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

                               ----------------

                                   FORM 10-K

              [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the Fiscal Year Ended December 31, 2000

            [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934

                 For the Transition Period from       to

                        Commission File Number 0-21422

                               ----------------

                                   OPTi Inc.
            (Exact name of registrant as specified in this charter)

<TABLE>
<S>                                      <C>
              CALIFORNIA                                   77-0220697
    (State or other jurisdiction of                     (I.R.S. Employer
     incorporated or organization)                     Identification No.)

 660 Alder Drive, Milpitas, California                       95035
(Address of principal executive office)                    (Zip Code)
</TABLE>

       Registrant's telephone number, including area code (408) 382-2600

       Securities registered pursuant to Section 12(b) of the Act: None

 Securities registered pursuant to Section 12(g) of the Act: Common Stock, no
                                   par value

                               ----------------

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

   Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to the Form 10-K. [_]

   The aggregate market value of the voting stock held by non-affiliates of
the registrant, based upon the closing sale price of the Common Stock on March
21, 2001, as reported on the Nasdaq Stock Market, was approximately
$25,839,312. Shares of Common Stock held by each executive officer and
director and by each person who owns 5% or more of the outstanding Common
Stock have been excluded in that such persons may be deemed to be affiliates.
This determination of affiliate status is not necessarily a conclusive
determination for other purposes.

    The number of shares outstanding of the registrant's common stock as of
                       December 31, 2000 was 11,655,303.

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                                   OPTi Inc.

                                   Form 10-K
                  For the Fiscal Year Ended December 31, 2000

                                     INDEX

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                                                                         Page
                                                                        Number
                                                                        ------
 <C>         <S>                                                        <C>
 PART I

    Item 1.  Business.................................................     3

    Item 2.  Properties...............................................    11

    Item 3.  Legal Proceedings........................................    11

    Item 4.  Submission of Matters to a Vote of Security Holders......    12

 PART II

    Item 5.  Market for Registrant's Common Stock and Related
             Stockholder Matters......................................    13

    Item 6.  Selected Consolidated Financial Data.....................    14

    Item 7.  Management's Discussion and Analysis of Financial
             Condition and Results of Operations......................    15

    Item 7A. Quantitative and Qualitative Disclosures About Market
             Risk.....................................................    17

    Item 8.  Financial Statements and Supplementary Data..............    17

    Item 9.  Changes in and Disagreements with Accountants on
             Accounting and Financial Disclosure......................    17

 PART III

    Item 10. Directors and Executive Officers of the Registrant.......    18

    Item 11. Executive Compensation...................................    19

    Item 12. Security Ownership of Certain Beneficial Owners and
             Management...............................................    21

    Item 13. Certain Relationships and Related Transactions...........    22

 PART IV

    Item 14. Exhibits, Financial Statement Schedules and Reports on
             Form 8-K.................................................    23

             Signatures...............................................    25
</TABLE>

                                       2
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                                    PART I

Item 1. Business

   Information set forth in this report constitutes and includes forward
looking information made within the meaning of Section 27A of the Security Act
of 1933, as amended and Section 21E of the Securities and Exchange Act of
1934, as amended, that involve risks and uncertainties. The Company's actual
results may differ significantly from the results discussed in the forward
looking statements as a result of a number of factors, including product mix,
the Company's ability to obtain or maintain design wins, market conditions
generally and in the personal computer and semiconductor industries, product
development schedules, competition and other matters. Readers are encouraged
to refer to "Factors Affecting Earnings and Stock Price" found below.

Introduction

   OPTi Inc. a California corporation ("OPTi" or the "Company"), founded in
1989, is an independent supplier of semiconductor products to the personal
computer ("PC") and embedded marketplaces. The Company's products provide in a
semiconductor device the core logic functions or universal serial bus ("USB")
controller function of a PC or embedded product. During 2000, the Company
shipped approximately two million core logic and USB devices to more than 50
PC manufacturers, motherboard manufacturers, and add-in card manufacturers
located primarily in Asia and the U.S.

   During the past several years, the Company has shifted its efforts away
from its primary focus on the design, development, marketing and sales of core
logic products to its peripheral products (primarily the USB device) for use
by Original Equipment Manufacturer's ("OEM's") in the personal computer
market. During the month of February 1999 the Company stopped development of
its core logic products completely. The Company continues to ship its core
logic products today, mainly into embedded designs which historically have a
much longer product life cycle than the PC market. During 2000 the Company's
net product revenue from core logic chipsets was approximately 68% of its
revenue as compared to 56% and 74% for fiscal years 1999 and 1998,
respectively. Peripheral products were 32%, 44% and 26% of the Company's net
product revenue during 2000, 1999 and 1998, respectively.

   In addition, the Company has continued and is continuing, its efforts to
maximize shareholder value through restructuring of the Company's business and
assets. During the first quarter of 2000, the Company announced the signing of
a one-time fully paid license on all of its existing and pending patents.

   The Company currently competes principally in the embedded and USB
controller marketplaces. From the Company's inception through 1995, the
Company's principal segment had been desktop core logic. However, with
increasingly aggressive competition in this area, primarily from Intel
Corporation, the Company revised its strategy and focused on market
opportunities where the Company had strategic advances. This led the Company
to concentrate on the peripheral product marketplaces where the Company has
had some success over the past several years.

   In the past the Company's sales have been primarily attributable to its
introduction of highly integrated chipsets. The Company continues to focus its
efforts on increasing the revenue it receives from licensing its core logic
technology and continuing to sell its USB and core logic products into
existing and new marketplaces. The Company sells, and will continue to sell,
its products to its customers and their contractors directly or through a
network of independent sales representatives.

   The Company's strategy, at this time is to attempt to license its core
logic technology that it has developed during its history and to look for
areas where the Company can either develop or acquire technology for emerging
markets in the electronics area, increase sales in existing global markets and
strengthen its industry relationships.

Industry Background

   During the last decade, the PC industry has grown rapidly as increased
functionality combined with lower pricing have made PC" valuable and
affordable tolls for business and personal use.

                                       3
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   The principal functions of a PC are provided by a circuit board known as
the motherboard, consisting of a microprocessor, bus circuits, various memory
devices and core logic circuits. The bus is the pathway through which the
microprocessor communicates with peripheral devices and adapter cards. Core
logic circuits perform five principal functions in the PC: system control,
memory control, bus control, bus buffering and peripherals control. System
control refers to the computing functions which enable the microprocessor to
manage the flow of data between the microprocessor, the system bus and memory.
Memory control consists of the control functions employed by the
microprocessors to efficiently manage the operations of memory devices. Bus
control enables the PC to implement the protocols necessary to achieve
compatibility with industry standard bus interfaces and protocols, such as
Industry Standard Architecture ("ISA"), Extended Industry Standard
Architecture ("EISA"), and Peripheral Control Interconnect ("PCI"). Peripheral
control facilitates the operations of peripheral devices such as the disk
drive, keyboard and display device.

   The trend to higher performance, lower cost personal computers has been
accompanied by a variety of changes in the market for personal computers and
the technologies used to address these emerging market requirements. The
consumer and home office sectors have become the fastest growing sectors of
the PC market, driven, in part, by the emergence of low-cost multimedia
computers and peripherals.

   These changes in the PC market and technology directly affect the market
for core logic chipsets. The primary customer base for chipsets has shifted
significantly to major PC manufactures and to the suppliers to these leading
OEM customers, in contrast to prior periods in which motherboard manufacturers
and system integrators represented the largest portion of the market for core
logic chipsets. Large OEMs require increasingly higher levels of product
integration, thus enabling them to reduce parts count and control total
product costs.

   Dramatic growth has continued in the PC market as computer and consumer
electronics industries have converged, combining increased multimedia and
communications capabilities. Today's systems increasingly offer more powerful
microprocessors, highly integrated chipsets, integrated video, stereo sound,
highspeed fax and modem communications and CD-ROM.

   Like the PC market, the market for chipsets and peripheral products is
seasonal. In general, chipsets and peripheral products experience higher sales
in the second half of the calendar year than they experience in the first half
of the year.

Strategy

   The Company's strategy incorporates the following elements:

 License Opportunities for Chipset Technologies

   One of the Company's strategies is to pursue licensing opportunities in the
core logic area. During the first quarter of fiscal year 2000, the Company
entered into a one-time licensing arrangement for $13,311,000 on the core
logic technology that the Company had developed during its existence. We
believe that there may be additional companies that may have the need to
license the technology that we have developed. The Company is actively working
to explore all of the possible licensing arrangements.

 Continue to Sell Products Which Address New Market Opportunities

   The Company continues to expand its market opportunities outside core
logic, including USB controllers. The Company believes that its prior
relationships with major PC OEMs who used the Company's core logic chipsets
may provide a marketing opportunity in offering additional products outside of
the core logic area.

 Address Both U.S. and Asia Markets

   A significant aspect of the Company's market strategy for its peripheral
products, is to address both the U.S. market consisting of large PC OEMs and
the Asian market consisting primarily of subcontractors for U.S.

                                       4
<PAGE>

OEMs, motherboard manufacturers and add-in card manufacturers. The Company
offers manufacturers in these markets low cost solutions designed for the
needs of each market.

 Achieve Low Costs and Maintain Product Quality

   An important aspect of the Company's manufacturing strategy is to
vigorously control production and operating costs through efficient product
designs. The Company does not maintain its own internal production
capabilities and relies on third-party foundries, assembly and test houses to
produce its products.

Product Design Innovations and Technologies

 USB Controller

   The Company currently offers both a two port and a four port USB Host
controller. The USB Host controller brings USB support to any PCI-based
system. Its compact packaging allows it to be accommodated in virtually any
personal computer, consumer electronic devices or other systems requiring this
functionality. The USB controllers are fully supported under Windows 95,
Windows 98, Windows 2000 and Windows CE. The Company's implementation is
unique because it provides power management features not found in competitive
solutions.

 Docking Station

   The Company currently offers a docking station within its mobile computing
product offerings. This solution supports either a 5 volt or 3.3 volt docking
interface running synchronously at speeds up to 33 Megahertz. By offloading
the primary PCI bus from the device, the docking station can increase its
bandwidth.

Sales and Marketing

   OPTi markets its products to PC suppliers, motherboard manufacturers, and
add-on board manufacturers directly and through independent sales
representatives. In North America, OPTi's sales organization operates from the
Company's headquarters in Milpitas, California. OPTi also uses sales
representatives located in other parts of the country. In Asia and Europe, the
Company operates through independent sales representatives located in Korea,
Taiwan, Japan and Germany.

   The Company's products are used by a wide variety of personal computer and
motherboard manufacturers. The Company's sales to any single customer
fluctuates significantly from period to period based on order rates and design
cycles. Any individual customer may or may not continue purchasing products in
any subsequent product release or generation. It has been the Company's
experience that its major customers have changed from quarter to quarter and
year to year, and the Company expects that these changes in its customer base
will continue to occur based on the individual customer requirements and
strategies. Sales to the Company's customers are typically made pursuant to
specific purchase orders, which are cancelable without significant penalty.

   Sales to customers in Asia accounted for 55.4%, 82.2% and 86.0% of net
product sales in the years ended December 31, 2000, 1999 and 1998,
respectively. Sales to customers in Europe and other countries outside the
U.S. and Asia accounted for 1.6%, 0.5%, and 0.4% of net product sales in the
years ended December 31, 2000, 1999 and 1998, respectively. Approximately 11%,
16%, and 15% of net product sales were billed in Japanese yen in 2000, 1999
and 1998, respectively. Billings to almost all other customers were in U.S.
dollars over the three year period. With the sale of our Japanese subsidiary
in June 2000, all sales in the forseeable future will be billed in U.S.
dollars.

   Due to its export sales, the Company is subject to the risks of conducting
business internationally, including unexpected changes in regulatory
requirements, fluctuations in the U.S. dollar (which would increase the sales
price in local currencies of the Company's products in international markets
or make it difficult for the Company

                                       5
<PAGE>

to obtain price reductions from its foundries), delays in obtaining export
licenses for certain technologies, tariffs and other barriers and
restrictions.

   As is common in the semiconductor industry, the Company's business
relationship with its customers requires it to acquire and maintain
inventories of its product based on forecast volumes from customers and in
amounts greater than that supported by firm backlog. The Company's customers
typically purchase products on a purchase order basis and do not become
obligated to purchase any quantity of products prior to the issuance of the
purchase order, even if the customer has previously forecast a substantially
higher volume of product. The Company typically places non-cancelable orders
to purchase its products from its foundries on an approximately twelve week
rolling basis, while its customers generally place purchase orders
approximately four weeks prior to delivery which may be canceled without
significant penalty. Consequently, if anticipated sales and shipments in any
quarter do not occur when expected, expense and inventory levels could be
disproportionately high, requiring significant working capital. The Company
has experienced cancellation and shortfalls in purchase orders in the past,
and in some instances such changes have resulted in inventory write-downs or
write-offs. The Company expects that it will continue to experience such
difficulties in the future.

   The Company's payment terms to its customers typically require payment 30
to 60 days after shipments of products, which is the industry standard. The
Company sometimes obtains letters of credit in support of sales to customers
primarily located in Asia. International sales supported by letters of credit
are normally paid in a period of time which is shorter than the payment period
for sales for which no letter of credit is provided.

Customer Support and Service

   The Company believes that customer service and technical support are
important competitive factors in the embedded and peripheral product markets.
The Company provides technical support for customers from its headquarters in
Milpitas, California. Sales representatives supplement the Company's efforts
by providing additional customer service and technical support for OPTi
Products.

