10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the quarterly period ended June 29, 2013

or

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the transition period from                      to                     

Commission File Number 0-19084

PMC-Sierra, Inc.

(Exact name of registrant as specified in its charter)

A Delaware Corporation - I.R.S. NO. 94-2925073

1380 Bordeaux Drive

Sunnyvale, CA 94089

(408) 239-8000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of August 5, 2013, the registrant had 204,407,009 shares of Common Stock, $0.001 par value, outstanding.

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements
	- Condensed Consolidated Statements of Operations		3
	- Condensed Consolidated Statements of Comprehensive Loss		4
	- Condensed Consolidated Balance Sheets		5
	- Condensed Consolidated Statements of Cash Flows		6
	- Condensed Consolidated Statements of Stockholders’ Equity		7
	- Notes to the Condensed Consolidated Financial Statements		8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		30
Item 4.	Controls and Procedures		32
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings		33
Item 1A.	Risk Factors		34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		42
Item 3.	Defaults Upon Senior Securities		42
Item 4.	Mine Safety Disclosures		43
Item 5.	Other Information		43
Item 6.	Exhibits		44
Signatures			45

2

Part I - FINANCIAL INFORMATION

Item 1 - Financial Statements (Unaudited)

PMC-Sierra, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except for per share amounts)

	Three Months Ended						Six Months Ended
	June 29, 2013			July 1, 2012 (As Restated - See Note 10)			June 29, 2013			July 1, 2012 (As Restated - See Note 10)
Net revenues	$	127,907		$	137,762		$	253,068		$	269,856
Cost of revenues		37,827			41,253			75,087			82,265
Gross profit		90,080			96,509			177,981			187,591
Research and development		54,571			56,699			109,195			115,770
Selling, general and administrative		30,277			29,290			58,619			58,261
Amortization of purchased intangible assets		10,776			11,626			21,560			22,913
Loss from operations		(5,544	)		(1,106	)		(11,393	)		(9,353	)
Other income (expense):
Gain on investment securities and other		30			527			14			566
Amortization of debt issue costs		—			(50	)		—			(100	)
Foreign exchange gain		2,213			1,608			3,578			503
Interest income (expense), net		330			(563	)		594			(742	)
(Loss) income before provision for income taxes		(2,971	)		416			(7,207	)		(9,126	)
Provision for income taxes		(1,181	)		(519	)		(3,770	)		(58,330	)
Net loss	$	(4,152	)	$	(103	)	$	(10,977	)	$	(67,456	)
Net loss per common share - basic	$	(0.02	)	$	(0.00	)	$	(0.05	)	$	(0.30	)
Net loss per common share - diluted	$	(0.02	)	$	(0.00	)	$	(0.05	)	$	(0.30	)
Shares used in per share calculation - basic		205,230			222,316			204,269			227,229
Shares used in per share calculation - diluted		205,230			222,316			204,269			227,229

See notes to the interim condensed consolidated financial statements.

3

PMC-Sierra, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

	Three Months Ended						Six Months Ended
	June 29, 2013			July 1, 2012 (As Restated - See Note 10)			June 29, 2013			July 1, 2012 (As Restated - See Note 10)
Net loss	$	(4,152	)	$	(103	)	$	(10,977	)	$	(67,456	)
Other comprehensive (loss) income:
Change in fair value of derivatives, net of tax of $110, $103, $165 and $228		(546	)		(688	)		(948	)		1,080
Change in fair value of investment securities, net of tax of $206, $313, $223 and $101		(406	)		(1,001	)		(448	)		(53	)
Other comprehensive (loss) income		(952	)		(1,689	)		(1,396	)		1,027
Comprehensive loss	$	(5,104	)	$	(1,792	)	$	(12,373	)	$	(66,429	)

See notes to the interim condensed consolidated financial statements.

4

PMC-Sierra, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)

	June 29, 2013			December 29, 2012 (As Restated - See Note 10)
ASSETS:
Current assets:
Cash and cash equivalents	$	98,680		$	169,970
Short-term investments		37,659			11,431
Accounts receivable, net of allowance for doubtful accounts of $1,261 (2012 - $1,614)		57,454			62,143
Inventories, net		30,517			23,548
Prepaid expenses and other current assets		19,765			22,125
Income taxes receivable		5,594			6,630
Prepaid tax expense		5,963			—
Deferred tax assets		49,308			43,630
Total current assets		304,940			339,477
Investment securities		172,500			91,778
Investments and other assets		16,580			20,133
Prepaid tax expense		2,856			11,851
Property and equipment, net		39,705			43,146
Goodwill		252,419			252,419
Intangible assets, net		107,605			128,668
Deferred tax assets		252			—
	$	896,857		$	887,472
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current liabilities:
Accounts payable	$	27,687		$	27,410
Accrued liabilities		74,887			72,282
Income taxes payable		1,799			1,450
Liability for unrecognized tax benefit		52,003			51,810
Deferred income taxes		2,450			2,466
Deferred income		6,913			8,113
Total current liabilities		165,739			163,531
Long-term obligations		11,751			17,233
Deferred income taxes		47,282			44,849
Liability for unrecognized tax benefit		28,944			29,236
PMC special shares convertible into 1,019 (2012 - 1,019) shares of common stock		1,188			1,188
Stockholders’ equity:
Common stock, par value $.001: 900,000 shares authorized; 204,145 shares issued and outstanding (2012 - 200,924)		204			201
Additional paid in capital		1,552,145			1,527,509
Accumulated other comprehensive (loss) income		(780	)		616
Accumulated deficit		(909,616	)		(896,891	)
Total stockholders’ equity		641,953			631,435
	$	896,857		$	887,472

See notes to the interim condensed consolidated financial statements.

5

PMC-Sierra, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Six Months Ended
	June 29, 2013			July 1, 2012 (As Restated - See Note 10)
Cash flows from operating activities:
Net loss	$	(10,977	)	$	(67,456	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		33,185			32,041
Stock-based compensation		13,587			13,890
Unrealized foreign exchange gain, net		(3,775	)		(174	)
Net amortization of premiums/discounts and accrued interest of investments		595			2,984
Gain on investment securities and other		(4	)		(551	)
Asset impairment		—			260
Taxes related to intercompany dividend		—			60,940
Changes in operating assets and liabilities:
Accounts receivable		4,647			(6,367	)
Inventories		(6,969	)		10,749
Prepaid expenses and other current assets		610			(1,506	)
Accounts payable and accrued liabilities		3,438			(22,838	)
Deferred income taxes and income taxes receivables/payables		4,213			(677	)
Deferred income		(1,200	)		(1,247	)
Net cash provided by operating activities		37,350			20,048
Cash flows from investing activities:
Investment in long term deposits		(1,127	)		—
Business acquisition		—			(15,900	)
Purchases of property and equipment		(7,500	)		(15,818	)
Purchase of intangible assets		(2,048	)		(2,291	)
Redemption of short-term investments		7,966			—
Disposals of investment securities		38,297			73,579
Purchases of investment securities and other investments		(154,385	)		(59,210	)
Reclassification of short-term investments and long-term investment securities		—			74,852
Net cash (used in) provided by investing activities		(118,797	)		55,212
Cash flows from financing activities:
Repurchases of common stock		(5,509	)		(155,783	)
Equity forward contract related to accelerated share repurchase program		—			(9,827	)
Proceeds from issuance of common stock		16,452			8,949
Net cash provided by (used in) financing activities		10,943			(156,661	)
Effect of exchange rate changes on cash and cash equivalents		(786	)		(145	)
Net decrease in cash and cash equivalents		(71,290	)		(81,546	)
Cash and cash equivalents, beginning of period		169,970			182,571
Cash and cash equivalents, end of period	$	98,680		$	101,025
Supplemental disclosures of cash flow information:
Cash refund received on income taxes, net	$	(379	)	$	(1,952	)

See notes to the interim condensed consolidated financial statements.

6

PMC-Sierra, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 29, 2013 AND JULY 1, 2012

(in thousands)

	Shares of Common Stock			Common Stock			Additional Paid in Capital (As Restated  - See Note 10)			Accumulated Other Comprehensive Income (Loss) (net of tax)			Accumulated Deficit (As Restated - See Note 10)			Total Stockholders’ Equity (As Restated  - See Note 10)
Balance at March 30, 2013		203,889		$	204		$	1,549,830		$	172		$	(903,716	)	$	646,490
Net loss		—			—			—			—			(4,152	)		(4,152	)
Other comprehensive loss:
Change in fair value of derivatives, net of tax of $110		—			—			—			(546	)		—			(546	)
Change in fair value of investment securities, net of tax of $206		—			—			—			(406	)		—			(406	)
Comprehensive loss																	(5,104	)
Issuance of common stock under stock benefit plans		1,159			1			688			—			—			689
Stock-based compensation expense		—			—			6,205			—			—			6,205
Benefit of stock option related loss carry-forwards		—			—			(820	)		—			—			(820	)
Repurchases of common stock		(903	)		(1	)		(3,758	)		—			(1,748	)		(5,507	)
Balance at June 29, 2013		204,145		$	204		$	1,552,145		$	(780	)	$	(909,616	)	$	641,953
Balance at April 1, 2012		231,823		$	231		$	1,636,753		$	1,570		$	(557,536	)	$	1,081,018
Net loss		—			—			—			—			(103	)		(103	)
Other comprehensive loss:
Change in fair value of derivatives, net of tax of $103		—			—			—			(688	)		—			(688	)
Change in fair value of investment securities, net of tax of $313		—			—			—			(1,001	)		—			(1,001	)
Comprehensive loss																	(1,792	)
Issuance of common stock under stock benefit plans		1,081			2			956			—			—			958
Stock-based compensation expense		—			—			7,309			—			—			7,309
Benefit of stock option related loss carry-forwards		—			—			(2,287	)		—			—			(2,287	)
Repurchases of common stock		(23,114	)		(23	)		(96,702	)		—			(59,058	)		(155,783	)
Equity forward contract related to accelerated share repurchase program		—			—			(9,827	)		—			—			(9,827	)
Balance at July 1, 2012		209,790		$	210		$	1,536,202		$	(119	)	$	(616,697	)	$	919,596
Balance at December 29, 2012		200,924		$	201		$	1,527,509		$	616		$	(896,891	)	$	631,435
Net loss		—			—			—			—			(10,977	)		(10,977	)
Other comprehensive income:
Change in fair value of derivatives, net of tax of $165		—			—			—			(948	)		—			(948	)
Change in fair value of investment securities, net of tax of $223		—			—			—			(448	)		—			(448	)
Comprehensive loss																	(12,373	)
Issuance of common stock under stock benefit plans		4,124			4			15,346			—			—			15,350
Stock-based compensation expense		—			—			13,587			—			—			13,587
Benefit of stock option related loss carry-forwards		—			—			(539	)		—			—			(539	)
Repurchases of common stock		(903	)		(1	)		(3,758	)		—			(1,748	)		(5,507	)
Balance at June 29, 2013		204,145		$	204		$	1,552,145		$	(780	)	$	(909,616	)	$	641,953
Balance at January 1, 2012		230,233		$	230		$	1,587,127		$	(1,146	)	$	(490,183	)	$	1,096,028
Net loss		—			—			—			—			(67,456	)		(67,456	)
Other comprehensive income:
Change in fair value of derivatives, net of tax of $228		—			—			—			1,080			—			1,080
Change in fair value of investment securities, net of tax of $101		—			—			—			(53	)		—			(53	)
Comprehensive loss																	(66,429	)
Issuance of common stock under stock benefit plans		2,671			3			8,177			—			—			8,180
Stock-based compensation expense		—			—			13,890			—			—			13,890
Benefit of stock option related loss carry-forwards		—			—			33,537			—			—			33,537
Repurchases of common stock		(23,114	)		(23	)		(96,702	)		—			(59,058	)		(155,783	)
Equity forward contract related to accelerated share repurchase program		—			—			(9,827	)		—			—			(9,827	)
Balance at July 1, 2012		209,790		$	210		$	1,536,202		$	(119	)	$	(616,697	)	$	919,596

See notes to the interim condensed consolidated financial statements.

7

PMC-Sierra, Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1. Summary of Significant Accounting Policies

Description of business. PMC-Sierra, Inc. (the “Company” or “PMC”) is a semiconductor innovator transforming networks that connect, move and store digital content. Building on a track record of technology leadership, the Company is driving innovation across storage, optical and mobile networks. PMC’s highly integrated solutions increase performance and enable next generation services to accelerate the network transformation.

Basis of presentation. The accompanying interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) and United States Generally Accepted Accounting Principles (“GAAP”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules or regulations. These interim condensed consolidated financial statements are unaudited, but reflect all adjustments which are normal and recurring in nature and are, in the opinion of management, necessary to provide a fair statement of results for the interim periods presented. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in the Company’s Annual Report on Form 10-K for the year ended December 29, 2012. The results of operations for the interim periods are not necessarily indicative of results to be expected in future periods. Fiscal 2013 will consist of 52 weeks and will end on Saturday, December 28, 2013. Fiscal 2012 consisted of 52 weeks and ended on Saturday, December 29, 2012. The second quarter of each of 2013 and 2012 consisted of 13 weeks.

Estimates. The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Estimates are used for, but not limited to, stock-based compensation, purchase accounting assumptions including those used to calculate the fair value of intangible assets and goodwill, the valuation of investments, accounting for doubtful accounts, inventory reserves, depreciation and amortization, asset impairments, revenue recognition, sales returns, warranty costs, income taxes including uncertain tax positions, restructuring costs, assumptions used to measure the fair value of the debt component of our senior convertible notes, accounting for employee benefit plans, and contingencies. Actual results could differ materially from these estimates.

8

NOTE 2. Business Combinations

Acquisition of 12GB/s SAS expander business from Maxim Integrated Products, Inc.

During the first quarter of fiscal 2012, the Company completed the acquisition of the 12Gb/s Serial attached SCSI (“SAS”) expander business from Maxim Integrated Products, Inc. (“Maxim”). Along with a very experienced team, this acquisition provides a strong strategic fit between PMC’s core strengths in enterprise storage and Maxim’s established traction with expander solutions at the largest server storage original equipment manufacturers. This acquisition was accounted for under the acquisition method of accounting. The financial impact of the acquisition was not material to the Company. See Note 11. Subsequent Events for a discussion regarding the acquisition of Integrated Device Technology, Inc.’s Enterprise Flash Controller Business.

NOTE 3. Derivative Instruments

The Company generates revenues in U.S. dollars but incurs a portion of its operating expenses in foreign currencies, primarily the Canadian dollar. To minimize the short-term impact of foreign currency fluctuations on the Company’s operating expenses, the Company purchases forward currency contracts.

As at June 29, 2013, the Company had 41 forward currency contracts (December 29, 2012 - 73) outstanding, all with maturities of less than 12 months, which qualified and were designated as cash flow hedges. The U.S. dollar notional amount of these contracts was $30.3 million (December 29, 2012 - $22.5 million) and the contracts had a fair value loss of $0.7 million (July 1, 2012 - fair value loss of $0.5 million), which was recorded in Accumulated other comprehensive income (loss) net of taxes of $nil million for the six months ended June 29, 2013 (net of taxes of $nil million for the six months ended July 1, 2012).

For the period ended July 1, 2012, the total consideration allocated to stock repurchases under the Company’s Accelerated Stock Buyback agreement was $150.2 million of which $57.2 million was recorded as an adjustment to accumulated deficit. The balance reduced common stock and additional paid-in capital. In addition, there was also $9.8 million recorded as an equity forward contract, which was included in Additional paid-in capital.

NOTE 4. Fair Value Measurements

ASC Topic 820 specifies a hierarchy of valuation techniques which requires an entity to maximize the use of observable inputs that may be used to measure fair value. The Company’s valuation techniques used to measure the fair value of money market funds, and certain marketable equity securities were derived from quoted prices in active markets for identical assets or liabilities. The valuation techniques used to measure the fair value of all other financial instruments, all of which have counterparties with high credit ratings, were valued based on quoted market prices or model driven valuations using significant inputs derived from or corroborated by observable market data.

There were no transfers in and out of Level 1 and 2 fair value measurements during the six months ended June 29, 2013.

9

Assets/Liabilities Measured and Recorded at Fair Value on a Recurring Basis

Financial assets measured on a recurring basis as at June 29, 2013 and December 29, 2012, are summarized below:

	Fair value,
	June 29, 2013
(in thousands)	Level 1		Level 2
Assets:
Corporate bonds and notes (1)	$	146,408	$	2,206
Money market funds (1)		17,434		—
United States (“US”) treasury and government agency notes (1)		55,007		—
Foreign government and agency notes (1)		5,902		—
US state and municipal securities (1)		637		—
Total assets	$	225,388	$	2,206

	Fair value,
	December 29, 2012
(in thousands)	Level 1		Level 2
Assets:
Corporate bonds and notes (1)	$	63,565	$	—
Money market funds (1)		50,528		—
US treasury and government agency notes (1)		33,854		—
Foreign government and agency notes (1)		4,044		—
US state and municipal securities (1)		1,746		—
Forward currency contracts (2)		—		392
Total assets	$	153,737	$	392

(1) Included in Cash and cash equivalents, Short-term investments, and Long-term investment securities. See Note 7. Investment Securities.

(2) Included in Prepaid expenses and other current assets.

Financial liabilities measured on a recurring basis are summarized below:

	Fair value,
	June 29, 2013
(in thousands)	Level 2
Current liabilities:
Forward currency contracts (1)	$	722

	Fair value,
	December 29, 2012
(in thousands)	Level 2
Current liabilities:
Forward currency contracts (1)	$	—

(1) Included in Accrued liabilities.

10

NOTE 5. Stock-Based Compensation

The Company has two stock-based compensation programs, which are described below. None of the Company’s stock-based awards under these plans are classified as liabilities. The Company did not capitalize any stock-based compensation cost and recorded compensation expense for the three and six months ended June 29, 2013 and July 1, 2012, as follows:

	Three Months Ended				Six Months Ended
(in thousands)	June 29, 2013		July 1, 2012		June 29, 2013		July 1, 2012
Cost of revenues	$	208	$	252	$	453	$	476
Research and development		2,396		2,900		5,700		5,741
Selling, general and administrative		3,601		4,157		7,434		7,673
Total	$	6,205	$	7,309	$	13,587	$	13,890

The Company received cash of $1.6 million and $16.5 million related to the issuance of stock-based awards during the three and six months ended June 29, 2013, respectively. The Company received cash of $1.7 million and $8.9 million related to the issuance of stock-based awards during the three and six months ended July 1, 2012, respectively.

Equity Award Plans

The Company issues its common stock under the provisions of the 2008 Equity Plan (the “2008 Plan”). Stock option awards are granted with an exercise price equal to the closing market price of the Company’s common stock at the grant date. The options generally expire within 10 years and vest over four years.

The 2008 Plan was approved by stockholders at the 2008 Annual Meeting. The 2008 Plan became effective on January 1, 2009 (the “Effective Date”). It is a successor to the 1994 Incentive Stock Plan (the “1994 Plan”) and the 2001 Stock Option Plan (the “2001 Plan”). Up to 30,000,000 shares of our common stock have been initially reserved for issuance under the 2008 Plan. At the 2012 Annual Meeting, stockholders approved an increase in shares reserved for issuance under the 2008 plan by 9,500,000 shares which shares were registered on May 14, 2012 on Form S-8 bringing the total number of authorized and registered shares available under the 2008 Plan to 39,500,000. To the extent that a share that is subject to an award that counts as 1.6 shares against the 2008 Plan’s share reserve (i.e., dividend equivalents, RSUs or stock awards awarded under the 2008 Plan when those shares are issued for cash consideration per share or unit less than 100% of the fair market value of our common stock on the award date), is added back into the 2008 Plan upon expiration or termination of the award or repurchase or forfeiture of the shares, the number of shares of common stock available for issuance under the 2008 Plan will be credited with 1.6 shares. The implementation of the 2008 Plan did not affect any options or restricted stock units outstanding under the 1994 Plan or the 2001 Plan on the Effective Date. To the extent that any of those options or restricted stock units subsequently terminate unexercised or prior to issuance of shares thereunder, the number of shares of common stock subject to those terminated awards will be added to the share reserve available for issuance under the 2008 Plan, up to an additional 15,000,000 shares. No additional shares may be issued under the 1994 Plan or the 2001 Plan. In 2006, the Company assumed the stock option plans and all outstanding stock options of Passave, Inc. as part of the merger consideration in that business combination. In 2010, the Company assumed the stock option plans and all outstanding stock options of Wintegra, Inc. as part of that business combination.

11

Activity under the option plans during the six months ended June 29, 2013 was as follows:

	Number of options			Weighted average exercise price per share		Weighted average remaining contractual term (years)		Aggregate intrinsic value at June 29, 2013
Outstanding, December 29, 2012		28,001,047		$	7.93
Granted and Assumed		213,148		$	6.08
Exercised		(1,951,741	)	$	5.40
Forfeited		(999,889	)	$	8.17
Outstanding, June 29, 2013		25,262,565		$	8.10		5.07	$	7,485,954
Vested & expected to vest, June 29, 2013		24,919,328		$	8.12		5.02	$	7,360,774
Exercisable, June 29, 2013		20,874,962		$	8.34		4.45	$	6,204,610

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the quoted price of the Company’s common stock for the options that were in-the-money at June 29, 2013. During each of the six months ended June 29, 2013, and July 1, 2012, $1.3 million and $1.4 million were recorded for forfeitures, respectively.

The fair value of the Company’s stock option awards granted to employees is estimated using a lattice-binomial valuation model. This model considers the contractual term of the option, the probability that the option will be exercised prior to the end of its contractual life, and the probability of termination or retirement of the option holder in computing the value of the option. The model requires the input of highly subjective assumptions including the expected stock price volatility and expected life.

The Company’s estimates of expected volatilities are based on a weighted historical and market-based implied volatility. The Company uses historical data to estimate option exercises and employee terminations within the valuation model; separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. The expected term of options granted is derived from the output of the stock option valuation model and represents the period of time that granted options are expected to be outstanding. The risk-free rate for periods within the expected life of the stock option is based on the U.S. Treasury yield curve in effect at the time of the grant.

The fair values of the Company’s stock option awards were calculated for expense recognition using an estimated forfeiture rate, assuming no expected dividends and using the following weighted average assumptions:

	Three Months Ended						Six Months Ended
	June 29, 2013			July 1, 2012			June 29, 2013			July 1, 2012
Expected life (years)		6.8			6.2			6.8			5.3
Expected volatility		40	%		45	%		40	%		45	%
Risk-free interest rate		1.5	%		0.9	%		1.5	%		0.8	%

The weighted average grant-date fair value per stock options granted during the three and six months ended June 29, 2013 was $2.57 and $2.57, respectively. The weighted average grant-date fair value per stock option granted during the three and six months ended July 1, 2012 was $2.70 and $2.47, respectively. The total intrinsic value of stock options exercised during the three months and six months ended June 29, 2013 was $0.5 million and $2.2 million, respectively. The total intrinsic value of stock options exercised during the three and six months ended July 1, 2012 was $0.6 million and $1.1 million, respectively.

