<PAGE>1
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington D.C. 20549


                                    FORM 10-Q

(Mark One)

[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934 for the quarterly period ended July 1, 1996 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 1-10079
                       -------

                       CYPRESS SEMICONDUCTOR CORPORATION
- -------------------------------------------------------------------------------
              (Exact name of registrant as specified in its charter)

           Delaware                                        94-2885898
- -------------------------------                   ---------------------------
 (State or other jurisdiction                            (I.R.S. employer
      of incorporation or                              identification No.)
       organization)


         3901 North First Street, San Jose, California       95134-1599
- -------------------------------------------------------------------------------
           (address of principal executive offices)          (Zip Code)

Registrant's telephone number, including area code: (408) 943-2600
                                                   
- ---------------

                                 NOT APPLICABLE
- -------------------------------------------------------------------------------
    (Former name, former address and former fiscal year, if changed since
                                   last report)

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 at least the past 90 days.

                         Yes  X                     No
                             ---                       ---

Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

                    July 1, 1996 (all one class):  80,041,000
                  --------------------------------------------

                                       1




<PAGE>2


                       CYPRESS SEMICONDUCTOR CORPORATION

                                   FORM 10-Q
                          Quarter Ended July 1, 1996

                                     Index


Part I - Financial Information
- --------------------------------


Item 1.  Condensed Consolidated Financial Statements              Pages  3 - 8

Item 2.  Management's Discussion and Analysis                     Pages  9 - 13



Part II - Other Information
- --------------------------------


Item 1.  Legal Proceedings                                        Page  14

Item 4.  Submission of Matters to a Vote of Security Holders      Page  14

Item 6.  Exhibits and Reports on Form 8-K                         Pages 14 - 16
       
  

             


                                                   



 

      












                                        
       









                                       2






<PAGE>3

<TABLE>

                       CYPRESS SEMICONDUCTOR CORPORATION

                     CONDENSED CONSOLIDATED BALANCE SHEETS

                             (Dollars in thousands)
                                   (Unaudited)

<CAPTION>                                     
                                                      Jul. 1,    Jan. 1,
                                                       1996       1996
                                                    ---------- ----------
<S>                                                 <C>        <C>
               ASSETS

Current assets:
  Cash and cash equivalents                         $    4,481 $    9,487
  Short-term investments                                60,972    152,131
                                                    ---------- ----------
    Total cash, cash equivalents and 
      short-term investments                            65,453    161,618
  Accounts receivable, net of allowances of
      $2,341 at July 1, 1996 and $2,828 at
      January 1, 1996                                   83,546    108,587
  Inventories                                           45,165     28,978
  Other current assets                                  57,651     52,454
                                                    ---------- ----------
       Total current assets                            251,815    351,637
Property, plant and equipment (net)                    434,576    336,593
Other assets                                            84,555     62,498
                                                    ---------- ----------
         Total assets                               $  770,946  $ 750,728
                                                    ========== ==========

   LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                  $   89,647  $  82,315
  Accrued liabilities                                   36,308     46,800
  Deferred income on sales to distributors              14,103     13,190
  Income taxes payable                                  10,255     18,752
                                                    ---------- ----------
       Total current liabilities                       150,313    161,057
Convertible subordinated notes                          97,043     95,879
Deferred income taxes                                   15,653     15,653
Other long-term liabilities                             10,222      6,040
                                                    ---------- ----------
         Total liabilities                             273,231    278,629
                                                    ---------- ----------






  
                                       3






<PAGE>4

                       CYPRESS SEMICONDUCTOR CORPORATION

               CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)

                             (Dollars in thousands)
                                   (Unaudited)

                                                      Jul. 1,    Jan. 1,
                                                       1996       1996
                                                    ---------- ----------
<S>                                                 <C>        <C>
                                                 
Commitments and contingencies (Note 4)

Stockholders' equity:
  Preferred stock, $.01 par value, 5,000,000
    shares authorized; none issued and
    outstanding                                             --         --
  Common stock, $.01 par value, 250,000,000
    shares authorized; 90,301,000 and
    88,924,000 issued; 80,041,000 and
    81,501,000 outstanding                                 903        889
  Additional paid-in capital                           300,051    292,713
  Retained earnings                                    313,604    262,462
                                                    ---------- ----------
                                                       614,558    556,064
  Less shares of common stock held in
    treasury, at cost: 10,260,000 at
    July 1, 1996 and 7,423,000 at
    January 1, 1996                                   (116,843)   (83,965)
                                                    ---------- ----------
       Total stockholders' equity                      497,715    472,099
                                                    ---------- ----------
         Total liabilities and stockholders'
           equity                                   $  770,946  $ 750,728
                                                    ========== ==========





     See accompanying notes to condensed consolidated financial statements.


