Marvell Technology Group (MRVL)

Item 4. Controls and Procedures

Stock Option Review

As discussed in Note 1 to our Consolidated Financial Statements and in our Management’s Discussion and Analysis of Financial Condition, our internal review of our stock option granting practices resulted in the restatement of certain previously filed annual and quarterly financial statements.

Management’s Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our interim Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934) as of July 29, 2006.  Disclosure controls and procedures are designed to ensure that information required to be disclosed is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and that such information is accumulated and communicated to management, including the Chief Executive Officer and

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interim Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.  Based on this evaluation, our management, including our Chief Executive Officer and interim Chief Financial Officer, has concluded that our disclosure controls and procedures were not effective as of July 29, 2006 because of the material weaknesses described below:

Control environment. We did not maintain an effective control environment based on criteria established in the COSO framework and commensurate with our rapid growth and increasing complexity.  Our management, including those individuals responsible for our Finance and Legal Departments, did not exercise the necessary rigor and commitment to internal control over financial reporting.  Specifically, certain individuals involved in the stock option process said that they did not feel able to provide frank advice to senior management  regarding controls over processing, recording and reporting of stock options transactions.  This lack of an effective control environment contributed to the restatement of the consolidated financial statements of annual periods through fiscal 2006, each of the quarters of fiscal year 2006, as well as the first quarter of fiscal year 2007.  Additionally, this lack of an effective control environment could result in misstatements of any of our financial statement accounts and disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevent or detected; this lack of effective control environment also contributed to the material weakness described below. Accordingly, our management has determined that this control deficiency constitutes a material weakness.

Control over stock option granting process. We did not maintain effective controls over the stock option granting process. Our controls, including monitoring controls, policies and procedures relating to the granting process were not effective. Specifically, effective controls were not maintained to ensure the validity of stock option grants and related supporting documentation and to ensure the accuracy of the measurement dates and associated accounting treatment for options granted. This lack of effective controls contributed to the restatement of the consolidated financial statements of annual periods through 2006, each of the quarters of fiscal year 2006, as well as the first quarter of fiscal year 2007. Additionally, this lack of effective controls could result in misstatements of any of our financial statement accounts and disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected. Accordingly, our management has determined that this control deficiency constitutes a material weakness.

Controls over stock-based compensation expense under FASB Statement of Financial Accounting Standards No. 123 (revised 2004), “Share Based Payments” FAS 123(R). We did not maintain effective controls over the accounting for and disclosure of our stock-based compensation expense under FAS 123(R).  Our controls, including monitoring controls, policies and procedures relating to the accounting for and disclosure of stock-based compensation were not effective.  Specifically, effective controls were not maintained to ensure the existence, completeness, accuracy, valuation and presentation of our stock-based compensation expense.  This control deficiency resulted in audit adjustments to stock-based compensation expense for the year ended January 27, 2007.  This control deficiency could also result in a misstatement to compensation expense that would result in a material misstatement to our annual or interim financial statements that would not be prevented or detected.  Accordingly, our management has determined that this control deficiency constitutes a material weakness.

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Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the most recently completed fiscal quarter that have materially affected, on are reasonably likely to materially affect, our internal control over financial reporting.

Implemented or Planned Remedial Actions of 2007 Material Weaknesses

Subsequent to July 29, 2006, we implemented or plan to implement further remedial actions, specifically:

·                  Implemented or planned remediation efforts regarding the material weakness in internal control over financial reporting related to an ineffective control environment include the following:

We accepted the resignation of our former Vice President of Finance and Chief Financial Officer, George A. Hervey, on May 2, 2007.  We also accepted Weili Dai’s resignation from her position as our Executive Vice President and Chief Operating Officer.  The Implementation Committee of our Board of Directors determined, contrary to the recommendation of the Special Committee that Ms. Dai have no continuing role with the Company, that retaining the services of Ms. Dai in a reduced capacity as Director of Strategic Marketing and Business Development, individual contributor in a non-managerial role, and under the auspices of the Implementation Committee better serves the interests of all shareholders.  Ms. Dai will have no authority to undertake any material decisions affecting internal controls or financial matters of the Company.  The Implementation Committee will provide periodic compliance updates to the Board of Directors.

Dr. Sehat Sutardja will remain Chief Executive Officer and a member of the Board, but will step down as Chairman of the Board in favor of a non-executive Chairman. The Implementation Committee believes that the reconstitution of the Board of Directors, the separation of the role of Chairman of the Board from that of Chief Executive Officer and President and the hiring of key qualified senior executives in Finance, Operations and Compliance will help address the issues discussed in the material weakness relating to our control environment noted above.

Following the Special Committee’s recommendations, we are conducting a search for a new Chief Operating Officer, Chief Financial Officer, General Counsel and Vice President of Compliance.  The Vice President of Compliance will report directly to the Audit Committee of the Board.  Additionally, the Board’s Governance Committee is conducting a search for three new independent directors to fill existing vacancies.  One of these independent directors will succeed Dr. Sutardja as Chairman of the Board.