Manufacturing

   The Company subcontracts its manufacturing to independent foundries which
allows OPTi to avoid the significant fixed overhead, staffing and capital
requirements associated with semiconductor fabrication facilities. As a
result, the Company is able to focus its resources on product design,
marketing and sales, and customer support.

   The majority of the Company's products are currently manufactured using its
custom owned tooling process and procured wafers primarily from United
Microelectronics Corporation ("UMC") in Taiwan, TSMC in Taiwan, Toshiba in
Japan, and packaging and test facilities in Taiwan. The Company, in an effort
to secure long term capacity has developed relationships with its suppliers.

   The Company is constantly engaged in cost reduction programs that need to
be successful in order to ensure the profitability for products that face
intense price competition in the marketplace.

   The Company has, on occasion, experienced an inability to get the amount of
wafers that it requires to meet some of its customers demands. The
semiconductor industry historically, has experienced cycles of under-capacity
and over-capacity which have resulted in temporary shortages of products in
high demand, as experienced in the industry at various times through 2000.

   The Company has attempted to reduce inventory risks by improving its
forecasting capabilities. Despite the fact that the Company has taken measures
to avoid supply shortages, periods of under-capacity may develop, creating
possible shortages for the Company's products. In the event of lower demand
for the Company's products, the Company may still be required to purchase
wafers in excess of that demand. Any such shortage or delays that are caused
by under capacity or any excess inventory created by a lowering of the
Company's actual demand for wafers could have a material adverse effect on the
Company's operating results.

                                       6
<PAGE>

Research and Development

   In January 2000, the Company had a reduction in staff as it made the
decision to terminate all design efforts on its Liquid Crystal Display and
core logic products. As of March 21, 2001, the Company had a staff of one
research and development person, who conducts virtually all of the Company's
product development with the assistance of outside contractors. During 2000,
1999 and 1998, respectively, the Company spent approximately $0.6, $5.6 and
$9.7 million on research and development. All research and development costs
are expensed as incurred.

   The Company is attempting to develop new products based on previously
developed technologies. In order to use the previous technology the Company
has hired consultants and outside development Companies to either complete the
design of a product or combine two or more technologies together so that they
become a more highly integrated device.

Competition

   The market for the Company's products is intensely competitive. Important
competitive factors in the Company's markets are price, performance, time-to-
market, added features, degree of integration, technical support and cost. The
Company believes that it currently competes effectively with respect to the
majority of these factors, although there can be no assurance that the Company
will be able to compete effectively in the future.

   The Company's competitors in both the embedded core logic market and the
USB market include a large number of competitive companies, several of which
have achieved a substantial market share. Certain of the Company's competitors
in both of these markets have substantially greater financial, marketing,
technical, distribution and other resources, greater name recognition, lower
cost structures and larger customer bases than the Company. In addition, the
Company faces competition from current and prospective customers that evaluate
the Company's capabilities against the merits of manufacturing products
internally. The Company also could face competition from new companies that
have recently or may in the future enter the markets in which the Company
participates.

 Competition in Embedded Core Logic Marketplace

   The Company's main competitor in this marketplace is Intel. Although Intel
is not as aggressive in this marketplace as it has been in the personal
computer area, there can be no assurance that they will not develop a strategy
to attempt to control this market. The Company must continue to try to compete
with Intel based on product features and product compatibility, but there can
be no assurance that it will be successful in doing so.

   The Company's other competitors in this marketplace include major domestic
and international semiconductor companies and established chipset companies,
including Acer Labs Inc., Silicon Integrated Systems, United Microelectronics
Corporation and VIA, Inc. Certain of these companies, in addition to Intel,
have substantially greater financial, technical, marketing and other resources
than the Company and several have their own internal production capabilities.
The Company must face the challenge of competing based on features and for the
low end of the marketplace, based on price.

 Competition in USB Market

   The Company's main competitors in this marketplace include CMD, Lucent
Technologies and VIA, Inc. As in the core logic marketplace, certain of these
companies have substantially greater financial, technical, marketing and other
resources than the Company. The Company must continue to try and compete with
these companies based on product features and price.

Intellectual Property

   The Company seeks to protect its proprietary technology by the filing of
patents. The Company currently has thirty two issued U.S. patents based on
certain aspects of the Company's designs. The Company currently

                                       7
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has five pending U.S. patents for its technology, and there can be no
assurance that the pending patents will be issued or, if issued, will provide
protection for the Company's competitive position.

   The Company in the past, has been and may from time to time continue to be
notified of claims that it may be infringing patents, copyrights or other
intellectual property rights owned by other third parties. There can be no
assurances that these or other companies will not in the future pursue claims
against the Company with respect to the alleged infringement of patents,
copyrights or other intellectual property rights. In addition, litigation may
be necessary to protect the Company's intellectual property rights and trade
secrets, to determine the validity of and scope of the proprietary rights of
others or to defend against third party claims of invalidity. Any litigation
could result in substantial costs and diversion of resources and could have a
material adverse effect on the Company's business, financial condition and
results of operations.

   There can be no assurance that additional infringement, invalidity, right
to use or ownership claims by third parties or claims for indemnification
resulting from infringement claims will be asserted in the future. The Company
has entered into license agreements in the past regarding certain alleged
infringement claims asserted by third parties. If any other claims or actions
are asserted against the Company, the Company may seek to obtain a license
under a third party's intellectual property rights. There can be no assurance,
however, that a license will be available under reasonable terms or at all.
The failure to obtain a license under a patent or intellectual property right
from a third party for technology used by the Company could cause the Company
to incur substantial liabilities and to suspend the manufacturing of the
products utilizing the intellectual property. In addition, should the Company
decide to litigate the claims, such litigation could be extremely expensive
and time consuming and could materially and adversely affect the Company's
business, financial condition and results of operations, regardless of the
outcome of the litigation.

Backlog

   Because the Company's customers typically expect quick deliveries, the
Company seeks to ship products within a few weeks of receipt of a purchase
order. A customer may reschedule delivery of products on a purchase order or
cancel the purchase order entirely without significant penalty. In addition,
the Company's actual shipments depend on the manufacturing capacity of the
Company's foundries, packaging houses, test houses, and other industry
factors. In the past, the Company has experienced material order cancellations
and deferrals, and expects that it will experience these issues in the future.
As a result, the Company does not believe that backlog is a reliable indicator
of future sales. At December 31, 2000, the Company's backlog scheduled for
delivery within six months was approximately $2.3 million, all of which is
expected to be filled during fiscal 2001 (subject to rescheduling or
cancellations). This amount compares to a backlog of approximately $3.4
million as of December 31, 1999.

Factors Affecting Earnings and Stock Price

 Fluctuations in Operating Results

   The Company has experienced significant fluctuations in its quarterly
operating results in the past and expects that it will experience such
fluctuations in the future. In the past, these fluctuations have been caused
by a variety of factors including increased competition from Intel and other
suppliers, price competition, ongoing rapid price declines, changes in
customer demand, the timing of delivery of new products, inventory
adjustments, changes in the availability of foundry capacity and changes in
the mix of products sold. In the future, the Company's operating results in
any given period may be adversely affected by one or more of these factors.

 Price Competition

   The market for the Company's products are subject to severe price
competition and price declines. There can be no assurance that the Company
will succeed in reducing its product costs rapidly enough to maintain or
increase its gross margin level or that further substantial reduction in
chipset prices will not result in lower profitability or losses.

                                       8
<PAGE>

 Changes in Customer Demand

   The Company currently places non-cancelable orders to purchase products
from independent foundries, while its customers generally place purchase
orders with a significantly shorter lead time which may be canceled without
significant penalty. In the past, the Company has experienced order
cancellations and deferrals and expects that it will experience cancellations
in the future from time to time. Any such order cancellations, deferrals, or a
shortfall in a receipt of orders, as compared to order levels expected by the
Company, could have a significant adverse effect on the Company's operating
results in any given period.

 Product Transitions and the Timing and Delivery of New Products

   A substantial percentage of the Company's net product sales is derived from
its mobile core logic products. The market for mobile core logic products is
characterized by frequent transitions in which products rapidly incorporate
new features and performance standards. A failure to develop products with
required feature sets or performance standards or a delay as short as a few
months in bringing a new product to market could significantly reduce the
Company's net sales for a substantial period, which would have a material
adverse effect on the Company's business, financial condition and results of
operations.

 Continued Sales of Current Products

   The Company's ability to maintain or increase its sales levels and
profitability depends directly on its ability to continue to sell its existing
products at current volumes. The Company, will have few, if any, new product
introductions for the foreseeable future. The inability to continue sales at
the current level could have an immediate and very significant adverse effect
on the trading price of the Company's stock. Investors in the Company's
securities must be willing to bear the risks of such fluctuations.

   Each of the product segments in which the Company offers new products is
intensely competitive and the Company must compete with entrenched competitors
who have established greater product breadth and distribution channels. The
introduction of new products can result in a greater than expected decline and
demand for existing products and create an imbalance between products ordered
by customers and products which the Company has in inventory. This imbalance
can result in surplus or obsolete inventory, leading to write-offs or other
unanticipated costs or disruptions.

 Customer Concentration

   The Company primarily sells products to PC, motherboard, and add-in card
manufacturers. The Company performs ongoing credit evaluations of its
customers but does not require collateral. The Company maintains reserves for
potential credit losses, and such losses have been within management's
expectations. The Company expects that sales of its products to a relatively
small group of customers will continue to account for a high percentage of its
net product sales in the foreseeable future, although the Company's customers
in any one period will continue to change.

   However, there can be no assurance that any of these customers or any of
the Company's other customers will continue to utilize the Company's products
at current levels, if at all. The Company has experienced significant changes
in the composition of its major customer base and expects that this
variability will continue in the future. During 1999 and 1998 both Compaq and
its subcontractors and Apple and its subcontractors were significant
customers. At this time the Company is not shipping any products to either
Compaq and its subcontractors or to Apple and its subcontractors. The loss of
any major customer or any reduction in orders by any such customer could have
a material adverse effect on the Company's business, financial condition and
results of operations.

   The Company has no long-term volume commitments from any of its major
customers and generally enters into individual purchase orders with its
customers. The Company has experienced cancellations of orders and
fluctuations in order levels from period to period and expects it will
continue to experience such cancellations

                                       9
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and fluctuations in the future. Customer purchase orders may be cancelled and
order volume levels can be changed or delayed with limited or no penalties.
The replacement of cancelled, delayed or reduced purchase orders with new
business cannot be assured. Moreover, the Company's business, financial
condition and results of operations will depend in significant part on its
ability to obtain orders from new customers, as well as on the financial
condition and success of its customers. Therefore, any adverse factors
affecting any of the Company's customers or their customers could have a
material effect on the Company's business, financial condition and results of
operation.

 Credit Risks

   Many of the Company's customers, particularly the motherboard manufacturers
in Taiwan, operate at very low profit margins and undertake significant
inventory risks. To the extent the Company provides open terms of credit to
some of the larger of these customers, the Company is exposed to significant
credit risks if these customers are unable to remain profitable. Approximately
18% of the Company's receivables at December 31, 2000 were with these
customers.

 Dependence on Foundries and Manufacturing Capacity

   Almost all of the Company's products are manufactured by outside foundries
pursuant to designs provided by the Company. In most instances, the Company
provides foundries with a custom-tooled design ("Custom Production"), whereby
the Company receives a finished die from the foundry which it sends to a third
party for cutting and packaging. This process subjects the Company to the risk
of low production yields as the die moves through the production and packaging
process. The Company's reliance on independent foundries, packaging houses,
and test houses involves several risks, including the absence of adequate
capacity, the unavailability of or interruptions in access to certain process
technologies and reduced control over delivery schedules, manufacturing yields
and costs. At times during the second half of 1999 and the first three
quarters of 2000, the Company was unable to meet the demand for certain of its
products due to limited foundry capacity and the Company expects that it will
experience other production shortfalls or difficulties in the future.

   Because the Company's purchase orders with its outside foundries are non-
cancelable by OPTi, the Company is subject to risks of, and has in the past
experienced, excess or obsolete inventory due to an unexpected reduction in
demand for a particular product. The manufacture of chipsets is a complex
process and the Company may experience short-term difficulties in obtaining
timely deliveries, which could affect the Company's ability to meet customer
demand for its products. Should any of its major suppliers be unable or
unwilling to continue to manufacture the Company's key products in required
volumes, the Company would have to identify and qualify acceptable additional
foundries. This qualification process could take up to six months or longer.
No assurances can be given that any additional sources of supply could be in a
position to satisfy any of the Company's requirements on a timely basis. The
semiconductor industry experiences cycles of under-capacity and over-capacity
which have resulted in temporary shortages of products in high demand. Any
such delivery problems in the future could materially and adversely affect the
Company's operating results.

   The Company began using Custom Production in 1993. Custom Production
requires that the Company provide foundries with designs that differ from
those traditionally developed by the Company in its gate array production and
which are developed with specialized tools provided by the foundry. This type
of design process is inherently more complicated than gate array production
and there can be no assurance that the Company will not experience delays in
developing designs for Custom Production or that such designs will not contain
bugs. To the extent bugs are found, correcting such bugs is likely to be both
expensive and time consuming. In addition, the use of Custom Production
requires the Company to purchase wafers from the foundry instead of finished
products. As a result, the Company is required to increase its inventories and
maintain inventories of unfinished products at packaging houses. The Company
is also dependent on these packaging houses and its own internal test
functions for adequate capacity.