 </TABLE>



         
   







                                       4 





<PAGE>5

<TABLE>
                       CYPRESS SEMICONDUCTOR CORPORATION

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                      (In thousands, except per share data)
                                   (Unaudited)


<CAPTION>
                                Three Months Ended         Six Months Ended
                              ----------------------   ----------------------
                                Jul. 1,     Jul. 3,       Jul. 1,    Jul. 3,
                                 1996        1995          1996       1995
                              ----------  ----------   ----------  ----------
<S>                           <C>         <C>           <C>        <C>

Revenues                      $  135,464  $  134,273    $ 305,635  $  257,638
                              ----------  ----------   ----------  ----------
Costs and expenses:
  Cost of revenues                72,015      60,899      148,876     121,733
  Research and development        21,989      16,392       43,405      32,063
  Marketing, general and
    administrative                15,502      17,506       33,642      32,797
  Other non-recurring 
    costs (Note 4)                    --          --           --      17,800
                              ----------  ----------   ----------  ----------
     Total operating costs   
       and expenses              109,506      94,797      225,923     204,393
                              ----------  ----------   ----------  ----------
Operating income                  25,958      39,476       79,712      53,245
Interest expense                  (1,482)     (1,415)      (3,129)     (3,148)
Interest and other income          2,075       2,255        3,948       4,558
                              ----------  ----------   ----------  ----------
Income before income taxes        26,551      40,316       80,531      54,655
Provision for income taxes        (9,686)    (14,714)     (29,389)    (19,948)
                              ----------  ----------   ----------  ----------
Net income                    $   16,865  $   25,602    $  51,142  $   34,707
                              ==========  ==========   ==========  ==========

Net income per share:

    Primary                   $     0.20  $     0.29    $    0.61  $     0.39
    Fully diluted             $     0.20  $     0.27    $    0.58  $     0.38

Weighted average common and
  common equivalent shares
  outstanding:

    Primary                       83,285      89,557       83,352      88,390
    Fully diluted                 91,227      98,244       91,293      96,926 
   
  

     See accompanying notes to condensed consolidated financial statements.

</TABLE>
                      
                                       5






<PAGE>6

<TABLE>
                       CYPRESS SEMICONDUCTOR CORPORATION

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
                                   (Unaudited)
<CAPTION>
                                                          Six Months Ended
                                                      ----------------------
                                                         Jul. 1,    Jul. 3,
                                                          1996       1995
                                                       ---------- ----------
<S>                                                    <C>        <C>
Cash flows from operating activities:
 Net income                                            $   51,142 $   34,707
 Adjustments to reconcile net income to net
  cash provided by operating activities:
   Depreciation and amortization                           44,894     26,900
   Provision for other non-recurring costs                     --     17,800
   Non-cash interest and amortization of debt
    issuance costs                                          1,369      1,303  
   Changes in operating assets and liabilities:
    Receivables                                            21,147    (11,805)
    Inventories                                           (16,187)      (465)
    Other assets                                           (3,965)   (13,410)
    Accounts payable and accrued liabilities               (3,480)     9,709 
    Deferred income                                           913      1,285 
    Income taxes payable and deferred income taxes         (8,497)     3,240 
                                                       ---------- ----------
Net cash generated by operations                           87,336     69,264
                                                       ---------- ----------
Cash flows from investing activities:
  Decrease (Increase) in short-term investments (net)      91,159    (13,317)
  Acquisition of property, plant and equipment (net)     (141,212)   (94,774)
                                                       ---------- ----------
Net cash used for investing activities                    (50,053)  (108,091) 
                                                       ---------- ----------
Cash flows from financing activities:
  Repurchase of common stock                              (32,878)        --
  Issuance of common stock                                  7,353     22,471
  Restricted investments related to building lease
    agreements                                            (21,264)   (14,695)
  Other long-term liability                                 4,500         --
                                                       ---------- ----------
Net cash generated (used) by financing activities         (42,289)     7,776
                                                       ---------- ----------   

Net decrease in cash and cash equivalents                  (5,006)   (31,051)
Cash and cash equivalents, beginning of year                9,487     33,308
                                                       ---------- ----------
Cash and cash equivalents, end of quarter              $    4,481 $    2,257
                                                       ========== ==========
</TABLE>


     See accompanying notes to condensed consolidated financial statements. 


