UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                                       OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                       For the Quarter Ended June 29, 1997
                         Commission File Number 0-16852

                               KOMAG, INCORPORATED
                                  (Registrant)

                      Incorporated in the State of Delaware
                I.R.S. Employer Identification Number 94-2914864
               1704 Automation Parkway, San Jose, California 95131
                            Telephone: (408) 576-2000

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 _____.

On June 29, 1997,  52,349,575 shares of the Registrant's common stock, $0.01 par
value, were issued and outstanding.


<PAGE>
                                      INDEX

                               KOMAG, INCORPORATED

                                                                        Page No.

PART I.           FINANCIAL INFORMATION

Item 1.           Consolidated Financial Statements (Unaudited)

                  Consolidated statements of income-Three- and six-months
                  ended June 29, 1997, and June 30, 1996. .................... 3

                  Consolidated balance sheets-June 29, 1997,
                  and December 29, 1996 ...................................... 4

                  Consolidated statements of cash flows-Three- and six-
                  months ended June 29, 1997, and June 30, 1996 .............. 5

                  Notes to consolidated financial statements-
                  June 29, 1997  ........................................... 6-8

Item 2.           Management's Discussion and Analysis of
                  Financial Condition and Results of Operations  .......... 9-14

PART II.          OTHER INFORMATION

Item 1.           Legal Proceedings  ........................................ 15

Item 2.           Changes in Securities  .................................... 15

Item 3.           Defaults Upon Senior Securities  .......................... 15

Item 4.           Submission of Matters to a Vote of Security Holders .... 16-17

Item 5.           Other Information  ........................................ 18

Item 6.           Exhibits and Reports on Form 8-K  ......................... 18

SIGNATURES  ................................................................. 19

                                       -2-

<PAGE>

                                                                
PART I.   FINANCIAL INFORMATION


<TABLE>

                                             KOMAG, INCORPORATED
                                      CONSOLIDATED STATEMENTS OF INCOME
                                    (In Thousands, except per share data)
                                                 (Unaudited)


<CAPTION>
                                                             Three Months Ended         Six Months Ended
                                                          ----------------------    ----------------------
<S>                                                       <C>          <C>          <C>          <C>
                                                            June 29      June 30      June 29      June 30
                                                               1997         1996         1997         1996
                                                          ---------    ---------    ---------    ---------
Net sales                                                 $ 175,121    $ 152,208    $ 342,363    $ 305,047
Cost of sales                                               139,460       89,252      267,387      177,602
                                                          ---------    ---------    ---------    ---------
          GROSS PROFIT                                       35,661       62,956       74,976      127,445

Operating expenses:
     Research, development and engineering                   11,326        7,011       23,339       13,659
     Selling, general and administrative                      7,605       11,256       17,750       22,074
                                                          ---------    ---------    ---------    ---------
                                                             18,931       18,267       41,089       35,733
                                                          ---------    ---------    ---------    ---------
          OPERATING INCOME                                   16,730       44,689       33,887       91,712

Other income (expense):
     Interest income                                          1,429        1,856        2,614        4,138
     Interest expense                                        (2,505)        (109)      (3,972)        (215)
     Other, net                                                 (83)        (141)         604          (83
                                                          ---------    ---------    ---------    ---------
                                                             (1,159)       1,606         (754)       3,840
                                                          ---------    ---------    ---------    ---------
Income before income taxes, minority interest,
   and equity in joint venture income (loss)                 15,571       46,295       33,133       95,552
Provision for income taxes                                    2,647        8,274        5,633       19,113
                                                          ---------    ---------    ---------    ---------
Income before minority interest and equity in
   joint venture income (loss)                               12,924       38,021       27,500       76,439
Minority interest in net income of
   consolidated subsidiary                                      187          122          369          302
Equity in net income (loss) of unconsolidated
 joint venture                                               (1,060)       4,661        2,345        8,927
                                                          ---------    ---------    ---------    ---------
          NET INCOME                                      $  11,677       42,560    $  29,476    $  85,064
                                                          =========    =========    =========    =========


Net income per share                                      $    0.22    $    0.80    $    0.55    $    1.60
                                                          =========    =========    =========    =========


Number of shares used in per share computation               53,862       53,364       53,844       53,233
                                                          =========    =========    =========    =========
                                                                