                                      10
<PAGE>

 Dependence on Intellectual Property position

   The success of the Company's current strategy of licensing its core logic
technology can be affected by new developments in intellectual property law
generally and with respect to semiconductor patents in particular and upon the
Company's success in defending its patent position. It is difficult to predict
developments and changes in intellectual property law in advance. However,
such changes could have an adverse impact on the Company's ability to license
its previously developed technology.

 Possible Volatility of Stock Price

   There can be no assurances as to the Company's operating results in any
given period. The Company expects that the trading price of its common stock
will continue to be subject to significant volatility.

Employees

   As of December 31, 2000, the Company had 17 full-time employees, including
one in research and development, 4 in marketing, sales, and support and 12 in
finance, administration and operations. The Company's future success will
depend, in part, on its ability to continue to attract, retain and motivate
highly qualified technical, marketing, engineering, and management personnel,
who are in great demand. The Company's employees are not represented by any
collective bargaining unit, and the Company has never experienced a work
stoppage. The Company's ability to retain key employees is a critical factor
to the Company's success.

Item 2. Properties

   The Company is headquartered in Milpitas, California, where it leases
administrative, sales and marketing, product development, and distribution
facilities in one location consisting of an aggregate of approximately, 18,000
square feet. The Company has an additional building in Milpitas, approximating
26,719 square feet, that is sub-leased through the life of the lease, October
2002. The Company believes that these facilities are adequate for its needs in
the forseeable future.

Item 3. Legal Proceedings

   In January 1997, a patent infringement claim was brought against the
Company by Crystal Semiconductor, Inc. ("Crystal"), a subsidiary of Cirrus
Logic, in the United States District Court for the Western District of Texas.
The claim alleged that the Company and Tritech Microelectronics International,
Inc. and its Singapore parent company, Tritech Microelectronics Pte, Ltd.
(collectively "Tritech") infringed three patents owned by Crystal. These
patents related to the analog-to-digital coder-decoder ("codec") module that
was designed by Tritech and incorporated into integrated PC audio chips
formerly sold by the Company. The suit sought injunctive relief and damages.

   A jury trial was held in this action from May 3-13, 1999. On May 17, 1999,
the jury returned a verdict that all of the asserted claims of the patents in
suit were valid and were infringed by the accused OPTi and TriTech products.
The jury further found that Tritech's infringement, but not OPTi's, was
willful and deliberate. The jury was asked to consider separately three
different damages allegations. The first was that Crystal lost profits because
sales that it would otherwise have made were in fact made by the defendants
("lost profits"). The second was that the defendants' conduct had caused
Crystal to reduce its selling prices from what they otherwise would have been
during the period of infringement ("price erosion"). The third allegation was
for the statutory alternative to lost profits, a ("reasonable royalty"). The
jury was asked to consider these questions with respect to the defendants as a
group and, of that amount, to assign a specific portion to OPTi. The jury's
verdict was as follows: all defendants $48.5 million, OPTi's portion of that
total $19.4 million. Following the jury's verdict, the parties made various
motions for judgment.

   On July 23, 1999, the United States District Court for the Western District
of Texas entered an Order and Judgment in the patent infringement action
brought by Crystal Semiconductor Corporation against OPTi, Inc.,

                                      11
<PAGE>

Tritech Microelectronics Pte Ltd., a Singapore company, and TriTech
Microelectronics International, Inc., its American marketing subsidiary. The
Court's judgment substantially reduced the amount of damages that one jury had
awarded to Crystal against OPTi, from $19.4 million to $4 million.

   Following the entry of judgment, all three parties involved in the suit
appealed the judgment to the United States Court of Appeals for the Federal
Circuit.

   In response to the Company's announcement of its intention to pay a
dividend in cash to its shareholders of four dollars per share, Crystal
requested in the Santa Clara County Superior Court of California that the
Company stipulate to preserve additional assets in order to pay a potential
judgment should Crystal prevail on appeal of the post-trial rulings in the
Texas litigation. On November 3, 1999, the Court entered a Stipulation and
Order Regarding Payment of Dividend obligating the Company to maintain and
preserve assets in an amount not less than $24,000,000, "until such time as
the judgment in the Texas litigation, after resolution of any appeals therein,
is satisfied in full by the Company or until such time as Crystal's claims
against the Company in the Texas Litigation are settled, released or waived by
Crystal."

   In September 1998, Crystal Semiconductor filed a second suit against the
Company and Does 1 through 1050 in the Superior court of the State of
California. That suit was a complaint to set aside fraudulent transfers, the
sale of its audio business and the stock repurchase program that the Company
started and completed in the summer of 1998, and for preliminary and permanent
injunction, against the Company divesting itself of its assets. On May 21,
1999, the Court signed a Stipulation and Order entered into by OPTi and
Crystal vacating the Preliminary Injunction Hearing set for June 3, 1999. This
Stipulation and Order obligated OPTi to maintain and preserve liquid assets
available, in an amount not less then the verdict against OPTi, plus costs and
interest, in the underlying patent litigation between Crystal and OPTi. Based
on the judgment entered into the Texas court a new Stipulation and Order was
entered into by the party whereas the amount of liquid assets to be maintained
and preserved was reduced to the amount of the court judgment.

   On July 7, 2000, Crystal Semiconductor and the Company signed a settlement
agreement to be effective as of June 24, 2000. Under the terms of the
agreement, OPTi was to pay Crystal Semiconductor $7,000,000 over a period of
time ending October 15, 2000. Upon receipt of the final payment from OPTi to
Crystal Semiconductor, Crystal and OPTi agreed to dismiss with prejudice all
claims now pending in the California State Court Action and to release each
other from all claims that were brought or could have been brought in the
action up to the date of the dismissal of that action.

   In October 2000, OPTi made the final settlement payment to Crystal
Semiconductor pursuant to the settlement agreement.

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

   Not Applicable.

                                      12
<PAGE>

                                    PART II

Item 5. Market for Registrant's Common Stock and Related Stockholder Matters

   The following required information is filed as a part of this Report:

   On November 17, 1999, the Company paid a cash dividend of $4.00 per share
on each share of its common stock. The Board of Directors made the
determination of providing the cash dividend based upon the Company's then
existing excess cash position. The Company had not previously paid cash
dividends on its common stock, and currently intends to retain any future
earnings for use in the operation of its business. Accordingly, the Company
does not expect to pay further cash dividends in the forseeable future. The
Company's common stock is traded over-the-counter and is quoted on the
National Market System under the symbol "OPTI". The following table sets forth
the range of high and low closing prices for the Common Stock:

<TABLE>
<CAPTION>
                                                   Quarterly Period Ended
                                            ------------------------------------
                                            Dec. 31, Sept. 30, June 30, Mar. 31,
                                            -------- --------- -------- --------
     <S>                                    <C>      <C>       <C>      <C>
     Common stock price per share:
     2000
       High................................  $6.31     $6.46    $5.50    $7.50
       Low.................................   3.69      3.75     3.75     4.50
     1999
       High................................  $7.25     $7.44    $6.44    $6.25
       Low.................................   3.06      5.63     5.28     4.13
</TABLE>

   As of March 21, 2001, there were approximately 163 holders of record of the
Company's common stock.

                                      13
<PAGE>

Item 6. Selected Consolidated Financial Data

<TABLE>
<CAPTION>
                                         Year Ended December 31,
                              ------------------------------------------------
                              2000(1)    1999      1998      1997      1996
                              -------- --------  --------  --------  ---------
                                  (in thousands, except per share data)
<S>                           <C>      <C>       <C>       <C>       <C>
Consolidated Statement of
 Operations Data:
Net sales...................  $ 23,198 $ 22,257  $ 40,003  $ 67,842  $ 118,725
Cost of sales...............     6,453   14,403    26,712    50,471    111,395
                              -------- --------  --------  --------  ---------
Gross margin................    16,745    7,854    13,291    17,371      7,330
Operating expenses..........     7,578   16,776    20,623    27,836     31,000
                              -------- --------  --------  --------  ---------
Operating income (loss).....     9,167   (8,922)   (7,332)  (10,465)   (23,670)
Other income (expenses):
  Gain on the sale of Audio
   line.....................       --       --        --     12,391        --
  Interest income and
   other....................     2,138    3,231     3,717     3,031      2,417
  Interest expense..........       --      (261)     (312)     (473)      (441)
                              -------- --------  --------  --------  ---------
Income (loss) before
 provision for income
 taxes......................    11,305   (5,952)   (3,927)    4,484    (21,694)
Provision (benefit) for
 income taxes...............       261       59       285     9,872     (7,636)
                              -------- --------  --------  --------  ---------
Net income (loss)...........  $ 11,044 $ (6,011) $ (4,212) $ (5,388) $ (14,058)
                              -------- --------  --------  --------  ---------
Basic net income (loss) per
 share......................  $   0.95 $  (0.54) $  (0.35) $  (0.42) $   (1.13)
                              ======== ========  ========  ========  =========
Shares used in computing
 basic per share amounts....    11,644   11,059    12,196    12,838     12,443
                              ======== ========  ========  ========  =========
Diluted net income (loss)
 per share..................  $   0.95 $  (0.54) $  (0.35) $  (0.42) $   (1.13)
                              ======== ========  ========  ========  =========
Shares used in computing
 diluted per share amounts..    11,653   11,059    12,196    12,838     12,443
                              ======== ========  ========  ========  =========
Consolidated Balance Sheet
 Data:
Cash, cash equivalents, and
 short-term investments.....  $ 58,126 $ 23,722  $ 60,903  $ 72,508  $  56,372
  Working capital...........    56,950   19,682    55,791    75,360     76,188
  Total assets..............    61,272   28,232    81,575   111,615    115,501
  Long term obligations,
   excluding current
   portion..................       --       310     1,810     3,473      4,649
  Shareholders' equity......    57,466   21,182    69,285    92,723     96,371
  Cash dividends declared
   per common share.........  $    --  $   4.00  $    --   $    --   $     --
</TABLE>
--------
(1) The Company's net sales for the year ended December 31, 2000 includes
    $13,311,000 related to license revenue.

                                      14
<PAGE>

Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations

   Information set forth in this report constitutes and includes forward
looking information made within the meaning of Section 27A of the Security Act
of 1933, as amended and Section 21E of the Securities and Exchange Act of
1934, as amended, that involve risks and uncertainties. The Company's actual
results may differ significantly from the results discussed in the forward
looking statements as a result of a number of factors, including product mix,
the Company's ability to obtain or maintain design wins, market conditions
generally and in the personal computer and semiconductor industries, product
development schedules, competition and other matters. Readers are encouraged
to refer to "Factors Affecting Earnings and Stock Price".

   OPTi was founded in 1989 and is an independent supplier of semiconductor
products to the personal computer market. During 2000, the Company shipped
more than 1.9 million core logic and peripheral products (such as USB
controllers and docking stations) to over 50 motherboard and add-on board
manufacturers located primarily in Asia and the U.S.

   2000 Compared to 1999--Net sales for the year ended December 31, 2000
("2000") increased 4% to $23.2 million, compared to net sales of $22.3 million
for the year ended December 31, 1999 ("1999"). This increase in net sales was
attributable to a one-time fully paid license in the amount of $13.3 million
that the Company had during fiscal year 2000. Net product sales for the year
ended December 31, 2000, decreased 56% to $9.9 million, compared to net
product sales of $22.3 million for 1999. This decrease in net product sales
for 2000, was attributable to the loss of the Companies two largest customers
at the end of 1999, which combined accounted for approximately $12 million of
net sales in 1999. The Company anticipates that net product sales for the year
ending December 31, 2001 will continue to decline as compared to 2000.

   Revenue from core logic products was approximately 68% of net product
revenue for 2000 as compared to 56% in 1999. The remaining 32% of net product
sales in 2000 was from its USB controllers.

   Gross margin for 2000 increased to approximately 72% as compared to
approximately 35% in 1999. This increase in gross margin is attributable to
the license revenue of $13.3 million which had no associated cost of goods
sold. Gross margin as a percent of net product sales in 2000 was approximately
35% which is comparable to the 35% net product gross margin in 1999.

   Research and development ("R&D") expenses for 2000 decreased approximately
90% to $559,000, compared with $5.6 million in 1999. This decrease in R&D
expenses for 2000 was related to the Companies decision to terminate all but
one R&D person in January 2000. The Company anticipates that R&D expenses will
increase in fiscal year 2001, as it incurs expenses related to the development
of some of its newer products.

   Selling, general and administrative ("SG&A") expenses for 2000 were $7.0
million as compared to $11.2 million for 1999. This represented an approximate
37% decrease in SG&A expenses year over year. This decrease was primarily
related to a reduction in costs and expenses in defending the Crystal
litigation and to decreased costs related to reduced headcount expenses and
costs relating to reduced net sales. During 2000 the Company expensed
approximately $2.5 million for settlement of the Crystal litigation.

   Net interest and other income for 2000 was $2.1 million as compared to $3.0
million in 1999. Interest and other income consists primarily of interest
income and has decreased primarily due to lower average cash balance
throughout the year following the Company's payment of cash dividends in
November 1999.

   The Company's effective tax rate was 2% for 2000 and 1% of 1999. The
Company's effective tax rate differed from the federal statutory rate in 2000
primarily due to the utilization of prior year tax losses carried forward,
federal alternative minimum taxes and foreign taxes. The Company's effective
tax rate in 1999 differed from the federal statutory rate due to certain
foreign income taxes and the limitations controlling the timing for
recognition of deferred tax assets established by Statement of Financial
Accounting Standards No. 109 ("qFAS 109"), "Accounting for Income Taxes" which
will prevent a tax benefit for potential operating losses.