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As of June 29, 2013, there was $10.3 million of total unrecognized compensation costs related to unvested stock options granted under the plans, which is expected to be recognized over an average period of 2.0 years.

Restricted Stock Units

On February 1, 2007, the Company amended its stock award plans to allow for the issuance of Restricted Stock Units (“RSUs”) to employees and members of the Board of Directors. The first grant of RSUs occurred on May 25, 2007. The grants vest over varying terms, up to a maximum of four years from the date of grant.

A summary of RSU activity during the six months ended June 29, 2013 is as follows:

	Restricted Stock Units			Weighted Average Remaining Contractual Term (years)		Aggregate intrinsic value at June 29, 2013
Unvested shares at December 29, 2012		5,358,201			—		—
Awarded		442,303			—		—
Released		(1,158,500	)		—		—
Forfeited		(353,402	)		—		—
Unvested shares at June 29, 2013		4,288,602			1.50	$	27,245,782
Restricted Stock Units expected to vest June 29, 2013		3,763,261			1.40	$	23,915,522

The intrinsic value of RSUs vested during the three and six months ended June 29, 2013 was $5.7 million and $6.9 million, respectively. As of June 29, 2013, total unrecognized compensation costs, adjusted for estimated forfeitures, related to unvested RSUs was $18.8 million, which is expected to be recognized over the next 2.6 years.

Employee Stock Purchase Plan

In 1991, the Company adopted an Employee Stock Purchase Plan (the “ESPP”) under Section 423 of the Internal Revenue Code. The ESPP allows eligible participants to purchase shares of the Company’s common stock at six-month intervals through payroll deductions at a price of 85% of the lower of the fair market value at specific dates in those six-month intervals (calculated in the manner provided in the plan). Shares of the Company’s common stock are offered under the ESPP through a series of successive offering periods, generally with a maximum duration of 24 months. Under the ESPP, the number of shares authorized to be available for issuance under the plan is increased automatically on January 1 of each year until the expiration of the plan. The increase will be limited to the lesser of (i) 1% of the outstanding shares on January 1 of each year, (ii) 2,000,000 shares (after adjusting for stock dividends), or (iii) an amount to be determined by the Board of Directors. The ESPP was terminated on February 10, 2011 and no additional shares will be issued under the ESPP.

The 2011 Employee Stock Purchase Plan (the “2011 Plan”) was approved by stockholders at the 2010 Annual Meeting. The 2011 Plan became effective on February 11, 2011 and is the successor to the ESPP. The 2011 Plan consists of consecutive offering periods, generally of a duration of 6 months, and allows eligible employees to purchase shares of the Company’s common stock at the end of each such offering period at a price per share equal to 85% of the lower of the fair market value of a share of Common Stock on the start date or the fair market value of a share of Common Stock on the exercise date of the offering period. Employees purchase such shares through payroll deductions which may not exceed 10% of their total cash compensation. The 2011 Plan imposes certain limitations upon an employee’s right to acquire Common Stock, including the following: (i) no employee may purchase more than 7,500 shares of Common Stock on any one purchase date and (ii) no employee may be granted rights to purchase more than $25,000 worth of Common Stock for each calendar year that such rights are at any time outstanding. Up to 12,000,000 shares of our common stock have been initially reserved for issuance under the 2011 Plan.

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During the first six months of 2013, 1,193,775 shares were issued under the 2011 Plan at a weighted average price of $4.95 per share. As of June 29, 2013, 7,259,359 shares were available for future issuance under the 2011 Plan compared to 8,453,134 under the 2011 Plan as at December 29, 2012.

	Six Months Ended
	June 29, 2013			July 1, 2013
Expected life (years)		0.5			0.5
Expected volatility		37	%		39	%
Risk-free interest rate		0.1	%		0.1	%

The weighted average grant date fair value per ESPP award granted during the first six months of 2013 was $1.64. The total intrinsic value of ESPP shares issued during the first six months of 2013 was $1.8 million.

For the six-month period ended June 29, 2013, total unrecognized compensation costs, adjusted for estimated forfeitures, related to non-vested ESPP awards was $0.4 million which is expected to be recognized over the next month.

NOTE 6. Balance Sheet Items

a. Inventories.

Inventories (net of reserves of $7.6 million and $7.8 million at June 29, 2013 and December 29, 2012, respectively) were as follows:

(in thousands)	June 29, 2013		December 29, 2012
Work-in-progress	$	15,136	$	9,867
Finished goods		15,381		13,681
	$	30,517	$	23,548

b. Product warranties.

The Company provides a limited warranty on most of its standard products and accrues for the estimated cost at the time of shipment. The Company estimates its warranty costs based on historical failure rates and related repair or replacement costs. The change in the Company’s accrued warranty obligations from December 29, 2012 to June 29, 2013, and from December 31, 2011 to July 1, 2012 were as follows:

	Six Months Ended
(in thousands)	June 29, 2013			July 1, 2012
Balance, beginning of the period	$	5,981		$	5,415
Accrual for new warranties issued		268			870
Reduction for payments and product replacements		(528	)		(112	)
Adjustments related to changes in estimate of warranty accrual		(898	)		(870	)
Balance, end of the period	$	4,823		$	5,303

The Company’s accrual for warranty obligations is included in Accrued liabilities in the interim Condensed Consolidated Balance Sheet.

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NOTE 7. Investment Securities

The Company’s available for sale investments, by investment type, consists of the following at June 29, 2013 and December 29, 2012:

	June 29, 2013
(in thousands)	Amortized Cost		Gross Unrealized Gains*		Gross Unrealized Losses*			Fair Value
Cash equivalents:
Money market funds	$	17,435	$	—	$	—		$	17,435
Total cash equivalents		17,435		—		—			17,435
Short-term investments:
Corporate bonds and notes		33,408		893		(11	)		34,290
US treasury and government agency notes		1,745		88		—			1,833
Foreign government and agency notes		1,504		32		—			1,536
Total short-term investments		36,657		1,013		(11	)		37,659
Long-term investment securities:
Corporate bonds and notes		114,581		104		(361	)		114,324
US treasury and government agency notes		53,275		8		(110	)		53,173
Foreign government and agency notes		4,378		3		(15	)		4,366
US states and municipal securities		641		—		(4	)		637
Total long-term investment securities		172,875		115		(490	)		172,500
Total	$	226,967	$	1,128	$	(501	)	$	227,594

* Gross unrealized gains include accrued interest on investments of $0.9 million. The remainder of the gross unrealized gains and losses are included in the interim Condensed Consolidated Balance Sheet as Accumulated other comprehensive income (loss).

	December 29, 2012
(in thousands)	Amortized Cost		Gross Unrealized Gains*		Gross Unrealized Losses*			Fair Value
Cash equivalents:
Money market funds	$	50,528	$	—	$	—		$	50,528
Total cash equivalents		50,528		—		—			50,528
Short-term investments:
Corporate bonds and notes		9,163		522		—			9,685
US states and municipal securities		1,720		26		—			1,746
Total short-term investments		10,883		548		—			11,431
Long-term investment securities:
Corporate bonds and notes		53,567		329		(16	)		53,880
US treasury and government agency notes		33,830		25		(1	)		33,854
Foreign government and agency notes		4,018		26		—			4,044
Total long-term investment securities		91,415		380		(17	)		91,778
Total	$	152,826	$	928	$	(17	)	$	153,737

* Gross unrealized gains include accrued interest on investments of $0.9 million. The remainder of the gross unrealized gains and losses are included in the interim Condensed Consolidated Balance Sheet as Accumulated other comprehensive income (loss).

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As of June 29, 2013 and December 29, 2012, the fair value of certain of the Company’s available-for-sale securities was less than their cost basis. Management reviews various factors in determining whether to recognize an impairment charge related to these unrealized losses, including the current financial and credit market environment, the financial condition, near-term prospects of the issuer of the investment security, the magnitude of the unrealized loss compared to the cost of the investment, length of time the investment has been in a loss position and the Company’s intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery of market value. As of June 29, 2013, the Company determined that all the unrealized losses are temporary in nature and recorded them as a component of Accumulated other comprehensive income (loss).

NOTE 8. Income Taxes

The Company recorded a provision for income taxes of $1.2 million and $3.8 million for the three and six months ended June 29, 2013, respectively, and a provision for income taxes of $0.5 million and $58.3 million for the three and six months ended July 1, 2012, respectively.

For the three months ended June 29, 2013, compared to the same period last year, the decrease in the provision for income taxes of $1.3 million was mainly the result of the $2.3 million income tax recovery related to change in the liability for unrecognized tax benefits, partially off-set by the tax effect on change in mix of income across our foreign subsidiaries. As a result, the Company’s effective tax rate was (40)% for the three months ended June 29, 2013 and (125)% for the three months ended July 1, 2012.

For the six months ended June 29, 2013, compared to the same period last year, the decrease in provision for income taxes of $54.5 million was mainly due to the result of the $20 million withholding tax related to an intercompany dividend made in preparation for funding the Company’s share repurchase programs in 2012 and $36 million tax expense related to taxable income generated in the United States by the dividend having been offset by available stock-option-related loss carryforwards. The remaining change is mainly due to the changes in mix of income across our foreign subsidiaries. The Company’s effective tax rate was (52)% and (639)% for the six months ended June 29, 2013 and the six months ended July 1, 2012, respectively. See Note 10. Error Corrections for further details.

The difference between our effective tax rate and the 35% federal statutory rate results primarily from foreign earnings eligible for tax rates lower than the federal statutory rate due to economic incentives subject to certain criteria granted by foreign jurisdictions and extending to approximately 2020, adjustments for prior years taxes and tax credits, the effect of intercompany transactions, investment tax credits earned, changes in valuation allowance, changes in accruals related to the unrecognized tax benefit liabilities, permanent differences arising from stock-based compensation, non-deductible, intangible asset amortization and utilization of stock option related loss carryforwards recorded in equity.

As at June 29, 2013, the Company’s liability for unrecognized tax benefits on a world-wide consolidated basis was $80.9 million. Recognition of an amount different from this estimate would affect the Company’s effective tax rate.

Because our projected tax rate is volatile, the provision for income taxes in our interim Condensed Consolidated Financial Statements reflects our actual effective tax rate for the current quarter. We believe our year-to-date tax provision for income taxes is the most reliable estimate of our annual effective tax rate. The effective income tax rate for the current fiscal year will likely be different from the tax rate in effect for the three and six months ended June 29, 2013 and could be considerably higher or lower, depending largely on our operating results before taxes and the geographic mix of income (loss) for the year.

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NOTE 9. Net Loss Per Share

The following table sets forth the computation of basic and diluted net loss per share:

	Three Months Ended						Six Months Ended
(in thousands, except per share amounts)	June 29, 2013			July 1, 2012 (As Restated - See Note 10)			June 29, 2013			July 1, 2012 (As Restated - See Note 10)
Numerator:
Net loss	$	(4,152	)	$	(103	)	$	(10,977	)	$	(67,456	)
Denominator:
Basic weighted average common shares outstanding (1)		205,230			222,316			204,269			227,229
Diluted weighted average common shares outstanding (1)		205,230			222,316			204,269			227,229
Basic net loss per share	$	(0.02	)	$	(0.00	)	$	(0.05	)	$	(0.30	)
Diluted net loss per share	$	(0.02	)	$	(0.00	)	$	(0.05	)	$	(0.30	)

(1) PMC-Sierra Ltd. special shares are included in the calculation of basic and diluted weighted average common shares outstanding.

In the three and six months ended June 29, 2013 and July 1, 2012, the Company had approximately 2.2 million of stock options and Restricted Stock Units that were not included in the diluted net loss per share because they would have been anti-dilutive.

NOTE 10. Error Corrections

Income Taxes

As previously disclosed in our March 30, 2013 interim condensed consolidated financial statements, the condensed consolidated financial statements as of December 29, 2012 and for the three and six months ended July 1, 2012 have been revised to reflect a restatement related to income tax errors. Subsequent to the issuance of the Company’s December 29, 2012 consolidated financial statements, errors were identified that related to the determination of tax expense associated with the Company’s 2009 intercompany sale of economic rights to intellectual property (“IP”). Under accounting principles that apply to intercompany sales, the tax expense attributable to the gain is recognized over the economic life of the asset sold. The correction reflects the Company’s recording of tax expense from the intercompany sale of IP that should be recognized over the life of the assets sold. Additionally, there was an increase in tax expense for the three months ended July 1, 2012 from correcting the recognition of foreign tax credits (related to an intercompany dividend) in the three months ended April 1, 2012 instead of in the three months ended July 1, 2012. Since total tax expense was reduced, the amount of benefit related to excess stock option deductions was reduced by the same amount. Management believes that the errors corrected are not material to any of the periods presented, including the effect on current and prior periods.

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The tables below illustrate the effects on the condensed consolidated balance sheet and statements of operations:

	As at
	December 29, 2012
(in thousands)	As Restated			As Previously Reported
CONDENSED CONSOLIDATED BALANCE SHEETS
Non-current assets:
Prepaid expenses	$	11,851		$	25,077
Total assets	$	887,472		$	900,698
Liabilities:
Liability for unrecognized tax benefits - non-current	$	29,236		$	38,915
Stockholders’ equity:
Additional paid in capital	$	1,527,509		$	1,526,883
Accumulated deficit	$	(896,891	)	$	(892,718	)
Total stockholders’ equity	$	631,435		$	634,982
Total liabilities and stockholders’ equity	$	887,472		$	900,698

	Three Months Ended
	July 1, 2012
(in thousands, except for per share amounts)	As Restated			As Previously Reported in Q2 2012 10-Q
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Provision for) recovery of income taxes	$	(519	)	$	26,064
Net (loss) income	$	(103	)	$	26,480
Net (loss) income per common share - basic	$	(0.00	)	$	0.12
Net (loss) income per common share - diluted	$	(0.00	)	$	0.12
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Net (loss) income	$	(103	)	$	26,480
Comprehensive income	$	(1,792	)	$	24,791

	Six Months Ended
	July 1, 2012
(in thousands, except for per share amounts)	As Restated			As Previously Reported in Q2 2012 10-Q
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Provision for income taxes	$	(58,330	)	$	(60,665	)
Net loss	$	(67,456	)	$	(69,791	)
Net loss per common share - basic	$	(0.30	)	$	(0.31	)
Net loss per common share - diluted	$	(0.30	)	$	(0.31	)
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Net loss	$	(67,456	)	$	(69,791	)
Comprehensive loss	$	(66,429	)	$	(68,764	)
CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS
Cash flows from operating activities:
Net loss	$	(67,456	)	$	(69,791	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Changes in operating assets and liabilities:
Deferred income taxes and income taxes receivables/payables	$	(677	)	$	1,658

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NOTE 11. Subsequent Events

Acquisition of Integrated Device Technology, Inc’s Enterprise Flash Controller Business

On May 29, 2013, PMC entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Integrated Device Technology, Inc., a Delaware corporation (“Seller”), and Integrated Device Technology (Malaysia) Sdn. Bhd., a wholly-owned subsidiary of Seller (“Selling Subsidiary” and, together with PMC and Seller, the “Parties”). Pursuant to the terms of the Purchase Agreement, PMC has agreed to acquire (i) substantially all of the assets that are used by Seller and its subsidiaries in the business of designing, developing, manufacturing, testing, marketing, supporting, maintaining, distributing, provisioning and selling non-volatile memory (flash) controllers and (ii) all technology and intellectual property rights owned by Seller or any of its subsidiaries and used exclusively in, or developed exclusively for use in, (a) switching circuits having the primary function of flexible routing of data from/to multiple switch interface ports, where all switch interface ports conform to the PCIe protocol, or (b) circuits having the primary function of executing all of the capturing, re-timing, re-generating and re-transmitting PCIe signals to help extend the physical reach of the signals in a system (the “Acquisition”). The Parties also entered into a license agreement, to be effective upon the closing of the Acquisition, whereby Seller and Selling Subsidiary will license certain intellectual property rights and technology to PMC, and PMC will license back to Seller and Selling Subsidiary certain of the intellectual property rights and technology acquired by PMC in the Acquisition. Upon the closing of the Acquisition, the Parties will also enter into (a) a transition services agreement and (b) a supply agreement, whereby Seller and Selling Subsidiary will manufacture certain products for PMC.

On July 15, 2013, PMC announced the completion of the Acquisition. The aggregate purchase price was approximately $96 million in cash. The transaction was funded by PMC’s available working capital. We are in the process of preparing the preliminary purchase price allocation. In connection with the completion of the Acquisition, the license agreement that was entered into by the Parties simultaneously with the Purchase Agreement became effective. In addition, as noted above, upon the closing of the Acquisition, the Parties entered into (a) a transition services agreement and (b) a supply agreement, whereby Seller and Selling Subsidiary will manufacture certain products for PMC.

Credit Facility

On August 2, 2013, PMC entered into a five-year senior secured credit facility with Bank of America, N.A., as administrative agent and a lender, and a syndicate of other lenders (the “Credit Agreement”). The Credit Agreement provides for a five-year $100 million revolving credit facility, which includes a $25 million sublimit for the issuance of standby letters of credit. The Company may request, from time to time, and subject to customary conditions, including receipt of commitments, that the revolving credit facility be increased by an aggregate amount not to exceed $150 million. The revolving credit facility is available for general corporate purposes. The Company’s obligations under the Credit Agreement are jointly and severally guaranteed by material wholly-owned domestic subsidiaries of the Company (the “Guarantors”).

In connection with the closing of the Credit Agreement, the Company also entered into a collateral agreement dated August 2, 2013 (the “Collateral Agreement”) with the Guarantors, and such other parties that may become Guarantors thereunder after the date thereof, and Bank of America, N.A., in its capacity as administrative agent, pursuant to which the Company, the Guarantors granted a security interest in substantially all of their personal property, including the equity interests of their domestic subsidiaries and 65% of the equity interests of their foreign subsidiaries.

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At the Company’s option, loans (other than swingline loans) under the Credit Agreement shall bear interest at (i) the Applicable Rate (as defined below) plus the Eurodollar Rate (as defined in the Credit Agreement) or (ii) the Applicable Rate plus a rate equal to the higher of (a) the federal funds rate plus 0.50%, (b) the prime rate of the Administrative Agent (as defined in the Credit Agreement), or (c) the Eurodollar Rate plus 1.0% (the “Base Rate”). All swingline loans will bear interest at a rate equal to the Applicable Rate plus the Base Rate. The Eurodollar Rate is equal to the rate per annum calculated from the British Bankers Association LIBOR rate, as published by Reuters, for the applicable interest periods. The Applicable Rate for Eurodollar Rate loans ranges from 1.75% per annum to 2.25% per annum based on the Company’s leverage ratio. The Applicable Rate for Base Rate loans ranges from 0.75% per annum to 1.25% per annum based on the Company’s leverage ratio. The Company will pay a commitment fee equal to the Applicable Rate times the actual daily amount of the unused portions of the revolving credit facility, subject to adjustments provided in the Credit Agreement. The Applicable Rate for the commitment fee ranges from 0.25% per annum to 0.35% per annum based on the Company’s leverage ratio. The Company may prepay amounts outstanding and terminate commitments under the Credit Agreement, at any time and in whole or in part, without premium or penalty (other than reimbursement of customary breakage costs in the case of Eurodollar Rate loans).

The Credit Agreement contains customary representations and warranties, affirmative covenants and negative covenants, with which the Company must be in compliance in order to borrow funds and to avoid an event of default, including, without limitation, restrictions and limitations on, dividends, asset sales, the ability to incur additional debt and additional liens and certain financial covenants. The Company must maintain a consolidated cash interest coverage ratio of not less than 3.50 to 1.0 as of the end of any fiscal quarter of the Company and a consolidated leverage ratio not to exceed 2.50 to 1.0 as of the end of any fiscal quarter of the Company.

The Credit Agreement also contains customary events of default, including, without limitation, non-payment, breach of representation and warranties, breach of covenants, cross default to other material indebtedness, insolvency events, material judgments, material ERISA events and change of control. The occurrence of an event of default will, in certain circumstances, increase the applicable rate of interest by 2.0% and could result in the termination of commitments under the revolving credit facility, the declaration that all outstanding loans are due and payable in whole or in part and the requirement of cash collateral deposits in respect of outstanding letters of credit.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report contains forward-looking statements that involve risks and uncertainties. We use words such as “anticipates”, “believes”, “plans”, “expects”, “future”, “intends”, “may”, “could”, “should”, “estimates”, “predicts”, “potential”, “continue”, “becoming”, “transitioning” and similar expressions to identify such forward-looking statements. Our forward-looking statements include statements as to our business outlook, revenues, margins, expenses, tax provision, capital resources and liquidity sufficiency, sources of liquidity, capital expenditures, interest income and expenses, restructuring activities, cash commitments, purchase commitments, use of cash, our expectation regarding our amortization of purchased intangible assets, our expectations regarding our business acquisitions, and our expectation regarding distribution from certain investments. Such statements, particularly in the “Business Outlook” section, are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this filing. (See also “Risk Factors” Part II, Item 1A. and our other filings with the Securities and Exchange Commission (“SEC”)). Our actual results may differ materially, and these forward-looking statements do not reflect the potential impact of any divestitures, mergers, acquisitions, or other business combinations that had not been completed as of the filing date of this Quarterly Report.

Investors are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date of this Quarterly Report. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

OVERVIEW

PMC is a semiconductor innovator transforming networks that connect, move and store digital content. Building on a track record of technology leadership, we are driving innovation across storage, optical and mobile networks. Our highly integrated solutions increase performance and enable next generation services to accelerate the network transformation.

Our current revenues are generated by a portfolio of approximately 700 products which we have designed and developed or acquired. PMC’s diverse product portfolio enables many different types of communications network infrastructure equipment in three market segments: Storage, Mobile and Optical networks.

1. Our Storage network products enable high-speed communication servers, switches and storage equipment to store, manage and move large quantities of data securely;

2. Our Optical network products are used in optical transport platforms, multi-services provisioning platforms, and edge routers where they gather, process and transmit disparate traffic to their next destination in the network; and

3. Our Mobile network products are used in wireless base stations, mobile backhaul, and aggregation equipment.

On July 15, 2013, we announced completion of the acquisition of Integrated Device Technology, Inc’s Enterprise Flash Controller Business. With the addition of these controllers to our storage network products, PMC is positioned for leadership in the rapidly growing market for enterprise flash controllers.

