The wireless communications market represents one of the most important and dynamic communications markets in the world. According to iSuppli, global wireless (mobile handset) subscribers reached 2.2 billion in 2005, and are expected to grow to 3.7 billion in 2010. Likewise, according to IDC, new global handset shipments are projected to grow from 833.2 million units in 2005 to 1.4 billion units in 2010.

Developing markets, particularly the Asia Pacific region, are leading the growth in new wireless subscribers and handset shipments, due to demand for both lower cost entry-level devices, which help drive new subscribers, and handsets with advanced features, which are the key to driving continued handset upgrades from existing subscribers. In particular, China represents the world’s largest wireless market, with 487.4 million wireless subscribers as of April 2007 according to the Ministry of Information Industry. According to IDC, China’s wireless subscribers are expected to grow to 681.5 million by 2010, and new wireless handset shipments in China, which totaled 95.7 million units in 2005, are expected to reach 152.8 million units by 2010.

The baseband semiconductor market is a significant constituent of the overall wireless semiconductor market. According to iSuppli, revenue from worldwide GSM, GPRS, EDGE and WCDMA baseband semiconductor shipments reached $8.5 billion in 2005 and is expected to grow to $13.1 billion by 2010. According to iSuppli, the baseband semiconductor market in China is expected to grow from $3.5 billion in 2005, representing 30.6% of the worldwide market, to $6.8 billion in 2010, representing 41.3% of the worldwide market.

Baseband semiconductors are increasingly incorporating additional functions, such as multimedia capabilities. Further, baseband semiconductor suppliers have several advantages over other handset component suppliers, including greater control over the selection of integrated complementary functionality. In some cases, baseband semiconductor suppliers can influence the selection of the peripherals that will be supported and included in the handset.

The Company has developed a family of baseband semiconductor solutions designed specifically for wireless handsets that support 2G to 3G wireless technology standards, such as GSM, GPRS and TD-SCDMA. Within its family of baseband semiconductors, the Company offers different models that support various wireless communications standards and incorporate different multimedia feature sets.

As part of its total baseband processor solution, the Company offers software, such as protocol stacks, user interface, file systems and device driver software, for its open platform that is integrated into its baseband semiconductors.

In addition, the Company has integrated other third-party operating systems and application software, such as text input, Internet browsing, electronic mail, wireless application protocol, Java and multimedia messaging service into its baseband semiconductors.

Also, the Company has developed its own software development tools to assist its customers in developing software applications for its baseband semiconductors.

When requested, the Company also provides certain customers with reference designs that incorporate its baseband semiconductors. These reference designs comprise a large library of complete, pre-tested, mass manufacturing ready handset designs for specific market segments.

Cost of revenue increased by 10.7% to $15.0 million for the three months ended March 31, 2007 from $13.5 million for the same period in 2006.

Gross profit increased by 81.3% to $11.2 million for the three months ended March 31, 2007 from $6.2 million for the same period in 2006.

Overall operating expenses increased by 71.0% to $9.9 million for the three months ended March 31, 2007 from $5.8 million for the same period in 2006.

Income from operations was $1.3 million for the three months ended March 31, 2007, as compared to $387,000 for the same period in 2006.

Net income was $2.0 million in the three months ended March 31, 2007, as compared to $649,000 in the same period in 2006.