<FN>

                                                                
                             See notes to consolidated financial statements.
</FN>
</TABLE>

                                                    -3-


<PAGE>
<TABLE>
  
                                             KOMAG, INCORPORATED
                                        CONSOLIDATED BALANCE SHEETS
                                               (In Thousands)

<CAPTION>
                                                                        June 29        Dec. 29
                                                                           1997           1996
                                                                    -----------    -----------
<S>                                                                 <C>            <C>
                                                                     (unaudited)         (note)
ASSETS
Current Assets
        Cash and cash equivalents                                   $    55,793    $    90,741
        Short-term investments                                           32,185          2,500
        Accounts receivable less allowances of
                $6,158 in 1997 and $3,087 in 1996                        79,766         55,676
        Accounts receivable from related                                 12,331          8,449
        Inventories:
                Raw materials                                            36,232         33,734
                Work-in-process                                          21,154         21,774
                Finished goods                                            9,981          6,452
                                                                    -----------    -----------
                        Total inventories                                67,367         61,960
        Prepaid expenses and deposits                                     8,614         16,192
        Deferred income taxes                                            15,579         15,579
                                                                    -----------    -----------
                        Total current assets                            271,635        251,097
Investment in Unconsolidated Joint Venture                               41,514         39,754
Property, Plant and Equipment
        Land                                                              9,368          9,367
        Building                                                        111,744        110,991
        Equipment                                                       767,875        673,210
        Furniture                                                        11,540          7,754
        Leasehold Improvements                                          146,519        131,737
                                                                    -----------    -----------
                                                                      1,047,046        933,059
        Less allowances for depreciation and amortization              (338,564)      (289,353)
                                                                    -----------    -----------
                        Net property, plant and equipment               708,482        643,706
Deposits and Other Assets                                                 3,959          3,800
                                                                    -----------    -----------
                                                                    $ 1,025,590    $   938,357
                                                                    ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
        Trade accounts payable                                      $    46,083    $    80,089
        Accounts payable to related parties                               4,846          3,294
        Accrued compensation and benefits                                20,775         21,835
        Other liabilities                                                 4,745          1,913
        Income taxes payable                                              6,266          1,824
                                                                    -----------    -----------
                        Total current liabilities                        82,715        108,955
Long-term Debt                                                          145,000         70,000
Deferred Income Taxes                                                    57,806         57,806
Other Long-term Liabilities                                                 746            497
Minority Interest in Consolidated Subsidiary                              3,528          3,159
Stockholders' Equity
        Preferred stock                                                      --             --
        Common stock                                                        523            517
        Additional paid-in capital                                      395,728        388,305
        Retained earnings                                               333,055        303,579
        Accumulated foreign currency translation adjustments              6,489          5,539
                                                                    -----------    -----------
                        Total stockholders' equity                      735,795        697,940
                                                                    -----------    -----------
                                                                    $ 1,025,590    $   938,357
                                                                    ===========    ===========
<FN>

           Note: The balance sheet at December 29, 1996 has been derived from the audited
                                  financial statements at that date.
                                                                            
                         See notes to consolidated financial statements.
</FN>
</TABLE>
                                               -4-



<PAGE>

<TABLE>

                                           KOMAG, INCORPORATED
                                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                                              (In Thousands)
                                               (Unaudited)
<CAPTION>
                                             
                                                                                       Six Months Ended        
                                                                                   ----------------------
                                                                                     June 29      June 30
                                                                                        1997         1996
                                                                                   ---------    ---------
OPERATING ACTIVITIES
<S>                                                                                <C>          <C>      
      Net income                                                                   $  29,476    $  85,064
      Adjustments to reconcile net income to net cash
          provided by operating activities:
            Depreciation and amortization                                             59,172       38,168
            Provision for losses on accounts receivable                                  860          252
            Equity in net income of unconsolidated joint venture                      (2,345)      (8,927)
            Loss on disposal of equipment                                              1,149          241
            Deferred rent                                                                249           (2)
            Minority interest in net income of consolidated subsidiary                   369          302
            Changes in operating assets and liabilities:
                  Accounts receivable                                                (24,950)      (5,186)
                  Accounts receivable from related parties                            (3,882)       3,726
                  Inventories                                                         (5,407)     (19,663)
                  Prepaid expenses and deposits                                       (2,422)          (5)
                  Trade accounts payable                                             (34,006)      12,551
                  Accounts payable to related parties                                  1,552       (2,060)
                  Accrued compensation and benefits                                   (1,060)      (7,646)
                  Other liabilities                                                    2,832         (188)
                  Income taxes payable                                                14,442        4,798
                                                                                   ---------    ---------
                         Net cash provided by operating activities                    36,029      101,425