                                       6





<PAGE>7

                       CYPRESS SEMICONDUCTOR CORPORATION


              Notes to Condensed Consolidated Financial Statements
                                  (Unaudited)


1.  Interim Statements

In the opinion of management, the accompanying, unaudited condensed
consolidated financial statements contain all adjustments (consisting solely of
normal recurring adjustments) necessary to present fairly the financial
information included therein.  While the Company believes that the disclosures
are adequate to make the information not misleading, it is suggested that this
financial data be read in conjunction with the audited financial statements and
notes thereto for the year ended January 1, 1996 included in the Company's 1995
Annual Report on Form 10-K.

For interim financial reporting purposes, the Company reports on a 13-week
quarter.  The results of operations for the three and six month periods ended
July 1, 1996 are not necessarily indicative of the results to be expected for
the full year.

2.  Balance Sheet Components

                                                July 1,   January 1,
                                                 1996        1996
                                              ----------  ----------
Inventories:
     Raw materials                            $   12,083  $    9,859
     Work in process                              18,124      12,682
     Finished goods                               14,958       6,437
                                              ----------  ----------
                                              $   45,165  $   28,978
                                              ==========  ==========

3.  Net Income Per Share

Net income per share is computed using the weighted average number of shares of
outstanding common stock and common equivalent shares, when dilutive.  Common
equivalent shares include shares issuable under the Company's stock option
plans as determined by the treasury stock method.  Fully diluted earnings per
share assumes full conversion of the convertible subordinated notes into common
shares and the elimination of the related interest requirements (net of income
taxes).


4.  Impact of Litigation

In the normal course of business, the Company receives and makes inquiries with
regard to possible patent infringement.  Where deemed advisable, the Company
may seek or extend licenses or negotiate settlements.

In June 1995, the U.S. District Court of Northern California dismissed by a
summary judgement the class-action lawsuit filed against the Company and
certain of its officers.  The suit filed was for alleged violations of the

                                       7





<PAGE>8

Securities Exchange Act of 1934 and certain provisions of state law regarding
disclosure of short-term business prospects.  The plaintiffs have filed an
appeal, in which the Company will continue to defend itself.  The Company will
vigorously defend itself in this matter and, subject to the inherent
uncertainties of litigation and based upon discovery completed to date,
management believes that the resolution of this matter will not have a material
adverse impact on the Company's financial position or results of operations. 
However, should the outcome of this action be unfavorable, the Company may be
required to pay damages and other expenses, which could have a material adverse
effect on the Company's financial position and results of operations.

In May 1995, in a case before the U.S. District Court in Dallas, Texas, a jury
delivered a verdict of $17.8 million against the Company in a patent
infringement lawsuit filed by Texas Instruments ("TI").  In August 1995, the
judge reversed the decision stating TI failed to prove that Cypress infringed
on TI's patents covering the plastic encapsulation process used to package
semiconductor devices.  In July 1996, the Federal Circuit Court of Appeals
affirmed the decision of the trial court that the Company did not infringe on
either of the patents in suit, and entered judgement to that effect.  While TI
has the right to seek reconsideration of that decision and the right to
petition for a writ of certiorari from the United States Supreme Court,
litigation counsel for the Company believes that it is unlikely that any such
motion for reconsideration would be granted or that writ of certiorari would
issue.  In March 1995, the Company recorded a one-time, pre-tax charge of $17.8
million with respect to the original decision.  The Company will continue to
maintain this reserve pending further resolution of this matter.

