<PAGE>

================================================================================
                                 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, 2001

             [_] 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)

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

       880 Maude Avenue, Suite A
       Mountain View, California                         94043
(Address of principal executive office)               (Zip Code)

      Registrant's telephone number, including area code: (650) 625-8787

       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 February
22, 2001, as reported on the Nasdaq Stock Market, was approximately
$10,642,165. 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, 2001 was 11,633,903

================================================================================

<PAGE>

                                   OPTi Inc.

                                   Form 10-K
                  For the Fiscal Year Ended December 31, 2001

                                     INDEX

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

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

   Item 2.   Properties................................................................   13

   Item 3.   Legal Proceedings.........................................................   14

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

PART II

   Item 5.   Market for Registrant's Common Stock and Related Stockholder Matters......   15

   Item 6.   Selected Consolidated Financial Data......................................   16

   Item 7.   Management's Discussion and Analysis of Financial Condition and Results of
             Operations................................................................   17

   Item 7A.  Quantitative and Qualitative Disclosures About Market Risk................   20

   Item 8.   Financial Statements and Supplementary Data...............................   20

   Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial
             Disclosure................................................................   20

PART III

   Item 10.  Directors and Executive Officers of the Registrant........................   21

   Item 11.  Executive Compensation....................................................   21

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

   Item 13.  Certain Relationships and Related Transactions............................   21

PART IV

   Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K...........   22

             Signatures................................................................   24
</TABLE>

                                      2

<PAGE>

                                    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. During the third quarter of 2001, as
OPTi considered its various strategic alternatives, including voluntary
liquidation and dissolution, continuing declines in orders from our customers
caused us to temporarily suspend our orders of inventory from semiconductor
foundries. In light of increasing competitive conditions, declining demand on
our products, the lack of new product development and declining revenue, the
Company determined that OPTi's business operations would result in continuing
losses and the erosion of shareholder value. On September 7, 2001, the Board of
Directors approved a plan to voluntarily liquidate and dissolve the Company
(the "Liquidation Plan"). Implementation of this plan would have required the
approval of the shareholders of the Company. Throughout the fourth quarter of
2001, the Company prepared the proxy statement to allow its shareholders to
vote on the Liquidation Plan. The Company also continued to review the status
of its intellectual property position as the Liquidation Plan called for the
Company's patents to be transferred to a liquidating trust. This would allow
the trust to continue to pursue potential patent infringement claims following
liquidation of the Company for the benefit of the Company's shareholders.
Although the decline in customer orders has slowed since OPTi announced Board
approval of the Liquidation Plan, the Company believes that many of the recent
orders are close-out orders from customers in anticipation of OPTi's
liquidation. The Company continues to place orders with foundries as necessary
to meet ongoing demand.

   On January 3, 2002, the Company announced a postponement of the Liquidation
Plan. The Company's Board determined that it would be prudent to postpone the
liquidation plan to allow the Company more time to evaluate its intellectual
property position, including the means by which it would pursue claims for the
potential infringement of certain of its patents. The Board decision was not
due to any change in the Company's business prospects.

   On February 15, 2002, the Company paid a cash dividend of $1.50 per share on
each share of its common stock. The Board of Directors made the decision to pay
a cash dividend based upon the Company's then existing excess cash position.
The Company currently intends to retain any future earnings for use in the
operation of its business. The Company also intends to proceed with a
distribution to its shareholders of cash and shares of stock that the Company
holds in Tripath Technology, Inc., a publicly traded company.

   While the Company continues to assess its intellectual property position, it
also continues to carry on its existing business operations, including
preparing and pursuing claims for the infringement of its patents. OPTi does
not currently believe that its existing business plan will succeed in
preserving shareholder value over the long-term and it does not currently have
an alternative business plan that it believes is viable. The Company may
determine whether it will proceed with the Liquidation Plan, and if so, what
the final form of the Liquidation Plan will entail.

                                      3

<PAGE>

   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 2001 the Company's net product revenue from core logic
chipsets was approximately 36% of its revenue as compared to 68% and 56% for
fiscal years 2000 and 1999, respectively. Peripheral products were 64%, 32% and
44% of the Company's net product revenue during 2001, 2000 and 1999,
respectively.