INVESTING ACTIVITIES
      Acquisition of property, plant and equipment                                  (125,198)    (167,386)
      Purchases of short-term investments                                            (29,685)        (163)
      Proceeds from short-term investments at maturity                                    --       72,626
      Proceeds from disposal of equipment                                                470        1,160
      Deposits and other assets                                                         (528)        (550)
      Dividend distribution from unconsolidated joint venture                          1,535           --
                         Net cash used in investing activities                      (153,406)     (94,313)
                                                                                   ---------    ---------

FINANCING ACTIVITIES
      Increase in long-term obligations                                               75,000           --
      Sale of Common Stock, net of issuance costs                                      7,429        6,172
      Distribution to minority interest holder                                            --         (279)
                                                                                   ---------    ---------
                         Net cash provided by financing activities                    82,429        5,893

                      Increase (decrease) in cash and cash equivalents               (34,948)      13,005

      Cash and cash equivalents at beginning of year                                  90,741       14,879
                                                                                   ---------    ---------

                      Cash and cash equivalents at end of period                   $  55,793    $  27,884
                                                                                   =========    =========
<FN>

                                     See notes to consolidated financial statements.

</FN>
</TABLE>

                                                          -5-



<PAGE>

                               KOMAG, INCORPORATED

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                                  June 29, 1997


NOTE 1 - BASIS OF PRESENTATION

     The  accompanying  unaudited  consolidated  financial  statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-Q and Article 10 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements. In the opinion of Management,  all adjustments (consisting
of normal recurring accruals)  considered necessary for a fair presentation have
been included. Operating results for the three- and six-month periods ended June
29, 1997 are not necessarily  indicative of the results that may be expected for
the year ending December 28, 1997.

     For further information, refer to the consolidated financial statements and
footnotes  thereto  included in the Company's Annual Report on Form 10-K for the
year ended December 29, 1996.

     The Company  uses a 52-53 week fiscal year ending on the Sunday  closest to
December 31. The three- and six-month reporting periods for the comparable years
included  in this  report  are  comprised  of  thirteen  and  twenty-six  weeks,
respectively.


                                       -6-

<PAGE>

 NOTE 2 - INVESTMENT IN DEBT SECURITIES

         The Company  invests its excess cash in  high-quality,  short-term debt
and equity  instruments.  None of the Company's  investments in debt  securities
have  maturities  greater  than one year.  The  following  is a  summary  of the
Company's   investments   by  major   security  type  at  amortized  cost  which
approximates fair value:

                                
                                                  
                                                         June 29     December 29
(in thousands)                                              1997            1996
                                                         -------         -------
Corporate debt securities                                $22,770         $55,618
Mortgage-backed securities                                35,162          35,699
Municipal auction rate preferred stock                    32,185           2,500
                                                         -------         -------
                                                         $90,117         $93,817
                                                         =======         =======

Amounts included in cash and cash equivalents            $57,932         $91,317
Amounts included in short-term investments                32,185           2,500
                                                         -------         -------
                                                         $90,117         $93,817
                                                         =======         =======
                                                                



     The Company utilizes  zero-balance accounts and other cash management tools
to  invest  all  available  funds  including  bank  balances  in  excess of book
balances.


NOTE 3 - INCOME TAXES

         The estimated annual effective income tax rate for 1997 of 17% is lower
than the 1997  combined  federal and state  statutory  rate of 41% and unchanged
from the effective  income tax rate for 1996 of 17%. The difference  between the
effective  tax rate  and the  combined  statutory  rate is  primarily  due to an
initial  five-year  tax  holiday  (commencing  in July  1993) for the  Company's
wholly-owned  thin-film  media  operation,  Komag USA (Malaysia)  Sdn.  ("KMS").
Assuming KMS fulfills  certain  commitments  under its license to operate within
Malaysia,  this initial tax holiday may be extended for an additional  five-year
period by the  Malaysian  government.  KMS has also been  granted a ten-year tax
holiday for its second and third plant sites in  Malaysia.  This new tax holiday
has not yet commenced as of June 29, 1997.