The following discussion of the financial condition and results of our operations should be read in conjunction with the interim condensed consolidated financial statements and notes thereto included in this Form 10-Q, with certain comparatives restated as described in Part I. Financial Information, Item 1. Financial Statements, the Notes to the Condensed Consolidated Financial Statements, Note 10. Error Correction related to accounting for income taxes.

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Results of Operations

Second Quarter of 2013 and 2012

Net revenues

	Second Quarter
($ millions)	2013		2012		Change
Net revenues	$	127.9	$	137.8		(7	)%

Overall net revenues for the second quarter of 2013 were $127.9 million, a decrease of $9.9 million compared to the second quarter of 2012, mainly due to lower sales volumes. This 7% decrease in the current period compared to the same period of 2012 was mainly attributable to macro-economic uncertainty and continued cautious enterprise and carrier infrastructure spending which impacted each of the Storage, Optical and Mobile market segments.

Storage represented 65% of our net revenues in the second quarter of 2013 compared to 62% in the same period of 2012. The Storage net revenues decreased by 3% compared to the same quarter in 2012 mainly due to the factors described above. On a sequential basis, storage net revenues were down 2% mainly due to continued challenging enterprise spending environment and some specific product roll-outs by customers, including by some of our Datacenter customers.

Optical represented 21% of our net revenues in the second quarter of 2013 compared to 23% in the same period of 2012. The Optical net revenues decreased by 17% compared to the same quarter in 2012 due mainly to the factors described above. On a sequential basis, Optical net revenues were up 7% mainly due to an aggressive marketing campaign by NTT in Japan and Optical Transport Network (“OTN”) growth driven mostly out of China.

Mobile represented 14% our net revenues for the second quarter of 2013 compared to 15% in the same period of 2012. The Mobile net revenues decreased by 10% compared to the same quarter in 2012 due mainly to the factors described above. On a sequential basis, mobile revenues were up 16% due to North America carrier recovery and customers in Europe back to run rate on mobile-backhaul. This increase is mainly due to strength in the WinPath family of processors. In the second quarter of 2013, we announced the availability of our 4^th generation WinPath4 mobile-backhaul processor, industry’s first backhaul processor that enables mobile operators to scale capacity in their backhaul networks while transitioning to Layer 3 Packet Transport Networks (PTN).

Gross profit

	Second Quarter
($ millions)	2013			2012			Change
Gross profit	$	90.1		$	96.5			(7	)%
Percentage of net revenues		70	%		70	%

Total gross profit decreased by $6.4 million in the second quarter of 2013 on lower net revenues compared to the same period in 2012. Gross profit as a percentage of net revenues was 70% in the second quarter of 2013 and 2012.

Operating expenses

	Second Quarter
($ millions)	2013			2012			Change
Research and development	$	54.6		$	56.7			(4	)%
Percentage of net revenues		43	%		41	%
Selling, general and administrative	$	30.3		$	29.3			3	%
Percentage of net revenues		24	%		21	%
Amortization of purchased intangible assets	$	10.8		$	11.6			(7	)%
Percentage of net revenues		8	%		8	%

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Research and Development and Selling, General and Administrative Expenses

Our research and development (“R&D”) expenses decreased $2.1 million, or 4% compared to the same period last year. This was primarily the result of the decrease in payroll-related costs, including termination costs, and lower tape-out related costs. On a sequential basis, R&D expenses were $0.9 million higher in the second quarter of 2013 compared to the first quarter of 2013. This was mainly due to higher tape-out related expenses in the second quarter of 2013.

Selling, general and administrative (“SG&A”) expenses were $1 million, or 3%, higher in the second quarter of 2013 compared to the same period last year, mainly due to the accelerated depreciation on leasehold improvements and acquisition related costs incurred during the second quarter of 2013. On a sequential basis, these expenses increased $2 million mainly due to the factors described above.

Amortization of purchased intangible assets

Amortization of acquired intangible assets related to developed technology, in-process research and development, customer relationships, and trademarks decreased by $0.8 million in the second quarter of 2013 compared to the same period in 2012 mainly due to impairment of goodwill and purchased intangible assets described below.

Impairment of goodwill and purchased intangible assets

During the third quarter of 2012, the Company recognized impairment charges of $276.1 million due to weaker quarterly results and lower future projections than previously expected in the former Fiber-to-the-Home (“FTTH”) and Wintegra reporting units, respectively, related to the Company’s 2006 acquisition of Passave and 2010 acquisition of Wintegra. This was driven by slower adoption rates of FTTH technology in markets outside of Asia and prolonged weak carrier spending due to unfavorable macroeconomic conditions which negatively impacted Wintegra. These circumstances triggered the Company to perform step one of the impairment test and we determined that the estimated fair values of the reporting units were lower than their respective carrying values.

The Company combined these two reporting units (formerly included in the Fiber-to-the-Home Products and Wireless Infrastructure and Networking Products operating segments) with the Communications Products operating segment, to form the new realigned Communications Business Unit operating segment near the end of 2012. This organizational realignment was made to capitalize on the many areas of synergy between the former three reporting units, to create an integrated and focused product roadmap, and to further strengthen the scale advantage we have in the area of network communications. It also allows us to become more efficient in our product development efforts, which is critical since research and development costs for each new device continue to climb while carrier end market growth has not kept pace in the recent past, and will take some time to return to normal levels as macroeconomic conditions recover. The Communications Business Unit operating segment will continue to introduce new products to grow the operating segment, and we have implemented structural changes to our research and development, and marketing and sales activities to better position the operating segment for growth as macroeconomic conditions recover. These products will be the foundation for our growth in the carrier market for the next several years. It is expected that the Company will continue to steadily increase sales and profitability with this newly realigned operating segment, to come in-line with our targeted financial operating metrics. Although the Company recorded impairment charges during 2012 for these former reporting units, their product technology continues to represent a core strategic part of our future technology road-map and portfolio of product offerings for communications network infrastructure equipment. We do not believe that the impairment loss recorded in 2012 will have a significant impact on future operations of the Company and/or its liquidity. We do note, however, that as a result of the write-down of purchased intangible assets of Wintegra (other than goodwill) of $7 million, there has been a corresponding reduction in quarterly amortization expense of approximately $0.8 million.

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Other income (expense) and Provision for income taxes

	Second Quarter
($ millions)	2013			2012 (As Restated)			Change
Amortization of debt issue costs	$	—		$	(0.1	)		(100	)%
Foreign exchange gain	$	2.2		$	1.6			(38	)%
Interest income (expense), net	$	0.3		$	(0.6	)		150	%
Provision for income taxes	$	(1.2	)	$	(0.5	)		(140	)%

Amortization of debt issue costs

In the second quarter of 2012, we amortized $0.1 million of debt issue costs relating to our senior convertible notes. We retired the remainder of these notes in the fourth quarter of 2012, and accordingly recognized the remaining debt issue costs at that time.

Foreign exchange gain

We recognized a net foreign exchange gain of $2.2 million in the second quarter of 2013 compared to a net foreign exchange gain of $1.6 million in the second quarter of 2012. This was primarily due to foreign exchange gain on the revaluation of our foreign denominated assets and liabilities. This was partly driven by the United States Dollar appreciating by approximately 4% during the second quarter of 2013 compared to approximately 2% appreciation during the second quarter of 2012, against currencies applicable to our foreign operations.

Interest income (expense), net

Net interest income was $0.3 million in the second quarter of 2013 compared to net interest expense of $0.6 million in the second quarter of 2012.

Provision for income taxes

See Part I. Financial Information, Item 1. Financial Statements, the Notes to the Condensed Consolidated Financial Statements, Note 8. Income Taxes and Note 10. Error Correction for details.

First Six Months of 2013 and 2012

Net revenues

	First Six Months
($ millions)	2013		2012		Change
Net revenues	$	253.1	$	269.9		(6	)%

Net revenues for the first half of 2013 were $253.1 million compared to $269.9 million for the same period of 2012. This 6% decrease was mainly attributable to macro-economic uncertainty and continued cautious enterprise and carrier infrastructure spending, which impacted each of the Storage, Optical and Mobile market segments.

Storage represented 66% of our net revenues in the first half of 2013 compared to 64% in the same period of 2012. Storage net revenues decreased by 3% compared to the first half of 2012 mainly due to macro-economic uncertainty driving continued softness in enterprise spending. Accordingly, sales volume of our server and storage products were lower compared to the first half of 2012. This was partially offset by higher volumes of sales to Datacenter customers and continued ramp of 6G SAS products.

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Optical represented 20% of our net revenues in the first half of 2013 compared to 21% in the same period of 2012. Optical net revenues decreased by 12% compared to the first half of 2012 mainly due to continued weakness in the macro-economic environment, which drove lower levels of carrier spending. Sales volumes were down from our Legacy metro aggregation transport products.

Mobile represented 14% of our net revenues in the first half of 2013 compared to 15% in the same period in 2012. Mobile net revenues decreased by 13% compared to the first half of 2012 mainly due to continued weakness in the macro-economic environment, which drove lower levels of carrier spending. Accordingly, sales volumes of our mobile backhaul products were lower compared to the first half of 2012.

Gross profit

	First Six Months
($ millions)	2013			2012			Change
Gross profit	$	178.0		$	187.6			(5	)%
Percentage of net revenues		70	%		70	%

Total gross profit decreased by $29 million in the first half of 2013 on lower net revenues compared to the same period in 2012. Gross profit as a percentage of net revenues remained at 70% in the first half of 2013 and 2012.

Operating expenses

	First Six Months
($ millions)	2013			2012			Change
Research and development	$	109.2		$	115.8			(6	)%
Percentage of net revenues		43	%		43	%
Selling, general and administrative	$	58.6		$	58.3			1	%
Percentage of net revenues		23	%		22	%
Amortization of purchased intangible assets	$	21.6		$	22.9			(6	)%
Percentage of net revenues		9	%		8	%

Research and Development and Selling, General and Administrative Expenses

Our R&D expense decreased by $6.6 million, or 6%, in the first half of 2013 compared to the same period in 2012. This was primarily the result of the decrease in payroll-related costs, including termination costs, lower outside services due to the timing of projects and lower tape-out related costs incurred in the first half of 2013.

SG&A expenses increased by $0.3 million, or 1%, in the first half of 2013 compared to the same period in 2012, mainly due to the accelerated depreciation on leasehold improvements and acquisition related costs.

Amortization of purchased intangible assets

Amortization of acquired intangible assets related to developed technology, in-process research and development, customer relationships, and trademarks decreased by $1.3 million in the second half of 2013 compared to the same period in 2012. As described above, we wrote down the goodwill and intangible assets in third quarter of 2012 related to the 2006 acquisition of Passave and 2010 acquisition of Wintegra, Inc., by $276.1 million, resulting in this reduction of quarterly amortization charges.

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Other income (expense) and provision for income taxes

	First Six Months
($ millions)	2013			2012			Change
Gain on investment securities and other	$	—		$	0.6			(100	)%
Amortization of debt issue costs	$	—		$	(0.1	)		(100	)%
Foreign exchange gain	$	3.6		$	0.5			620	%
Interest income (expense), net	$	0.6		$	(0.7	)		186	%
Provision for income taxes	$	(3.8	)	$	(58.3	)		93	%

Gain on investment securities and other

We recorded a gain on sale of investment securities of $0.6 million related to the disposition of investment securities in the first six months of 2012.

Amortization of debt issue costs

In the second half of 2012, we amortized $0.1 million of debt issue costs relating to our senior convertible notes. We retired the remainder of these notes in the fourth quarter of 2012, and accordingly recognized any remaining debt issue costs at that time.

Foreign exchange gain

We recognized a net foreign exchange gain of $3.6 million in the first six months of 2013 compared to a net foreign exchange gain of $0.5 million in the first six months of 2012. This was primarily due to foreign exchange gain and loss on the revaluation of our foreign denominated assets and liabilities. This was driven by the United States Dollar appreciating by approximately 6% during the first half of 2013 compared to approximately 1% appreciation during the first half of 2012, against currencies applicable to our foreign operations.

Interest income (expense), net

Net interest income was $0.6 million in the first half of 2013 compared to net interest expense of $ 0.7 million in the first half of 2012.

Provision for income taxes

See Part I. Financial Information, Item 1. Financial Statements, the Notes to the Condensed Consolidated Financial Statements, Note 8. Income Taxes and Note 10. Error Correction for details.

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Critical Accounting Estimates

General

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our interim condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect our reported assets, liabilities, revenue and expenses, and related disclosure of our contingent assets and liabilities. For a full discussion of our accounting estimates and assumptions that we have identified as critical in the preparation of our interim condensed consolidated financial statements, refer to our Annual Report on Form 10-K for the year ended December 29, 2012, which also provides commentary on our most critical accounting estimates.

As discussed more fully in our Form 10-K for the year ended December 29, 2012 in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Critical Accounting Policies and Estimates section and Item 8. Financial Statements and Supplementary Data, the Notes to the Consolidated Financial Statements, Note 1. Summary of Significant Accounting Policies, goodwill is reviewed for impairment annually and more frequently if an event occurs or circumstances change that could reduce the fair value below its carrying value.

Business Outlook

The following is our outlook for the three months ending September 28, 2013 and a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure:

	GAAP Measure	Reconciling items		Non-GAAP measure
(in millions, except for percentages)
Net revenues	$126 - $134	$ —	(a)	$126 - $134
Gross profit %	69.8% - 70.8%	0.2%	(b)	70% - 71%
Operating expenses	$90 - $93	$(18.9) - $(19.9)	(c)	$71 - $73
Net interest income	$0.3	$ —		$0.3
Provision for income taxes	**	**		$ nil

(a) As in the past, and consistent with business practice in the semiconductor industry, a portion of our revenue is likely to be derived from orders placed and shipped during the same quarter, which we call our “turns business.” Our turns business varies from quarter to quarter. We expect the turns business percentage from the beginning of the third quarter of 2013 to be approximately 27%. A number of factors such as volatile macroeconomic conditions could impact achieving our revenue outlook.

(b) This amount relates to stock-based compensation expense and can vary depending on the volume of products sold given that many of our costs are fixed. The gross margin percentage will also vary depending on the mix of products sold.

(c) The referenced amount consists of $5 million to $6 million of stock-based compensation expense and $13.9 million of amortization of purchased intangible assets.

** The comparable GAAP measure is not available on a forward-looking basis without unreasonable effort.

The above non-GAAP information is provided as a supplement to the Company’s condensed consolidated financial statements presented in accordance with generally accepted accounting principles (“GAAP”). A non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. The Company believes that the additional non-GAAP measures are useful to investors for the purpose of financial analysis. Management uses these measures internally to evaluate the Company’s in-period operating performance before gains, losses and other charges that are considered by management to be outside of the Company’s core operating results. In addition, the measures are used for planning and forecasting of the Company’s future periods. However, non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures. Other companies may use different non-GAAP measures and presentation of results.

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Liquidity & Capital Resources

Our principal sources of liquidity are cash from operations, short-term investments and long-term investment securities. We employ these sources of liquidity to support ongoing business activities, acquire or invest in critical or complementary technologies, purchase capital equipment, repay any short-term indebtedness, and finance working capital. Currently, our primary objective for use of discretionary cash has been to repurchase and retire a portion of our common stock. The combination of cash and cash equivalents, short-term investments, and long-term investment securities at June 29, 2013 totaled $308.8 million and is comprised of the following:

	June 29, 2013
(in thousands)	Amortized Cost		Gross Unrealized Gains*		Gross Unrealized Losses*			Fair Value
Cash and cash equivalents:
Cash	$	81,245	$	—	$	—		$	81,245
Money market funds		17,435		—		—			17,435
Total cash and cash equivalents		98,680		—		—			98,680
Short-term investments:
Corporate bonds and notes		33,408		893		(11	)		34,290
US Treasury and Government Agency notes		1,745		88		—			1,833
Foreign Government and Agency notes		1,504		32		—			1,536
Total short-term investments		36,657		1,013		(11	)		37,659
Long-term investment securities:
Corporate bonds and notes		114,581		104		(361	)		114,324
US Treasury and Government Agency notes		53,275		8		(110	)		53,173
Foreign Government and Agency notes		4,378		3		(15	)		4,366
US States and Municipal securities		641		—		(4	)		637
Total long-term investment securities		172,875		115		(490	)		172,500
Total	$	308,213	$	1,128	$	(501	)	$	308,840

* Gross unrealized gains include accrued interest on investments of $0.9 million. The remainder of the gross unrealized gains and losses are included in the interim Condensed Consolidated Balance Sheet as Accumulated other comprehensive income (loss).

Most of our cash and cash equivalents, short-term investments, and long-term investment securities balances at June 29, 2013 were held by our United States parent company and our Canadian subsidiary.

Operating Activities

In the first half of 2013, cash generated from operations was $37.4 million. Net income, after adding back non-cash expenses of $33.2 million amortization and depreciation and $13.6 million stock based compensation, was the main driver of our positive operating cashflow, with some benefit from normal changes in working capital, including improvement in accounts receivable collections at 41 days sales outstanding (Q2 2012 - 43 days).

Adjusting for the $20 million withholding tax payment related to an intercompany dividend in early 2012, cash generated in the first half of 2013 was lower by $2.7 million compared to the first half of 2012. This is reflective of the lower revenues experienced in the first half of 2013 being largely off-set by savings from expense control initiatives.

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Investing Activities

We had a net outflow of cash of $118.8 million from investing activities in the first six months of 2013 compared to a net cash inflow of $55.2 million in the same period in 2012. During this period, we used $154.4 million to purchase investment securities, which is a typical use for our excess cash, and generated $38.3 million from redemptions and disposals of such investments securities. We also invested $9.5 million in property and equipment and intangible assets in the first half of 2013. On July 15, 2013, PMC announced the completion of the acquisition of Integrated Device Technology, Inc’s Enterprise Flash Controller Business for an aggregate cash purchase consideration of approximately $96 million (please see Part 1 – Financial Information. Item 1. Financial Statements – Note 11. Subsequent Events for further details).

Financing Activities

Proceeds from employee related stock issuances in the first half of 2013 were $16.5 million. We also repurchased common stock for $5.5 million in the second quarter of 2013.

Contractual Obligations

As of June 29, 2013, we had cash commitments made up of the following:

	Payments due in:
(in thousands)	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Operating Lease Obligations:
Minimum Rental Payments	$	40,447	$	4,884	$	15,940	$	10,189	$	9,434
Estimated Operating Cost Payments		17,651		1,994		6,893		5,099		3,665
Purchase and Other Obligations		12,938		7,627		5,311		—		—
Total	$	71,036	$	14,505	$	28,144	$	15,288	$	13,099

In addition to the amounts shown in the table above, we have $80.9 million recorded as liability for unrecognized tax benefits as of June 29, 2013, and we are uncertain as to the amount and timing that these potential liabilities may be settled for.

Purchase obligations, as noted in the above table, are comprised of commitments to purchase design tools and software for use in product development. Excluded from these purchase obligations are commitments for inventory or other expenses entered into in the normal course of business. We estimate these other commitments to be approximately $46.8 million at June 29, 2013 for inventory and other expenses that will be received within 90 days and that will require settlement 30 days thereafter.

Also, in addition to the amounts shown in the table above, we expect to use approximately $10.5 million of cash in the remainder of 2013 for property and equipment and purchases of intellectual property.

We continue to expect that our cash from operations, short-term investments, long-term investment securities and credit facility will continue to be our primary sources of liquidity. Based on our current operating prospects, we believe that existing sources of liquidity will satisfy our projected operating, working capital, investing, and capital expenditures through the next twelve months.

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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The following discussion regarding our risk management activities contains “forward-looking statements” that involve risks and uncertainties. Actual results may differ materially from those projected in the forward-looking statements.

Cash Equivalents, Short-Term Investments and Long-Term Investment Securities:

We regularly maintain a portfolio of short and long-term investments comprised of various types of money market funds, United States treasury and government agency notes including FDIC-insured corporate notes, United States state and municipal securities, foreign government and agency notes, and corporate bonds and notes. Our investments are made in accordance with an investment policy approved by our Board of Directors. Our investment policy sets guidelines for diversification and maturities that intend to preserve principal, while meeting liquidity needs. Maturities of these instruments are 36 months or less. To minimize credit risk, we diversify our investments and select minimum ratings of P-1 or A3 by Moody’s, or A-1 or A- by Standard and Poor’s, or equivalent. We classify these securities as available-for-sale and they are carried at fair market value. Our corporate policies prevent us from holding material amounts of asset-backed commercial paper.

Investments in instruments with both fixed and floating rates carry a degree of interest rate risk. Fixed rate securities may have their fair market value adversely impacted because of a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors, our future investment income may fall short of expectations because of changes in interest rates, or we may suffer losses in principal if we were to sell securities that have declined in market value because of changes in interest rates.

We do not attempt to reduce or eliminate our exposure to interest rate risk through the use of derivative financial instruments.

Based on a sensitivity analysis performed on the financial instruments held at June 29, 2013, the impact to the fair value of our investment portfolio by a shift in the yield curve of plus or minus 100 basis points would result in a decline of approximately $3.6 million or an increase of approximately $2.5 million, respectively. The selected hypothetical change in interest rates does not reflect what could be considered the best or worst case scenarios.

Foreign Currency:

Our sales and corresponding receivables are denominated primarily in United States dollars. We generate a significant portion of our revenues from sales to customers located outside the United States including Asia, Europe and Canada. We are subject to risks typical of an international business including, but not limited to, differing economic conditions, changes in political climate, differing tax structures, other regulations and restrictions and foreign exchange rate volatility. Accordingly, our future results could be materially and adversely affected by changes in these or other factors.

Through our operations in Canada and elsewhere outside of the United States, we incur research and development, sales, customer support and administrative expenses in various foreign currencies. We are exposed, in the normal course of business, to foreign currency risks on these expenditures, primarily in Canada. In our effort to manage such risks, we have adopted a foreign currency risk management policy intended to reduce the effects of potential short-term fluctuations on our operating results stemming from our exposure to these risks. As part of this risk management, we enter into foreign exchange forward contracts. These forward contracts offset the impact of exchange rate fluctuations on forecasted cash flows or firm commitments. We limit the forward contracts operational period to 12 months or less and we do not enter into foreign exchange forward contracts for trading purposes. Because we do not engage in foreign exchange risk management techniques beyond these periods, our cost structure is subject to long-term changes in foreign exchange rates. In the event that one of the counterparties to our forward currency contracts failed to complete the terms of their contracts, we would purchase foreign currencies at the spot rate as of the date the funds were required. If the counterparties to our foreign forward currency contracts that matured in the fiscal quarter ended June 29, 2013 had not fulfilled their contractual obligations and we were required to purchase the foreign currencies at the spot market rate on respective settlement dates, our operating income for the first six months of 2013 would have decreased by $0.1 million. See Part I. Financial Information, Item 1. Financial Statements, the Notes to the Condensed Consolidated Financial Statements, Note 3. Derivative Instruments for further details.