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·                  Implemented or planned remediation efforts regarding the material weakness over accounting for and disclosure of our stock-based compensation expense under FAS 123R includes the changes in internal control over financial reporting as stated above along with the following:

We reviewed the accounting for and disclosure of our stock-based compensation expense process and have assessed the need for additional managerial and qualified staff resources.  Once these qualified individuals are hired and training of appropriate personnel is completed, effective monitoring controls will be in place and maintained to ensure existence, completeness, accuracy, valuation and presentation of our stock-based compensation expense.

As a result of the material weaknesses described above, management, with the assistance of outside consultants, reviewed key areas within internal control over financial reporting and the related financial statement amounts and disclosure for the periods ended July 29, 2006 and January 28, 2006.  Based on the review performed management did not identify any evidence that would prevent our Audit Committee or current management from approving our financial statements.

PART II. OTHER INFORMATION

Item 4.  Controls and Procedures

Stock Option Review

As discussed in Note 1 to our Consolidated Financial Statements and in our Management’s Discussion and Analysis of Financial Condition, our internal review of our stock option granting practices resulted in the restatement of certain previously filed annual and quarterly financial statements.

Management’s Consideration of Restatement

At the time that our Quarterly Report on Form 10-Q for the three months ended April 29, 2006 was filed on June 8, 2006, our Chief Executive Officer and then Chief Financial Officer concluded that our disclosure controls and procedures were effective as of April 29, 2006. Subsequent to that evaluation, our management, including our Chief Executive Officer and current interim Chief Financial Officer, concluded that our disclosure controls and procedures were not effective as of April 29, 2006 because of the material weaknesses identified below.

Management’s Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our interim Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934) as of April 29, 2006.  Disclosure controls and procedures are designed to ensure that information required to be disclosed is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and that such information is accumulated and communicated to management, including the Chief Executive Officer and

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interim Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.  Based on this evaluation, our management, including our Chief Executive Officer and interim Chief Financial Officer, has concluded that our disclosure controls and procedures were not effective as of April 29, 2006 because of the material weaknesses described below.

Control environment. We did not maintain an effective control environment based on criteria established in the COSO framework and commensurate with our rapid growth and increasing complexity.  Our management, including those individuals responsible for our Finance and Legal Departments, did not exercise the necessary rigor and commitment to internal control over financial reporting.  Specifically, certain individuals involved in the stock option process said that they did not feel able to provide frank advice to senior management  regarding controls over processing, recording and reporting of stock options transactions.  This lack of an effective control environment contributed to the restatement of the consolidated financial statements of annual periods through fiscal 2006, each of the quarters of fiscal year 2006, as well as the first quarter of fiscal year 2007.  Additionally, this lack of an effective control environment could result in misstatements of any of our financial statement accounts and disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected; this lack of effective control environment also contributed to the material weaknesses described below. Accordingly, our management has determined that this control deficiency constitutes a material weakness.

Control over stock option granting process. We did not maintain effective controls over the stock option granting process. Our controls, including monitoring controls, policies and procedures relating to the granting process were not effective. Specifically, effective controls were not maintained to ensure the validity of stock option grants and related supporting documentation and to ensure the accuracy of the measurement dates and associated accounting treatment for options granted. This lack of effective controls contributed to the restatement of the consolidated financial statements of annual periods through 2006, each of the quarters of fiscal year 2006, as well as the first quarter of fiscal year 2007. Additionally, this lack of effective controls could result in misstatements of any of our financial statement accounts and disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected. Accordingly, our management has determined that this control deficiency constitutes a material weakness.

Controls over stock-based compensation expense under FAS 123(R). We did not maintain effective controls over the accounting for and disclosure of our stock-based compensation expense.  Our controls, including monitoring controls, policies and procedures relating to the accounting for and disclosure of stock-based compensation were not effective.  Specifically, effective controls were not maintained to ensure the existence, completeness, accuracy, valuation and presentation of our stock-based compensation expense.  This control deficiency resulted in audit adjustments to stock-based compensation expense for the year ended January 27, 2007.  This control deficiency could also result in a misstatement to compensation expense that would result in a material misstatement to our annual or interim financial statements that would not be prevented or detected.  Accordingly, our management has determined that this control deficiency constitutes a material weakness.

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Item 4. Controls and Procedures

Stock Option Review

As discussed in Note 1 to our Consolidated Financial Statements and in our Management’s Discussion and Analysis of Financial Condition, our internal review of our stock option granting practices resulted in the restatement of certain previously filed annual and quarterly financial statements.