   1999 Compared to 1998--Net sales for the year ended December 31, 1999
("1999") decreased 44% to $22.3 million, compared to net sales of $40.0
million for the year ended December 31, 1998 ("1998"). This decrease in sales
was attributable to decreased sales of chipsets from the Company's mobile core
logic products

                                      15
<PAGE>

and decreased sales from audio products after the Company sold its Audio
assets to Creative Technology in November 1997, as well as the loss of
significant mobile core logic design wins in the second half of 1999.

   Revenue from core logic products were approximately 56% of net sales for
1999 as compared to approximately 74% in 1998. The remaining 44% of revenue in
1999 was from peripheral products (the vast majority from our USB product).
The mix of revenues within the Company shifted in the second half of 1999 to a
higher percentage of peripheral products, specifically the USB product, and a
lower percentage of core logic products.

   Gross margin for 1999 increased to approximately 35% of net sales as
compared to approximately 33% in 1998. This increase in gross margin for 1999
as compared to 1998 was primarily attributable to change in the Company's
product mix from core logic to peripheral products. The Company was also
successful in 1999 in obtaining a reduction in costs of wafers used in its
core logic products and a reduction in the cost of assembling its core logic
and peripheral products.

   R&D expenses for 1999 decreased approximately 42% to $5.6 million, compared
with $9.7 million for 1998. The decrease in research and development expenses
for 1999 as compared to 1998 is primarily related to the Company's decision to
discontinue all development efforts related to mobile core logic. During
fiscal 1999 the Company main focus for research and development was on the
peripheral products, USB controllers and LCD products.

   SG&A expenses for 1999 increased approximately 2% to $11.2 million,
compared with $10.9 million in 1998. This increase in SG&A expenses from 1998
to 1999 was primarily attributable to the litigation expenses that the Company
incurred in regards to the award of a judgment for $4.0 million plus costs in
the Crystal litigation in Austin, Texas. This increase was partially offset
by, decreased costs related to reduced net sales and reduced headcount related
expenses in both the sales and general & administrative areas.

   Net interest and other income for 1999 was $3.0 million as compared to $3.4
million for 1998. Interest and other income consists primarily of interest
income and has decreased primarily due to lower average interest rates during
1999 versus 1998 and lower cash balances in the fourth quarter of 1999,
following the Company's payment of dividends.

   The Company's effective tax rate was 1% for 1999 and 7% for 1998. The
Company's effective tax rate differed from the federal statutory rate in 1999
due primarily to federal alternative minimum taxes and the limitations
controlling the timing for recognition of deferred tax assets established by
Statement of Financial Accounting Standards No. 109 ("FAS 109"), "Accounting
for Income Taxes" which will prevent a tax benefit for potential operating
losses.

   Liquidity and Capital Resources--The Company has financed its operations
through cash generated from operations and an initial public offering of
equity in 1993. In 2000, the Company provided cash from operations of
approximately $7.4 million primarily due to net income for the year of $11.0
million, offset in part, by a reduction in accrued expenses of $4.5 million as
the Company made the payment to Crystal as settlement of the patent
litigation. In 1999, the Company used cash from operating activities of $1.5
million primarily due to reductions in accounts payable of $4.8 million and
the Company's net loss for the year of $2.3 million, net of noncash charges.
This was partially offset by decreases in accounts receivable, and
inventories, as well as an increase in accrued expenses relating to the
litigation.

   The Company's investing activities used cash of approximately $19.1 million
during 2000. The cash used in investing activities was primarily related to
the net purchase of $18.6 million in short-term investments. In 1999, the
Company provided cash of $14.0 million from investing activities. The cash
provided by investing activities was attributable to the sale of the Company's
investment in the UICC wafer fab for $8.5 million and the net sale of its
short-term investments.

   Financing activities provided approximately $0.2 million in 2000 relating
to the exercise of stock options. Financing activities in 1999, used cash of
approximately $45.4 million. This use in cash for financing activities during
1999 was mainly attributable to a cash dividend of $46.5 million.

                                      16
<PAGE>

   The Company's manufacturing plans and expenditure levels are based
primarily upon sales forecasts. Typically, the Company orders product from
foundries pursuant to non-cancelable purchase orders on a rolling twelve week
basis while its customers generally place product purchase orders
approximately four weeks prior to delivery, which orders may be canceled
without significant penalty. The Company anticipates that the rate of new
orders will vary significantly from month to month. As a result, backlog can
fluctuate significantly. Consequently, if anticipated sales and shipments do
not occur when expected, expense and inventory levels could be
disproportionately high and the Company's operating results could be
materially and adversely affected.

   As of December 31, 2000, the Company's principal sources of liquidity
included cash, cash equivalents and short term investments of approximately
$58.1 million and working capital of approximately $57.0 million. The Company
believes that the existing sources of liquidity will satisfy the Company's
projected working capital and other cash requirements through at least the end
of 2001.

   In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards NO. 133, "Accounting for
Derivative Instruments and Hedging Activities" (SFAS 133). SFAS 133 provides a
comprehensive and consistent standard for the recognition and measurement of
derivatives and hedging activities. In June 1999, FASB issued Financial
Accounting Standards No. 137 which deferred the effective date of SFAS 133 to
fiscal years beginning after June 15, 2000. In June 2000, the FASB issued SFAS
138, a significant amendment of SFAS 133 which is effective simultaneously
with SFAS 133. SFAS 138 does not amend any of the fundamental precepts of SFAS
133, but does address many constituents' concerns about some of the more
impractical aspects of the original Statement, which were incompatible with
many common hedging approaches. The adoption of SFAS 133 is not anticipated to
have an impact on the Company's results of operations of financial condition
when adopted as the Company holds no derivative financial instruments and does
not currently engage in hedging activities.

Item 7A. Quantitative and Qualitative Disclosure About Market Risk

 Interest Rate Sensitivity

   We maintain our cash and cash equivalents primarily in money market funds.
The Company invests its excess cash in high quality, auction rate preferred
securities with reset dates every thirty five days. We do not have any
derivative financial instruments. As of December 31, 2000, all of our
investments mature in less than six months. Accordingly, we do not believe
that our investments have significant exposure to interest rate risk.

Item 8. Financial Statements and Supplementary Data

   The Company's financial statements and the report of the independent
auditors appear on pages F-1 through F-16 of this Report.

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures

   None.

                                      17
<PAGE>

                                   PART III

Item 10. Directors and Executive Officers of the Registrant

Directors and Executive Officers of the Registrant

   The directors and executive officers of the Company as of March 21, 2000
were as follows:

<TABLE>
<CAPTION>
Name                                  Age Position with the Company
----                                  --- -------------------------
<S>                                   <C> <C>
Bernard T. Marren....................  65 President and Chief Executive Officer,
                                          Chairman of the Board
Michael Mazzoni......................  38 Chief Financial Officer and Secretary
Donald E. Farina.....................  69 Vice President, Intellectual Property
Stephen A. Dukker(1).................  48 Director
William Welling(1)(2)................  64 Director
Kapil K. Nanda(1)(2).................  55 Director
</TABLE>
--------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.

   Bernard T. Marren has served as President and Chief Executive Officer of
the Company since May 1998. Mr. Marren was elected as a director in May 1996.
Mr. Marren founded Western Microtechnology Inc., a distributor of electronic
systems and semiconductor devices. He served as its President from 1977 to
1994. From 1972 to 1976, Mr. Marren was President of American Microsystems. He
also founded and was the first President of SIA (the Semiconductor Industry
Association). Mr. Marren is also a director of several private companies.

   Michael Mazzoni has served as Chief Financial Officer since December 2000.
Mr. Mazzoni also served with the Company from October 1993 to January 2000.
The last two years prior to his departure Mr. Mazzoni served as its Chief
Financial Officer. Prior to rejoining the Company, Mr. Mazzoni was Chief
Financial Officer of Xpeed, Inc., a startup in the Digital Subscriber Line CPE
business, from January 2000 to November 2000.

   Donald Farina joined the Company in April 2000 as V.P. of Intellectual
Property. For the prior 1 1/2 years, he was a semiconductor technology
consultant to Invox Technology, a developer of digital answering machine chips
and Magtrac Inc. a user of passive remote identification systems for the
livestock industry. In 1994 he was a founder and Director of Semiconductor
Technology for Arkos Design, Inc., a developer of digital emulation systems.
Arkos was purchased in 1999 by Sypnosys Inc.

   Stephen A. Dukker was elected as a director of the Company in January 1993.
He is currently President of eMachines, Inc. where he has been employed since
mid 1998. Prior to joining eMachines, he was a Senior Vice President of
Merchandising at Computer City from October 1997 to August 1998. He served as
President of OPTi Inc. from January 1996 to October 1997. From May 1994 to mid
1995, Mr. Dukker served as President of VideoLogic, Inc., a supplier of video
and graphic add-on boards.

   William Welling was elected as a director in August 1998. He is currently
chairman and CEO of @Comm, a telecommunications software company. Since 1983
he has been a managing partner of Venture Growth Associates, an investment
firm. Mr. Welling also serves as a director on the boards of several private
companies.

   Kapil K. Nanda was elected as a director in May 1996. Mr. Nanda is
currently President of InfoGain Corporation, a software and development
consulting company, which he founded in 1990. Prior to 1990, Mr. Nanda held
various positions at Altos Computer Systems, a personal computer manufacturing
company, from 1981 to 1989. He served as the Vice President of Engineering
from 1984 to 1988.

Compliance with Section 16(a) Beneficial Ownership Reporting Compliance

   Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of a registered
class of the Company's equity securities, to file certain reports regarding
ownership of, and transactions in, the Company's securities with the
Securities and Exchange Commission (the "SEC") and with Nasdaq. Such officers,
directors and 10% shareholders are also required by SEC rules to furnish the
Company with copies of all Section 16(a) forms that they file.

                                      18
<PAGE>

   Based solely on its review of copies of Forms 3 and 4 and amendments
thereto furnished to the Company pursuant to Rule 16a-3(e) and Forms 5 and
amendments thereto furnished to the Company with respect to the Last Fiscal
Year (January 1, 2000 to December 31, 2000), and any written representations
referred to in Item 405(b)(2)(i) of Regulation S-K stating that no Forms 5
were required, the Company believes that, during the last Fiscal Year, all
Section 16(a) filing requirements applicable to the Company's officers,
directors and 10% shareholders were complied with, except for two Form 4's
relating to sales of stock not reported by Michael Mazzoni.

Item 11. Executive Compensation

Summary Compensation Table

   The following table sets forth certain information with respect to the
compensation paid by the Company for services rendered during fiscal years
2000, 1999, and 1998 to Bernard Marren, Michael Mazzoni and Donald Farina (the
"Named Officers"). The table lists the principal position held by each Named
Officer in the Last Fiscal Year.

<TABLE>
<CAPTION>
                                         Annual
                                      Compensation     Long-Term
                                    ----------------- Compensation
                             Fiscal  Salary   Bonus      Awards     All Other
Name                          Year    ($)      ($)    Options (#)  Compensation
----                         ------ -------- -------- ------------ ------------
<S>                          <C>    <C>      <C>      <C>          <C>
Bernard Marren..............  2000  $255,000 $100,000       --        $5,250(1)
 President and Chief          1999   251,250  420,000       --           --
 Executive Officer            1998   150,923      --        --           --

Michael Mazzoni (2)(3)......  2000    43,650   75,000       --           --
 Chief Financial Officer      1999   145,763   69,525       --           --
                              1998   136,475   50,000    45,000          --

Donald Farina (4)...........  2000    88,654      --     25,000       $3,500(1)
 Vice President,              1999       --       --        --           --
 Intellectual Property        1998       --       --        --           --
</TABLE>
--------
(1) These amounts are related to the 50% company match on 401K contributions.
(2) Mr. Mazzoni resigned from the Company in January 2000.
(3) Mr. Mazzoni was rehired in December 2000.
(4) Mr. Farina was hired as Vice President, Intellectual Property on April 1,
    2000.

                                      19
<PAGE>

Option Grants in Last Fiscal Year

   The following table provides information with respect to options granted in
the Last Fiscal Year to the Named Officers.

<TABLE>
<CAPTION>
                                           Individual Grants
                         -----------------------------------------------------
                          Shares of                                             Potential Realizable Value
                         Common Stock   Percent of                               at Assumed Annual Rates
                          Underlying   Total Options                            of Stock Price Appreciation
                           Options      Granted to                                  for Option Term (3)
                           Granted     Employees in     Exercise    Expiration ----------------------------
Name                        (#)(1)    Fiscal Year (2) Price ($/Sh.)    Date         5%            10%
----                     ------------ --------------- ------------- ---------- ------------- --------------
<S>                      <C>          <C>             <C>           <C>        <C>           <C>
Bernard Marren..........       --           --              --           --              --             --
Michael Mazzoni.........       --           --              --           --              --             --
Donald Farina...........    25,000         13.9%          $3.75      4/16/10   $      58,959 $      149,413
</TABLE>
--------
(1) All options to Named Officers are granted under the Company's 1993 Stock
    Option Plan at an exercise price equal to the fair market value on the
    date of the grant. Under the terms of the Option Plan, the option plan
    administrator retains the discretion, subject to certain limitations
    within the plan, to modify, extend, renew or accelerate the vesting of
    options and to reprice outstanding options. In particular, subject to
    Board approval, the stock plan administrator may reduce the exercise price
    of an option to the current fair market price of the underlying stock if
    the price of such stock has declined since the date on which the option
    was granted.
(2) Based on 180,000 options granted to employees during the Last Fiscal Year
    under the 1993 and 1995 Stock Option Plan(s).
(3) The 5% and 10% assumed rates of appreciation are mandated by the rules of
    the Securities and Exchange Commission and do not represent the Company's
    estimate or projection of the future Common Stock price.