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We attempt to limit our exposure to foreign exchange rate fluctuations from our foreign currency net asset or liability positions. In the first six months of 2013, we recorded a $3.6 million foreign exchange gain on the revaluation of our net tax liabilities in a foreign jurisdiction. The revaluation of our foreign income tax liabilities was required because of fluctuations in the value of the United States dollar against other currencies. Our operating income would be materially impacted by a shift in the foreign exchange rates between United States and foreign currencies that are material to our business. For example, a five percent shift in the foreign exchange rates between United States dollar and Canadian dollar would impact our pre-tax income by approximately $3.2 million.

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Item 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

Our management evaluated, with the participation of our chief executive officer and our chief financial officer, our disclosure controls and procedures as of the end of the period covered by this quarterly report. Based on this evaluation, our chief executive officer and our chief financial officer concluded that our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our chief executive officer and our chief financial officer, as appropriate, to allow timely decisions regarding required disclosure, and is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms.

Changes in internal control over financial reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) that occurred during the fiscal quarter ended June 29, 2013 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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Part II – OTHER INFORMATION

Item 1. Legal Proceedings

None.

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ITEM 1A. RISK FACTORS.

Our company is subject to a number of risks. Some of these risks are common in the fabless semiconductor industry, some are the same or similar to those disclosed in previous SEC filings, and some may be present in the future. You should carefully consider all of these risks and the other information in this report before investing in PMC. The fact that certain risks are endemic to the industry does not lessen the significance of the risk.

As a result of the following risks, our business, financial condition, operating results and/or liquidity could be materially adversely affected. This could cause the trading price of our securities to decline, and you may lose part or all of your investment.

Our global business is subject to a number of economic risks.

We conduct business throughout the world, including in Asia, North America, Europe and the Middle East. Instability in the global credit markets, including the recent European economic and financial turmoil related to sovereign debt issues in certain countries, the instability in the geopolitical environment in many parts of the world and other disruptions, such as changes in energy costs, may continue to put pressure on global economic conditions. The world has recently experienced a global macroeconomic downturn. To the extent global economic and market conditions, or economic conditions in key markets, remain uncertain or deteriorate further, business, operating results, and financial condition may be materially adversely impacted.

Additionally, given the greater credit restrictions that are being invoked by lenders around the world, our ability to access the capital markets may be severely restricted at a time when we would like, or need, to access such capital markets, which could have an impact on our flexibility to pursue additional expansion opportunities and maintain our desired level of revenue growth in the future.

Our operating results may be impacted by rapid changes in demand due to the following:

• variations in our turns business;

• short order lead time;

• customer inventory levels;

• production schedules; and

• fluctuations in demand.

As a result, there could be significant variability in the demand for our products, and our past operating results may not be indicative of our future operating results.

Fluctuation in demand is dependent on, among other things the size of the markets for our products, the rate at which such markets develop, and the level of capital spending by end customers. We cannot assure you of the rate, or extent to which, capital spending by end customers will grow, if at all.

Our revenues and profits may fluctuate because of factors that are beyond our control. As a result, we may fail to meet the expectations of securities analysts and investors, which could cause our stock price to decline.

Our ability to project revenues is limited because a significant portion of our quarterly revenues may be derived from orders placed and shipped in the same quarter, which we call our “turns business.” Our turns business varies widely from quarter to quarter. Our customers may delay product orders and reduce delivery lead-time expectations, which may reduce our ability to project revenues beyond the current quarter. While we regularly evaluate end users’ and contract manufacturers’ inventory levels of our products to assess the impact of their inventories on our projected turns business, we do not have complete information on their inventories. This could cause our projections of a quarter’s turns business to be inaccurate, leading to lower or higher revenues than projected.

We may fail to meet our forecasts if our customers cancel or delay the purchase of our products or if we are unable to meet their demand.

We rely on customer forecasts in order to estimate the appropriate levels of inventory to build and to project our future revenues. Many of our customers have numerous product lines, numerous component requirements for each product, sizeable and complex supplier structures, and typically engage contract manufacturers for additional manufacturing capacity. This complex supply chain creates several variables that make it difficult to accurately forecast our customers’ demand and accurately monitor their inventory levels of our products. If customer forecasts are not accurate, we may build too much inventory, potentially leaving us with excess and obsolete inventory, which would reduce our profit margins and adversely affect our operating results. Conversely, we may build too little inventory to meet customer demand causing us to miss revenue-generating opportunities. The cancellation or deferral of product orders, the return of previously sold products or overproduction due to the failure of anticipated orders to materialize, could result in our holding excess or obsolete inventory, which could in turn result in write-downs of inventory. This difficulty may be compounded when we sell to OEMs indirectly through distributors and other resellers or contract manufacturers, or both, as our forecasts of demand are then based on estimates provided by multiple parties.

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Our customers often shift buying patterns as they manage inventory levels, market different products, or change production schedules. This makes forecasting their production requirements difficult and can lead to an inventory surplus or shortage of certain components. In addition, our products vary in terms of the profit margins they generate. If our customers purchase a greater proportion of our lower margin parts in a particular period, it would adversely impact our results of operations.

Further, our distributors provide us with periodic reports of their backlog to end customers, sales to end customers and quantities of our products that they have on hand. If the data that is provided to us is inaccurate, it could lead to inaccurate forecasting of our revenues or errors in our reported revenues, gross profit and net income.

While backlog is our best estimate of our next quarter’s expectations of revenues, it is industry practice to allow customers to cancel, change or defer orders with limited advance notice prior to shipment. As such, backlog may be an unreliable indicator of future revenue levels. Because a significant portion of our operating expenses is fixed, even a small revenue shortfall can have a disproportionately negative effect on our operating results.

We rely on a few customers for a major portion of our sales, any one of which could materially impact our revenues should they change their ordering pattern. The loss of a key customer could materially impact our results of operations.

We depend on a limited number of customers for large portions of our net revenues. During each of the rolling twelve month periods ended June 29, 2013 and July 1, 2012, we had two customers that accounted for more than 10% of our revenues, namely, HP and EMC. During the first six months of 2013 and 2012, our top ten customers accounted for approximately 64% of our net revenues. We do not have long-term volume purchase commitments from any of our major customers. We sell our products solely on the basis of purchase orders. Those customers could decide to cease purchasing products with little or no notice and without significant penalties. A number of factors could cause our customers to cancel or defer orders, including interruptions to their operations due to a downturn in their industries, delays in manufacturing their own product offerings into which our products are incorporated, and natural disasters. Accordingly, our future operating results will continue to depend on the success of our largest customers and on our ability to sell existing and new products to these customers in significant quantities.

The loss of a key customer, or a reduction in our sales to any major customer or our inability to attract new significant customers could materially and adversely affect our business, financial condition or results of operations. In addition, if we fail to win new product designs from our major customers, our business and results of operations may be harmed.

We use indirect channels of product distribution, in many locations across the world, over which we have limited control.

We generate a portion of our sales through third-party distribution and reseller agreements. Termination of a distributor agreement either by us or a distributor, could result in a temporary or permanent loss of revenue, if we cannot establish an alternative distributor to manage this portion of our business, or we are unable to service the related end customers directly. Further, if we terminate a distributor agreement, we may be required to repurchase unsold inventory held by the distributor. We maintain a reserve for estimated returns. If actual returns exceed our estimate, there may be an adverse effect on our operating results. Our distributors are located all over the world and are of various sizes and financial profiles. Lower sales, lower earnings, debt downgrades, the inability to access capital markets and higher interest rates could potentially affect our distributors’ operations.

If the demand for our customers’ products declines, demand for our products will be similarly affected and our revenues, gross margins and operating performance will be adversely affected.

Our customers are subject to their own business cycles, most of which are unpredictable in commencement, depth and duration. We cannot accurately predict the continued demand of our customers’ products and the demands of our customers for our products. In the past, networking customers have reduced capital spending without notice, adversely affecting our revenues. As a result of this uncertainty, our past operating results may not be indicative of our future operating results. It is possible that, in future periods, our results may be below the expectations of public market analysts and investors. This could cause the market price of our common stock to decline.

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Changes in the political and economic climate in the countries in which we do business may adversely affect our operating results.

We earn a substantial proportion of our revenues in Asia. We conduct an increasing portion of our research and development and manufacturing activities outside North America. We procure substantially all of our wafers from Taiwan and use assemblers and testers throughout Asia.

Given the depth of our sales and operations in Asia, we face risks that could negatively impact our results of operations, including economic sanctions imposed by the U.S. government, imposition of tariffs and other potential trade barriers or regulations, uncertain protection for intellectual property rights and generally longer receivable collection periods. In addition, fluctuations in foreign currency exchange rates could adversely affect the revenues, net income, earnings per share and cash flow of our operations in affected markets. Similarly, fluctuations in exchange rates may affect demand for our products in foreign markets or our cost competitiveness and may adversely affect our profitability.

Our results of operations continue to be influenced by our sales to customers in Asia. Government agencies in this region have broad discretion and authority over many aspects of the telecommunications and information technology industry. Accordingly, their decisions may impact our ability to do business in this region, and significant changes in this region’s political and economic conditions and governmental policies could have a substantial negative impact on our business.

Laws and regulations to which we are subject, as well as customer requirements in the area of environmental protection and social responsibility, could impose substantial costs on us and may adversely affect our business.

Our business is subject to or may be impacted by various environmental protection and social responsibility legal and customer requirements. For example, we are subject to the European Union Directive on the Restriction of the use of certain Hazardous Substances in Electrical & Electronic Equipment (RoHS) and the Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) Regulation in the European Union. Such regulations could require us to redesign our products in order to comply with their requirements and require the development and/or maintenance of compliance administration systems. Redesigned products could be more costly to manufacture or require more costly or less efficient raw materials. If we cannot develop compliant products on a timely basis or properly administer our compliance programs, our revenues could decline due to lower sales. In addition, under certain environmental laws, we could be held responsible, without regard to fault, for costs relating to any contamination at our current or past facilities and at third-party waste-disposal sites. We could also be held liable for consequences arising out of human exposure to such substances or other environmental damage.

Recently there has been increased focus on environmental protection and social responsibility initiatives. We may choose or be required to implement various standards due to the adoption of rules or regulations that result from these initiatives, such as with respect to the use of conflict minerals, which are certain minerals that originate in the Democratic Republic of the Congo or adjoining countries. Our customers may also require us to implement environmental or social responsibility procedures or standards before they will continue to do business with us or order new products from us. Our adoption of these procedures or standards could be costly, and our failure to adopt these standards or procedures could result in the loss of business or fines or other costs.

The conflict minerals provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act could result in additional costs and liabilities.

In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC established new disclosure and reporting requirements for those companies who use “conflict minerals” mined from the Democratic Republic of Congo and adjoining countries in their products, whether or not these products are manufactured by third parties. These new requirements could affect the sourcing and availability of minerals used in the manufacture of our semiconductor products. There will also be costs associated with complying with the disclosure requirements, including for due diligence in regard to the sources of any conflict minerals used in our products, in addition to the cost of remediation and other changes to products, processes, or sources of supply as a consequence of such verification activities.

The loss of key personnel could delay us from designing new products.

To succeed, we must retain and hire technical personnel highly skilled at design and test functions needed to develop high-speed networking products. The competition for such employees is intense.

We do not have employment agreements in place with many of our key personnel. As employee incentives, we issue common stock options and restricted stock grants that are subject to time vesting, and, in the case of options, have exercise prices at the market value on the grant date. As our stock price varies substantially, the equity awards to employees are effective as retention incentives only if they have economic value.

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Our revenues may decline if we do not maintain a competitive portfolio of products or if we fail to secure design wins.

We are experiencing significantly greater competition in the markets in which we participate. We are expanding into market segments, such as the Storage, Optical, and Mobile market segments, which have established incumbents with substantial financial and technological resources. We expect more intense competition than that which we have traditionally faced as some of these incumbents derive a majority of their earnings from these markets.

We typically face competition at the design stage, where customers evaluate alternative design approaches requiring integrated circuits. We often compete in bid selection processes to achieve design wins. These selection processes can be lengthy and can require us to invest significant effort and incur significant design and development expenditures. We may not win competitive selection processes, and even if we do win such processes, we may not generate the expected level of revenue despite incurring significant design and development expenditures. Because the life cycles of our customers’ products can last several years and changing suppliers involves significant cost, time, effort and risk, our failure to win a competitive bid can result in our foregoing revenue from a given customer’s product line for the life of that product.

The markets for our products are intensely competitive and subject to rapid technological advancement in design tools, wafer manufacturing techniques, process tools and alternate networking technologies. We may not be able to develop new products at competitive pricing and performance levels. Even if we are able to do so, we may not complete a new product and introduce it to market in a timely manner. Our customers may substitute use of our products in their next generation equipment with those of current or future competitors, reducing our future revenues. With the shortening product life and design-in cycles in many of our customers’ products, our competitors may have more opportunities to supplant our products in next generation systems.

Our customers are increasingly price conscious, as semiconductors sourced from third party suppliers comprise a greater portion of the total materials cost in networking equipment. We continue to experience aggressive price competition from competitors that wish to enter into the market segments in which we participate. These circumstances may make some of our products less competitive, and we may be forced to decrease our prices significantly to win a design. We may lose design opportunities or may experience overall declines in gross margins as a result of increased price competition.

Over the next few years, we expect additional competitors, some of which may also have greater financial and other resources, to enter these markets with new products. These companies, individually or collectively, could represent future competition for many design wins and subsequent product sales.

Design wins do not translate into near-term revenues and the timing of revenues from newly designed products is often uncertain.

From time to time, we announce new products and design wins for existing and new products. While some industry analysts may use design wins as a metric for future revenues, many design wins have not, and will not, generate any revenues for us, as customer projects are cancelled or unsuccessful in their end market. In the event a design win generates revenues, the amount of revenues will vary greatly from one design win to another. In addition, most revenue-generating design wins do not translate into near-term revenues. Most revenue-generating design wins take more than two years to generate meaningful revenues.

Product quality problems could result in reduced revenues and claims against us.

We produce highly complex products that incorporate leading-edge technology. Despite our testing efforts and those of our subcontractors, defects may be found in existing or new products. Because our product warranties against materials and workmanship defects and non-conformance to our specifications are for varying lengths of time we may incur significant warranty, support and repair or replacement costs. The resolution of any defects could also divert the attention of our engineering personnel from other product development efforts. If the costs for customer or warranty claims increase significantly compared with our historical experience, our revenue, gross margins and net income may be adversely affected.

Since many of the products we develop do not reach full production sales volumes for a number of years, we may incorrectly anticipate market demand and develop products that achieve little or no market acceptance.

Our products generally take between 12 and 24 months from initial conceptualization to development of a viable prototype, and another three to 18 months to be designed into our customers’ equipment and sold in production quantities. We sell products whose characteristics include evolving industry standards, short product life spans and new manufacturing and design technologies. As a result, we develop products many years before volume production and may inaccurately anticipate our customers’ needs. From initial product design-in to volume production, many factors, such as unacceptable manufacturing yields on prototypes or our customers’ redefinition of their products, can affect the timing and/or delivery of our products. Our products may become obsolete during these delays, resulting in our inability to recoup our initial investments in product development.

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We may be unsuccessful in transitioning the design of our new products to new manufacturing processes.

Many of our new products are designed to take advantage of new manufacturing processes offering smaller device geometries as they become available, since smaller geometries can provide a product with improved features such as lower power requirements, increased performance, more functionality and lower cost. We believe that the transition of our products to, and introduction of new products using, smaller device geometries is critical for us to remain competitive. We could experience difficulties in migrating to future smaller device geometries or manufacturing processes, which would result in the delay of the production of our products. Our products may become obsolete during these delays, or allow competitors’ parts to be chosen by customers during the design process.

The final determination of our income tax liability may be materially different from our income tax provision.

We are subject to income taxes in both the United States and international jurisdictions. Significant judgment is required in determining our worldwide provision for income taxes. In the ordinary course of our business, there are many transactions where the ultimate tax determination is uncertain. Additionally, our calculations of income taxes are based on our interpretations of applicable tax laws in the jurisdictions in which we file. Although we believe our tax estimates are reasonable, there is no assurance that the final determination of our income tax liability will not be materially different than what is reflected in our income tax provisions and accruals. Should additional taxes be assessed as a result of new legislation, an audit or litigation, if our effective tax rate should change as a result of changes in federal, international or state and local tax laws, or if we were to change the locations where we operate, there could be a material effect on our income tax provision and results of operations in the period or periods in which that determination is made, and potentially to future periods as well.

The ultimate resolution of outstanding tax matters could be for amounts in excess of our reserves established. Such events could have a material adverse effect on our liquidity or cash flows in the quarter in which an adjustment is recorded or the tax payment is due.

If foreign exchange rates fluctuate significantly, our profitability may decline.

We are exposed to foreign currency rate fluctuations because a significant part of our development, test, and selling and administrative costs are incurred in foreign currencies. The U.S. dollar has fluctuated significantly compared to other foreign currencies and this trend may continue. To protect against reductions in value and the volatility of future cash flows caused by changes in foreign exchange rates, we enter into foreign currency forward contracts. The contracts reduce, but do not eliminate, the impact of foreign currency exchange rate movements. In addition, this foreign currency risk management policy may not be effective in addressing long-term fluctuations since our contracts do not extend beyond a 12-month maturity.

We attempt to limit our exposure to foreign exchange rate fluctuations from our foreign net asset or liability positions. We recorded a net $3.6 million foreign exchange gain on the revaluation of our income tax liability in the first six months of 2013 because of the fluctuations in the U.S. dollar against certain foreign currencies. A five percent shift in the foreign exchange rates between the U.S. and Canadian dollar would cause an approximately $3.2 million impact to our pre-tax net income.

We are exposed to the credit risk of some of our customers.

Many of our customers employ contract manufacturers to produce their products and manage their inventories. Many of these contract manufacturers represent greater credit risk than our OEM customers, who do not guarantee our credit receivables related to their contract manufacturers.

In addition, a significant portion of our sales flow through our distribution channel. This generally represents a higher credit risk. Should these companies encounter financial difficulties, our revenues could decrease, and collection of our significant accounts receivables with these companies or other customers could be jeopardized.

Our business strategy contemplates acquisition of other products, technologies or businesses, which could adversely affect our operating performance.

Acquiring products, intellectual property, technologies and businesses from third parties is a core part of our business strategy. That strategy depends on the availability of suitable acquisition candidates at reasonable prices and our ability to resolve challenges associated with integrating acquired businesses into our existing business. These challenges include integration of product lines, sales forces, customer lists and manufacturing facilities, development of expertise outside our existing business, diversion of management time and resources, possible divestitures, inventory write-offs and other charges. We also may be forced to replace key personnel who may leave our company as a result of an acquisition. We cannot be certain that we will find suitable acquisition candidates or that we will be able to meet these challenges successfully. Acquisitions could also result in customer dissatisfaction, performance problems with the acquired company, investment, or technology, the assumption of contingent liabilities, or other unanticipated events or circumstances, any of which could harm our business. Consequently, we might not be successful in integrating any acquired businesses, products or technologies and may not achieve anticipated revenues and cost benefits.

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An acquisition could absorb substantial cash resources, require us to incur or assume debt obligations, or issue additional equity. If we are not able to obtain financing, then we may not be in a position to consummate acquisitions. If we issue equity securities in connection with an acquisition, we may dilute our common stock with securities that have an equal or a senior interest in our company.

From time to time, we license, or acquire, technology from third parties to incorporate into our products. Incorporating technology into our products may be more costly or more difficult than expected, or require additional management attention to achieve the desired functionality. The complexity of our products could result in unforeseen or undetected defects or bugs, which could adversely affect the market acceptance of new products and damage our reputation with current or prospective customers.

Our current product roadmap will, in part, be dependent on successful acquisition and integration of intellectual property cores developed by third parties. If we experience difficulties in obtaining or integrating intellectual property from these third parties, it could delay or prevent the development of our products in the future.

Although our customers, our suppliers and we rigorously test our products, our highly complex products may contain defects or bugs. We have in the past experienced, and may in the future experience, defects and bugs in our products. If any of our products contain defects or bugs, or have reliability, quality or compatibility problems that are significant to our customers, our reputation may be damaged and customers may be reluctant to buy our products. This could materially and adversely affect our ability to retain existing customers or attract new customers. In addition, these defects or bugs could interrupt or delay sales to our customers.

We may have to invest significant capital and other resources to alleviate problems with our products. If any of these problems are not found until after we have commenced commercial production of a new product, we may be required to incur additional development costs and product recall, repair or replacement costs. These problems may also result in claims against us by our customers or others. In addition, these problems may divert our technical and other resources from other development efforts. Moreover, we would likely lose or experience a delay in, market acceptance of the affected product or products, and we could lose credibility with our current and prospective customers.

Industry consolidation may lead to increased competition and may harm our operating results.

There has been a trend toward industry consolidation in our markets for several years. We expect this trend to continue as companies attempt to improve the leverage of growing research and development costs, strengthen or hold their market positions in an evolving industry or are unable to continue operations. Companies that are strategic alliance partners in some areas of our business may acquire or form alliances with our competitors, thereby reducing their business with us. We believe that industry consolidation may result in stronger competitors that are better able to compete as sole-source vendors for customers. This could lead to more variability in our operating results and could have a material adverse effect on our business, operating results and financial condition.

Our business may be adversely affected if our customers or suppliers cannot obtain sufficient supplies of other components needed in their product offerings to meet their production projections and target quantities.

Some of our products are used by customers in conjunction with a number of other components, such as transceivers, microcontrollers and digital signal processors. If, for any reason, our customers experience a shortage of any component, their ability to produce the forecasted quantity of their product offerings may be affected adversely and our product sales would decline until the shortage is remedied.

Moreover, if any of our suppliers experience capacity constraints or component shortages, encounters financial difficulties, or experiences any other major disruption of its operations, we may need to qualify an alternate supplier, which may take an extended period of time and could result in delays in product shipments. These delays could cause our customers to seek alternate semiconductor companies to provide them with products previously purchased from us. Such a situation could harm our operating results, cash flow and financial condition.

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We rely on limited sources of wafer fabrication, the loss of which could delay and limit our product shipments.