In June 1995, Advanced Micro Devices ("AMD") charged the Company with patent
infringement and filed suit in the U.S. District Court in Delaware.  The suit
claims that the Company infringed on several of AMD's Programmable Logic
Patents.  In November 1995 the Company filed a patent infringement action
against AMD in the U.S. District Court for the District of Minnesota.  The
Company alleged infringement by AMD of a number of the Company's patents in
this action.  In April 1996, the Company and AMD signed a cross-licensing
agreement terminating the patent litigation between the two companies.  The
agreement allows each company to continue to produce its own products with no
threat of future patent lawsuits by the other company.
                               



















                                       8





<PAGE>9
 
                       MANAGEMENT'S DISCUSSION AND ANALYSIS
                            OF FINANCIAL CONDITION AND
                              RESULTS OF OPERATIONS


     This report contains forward-looking statements within the meaning of
Section 27A of the Securities Exchange Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended.  Actual results could
differ from those projected in the forward-looking statements as a result of
the factors set forth in "Factors Affecting Future Results" and elsewhere in
this report.
 

RESULTS OF OPERATIONS:
- --------------------------

Revenues for the quarter and six month periods ended July 1, 1996 increased
0.1% and 18.6%, respectively, over the comparable periods a year ago,
increasing to $135.5 million and $305.6 million compared to $134.3 million and
$257.6 million in 1995.  The $1.2 million increase in revenues, comparing the
second quarter of 1996 to the same period in 1995, was primarily attributable
to revenue growth in the Programmable Products Division ("PPD") and the
Datacommunications Division ("DCD").  Increased revenues in these product lines
more than offset the decline in revenues experienced in the Memory Products
Division ("MPD").  MPD, the Company's highest revenue producing product line,
recorded an $8.5 million decline in revenues comparing the second quarter of
1996 to the comparable quarter in 1995.  Even though MPD's Static Random Access
Memory ("SRAM") line of products increased sales volume by 16% comparing the
second quarter of 1996 to the comparable quarter in 1995, the decline in SRAMs'
average selling price ("ASP") of 18% more than offset the effects of increased
volume.  The decline in ASPs is primarily due to over supply of product and
resulting inventory correction by end user customers.  The opposite was true in
the DCD product line, where higher ASPs increased revenue by $3.4 million
comparing the second quarter of 1996 to the comparable quarter in 1995. 
Although unit sales in the second quarter of 1996 grew slightly in comparison
to the same quarter last year, higher ASPs recorded in DCD's Specialty Memory
and Channel line of products increased revenue.  In addition, PPD's revenues
grew $4.0 million comparing the second quarter of 1996 to the comparable
quarter in 1995. Increased volume, particularly in the Programmable Read-Only
Memory line of products, aided the growth of revenues in PPD as the ASP of PPD
products remained relatively constant year to year.
   
Although revenues increased in the second quarter and in the first half of
1996 compared to the comparable periods in 1995, revenues declined
significantly in comparing the second quarter of 1996 to the first quarter of
1996 as the Company continued to experience reductions in ASPs, particularly in
its SRAM products.  The decrease in ASPs is caused by overall market demand
softness, mainly attributable to over supply and the resulting inventory
corrections by end user customers, particularly in the telecommunication and 
datacommunication markets.  Even though end consumption is growing in these two
markets, the Company believes some customers have built up 15 to 20 weeks of
inventory which they are currently in the process of drawing down.  The greater
availability of products due to excess supply has also shortened the ordering
cycle of customers due to their expectation of product availability.  The
Company has continued to build certain levels of inventory for select core
products despite the overall market softness because the Company wants to 


                                       9





<PAGE>10

position itself to have sufficient levels of inventory of these products for
the anticpated growth when the market improves.  The Company's inventory levels
have increased and may continue to increase in the future resulting in
potential exposure to obsolescence, excess quantities, aged inventory and
lower-of-cost-or-market write-down if demand were to not improve as expected by
the Company.  The continuation of these factors in the future, which have
impacted the industry and the Company, could have a material adverse effect on
the Company's results of operations.

