Management's discussion and analysis of financial condition and results of operations ("MD&A") is provided as a supplement to the accompanying consolidated financial statements and footnotes to help provide an understanding of our financial condition, changes in our financial condition and results of our operations. The MD&A is organized as follows:

• Caution concerning forward-looking statements. This section discusses how forward-looking statements made by us in the MD&A and elsewhere in this report are based on management's present expectations about future events and are inherently susceptible to uncertainty and changes in circumstances.

• Overview. This section provides an introductory overview and context for the discussion and analysis that follows in the MD&A.

• Critical accounting policies. This section discusses those accounting policies that are both considered important to our financial condition and operating results and require significant judgment and estimates on the part of management in their application.

• Results of operations. This section provides an analysis of our results of operations for the three fiscal years ended March 31, 2009. A brief description is provided of transactions and events that impact the comparability of the results being analyzed.

• Financial condition and liquidity. This section provides an analysis of our cash position and cash flows, as well as a discussion of our financing arrangements and financial commitments.

• Subsequent events. This section provides information on significant events that occurred after the end of the fiscal year presented in this annual report.

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

The MD&A should be read in conjunction with the consolidated financial statements and notes thereto included in this report. This discussion contains forward-looking statements. These forward-looking statements are made as of the date of this report. Any statement that refers to an expectation, projection or other characterization of future events or circumstances, including the underlying assumptions, is a forward-looking statement. We use certain words and their derivatives such as "anticipate", "believe", "plan", "expect", "estimate", "predict", "intend", "may", "will", "should", "could", "future", "potential", and similar expressions in many of the forward-looking statements. The forward-looking statements are based on our current expectations, estimates and projections about our industry, management's beliefs, and other assumptions made by us. These statements and the expectations, estimates, projections, beliefs and other assumptions on which they are based are subject to many risks and uncertainties and are inherently subject to change. We describe many of the risks and uncertainties that we face in Item 1A, "Risk Factors" and elsewhere in this report. Our actual results and actual events could differ materially from those anticipated in any forward-looking statement. Readers should not place undue reliance on any forward-looking statement.

OVERVIEW

AMCC is a leader in semiconductor solutions for the enterprise, telecom and consumer/SMB markets. We design, develop, market and support high-performance low power ICs, which are essential for the processing, transporting and storing of information worldwide. In the telecom and enterprise markets, we utilize a combination of design expertise coupled with system-level knowledge and multiple technologies to offer IC products for wireline and wireless communications equipment such as wireless access points, wireless base stations, multi-function printers, edge switches, gateways, metro transport platforms, core switches and routers. In the consumer/SMB markets, we combine optimized software and system-level expertise with highly integrated semiconductors to deliver comprehensive reference designs and stand-alone semiconductor solutions for wireline and wireless communications equipment such wireless access points. Our enterprise and consumer storage products leveraged our expertise in providing high performance accessibility and high availability of stored information, including the use of technologies such as RAID, SATA and SAS. Our customers used our products for storage applications such as

disk-to-disk backup, near-line storage, network-attached storage, video, security and high-performance computing. Our corporate headquarters are located in Sunnyvale, California. Sales and engineering offices are located throughout the world.

Our business had three reporting units, Process, Transport and Store. On April 21, 2009 we completed the sale of our 3ware storage adapter business, which was substantially all the business of our Store unit, to LSI Corporation to focus on our Process and Transport reporting units. AMCC is a semiconductor company that possesses fundamental and differentiated intellectual property for high speed signal processing, packet based communications processors and telecommunications transport protocols. This intellectual property enables us to be a key player in the datacenter, enterprise and telecommunications applications. Our focus is on the OEMs and telecommunications companies that build and connect to datacenters. See "Subsequent Events" at the end of Management's Discussion and Analysis of Financial Conditions and Results of Operations for more information about this transaction.