We do not own or operate a wafer fabrication facility. In the 2012, three outside wafer foundries supplied more than 95% of our semiconductor wafer requirements. Our wafer foundry suppliers also make products for other companies and some make products for themselves, thus we may not have access to adequate capacity or certain process technologies. We also have less control over delivery schedules, manufacturing yields and costs than competitors with their own fabrication facilities. If the wafer foundries we use are unable or unwilling to manufacture our products in required volumes, or at specified times, we may have to identify and qualify acceptable additional or alternative foundries. This qualification process could take six months or longer. We may not find sufficient capacity quickly enough or at an acceptable cost, to satisfy our production requirements.

Some companies that supply our customers are similarly dependent on a limited number of suppliers to produce their products. These other companies’ products may be designed into the same networking equipment into which our products are designed. Our order levels could be reduced materially if these companies are unable to access sufficient production capacity to produce in volumes demanded by our customers because our customers may be forced to slow down or halt production on the equipment into which our products are designed.

We depend on third parties for the assembly and testing of our semiconductor products, which could delay and limit our product shipments.

We depend on third parties in Asia for the assembly and testing of our semiconductor products. In addition, subcontractors in Asia assemble all of our semiconductor products into a variety of packages. Raw material shortages, political, economic and social instability, assembly and testing house service disruptions, currency fluctuations, or other circumstances in the region could force us to seek additional or alternative sources of supply, assembly or testing. This could lead to supply constraints or product delivery delays that, in turn, may result in the loss of revenues. At times, capacity in the assembly industry has become scarce and lead times have lengthened. This capacity shortage may become more severe, which could in turn adversely affect our revenues. We have less control over delivery schedules, assembly processes, testing processes, quality assurances, raw material supplies and costs than competitors that do not outsource these tasks.

Due to the amount of time that it usually takes us to qualify assemblers and testers, we could experience significant delays in product shipments if we are required to find alternative assemblers or testers for our components. Any problems that we may encounter with the delivery, quality or cost of our products could damage our customer relationships and materially and adversely affect our results of operations. We are continuing to develop relationships with additional third-party subcontractors to assemble and test our products. However, even if we use these new subcontractors, we will continue to be subject to all of the risks described above.

If we are unable to maintain effective internal controls, our stock price could be adversely affected.

We are subject to the ongoing internal control provisions of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Act”). Our controls necessary for continued compliance with the Act may not operate effectively at all times and may result in a material weakness disclosure. The identification of material weaknesses in internal control, if any, could indicate a lack of proper controls to generate accurate financial statements and could cause investors to lose confidence and our stock price to drop.

Our business is vulnerable to interruption by earthquake, flooding, fire, power loss, telecommunications failure, terrorist activity and other events beyond our control.

We do not have sufficient business interruption insurance to compensate us for actual losses from interruption of our business that may occur, and any losses or damages incurred by us could have a material adverse effect on our business. We are vulnerable to a major earthquake and other calamities. We have operations in seismically active regions in California, Japan and British Columbia, Canada, and we rely on third-party suppliers, including wafer fabrication and testing facilities, in seismically active regions in Asia, which have recently experienced natural disasters. To the extent that manufacturing issues and any related component shortages result in delayed shipments in the future, and particularly in periods in which we and our contract manufacturers are operating at higher levels of capacity, it is possible that revenue for a quarter could be adversely affected if such matters occur and are not remediated within the same quarter.

We are unable to predict the effects of any such events, but the effects could be seriously harmful to our business.

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Hostilities in the Middle East and India may have a significant impact on our Israeli and Indian subsidiaries’ ability to conduct their business.

We have operations, which are primarily research and development facilities, located in Israel and India which employ approximately 170 and 160 people, respectively. A catastrophic event, such as a terrorist attack or the outbreak of hostilities that results in the destruction or disruption of any of our critical business or information technology systems in Israel or India could harm our ability to conduct normal business operations and therefore negatively impact our operating results.

On an on-going basis, some of our Israeli employees are periodically called into active military duty. In the event of severe hostilities breaking out, a significant number of our Israeli employees may be called into active military duty, resulting in delays in various aspects of production, including product development schedules.

From time to time, we become defendants in legal proceedings about which we are unable to assess our exposure and which could become significant liabilities upon judgment.

We become defendants in legal proceedings from time to time. Companies in our industry have been subject to claims related to patent infringement and product liability, as well as contract and personal claims. We may not be able to accurately assess the risk related to these suits and we may be unable to accurately assess our level of exposure. An infringement or product liability claim brought against us, even if unsuccessful, would likely be time-consuming and costly to defend and could divert the efforts of our technical and management personnel. These proceedings may result in material charges to our operating results in the future if our exposure is material and if our ability to assess our exposure becomes clearer.

If we cannot protect our proprietary technology, we may not be able to prevent competitors from copying or misappropriating our technology and selling similar products, which would harm our business.

To compete effectively, we must protect our intellectual property. We rely on a combination of patents, trademarks, copyrights, trade secret laws, confidentiality procedures and licensing arrangements to protect our intellectual property rights. We hold numerous patents and have a number of pending patent applications. However, our portfolio of patents evolves as new patents are issued and older patents expire and the expiration of patents could have a negative effect on our ability to prevent competitors from duplicating certain of our products.

We might not succeed in obtaining patents from any of our pending applications. Even if we are awarded patents, they may not provide any meaningful protection or commercial advantage to us, as they may not be of sufficient scope or strength, or may not be issued in all countries where our products can be sold. In addition, our competitors may be able to design around our patents.

To protect our product technology, documentation and other proprietary information, we enter into confidentiality agreements with our employees, customers, consultants and strategic partners. We require our employees to acknowledge their obligation to maintain confidentiality with respect to PMC’s products. Despite these efforts, we cannot guarantee that these parties will maintain the confidentiality of our proprietary information in the course of future employment or working with other business partners. We develop, manufacture and sell our products in Asia and other countries that may not protect our intellectual property rights to the same extent as the laws of the United States. This makes piracy of our technology and products more likely. Steps we take to protect our proprietary information may not be adequate to prevent theft of our technology. We may not be able to prevent our competitors from independently developing technologies that are similar to or better than ours.

Our products employ technology that may infringe on the intellectual property and the proprietary rights of third parties, which may expose us to litigation and prevent us from selling our products.

Vigorous protection and pursuit of intellectual property rights or positions characterize the semiconductor industry. This often results in expensive and lengthy litigation. We, and our customers or suppliers, may be accused of infringing patents or other intellectual property rights owned by third parties in the future. An adverse result in any litigation against us or a customer or supplier could force us to pay substantial damages, stop manufacturing, using and selling the infringing products, spend significant resources to develop non-infringing technology, discontinue using certain processes or obtain licenses to the infringing technology. In addition, we may not be able to develop non-infringing technology or find appropriate licenses on reasonable terms or at all. Although some of our suppliers have agreed to indemnify us against certain intellectual property infringement claims or other losses relating to their products, these contractual indemnification rights may not cover the full extent of losses we incur as a result of these suppliers’ products.

Patent disputes in the semiconductor industry are often settled through cross-licensing arrangements. Our portfolio of patents may not have the breadth to enable us to settle an alleged patent infringement claim through a cross-licensing arrangement. We may therefore be more exposed to third party claims than some of our larger competitors and customers.

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The majority of our customers are required to obtain licenses from and pay royalties to third parties for the sale of systems incorporating our semiconductor devices, and our customers have faced and may continue to face infringement claims related to our products or third-party components used in our products. In the past, customers have sought indemnification from us or made other claims against us in connection with such infringement claims, and we may face similar claims in the future. Even when we do not ultimately incur any liabilities to third parties, addressing these claims may require us to divert internal resources and incur other costs. Although we may ultimately be entitled to indemnification from suppliers of third-party components in connection with some such cases, there can be no assurance that we would be fully indemnified against such losses.

Furthermore, we may initiate claims or litigation against third parties for infringing our proprietary rights or to establish the validity of our proprietary rights. This could consume significant resources and divert the efforts of our technical and management personnel, regardless of the litigation’s outcome.

We may be subject to intellectual property theft or misuse, which could result in third-party claims and harm our business and results of operations.

We regularly face attempts by others to gain unauthorized access through the Internet to our information technology systems, such as when such parties masquerade as authorized users or surreptitiously introduce software. We might become a target of computer hackers who create viruses to sabotage or otherwise attack our products and services. Hackers might attempt to penetrate our network security and gain access to our network and our data centers, misappropriate our or our customers’ proprietary information, including personally identifiable information, or cause interruptions of our internal systems and services. We seek to detect and investigate these security incidents and to prevent their recurrence, but in some cases we might be unaware of an incident or its magnitude and effects. The theft or unauthorized use or publication of our trade secrets and other confidential business information as a result of such an incident could adversely affect our competitive position and reduce marketplace acceptance of our products; the value of our investment in R&D, product development, and marketing could be reduced; and third parties might assert against us or our customers claims related to resulting losses of confidential or proprietary information or end-user data, or system reliability. Our business could be subject to significant disruption, and we could suffer monetary and other losses, including the cost of product recalls and returns and reputational harm, in the event of such incidents and claims.

Securities we issue to fund our operations could dilute your ownership.

We may decide to raise additional funds through public or private debt or equity financing. If we raise funds by issuing equity securities, the percentage ownership of current stockholders will be reduced and the new equity securities may have priority rights to your investment. We may not obtain sufficient financing on terms that are favorable to you or us. We may delay, limit or eliminate some or all of our proposed operations if adequate funds are not available.

Our stock price has been and may continue to be volatile.

We expect that the price of our common stock will continue to fluctuate significantly, as it has in the past. In particular, fluctuations in our stock price and our price-to-earnings multiple may have made our stock attractive to momentum, hedge or day-trading investors who often shift funds into and out of stocks rapidly, exacerbating price fluctuations in either direction particularly when viewed on a quarterly basis.

Securities class action litigation has often been instituted against a company following periods of volatility and decline in the market price of their securities. If instituted against us, regardless of the outcome, such litigation could result in substantial costs and diversion of our management’s attention and resources and have a material adverse effect on our business, financial condition and operating results. In addition, we could incur substantial punitive and other damages relating to such litigation.

Provisions in Delaware law and our charter documents may delay or prevent another entity from acquiring us without the consent of our Board of Directors.

Our Board of Directors has the right to issue preferred stock without stockholder approval, which could be used to dilute the stock ownership of a potential hostile acquirer. Delaware law imposes some restrictions on mergers and other business combinations between us and any holder of 15% or more of our outstanding common stock.

Although we believe these provisions of our charter documents and Delaware law will provide for an opportunity to receive a higher bid by requiring potential acquirers to negotiate with our Board of Directors, these provisions apply even if the offer may be considered beneficial by some stockholders.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

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Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

As supplemental information to Part I. Financial Information, Item 1. Financial Statements, the Notes to the Condensed Consolidated Financial Statements, Note 10. Error Correction, the corresponding restated comparatives that will be presented in the Form 10-Q in the third quarter, and the Form 10-K for 2013 are provided below:

	As at						As at
	December 31, 2011						December 26, 2010
(in thousands)	As Restated			As Previously Reported in 2012 10-K			As Restated			As Previously Reported in 2011 10-K
CONDENSED CONSOLIDATED BALANCE SHEETS
Non-current assets:
Prepaid expenses	$	18,293		$	27,898		$	24,844		$	22,987
Total assets	$	1,400,831		$	1,410,436		$	1,528,403		$	1,526,546
Liabilities
Liability for unrecognized tax benefits - non-current	$	26,929		$	38,460		$	26,133		$	17,908
Stockholders’ equity:
Additional paid in capital	$	1,587,357		$	1,577,562		$	1,567,082		$	1,575,949
Accumulated deficit	$	(490,183	)	$	(482,314	)	$	(556,703	)	$	(559,202	)
Total stockholders’ equity	$	1,094,258		$	1,094,332		$	1,012,703		$	1,019,071
Total liabilities and stockholders’ equity	$	1,400,831		$	1,410,436		$	1,528,403		$	1,526,546

	Three Months Ended						Nine Months Ended						Years ended
	September 30, 2012						September 30, 2012						December 26, 2010						December 31, 2011						December 29, 2012
(in thousands, except per share amounts)	As Restated			As Previously Reported in Q3 2012 10-Q			As Restated			As Previously Reported in Q3 2012 10-Q			As Restated			As Previously Reported in 2012 10-K			As Restated			As Previously Reported in 2012 10-K			As Restated			As Previously Reported in 2012 10-K
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Provision for) recovery of income taxes	$	5,577		$	7,098		$	(52,753	)	$	(53,567	)	$	(33,507	)	$	(23,940	)	$	183		$	(720	)	$	(49,052	)	$	(52,748	)
Net (loss) income	$	(275,907	)	$	(274,386	)	$	(343,363	)	$	(344,177	)	$	79,817		$	89,384		$	81,066		$	80,163		$	(332,524	)	$	(336,220	)
Net (loss) income per common share - basic	$	(1.32	)	$	(1.31	)	$	(1.61	)	$	(1.60	)	$	0.34		$	0.39		$	0.35		$	0.34		$	(1.54	)	$	(1.55	)
Net (loss) income per common share - diluted	$	(1.32	)	$	(1.31	)	$	(1.61	)	$	(1.60	)	$	0.34		$	0.38		$	0.34		$	0.34		$	(1.54	)	$	(1.55	)
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Net (loss) income	$	(275,907	)	$	(274,386	)	$	(343,363	)	$	(344,177	)	$	79,817		$	89,384		$	81,066		$	80,163		$	(332,524	)	$	(336,220	)
Comprehensive (loss) income	$	(275,021	)	$	(273,500	)	$	(341,450	)	$	(342,264	)	$	80,725		$	90,292		$	77,848		$	76,945		$	(330,762	)	$	(334,458	)
CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS
Cash flows from operating activities:
Net (loss) income	$	(275,907	)	$	(274,386	)	$	(343,363	)	$	(344,177	)	$	79,817		$	89,384		$	81,066		$	80,163		$	(332,524	)	$	(336,220	)
Changes in operating assets and liabilities:
Deferred taxes and income taxes payable	$	(5,884	)	$	(7,405	)	$	(6,561	)	$	(5,747	)	$	12,385		$	2,818		$	(411	)	$	492		$	(9,334	)	$	(5,638	)

43

Item 6. Exhibits

Exhibit No.	Description	Form	File No.	Filing Date	Exhibit No. as Filed	Filed with this 10-Q
2.1	Asset Purchase agreement by and among PMC-Sierra, Inc., Integrated Device Technology, Inc., and Integrated Device Technology (Malaysia) Sdn. Bhd., dated as of May 29, 2013.	8-K	0-19084	5/29/2013	2.1
31.1	Certification of Chief Executive Officer pursuant to Section 302 (a) of the Sarbanes-Oxley Act of 2002					X
31.2	Certification of Chief Financial Officer pursuant to Section 302 (a) of the Sarbanes-Oxley Act of 2002					X
32.1	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer)					X
32.2	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer)					X
101.INS	XBRL Instance Document					X
101.SCH	XBRL Taxonomy Extension Schema Document					X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document					X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document					X
101.LAB	XBRL Taxonomy Extension Label Linkbase Document					X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document					X

44

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		PMC-SIERRA, INC.
		(Registrant)
Date:	August 7, 2013	/s/ Steven J. Geiser
		Steven J. Geiser
		Vice President,
		Chief Financial Officer and Principal Accounting Officer

45

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Gregory S. Lang, certify that:

1. I have reviewed this quarterly report on Form 10-Q of PMC-Sierra, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	August 7, 2013	By:	/s/ Gregory S. Lang
		Gregory S. Lang
		President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Steven J. Geiser, certify that:

1. I have reviewed this quarterly report on Form 10-Q of PMC-Sierra, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	August 7, 2013	By:	/s/ Steven J. Geiser
		Steven J. Geiser
		Vice President,
		Chief Financial Officer and Principal Accounting Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Gregory S. Lang, hereby certify, in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in my capacity as an officer of PMC-Sierra, Inc. (“PMC”), that, to my knowledge, this Quarterly Report of PMC on Form 10-Q for the period ended June 29, 2013, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of PMC.

Date:	August 7, 2013	By:	/s/ Gregory S. Lang
		Gregory S. Lang
		President and
		Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Steve J. Geiser hereby certify, in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in my capacity as an officer of PMC-Sierra, Inc. (“PMC”), that, to my knowledge, this Quarterly Report of PMC on Form 10-Q for the period ended June 29, 2013, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of PMC.

Date:	August 7, 2013	By:	/s/ Steven J. Geiser
		Steven J. Geiser
		Vice President,
		Chief Financial Officer and
		Principal Accounting Officer

XML

Income Taxes

6 Months Ended

Jun. 29, 2013

Income Taxes [Abstract]

Income Taxes

NOTE 8.  Income Taxes  

The Company recorded a provision for income taxes of $1.2 million and $3.8 million for the three and six months ended June 29, 2013, respectively, and a provision for income taxes of $0.5 million and $58.3 million for the three and six months ended July 1, 2012, respectively.

For the three months ended June 29, 2013, compared to the same period last year, the decrease in the provision for income taxes of $1.3 million was mainly the result of the $2.3 million income tax recovery related to change in the liability for unrecognized tax benefits,partially off-set by the tax effect on change in mix of income across our foreign subsidiaries. As a result, the Company’s effective tax rate was (40)% for the three months ended  June 29, 2013 and (125)% for the three months ended July1, 2012.

For the six months ended June 29, 2013, compared to the same period last year, the decrease in provision for income taxes of $54.5 million was mainly due to the result of the $20 million withholding tax related to an intercompany dividend made in preparation for funding the Company’s share repurchase programs in 2012 and$36 million tax expense related to taxable income generated in the United States by the dividend having been offset by available stock-option-related loss carryforwards.  The remaining change is mainly due to the changes in mix of income across our foreign subsidiaries.The Company’s effective tax rate was (52)% and (639)% for the six months ended June 29, 2013 and the six months ended July 1,2012, respectively.  See Note 10. Error Correctionsfor further details.

The difference between our effective tax rate and the 35% federal statutory rate results primarily from foreign earnings eligible for tax rates lower than the federal statutory rate due to economic incentives subject to certain criteria granted by foreign jurisdictions and extending to approximately 2020, adjustments for prior years taxes and tax credits, the effect of intercompany transactions, investment tax credits earned, changes in valuation allowance, changes in accruals related to the unrecognized tax benefit liabilities, permanent differences arising from stock-based compensation, non-deductible, intangible asset amortization and utilization of stock option related loss carryforwards recorded in equity.

As at June 29, 2013, the Company’s liability for unrecognized tax benefits on a world-wide consolidated basis was $80.9 million. Recognition of an amount different from this estimate would affect the Company’s effective tax rate.

Because our projected tax rate is volatile, the provision for income taxes in our interim Condensed Consolidated Financial Statements reflects our actual effective tax rate for the current quarter.  We believe our year-to-date tax provision for income taxes is the most reliable estimate of our annual effective tax rate.  The effective income tax rate for the current fiscal year will likely be different from the tax rate in effect for the three and six months ended June 29, 2013 and could be considerably higher or lower, depending largely on our operating results before taxes and the geographic mix of income (loss) for the year.

XML

Condensed Consolidated Statements Of Comprehensive Loss (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2013	Jul. 01, 2012	Jun. 29, 2013	Jul. 01, 2012
Condensed Consolidated Statements Of Comprehensive Loss [Abstract]
Change in fair value of derivatives, deferred tax expense (benefit)	$ (110)	$ (103)	$ (165)	$ 228
Change in fair value of investment securities, deferred tax expense (benefit)".	$ (206)	$ (313)	$ (223)	$ (101)

XML

Summary Of Significant Accounting Policies

6 Months Ended

Jun. 29, 2013

Summary Of Significant Accounting Policies [Abstract]

Summary Of Significant Accounting Policies

NOTE 1.  Summary of Significant Accounting Policies

Description of business. PMC-Sierra, Inc. (the “Company” or “PMC”) is a semiconductor innovator transforming networks that connect, move and store digital content. Building on a track record of technology leadership, the Company is driving innovation across storage, optical and mobile networks.  PMC’s highly integrated solutions increase performance and enable next generation services to accelerate the network transformation. 

Basis of presentation.The accompanying interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) and United States Generally Accepted Accounting Principles (“GAAP”).  Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules or regulations.  These interim condensed consolidated financial statements are unaudited, but reflect all adjustments which are normal and recurring in nature and are, in the opinion of management, necessary to provide a fair statement of results for the interim periods presented.  These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in the Company’s Annual Report on Form 10-K for the year ended December 29, 2012.  The results of operations for the interim periods are not necessarily indicative of results to be expected in future periods. Fiscal 2013 will consist of 52 weeks and will end on Saturday, December 28, 2013.  Fiscal 2012 consisted of 52 weeks and ended on Saturday, December 29, 2012.  The second quarter of each of 2013 and 2012 consisted of 13 weeks.

Estimates. The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.  Estimates are used for, but not limited to, stock-based compensation, purchase accounting assumptions including those used to calculate the fair value of intangible assets and goodwill, the valuation of investments, accounting for doubtful accounts, inventory reserves, depreciation and amortization, asset impairments, revenue recognition, sales returns, warranty costs, income taxes including uncertain tax positions, restructuring costs, assumptions used to measure the fair value of the debt component of our senior convertible notes, accounting for employee benefit plans, and contingencies.  Actual results could differ materially from these estimates. 

XML

Balance Sheet Items (Tables)

6 Months Ended

Jun. 29, 2013

Balance Sheet Items [Abstract]

Schedule Of Inventory

	June 29,		December 29,
(in thousands)	2013		2012
Work-in-progress	$	15,136	$	9,867
Finished goods		15,381		13,681
	$	30,517	$	23,548

Schedule Of Product Warranties

	Six Months Ended
	June 29,		July 1,
(in thousands)	2013		2012
Balance, beginning of the period	$	5,981	$	5,415
Accrual for new warranties issued		268		870
Reduction for payments and product replacements		(528)		(112)
Adjustments related to changes in estimate of warranty accrual		(898)		(870)
Balance, end of the period	$	4,823	$	5,303

XML

Net Loss Per Share

6 Months Ended

Jun. 29, 2013

Net Loss Per Share [Abstract]

Net Income (Loss) Per Share

NOTE 9.   Net Loss Per Share  

The following table sets forth the computation of basic and diluted net loss per share:

	Three Months Ended				Six Months Ended
	June 29,		July 1,		June 29,		July 1,
	2013		2012			2013		2012
			(As Restated -				(As Restated -
(in thousands, except per share amounts)			See Note 10)				See Note 10)
Numerator:
Net loss	$	(4,152)	$	(103)	$	(10,977)	$	(67,456)
Denominator:
Basic weighted average common shares outstanding (1)		205,230		222,316		204,269		227,229
Diluted weighted average common shares outstanding (1)		205,230		222,316		204,269		227,229
Basic net loss per share	$	(0.02)	$	(0.00)	$	(0.05)	$	(0.30)
Diluted net loss per share	$	(0.02)	$	(0.00)	$	(0.05)	$	(0.30)

(1) PMC-Sierra Ltd. special shares are included in the calculation of basic and diluted weighted average common shares outstanding.