                                       -7-


<PAGE>

NOTE 4 - TERM DEBT AND LINES OF CREDIT

         In June 1997, the Company amended an existing line of credit  facility.
The amended  agreement  increased  the  Company's  total  credit  facilities  to
$345,000,000.  At June 29,  1997,  a total of  $200,000,000  was  available  for
additional  borrowings  under these  credit  facilities.  Loan  availability  is
subject to compliance with certain financial covenants.


NOTE 5 - EARNINGS PER SHARE

         In February  1997,  the  Financial  Accounting  Standards  Board issued
Statement No. 128 (FAS 128), "Earnings per Share", which the Company is required
to adopt for its fiscal year ending December 28, 1997. At that time, the Company
will be required to change the method  currently  used to compute  earnings  per
share  and to  restate  all  prior  periods.  Under  the  new  requirements  for
calculating  primary  earnings per share,  the dilutive  effect of stock options
will be  excluded.  Application  of FAS 128 is  expected  to have no  impact  on
primary  earnings per share for the second  quarter ended June 29, 1997 but will
increase  primary  earnings per share for the second quarter ended June 30, 1996
by $0.03 per share.  Earnings per share for the six-month periods ended June 29,
1997 and June 30, 1996 will increase by $0.02 and $0.07 per share, respectively.
A calculation of diluted earnings per share will also be required; however, this
is not  expected  to  differ  materially  from the  Company's  reported  primary
earnings per share.


                                       -8-

<PAGE>

                               KOMAG, INCORPORATED

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Results of Operations:

         The  following  discussion  contains  predictions,  estimates and other
forward-looking  statements  that  involve a number of risks and  uncertainties.
While this  outlook  represents  the  Company's  current  judgment on the future
direction  of the  business,  such risks and  uncertainties  could cause  actual
results to differ  materially  from any  future  performance  suggested  herein.
Factors  that could  cause  actual  results  to differ  include  the  following:
industry supply-demand relationship and related pricing for high-end desktop and
enterprise disk products;  successful  product  qualification of next-generation
products;  utilization  of  manufacturing  facilities;  rate of  improvement  in
manufacturing   efficiencies  on  magnetoresistive  ("MR")  products;   vertical
integration  and  consolidation  within the  Company's  limited  customer  base;
increased competition;  availability of sufficient cash resources; extensibility
of  process  equipment  to meet  more  stringent  future  product  requirements;
availability of certain sole-sourced raw material supplies; and the risk factors
listed in the Company's Form 10-K filed in March 1997. The Company undertakes no
obligation   to  publicly   release  the  result  of  any   revisions  to  these
forward-looking  statements which may be made to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.

Overview
         Results  for the first  half of 1997 were  dramatically  lower than the
first half of 1996. In the first half of 1996, the Company was producing  mature
product  offerings  at high yields with full  utilization  of its  capacity  and
strong demand for these products.  Gross margins exceeding 40% in both the first
and second quarters of 1996 were at near-record  levels for the Company.  In the
last half of 1996,  the Company  began a rapid  transition  to  magnetoresistive
("MR") and  proximity-inductive  thin-film media products.  Manufacturing yields
for these products were substantially  below the high yields achieved during the
first half of 1996.  Additionally,  the Company devoted significant  portions of
its  manufacturing  capacity to development  efforts for the new products.  As a
result of these low yields and equipment  utilization rates, the Company's sales
in the second half of 1996 were  production  constrained  and declined  from the
levels during the first half of the year. Furthermore,  an increasing mix of the
low  yielding  new  products  led  to  a  sequential  decline  in  gross  margin
percentages  in the second half of 1996.  The gross  margin  percentage  for the
third and fourth quarters of 1996 were 24.0% and 11.2%, respectively.

                                       -9-

<PAGE>

         During  the  first  two  quarters  of 1997,  the  Company  sequentially
improved unit output primarily through increased  production  capacity.  Despite
the  sequential   improvement,   overall   manufacturing  yields  and  equipment
utilization were substantially lower in the first half of 1997 than in the first
half of 1996 due to the large mix of new MR and proximity-inductive  products in
the first half of 1997. In the second quarter of 1997 the Company increased unit
output and net sales from the first  quarter of 1997.  Despite  this  sequential
improvement,  the  gross  margin  percentage  decreased  to 20.4% in the  second
quarter of 1997 from 23.5% in the first quarter of 1997. The Company's financial
performance for the second quarter of 1997 was negatively affected by a slowdown
in  the  market  demand  for  enterprise-class  disk  products,   lower  factory
utilization due to changing  customer orders,  yield-related  production  issues
late in the second quarter,  and increased  reserves  related to inventory.  The
Company recorded  approximately $5.6 million in inventory reserves in the second
quarter  of  1997  primarily  related  to the  slowdown  in  market  demand  for
enterprise-class  disks and production issues for in-process product.  Excluding
these inventory reserves,  the gross margin percentage for the second quarter of
1997 was  approximately  the same as the gross margin  percentage  for the first
quarter of 1997.