The Company's cost of revenues as a percentage of revenues for the quarter
and six month periods ended July 1, 1996 increased to 53.2% and 48.7%,
respectively, in comparison with 45.4% and 47.3%, respectively, for the
comparable periods in 1995.  Due to lower ASPs, particularly in the SRAM
market, and a change in product mix to products yielding lower margins, cost of
revenues grew 18.3% in the second quarter of 1996 in comparison to the
comparable period in 1995, while revenues increased 0.1% comparing the same
time period.  If ASPs in the future continue to erode, this could have a
material adverse effect on the Company's cost of revenues as a percentage of
revenues.  The Company continues to explore new methods of reducing
manufacturing costs in order to mitigate the effects of declining ASPs.
     
Research and development("R & D") expenses were 16.2% and 14.2% of revenues for
the quarter and six month periods ended July 1, 1996, versus 12.2% and 12.4%
in the comparable periods for 1995.  Actual R & D spending increased $5.6
million and $11.3 million, respectively, from the comparable quarter and six
month periods in the prior year as the Company continued to increase spending
in R & D to accelerate the development of new products and enhance its design
and process technologies.  This trend is expected to continue in the future as
the Company explores new markets and improves its design and process
technologies in an effort to increase revenue and lower costs.

Selling, general and administrative ("SG&A") expenses for the quarter and six
month periods ended July 1, 1996 have decreased to 11.4% and 11.0% of revenues,
respectively, compared to 13.0% and 12.7%, respectively, in the comparable
periods a year ago.  Actual spending was $2.0 million less in the second
quarter of 1996 in comparison to the second quarter of 1995.  Selling and
marketing expenditures decreased $0.7 million and general and administrative
expenses decreased $1.3 million.  In the second quarter of 1995, the Company
incurred legal expenditures in excess of typical levels related to the Texas
Instruments patent infringement lawsuit and the securities class-action
lawsuit, thus increasing general and administrative expenditures.  In the
second quarter of 1996, salesmen commissions were significantly less than in
the comparable period in 1995.  Last year, the Company incurred higher costs in
sales and marketing in an effort to maintain its growth rate in revenues. 

Operating income for the quarter ended July 1, 1996 was $26.0 million, or 19.2%
of revenues.  This was a decrease from the comparable period in 1995 which
recorded operating income of $39.5 million, or 29.4% of revenues.  As a result
of lower ASPs, the Company's gross margin in the second quarter of 1996
decreased to 46.8% compared to 54.7% in the comparable period a year ago. 
Operating income for the six month period ended July 1, 1996 was $79.7 million
or 26.1% of revenues compared to $53.2 million, or 20.7% of revenues in the
comparable period in 1995.  During the first quarter of 1995 the Company
recorded a one-time charge of $17.8 million ($11.3 million net of taxes)


                                       10
 




<PAGE>11

related to the verdict issued against the Company in the patent infringement
lawsuit filed by Texas Instruments.  Without the one-time charge, operating
income for the six month period ended July 3, 1995 would have been $71.0
million, or 27.6% of revenues.

Net interest and other income for the quarter and six month periods ended July
1, 1996 were $0.6 million and $0.8 million, respectively, compared to $0.8
million and $1.4 million in the comparable periods for 1995.  The decrease in
net interest and other income is directly related to a significantly lower
average cash balance in 1996 compared to 1995, resulting in lower interest
income. 


FACTORS AFFECTING FUTURE RESULTS:
- -----------------------------------

The Company believes that its future operating results will continue to be
subject to variations based on a wide variety of factors.  Such factors
include, but are not limited to: general economic conditions, the cyclical
nature of the semiconductor industry and the markets addressed by the Company's
products such as networking, computer and telecommunications markets, failure
of expected growth in demand for, or areas of expected new demand for,
semiconductor products to materialize, the availability and extent of
utilization of manufacturing capacity, inventory and valuation exposure,
fluctuations in manufacturing yields, price erosion, competitive factors, the
timing of new product introductions, product obsolescence, obsolescence of
acquired technologies and product designs and the ability to develop and
implement new technologies including the ramp of the Company's RAM3 process to
full commercial production.

The Company is expecting to begin production in its new assembly and test
facilities in the Philippines in the second half of 1996.  Should the Company
encounter problems during the ramp up of production, this could have a material
adverse affect on the Company's results of operation.
   