   From inception through 1995, OPTi's principal business was its core logic
products for desktop personal computers and the Company employed as many as 235
employees over the years. However, in time, OPTi faced increasingly tight
competition from companies with substantially greater financial, technical,
distribution and marketing resources. During February 1999, the Company
completely ceased further development of core logic products, although OPTi has
continued to ship such products to customers. The Company has also been unable
to introduce new products that can compete successfully in its changing markets
as many of the functions of its semiconductor products have been integrated
into chip sets manufactured by OPTi's larger competitors. From 1995 through
2001, the Company's annual net sales declined from $163.7 million to $7.6
million in 2001.

   In the face of declining sales of its existing semiconductor products,
OPTi's Board and management considered a number of strategic alternatives.
Initially, OPTi took steps to minimize operating costs and in 2000, the Company
outsourced its research and development activities. The Company also shifted
its intellectual property strategy to pursue licenses as a means of settling
potential patent infringement claims against companies which may be using its
patented technology without OPTi's permission. OPTi also looked for areas where
it could develop or acquire technology for emerging markets in the electronics
area, increase sales in existing global markets and strengthen its industry
relationships. Since 1999, OPTi's Board and management also investigated
various strategic opportunities and engaged in discussions regarding merger and
asset sale transactions with potential business partners and an investment
bank. However, although OPTi received a number of proposals and engaged in
several discussions during that period, OPTi did not receive any definitive
merger offers.

   Since December 31, 1999, OPTi has reduced its workforce from 45 to six
employees. We began the second quarter of 2001 with 17 employees and continue
to reduce our workforce due to the ongoing decline in demand for our products
and our decision to cease marketing efforts related to a product development
program that failed to meet its expectations.

Industry Background

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

   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.

                                      4

<PAGE>

   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.

   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 USB products is seasonal. In
general, chipsets and USB products experience higher sales in the second half
of the calendar year than they experience in the first half of the year.

Strategy

   As the Company continues to appraise its intellectual property position and
the Liquidation Plan, its ongoing business strategy incorporates the following
elements:

  Pursue Infringement Claims for Proprietary Chipset Technologies

   One of the Company's strategies is to pursue licensing opportunities as a
means of resolving potential infringement of its proprietary intellectual
property 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.
The Company believes that there may be additional companies that may be
infringing its patents. The Company is actively working to explore all possible
arrangements to settle such infringement.

  Address Both U.S. and Asia Markets

   A significant aspect of the Company's market strategy for its USB 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. 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.


                                      5

<PAGE>

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 Mountain View, 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
manufacturers, add in cards suppliers, embedded systems and motherboard
manufacturers. The Company's sales to any single customer fluctuate
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 73.9%, 55.4% and 82.2% of net
product sales in the years ended December 31, 2001, 2000 and 1999,
respectively. Sales to customers in Europe and other countries outside the U.S.
and Asia accounted for 1.1%, 1.6% and 0.5% of net product sales in the years
ended December 31, 2001, 2000 and 1999, respectively. During these three years,
billings to almost all customers were made in U.S. dollars. Approximately 0%,
11% and 16% of net product sales were billed in Japanese yen in 2001, 2000 and
1999, respectively. With the sale of our Japanese subsidiary in June 2000, all
sales in the foreseeable 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 to obtain price reductions from its
foundries), delay 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 prepayment or 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.

                                      6

<PAGE>

Customer Support and Service

   The Company believes that customer service and technical support are
important competitive factors in the embedded and USB product markets. The
Company provides technical support for customers from its headquarters in
Mountain View, 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 marketing and sales.

   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.

   Due to the decline in product sales during 2001, the Company temporarily
suspended its orders of inventory from semiconductor foundries during the third
quarter. Additional orders to the foundries were placed later in the quarter.
The decision on whether to continue placing orders will depend upon the level
of demand for OPTi products and whether OPTi decides to proceed with its
currently postponed plan of liquidation.

Research and Development

   In January 2000, the Company had a reduction in staff as it made the
decision to terminate all internal design efforts on its newer products, such
as the LCD product. As of February 22, 2002, the Company had no research and
development employees. During 2001, 2000 and 1999, respectively, the Company
spent approximately $0.5, $0.6 and $5.6 million on research and development.
All research and development costs are expensed as incurred.

   During July 2001, management informed the Board that OPTi's primary research
and development projects on alternative universal serial bus chips and combined
chipsets had yielded disappointing results due to delays in getting finished
product to the marketplace and, in the opinion of management, no longer
justified the continuing expenditure of OPTi's resources. The Board directed
management to cease the development and the related marketing efforts.

                                      7

<PAGE>

   At this time the Company is not engaged in any research and development
activity.

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, technical support and cost.