         Near the end of the  second  quarter  of  1997,  the  Company  received
notification from a significant customer that orders for the second half of 1997
would be reduced  substantially.  The customer  accounted for 31% and 14% of net
sales in the first and second  quarters  of 1997,  respectively.  Given the high
fixed cost  nature of the  Company's  business,  replacement  of this lost order
volume is critical to the Company's second half performance.  Unfortunately, the
current  anticipated  level of order  replacement  will be insufficient to fully
utilize the Company's expanded second half production  capacity.  As a result of
the anticipated lower capacity utilization, gross margins and net income for the
third and fourth  quarters of 1997 are  expected to fall below the levels of the
first and second quarters of 1997.

         In view of the this lower demand  outlook,  the Company has reevaluated
its capital  plan.  Based on this review the Company plans to adjust the current
quarterly  capital  expenditure  rate of  approximately  $70 million downward by
40-50%  possibly as early as the fourth quarter of 1997. To achieve this result,
the Company will focus  expenditures  primarily on projects that improve process
capabilities  and support an  increasing  MR product  mix.  Production  capacity
expansion will be curtailed  after  installation of a new production line in the
second half,  the last of four lines added in 1997. In addition to reviewing its
capital  spending  plans,  the  Company  is  evaluating  other  actions to align
spending levels with revenue expectations.

                                      -10-


<PAGE>

Revenue
         Net sales  increased 15% in the second  quarter of 1997 relative to the
second  quarter  of 1996.  Net  sales in the  second  quarter  of 1996  included
approximately  $5.4 million of substrate  sales;  no such sales  occurred in the
second quarter of 1997.  Excluding substrate sales, net sales of thin-film media
increased  19%. The increase was  primarily  due to a 16% increase in unit sales
volume coupled with a modestly higher overall average selling price. The overall
average  selling  price  typically  strengthens  only as the  result of  product
transitions to higher-priced,  more technologically  advanced product offerings.
Price  reductions for individual  product  offerings are  characteristic  of the
thin-film media industry. Sales of the new MR and proximity-inductive  products,
which began in the last half of 1996, increased rapidly and accounted for 95% of
unit sales in the second  quarter of 1997.  The effect of the sales mix shift to
these new higher-priced, next-generation products more than offset the effect of
price  reductions  on  maturing  inductive  disk  products  and  resulted in the
increase in the overall average selling price.

         Net sales increased 12% in the first half of 1997 relative to the first
half of 1996  primarily  due to an  increase  in unit  sales  volume.  Excluding
substrate  disk  sales of $2.0  million in the first six months of 1997 and $5.4
million  in the first  half of 1996,  net  sales of  thin-film  media  increased
approximately  14%. The overall average selling price increased slightly between
the periods.  The sales mix shift to  higher-priced  MR and  proximity-inductive
products  described in the quarterly  comparison  more than offset the effect of
price reductions on maturing  inductive disk products and resulted in the slight
increase in the overall average selling price.

         In addition to sales of internally produced disk products,  the Company
has  historically  resold  products  manufactured by its Japanese joint venture,
Asahi Komag Co., Ltd. (AKCL). Distribution sales of thin-film media manufactured
by AKCL were  negligible in the second  quarter of 1997 compared to $1.8 million
in  the  second  quarter  of  1996.   Distribution   sales  of  thin-film  media
manufactured  by AKCL were $2.7  million in the first half of 1997  compared  to
$2.2 million in the first half of 1996.  The Company  expects that  distribution
sales of AKCL product will remain at a relatively low level throughout 1997.