The Company also depends on subcontractors for a portion of the assembly and
test manufacturing of its products, which presents risks including the lack
of guaranteed production capacity, delay in delivery, susceptibility to
disruption in supply, the reduced control over product cost, adverse weather
conditions, and manufacturing yields.  The Company's operating results could
also be impacted by sudden fluctuations in customer requirements, currency
exchange rate fluctuations and other economic conditions affecting customer
demand and the cost of operations in one or more of the global markets in which
the Company does business.  Typically, the Company requires new orders, in
addition to its existing backlog, to meet each quarter's revenue plan.  Failure
to obtain such new orders could cause the Company to not meet its revenue plan.

As a participant in the semiconductor industry, the Company operates in a
technologically advanced, rapidly changing and highly competitive environment. 
While the Company cannot predict what effect these and other factors will have
on the Company, they could result in significant volatility in the Company's
future performance.  To the extent the Company's performance may not meet
expectations published by external sources, public reaction could result in a
sudden and significantly adverse impact on the market price of the Company's
securities, particularly on a short-term basis.

                                        11





<PAGE>12

The Company's headquarters and some manufacturing facilities are located near
major earthquake faults.  In the event of a major earthquake, the Company could
suffer damages which could materially and adversely affect the operating
results and financial condition of the Company.
 
Current pending material litigation and claims are described in Note 4 of the
Notes to the Condensed Consolidated Financial Statements.  The Company will
vigorously defend itself in these matters and, subject to the inherent
uncertainties of litigation and based upon discovery completed to date,
management believes that the resolution of these matters will not have a
material adverse impact on the Company's financial position or results of
operations.  However, should the outcome of any of these actions be
unfavorable, the Company may be required to pay damages and other expenses,
which could have a material adverse effect on the Company's financial position
and results of operations.  In addition, the Company could be required to alter
certain of its production processes or products as a result of these matters.


LIQUIDITY AND CAPITAL RESOURCES:
- ---------------------------------

The Company's cash, cash equivalents and short-term investments totaled $65.5
million at July 1, 1996, a decrease of $96.2 million compared to the end of
1995.  The decrease in cash, cash equivalents and short-term investments was
primarily due to the purchase of capital equipment and the repurchase of its
own common stock.  

During the first six months of 1996, the Company generated $87.3 million in
cash from operations, compared to $69.3 million in the comparable period in
1995.  A majority of the increase in cash from operations can be attributed to
higher revenues and earnings recorded in the first six months of 1996 compared
to 1995.  During the first six months of 1996, the Company generated $21.1
million in cash from a reduction in accounts receivable.  This generation of
cash was partially offset by an increase in inventory of $16.2 million over the
same time period.  Both the decrease in accounts receivable and the increase in
inventory are a result of declining revenues experienced throughout 1996 caused
by current market conditions.

Cash used for investing activities was $50.1 million for the first six months
of 1996, compared to a cash use of $108.1 million in the comparable period in
1995.  During the first half of 1996, the Company purchased $143.0 million in
capital equipment, primarily to increase capacity and increase capability in
the Company's fabrication facilities in San Jose, Minnesota and Texas.  The
Company also increased the level of capital spending during the second quarter
of 1996 in order to prepare its new assembly and test facility in the
Philippines for production in the third quarter of this year.  Capital
purchases for the remainder of 1996 are expected to be approximately $80.0
million as the Company continues to buy equipment to expand backend
manufacturing capacity and to increase capability in the domestic wafer
fabrication facilities.  Projected capital purchases are less than previous
estimates due to the Company's decision in the second quarter to delay the
construction of Fab V.  Offsetting the purchases of capital equipment was the
conversion of short-term investments into cash of $91.2 million.  A majority of
the cash was used to purchase capital equipment and to fund the repurchase of
the Company's common stock.

                                       12
 





<PAGE>13

Cash used for financing activities in the first half of 1996 was $42.3 million,
compared to a generation of cash of $7.8 million during the comparable period
in 1995.  During the first quarter of 1996, the Company continued its stock
repurchase program by purchasing 2.8 million shares of its own common stock for
approximately $32.9 million, completing the repurchase program authorized by
the Company's Board of Directors in the fourth quarter of 1995.  The Company
also increased its restricted investments by $21.3 million during the first six
months of 1996 bringing the total to $60.5 million at the end of the second
quarter.  During the first six months of 1995, the Company increased its 
restricted investments by $14.7 million.  These restricted investments relate
to certain operating lease agreements entered into by the Company in 1994, 1995
and 1996 with respect to its office and manufacturing facilities in San Jose
and Minnesota.  These agreements require quarterly payments which vary based on
the London interbank offering rate (LIBOR) and provide the Company with the
option of either acquiring the properties at their original cost or arranging
for the property to be acquired at the end of the respective lease terms.  The
Company must maintain a specific level of restricted cash or investments to
serve as collateral for these leases and maintain compliance with certain
financial covenants.  The restricted investments are classified as non-current
assets on the balance sheet.