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values

   The following table provides information with respect to option exercises
in the Last Fiscal Year by the Named Officers and the value of such officer's
unexercised options at December 31, 2000.

<TABLE>
<CAPTION>
                                                                        Total Value of
                                              Total Number of      Unexercised In-the-Money
                                          Unexercised Options at    Options at Fiscal Year
                         Shares             Fiscal Year End (#)           End ($)(1)
                          Acq.   Value   ------------------------- -------------------------
Name                     Exer.  Realized Exercisable Unexercisable Exercisable Unexercisable
----                     ------ -------- ----------- ------------- ----------- -------------
<S>                      <C>    <C>      <C>         <C>           <C>         <C>
Bernard Marren..........    --      --     100,000         --        $24,500         --
Michael Mazzoni......... 20,000 $32,375        --          --            --          --
Donald Farina...........    --      --      16,667       8,333       $18,750      $9,375
</TABLE>
--------
(1) Market value of the underlying securities based on the closing price of
    the Company's Common Stock on December 31, 2000 on the Nasdaq National
    Market, minus the exercise price.

                                      20
<PAGE>

Item 12. Security Ownership of Certain Beneficial Owners and Management

   The following nominee table sets forth the beneficial ownership of Common
Stock of the Company as of March 21, 2001 by: (i) each present director of the
Company; (ii) each of the officers named in the table under the heading
"EXECUTIVE COMPENSATION--Summary Compensation Table"; (iii) all current
directors and executive officers as a group; and (iv) each person known to the
Company who beneficially owns 5% or more of the outstanding shares of its
Common Stock. The number and percentage of shares beneficially owned is
determined under the rules of the SEC, and the information is not necessarily
indicative of beneficial ownership for any other purpose. Under such rules,
beneficial ownership includes shares as to which the individual has sole or
shares voting power or investment power and also any shares which the
individual has the right to acquire within sixty (60) days of March 21,2001
through the exercise of any stock option or other right. Unless otherwise
indicated, each person has sole voting and investment power (one shares such
power with his or her spouse) with respect to the shares, shown as
beneficially owned. Unless otherwise indicated, officers and directors can be
reached at the Company's principal executive offices. A total of 11,648,303
shares of the Company's Common Stock were issued and outstanding as of March
21, 2001.

<TABLE>
<CAPTION>
                                                                  Shares
                                                               Beneficially
                                                                   Owned
                                                             -----------------
Name                                                          Number   Percent
----                                                         --------- -------
<S>                                                          <C>       <C>
Bernard Marren(1)...........................................   127,333   1.1%
Michael Mazzoni(2)..........................................       --      *
Donald Farina(3)............................................    25,000     *
Stephen Dukker(4)...........................................    89,166     *
Kapil Nanda(5)..............................................    21,333     *
William Welling(6)..........................................    13,333     *
Caxton International........................................   941,100   8.1%
 315 Enterprise Drive
 Plainsboro, NJ 08536
Dimension Fund Advisors.....................................   800,600   6.9%
 1299 Ocean Avenue, 11th Floor
 Santa Monica, CA 90401
MG Capital Management LLC................................... 1,177,000  10.1%
 1725 Kearny Street, No. 1
 San Francisco, CA 94133
All Directors and Executive Officers as a group(6
 persons)(7)................................................   276,165   2.4%
</TABLE>
--------
  * Represents less than one percent.
(1) Includes 117,333 shares subject to stock option exercisable as of March
    21, 2001 or within sixty (60) days thereafter.
(2) Includes 0 shares subject to stock option exercisable as of March 21, 2001
    or within sixty (60) days thereafter.
(3) Includes 25,000 shares subject to stock option exercisable as of March 21,
    2001 or within sixty (60) days thereafter.
(4) Includes 0 shares subject to stock option exercisable as of March 21, 2001
    or within sixty (60) days thereafter.
(5) Includes 17,333 shares subject to stock option exercisable as of March 21,
    2001 or within sixty (60) days thereafter.
(6) Includes 0 shares subject to stock option exercisable as of March 21, 2001
    or within sixty (60) days thereafter.
(7) Includes shares pursuant to notes (1), (2), (3), (4), (5), and (6).

                                      21
<PAGE>

Item 13. Certain Relationships and Related Transactions

Compensation Committee Interlocks and Insider Participation

   In February 1993, the Company established a compensation committee of the
Board or Directors which currently consists of Mr. Nada and Mr. Welling.

Certain Transactions

   The Company's policy is that it will not make loans to, or enter into other
transactions with, directors, officers or affiliates unless such loans or
transactions are (i) approved by a majority of the Company's independent
disinterested directors, (ii) may reasonably be expected to benefit the
Company, and (iii) will be on terms no less favorable to the Company than
could be obtained in arm's length transactions with unaffiliated third
parties.

   The Company has entered into indemnification agreements with each of its
directors and executive officers. Such agreements require the Company to
indemnify such individuals to the fullest extent permitted by California law.

                                      22
<PAGE>

                                    PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

   (a)(1) Financial Statements

    The following financial statements are filed as part of this Report:

<TABLE>
<CAPTION>
                                                                          Page
                                                                          ----
     <S>                                                                  <C>
     Report of Ernst & Young LLP, Independent Auditors................... F-1
     Consolidated Balance Sheets, December 31, 2000 and 1999............. F-2
     Consolidated Statements of Operations for the years ended December
      31, 2000, 1999 and 1998............................................ F-3
     Consolidated Statements of Shareholders' Equity for the years ended
      December 31, 2000, 1999 and 1998................................... F-4
     Consolidated Statements of Cash Flows for the years ended December
      31, 2000, 1999 and 1998............................................ F-5
     Notes to Consolidated Financial Statements.......................... F-6
</TABLE>

   (a)(2) Financial Statement Schedules

<TABLE>
<CAPTION>
     Schedule                                                              Page
      Number  Description                                                 Number
     -------- -----------                                                 ------
     <C>      <S>                                                         <C>
        II    Valuation and Qualifying Accounts.........................   S-1
</TABLE>

    All other schedules not applicable.

   (a)(3) Exhibits Listing

<TABLE>
<CAPTION>
     Exhibit
     Number  Description
     ------- -----------
     <C>     <S>
       3.1   Registrant's Articles of Incorporation, as amended. (1)

       3.2   Registrant's Bylaws. (1)

      10.1   1993 Stock Option Plan, as amended. (1)

      10.2   1993 Director Stock Option Plan. (1)

      10.3   1993 Employee Stock Purchase Plan. (1)

      10.4   Form of Indemnification Agreement between Registrant and its
             officers and directors. (1)

      10.6   OPTi Inc. 1993 Bonus Plan. (1)

      10.10  Promissory Note between OPTi Inc. and Sumitomo Bank of California,
             dated November 14, 1994. (2)

      10.11  Credit Agreement dated as of November 14, 1994 by and among OPTi
             Inc., certain banks therein named and Sumitomo Bank of California,
             as Agent. (2)

      10.14  Foundry Venture Investment Agreement between the Registrant and
             United Microelectronics Corporation dated September 13, 1995. (3)

      10.15  Foundry Capacity Agreement by and between the Registrant, FabVen
             and United Microelectronics Corporation dated September 13, 1995.
             (3)

      10.16  Lease between the Registrant and John Arrillaga and Richard T.
             Peery as separate property trusts, dated April 26, 1995. (3)

      10.17  OPTi Inc. 1995 Nonstatutory Stock Option Plan. (3)

</TABLE>

                                       23
<PAGE>

<TABLE>
<CAPTION>
     Exhibit
     Number  Description
     ------- -----------
     <C>     <S>
      10.18  1996 Employee Stock Purchase Plan. (4)

      10.19  1995 Employee Stock Option Plan, as amended. (5)

      10.20  Patent license agreement between Intel Corporation and OPTi Inc.
             (6)

      10.21  Lease agreement between FVC.com Inc. and OPTi Inc. (6)

      10.22  Lease between the Registrant and John Arrillaga and Richard T.
             Peery as separate property trusts, dated October 5, 2000.

      21.1   Subsidiaries of Registrant.

      23.1   Consent of Ernst & Young LLP, Independent Auditors.

      24.1   Power of Attorney (see page 25, signature page).
</TABLE>
--------
(1) Incorporated by reference to Registrants Statement on Form S-1 (File No.
    33-59978) as declared effective by the Securities and Exchange Commission
    on May 11, 1993.
(2) Incorporated by reference to the Annual Report on Form 10-K for the Fiscal
    Year Ended December 31, 1994, of OPTi Inc.
(3) Incorporated by reference to the Annual Report on Form 10-K for the Fiscal
    Year Ended December 31, 1995, of OPTi Inc.
(4) Incorporated by reference to Registration Statement on Form S-8 (File No.
    333-15181) as filed with the Securities and Exchange Commission on October
    31, 1996.
(5) Incorporated by reference to Registration Statement on Form S-8 (File No.
    333-17299) as filed with the Securities and Exchange Commission on December
    5, 1996.
(6) Incorporated by reference to the Annual Report on Form 10-K for the Fiscal
    Year Ended December 31, 1999, of OPTi Inc.

   (b) Reports on Form 8-K.

    No reports on Form 8-K were filed during the last quarter of 2000.

   (c) Exhibits. See Item 14 (a)(3) above.

   (d) Financial Statements Schedules. See Item 14 (a)(2) above.

                                       24
<PAGE>

                                  SIGNATURES

   Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Form 10-K to be
signed on its behalf by the undersigned, thereunto duly authorized in the City
of Milpitas, State of California on the 29 day of March 2001.

                                          OPTi Inc.

                                                   /s/ Bernard Marren
                                          By: _________________________________
                                                      Bernard Marren
                                                Chief Executive Officer and
                                                   Chairman of the Board

                               POWER OF ATTORNEY

   KNOW ALL PERSONS BY THESE PRESENT, that each person whose signature appears
below constitutes and appoints Bernard Marren and Michael Mazzoni and each of
them, jointly and severally, his true and lawful attorney-in-fact, each with
full power of substitution and resubstitution, for him in any and all
capacities, to sign any and all amendments to this Annual Report on Form 10-K,
and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them , full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that each said attorneys-in-fact and agents, or their
substitute or substitutes, or any of them, shall do or cause to be done by
virtue hereof.

   Pursuant to the requirements of the Securities Exchange Act of 1934, this
Form 10-K has been signed below by the persons on behalf of the Registrant and
in the capacities and on the dates indicated:

<TABLE>
<CAPTION>
             Signatures                          Title                    Date
             ----------                          -----                    ----

<S>                                  <C>                           <C>
         /s/ Bernard Marren          President and Chief             March 29, 2001
____________________________________ Executive Officer and
            Bernard Marren           Chairman of the Board
                                     (Principal Executive
                                     Officer)

        /s/ Michael Mazzoni          Chief Financial Officer         March 29, 2001
____________________________________ (Principal Financial and
           Michael Mazzoni           Accounting Officer)

                                     Director
____________________________________
            Stephen Dukker

         /s/ Kapil K. Nanda          Director                        March 29, 2001
____________________________________
            Kapil K. Nanda

        /s/ William Welling          Director                        March 29, 2001
____________________________________
           William Welling
</TABLE>

                                      25
<PAGE>

                        REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders
OPTi Inc.

   We have audited the accompanying consolidated balance sheets of OPTi Inc.
as of December 31, 2000 and 1999, and the related consolidated statements of
operations, shareholders' equity, and cash flows for each of the three years
in the period ended December 31, 2000. Our audits also included the financial
statement and schedule listed in the Index at Item 14(a). These financial
statements and schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
schedule based on our audits.

   We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

   In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of OPTi Inc., at
December 31, 2000 and 1999, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended December 31,
2000, in conformity with accounting principles generally accepted in the
United States. Also, in our opinion, the related financial statement schedule,
when considered in relation to the basis financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.

                                          /s/ ERNST & YOUNG LLP

San Jose, California
February 9, 2001
except as to the last sentence of the first paragraph of Note 6, as to which
the date is March 28, 2001

                                      F-1
<PAGE>

                                   OPTi Inc.

                          CONSOLIDATED BALANCE SHEETS
                      (In thousands, except share amounts)

<TABLE>
<CAPTION>
                                                               December 31,
                                                              ----------------
                                                               2000     1999
                                                              -------  -------
<S>                                                           <C>      <C>
                           ASSETS
Current assets:
 Cash and cash equivalents................................... $12,146  $23,722
 Short-term investments......................................  45,980      --
 Accounts receivable, net of allowance for doubtful accounts
  of $200 in 2000 and $151 in 1999...........................   1,131    1,459
 Inventories.................................................   1,140      298
 Prepaid expenses and other current assets...................     359      943
                                                              -------  -------
   Total current assets......................................  60,756   26,422
Property and equipment:
 Machinery and equipment.....................................  10,359   11,085
 Furniture and fixtures......................................     819      847
                                                              -------  -------
                                                               11,178   11,932
 Accumulated depreciation.................................... (11,021) (11,264)
                                                              -------  -------
                                                                  157      668
Other assets.................................................     359    1,142
                                                              -------  -------
   Total assets.............................................. $61,272  $28,232
                                                              =======  =======

            LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
 Accounts payable............................................ $ 1,365  $ 1,201
 Accrued expenses............................................     548      827
 Accrued litigation..........................................     --     4,200
 Accrued employee compensation...............................     309      512
 Deferred tax liability......................................   1,584      --
                                                              -------  -------
   Total current liabilities.................................   3,806    6,740
Other long-term liabilities..................................     --       310

Commitments and contingences

Shareholders' equity:
 Preferred stock, no par value:
  Authorized shares--5,000,000
  No shares issued or outstanding............................     --       --
 Common stock, no par value:
  Authorized shares--50,000,000 Issued and outstanding
   shares--11,655,303 in 2000, and 11,620,970 in 1999........  22,646   22,494
 Accumulated other comprehensive income......................  25,088      --
 Retained earnings (Accumulated deficit).....................   9,732   (1,312)
                                                              -------  -------
   Total shareholders' equity................................  57,466   21,182
                                                              -------  -------
   Total liabilities and shareholders' equity................ $61,272  $28,232
                                                              =======  =======
</TABLE>

                            See accompanying notes.