Certain amounts have been reclassified to conform to the current year presentation. As described in Note 13, we classified the financial results of our 3ware storage adapter business as discontinued operations for all periods presented. These presentations relate to continuing operations only, unless otherwise indicated.

The following tables present a summary of our results of operations for the fiscal years ended March 31, 2009 and 2008 (dollars in thousands):

                                                  Fiscal Year Ended March 31,
                                              2009                          2008
                                                   % of Net                       % of Net        Increase          %
                                      Amount        Revenue         Amount        Revenue        (Decrease)       Change

Net revenues                        $  214,216         100.0 %    $  194,115          100.0 %    $    20,101         10.4 %
Cost of revenues                       101,070          47.2          98,756           50.9            2,314          2.3

Gross profit                           113,146          52.8          95,359           49.1           17,787         18.7
Total operating expenses               370,609         173.0         147,370           75.9          223,239        151.5

Operating loss                        (257,463 )      (120.2 )       (52,011 )        (26.8 )       (205,452 )     (395.0 )
Interest and other income
(expense), net                          (7,581 )        (3.5 )        10,579            5.4          (18,160 )     (171.7 )

Loss from continuing operations
before income taxes                   (265,044 )      (123.7 )       (41,432 )        (21.4 )       (223,612 )     (539.7 )
Income tax expense (benefit)            (3,946 )        (1.8 )         3,773            2.0           (7,719 )     (204.6 )

Loss from continuing operations       (261,098 )      (121.9 )       (45,205 )        (23.4 )       (215,893 )     (477.6 )
Loss from discontinued
operations, net of taxes               (48,235 )       (22.5 )       (69,916 )        (36.0 )         21,681         31.0

Net loss                            $ (309,333 )      (144.4 )%   $ (115,121 )        (59.4 )%   $  (194,212 )     (168.7 )%

The following tables present a summary of our results of operations for the fiscal years ended March 31, 2008 and 2007 (dollars in thousands):

                                                   Fiscal Year Ended March 31,
                                               2008                           2007
                                                     % of Net                      % of Net         Increase            %
                                       Amount        Revenue         Amount        Revenue         (Decrease)        Change

Net revenues                         $  194,115          100.0 %    $ 242,478          100.0 %    $    (48,363 )         (19.9 )%
Cost of revenues                         98,756           50.9        115,794           47.8           (17,038 )         (14.7 )

Gross profit                             95,359           49.1        126,684           52.2           (31,325 )         (24.7 )
Total operating expenses                147,370           75.9        163,354           67.4           (15,984 )          (9.8 )

Operating loss                          (52,011 )        (26.8 )      (36,670 )        (15.2 )         (15,341 )         (41.8 )
Interest and other income, net           10,579            5.4         13,375            5.5            (2,796 )         (20.9 )

Loss from continuing operations
before income taxes                     (41,432 )        (21.4 )      (23,295 )         (9.7 )         (18,137 )         (77.9 )
Income tax expense                        3,773            2.0            333            0.1             3,440         1,033.0

Loss from continuing operations         (45,205 )        (23.4 )      (23,628 )         (9.8 )         (21,577 )         (91.3 )
Loss from discontinued operations,
net of taxes                            (69,916 )        (36.0 )         (580 )         (0.2 )         (69,336 )     (11,954.5 )

Net loss from continuing
operations                           $ (115,121 )        (59.4 )%   $ (24,208 )        (10.0 )%   $    (90,913 )        (375.5 )%

On April 21, 2009, we completed the sale of our 3ware storage adapter business to LSI Corporation. The results of operations for that business for the years ended March 31, 2009, 2008 and 2007 are provided below. A detailed presentation of the 3ware storage adapter business's results of operations is presented in Note 13 to the consolidated financial statements.