         During the second quarter of 1997 five customers individually accounted
for at least ten percent of consolidated net sales:  Western Digital Corporation
(27%), Quantum Corporation,  together with its Japanese  manufacturing  partner,
Matsushita-Kotobuki   Electronics   Industries,   Ltd.  ("MKE")  (21%),   Maxtor
Corporation  (20%),  International  Business  Machines ("IBM") (14%) and Seagate
Technology,  Inc.  (14%).  The Company expects that it will continue to derive a
substantial portion of its sales from relatively few customers. The distribution
of sales among  customers may vary from quarter to quarter based on the match of
the Company's  product  capabilities  with  specific disk drive  programs of the
customers.

                                      -11-


<PAGE>

         Unit production  increased 7% in the second quarter of 1997 relative to
the second quarter of 1996.  Increased production volume typically occurs due to
increased physical capacity (additional sputtering lines) and/or improvements in
manufacturing  efficiencies  (improved production throughput from higher yields,
better equipment utilization,  and shorter process cycle times). The combination
of substantially lower yields for new MR and proximity-inductive  products and a
reduction in equipment  utilization  largely offset the effect of a 28% increase
in  physical  capacity  in the  second  quarter of 1997  relative  to the second
quarter of 1996. Unit production  volume also increased  approximately 7% in the
first half of 1997  compared to the first half of 1996.  The net effect of a 25%
increase in unit production capacity offset decreases in manufacturing yield and
utilization rates during the comparable  six-month  periods.  Product transition
issues as discussed in the quarterly comparison were the primary contributors to
the lower yield and utilization rates.

Gross Margin
         The gross margin  percentage  for the second quarter of 1997 was 20.4%,
compared to 41.4% for the second  quarter of 1996.  The gross margin  percentage
for the first  half of 1997 was  21.9%,  down from  41.8% for the first  half of
1996. The substantial  decreases in the gross margin  percentages were primarily
attributable to a combination of lower manufacturing  yields,  reduced equipment
utilization  rates and inherently  higher product  material and processing costs
for MR and advanced proximity disks.

Operating Expenses
         Research and development  ("R&D") expenses increased 62% ($4.3 million)
and 71% ($9.7  million) in the three- and six-month  periods of 1997 relative to
the comparable periods of 1996. The Company occupied a newly constructed 188,000
square-foot  R&D  facility  in the  first  quarter  of 1997.  Costs  for the new
facility and  increased R&D staffing  accounted  for the  increases  between the
three- and six-month  periods of 1997 and the  comparable  periods of 1996.  The
Company expects to increase R&D spending by 70% to approximately  $50 million in
1997 from $29 million in 1996  primarily due to additional  facility,  equipment
and staffing costs.

         Selling,   general  and  administrative   ("SG&A")  expenses  decreased
approximately  32% ($3.6  million) in the second quarter of 1997 relative to the
second quarter of 1996.  Lower  provisions for bonus and profit sharing programs
(decrease of $4.1 million) and lower  provisions  for bad debt (decrease of $0.7
million) resulted in the overall decrease in SG&A expenses between the quarters.
Excluding  provisions for bonus and profit  sharing  programs and provisions for
bad debt,  SG&A  expenses  increased  $1.2  million.  The  higher  spending  was
primarily due to the combination of increased  payroll and facility  costs.  The
Company occupied a newly constructed administration facility in March 1997. SG&A
expenses  decreased 20% ($4.3 million) in the first half of 1997 compared to the
first half of 1996 primarily due to a $6.4 million reduction in bonus and profit

                                      -12-

<PAGE>

sharing provisions.  Provisions for bad debt increased $0.6 million in the first
half of 1997 compared to the first half of 1996.  Excluding provisions for bonus
and profit sharing programs and provisions for bad debt, SG&A expenses increased
$1.5 million due mainly to the higher payroll and facility costs.

Interest and Other Income/Expense
         Interest  income  decreased  $0.4 million in the second quarter of 1997
relative  to the second  quarter  of 1996 and $1.5  million in the first half of
1997 relative to the first half of 1996. The decreases were due to lower average
cash and short-term  investment  balances in the current year periods.  Interest
expense  increased  $2.4 million in the second  quarter of 1997  compared to the
second  quarter of 1996 and $3.8  million in the first half of 1997  relative to
the first half of 1996.  The Company  borrowed  $145.0  million under its credit
facilities between the beginning of December 1996 and the end of March 1997. The
Company had no outstanding debt during the first half of 1996.