                                      F-2
<PAGE>

                                   OPTi Inc.

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                     (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                     Year Ended December 31,
                                                    --------------------------
                                                     2000     1999      1998
                                                    ------- --------  --------
<S>                                                 <C>     <C>       <C>
Sales
 Product Sales....................................  $ 9,887 $ 22,257  $ 40,003
 Licence Sales....................................   13,311      --        --
                                                    ------- --------  --------
Net Sales.........................................   23,198   22,257    40,003


Costs and expenses:
 Cost of product sales............................    6,453   14,403    26,712
 Research and development.........................      559    5,611     9,681
 Selling, general and administrative..............    7,019   11,165    10,942
                                                    ------- --------  --------
Total costs and expenses..........................   14,031   31,179    47,335
                                                    ------- --------  --------
Operating income (loss)...........................    9,167   (8,922)   (7,332)
Interest income and other.........................    2,138    3,231     3,717
Interest expense..................................      --      (261)     (312)
                                                    ------- --------  --------
                                                      2,138    2,970     3,405
                                                    ------- --------  --------
Income (loss) before provision for income taxes...   11,305   (5,952)   (3,927)
Provision for income taxes........................      261       59       285
                                                    ------- --------  --------
Net income (loss).................................  $11,044 $ (6,011) $ (4,212)
                                                    ======= ========  ========
Basic net income (loss) per share.................  $  0.95 $  (0.54) $  (0.35)
                                                    ======= ========  ========
Shares used in computing basic per share amounts..   11,644   11,059    12,196
                                                    ======= ========  ========
Diluted net income (loss) per share...............  $  0.95 $  (0.54) $  (0.35)
                                                    ======= ========  ========
Shares used in computing diluted per share
 amounts..........................................   11,653   11,059    12,196
                                                    ======= ========  ========
</TABLE>


                            See accompanying notes.

                                      F-3
<PAGE>

                                   OPTi Inc.

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                      (In thousands, except share amounts)

<TABLE>
<CAPTION>
                            Common Stock       Accumulated Other                           Total
                         --------------------    Comprehensive     Retained Earnings   Shareholders'
                           Shares     Amount        Income       (Accumulated Deficit)    Equity
                         ----------  --------  ----------------- --------------------- -------------
<S>                      <C>         <C>       <C>               <C>                   <C>
Balance at December 31,
 1997................... 13,126,508  $ 58,623       $   --             $ 34,100          $ 92,723
  Sale of common stock..  1,264,416     4,769           --                  --              4,769
  Stock repurchase...... (3,580,375)  (23,995)          --                  --            (23,995)
  Net loss and
   comprehensive loss...        --        --            --               (4,212)           (4,212)
                         ----------  --------       -------            --------          --------
Balance at December 31,
 1998................... 10,810,549    39,397           --               29,888            69,285
  Sale of common stock..    810,421     4,392           --                  --              4,392
  Cash Dividend.........        --    (21,295)          --              (25,189)          (46,484)
  Net loss and
   comprehensive loss...        --        --            --               (6,011)           (6,011)
                         ----------  --------       -------            --------          --------
Balance at December 31,
 1999................... 11,620,970    22,494           --               (1,312)           21,182
  Sale of common stock..     34,333       152           --                  --                152
  Comprehensive income:
   Unrealized gain on
    short-term
    investments, net of
    $1,584,000 in taxes
    ....................        --        --         25,088                 --             25,088
   Net income...........        --        --            --               11,044            11,044
                                                                                         --------
   Total comprehensive
    income..............                                                                   36,132
                         ----------  --------       -------            --------          --------
Balance at December 31,
 2000................... 11,655,303  $ 22,646       $25,088            $  9,732          $ 57,466
                         ==========  ========       =======            ========          ========
</TABLE>


                            See accompanying notes.

                                      F-4
<PAGE>

                                   OPTi Inc.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                   Year Ended December 31,
                                                  ----------------------------
                                                    2000      1999      1998
                                                  --------  --------  --------
<S>                                               <C>       <C>       <C>
Operating activities
Net income(loss)................................  $ 11,044  $ (6,011) $ (4,212)
Adjustments to reconcile net income(loss) to net
 cash provided by (used in) operating
 activities:
  Depreciation and amortization.................       465     3,717     6,629
  Loss on sale of OPTi Japan....................       (50)      --
  Changes in operating assets and liabilities:
    Accounts receivable.........................       (61)    1,773     8,550
    Inventories.................................      (919)      894     3,825
    Prepaid expenses and other assets...........       672       (14)      261
    Accounts payable............................       953    (4,790)   (5,180)
    Accrued expenses............................    (4,486)    3,442      (160)
    Accrued employee compensation...............      (203)     (540)     (315)
                                                  --------  --------  --------
Net cash provided by (used in) operating
 activities.....................................     7,415    (1,529)    9,398

Investing activities
Purchases of property and equipment.............       (44)     (248)     (830)
Sale of Property and equipment..................        41     1,545       --
Sale of Investment in UICC foundry..............       --      8,495       --
Cash disposed of on sale of OPTi Japan, net of
 proceeds.......................................      (557)      --        --
Purchase of short term investments..............   (50,127)  (36,150)  (57,750)
Sale of short term investments..................    31,544    40,400    62,176
                                                  --------  --------  --------
Net cash provided by (used in) investing
 activities.....................................   (19,143)   14,042     3,596

Financing activities
Proceeds from sale of common stock..............       152     4,392     4,769
Repurchase of common stock......................       --        --    (23,995)
Cash dividend...................................       --    (46,484)      --
Principal payments on capital lease
 obligations....................................       --     (3,352)     (947)
                                                  --------  --------  --------
Net cash provided by (used in) financing
 activities.....................................       152   (45,444)  (20,173)
Net decrease in cash and cash equivalents.......   (11,576)  (32,931)   (7,179)
Cash and cash equivalents at beginning of year..    23,722    56,653    63,832
                                                  --------  --------  --------
Cash and cash equivalents at end of year........  $ 12,146  $ 23,722  $ 56,653
                                                  ========  ========  ========

Supplemental cash flow information
Cash paid for interest..........................  $    --   $    261  $    312
Cash paid for income taxes......................  $    148  $    --   $    210
</TABLE>

                            See accompanying notes.

                                      F-5
<PAGE>

                                   OPTi Inc.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1--Summary of Significant Accounting Policies

   The Company OPTi Inc., a California corporation, is engaged in marketing
semiconductor products for use principally by personal computer, add in card
manufacturers and motherboard manufacturers.

   Principles of Consolidation The consolidated financial statements include
the Company and its majority and wholly owned subsidiaries. All significant
intercompany transactions and balances have been eliminated.

   Use of Estimates The preparation of financial statements in accordance with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts reported
in the financial statements and accompanying notes. Actual results could
differ from those estimates.

   Cash and Cash Equivalents The Company considers all highly liquid
investments purchased with an original maturity of three months or less to be
cash equivalents. Cash equivalents are carried at cost, which approximates
fair value.

   Short-Term Investments The Company invests its excess cash in high quality,
auction rate preferred securities with reset dates every thirty-five days. At
December 31, 2000, all short-term investments are designated as available for
sale. Interest and dividends on the investments are included in interest
income. There were no realized gains or losses on the Company's investments
during 2000 as all investments were held to maturity during the year.

   Inventories Inventories, comprised of finished goods and work in process,
are stated at the lower of cost (using the first-in, first-out method ) or
market. The market value is based upon estimated net realizable value.

   Property and Equipment Property and equipment are stated at cost, less
accumulated depreciation and amortization. Depreciation is computed by the
straight-line method over the estimated useful lives of the assets, ranging
from three to five years.

   Revenue Recognition The Company records sales upon transfer of title, which
typically is upon shipment, and provides an allowance for the estimated return
of product. The Company adopted Staff Accounting Bulletin 101 ("SAB 101"),
"Revenue Recognition in Financial Statements" effective January 1, 2000. The
adoption of SAB 101 did not have a material impact on the Company's operating
results or cash flows.

   Accounting for Employee Stock Options In October 1995, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation" (FAS 123). The Company has
elected to continue to account for employee stock options in accordance with
APB Opinion No. 25 and has adopted the "disclosure only" alternative described
in FAS 123.

   Recent Pronouncements In June 1998, the Financial Accounting Standards
Board ("FASB") issued Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities" (SFAS 133).
SFAS 133 provides a comprehensive and consistent standard for the recognition
and measurement of derivatives and hedging activities. In June 1999, FASB
issued Financial Accounting Standards No. 137 which deferred the effective
date of SFAS 133 to fiscal years beginning after June 15, 2000. In June 2000,
the FASB issued SFAS 138, a significant amendment of SFAS 133 which is
effective simultaneously with SFAS 133. SFAS 138 does not amend any of the
fundamental precepts of SFAS 133, but does address many constituents' concerns
about some of the more impractical aspects of the original Statement, which
were incompatible with many common hedging approaches. The adoption of SFAS
133 is not anticipated to have an impact on the Company's results of
operations of financial condition when adopted as the Company holds no
derivative financial instruments and does not currently engage in hedging
activities.

                                      F-6
<PAGE>

                                   OPTi INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Note 2--Inventories

   A summary of inventories follows (in thousands):
<TABLE>
<CAPTION>
                                                                      2000  1999
                                                                     ------ ----
     <S>                                                             <C>    <C>
     Finished Goods................................................. $  871 $240
     Work in Process................................................    269   58
                                                                     ------ ----
       Total Inventory.............................................. $1,140 $298
                                                                     ====== ====
</TABLE>

Note 3--Cash equivalents and Short-Term Investments

   The following is a summary of December 31, 2000 and 1999:

<TABLE>
<CAPTION>
                                           2000                                      1999
                         ----------------------------------------- -----------------------------------------
                                     Gross      Gross    Estimated             Gross      Gross    Estimated
                         Amortized Unrealized Unrealized   Fair    Amortized Unrealized Unrealized   Fair
                           Cost      Losses     Gains      Value     Cost      Losses     Gains      Value
                         --------- ---------- ---------- --------- --------- ---------- ---------- ---------
<S>                      <C>       <C>        <C>        <C>       <C>       <C>        <C>        <C>
Cash....................  $ 1,870      --           --    $ 1,870   $ 3,497      --         --      $ 3,497
Certificates of
 Deposit................  $10,276      --           --    $10,276   $20,225      --         --      $20,225
Commercial Paper........  $10,338      --           --    $10,338   $    --      --         --      $    --
U.S. Government Bonds
 and Notes..............  $ 8,245      --           --    $ 8,245   $    --      --         --      $    --
Investment in Tripath
 Technology.............  $   725      --       26,672    $27,397   $    --      --         --      $    --
                          -------                         -------   -------                         -------
                          $31,454                         $58,126   $23,722                         $23,722
                          =======                         =======   =======                         =======
Reported as:
  Cash and cash
   equivalents..........  $12,146      --           --    $12,146   $23,722      --         --      $23,722
  Short-term
   investments..........  $19,308      --       26,672    $45,980   $    --      --         --      $    --
                          -------                         -------   -------                         -------
                          $31,454                         $58,126   $23,722                         $23,722
                          =======                         =======   =======                         =======
</TABLE>

   At December 31, 2000, net unrealized gain on marketable securities has been
included in the Company's Statement of Shareholders Equity, less the
associated deferred tax liability of $1,584,000.

   All available for sale debt securities held by the Company as of December
31, 2000 had a maturity date of one year or less.

Note 4--Shareholders' Equity

Preferred Stock

   The Board of Directors has authority to issue up to 5,000,000 shares of
Preferred Stock in one or more series and to fix the rights, preferences,
privileges, qualifications, limitations and restrictions thereof, including
dividend rights, dividend rates, conversion rights, voting rights, terms of
redemption, qredemption prices, liquidation preferences and the number of
shares constituting any series or the designation of such series, without any
further vote or action by the shareholders.

                                      F-7
<PAGE>

                                   OPTi INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Stock Option Plans

   Fair value pro forma information regarding net income (loss) and income
(loss) per share for options granted subsequent to December 31, 1994 was
estimated at the date of the grant using a Black-Scholes option pricing model.

   The fair value of the Company's stock based awards to employees was
estimated assuming no expected dividends and the following weighted-average
assumptions:

<TABLE>
<CAPTION>
                                                     2000      1999      1998
                                                   --------- --------- ---------
     <S>                                           <C>       <C>       <C>
     Expected Life................................ 4.8 years 4.8 years 5.0 years
     Expected volatility.......................... 0.88      0.95      0.57
     Risk Free Interest Rate...................... 6.28%     6.00%     5.40%
</TABLE>

   For purposes of pro forma disclosures, the estimated fair value of the
options is amortized over the options' vesting period. The Company's pro forma
information follows (in thousands except for earnings per share information):

<TABLE>
<CAPTION>
                                                       2000    1999     1998
                                                      ------- -------  -------
     <S>                                              <C>     <C>      <C>
     Pro forma net income (loss)..................... $10,821 $(6,415) $(5,693)
     Pro forma basic net income (loss) per share..... $  0.93 $ (0.58) $ (0.47)
     Pro forma diluted net income (loss) per share... $  0.93 $ (0.58) $ (0.47)
</TABLE>

   Because pro forma disclosure is applicable only to options granted
subsequent to December 31, 1994, the full pro forma effect was not fully
reflected until 1999.