The following tables present a summary of the discontinued operations of the 3ware storage adapter business for the fiscal years ended March 31, 2009, 2008 and 2007 (dollars in thousands):

                                                               Fiscal Years Ended March 31,
                                            2009                           2008                           2007
                                                 % of Net                       % of Net                       % of Net
                                   Amount         Revenue         Amount         Revenue         Amount        Revenue

Net revenues                      $  39,849          100.0 %     $  52,031          100.0 %     $ 50,374           100.0 %
Cost of revenues                     24,437           61.3          27,912           53.6         24,920            49.5

Gross profit                         15,412           38.7          24,119           46.4         25,454            50.5
Total operating expenses             63,575          159.5          94,084          180.8         25,965            51.5

Loss from discontinued
operations before income taxes      (48,163 )       (120.8 )       (69,965 )       (134.4 )         (511 )          (1.0 )
Income tax expense (benefit)             72            0.2             (49 )         (0.1 )           69             0.2

Net loss from discontinued
operations                        $ (48,235 )       (121.0 )%    $ (69,916 )       (134.3 )%    $   (580 )          (1.2 )%

Net Revenues. We generate revenues primarily through sales of our IC products, embedded processors and PCBAs to original equipment manufacturers, such as Alcatel-Lucent, Ciena, Cisco, Brocade, Fujitsu, Hitachi, Huawei, Juniper, Ericsson, NEC, Nortel, Nokia Siemens Networks, and Tellabs, who in turn supply their equipment principally to communications service providers. In the storage market we generated revenues primarily through

sales of our SATA RAID controllers to our distribution channel partners who in turn sell to enterprises, small and mid-size businesses, value added resellers, systems integrators and retail consumers.

In calendar 2006, we changed our strategic direction in such a way that certain patents while still valuable were no longer core to our strategic direction. We reported our non-focus revenues separately and began to analyze our patent portfolio in detail. These patents related to non-focus products, foundry and other items that were not relevant to our long-term strategic product road maps. As a result, we embarked on a program to monetize this intellectual property. In July 2008, we entered into a Patent Purchase Agreement (the "Agreement") with QUALCOMM Incorporated ("Qualcomm"). Pursuant to the Agreement, we agreed to sell a series of our patents, patent applications and associated rights related to certain technologies for an aggregate purchase price of $33.0 million. The purchase price is being paid over three years in equal quarterly payments of $3.0 million each beginning in the three months ended September 30, 2008. Due to the nature of the payment terms, related revenue is being recorded as the payments are received beginning in the quarter ended September 30, 2008. Under the Agreement, we and our affiliates have retained a worldwide and non-exclusive right to manufacture and sell existing AMCC products that utilize technology covered by the patents. The Agreement includes customary representations, warranties and covenants by us. Prior to the due date of the final payment, Qualcomm is permitted to withhold a portion of the total purchase price in the event we breach the representations, warranties or covenants that we made under the Agreement. We hope to achieve a sustainable long-term revenue stream from our program to monetize our non-core intellectual property in the next three-to-five years.

The demand for our products has been affected in the past, and may continue to be affected in the future, by various factors, including, but not limited to, the following:

• the timing, rescheduling or cancellation of significant customer orders and our ability, as well as the ability of our customers, to manage inventory corrections;

• the qualification, availability and pricing of competing products and technologies and the resulting effects on sales and pricing of our products.

• our ability to specify, develop or acquire, complete, introduce, and market new products and technologies in a cost effective and timely manner;

• the rate at which our present and future customers and end-users adopt our products and technologies in our target markets;

• general economic and market conditions in the semiconductor industry and communications markets, including the current global economic recession;

• combinations of companies in our customer base, resulting in the combined company choosing our competitor's IC standardization other than our supported product platforms;

• the gain or loss of one or more key customers, or their key customers, or significant changes in the financial condition of one or more of our key customers or their key customers.

For these and other reasons, including the recently completed sale of our 3ware storage adapter business, our net revenue and results of operations for the fiscal year ended March 31, 2009 and prior periods may not necessarily be indicative of future net revenue and results of operations.

