract and retain key personnel We may be unable to adequately protect our intellectual property rights, and may face significant expenses as a result of future litigation We may engage in manufacturing, distribution or technology agreements that involve numerous risks, including the use of cash, diversion of resources and significant write-offs Our business is subject to the risks of earthquakes, other catastrophic events and business interruptions for which we may maintain limited insurance Our principal stockholders have significant voting power and may vote for actions that may not be in the best interests of our other stockholders Our Shareholder Rights Plan, Certificate of Incorporation, Bylaws and Delaware law contain provisions that could discourage a takeover that is beneficial to stockholders The market price of our common stock may fluctuate significantly and could lead to securities litigation Changes to existing accounting pronouncements or taxation rules or practices may cause adverse revenue fluctuations, affect our reported results of operations or how we conduct our business Compliance with changing regulations related to corporate governance and public disclosure may result in additional expenses While we believe that we currently have adequate internal control procedures in place, we are still exposed to potential risks from recent legislation requiring companies to evaluate controls under Section 404 of the Sarbanes-Oxley Act of 2002 We have implemented import and export control procedures to comply with United States regulations but we are still exposed to potential risks from import and export activity

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882508--3/17/2006--QUICKLOGIC_CORPORATION