In the three and six months ended June 29, 2013 and July 1, 2012, the Company had approximately 2.2 million of stock options and Restricted Stock Units that were not included in the diluted net loss per share because they would have been anti-dilutive.

XML

Investment Securities (Available For Sale Investments) (Details) (USD $)	6 Months Ended		12 Months Ended
	Jun. 29, 2013		Dec. 29, 2012
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 226,967,000		$ 152,826,000
Gross Unrealized Gains	1,128,000	[1]	928,000	[1]
Gross Unrealized Losses	(501,000)	[1]	(17,000)	[1]
Fair Value	227,594,000		153,737,000
Accrued interest on investments	900,000		900,000
Cash Equivalents [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	17,435,000		50,528,000
Fair Value	17,435,000		50,528,000
Cash Equivalents [Member] | Money Market Funds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	17,435,000		50,528,000
Fair Value	17,435,000		50,528,000
Short-Term Investments [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	36,657,000		10,883,000
Gross Unrealized Gains	1,013,000	[1]	548,000	[1]
Gross Unrealized Losses	(11,000)	[1]
Fair Value	37,659,000		11,431,000
Short-Term Investments [Member] | Corporate Bonds And Notes [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	33,408,000		9,163,000
Gross Unrealized Gains	893,000	[1]	522,000	[1]
Gross Unrealized Losses	(11,000)	[1]
Fair Value	34,290,000		9,685,000
Short-Term Investments [Member] | US Treasury And Government Agency Notes [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1,745,000
Gross Unrealized Gains	88,000	[1]
Fair Value	1,833,000
Short-Term Investments [Member] | Foreign Government And Agency Notes [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1,504,000
Gross Unrealized Gains	32,000	[1]
Fair Value	1,536,000
Short-Term Investments [Member] | US States And Municipal Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost			1,720,000
Gross Unrealized Gains			26,000	[1]
Fair Value			1,746,000
Long-Term Investment Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	172,875,000		91,415,000
Gross Unrealized Gains	115,000	[1]	380,000	[1]
Gross Unrealized Losses	(490,000)	[1]	(17,000)	[1]
Fair Value	172,500,000		91,778,000
Long-Term Investment Securities [Member] | Corporate Bonds And Notes [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	114,581,000		53,567,000
Gross Unrealized Gains	104,000	[1]	329,000	[1]
Gross Unrealized Losses	(361,000)	[1]	(16,000)	[1]
Fair Value	114,324,000		53,880,000
Long-Term Investment Securities [Member] | US Treasury And Government Agency Notes [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	53,275,000		33,830,000
Gross Unrealized Gains	8,000	[1]	25,000	[1]
Gross Unrealized Losses	(110,000)	[1]	(1,000)	[1]
Fair Value	53,173,000		33,854,000
Long-Term Investment Securities [Member] | Foreign Government And Agency Notes [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	4,378,000		4,018,000
Gross Unrealized Gains	3,000	[1]	26,000	[1]
Gross Unrealized Losses	(15,000)	[1]
Fair Value	4,366,000		4,044,000
Long-Term Investment Securities [Member] | US States And Municipal Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	641,000
Gross Unrealized Losses	(4,000)	[1]
Fair Value	$ 637,000

[1] Gross unrealized gains include accrued interest on investments of $0.9 million. The remainder of the gross unrealized gains and losses are included in the interim Condensed Consolidated Balance Sheet as Accumulated other comprehensive income (loss).

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Error Corrections (Tables)

6 Months Ended

Jun. 29, 2013

Error Corrections [Abstract]

Summary Of Effects On Consolidated Balance Sheets And Statements Of Operations

	As at
	December 29, 2012
	As Restated		As Previously
(in thousands)			Reported
CONDENSED CONSOLIDATED BALANCE SHEETS
Non-current assets:
Prepaid expenses	$	11,851	$	25,077
Total assets	$	887,472	$	900,698
Liabilities:
Liability for unrecognized tax benefits - non-current	$	29,236	$	38,915
Stockholders' equity:
Additional paid in capital	$	1,527,509	$	1,526,883
Accumulated deficit	$	(896,891)	$	(892,718)
Total stockholders' equity	$	631,435	$	634,982
Total liabilities and stockholders' equity	$	887,472	$	900,698
	Three Months Ended
	July 1, 2012
	As Restated		As Previously
			Reported in
(in thousands, except for per share amounts)			Q2 2012 10-Q
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Provision for) recovery of income taxes	$	(519)	$	26,064
Net (loss) income	$	(103)	$	26,480
Net (loss) income per common share - basic	$	(0.00)	$	0.12
Net (loss) income per common share - diluted	$	(0.00)	$	0.12
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Net (loss) income	$	(103)	$	26,480
Comprehensive income	$	(1,792)	$	24,791
	Six Months Ended
	July 1, 2012
	As Restated		As Previously
			Reported in
(in thousands, except for per share amounts)			Q2 2012 10-Q
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Provision for income taxes	$	(58,330)	$	(60,665)
Net loss	$	(67,456)	$	(69,791)
Net loss per common share - basic	$	(0.30)	$	(0.31)
Net loss per common share - diluted	$	(0.30)	$	(0.31)
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Net loss	$	(67,456)	$	(69,791)
Comprehensive loss	$	(66,429)	$	(68,764)
CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS
Cash flows from operating activities:
Net loss	$	(67,456)	$	(69,791)
Adjustments to reconcile net loss to net cash provided by operating activities:
Changes in operating assets and liabilities:
Deferred income taxes and income taxes receivables/payables	$	(677)	$	1,658

XML

Net Loss Per Share (Tables)

6 Months Ended

Jun. 29, 2013

Net Loss Per Share [Abstract]

Schedule Of Net Income (Loss) Per Share

	Three Months Ended				Six Months Ended
	June 29,		July 1,		June 29,		July 1,
	2013		2012			2013		2012
			(As Restated -				(As Restated -
(in thousands, except per share amounts)			See Note 10)				See Note 10)
Numerator:
Net loss	$	(4,152)	$	(103)	$	(10,977)	$	(67,456)
Denominator:
Basic weighted average common shares outstanding (1)		205,230		222,316		204,269		227,229
Diluted weighted average common shares outstanding (1)		205,230		222,316		204,269		227,229
Basic net loss per share	$	(0.02)	$	(0.00)	$	(0.05)	$	(0.30)
Diluted net loss per share	$	(0.02)	$	(0.00)	$	(0.05)	$	(0.30)

(1) PMC-Sierra Ltd. special shares are included in the calculation of basic and diluted weighted average common shares outstanding.

XML

Stock-Based Compensation (Schedule Of Fair Values Of Company's Stock Option Awards) (Details)	3 Months Ended		6 Months Ended
	Jun. 29, 2013	Jul. 01, 2012	Jun. 29, 2013	Jul. 01, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life (years)	6 years 9 months 18 days	6 years 2 months 12 days	6 years 9 months 18 days	5 years 3 months 18 days
Expected volatility	40.00%	45.00%	40.00%	45.00%
Risk-free interest rate	1.50%	0.90%	1.50%	0.80%
Employee Stock Purchase Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life (years)			6 months	6 months
Expected volatility			37.00%	39.00%
Risk-free interest rate			0.10%	0.10%

XML

Net Loss Per Share (Schedule Of Net Income Per Share) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 29, 2013		Jul. 01, 2012		Jun. 29, 2013		Jul. 01, 2012
Net Loss Per Share [Abstract]
Net loss	$ (4,152)		$ (103)		$ (10,977)		$ (67,456)
Basic weighted average common shares outstanding	205,230	[1]	222,316	[1]	204,269	[1]	227,229	[1]
Diluted weighted average common shares outstanding	205,230	[1]	222,316	[1]	204,269	[1]	227,229	[1]
Basic net income per share	$ (0.02)		$ 0.00		$ (0.05)		$ (0.30)
Diluted net income per share	$ (0.02)		$ 0.00		$ (0.05)		$ (0.30)
Antidilutive securities excluded from computation of earnings per share	2,200,000		2,200,000		2,200,000		2,200,000

[1] PMC-Sierra Ltd. special shares are included in the calculation of basic and diluted weighted average common shares outstanding.

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Stock-Based Compensation (Narrative) (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 29, 2013	Jul. 01, 2012	Jun. 29, 2013 ShareBasedCompensationPlan	Jul. 01, 2012	Dec. 29, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of stock-based compensation programs			2
Proceeds from issuance of stock-based awards	$ 1,600,000	$ 1,700,000	$ 16,500,000	$ 8,900,000
Adjustments for forfeitures			1,300,000	1,400,000
Weighted average grant-date fair value per stock option	$ 2.57	$ 2.70	$ 2.57	$ 2.47
Total intrinsic value of stock options	500,000	600,000	2,200,000	1,100,000
Total unrecognized compensation costs	10,300,000		10,300,000
Shares issued during period under ESPP			1,193,775
Weighted average price per share under ESPP	$ 4.95		$ 4.95
Stock available for further issuance during the period under ESPP	7,259,359		7,259,359		8,453,134
Total intrinsic value of ESPP shares issued			1,800,000
RSU Activity [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total intrinsic value of stock options	5,700,000		6,900,000
Total unrecognized compensation costs	18,800,000		18,800,000
Unrecognized compensation expected to be recognized, average period			2 years 7 months 6 days
Employee Stock Purchase Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized compensation costs	400,000		400,000
Stock price as a percentage of fair value			85.00%
Maximum annual increase in shares that can be issued under ESPP			2,000,000
Maximum annual increase in shares that can be issued under ESPP, percentage of outstanding shares			1.00%
Weighted average grant-date fair value per ESPP award			$ 1.64
2008 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Option expiration term (years)			10 years
Award vesting period (years)			4 years
Common shares reserved for issuance	39,500,000	30,000,000	39,500,000	30,000,000
Additional shares reserved for issuance	9,500,000		9,500,000
Shares per award, ratio			1.6
RSUs or stock awards awarded when those shares are issued for cash consideration per share or unit, precent, less than fair market value of common stock	100.00%		100.00%
Maximum number of unexercised options that may become eligible for reissuance under the plan			15,000,000
2011 Employee Stock Purchase Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common shares reserved for issuance	12,000,000		12,000,000
Stock price as a percentage of fair value			85.00%
Maximum percentage of compensation an employee can use to purchase stock	10.00%		10.00%
Maximum [Member] | Employee Stock Purchase Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum duration of offering period of common stock under ESPP (months)			24 months
Maximum [Member] | 2011 Employee Stock Purchase Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum shares of stock an employee can purchase			7,500
Maximum amount granted to each employee to purchase common stock under ESPP			$ 25,000
Pre-Vesting [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expected to be recognized, average period			2 years

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Error Corrections (Condensed Consolidated Statements Of Comprehensive Income (Loss)) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2013	Jul. 01, 2012	Jun. 29, 2013	Jul. 01, 2012
Net loss	$ (4,152)	$ (103)	$ (10,977)	$ (67,456)
Comprehensive loss	(5,104)	(1,792)	(12,373)	(66,429)
As Previously Reported [Member]
Net loss		26,480		(69,791)
Comprehensive loss		24,791		(68,764)
As Restated [Member]
Net loss		(103)		(67,456)
Comprehensive loss		$ (1,792)		$ (66,429)

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Investment Securities (Tables)

6 Months Ended

Jun. 29, 2013

Investment Securities [Abstract]

Available For Sale Investments

		June 29, 2013
(in thousands)	Amortized Cost		Gross Unrealized Gains*		Gross Unrealized Losses*		Fair Value
Cash equivalents:
Money market funds	$	17,435	$	-	$	-	$	17,435
Total cash equivalents		17,435		-		-		17,435
Short-term investments:
Corporate bonds and notes		33,408		893		(11)		34,290
US treasury and government agency notes		1,745		88		-		1,833
Foreign government and agency notes		1,504		32		-		1,536
Total short-term investments		36,657		1,013		(11)		37,659
Long-term investment securities:
Corporate bonds and notes		114,581		104		(361)		114,324
US treasury and government agency notes		53,275		8		(110)		53,173
Foreign government and agency notes		4,378		3		(15)		4,366
US states and municipal securities		641		-		(4)		637
Total long-term investment securities		172,875		115		(490)		172,500
Total	$	226,967	$	1,128	$	(501)	$	227,594
*Gross unrealized gains include accrued interest on investments of $0.9 million.  The remainder of the gross unrealized gains and losses are included in the interim Condensed Consolidated Balance Sheet as Accumulated other comprehensive income (loss).
		December 29, 2012
(in thousands)	Amortized Cost		Gross Unrealized Gains*		Gross Unrealized Losses*		Fair Value
Cash equivalents:
Money market funds	$	50,528	$	-	$	-	$	50,528
Total cash equivalents		50,528		-		-		50,528
Short-term investments:
Corporate bonds and notes		9,163		522		-		9,685
US states and municipal securities		1,720		26		-		1,746
Total short-term investments		10,883		548		-		11,431
Long-term investment securities:
Corporate bonds and notes		53,567		329		(16)		53,880
US treasury and government agency notes		33,830		25		(1)		33,854
Foreign government and agency notes		4,018		26		-		4,044
Total long-term investment securities		91,415		380		(17)		91,778
Total	$	152,826	$	928	$	(17)	$	153,737
*Gross unrealized gains include accrued interest on investments of $0.9 million.  The remainder of the gross unrealized gains and losses are included in the interim Condensed Consolidated Balance Sheet as Accumulated other comprehensive income (loss).

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 29, 2013	Dec. 29, 2012
Condensed Consolidated Balance Sheets [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 1,261	$ 1,614
PMC special shares convertible into common stock, shares	1,019,000	1,019,000
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	900,000	900,000
Common stock, shares issued	204,145,000	200,924,000
Common stock, shares outstanding	204,145,000	200,924,000

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Condensed Consolidated Statements Of Stockholders' Equity (USD $) In Thousands, unless otherwise specified	Common Stock [Member]	Additional Paid In Capital [Member]	Accumulated Other Comprehensive Income (Loss) (Net Of Tax) [Member]	Accumulated Deficit [Member]	Total
Beginning Balance at Dec. 31, 2011	$ 230	$ 1,587,127	$ (1,146)	$ (490,183)	$ 1,096,028
Beginning Balance (in shares) at Dec. 31, 2011	230,233
Net loss				(67,456)	(67,456)
Other comprehensive income (loss):
Change in fair value of derivatives, net of tax			1,080		1,080
Change in fair value of investment securities, net of tax			(53)		(53)
Comprehensive income (loss)					(66,429)
Issuance of common stock under stock benefit plans	3	8,177			8,180
Issuance of common stock under stock benefit plans (in shares)	2,671
Stock-based compensation expense		13,890			13,890
Benefit of stock option related loss carry-forwards		33,537			33,537
Repurchases of common stock	(23)	(96,702)		(59,058)	(155,783)
Repurchases of common stock (in shares)	(23,114)
Equity forward contract related to accelerated share repurchase program		(9,827)			(9,827)
Ending Balance at Jul. 01, 2012	210	1,536,202	(119)	(616,697)	919,596
Ending Balance (in shares) at Jul. 01, 2012	209,790
Beginning Balance at Apr. 01, 2012	231	1,636,753	1,570	(557,536)	1,081,018
Beginning Balance (in shares) at Apr. 01, 2012	231,823
Net loss				(103)	(103)
Other comprehensive income (loss):
Change in fair value of derivatives, net of tax			(688)		(688)
Change in fair value of investment securities, net of tax			(1,001)		(1,001)
Comprehensive income (loss)					(1,792)
Issuance of common stock under stock benefit plans	2	956			958
Issuance of common stock under stock benefit plans (in shares)	1,081
Stock-based compensation expense		7,309			7,309
Benefit of stock option related loss carry-forwards		(2,287)			(2,287)
Repurchases of common stock	(23)	(96,702)		(59,058)	(155,783)
Repurchases of common stock (in shares)	(23,114)
Equity forward contract related to accelerated share repurchase program		(9,827)			(9,827)
Ending Balance at Jul. 01, 2012	210	1,536,202	(119)	(616,697)	919,596
Ending Balance (in shares) at Jul. 01, 2012	209,790
Beginning Balance at Dec. 29, 2012	201	1,527,509	616	(896,891)	631,435
Beginning Balance (in shares) at Dec. 29, 2012	200,924				200,924
Net loss				(10,977)	(10,977)
Other comprehensive income (loss):
Change in fair value of derivatives, net of tax			(948)		(948)
Change in fair value of investment securities, net of tax			(448)		(448)
Comprehensive income (loss)					(12,373)
Issuance of common stock under stock benefit plans	4	15,346			15,350
Issuance of common stock under stock benefit plans (in shares)	4,124
Stock-based compensation expense		13,587			13,587
Benefit of stock option related loss carry-forwards		(539)			(539)
Repurchases of common stock	(1)	(3,758)		(1,748)	(5,507)
Repurchases of common stock (in shares)	(903)
Ending Balance at Jun. 29, 2013	204	1,552,145	(780)	(909,616)	641,953
Ending Balance (in shares) at Jun. 29, 2013	204,145				204,145
Beginning Balance at Mar. 30, 2013	204	1,549,830	172	(903,716)	646,490
Beginning Balance (in shares) at Mar. 30, 2013	203,889
Net loss				(4,152)	(4,152)
Other comprehensive income (loss):
Change in fair value of derivatives, net of tax			(546)		(546)
Change in fair value of investment securities, net of tax			(406)		(406)
Comprehensive income (loss)					(5,104)
Issuance of common stock under stock benefit plans	1	688			689
Issuance of common stock under stock benefit plans (in shares)	1,159
Stock-based compensation expense		6,205			6,205
Benefit of stock option related loss carry-forwards		(820)			(820)
Repurchases of common stock	(1)	(3,758)		(1,748)	(5,507)
Repurchases of common stock (in shares)	(903)
Ending Balance at Jun. 29, 2013	$ 204	$ 1,552,145	$ (780)	$ (909,616)	$ 641,953
Ending Balance (in shares) at Jun. 29, 2013	204,145				204,145

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Business Combinations

6 Months Ended

Jun. 29, 2013

Business Combinations [Abstract]

Business Combinations

NOTE 2. Business Combinations

Acquisition of 12GB/s SAS expander business from Maxim Integrated Products, Inc.

During the first quarter of fiscal 2012, the Company completed the acquisition of the 12Gb/s Serial attached SCSI (“SAS”) expander business from Maxim Integrated Products, Inc. (“Maxim”).  Along with a very experienced team, this acquisition provides a strong strategic fit between PMC’s core strengths in enterprise storage and Maxim’s established traction with expander solutions at the largest server storage original equipment manufacturers.  This acquisition was accounted for under the acquisition method of accounting.  The financial impact of the acquisition was not material to the Company.  See Note 11. Subsequent Eventsfor a discussion regarding the acquisition of Integrated Device Technology, Inc.’s Enterprise Flash Controller Business.

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Condensed Consolidated Statements Of Stockholders' Equity (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2013	Jul. 01, 2012	Jun. 29, 2013	Jul. 01, 2012
Condensed Consolidated Statements Of Stockholders' Equity [Abstract]
Change in fair value of derivatives, deferred tax expense (benefit)	$ (110)	$ (103)	$ (165)	$ 228
Change in fair value of investment securities, deferred tax expense (benefit)	$ (206)	$ (313)	$ (223)	$ (101)

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Error Corrections (Summary Of Effects On The Consolidated Balance Sheet) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 29, 2013	Mar. 30, 2013	Dec. 29, 2012	Jul. 01, 2012	Apr. 01, 2012	Dec. 31, 2011
Prepaid expenses	$ 2,856		$ 11,851
Total assets	896,857		887,472
Liability for unrecognized tax benefits - non-current	28,944		29,236
Accumulated deficit	(909,616)		(896,891)
Total stockholders' equity	641,953	646,490	631,435	919,596	1,081,018	1,096,028
Total liabilities and stockholders' equity	896,857		887,472
As Previously Reported [Member]
Prepaid expenses			25,077
Total assets			900,698
Liability for unrecognized tax benefits - non-current			38,915
Common stock and additional paid in capital			1,526,883
Accumulated deficit			(892,718)
Total stockholders' equity			634,982
Total liabilities and stockholders' equity			900,698
As Restated [Member]
Prepaid expenses			11,851
Total assets			887,472
Liability for unrecognized tax benefits - non-current			29,236
Common stock and additional paid in capital			1,527,509
Accumulated deficit			(896,891)
Total stockholders' equity			631,435
Total liabilities and stockholders' equity			$ 887,472

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Derivative Instruments (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 29, 2013 contract	Jul. 01, 2012	Dec. 29, 2012 contract
2012 Stock Repurchase Program [Member]
Derivative [Line Items]
Consideration Allocated To Stock Repurchases		$ 150.2
Adjustment To Accumulated Deficit		57.2
Equity Forward Contract Included In Additional Paid-In Capital		9.8
Cash Flow Hedging [Member]
Derivative [Line Items]
Forward currency contracts outstanding	41		73
Forward currency contracts maturity, maximum	12 months
Notional amount of contracts	30.3		22.5
Fair value gain, net of taxes	$ 0.7	$ (0.5)

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Stock-Based Compensation (Schedule Of Stock-Based Compensation Expense) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2013	Jul. 01, 2012	Jun. 29, 2013	Jul. 01, 2012
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 6,205	$ 7,309	$ 13,587	$ 13,890
Cost of revenues [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	208	252	453	476
Research and development [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	2,396	2,900	5,700	5,741
Selling, general and administrative [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 3,601	$ 4,157	$ 7,434	$ 7,673

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Balance Sheet Items (Schedule Of Product Warranties) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 29, 2013	Jul. 01, 2012
Balance Sheet Items [Abstract]
Balance, beginning of the period	$ 5,981	$ 5,415
Accrual for new warranties issued	268	870
Reduction for payments and product replacements	(528)	(112)
Adjustments related to changes in estimate of warranty accrual	(898)	(870)
Balance, end of the period	$ 4,823	$ 5,303

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Subsequent Events (Details) (Subsequent Event [Member], USD $) In Millions, unless otherwise specified	6 Months Ended		0 Months Ended	6 Months Ended
	Jun. 29, 2013	Jul. 15, 2013	Aug. 02, 2013 Bank Of America [Member]	Jun. 29, 2013 Minimum [Member]	Jun. 29, 2013 Maximum [Member]
Subsequent Event [Line Items]
Aggregate purchase price		$ 96
Revolving credit facility			100
Sublimit for issuance of standby letters of credit			25
Credit facility, term			5 years
Credit facility, maximum amount			$ 150
Equity interests of their foreign subsidiaries			65.00%
Federal funds rate plus	0.50%
Eurodollar rate plus	1.00%
Eurodollar loans rate				1.75%	2.25%
Applicable rate				0.75%	1.25%
Applicable rate, fee				0.25%	0.35%
Cash Interest Coverage Ratio				1.00%	3.50%
Consolidation Leverage Ratio				1.00%	2.50%
Rate increase upon default	2.00%

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Condensed Consolidated Statements Of Comprehensive Loss (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2013	Jul. 01, 2012	Jun. 29, 2013	Jul. 01, 2012
Condensed Consolidated Statements Of Comprehensive Loss [Abstract]
Net loss	$ (4,152)	$ (103)	$ (10,977)	$ (67,456)
Change in fair value of derivatives, net of tax of $110, $103, $165 and $228	(546)	(688)	(948)	1,080
Change in fair value of investment securities, net of tax of $206, $313, $223 and $101	(406)	(1,001)	(448)	(53)
Other comprehensive (loss) income	(952)	(1,689)	(1,396)	1,027
Comprehensive loss	$ (5,104)	$ (1,792)	$ (12,373)	$ (66,429)

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Stock-Based Compensation

6 Months Ended

Jun. 29, 2013

Stock-Based Compensation [Abstract]

Stock-Based Compensation

NOTE 5.   Stock-Based Compensation

The Company has two stock-based compensation programs, which are described below.  None of the Company’s stock-based awards under these plans are classified as liabilities.  The Company did not capitalize any stock-based compensation cost and recorded compensation expense for the three andsix months ended June 29, 2013 and July 1, 2012, as follows:

	Three Months Ended				Six Months Ended
	June 29,		July 1,		June 29,		July 1,
(in thousands)	2013		2012		2013		2012
Cost of revenues	$	208	$	252	$	453	$	476
Research and development		2,396		2,900		5,700		5,741
Selling, general and administrative		3,601		4,157		7,434		7,673
Total	$	6,205	$	7,309	$	13,587	$	13,890

The Company received cash of $1.6 million and $16.5 million related to the issuance of stock-based awards during the three and six months ended June 29, 2013, respectively.  The Company received cash of $1.7 million and $8.9 million related to the issuance of stock-based awards during the three and six months ended July 1, 2012, respectively.