   The Company's competitors in both the embedded core logic market and the USB
market include a large number of 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
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, during fiscal year 2001,
included CMD, Lucent Technologies and VIA, Inc. The Company believes that one
or more of these competitors may have or may be in the process of exiting this
marketplace. 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 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 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.

                                      8

<PAGE>

   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, 2001, the Company's backlog scheduled for
delivery within six months was approximately $0.5 million, all of which is
expected to be filled during fiscal 2002 (subject to rescheduling or
cancellations). This amount compares to a backlog of approximately $2.3 million
as of December 31, 2000.

Factors Affecting Earnings and Stock Price

  Cash and Stock Dividend

   On February 15, 2002, the Company paid a cash dividend of $1.50 per share on
each share of the Company's common stock. The Company also plans to distribute
to its shareholders the shares of stock that the Company holds in Tripath
Technology, Inc. in the near future. The Company expects that the trading price
of its common stock will reflect these distributions.

  Plan of Liquidation and Dissolution

   On September 10, 2001, OPTi announced that its Board had approved a plan for
the complete liquidation and dissolution of OPTi, pending approval of the plan
by its shareholders. On January 3, 2002, OPTi announced a postponement of its
plan of voluntary liquidation and dissolution to allow the Company more time to
evaluate its intellectual property position, including the means by which it
would pursue claims for the infringement of certain of its patents. The Company
may decide in the near future to again pursue the voluntary liquidation and
dissolution of OPTi.

   It is possible that the announcement of the plan of liquidation made in
September 2001 caused OPTi's existing customers to seek substitutes for OPTi
products from other suppliers, thereby causing the continuing decline in OPTi
product sales to accelerate. The announcement could also make it more difficult
for OPTi to collect on its accounts receivable balances.

   In addition, the announcements could affect the trading volume and the price
of OPTi stock as investors decide whether or not they wish to hold OPTi shares
and receive the liquidating distributions, when shareholders approve the plan
to liquidate and dissolve OPTi.

                                      9

<PAGE>

Listing of OPTi Common Stock on Nasdaq

   As the trading price of our shares of common stock changes to reflect our
February 2002 cash dividend and our planned distribution of the shares of stock
that the Company holds in Tripath Technology, Inc. our common stock will
continue to trade on the Nasdaq National Market as long as we continue to meet
Nasdaq's listing maintenance standards. If our common stock is delisted from
Nasdaq, trading, if any, would thereafter be conducted on the over-the-counter
market in the so-called "pink sheets" or on the "Electronic Bulletin Board" of
the National Association of Securities Dealers, Inc. Consequently, if our
common stock is delisted, shareholders may find it more difficult to dispose
of, or to obtain accurate quotations as to the price of our common stock. Of
the Nasdaq requirements for continued listing, we believe that our ability to
meet the following criteria will determine how long our shares continue to
trade on the Nasdaq National Market:

  .  Our stockholders' equity must equal or exceed $10 million or our net
     tangible asset must equal or exceed $4 million; and

  .  The minimum daily per share bid price for our stock must equal or exceed
     $1.

   With respect to the minimum bid price requirement, as of February 22, 2002
following our cash dividend, the closing sale price for our shares was $1.30
per share. We expect that our distribution of Tripath shares will take place in
the first half of 2002 and OPTi shareholders will receive approximately 0.17
shares of Tripath stock for each share of OPTi stock. The closing sale price of
Tripath stock on February 22, 2002 was $1.72 per share. If we fail to meet
Nasdaq's minimum bid price criterion for 30 consecutive business days, Nasdaq
will notify us that we are not meeting the requirement. We will then be given a
90 day grace period during which our shares must exceed the minimum bid price
for at least ten consecutive trading days for us to avoid being delisted at the
end of the grace period.

  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, price competition,
changes in customer demand, ability to continue to sell existing products,
inventory adjustments, changes in the availability of foundry capacity and
changes in the mix of products sold. In the future, one or more of these
factors may adversely effect the Company's operating results in any given
period.

  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.

  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.

   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.

                                      10

<PAGE>

  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 or increased volumes. The Company, after its decision to
terminate all new product development will have no new product introductions
for the foreseeable future. Any 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 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.

   During 2001 the Company had three customers that represented more than 10%
of its sales for the year. The Company sold approximately $2.5 million of its
USB products to Holystone Enterprises Limited, a Taiwan based company,
representing approximately 32.7% of net sales for the period. The Company also
sold approximately $1.1 million of embedded core logic and USB products to Max
Components, a Hong Kong based company, representing approximately 14.7% of net
sales during 2001. Also in fiscal 2001 the Company sold to OPTi Japan, its
former subsidiary, approximately $0.9 million of embedded product representing
approximately 11.8% of net sales. 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 $2.4 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 $1.1 million in USB products, representing 11% of net sales for
that period. In 1999, the Company sold approximately $6.0 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 $6.0 million in USB products,
representing a combined 27% of net sales for that period.