Management’s Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our interim Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934) as of October 28, 2006.  Disclosure controls and procedures are designed to ensure that information required to be disclosed is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and that such information is accumulated and communicated to management, including the Chief Executive Officer and

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interim Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.  Based on this evaluation, our management, including our Chief Executive Officer and interim Chief Financial Officer, has concluded that our disclosure controls and procedures were not effective as of October 28, 2006 because of the material weaknesses described below:

Control environment. We did not maintain an effective control environment based on criteria established in the COSO framework and commensurate with our rapid growth and increasing complexity.  Our management, including those individuals responsible for our Finance and Legal Departments, did not exercise the necessary rigor and commitment to internal control over financial reporting.  Specifically, certain individuals involved in the stock option process said that they did not feel able to provide frank advice to senior management  regarding controls over processing, recording and reporting of stock options transactions.  This lack of an effective control environment contributed to the restatement of the consolidated financial statements of annual periods through fiscal 2006, each of the quarters of fiscal year 2006, as well as the first quarter of fiscal year 2007.  Additionally, this lack of an effective control environment could result in misstatements of any of our financial statement accounts and disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevent or detected; this lack of effective control environment also contributed to the material weakness described below. Accordingly, our management has determined that this control deficiency constitutes a material weakness.

Control over stock option granting process. We did not maintain effective controls over the stock option granting process. Our controls, including monitoring controls, policies and procedures relating to the granting process were not effective. Specifically, effective controls were not maintained to ensure the validity of stock option grants and related supporting documentation and to ensure the accuracy of the measurement dates and associated accounting treatment for options granted. This lack of effective controls contributed to the restatement of the consolidated financial statements of annual periods through 2006, each of the quarters of fiscal year 2006, as well as the first quarter of fiscal year 2007. Additionally, this lack of effective controls could result in misstatements of any of our financial statement accounts and disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected. Accordingly, our management has determined that this control deficiency constitutes a material weakness.

Controls over stock-based compensation expense under FASB Statement of Financial Accounting Standards No. 123 (revised 2004), “Share Based Payments” (“FAS 123(R)”). We did not maintain effective controls over the accounting for and disclosure of our stock-based compensation expense under FAS 123(R).  Our controls, including monitoring controls, policies and procedures relating to the accounting for and disclosure of stock-based compensation were not effective.  Specifically, effective controls were not maintained to ensure the existence, completeness, accuracy, valuation and presentation of our stock-based compensation expense.  This control deficiency resulted in audit adjustments to stock-based compensation expense for the year ended January 27, 2007.  This control deficiency could also result in a misstatement to compensation expense that would result in a material misstatement to our annual or interim financial statements that would not be prevented or detected.  Accordingly, our management has determined that this control deficiency constitutes a material weakness.

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Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the most recently completed fiscal quarter that have materially affected, on are reasonably likely to materially affect, our internal control over financial reporting.

Implemented or Planned Remedial Actions of 2007 Material Weaknesses

Subsequent to October 28, 2006, we implemented or plan to implement further remedial actions, specifically:

·                  Implemented or planned remediation efforts regarding the material weakness in internal control over financial reporting related to an ineffective control environment include the following:

We accepted the resignation of our former Vice President of Finance and Chief Financial Officer, George A. Hervey, on May 2, 2007.  We also accepted Weili Dai’s resignation from her position as our Executive Vice President and Chief Operating Officer.  The Implementation Committee of our Board of Directors determined, contrary to the recommendation of the Special Committee that Ms. Dai have no continuing role with the Company, that retaining the services of Ms. Dai in a reduced capacity as Director of Strategic Marketing and Business Development, an individual contributor in a non-managerial role, and under the auspices of the Implementation Committee better serves the interests of all shareholders.  Ms. Dai will have no authority to undertake any material decisions affecting internal controls or financial matters of the Company.  The Implementation Committee will provide periodic compliance updates to the Board of Directors on Ms. Dai’s activities.

Dr. Sehat Sutardja will remain Chief Executive Officer and a member of the Board, but will step down as Chairman of the Board in favor of a non-executive Chairman. The Implementation Committee believes that the reconstitution of the Board of Directors, the separation of the role of Chairman of the Board from that of Chief Executive Officer and President and the hiring of key qualified senior executives in Finance, Operations and Compliance will help address the issues discussed in the material weakness relating to our control environment noted above.

Following the Special Committee’s recommendations, we are conducting a search for a new Chief Operating Officer, Chief Financial Officer, General Counsel and Vice President of Compliance.  The Vice President of Compliance will report directly to the Audit Committee of the Board.  Additionally, the Board’s Governance Committee is conducting a search for three new independent directors to fill existing vacancies.  One of these independent directors will succeed Dr. Sutardja as Chairman of the Board.

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·                  Implemented or planned remediation efforts regarding the material weakness over accounting for and disclosure of our stock-based compensation expense under FAS 123R includes the changes in internal control over financial reporting as stated above along with the following:

We reviewed the accounting for and disclosure of our stock-based compensation expense process and have assessed the need for additional managerial and qualified staff resources.  Once these qualified individuals are hired and training of appropriate personnel is completed, effective monitoring controls will be in place and maintained to ensure existence, completeness, accuracy, valuation and presentation of our stock-based compensation expense.

As a result of the material weaknesses described above, management, with the assistance of outside consultants, reviewed key areas within internal control over financial reporting and the related financial statement accounts and disclosure for the periods ended October 28, 2006.  Based on the review performed, management did not identify any evidence that would prevent our Audit Committee or current management from approving our financial statements.

PART II. OTHER INFORMATION