I'm very pleased to present Fairchild Semiconductor International's annual report for the year 2000. It's been a banner year. Fairchild shipped a record number of products, producing record sales and profits.

   Fairchild Semiconductor's mission is clear and focused: to be the leading global supplier of high performance building block semiconductors for multiple end markets. Our products are designed into a wide variety of electronic systems serving the computing, Internet hardware, telecommunications, consumer, industrial and automotive markets. We're regulating power in cell phones, speeding data transfer on the Internet, increasing the portability of wireless applications, illuminating displays in all types of appliances, and helping provide electrical power to just about every type of electrical product that plugs into a wall outlet. Our growing list of new products enhances the remarkable capabilities of today's technologies in almost every electronic market you can think of. No matter where you go or what you do, Fairchild is there.

   Our broad market presence is a key to the Fairchild strategy. We focus on applications including power management, power conversion, data and signal interfacing, and optical electronics because these applications are found in just about every type of electronic equipment. This focus provides a quicker, higher return on investment as we develop new products, new technology, and new manufacturing capacity to expand our sales across multiple market segments. Because our end markets grow at different rates, Fairchild can provide steadier overall growth due to our balance of product lines, key customers, and end market penetration.

Key Accomplishments in 2000
   As I wrote you in last year's annual report, Fairchild's major goal in 2000 was to accelerate our growth through additional R&D, capital spending, and acquisitions. We accomplished our goal. Fairchild's overall revenues grew 37% compared to pro forma 1999. Our gross margins for the year grew eight percentage points. The key to Fairchild's growth was focusing on developing new products that are used by our customers in a broad array of applications. In 2000 we spent more than $80 million in R&D and introduced more than 450 new products. We reinforced our new product introductions with approximately $300 million in capital spending to expand our manufacturing capacity, including a new 6-inch wafer fabrication line in Puchon, Korea. By the end of 2000, new product sales grew to 34% of trade sales, up from only 5% of sales in 1997. These higher margin new products are helping penetrate new consumer, communications and portable electronics markets while strengthening our market share with key customers.

   Fairchild is also proud of its accomplishments in the e-business arena, with the adoption of our Customer First initiative, reinforcing our strategic initiative of superior customer service. As part of Customer First, Fairchild launched two major web-based design tools that allow engineers to design our products into their applications more quickly. Our WebSIM tool allows designers to optimize their choice of Power MOSFETs for their specific power supply design. And our Ensigna™ website launched by our Interface and Logic Products group functions as an online laboratory, providing interactive design support for backplane and interconnect designs in Internet hardware and wireless communications systems. We believe we can accelerate our new product sales by using the Internet to provide more designers with applications help, and we expect to add more to these capabilities in 2001.

   We made key strategic acquisitions during 2000 to strengthen our product offerings and broaden our market presence. Fairchild acquired QT Optoelectronics in May, providing our initial entry into the six billion dollar optoelectronics market. We acquired Kota Microcircuits and the power management business of Micro Linear Corporation in September. These acquisitions bolstered our analog business with high performance op amps, battery management, power factor control, and bus terminator products. In December we invested in Silicon Wireless Corporation, which we expect will provide an entry into the fast growing RF power transistor market during 2001. With Silicon Wireless we're developing technology for power amp applications in cellular and wireless local area network base-stations. Finally, as this report goes to press, we have announced an agreement to purchase the discrete power business of Intersil Corporation. Upon completion, this acquisition will make Fairchild the second leading power MOSFET supplier in the world, will broaden our power discrete line with IGBTs and rectifiers, and will strengthen our presence in the automotive and industrial power markets.

   Fairchild also significantly improved its financial position during the year. We completed a follow-on stock offering that raised our cash levels and broadened our shareholder base. We eliminated our bank term debt by opening a revolving credit line which offers more favorable credit terms. Both of these financial actions strengthened our balance sheet while providing greater flexibility for funding future growth.

In Summary
   Our two-pronged growth strategy of new product development coupled with strategic acquisitions has positioned Fairchild as a leader in our target market segments, forecasted to grow to over $60 billion in the next two to three years. Fairchild plans to capture a large part of that growth by building our portfolio of power, interface, and optoelectronic solutions. We expect this to strengthen our leadership in the markets we serve with a goal of doubling our revenue every three years.

   Fairchild has all the necessary ingredients to execute its growth plan: talented people pursuing a clear strategy, a broad product portfolio of key high performance products which sell into diverse end markets, best-in-class manufacturing capabilities and strong customer relationships with leading global companies-all supported by a solid financial base. Fairchild is creating an exciting future. I thank you for your interest in us, and your continued support.

	KIRK P. POND Chairman of the Board, President, CEO