   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. 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 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

                                      11

<PAGE>

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
30% of the Company's receivables at December 31, 2001 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 wafer 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.

                                      12

<PAGE>

  Dependence on Intellectual Property Position

   The success of the Company's current strategy of resolving potential
infringement of its patented 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 pursue infringement claims on 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, 2001, the Company had six full-time employees, including
one marketing, sales, and support and five in finance, administration and
operations. 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.

Executive Officers of the Registrant

   The executive officers of the Company as of February 22, 2002 were as
follows:

<TABLE>
<CAPTION>
Name                     Age Position with the Company
----                     --- -------------------------
<C>                      <C> <S>
Bernard T. Marren....... 66  President and Chief Executive Officer, Chairman of the Board
Michael Mazzoni......... 39  Chief Financial Officer and Secretary
</TABLE>

   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 joining 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.

Item 2.  Properties

   The Company is headquartered in Mountain View, California, where it leases
administrative, sales and marketing, and distribution facilities in one
location consisting of approximately, 1,800 square feet. The Company has two
additional buildings in Milpitas, one approximating 26,719 square feet, that is
sub-leased through the life of the lease, which expires October 2002. The other
Milpitas facility is currently vacant and is leased through October 2002. The
Company believes that these facilities are adequate for its needs in the
foreseeable future.

                                      13

<PAGE>

Item 3.  Legal Proceedings

   The Company has been notified of claims that it may be infringing patents,
maskwork rights, or copyrights owned by third parties. There can be no
assurance that the Company will not become involved in litigation regarding the
alleged infringements by the Company of third party intellectual property
rights. However, the Company believes that the final disposition of such
matters will not have a material adverse effect on the Company's financial
position, results of operation and cash flows.

   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.

   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 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.

                                      14

<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 February 15, 2002, the Company paid a cash dividend of $1.50 per share on
each share of its common stock. The Board of Directors made the decision to pay
a cash dividend based upon the Company's then existing excess cash position.
The Company currently intends to retain any future earnings for use in the
operation of its business. The Company intends to re-evaluate its position
regarding dissolution in the near future and may put forth a vote to its
shareholders at a special meeting of shareholders.

   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:
  2001
     High................................  $3.08     $3.92    $3.87    $5.00
     Low.................................   2.72      2.75     2.92     3.00
  2000
     High................................  $6.31     $6.46    $5.50    $7.50
     Low.................................   3.69      3.75     3.75     4.50
</TABLE>

   As of February 22, 2002, there were approximately 153 holders of record of
the Company's common stock.

                                      15

<PAGE>

Item 6.  Selected Consolidated Financial Data

<TABLE>
<CAPTION>
                                                                 Year Ended December 31,
                                                       -------------------------------------------
                                                        2001     2000    1999     1998      1997
                                                       -------  ------- -------  -------  --------
                                                          (In thousands, except per share data)
<S>                                                    <C>      <C>     <C>      <C>      <C>
Consolidated Statement of Operations Data:
Net sales............................................. $ 7,566  $23,198 $22,257  $40,003  $ 67,842
Cost of sales.........................................   3,555    6,453  14,403   26,712    50,471
                                                       -------  ------- -------  -------  --------
Gross margin..........................................   4,011   16,745   7,854   13,291    17,371
Operating expenses....................................   4,776    7,578  16,776   20,623    27,836
                                                       -------  ------- -------  -------  --------
Operating income (loss)...............................    (765)   9,167  (8,922)  (7,332)  (10,465)
Other income (expenses):
   Gain on sale of Audio line.........................      --       --      --       --    12,391
   Interest income and other..........................   1,655    2,138   3,231    3,717     3,031
   Interest expense...................................      --       --    (261)    (312)     (473)
                                                       -------  ------- -------  -------  --------
Income (loss) before provision for income taxes.......     890   11,305  (5,952)  (3,927)    4,484
Provision for income taxes............................      12      261      59      285     9,872
                                                       -------  ------- -------  -------  --------
Net income (loss)..................................... $   878  $11,044 $(6,011) $(4,212) $ (5,388)
                                                       =======  ======= =======  =======  ========
Basic net income (loss) per share..................... $  0.08  $  0.95 $ (0.54) $ (0.35) $  (0.42)
                                                       =======  ======= =======  =======  ========
Shares used in computing basic per share amounts......  11,638   11,644  11,059   12,196    12,838
                                                       =======  ======= =======  =======  ========
Diluted net income (loss) per share................... $  0.08  $  0.95 $ (0.54) $ (0.35) $  (0.42)
                                                       =======  ======= =======  =======  ========
Shares used in computing diluted per share amounts....  11,639   11,653  11,059   12,196    12,838
                                                       =======  ======= =======  =======  ========
Consolidated Balance Sheet Data:
   Cash, cash equivalents, and short-term investments. $34,847  $58,126 $23,722  $60,903  $ 72,508
   Working capital....................................  35,461   56,950  19,682   55,791    75,360
   Total assets.......................................  36,961   61,272  28,232   81,575   111,615
   Long-term obligations, excluding current portion...      --       --     310    1,810     3,473
   Shareholders' equity...............................  35,793   57,466  21,182   69,285    92,723
   Cash dividends declared per common share........... $    --  $    -- $  4.00  $    --  $     --
</TABLE>