Based on direct shipments, net revenues to customers that was equal to or greater than 10% of total net revenues in any of the three years ended March 31, 2009 were as follows:

                                                   2009      2008      2007

             Avnet (distributor)                      25 %      26 %      27 %
             Hon Hai (sub-contract manufacturer)         *      10 %         *

* Less than 10% of total net revenues for period indicated.

We expect that our largest customers will continue to account for a substantial portion of our net revenue for the foreseeable future.

Net revenues by geographic region were as follows (in thousands):

                                            Fiscal Years Ended March 31,
                                          2009          2008          2007

             United States of America   $  63,619     $  54,842     $  95,039
             Other North America           16,678        23,443        24,113
             Europe                        34,108        28,154        35,923
             Asia                          98,777        86,609        86,342
             Other                          1,034         1,067         1,061

                                        $ 214,216     $ 194,115     $ 242,478

All of our revenues have been denominated in U.S. dollars.

Sale of our 3ware storage adapter business. We completed the sale of our 3ware storage adapter business, a significant portion of our business, to LSI Corporation on April 21, 2009, after our 2009 fiscal year. As a result, we now expect to generate all of our sales from our remaining business, which will require us to grow our remaining business in order to achieve profitability. Economic and other factors may prevent us from growing our remaining business. If we fail to grow our remaining business, it could have a material adverse impact on our business, financial condition and operating results. We may in the future dispose of additional assets or businesses that represent a significant portion of our business.

Under the Asset Purchase Agreement with LSI Corporation (the "Purchase Agreement"), which we entered on April 5, 2009, we sold substantially all of the operating assets (other than patents) of our 3ware storage adapter business. The assets sold included customer contracts, inventory, fixed assets, certain intellectual property and other assets, as well as rights to the name "3ware." The purchase price was approximately $20 million, subject to adjustments for changes in the level of inventory and products in the channel at the closing of the sale. We estimate the adjustments will increase the purchase price by approximately $1.5 million to $2.0 million.

The Purchase Agreement contained customary representations, warranties, covenants and indemnities, including, among others, entering into an intellectual property agreement, a transition services agreement and a master procurement agreement with LSI Corporation.

Goodwill Impairment Charge. During the three months ended December 31, 2008, we assessed goodwill for impairment since we observed there were indicators of impairment. The notable indicators were a significant downward revision to our revenue forecasts, a sustained decline in our market capitalization below book value, depressed market conditions and industry trends. These market conditions continuously change and it is difficult to project how long this current economic downturn may last. As a result of these market conditions, our planned product introductions were not expected to ramp as quickly as previously expected, causing our near-term and longer-term revenue forecasts to decrease, and it will take some time for our forecasts to return to their previous levels due to the current economic conditions. Additionally, the deterioration of market values has had an unfavorable impact on our valuations which are part of the goodwill impairment tests. As required by Statement of Financial Accounting Standards ("SFAS") No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets ("SFAS 144"), we verified our long-lived assets, other than goodwill, were not impaired as of the time of the goodwill impairment. Upon completion of the impairment test, we determined that additional impairment analysis was required by SFAS No. 142, Goodwill and Other Intangible Assets ("SFAS 142") because the estimated carrying value of each of the three reporting units (including our Store unit) exceeded its estimated fair value. The second step of the goodwill impairment test compared the implied fair value of each reporting unit's goodwill with the carrying amount of that goodwill. Since the carrying amount of each reporting unit's goodwill exceeded the implied fair value of that goodwill, we recorded a goodwill impairment charge of $223.0 million, to continuing operations, in the fiscal year ended March 31, 2009. The goodwill impaired was assigned to the Process and Transport reporting units in the amounts of $101.5 million, $121.5 million, respectively. In the fiscal year ended March 31, 2006, we recorded a goodwill impairment charge of $49.7 million, to continuing operations for the Process reporting unit. In the fiscal years ended March 31, 2009, 2008 and 2006, goodwill impairment charges related to discontinued operations were $41.1 million, $71.5 million and $81.5 million, respectively, for the Store

reporting unit. As a result of the impairment charges, all of the goodwill on the balance sheet has been written off. Please see Note 7 of the Notes to Consolidated Financial Statements for more information.