   The weighted average fair value of options granted under all stock option
plans was $2.86, $5.82 and $5.13 for the years ending 2000, 1999 and 1998,
respectively.

 1993 Stock Option Plan

   The Company's 1993 Stock Option Plan (the "1993 Plan"), which was adopted
in February 1993, provides for the granting of incentive stock options to
employees and for the granting of nonstatutory stock options to employees and
consultants of the Company. The Board of Directors determines the term of each
option, the option price and the condition under which the option becomes
exercisable. The options generally vest over four years from the date of grant
and expire ten years from the date of grant.

                                      F-8
<PAGE>

                                   OPTi INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   The activity under the 1993 Plan (including the Evergreen Plan) is as
follows:

<TABLE>
<CAPTION>
                                                             Outstanding
                                                       -------------------------
                                                                   Weighted Ave
                                                        Shares    Exercise Price
                                                       ---------  --------------
     <S>                                               <C>        <C>
     Outstanding at December 31, 1997 ................ 1,415,433      $4.30
       Granted........................................   145,000      $5.13
       Exercised......................................  (855,873)     $3.02
       Canceled.......................................  (341,746)     $6.83
                                                       ---------      -----
     Outstanding at December 31, 1998.................   362,814      $5.20
       Granted........................................    45,000      $5.94
       Exercised......................................  (245,877)     $5.32
                                                       ---------      -----
     Outstanding at December 31, 1999.................   161,937      $5.15
       Exercised......................................   (10,000)     $5.32
       Canceled.......................................  (51,937)      $6.13
                                                       ---------      -----
     Outstanding at December 31, 2000.................   100,000      $4.63
                                                       =========      =====
</TABLE>

   Approximately 100,000, 161,937 and 192,710 options outstanding were
exercisable as of December 31, 2000, 1999 and 1998, respectively. The weighted
average exercise price for the exercisable shares as of December 31, 2000,
1999 and 1998, was $4.63, $5.15 and $5.20, respectively.

 1995 Stock Option Plan

   The Company's 1995 Stock Option Plan (the "1995 Plan"), which was adopted
in August 1995, provides for the granting of up to 2,500,000 nonstatutory
stock options to employees and consultants of the Company. The Board of
Directors determines the term of each option, the option price and the
condition under which the option becomes exercisable. The options generally
vest over four years from the date of grant and expire ten years from the date
of grant.

   The activity under the 1995 Plan is as follows:
<TABLE>
<CAPTION>
                                                              Outstanding
                                                        ------------------------
                                                                   Weighted Ave.
                                                                     Exercise
                                                         Shares        Price
                                                        ---------  -------------
   <S>                                                  <C>        <C>
   Outstanding at December 31, 1997...................  1,586,255      $5.06
     Granted..........................................    189,000      $5.47
     Exercised........................................   (347,188)     $5.04
     Canceled.........................................   (614,299)     $5.21
                                                        ---------
   Outstanding at December 31, 1998...................    813,768      $5.06
     Granted..........................................     45,500      $5.69
     Exercised........................................   (542,933)     $5.04
     Canceled.........................................   (266,522)     $5.19
                                                        ---------
   Outsatnding at December 31, 1999...................     49,813      $5.15
     Granted..........................................    180,000      $3.76
     Exercised........................................    (24,333)     $4.05
     Canceled.........................................    (98,480)     $4.38
                                                        ---------
   Outstanding at December 31, 2000...................    107,000      $3.76
                                                        =========
</TABLE>

                                      F-9
<PAGE>

                                   OPTi INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   Approximately 58,500, 49,813, and 425,795 options outstanding were
exercisable as of December 31, 2000, 1999 and 1998, respectively. The weighted
average exercise price for the exercisable shares as of December 31, 2000,
1999 and 1998, was $3.76, $5.15 and $5.06, respectively.

 Stock Options Outstanding and Stock Options Exercisable:

   The following table summarizes information about options outstanding at
December 31, 2000:

<TABLE>
<CAPTION>
                          Options Outstanding             Options Exercisable
                --------------------------------------- ------------------------
     Range of   Number  Weighted Average    Weighted    Number      Weighted
     Exercise     of    Contractual Life    Average       of    Average Exercise
      Prices    Shares     (in years)    Exercise Price Shares       Price
     --------   ------- ---------------- -------------- ------- ----------------
     <S>        <C>     <C>              <C>            <C>     <C>
      $3.75     101,000       9.39           $3.75       58,000      $3.75
      $4.00       6,000       9.92           $4.00          500      $4.00
      $4.63     100,000       7.97           $4.63      100,000      $4.63
</TABLE>

 1993 Director Stock Option Plan

   In February 1993, the Company adopted the 1993 Director Stock Option Plan
(the "Director Plan") and reserved 50,000 shares of common stock for issuance
thereunder. Under this plan, non-employee directors are granted options to
purchase common stock at 100% of fair market value on dates specified in the
plan. The options generally vest over four years from the date of grant and
expire ten years from the date of grant. In May 1996, the Company's
shareholders authorized an additional 50,000 shares for grant under the plan.

   The activity under the 1993 Director Plan is as follows:
<TABLE>
<CAPTION>
                                                               Outstanding
                                                          ----------------------
                                                                   Weighted Ave.
                                                                     Exercise
                                                          Shares       Price
                                                          -------  -------------
     <S>                                                  <C>      <C>
     Outstanding at December 31, 1997...................   85,943      $7.35
      Granted...........................................   21,333      $3.44
      Exercised.........................................   (8,611)     $5.25
      Canceled..........................................  (42,666)     $8.07
                                                          -------
     Outstanding at December 31, 1998...................   55,999      $5.64
      Exercised.........................................  (21,333)     $3.44
      Canceled..........................................      --       $ --
                                                          -------
     Outstanding at December 31, 2000 and 1999..........   34,666      $6.99
                                                          =======      =====
</TABLE>

   Approximately 34,666, 34,666 and 28,665 options were exercisable as of
December 31, 2000, 1999 and 1998, respectively. The weighted average exercise
price for the exercisable shares of December 31, 2000, 1999 and 1998, was
$6.99, $6.99 and $5.64, respectively.

 1993 Employee Stock Purchase Plan

   In February 1993, the Company adopted the 1993 Employee Stock Purchase Plan
(the "Purchase Plan") under Section 423 of the Internal Revenue Code and
reserved 150,000 shares of common stock for issuance thereunder. Under the
Purchase Plan, qualified employees are entitled to purchase shares at 85% of
fair market value. As of December 31, 2000, 149,399 shares were issued under
the Purchase Plan.

                                     F-10
<PAGE>

                                   OPTi INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


 1996 Employee Stock Purchase Plan

   In October 1996, the Company adopted the 1996 Employee Stock Purchase Plan
(the "Purchase Plan") under Section 423 of the Internal Revenue Code and
reserved 150,000 shares of common stock for issuance thereunder. In October
1997, the Company added an additional 100,000 shares to this plan, for a total
of 250,000 shares available. Under the Purchase Plan, qualified employees are
entitled to purchase shares at 85% of fair market value. As of December 31,
2000, 249,998 shares were issued under the Purchase Plan.

 Warrants

   The Company issued a warrant to Creative Technology Ltd in November 1997 as
part of the asset purchase agreement entered into between the companies. The
warrant allows Creative Technology to purchase 200,000 shares of common stock
at the purchase price of $10.00 per share. The warrant expires on November 25,
2002.

 Common Stock Reserved

   At December 31, 2000, the Company has reserved shares of common stock for
future issuance as follows:

<TABLE>
     <S>                                                               <C>
     1993 Stock Option Plan (including the Evergreen Plan)............   734,210
     1995 Stock Option Plan........................................... 1,457,275
     1993 Directors Stock Option Plan.................................    65,334
     1993 Employee Stock Purchase Plan................................       601
     1996 Employee Stock Purchase Plan................................         2
     Common Stock Warrants............................................   200,000
                                                                       ---------
       Totals......................................................... 2,457,422
                                                                       =========
</TABLE>

Note 5--Commitments

   The Company leases its facilities under noncancelable operating leases. At
December 31, 2000, future minimum commitments related to these leases are as
follows (in thousands):

<TABLE>
     <S>                                                                  <C>
     2001................................................................ $  692
     2002................................................................    845
     2003................................................................  1,514
     2004................................................................  1,558
     2005................................................................  1,603
                                                                          ------
       Total............................................................. $6,212
                                                                          ======
</TABLE>

   The Company has the ability to terminate the lease on its existing building
as of October 2002, with a buyout payment of $150,000. If the company were to
exercise its buyout provision it would reduce the Company's commitment above
by $251,000, $1,514,000, $1,558,000 and $1,603,000 for the years 2002 through
2005, respectively.

   The Company has entered into an agreement to sub-lease a facility that will
reduce its commitment above by approximately $413,000 and $357,000 for the
years 2001 and 2002, respectively. This sub-lease is for a facility that the
Company has never occupied and will not have a material effect on the
Company's financials.

   Rent expense for operating leases amounted to $431,000, $421,000, and
$1,402,000 net of sublease income of $1,416,000, $1,312,000 and $595,000, for
the years ended December 31, 2000, 1999, and 1998, respectively.

                                     F-11
<PAGE>

                                   OPTi INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Note 6--Concentrations

 Tripath Technology

   Tripath Technology, Inc.("Tripath"), an investment held by the Company,
became publicly traded in August 2000. This investment, with a cost of $0.7
million, is reflected in the Company's December 31, 2000 balance sheet under
short term investments at a fair market value of approximately $27.4 million,
which represents approximately 60% of short term investments. These shares
were subject to lock-up agreements which restricted their transfer until
January 27, 2001. Tripath to date has a limited operating history as it began
to ship products in 1998 and many of its products have only recently been
introduced. Tripath also has a history of losses. As of December 31, 2000,
Tripath had an accumulated deficit of approximately $111 million. Its incurred
net losses of approximately $41 million in 2000, $32 million in 1999 and $34
million in 1998. It expects to continue to incur net losses in the future and
these losses may be substantial. As of March 28, 2001, the fair market value
of the Company's investment in Tripath and comprehensive income had decreased
by $13.3 million to $14.1 million.

 Credit Risks and Major Customers

   The Company primarily sells to PC, motherboard, and add-in card
manufacturers. The Company performs ongoing credit evaluations of its
customers but does not require collateral. The Company maintains reserves for
potential credit losses, and such losses have been within management's
expectations. With the exception of sales to NCR and its subcontractors and
Harbourview Assets Limited, a Taiwan based company, no other single customer
represented more than 10% of sales in fiscal 2000. The Company sold
approximately $2 million of its embedded core logic to NCR and its
subcontractors, representing a combined 24% of net product sales for that
period. Also in fiscal 2000 the Company sold to Harbourview Assets Limited
approximately $1 million in USB products, representing 11% of net sales for
that period. In 1999, the Company sold approximately $6 million of mobile core
logic product to Compaq and its subcontractors, representing a combined 27% of
net sales for that period. Also in fiscal 1999 the Company sold to Apple
Computer and its subcontractors approximately $6 million in USB products,
representing a combined 27% of net sales for that period. In 1998, the Company
sold approximately $17 million of mobile core logic product to Compaq and its
subcontractors, representing a combined 43% of net sales for that period. Also
in 1998, the Company sold to Apple Computer and its subcontractors
approximately $4 million in USB products, representing a combined 11% of net
sales for that period. The Company expects that sales of its products to a
relatively small group of customers will continue to account for a high
percentage of its net sales in the foreseeable future, although the Company's
customers in any one period will continue to change.

   Many of the Company's customers, particularly the motherboard manufacturers
in Taiwan, operate at very low profit margins and undertake significant
inventory risks. To the extent the Company provides open terms of credit to
some of the larger of these customers, the Company is exposed to significant
credit risks if these customers are unable to remain profitable. Approximately
18% of the Company's receivables at December 31, 2000 were with these
customers.

 Suppliers

   The Company's reliance on independent foundries, packaging and test houses
involves several risks, including the absence of adequate capacity, the
unavailability of or interruptions in access to certain process technologies
and reduced control over delivery schedules, manufacturing yields and costs.
At times during the first half of 2000, the Company was unable to meet the
demand for certain of its products due to limited foundry capacity and the
Company expects that it will experience other production shortfalls or
difficulties in the future. Because the Company's purchase orders with its
outside foundries are non-cancelable by OPTi, the Company is subject to
inventory surpluses and has in the past experienced write-downs of inventories
due to an unexpected reduction in demand for a particular product.

                                     F-12
<PAGE>

                                   OPTi INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


 Products

   The Company's product life cycles are typically very short and ramp into
volume production very quickly. At any point in time, the Company may rely on
a limited number of products for a significant share of the Company's
revenues. In the first half of 2001, the Company will be highly dependent on
continued revenue contributions from its USB controller. In the second half of
2001, the Company will rely heavily upon the successful product transitions
into its new four port USB controller and 1394 peripheral products. Any
significant shortfall in sales for the Company's current volume products or
problems with the successful transition to next generation products will have
a material adverse effect upon the Company's financials.