Equity Award Plans

The Company issues its common stock under the provisions of the 2008 Equity Plan (the “2008 Plan”).   Stock option awards are granted with an exercise price equal to the closing market price of the Company’s common stock at the grant date. The options generally expire within 10 years and vest over four years.

The 2008 Plan was approved by stockholders at the 2008 Annual Meeting.  The 2008 Plan became effective on January 1, 2009 (the “Effective Date”).  It is a successor to the 1994 Incentive Stock Plan (the “1994 Plan”) and the 2001 Stock Option Plan (the “2001 Plan”).  Up to 30,000,000 shares of our common stock have been initially reserved for issuance under the 2008 Plan.  At the 2012 Annual Meeting, stockholders approved an increase in shares reserved for issuance under the 2008 plan by 9,500,000 shares which shares were registered on May 14, 2012 on Form S-8 bringing the total number of authorized and registered shares available under the 2008 Plan to 39,500,000.  To the extent that a share that is subject to an award that counts as 1.6 shares against the 2008 Plan’s share reserve(i.e., dividend equivalents, RSUs or stock awards awarded under the 2008 Plan when those shares are issued for cash consideration per share or unit less than 100% of the fair market value of our common stock on the award date),is added back into the 2008 Plan upon expiration or termination of the award or repurchase or forfeiture of the shares, the number of shares of common stock available for issuance under the 2008 Plan will be credited with 1.6 shares.  The implementation of the 2008 Plan did not affect any options or restricted stock units outstanding under the 1994 Plan or the 2001 Plan on the Effective Date.  To the extent that any of those options or restricted stock units subsequently terminate unexercised or prior to issuance of shares thereunder, the number of shares of common stock subject to those terminated awards will be added to the share reserve available for issuance under the 2008 Plan, up to an additional 15,000,000 shares. No additional shares may be issued under the 1994 Plan or the 2001 Plan.  In 2006, the Company assumed the stock option plans and all outstanding stock options of Passave, Inc. as part of the merger consideration in that business combination.  In 2010, the Company assumed the stock option plans and all outstanding stock options of Wintegra, Inc. as part of that business combination.

Activity under the option plans during the six months ended June 29, 2013 was as follows:

	Number of options	Weighted average exercise price per share		Weighted average remaining contractual term (years)	Aggregate intrinsic value at June 29, 2013
Outstanding, December 29, 2012	28,001,047	$	7.93
Granted and Assumed	213,148	$	6.08
Exercised	(1,951,741)	$	5.40
Forfeited	(999,889)	$	8.17
Outstanding, June 29, 2013	25,262,565	$	8.10	5.07	$	7,485,954
Vested & expected to vest, June 29, 2013	24,919,328	$	8.12	5.02	$	7,360,774
Exercisable, June 29, 2013	20,874,962	$	8.34	4.45	$	6,204,610

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the quoted price of the Company’s common stock for the options that were in-the-money at June 29, 2013.  During each of the six months ended June 29, 2013, and July 1, 2012,  $1.3 million and $1.4 million were recorded for forfeitures, respectively. 

The fair value of the Company’s stock option awards granted to employees is estimated using a lattice-binomial valuation model.  This model considers the contractual term of the option, the probability that the option will be exercised prior to the end of its contractual life, and the probability of termination or retirement of the option holder in computing the value of the option.   The model requires the input of highly subjective assumptions including the expected stock price volatility and expected life.

The Company’s estimates of expected volatilities are based on a weighted historical and market-based implied volatility. The Company uses historical data to estimate option exercises and employee terminations within the valuation model; separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes.  The expected term of options granted is derived from the output of the stock option valuation model and represents the period of time that granted options are expected to be outstanding.  The risk-free rate for periods within the expected life of the stock option is based on the U.S. Treasury yield curve in effect at the time of the grant.

The fair values of the Company’s stock option awards were calculated for expense recognition using an estimated forfeiture rate, assuming no expected dividends and using the following weighted average assumptions:

	Three Months Ended		Six Months Ended
	June 29,	July 1,	June 29,	July 1,
	2013	2012	2013	2012
Expected life (years)	6.8	6.2	6.8	5.3
Expected volatility	40%	45%	40%	45%
Risk-free interest rate	1.5%	0.9%	1.5%	0.8%

The weighted average grant-date fair value per stock options granted during the three and six months ended June 29, 2013was$2.57 and $2.57, respectively.  The weighted average grant-date fair value per stock option granted during the three and six months ended July 1, 2012was $2.70 and $2.47, respectively.  The total intrinsic value of stock options exercised during the three months and six months ended June 29, 2013 was $0.5  million and $2.2 million, respectively.  The total intrinsic value of stock options exercised during the three and six months ended July 1, 2012 was $0.6  million and $1.1 million, respectively. 

As of June 29, 2013, there was $10.3 million of total unrecognized compensation costs related to unvested stock options granted under the plans, which is expected to be recognized over an average period of 2.0 years.  

Restricted Stock Units

On February 1, 2007, the Company amended its stock award plans to allow for the issuance of Restricted Stock Units (“RSUs”) to employees and members of the Board of Directors.  The first grant of RSUs occurred on May 25, 2007.  The grants vest over varying terms, up to a maximum of four years from the date of grant.

A summary of RSU activity during the six months ended June 29, 2013 is as follows:

	Restricted Stock Units	Weighted Average Remaining Contractual Term (years)			Aggregate intrinsic value at June 29, 2013
Unvested shares at December 29, 2012	5,358,201		-		-
Awarded	442,303		-		-
Released	(1,158,500)		-		-
Forfeited	(353,402)		-		-
Unvested shares at June 29, 2013	4,288,602		1.50	$	27,245,782
Restricted Stock Units expected to vest June 29, 2013	3,763,261		1.40	$	23,915,522

The intrinsic value of RSUs vested during the three and six months ended June 29, 2013 was $5.7 million and $6.9 million, respectively.  As of June 29, 2013, total unrecognized compensation costs, adjusted for estimated forfeitures, related to unvested RSUs was $18.8 million, which is expected to be recognized over the next 2.6 years.

Employee Stock Purchase Plan

In 1991, the Company adopted an Employee Stock Purchase Plan (the “ESPP”) under Section 423 of the Internal Revenue Code.  The ESPP allows eligible participants to purchase shares of the Company’s common stock at six-month intervals through payroll deductions at a price of 85% of the lower of the fair market value at specific dates in those six-month intervals (calculated in the manner provided in the plan). Shares of the Company’s common stock are offered under the ESPP through a series of successive offering periods, generally with a maximum duration of 24 months.  Under the ESPP, the number of shares authorized to be available for issuance under the plan is increased automatically on January 1 of each year until the expiration of the plan.  The increase will be limited to the lesser of (i) 1% of the outstanding shares on January 1 of each year, (ii) 2,000,000 shares (after adjusting for stock dividends), or (iii) an amount to be determined by the Board of Directors.  The ESPP was terminated on February 10, 2011 and no additional shares will be issued under the ESPP. 

The 2011 Employee Stock Purchase Plan (the “2011 Plan”) was approved by stockholders at the 2010 Annual Meeting.  The 2011 Plan became effective on February 11, 2011 and is the successor to the ESPP. The 2011 Plan consists of consecutive offering periods, generally of a duration of 6 months, and allows eligible employees to purchase shares of the Company’s common stock at the end of each such offering period at a price per share equal to 85% of the lower of the fair market value of a share of Common Stock on the start date or the fair market value of a share of Common Stock on the exercise date of the offering period.  Employees purchase such shares through payroll deductions which may not exceed 10% of their total cash compensation.  The 2011 Plan imposes certain limitations upon an employee’s right to acquire Common Stock, including the following: (i) no employee may purchase more than 7,500 shares of Common Stock on any one purchase date and (ii) no employee may be granted rights to purchase more than $25,000 worth of Common Stock for each calendar year that such rights are at any time outstanding.  Up to 12,000,000 shares of our common stock have been initially reserved for issuance under the 2011 Plan.

During the first six months of 2013,  1,193,775 shares were issued under the 2011 Plan at a weighted average price of $4.95 per share.  As of June 29, 2013,  7,259,359 shares were available for future issuance under the 2011 Plan compared to 8,453,134 under the 2011 Plan as at December 29, 2012.

	Six Months Ended
	June 29, 2013	July 1, 2013
Expected life (years)	0.5	0.5
Expected volatility	37%	39%
Risk-free interest rate	0.1%	0.1%

The weighted average grantdate fair value per ESPP award granted during the first six months of 2013 was $1.64.  The total intrinsic value of ESPP shares issued during the first six months of 2013 was $1.8 million.

For the six-monthperiod endedJune 29, 2013, total unrecognized compensation costs, adjusted for estimated forfeitures, related to non-vested ESPP awards was $0.4 million which is expected to be recognized over the next month.

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 29, 2013	Dec. 29, 2012
Current assets:
Cash and cash equivalents	$ 98,680	$ 169,970
Short-term investments	37,659	11,431
Accounts receivable, net of allowance for doubtful accounts of $1,261 (2012 - $1,614)	57,454	62,143
Inventories, net	30,517	23,548
Prepaid expenses and other current assets	19,765	22,125
Income taxes receivable	5,594	6,630
Prepaid tax expense	5,963
Deferred tax assets	49,308	43,630
Total current assets	304,940	339,477
Investment securities	172,500	91,778
Investments and other assets	16,580	20,133
Prepaid expenses	2,856	11,851
Property and equipment, net	39,705	43,146
Goodwill	252,419	252,419
Intangible assets, net	107,605	128,668
Deferred tax assets	252
Assets, Total	896,857	887,472
Current liabilities:
Accounts payable	27,687	27,410
Accrued liabilities	74,887	72,282
Income taxes payable	1,799	1,450
Liability for unrecognized tax benefit	52,003	51,810
Deferred income taxes	2,450	2,466
Deferred income	6,913	8,113
Total current liabilities	165,739	163,531
Long-term obligations	11,751	17,233
Deferred income taxes	47,282	44,849
Liability for unrecognized tax benefit	28,944	29,236
PMC special shares convertible into 1,019 (2012 - 1,019) shares of common stock	1,188	1,188
Stockholders' equity:
Common stock, par value $.001: 900,000 shares authorized; 204,145 shares issued and outstanding (2012 - 200,924)	204	201
Additional paid in capital	1,552,145	1,527,509
Accumulated other comprehensive (loss) income	(780)	616
Accumulated deficit	(909,616)	(896,891)
Total stockholders' equity	641,953	631,435
Liabilities and Stockholders' Equity, Total	$ 896,857	$ 887,472

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Condensed Consolidated Statements Of Operations (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 29, 2013		Jul. 01, 2012		Jun. 29, 2013		Jul. 01, 2012
Condensed Consolidated Statements Of Operations [Abstract]
Net revenues	$ 127,907		$ 137,762		$ 253,068		$ 269,856
Cost of revenues	37,827		41,253		75,087		82,265
Gross profit	90,080		96,509		177,981		187,591
Other costs and expenses:
Research and development	54,571		56,699		109,195		115,770
Selling, general and administrative	30,277		29,290		58,619		58,261
Amortization of purchased intangible assets	10,776		11,626		21,560		22,913
Loss from operations	(5,544)		(1,106)		(11,393)		(9,353)
Other income (expense):
Gain on investment securities and other	30		527		14		566
Amortization of debt issue costs			(50)				(100)
Foreign exchange gain	2,213		1,608		3,578		503
Interest income (expense), net	330		(563)		594		(742)
Loss before provision for income taxes	(2,971)		416		(7,207)		(9,126)
Provision for income taxes	(1,181)		(519)		(3,770)		(58,330)
Net loss	$ (4,152)		$ (103)		$ (10,977)		$ (67,456)
Net loss per common share - basic	$ (0.02)		$ 0.00		$ (0.05)		$ (0.30)
Net loss per common share - diluted	$ (0.02)		$ 0.00		$ (0.05)		$ (0.30)
Shares used in per share calculation - basic	205,230	[1]	222,316	[1]	204,269	[1]	227,229	[1]
Shares used in per share calculation - diluted	205,230	[1]	222,316	[1]	204,269	[1]	227,229	[1]

[1] PMC-Sierra Ltd. special shares are included in the calculation of basic and diluted weighted average common shares outstanding.

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Fair Value Measurements (Financial Assets Measured At Fair Values On Recurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 29, 2013		Jul. 01, 2012
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	$ 225,388		$ 153,737
Level 1 [Member] | Corporate Bonds And Notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	146,408	[1]	63,565	[1]
Level 1 [Member] | Money Market Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	17,434	[1]	50,528	[1]
Level 1 [Member] | United States ("US") Treasury And Government Agency Notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	55,007	[1]	33,854	[1]
Level 1 [Member] | Foreign Government And Agency Notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	5,902	[1]	4,044	[1]
Level 1 [Member] | US State And Municipal Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	637	[1]	1,746	[1]
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	2,206		392
Level 2 [Member] | Forward Currency Contracts [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets			392	[2]
Level 2 [Member] | Corporate Bonds And Notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	$ 2,206	[1]

[1] Included in Cash and cash equivalents, Short-term investments, and Long-term investment securities. See Note 7. Investment Securities.

[2] Included in Prepaid expenses and other current assets.

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 29, 2013

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule Of Stock-Based Compensation Expense

	Three Months Ended				Six Months Ended
	June 29,		July 1,		June 29,		July 1,
(in thousands)	2013		2012		2013		2012
Cost of revenues	$	208	$	252	$	453	$	476
Research and development		2,396		2,900		5,700		5,741
Selling, general and administrative		3,601		4,157		7,434		7,673
Total	$	6,205	$	7,309	$	13,587	$	13,890

Schedule Of Activity Under Option Plans

	Number of options	Weighted average exercise price per share		Weighted average remaining contractual term (years)	Aggregate intrinsic value at June 29, 2013
Outstanding, December 29, 2012	28,001,047	$	7.93
Granted and Assumed	213,148	$	6.08
Exercised	(1,951,741)	$	5.40
Forfeited	(999,889)	$	8.17
Outstanding, June 29, 2013	25,262,565	$	8.10	5.07	$	7,485,954
Vested & expected to vest, June 29, 2013	24,919,328	$	8.12	5.02	$	7,360,774
Exercisable, June 29, 2013	20,874,962	$	8.34	4.45	$	6,204,610

Schedule Of Fair Value Assumptions

	Three Months Ended		Six Months Ended
	June 29,	July 1,	June 29,	July 1,
	2013	2012	2013	2012
Expected life (years)	6.8	6.2	6.8	5.3
Expected volatility	40%	45%	40%	45%
Risk-free interest rate	1.5%	0.9%	1.5%	0.8%

Schedule Of Summary Of RSU Activity

	Restricted Stock Units	Weighted Average Remaining Contractual Term (years)			Aggregate intrinsic value at June 29, 2013
Unvested shares at December 29, 2012	5,358,201		-		-
Awarded	442,303		-		-
Released	(1,158,500)		-		-
Forfeited	(353,402)		-		-
Unvested shares at June 29, 2013	4,288,602		1.50	$	27,245,782
Restricted Stock Units expected to vest June 29, 2013	3,763,261		1.40	$	23,915,522

2011 Employee Stock Purchase Plan [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule Of Fair Value Assumptions

	Six Months Ended
	June 29, 2013	July 1, 2013
Expected life (years)	0.5	0.5
Expected volatility	37%	39%
Risk-free interest rate	0.1%	0.1%

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Error Corrections (Condensed Consolidated Statements Of Cashflows) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended
	Jul. 01, 2012	Jun. 29, 2013	Jul. 01, 2012
Net loss	$ (103)	$ (10,977)	$ (67,456)
Taxes related to intercompany dividend			60,940
Accounts payable and accrued liabilities		3,438	(22,838)
Deferred income taxes and income taxes receivables/payable		4,213	(677)
As Previously Reported [Member]
Net loss	26,480		(69,791)
Deferred income taxes and income taxes receivables/payable			1,658
As Restated [Member]
Net loss	(103)		(67,456)
Deferred income taxes and income taxes receivables/payable			$ (677)

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Income Taxes (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 29, 2013	Jul. 01, 2012	Jun. 29, 2013	Jul. 01, 2012
Income Taxes [Abstract]
Provision for income taxes	$ 1,181,000	$ 519,000	$ 3,770,000	$ 58,330,000
Income tax recovery related to unrecognized tax benefit accrual	2,300,000
Effective tax rate	(40.00%)	(125.00%)	(52.00%)	(639.00%)
Decrease in the provision for income taxes	1,300,000		54,500,000
Income tax provision related to an intercompany dividend			20,000,000
Foreign withholding taxes related to intercompany dividend			36,000,000
Federal statutory rate			35.00%
Unrecognized tax benefits, liability	$ 80,900,000		$ 80,900,000

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Stock-Based Compensation (Schedule Of Summary Of RSU Activity) (Details) (USD $)	6 Months Ended
	Jun. 29, 2013
Stock-Based Compensation [Abstract]
Beginning of period, Unvested Restricted Stock Units	5,358,201
Awarded, Restricted Stock Units	442,303
Released, Restricted Stock Units	(1,158,500)
Forfeited, Restricted Stock Units	(353,402)
End of period, Restricted Stock Units	4,288,602
Restricted Stock Units expected to vest	3,763,261
End of period, Weighted Average Remaining Contractual Term (years)	1 year 6 months
Restricted Stock Units expected to vest, Weighted Average Remaining Contractual Term (years)	1 year 4 months 24 days
End of period, Aggregate intrinsic value	$ 27,245,782
Restricted Stock Units expected to vest, Aggregate intrinsic value	$ 23,915,522

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Balance Sheet Items (Schedule Of Inventory) (Details) (USD $)	Jun. 29, 2013	Dec. 29, 2012
Balance Sheet Items [Abstract]
Work-in-progress	$ 15,136,000	$ 9,867,000
Finished goods	15,381,000	13,681,000
Inventory, net	30,517,000	23,548,000
Inventory reserves	$ 7,600,000	$ 7,800,000

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Fair Value Measurements

6 Months Ended

Jun. 29, 2013

Fair Value Measurements [Abstract]

Fair Value Measurements

NOTE 4.  Fair Value Measurements

ASC Topic 820 specifies a hierarchy of valuation techniques which requires an entity to maximize the use of observable inputs that may be used to measure fair value.  The Company’s valuation techniques used to measure the fair value of money market funds, and certain marketable equity securitieswere derived from quoted prices in active markets for identical assets or liabilities. The valuation techniques used to measure the fair value of all other financial instruments, all of which have counterparties with high credit ratings, were valued based on quoted market prices or model driven valuations using significant inputs derived from or corroborated by observable market data. 

There were no transfers in and out of Level 1 and 2 fair value measurements during the six months ended June 29, 2013.

Assets/Liabilities Measured and Recorded at Fair Value on a Recurring Basis

Financial assets measured on a recurring basis as at June 29, 2013 and December 29, 2012, are summarized below:

	Fair value,
	June 29, 2013
(in thousands)	Level 1		Level 2
Assets:
Corporate bonds and notes (1)	$	146,408	$	2,206
Money market funds (1)		17,434		-
United States (“US”) treasury and government agency notes (1)		55,007		-
Foreign government and agency notes (1)		5,902		-
US state and municipal securities (1)		637		-
Total assets	$	225,388	$	2,206
	Fair value,
	December 29, 2012
(in thousands)	Level 1		Level 2
Assets:
Corporate bonds and notes (1)	$	63,565	$	-
Money market funds (1)		50,528		-
US treasury and government agency notes (1)		33,854		-
Foreign government and agency notes (1)		4,044		-
US state and municipal securities (1)		1,746		-
Forward currency contracts (2)		-		392
Total assets	$	153,737	$	392
(1)  Included in Cash and cash equivalents, Short-term investments, and Long-term investment securities.  See Note 7. Investment Securities.
(2)  Included in Prepaid expenses and other current assets.

Financial liabilities measured on a recurring basis are summarized below:

	Fair value,
	June 29, 2013
(in thousands)	Level 2
Current liabilities:
Forward currency contracts (1)	$	722
	Fair value,
	December 29, 2012
(in thousands)	Level 2
Current liabilities:
Forward currency contracts (1)	$	-
(1)  Included in Accrued liabilities.