In July 1996, the Company entered into an agreement with certain banks securing
a three-year, unsecured, $100,000,000 revolving line of credit.  The applicable
interest rate for usage under this agreement will be a spread over LIBOR.  The
spread is a graduated scale, by usage, ranging from 35 to 60 basis points
(0.35% to 0.60%).  Under the agreement, usage of this facility will require the
Company to comply with certain financial and other restrictive covenants.

While the Company plans to fund working capital requirements through existing
capital resources and internally generated cash flow, the Company may, based
upon favorable market conditions, choose to raise additional capital through
the issuance of equity or debt securities of the Company or borrow under its
revolving line of credit.  The Company may also from time to time consider
using available funds to acquire complementary technologies and businesses,
although it has no current plans to make such an acquisition.





















                                      13





<PAGE>14


 
                          PART II - OTHER INFORMATION



ITEM 1.  The information required by this item is included in Part I in Note 4
         of Notes to the Condensed Consolidated Financial Statements.



ITEM 4.  Submission of Matters to a Vote of Security Holders

         On May 3, 1996, at the Company's Annual Meeting of Shareholders, the
         nominated slate of directors was elected, the amendment to the
         Company's 1994 Stock Option Plan was approved and the appointment of
         the independent accountants was ratified.  The results of the votes
         were as follows:

         (1) Approval of Directors:

                                                              Total Votes
                                 Total Votes For             Withheld From
                                  Each Director              Each Director
                                 ---------------             -------------
             T.J. Rodgers           58,004,705                   831,852
             Pierre R. Lamond       58,446,457                   390,100
             Fred B. Bialek         56,505,644                 2,330,913
             Eric A. Benhamou       58,450,366                   386,191
             John C. Lewis          58,454,028                   382,529


         (2) Approve the amendment to the Company's 1994 Stock Option Plan:

                For  55,986,591   Against  1,654,608  Abstain  74,166


         (3) Ratification of the appointment of Independent Accountants:

              For  33,934,570   Against     41,750  Abstain  49,701            

 


ITEM 6:

  (a)  Exhibit  -  11.1  "Computation of Net Income Per Share and Dilutive
                          Common Share Equivalents"


  (b)  Reports on Form 8-K - None











                                      14





<PAGE>15


<TABLE>
                       CYPRESS SEMICONDUCTOR CORPORATION

                                 EXHIBIT 11.1
            COMPUTATION OF NET INCOME PER COMMON SHARE AND DILUTIVE
                           COMMON SHARE EQUIVALENTS      
                     (In thousands, except per share data)
                                  (Unaudited)
<CAPTION>
                                  Three Months Ended        Six Months Ended
                                ----------------------   ----------------------
                                  Jul. 1,     Jul. 3,      Jul. 1,     Jul. 3,
                                   1996        1995         1996        1995
                                ----------  ----------   ----------  ----------
<S>                             <C>         <C>          <C>         <C>

PRIMARY:
- ----------------------------
Weighted average number of
 common shares outstanding          79,773      81,214       79,870      80,040

Common share equivalents:
  Dilutive effect of
  outstanding stock options          3,512       8,343        3,482       8,350
                                ----------  ----------   ----------  ----------
Weighted average number of
 common shares and dilutive
 common share equivalents
 outstanding                        83,285      89,557       83,352      88,390
                                ==========  ==========   ==========  ==========

Net income used in per share
 computation                    $   16,865      25,602   $   51,142  $   34,707
                                ==========  ==========   ==========  ==========
Net income per common and
 common equivalent share        $     0.20  $     0.29   $     0.61  $     0.39
                                ==========  ==========   ==========  ==========

FULLY DILUTED:
- ----------------------------
Weighted average number of
 common shares outstanding          79,773      81,214       79,870      80,040