Net Loss. Our net loss has been affected in the past, and may continue to be affected in the future, by various factors, including, but not limited to, the following:

• stock-based compensation expense;

• amortization of purchased intangibles;

• acquired in-process research and development;

• litigation settlement costs;

• restructuring charges;

• combinations of companies within our customer base;

• purchased intangible asset impairment charges;

• other-than-temporary impairment of short-term investments and marketable securities; and

• income tax expense (benefit).

Since the start of fiscal 2007, we have invested a total of $252.1 million in the research and development of new products, including higher-speed, lower-power and lower-cost products, products that combine the functions of multiple existing products into single highly integrated products, and other products to complete our portfolio of communications products. These products, and our customers' products for which they are intended, are highly complex. Due to this complexity, it often takes several years to complete the development and qualification of these products before they enter into volume production. Accordingly, we have not yet generated significant revenues from some of the products developed during this time period. In addition, downturns in the telecommunications market can severely impact our customers' business and usually result in significantly less demand for our products than was expected when the development work commenced. As a result of restructuring activities associated with these downturns, we have discontinued development of several products that were in process and slowed down development of others as we realized that demand for these products would not materialize as originally anticipated.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net revenue and expenses in the reporting period. We regularly evaluate our estimates and assumptions related to inventory valuation and warranty liabilities, which affect our cost of sales and gross margin; the valuation of purchased intangibles and goodwill, which has in the past, and could in the future affect our impairment charges to write down the carrying value of goodwill and other intangibles and the amount of related periodic amortization expense recorded for definite-lived intangibles; the valuation of restructuring liabilities, which affects the amount and timing of restructuring charges; an evaluation of other than temporary impairment of our investments, which affects the amount and timing of write-down charges; and the valuation of deferred income taxes, which affects our income tax expense (benefit). We also have other key accounting policies, such as our policies for stock-based compensation and revenue recognition, including the deferral of a portion of revenues on sales to distributors. The methods, estimates and judgments we use in applying these critical accounting policies have a significant impact on the results we report in our financial statements. We base our estimates and assumptions on historical experience and on various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The actual results experienced by us may differ materially and adversely from management's estimates. To the extent there are material differences between our estimates and the actual results, our future results of operations will be affected.

We believe the following critical accounting policies require us to make significant judgments and estimates in the preparation of our consolidated financial statements.

Inventory Valuation and Warranty Liabilities

Our policy is to value inventories at the lower of cost or market on a part-by-part basis. This policy requires us to make estimates regarding the market value of our inventories, including an assessment of excess or obsolete inventories. We determine excess and obsolete inventories based on an estimate of the future demand for our products within a specified time horizon, generally 12 months. The estimates we use for future demand are also used for near-term capacity planning and inventory purchasing and are consistent with our revenue forecasts. If our demand forecast is greater than our actual demand we may be required to take additional excess inventory charges, which would decrease gross margin and net operating results. For example, as of March 31, 2009, reducing our future demand estimate to six months could decrease our current inventory valuation by approximately $5.2 million or increasing our future demand forecast to 18 months could increase our current inventory valuation by approximately $0.3 million.

Our products typically carry a one year warranty. We establish reserves for estimated product warranty costs at the time revenue is recognized. Although we engage in extensive product quality programs and processes, our warranty obligation is affected by product failure rates, use of materials and service delivery costs incurred in correcting any product failure. Should actual product failure rates, use of materials or service delivery costs differ from our estimates, additional warranty reserves could be required, which could reduce our gross margin. Additional changes to negotiated master purchase agreements . . .