Note 7--Geographic Segments

   Net product sales by the geographic location of the Company's customers,
based on shipments to location, are summarized by geographic areas as follows
(in thousands):

<TABLE>
<CAPTION>
                                                        Year Ended December 31,
                                                       -------------------------
                                                        2000     1999     1998
                                                       ------- -------- --------
     <S>                                               <C>     <C>      <C>
     Taiwan..........................................  $ 2,055 $  7,908 $ 22,761
     Japan...........................................    2,065    3,610    6,085
     USA.............................................    4,251    3,850    5,408
     Singapore.......................................      315    6,710    5,138
     Other Far East..................................    1,040       68      436
     Europe/Other....................................      161      111      175
                                                       ------- -------- --------
       Total Export Sales............................  $ 9,887 $ 22,257 $ 40,003
                                                       ======= ======== ========
</TABLE>

Note 8--Taxes

   The provision (benefit) for income taxes consists of the following (in
thousands):

<TABLE>
<CAPTION>
                                                                 2000 1999  1998
                                                                 ---- ----- ----
     <S>                                                         <C>  <C>   <C>
     Federal:
      Current................................................... $181 $ --  $238
      Deferred..................................................  --    --   --
                                                                 ---- ----- ----
                                                                  181   --   238
     State:
      Current...................................................   30   --   --
      Deferred..................................................  --    --   --
                                                                 ---- ----- ----
                                                                   30   --   --
                                                                 ---- ----- ----
     Foreign:
      Current...................................................   50    59   47
      Deferred..................................................  --    --   --
                                                                 ---- ----- ----
                                                                   50    59   47
                                                                 ---- ----- ----
        Total................................................... $261 $  59 $285
                                                                 ==== ===== ====
</TABLE>

                                     F-13
<PAGE>

                                   OPTi INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   A reconciliation of the income tax provision at the federal statutory rate
to the income tax provision at the effective rate is as follows (in
thousands):

<TABLE>
<CAPTION>
                                                    2000     1999     1998
                                                   -------  -------  -------
     <S>                                           <C>      <C>      <C>
     Income taxes computed at the federal
      statutory rate.............................. $ 3,957  $(2,104) $(1,485)
     Net operating losses not benefitted..........     --     2,104    1,485
     Benefit of net operating losses..............  (3,957)     --       --
     Alternative minimum taxes....................     211      --       238
     Foreign Taxes................................      50       59       47
     Other individually immaterial items..........     --       --       --
                                                   -------  -------  -------
                                                   $   261  $    59  $   285
                                                   =======  =======  =======
</TABLE>

   The components of deferred taxes consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                               2000      1999
                                                             --------  --------
     <S>                                                     <C>       <C>
     Deferred tax assets:
      Inventory reserve....................................  $    656  $  3,800
      Credit carryforwards.................................     4,733     5,200
      Depreciation and amortization........................     1,300     1,300
      Accounts receivable reserve..........................        80        60
      Reserve for sales return.............................        20        20
      Net operating losses.................................     6,467     8,789
      Other individually immaterial items..................       117       300
                                                             --------  --------
        Total deferred tax assets..........................    13,373    19,469
        Valuation Allowance................................    (4,288)  (19,469)
                                                             --------  --------
                                                                9,085       --
                                                             --------  --------
     Deferred tax liabilities:
      Unrealized gain on investment........................   (10,669)      --
                                                             --------  --------
        Net deferred tax liability.........................  $ (1,584) $    --
                                                             ========  ========
</TABLE>

   At December 31, 2000, the Company had federal and state net operating loss
carryforwards of approximately $19.0 million and $0.3 million, respectively,
expiring in the years 2003 through 2019. At December 31, 2000, the Company had
tax credit carryovers of approximately $2.6 million and $2.1 million for
federal and state purposes, expiring in the years 2007 through 2018. In
addition, the Company had federal alternative minimum tax credit carryforwards
of approximately $1.1 million that will not expire.

   The tax benefit associated with exercise of non-qualified stock options,
disqualifying dispositions of stock options and shares acquired under the
employee stock purchase plan created net operating losses of $1,798,000 in
1997. These benefits were fully reserved by a valuation allowance, and will be
credited to paid in capital when realized.

   Realization of deferred tax assets is dependent upon future earnings.
During 1999 and 1998, the timing and amount of future earnings was uncertain
and accordingly, the net deferred tax assets were fully offset by a valuation
allowance. The valuation allowance increased by $2.5 million and $4.1 million
during 1999 and 1998, respectively. During 2000, the valuation allowance
decreased by $15.2 million. The reduction was primarily due to unrealized
gains recognized in connection with the Company's investment in Tripath
Technology, Inc. in accordance with FAS 115.

                                     F-14
<PAGE>

                                   OPTi INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Note 9--Employee Benefit Plan

   Savings Plan The Company has a savings plan, which qualifies under Section
401(k) of the Internal Revenue Code. Under the plan, participating U.S.
employees may defer up to 15% of their pre-tax salary, but not more than the
statutory limits. The Company currently matches fifty percent of employee
contributions made to the savings plan. During 2000, the amount of the Company
contribution to the 401K plan was approximately $61,000. Administrative costs
of the plan are immaterial.

Note 10--Contingencies

   In January 1997, a patent infringement claim was brought against the
Company by Crystal Semiconductor, Inc. ("Crystal"), a subsidiary of Cirrus
Logic, in the United States District Court for the Western District of Texas.
The claim alleged that the Company and Tritech Microelectronics International,
Inc. and its Singapore parent company, Tritech Microelectronics Pte, Ltd.
(collectively "Tritech") infringed three patents owned by Crystal. These
patents related to the analog-to-digital coder-decoder ("codec") module that
was designed by Tritech and incorporated into integrated PC audio chips
formerly sold by the Company. The suit sought injunctive relief and damages.

   A jury trial was held in this action from May 3-13, 1999. On May 17, 1999,
the jury returned a verdict that all of the asserted claims of the patents in
suit were valid and were infringed by the accused OPTi and TriTech products.
The jury further found that Tritech's infringement, but not OPTi's, was
willful and deliberate. The jury was asked to consider separately three
different damages allegations. The first was that Crystal lost profits because
sales that it would otherwise have made were in fact made by the defendants
("lost profits"). The second was that the defendants' conduct had caused
Crystal to reduce its selling prices from what they otherwise would have been
during the period of infringement ("price erosion"). The third allegation was
for the statutory alternative to lost profits, a ("reasonable royalty"). The
jury was asked to consider these questions with respect to the defendants as a
group and, of that amount, to assign a specific portion to OPTi. The jury's
verdict was as follows: all defendants $48.5 million, OPTi's portion of that
total $19.4 million. Following the jury's verdict, the parties made various
motions for judgment.

   On July 23, 1999, the United States District Court for the Western District
of Texas entered an Order and Judgment in the patent infringement action
brought by Crystal Semiconductor Corporation against OPTi, Inc., Tritech
Microelectronics Pte Ltd., a Singapore company, and TriTech Microelectronics
International, Inc., its American marketing subsidiary. The Court's judgment
substantially reduced the amount of damages that one jury had awarded to
Crystal against OPTi, from $19.4 million to $4 million.

   Following the entry of judgment, all three parties involved in the suit
appealed the judgment to the United States Court of Appeals for the Federal
Circuit.

   In response to the Company's announcement of its intention to pay a
dividend in cash to its shareholders of four dollars per share, Crystal
requested in the Santa Clara County Superior Court of California that the
Company stipulate to preserve additional assets in order to pay a potential
judgment should Crystal prevail on appeal of the post-trial rulings in the
Texas litigation. On November 3, 1999, the Court entered a Stipulation and
Order Regarding Payment of Dividend obligating the Company to maintain and
preserve assets in an amount not less than $24,000,000, "until such time as
the judgment in the Texas litigation, after resolution of any appeals therein,
is satisfied in full by the Company or until such time as Crystal's claims
against the Company in the Texas Litigation are settled, released or waived by
Crystal."

                                     F-15
<PAGE>

                                   OPTi INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   In September 1998, Crystal Semiconductor filed a second suit against the
Company and Does 1 through 1050 in the Superior court of the State of
California. That suit was a complaint to set aside fraudulent transfers, the
sale of its audio business and the stock repurchase program that the Company
started and completed in the summer of 1998, and for preliminary and permanent
injunction, against the Company divesting itself of its assets. On May 21,
1999, the Court signed a Stipulation and Order entered into by OPTi and
Crystal vacating the Preliminary Injunction Hearing set for June 3, 1999. This
Stipulation and Order obligated OPTi to maintain and preserve liquid assets
available, in an amount not less then the verdict against OPTi, plus costs and
interest, in the underlying patent litigation between Crystal and OPTi. Based
on the judgment entered into the Texas court a new Stipulation and Order was
entered into by the party whereas the amount of liquid assets to be maintained
and preserved was reduced to the amount of the court judgment.

   On July 7, 2000, Crystal Semiconductor and the Company signed a settlement
agreement to be effective as of June 24, 2000. Under the terms of the
agreement, OPTi agreed to pay Crystal Semiconductor $7,000,000 over a period
of time ending October 15, 2000. Upon receipt of the final payment from OPTi
to Crystal Semiconductor, Crystal and OPTi agree to dismiss with prejudice all
claims now pending in the California State Court Action and to release each
other from all claims that were brought or could have been brought in the
action up to the date of the dismissal of that action.

   In October 2000, OPTi made the final settlement payment to Crystal
Semiconductor pursuant to the settlement agreement.

Note 11--Sale of OPTi KK Japan

   Effective June 23, 2000 the Company sold the assets and liabilities of OPTi
KK, its wholly owned Japanese subsidiary, in exchange for a note due from the
purchaser amounting to $645,000, of which $100,000 was outstanding as of
December 31, 2000. The sale resulted in a net loss of approximately $50,000
which was recorded in the second quarter of 2000.

Note 12--Quarterly Financial Data (unaudited)

<TABLE>
<CAPTION>
                                             First   Second    Third   Fourth
                                            Quarter  Quarter  Quarter  Quarter
                                            -------  -------  -------  -------
                                            (In thousands, except per share
                                                         data)
   <S>                                      <C>      <C>      <C>      <C>
   2000
   Revenue................................. $15,354  $ 3,324  $ 2,415  $ 2,105
   Operating income (loss).................  12,332   (3,005)     148     (308)
   Net income (loss).......................  12,576   (2,487)     891       64
   Basic net income (loss) per share....... $  1.08  $ (0.21) $  0.08  $  0.01
   Diluted net income (loss) per share..... $  1.08  $ (0.21) $  0.08  $  0.01
   1999
   Revenue................................. $ 7,156  $ 6,582  $ 5,635  $ 2,884
   Operating loss..........................  (1,492)  (4,079)  (1,402)  (1,949)
   Net loss................................    (784)  (3,275)    (640)  (1,312)
   Basic and diluted net loss per share.... $ (0.07) $ (0.30) $ (0.06) $ (0.11)
</TABLE>


                                     F-16
<PAGE>

                                   OPTi INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Note 13--Net income (loss) per share

   The following table sets forth the computation of basic and diluted net
income (loss) per share

<TABLE>
<CAPTION>
                                                          Fiscal Year Ended
                                                       ------------------------
                                                        2000    1999     1998
                                                       ------- -------  -------
                                                        (In thousands, except
                                                           per share data)
<S>                                                    <C>     <C>      <C>
Net income (loss)....................................  $11,044 $(6,011) $(4,212)
                                                       ======= =======  =======
Shares used in computing basic net income (loss) per
 share--weighted average number of common shares.....   11,644  11,059   12,196
                                                       ======= =======  =======
Basic net income (loss) per share....................  $  0.95 $ (0.54) $ (0.35)
                                                       ======= =======  =======
Outstanding weighted average number of common
 shares..............................................   11,644  11,059   12,196
Effect of dilutive securities:
 Employee stock options..............................        9     --       --
                                                       ------- -------  -------
Denominator for diluted net income (loss) per share..   11,653  11,059   12,196
                                                       ======= =======  =======
Diluted net income (loss) per share..................  $  0.95 $ (0.54) $ (0.35)
                                                       ======= =======  =======
</TABLE>

   The following outstanding options and warrants were excluded from the
computation of diluted net income (loss) per share as they had an antidilutive
effect (in thousands):

<TABLE>
<CAPTION>
                                                                   Years ended
                                                                   December 31,
                                                                  --------------
                                                                  2000 1999 1998
                                                                  ---- ---- ----
<S>                                                               <C>  <C>  <C>
Options and warrants............................................. 200  246  647
                                                                  ---  ---  ---
</TABLE>

                                      F-17
<PAGE>

                                   OPTi Inc.

                                  SCHEDULE II

                       VALUATION AND QUALIFYING ACCOUNTS
                                 (In thousands)


<TABLE>
<CAPTION>
                                                Additions
                                       Balance  Charged to              Balance
                                      Beginning Costs and               at End
                                      of Period  Expenses  Deductions  of Period
                                      --------- ---------- ----------  ---------
<S>                                   <C>       <C>        <C>         <C>
Year ended December 31, 1998
  Allowance for doubtful accounts....  $1,600      $421      $1,221(1)   $800
Year ended December 31, 1999
  Allowance for doubtful accounts....  $  800      $ 50      $  699(1)   $151
Year ended December 31, 2000
  Allowance for doubtful accounts....  $  151      $127      $   78(1)   $200
</TABLE>
--------
(1) Represents specific write-off of accounts.


                                      S-1