Common share equivalents:
  Dilutive effect of
  outstanding stock options          3,514       9,090        3,483       8,946

Shares issuable upon
 conversion of convertible
 subordinated notes                  7,940       7,940        7,940       7,940
                                ----------  ----------   ----------  ----------
Weighted average number of
 common shares and dilutive
 common share equivalents
 outstanding                        91,227      98,244       91,293      96,926
                                ==========  ==========   ==========  ==========

                                       15





<PAGE>16

                       CYPRESS SEMICONDUCTOR CORPORATION

                                 EXHIBIT 11.1
            COMPUTATION OF NET INCOME PER COMMON SHARE AND DILUTIVE
                           COMMON SHARE EQUIVALENTS (Continued)   
  
                     (In thousands, except per share data)
                                  (Unaudited)
<CAPTION>
                                  Three Months Ended        Six Months Ended
                                ----------------------   ----------------------
                                  Jul. 1,     Jul. 3,      Jul. 1,     Jul. 3,
                                   1996        1995         1996        1995
                                ----------  ----------   ----------  ----------
<S>                             <C>         <C>          <C>         <C>

Net income used in per share
  computation                   $   17,790  $   26,505   $   52,981  $   36,503
                                ==========  ==========   ==========  ==========
Net income per common and 
  common equivalent share       $     0.20  $     0.27   $     0.58  $     0.38
                                ==========  ==========   ==========  ==========

</TABLE>

































                                      16






<PAGE>17



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.

                                    CYPRESS SEMICONDUCTOR CORPORATION


Date:     August 15, 1996           /s/  T.J. Rodgers
      -----------------------       ---------------------------------
                                    T.J. Rodgers
                                    President and Chief Executive
                                    Officer


                                    /s/  Emmanuel Hernandez
                                    ---------------------------------
                                    Emmanuel Hernandez
                                    Vice President, Finance and
                                    Administration and Chief Financial
                                    Officer

                   

























                                      17







<TABLE> <S> <C>

<ARTICLE> 5
<LEGEND>  THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
          THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTER AND SIX MONTH 
          PERIODS ENDED JULY 1, 1996.
</LEGEND> 
       
<MULTIPLIER>   1,000
<S>                                   <C>                   <C>
<PERIOD-TYPE>                         3-MOS                 6-MOS
<FISCAL-YEAR-END>                     DEC-30-1996           DEC-30-1996
<PERIOD-START>                        APR-02-1996           JAN-02-1996
<PERIOD-END>                          JUL-01-1996           JUL-01-1996
<CASH>                                      4,481                 4,481
<SECURITIES>                               60,972                60,972
<RECEIVABLES>                              85,886                85,886
<ALLOWANCES>                                2,341                 2,341
<INVENTORY>                                45,165                45,165
<CURRENT-ASSETS>                          251,815               251,815
<PP&E>                                    682,545               682,545
<DEPRECIATION>                            247,969               247,969
<TOTAL-ASSETS>                            770,946               770,946 
<CURRENT-LIABILITIES>                     150,313               150,313
<BONDS>                                    97,043                97,043
<COMMON>                                      903                   903
<PREFERRED-MANDATORY>                           0                     0
<PREFERRED>                                     0                     0
<OTHER-SE>                                496,812               496,812
<TOTAL-LIABILITY-AND-EQUITY>              770,946               770,946
<SALES>                                   135,464               305,635
<TOTAL-REVENUES>                          135,464               305,635
<CGS>                                      72,015               148,876
<TOTAL-COSTS>                              72,015               148,876
<OTHER-EXPENSES>                           21,989                43,405
<LOSS-PROVISION>                                0                     0
<INTEREST-EXPENSE>                          1,482                 3,129
<INCOME-PRETAX>                            26,551                80,531
<INCOME-TAX>                                9,686                29,389
<INCOME-CONTINUING>                        16,865                51,142
<DISCONTINUED>                                  0                     0
<EXTRAORDINARY>                                 0                     0
<CHANGES>                                       0                     0
<NET-INCOME>                               16,865                51,142
<EPS-PRIMARY>                                0.20                  0.61
<EPS-DILUTED>                                0.20                  0.58

        

</TABLE>