         Other  expense  decreased  $0.1  million in the second  quarter of 1997
compared to the second quarter of 1996.  The effect of increased  losses for the
disposal of property,  plant and equipment of $1.1 million in the second quarter
of 1997 was more than offset by reduced foreign  currency losses and the receipt
of royalty  income in the second quarter of 1997.  Royalty income  received from
AKCL for sales made by AKCL  outside of Japan  amounted  to  approximately  $0.6
million  (royalties from AKCL began in the third quarter of 1996).  Other income
increased  $0.7 million in the first half of 1997  relative to the first half of
1996.  Royalty income from AKCL of $1.4 million and decreased  foreign  exchange
losses more than offset the effect of a $0.9 million  increase in losses for the
disposal of property plant and equipment.

Income Taxes
         The estimated annual effective income tax rate for 1997 of 17% is lower
than the 1997  combined  federal and state  statutory  rate of 41% and unchanged
from the effective  income tax rate for 1996 of 17%. The difference  between the
effective  tax rate  and the  combined  statutory  rate is  primarily  due to an
initial  five-year  tax  holiday  (commencing  in July  1993) for the  Company's
wholly-owned  thin-film  media  operation,  Komag USA (Malaysia)  Sdn.  ("KMS").
Assuming KMS fulfills  certain  commitments  under its license to operate within
Malaysia,  this initial tax holiday may be extended for an additional  five-year
period by the  Malaysian  government.  KMS has also been  granted a ten-year tax
holiday for its second and third plant sites in  Malaysia.  This new tax holiday
has not yet commenced at June 29, 1997.

                                      -13-

<PAGE>

Minority Interest in KMT/Equity in Net Income of AKCL
         The  minority  interest  in the net income of  consolidated  subsidiary
represented  Kobe Steel USA Holdings  Inc.'s  ("Kobe  USA's") 20% share of Komag
Material  Technology,  Inc.'s  ("KMT's") net income.  KMT recorded net income of
$0.9  million  and $1.8  million in the second  quarter  and first half of 1997,
respectively,  compared to $0.6 million and $1.5  million in the second  quarter
and first half of 1996, respectively.

         The Company  records  50% of AKCL's net income  (loss) as equity in net
income (loss) of unconsolidated joint venture.  AKCL reported a net loss of $2.1
million in the second  quarter of 1997,  down  substantially  from net income of
$9.3  million in the second  quarter of 1996.  AKCL  reported net income of $4.6
million in the first half of 1997 compared to $17.9 million in the first half of
1996.  Results for the first half of 1997  included a $5.3  million (net of tax)
gain on AKCL's March 1997 sale of its investment in Headway  Technologies,  Inc.
Excluding  the gain,  AKCL incurred a net loss of $0.7 million in the first half
of 1997.  Similar  to  Komag,  AKCL was  primarily  producing  mature  inductive
products with more stable, higher yields in the second quarter and first half of
1996. Product  transition issues related to AKCL's  qualification and production
of MR  products  adversely  affected  both the second  quarter and first half of
1997. The Company  anticipates that MR production and  qualification  issues may
continue into the last half of 1997. As a result,  the Company expects that AKCL
will substantially  underutilize its manufacturing capacity and incur losses for
at least the remainder of 1997.


Liquidity and Capital Resources:

         Cash and  short-term  investments  of $88.0  million  at the end of the
second  quarter of 1997  decreased $5.3 million from the end of the prior fiscal
year.  Consolidated  operating activities generated $36.0 million in cash during
the first half of 1997.  The Company  borrowed  $75.0  million  under its credit
facilities  and spent $125.2  million on capital  requirements  during the first
half of 1997.  Sales of  Common  Stock  under the  Company's  stock  option  and
employee  stock purchase  programs  generated  $7.4 million.  Additionally,  the
Company received a $1.5 million cash dividend from AKCL.

         Total  capital   expenditures  for  1997  were  previously  planned  at
approximately $290 million, and included  expenditures for additional production
capacity, equipment upgrades, facility expansions, and R&D equipment. In view of
the current demand outlook,  the Company has reevaluated its capital plan. Based
on this  review  the  Company  plans to adjust  the  current  quarterly  capital
expenditure  rate of  approximately  $70 million  downward by 40-50% possibly as
early as the fourth  quarter of 1997.  To achieve this result,  the Company will
focus expenditures primarily on projects that


                                      -14-

<PAGE>


improve  process   capabilities  and  support  an  increasing  MR  product  mix.
Production  capacity  expansion will be curtailed  after  installation  of a new
production line in the second half, the last of four lines added in 1997.