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Fair Value Measurements (Liabilities Measured At Fair Value On A Recurring Basis) (Details) (Level 2 [Member], USD $) In Thousands, unless otherwise specified	Jun. 29, 2013		Jul. 01, 2012
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Forward currency contracts	$ 722	[1]		[1]

[1] Included in Accrued liabilities.

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Error Corrections (Summary Of Effects On The Consolidated Statements Of Operations) (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2013	Jul. 01, 2012	Jun. 29, 2013	Jul. 01, 2012
Provision for income taxes	$ 1,181	$ 519	$ 3,770	$ 58,330
Net loss	(4,152)	(103)	(10,977)	(67,456)
Net income per common share - basic	$ (0.02)	$ 0.00	$ (0.05)	$ (0.30)
Net income per common share - diluted	$ (0.02)	$ 0.00	$ (0.05)	$ (0.30)
As Previously Reported [Member]
Provision for income taxes		26,064		(60,665)
Net loss		26,480		(69,791)
Net income per common share - basic		$ 0.12		$ (0.31)
Net income per common share - diluted		$ 0.12		$ (0.31)
As Restated [Member]
Provision for income taxes		(519)		(58,330)
Net loss		$ (103)		$ (67,456)
Net income per common share - basic		$ 0.00		$ (0.30)
Net income per common share - diluted		$ 0.00		$ (0.30)

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Investment Securities

6 Months Ended

Jun. 29, 2013

Investment Securities [Abstract]

Investment Securities

NOTE 7.  Investment Securities

The Company’s available for sale investments, by investment type, consists of the following at June 29, 2013 and December 29, 2012:

		June 29, 2013
(in thousands)	Amortized Cost		Gross Unrealized Gains*		Gross Unrealized Losses*		Fair Value
Cash equivalents:
Money market funds	$	17,435	$	-	$	-	$	17,435
Total cash equivalents		17,435		-		-		17,435
Short-term investments:
Corporate bonds and notes		33,408		893		(11)		34,290
US treasury and government agency notes		1,745		88		-		1,833
Foreign government and agency notes		1,504		32		-		1,536
Total short-term investments		36,657		1,013		(11)		37,659
Long-term investment securities:
Corporate bonds and notes		114,581		104		(361)		114,324
US treasury and government agency notes		53,275		8		(110)		53,173
Foreign government and agency notes		4,378		3		(15)		4,366
US states and municipal securities		641		-		(4)		637
Total long-term investment securities		172,875		115		(490)		172,500
Total	$	226,967	$	1,128	$	(501)	$	227,594
*Gross unrealized gains include accrued interest on investments of $0.9 million.  The remainder of the gross unrealized gains and losses are included in the interim Condensed Consolidated Balance Sheet as Accumulated other comprehensive income (loss).
		December 29, 2012
(in thousands)	Amortized Cost		Gross Unrealized Gains*		Gross Unrealized Losses*		Fair Value
Cash equivalents:
Money market funds	$	50,528	$	-	$	-	$	50,528
Total cash equivalents		50,528		-		-		50,528
Short-term investments:
Corporate bonds and notes		9,163		522		-		9,685
US states and municipal securities		1,720		26		-		1,746
Total short-term investments		10,883		548		-		11,431
Long-term investment securities:
Corporate bonds and notes		53,567		329		(16)		53,880
US treasury and government agency notes		33,830		25		(1)		33,854
Foreign government and agency notes		4,018		26		-		4,044
Total long-term investment securities		91,415		380		(17)		91,778
Total	$	152,826	$	928	$	(17)	$	153,737
*Gross unrealized gains include accrued interest on investments of $0.9 million.  The remainder of the gross unrealized gains and losses are included in the interim Condensed Consolidated Balance Sheet as Accumulated other comprehensive income (loss).

As of June 29, 2013 and December 29, 2012, the fair value of certain of the Company’s available-for-sale securities was less than their cost basis.  Management reviews various factors in determining whether to recognize an impairment charge related to these unrealized losses, including the current financial and credit market environment, the financial condition, near-term prospects of the issuer of the investment security, the magnitude of the unrealized loss compared to the cost of the investment, length of time the investment has been in a loss position and the Company’s intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery of market value.  As of June 29, 2013, the Company determined that all the unrealized losses are temporary in nature and recorded them as a component of Accumulated other comprehensive income (loss).

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Derivative Instruments

6 Months Ended

Jun. 29, 2013

Derivative Instruments [Abstract]

Derivative Instruments

NOTE 3.  Derivative Instruments

The Company generates revenues in U.S. dollars but incurs a portion of its operating expenses in foreign currencies, primarily the Canadian dollar.  To minimize the short-term impact of foreign currency fluctuations on the Company’s operating expenses, the Company purchases forward currency contracts. 

As at June 29, 2013, the Company had 41 forward currency contracts (December 29, 2012 -73) outstanding, all with maturities of less than 12 months, which qualified and were designated as cash flow hedges.  The U.S. dollar notional amount of these contracts was$30.3million (December 29, 2012 - $22.5 million) and the contracts had a fair value lossof $0.7 million (July 1, 2012 – fair value loss of $0.5 million), which was recorded in Accumulated other comprehensive income (loss) net of taxes of $nil million for the six months ended June 29, 2013 (net of taxes of $nil million for the six months ended July 1, 2012).

For the period ended July 1, 2012, the total consideration allocated to stock repurchases under the Company’s Accelerated Stock Buyback agreement was $150.2 million of which $57.2 million was recorded as an adjustment to accumulated deficit.  The balance reduced common stock and additional paid-in capital. In addition, there was also $9.8 million recorded as an equity forward contract, which was included in Additional paid-in capital.

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Condensed Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 29, 2013	Jul. 01, 2012
Cash flows from operating activities:
Net loss	$ (10,977)	$ (67,456)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	33,185	32,041
Stock-based compensation	13,587	13,890
Unrealized foreign exchange gain, net	(3,775)	(174)
Net amortization of premiums/discounts and accrued interest of investments	595	2,984
Gain on investment securities and other	(4)	(551)
Asset impairment		260
Taxes related to intercompany dividend		60,940
Changes in operating assets and liabilities:
Accounts receivable	4,647	(6,367)
Inventories	(6,969)	10,749
Prepaid expenses and other current assets	610	(1,506)
Accounts payable and accrued liabilities	3,438	(22,838)
Deferred income taxes and income taxes receivables / payables	4,213	(677)
Deferred income	(1,200)	(1,247)
Net cash provided by operating activities	37,350	20,048
Cash flows from investing activities:
Investment in long term deposits	(1,127)
Business acquisition		(15,900)
Purchases of property and equipment	(7,500)	(15,818)
Purchase of intangible assets	(2,048)	(2,291)
Redemption of short-term investments	7,966
Disposals of investment securities	38,297	73,579
Purchases of investment securities and other investments	(154,385)	(59,210)
Reclassification of short-term investments and long-term investment securities		74,852
Net cash (used in) provided by investing activities	(118,797)	55,212
Cash flows from financing activities:
Repurchases of common stock	(5,509)	(155,783)
Equity forward contract related to accelerated share repurchase program		(9,827)
Proceeds from issuance of common stock	16,452	8,949
Net cash provided by (used in) financing activities	10,943	(156,661)
Effect of exchange rate changes on cash and cash equivalents	(786)	(145)
Net decrease in cash and cash equivalents	(71,290)	(81,546)
Cash and cash equivalents, beginning of period	169,970	182,571
Cash and cash equivalents, end of period	98,680	101,025
Supplemental disclosures of cash flow information:
Cash refund received income taxes, net	$ (379)	$ (1,952)

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Stock-Based Compensation (Schedule Of Activity Under Option Plans) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	6 Months Ended
	Jun. 29, 2013
Stock-Based Compensation [Abstract]
Outstanding beginning balance, Number of options	28,001,047
Granted, Number of options	213,148
Exercised, Number of options	(1,951,741)
Forfeited, Number of options	(999,889)
Outstanding ending balance, Number of options	25,262,565
Vested & expected to vest, Number of options	24,919,328
Exercisable ending balance, Number of options	20,874,962
Outstanding beginning balance, Weighted average exercise price per share	$ 7.93
Granted, Weighted average exercise price per share	$ 6.08
Exercised, Weighted average exercise price per share	$ 5.40
Forfeited, Weighted average exercise price per share	$ 8.17
Outstanding ending balance, Weighted average exercise price per share	$ 8.10
Vested & expected to vest, Weighted average exercise price per share	$ 8.12
Exercisable ending balance, Weighted average exercise price per share	$ 8.34
Outstanding ending balance, Weighted average remaining contractual term (years)	5 years 26 days
Vested & expected to vest, Weighted average remaining contractual term (years)	5 years 7 days
Exercisable ending balance, Weighted average remaining contractual term (years)	4 years 5 months 12 days
Outstanding ending balance, Aggregate intrinsic value	$ 7,485,954
Vested & expected to vest, Aggregate intrinsic value	7,360,774
Exercisable ending balance, Aggregate intrinsic value	$ 6,204,610

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Error Corrections

6 Months Ended

Jun. 29, 2013

Error Corrections [Abstract]

Error Corrections

NOTE 10. Error  Corrections

Income Taxes

As previously disclosed in our March 30, 2013 interim condensed consolidated financial statements, the condensed consolidated financial statements as of December 29, 2012 and for the three and six months ended July 1, 2012 have been revised to reflect a restatement related to income tax errors.  Subsequent to the issuance of the Company’s December 29, 2012 consolidated financial statements, errors were identified that related to the determination of tax expense associated with the Company’s 2009 intercompany sale of economic rights to intellectual property (“IP”).  Under accounting principles that apply to intercompany sales, the tax expense attributable to the gain is recognized over the economic life of the asset sold.  The correction reflects the Company’s recording of tax expense from the intercompany sale of IP that should be recognized over the life of the assets sold.  Additionally, there was an increase in tax expense for the three months ended July 1, 2012 from correcting the recognition of foreign tax credits(related to an intercompany dividend) in the three months ended April 1, 2012 instead of in the three months ended July 1, 2012. Since total tax expense was reduced, the amount of benefit related to excess stock option deductions was reduced by the same amount.  Management believes that the errors corrected are not material to any of the periods presented, including the effect on current and prior periods. 

The tables below illustrate the effects on the condensed consolidated balance sheet and statements of operations:

	As at
	December 29, 2012
	As Restated		As Previously
(in thousands)			Reported
CONDENSED CONSOLIDATED BALANCE SHEETS
Non-current assets:
Prepaid expenses	$	11,851	$	25,077
Total assets	$	887,472	$	900,698
Liabilities:
Liability for unrecognized tax benefits - non-current	$	29,236	$	38,915
Stockholders' equity:
Additional paid in capital	$	1,527,509	$	1,526,883
Accumulated deficit	$	(896,891)	$	(892,718)
Total stockholders' equity	$	631,435	$	634,982
Total liabilities and stockholders' equity	$	887,472	$	900,698
	Three Months Ended
	July 1, 2012
	As Restated		As Previously
			Reported in
(in thousands, except for per share amounts)			Q2 2012 10-Q
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Provision for) recovery of income taxes	$	(519)	$	26,064
Net (loss) income	$	(103)	$	26,480
Net (loss) income per common share - basic	$	(0.00)	$	0.12
Net (loss) income per common share - diluted	$	(0.00)	$	0.12
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Net (loss) income	$	(103)	$	26,480
Comprehensive income	$	(1,792)	$	24,791
	Six Months Ended
	July 1, 2012
	As Restated		As Previously
			Reported in
(in thousands, except for per share amounts)			Q2 2012 10-Q
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Provision for income taxes	$	(58,330)	$	(60,665)
Net loss	$	(67,456)	$	(69,791)
Net loss per common share - basic	$	(0.30)	$	(0.31)
Net loss per common share - diluted	$	(0.30)	$	(0.31)
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Net loss	$	(67,456)	$	(69,791)
Comprehensive loss	$	(66,429)	$	(68,764)
CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS
Cash flows from operating activities:
Net loss	$	(67,456)	$	(69,791)
Adjustments to reconcile net loss to net cash provided by operating activities:
Changes in operating assets and liabilities:
Deferred income taxes and income taxes receivables/payables	$	(677)	$	1,658

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Balance Sheet Items

6 Months Ended

Jun. 29, 2013

Balance Sheet Items [Abstract]

Balance Sheet Items

NOTE 6.   Balance Sheet Items 

a. Inventories.

Inventories (net of reserves of $7.6 million and $7.8 million at June 29, 2013 and December 29, 2012, respectively) were as follows:

	June 29,		December 29,
(in thousands)	2013		2012
Work-in-progress	$	15,136	$	9,867
Finished goods		15,381		13,681
	$	30,517	$	23,548

b. Product warranties. 

The Company provides a limited warranty on most of its standard products and accrues for the estimated cost at the time of shipment.  The Company estimates its warranty costs based on historical failure rates and related repair or replacement costs.  The change in the Company’s accrued warranty obligations from December 29, 2012 to June 29, 2013, and from December 31, 2011 to July 1, 2012 were as follows:

	Six Months Ended
	June 29,		July 1,
(in thousands)	2013		2012
Balance, beginning of the period	$	5,981	$	5,415
Accrual for new warranties issued		268		870
Reduction for payments and product replacements		(528)		(112)
Adjustments related to changes in estimate of warranty accrual		(898)		(870)
Balance, end of the period	$	4,823	$	5,303

The Company’s accrual for warranty obligations is included in Accrued liabilities in the interim Condensed Consolidated Balance Sheet.

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 29, 2013

Fair Value Measurements [Abstract]

Financial Assets Measured At Fair Value On Recurring Basis

	Fair value,
	June 29, 2013
(in thousands)	Level 1		Level 2
Assets:
Corporate bonds and notes (1)	$	146,408	$	2,206
Money market funds (1)		17,434		-
United States (“US”) treasury and government agency notes (1)		55,007		-
Foreign government and agency notes (1)		5,902		-
US state and municipal securities (1)		637		-
Total assets	$	225,388	$	2,206
	Fair value,
	December 29, 2012
(in thousands)	Level 1		Level 2
Assets:
Corporate bonds and notes (1)	$	63,565	$	-
Money market funds (1)		50,528		-
US treasury and government agency notes (1)		33,854		-
Foreign government and agency notes (1)		4,044		-
US state and municipal securities (1)		1,746		-
Forward currency contracts (2)		-		392
Total assets	$	153,737	$	392
(1)  Included in Cash and cash equivalents, Short-term investments, and Long-term investment securities.  See Note 7. Investment Securities.
(2)  Included in Prepaid expenses and other current assets.

Liabilities Measured At Fair Value On A Recurring Basis

	Fair value,
	June 29, 2013
(in thousands)	Level 2
Current liabilities:
Forward currency contracts (1)	$	722
	Fair value,
	December 29, 2012
(in thousands)	Level 2
Current liabilities:
Forward currency contracts (1)	$	-
(1)  Included in Accrued liabilities.

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Subsequent Events

6 Months Ended

Jun. 29, 2013

Subsequent Events [Abstract]

Subsequent Events

1NOTE 11. Subsequent Events

Acquisition of Integrated Device Technology, Inc’s Enterprise Flash Controller Business

On May 29, 2013, PMC entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Integrated Device Technology, Inc., a Delaware corporation (“Seller”), and Integrated Device Technology (Malaysia) Sdn. Bhd., a wholly-owned subsidiary of Seller (“Selling Subsidiary” and, together with PMC and Seller, the “Parties”). Pursuant to the terms of the Purchase Agreement, PMC has agreed to acquire (i) substantially all of the assets that are used by Seller and its subsidiaries in the business of designing, developing, manufacturing, testing, marketing, supporting, maintaining, distributing, provisioning and selling non-volatile memory (flash) controllers and (ii) all technology and intellectual property rights owned by Seller or any of its subsidiaries and used exclusively in, or developed exclusively for use in, (a) switching circuits having the primary function of flexible routing of data from/to multiple switch interface ports, where all switch interface ports conform to the PCIe protocol, or (b) circuits having the primary function of executing all of the capturing, re-timing, re-generating and re-transmitting PCIe signals to help extend the physical reach of the signals in a system (the “Acquisition”). The Parties also entered into a license agreement, to be effective upon the closing of the Acquisition, whereby Seller and Selling Subsidiary will license certain intellectual property rights and technology to PMC, and PMC will license back to Seller and Selling Subsidiary certain of the intellectual property rights and technology acquired by PMC in the Acquisition. Upon the closing of the Acquisition, the Parties will also enter into (a) a transition services agreement and (b) a supply agreement, whereby Seller and Selling Subsidiary will manufacture certain products for PMC.

On July 15, 2013, PMC announced the completion of the Acquisition. The aggregate purchase price was approximately $96 million in cash. The transaction was funded by PMC’s available working capital. We are in the process of preparing the preliminary purchase price allocation.  In connection with the completion of the Acquisition, the license agreement that was entered into by the Parties simultaneously with the Purchase Agreement became effective. In addition, as noted above, upon the closing of the Acquisition, the Parties entered into (a) a transition services agreement and (b) a supply agreement, whereby Seller and Selling Subsidiary will manufacture certain products for PMC.

Credit Facility

On August 2, 2013, PMC entered into a five-year senior secured credit facility with Bank of America, N.A., as administrative agent and a lender, and a syndicate of other lenders (the “Credit Agreement”). The Credit Agreement provides for a five-year $100 million revolving credit facility, which includes a $25 million sublimit for the issuance of standby letters of credit. The Company may request, from time to time, and subject to customary conditions, including receipt of commitments, that the revolving credit facility be increased by an aggregate amount not to exceed $150 million. The revolving credit facility is available for general corporate purposes. The Company’s obligations under the Credit Agreement are jointly and severally guaranteed by material wholly-owned domestic subsidiaries of the Company (the “Guarantors”).

In connection with the closing of the Credit Agreement, the Company also entered into a collateral agreement dated August 2, 2013 (the “Collateral Agreement”) withthe Guarantors, and such other parties that may become Guarantors thereunder after the date thereof, and Bank of America, N.A., in its capacity as administrative agent, pursuant to which the Company, the Guarantors granted a security interest in substantially all of their personal property, including the equity interests of their domestic subsidiaries and 65% of the equity interests of their foreign subsidiaries.

At the Company’s option, loans (other than swingline loans) under the Credit Agreement shall bear interest at (i) the Applicable Rate (as defined below) plus the Eurodollar Rate (as defined in the Credit Agreement) or (ii) the Applicable Rate plus a rate equal to the higher of (a) the federal funds rate plus 0.50%, (b) the prime rate of the Administrative Agent (as defined in the Credit Agreement), or (c) the Eurodollar Rate plus 1.0% (the “Base Rate”). All swingline loans will bear interest at a rate equal to the Applicable Rate plus the Base Rate. The Eurodollar Rate is equal to the rate per annum calculated from the British Bankers Association LIBOR rate, as published by Reuters, for the applicable interest periods. The Applicable Rate for Eurodollar Rate loans ranges from 1.75% per annum to 2.25% per annum based on the Company’s leverage ratio. The Applicable Rate for Base Rate loans ranges from 0.75% per annum to 1.25% per annum based on the Company’s leverage ratio. The Company will pay a commitment fee equal to the Applicable Rate times the actual daily amount of the unused portions of the revolving credit facility, subject to adjustments provided in the Credit Agreement.  The Applicable Rate for the commitment fee ranges from 0.25% per annum to 0.35% per annum based on the Company’s leverage ratio. The Company may prepay amounts outstanding and terminate commitments under the Credit Agreement, at any time and in whole or in part, without premium or penalty (other than reimbursement of customary breakage costs in the case of Eurodollar Rate loans).

The Credit Agreement contains customary representations and warranties, affirmative covenants and negative covenants, with which the Company must be in compliance in order to borrow funds and to avoid an event of default, including, without limitation, restrictions and limitations on, dividends, asset sales, the ability to incur additional debt and additional liens and certain financial covenants.  The Company must maintain a consolidated cash interest coverage ratio of not less than 3.50 to 1.0 as of the end of any fiscal quarter of the Company and a consolidated leverage ratio not to exceed 2.50 to 1.0 as of the end of any fiscal quarter of the Company.

The Credit Agreement also contains customary events of default, including, without limitation, non-payment, breach of representation and warranties, breach of covenants, cross default to other material indebtedness, insolvency events, material judgments, material ERISA events and change of control.  The occurrence of an event of default will, in certain circumstances, increase the applicable rate of interest by 2.0% and could result in the termination of commitments under the revolving credit facility, the declaration that all outstanding loans are due and payable in whole or in part and the requirement of cash collateral deposits in respect of outstanding letters of credit.

O

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Document And Entity Information	6 Months Ended
	Jun. 29, 2013	Aug. 05, 2013
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 29, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2
Trading Symbol	pmcs
Entity Registrant Name	PMC SIERRA INC
Entity Central Index Key	0000767920
Current Fiscal Year End Date	--12-28
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		204,407,009

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Summary Of Significant Accounting Policies (Policy)

6 Months Ended

Jun. 29, 2013

Summary Of Significant Accounting Policies [Abstract]

Description Of Business

Description of business. PMC-Sierra, Inc. (the “Company” or “PMC”) is a semiconductor innovator transforming networks that connect, move and store digital content. Building on a track record of technology leadership, the Company is driving innovation across storage, optical and mobile networks.  PMC’s highly integrated solutions increase performance and enable next generation services to accelerate the network transformation. 

Basis Of Presentation

Basis of presentation.The accompanying interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) and United States Generally Accepted Accounting Principles (“GAAP”).  Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules or regulations.  These interim condensed consolidated financial statements are unaudited, but reflect all adjustments which are normal and recurring in nature and are, in the opinion of management, necessary to provide a fair statement of results for the interim periods presented.  These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in the Company’s Annual Report on Form 10-K for the year ended December 29, 2012.  The results of operations for the interim periods are not necessarily indicative of results to be expected in future periods. Fiscal 2013 will consist of 52 weeks and will end on Saturday, December 28, 2013.  Fiscal 2012 consisted of 52 weeks and ended on Saturday, December 29, 2012.  The second quarter of each of 2013 and 2012 consisted of 13 weeks.

Estimates

Estimates. The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.  Estimates are used for, but not limited to, stock-based compensation, purchase accounting assumptions including those used to calculate the fair value of intangible assets and goodwill, the valuation of investments, accounting for doubtful accounts, inventory reserves, depreciation and amortization, asset impairments, revenue recognition, sales returns, warranty costs, income taxes including uncertain tax positions, restructuring costs, assumptions used to measure the fair value of the debt component of our senior convertible notes, accounting for employee benefit plans, and contingencies.  Actual results could differ materially from these estimates.