         Current  noncancellable  capital  commitments total  approximately $125
million.  In addition to reviewing its capital  spending  plans,  the Company is
evaluating other actions to align spending levels with revenue expectations. The
Company currently has $200 million  available under its $345 million  unsecured,
multi-year bank lines of credit.  The availability of funds under these lines of
credit is subject to  compliance  with certain  financial  covenants,  including
limitations  on the number of quarterly  losses.  The Company  believes that the
reduction in capital  spending  and certain  reductions  in  operating  expenses
currently under  evaluation will be required in order to ensure that the Company
maintains adequate cash reserves.

                                      -15-

<PAGE>

PART II. OTHER INFORMATION
         ITEM 1. Legal Proceedings-Not Applicable.

         ITEM 2. Changes in Securities-Not Applicable.

         ITEM 3. Defaults Upon Senior Securities-Not Applicable.

         ITEM 4. Submission of Matters to a Vote of Security Holders-Not
                 Applicable.

                      (a)    The Annual Meeting of Stockholders  was held on May
                             14, 1997.

                      (b)    The meeting  included  the election of the Board of
                             Directors, submitted as Item No. 1, whose names are
                             as follows:

                             Tu Chen
                             Stephen C. Johnson
                             Craig R. Barrett
                             Chris A. Eyre
                             Irwin Federman
                             George A. Neil
                             Max Palevsky
                             Anthony Sun
                             Masayoshi Takebayashi


                      (c)    Other  matters  voted  upon  at  the   stockholders
                             meeting were:

                      Item   No. 2,  Approval of  Amendments  to  Restated  1987
                             Stock Option Plan; and

                      Item   No. 3, Approval of Amendments to the Company's 1988
                             employee stock purchase plan; and

                      Item   No. 4,  Approval  of  Amendments  to the  Company's
                             management bonus plan; and

                      Item   No. 5,  Ratification  of the Appointment of Ernst &
                             Young LLP as the Company's Independent Auditors for
                             the year ended December 28, 1997.


                                      -16-




<PAGE>

         Shares of Common Stock voted were as follows:

Item No. 1                             
(Election of Board of Directors)

                                     Total Vote For          Total Vote Withheld
                                      Each Director           From Each Director
                                     --------------          -------------------
Tu Chen                                44,619,750                         79,315
Stephen C. Johnson                     44,618,553                         80,512
Craig R. Barrett                       44,486,100                        212,965
Chris A. Eyre                          44,616,501                         82,564
Irwin Federman                         44,614,801                         84,264
George A. Neil                         44,617,334                         81,731
Max Palevsky                           44,613,545                         85,520
Anthony Sun                            44,615,811                         83,254
Masayoshi Takebayashi                  44,615,740                         83,325
                                                                   
                                                                   
                                                                   
                                                                   
                                                                        Broker
                                   For        Against       Abstain    Non-Vote
                               ----------    ---------      -------    ---------
Item No. 2
(Amendment to Restated
1987 Stock Option
Plan)                          30,089,860    6,866,958      212,628    7,529,619

Item No. 3
(Amendment to 1988
Employee Stock Purchase
Plan)                          34,449,843    2,499,211      220,392    7,529,619

Item No. 4
(Amendment to the
Management Bonus Plan)         41,776,156    1,411,179      260,528    1,251,702

Item No. 5
(Selection of
Independent Auditors)          44,611,330       37,202       50,333          200


     (d) Not Applicable.

                                      -17-
<PAGE>


         ITEM 5. Other Information-Not Applicable.

         ITEM 6. Exhibits and Reports on Form 8-K

                  (a)   Exhibit  10.23  Amended and  Restated  Credit  Agreement
                        Among Komag, Incorporated and BankBoston, N.A. as Agent.
                        Exhibit 27-Financial Data Schedule.

                  (b)   Not Applicable

                                      -18-



<PAGE>



                                   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.




                               KOMAG, INCORPORATED
                                  (Registrant)








DATE:  August 5, 1997               BY: /s/ William L. Potts, Jr.
       ------------------               ----------------------------
                                            William L. Potts, Jr.
                                            Senior Vice President and
                                            Chief Financial Officer



DATE:  August 5, 1997               BY: /s/ Stephen C. Johnson
     -------------------                ----------------------------
                                            Stephen C. Johnson
                                            President and
                                            Chief Executive Officer

                                      -19-