                                      16

<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 2001, the Company shipped more
than two 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.

Critical Accounting Policies

   We have identified the policies below as critical to our business operations
and the understanding of our results of operations. The impact and any
associated risks related to these policies on our business operations is
discussed throughout Management's Discussion and Analysis of Financial
Condition and Results of Operations where such policies affect our reported and
expected financial results. For a detailed discussion on the application of
these and other accounting policies, see Note 2 in the Notes to the
Consolidated Financial Statements in Item 14 of this Annual Report on Form
10-K, beginning on page F-6. Note that our preparation of this Annual Report on
Form 10-K requires us to make estimates and assumptions that affect the
reported amount of assets and liabilities, disclosure of contingent assets and
liabilities at the date of our financial statements, and the reported amounts
of revenue and expenses during the reporting period. There can be no assurance
that actual results will not differ from those estimates.

  Revenue Recognition

   The Company recognizes revenue in accordance with SEC Staff Accounting
Bulletin No. 101, Revenue Recognition in Financial Statements (SAB 101), as
amended by SAB 101A and 101B. SAB 101 requires that four basic criteria must be
met before revenue can be recognized: (1) persuasive evidence of an arrangement
exists; (2) delivery has occurred or services rendered; (3) the fee is fixed
and determinable; and (4) collectibility is reasonably assured. Determination
of criteria (3) and (4) are based on management's judgments regarding the fixed
nature of the fee charged for services rendered and products delivered and the
collectibility of those fees. Should changes in conditions cause management to
determine these criteria are not met for certain future transactions, revenue
recognized for any reporting period could be adversely affected.

  Bad Debt

   OPTi maintains allowances for doubtful accounts for estimated losses
resulting from the inability of its customers to make required payments. If the
financial condition of OPTi's customers were to deteriorate, resulting in an
impairment of their ability to make payments, additional allowances may be
required.

  Inventory

   OPTi writes down its inventory for estimated obsolescence or unmarketable
inventory equal to the difference between the cost of inventory and the
estimated market value based upon assumptions about future demand and market
conditions. If actual market conditions are less favorable than those projected
by management, additional inventory write-downs may be required.


                                      17

<PAGE>

  Contingencies

   We are subject to proceedings, lawsuits and other claims related to
environmental, labor, product and other matters. We are required to assess the
likelihood of any adverse judgments or outcomes to these matters as well as
potential ranges of probable losses. A determination of the amount of reserves
required, if any, for these contingencies are made after careful analysis of
each individual issue. The required reserves may change in the future due to
new developments in each matter or changes in approach such as a change in
settlement strategy in dealing with these matters.

  Valuation of Certain Marketable Equity Securities

   The Company currently classifies its investment securities as
available-for-sale securities. Pursuant to SFAS No. 115 such securities are
measured at fair market value in the financial statements with unrealized gains
or losses recorded in other comprehensive income until the securities are sold
or otherwise disposed of. However, in accordance with SFAS No. 115 a decline in
fair market value below cost that is other than temporary is accounted for as a
realized loss.

   2001 Compared to 2000--Net sales for the year ended December 31, 2001
("2001") decreased 67% to $7.6 million, compared to net sales of $23.2 million
for the year ended December 31, 2000 ("2000"). This decrease in net sales was
mainly attributable to a one-time fully paid license in the amount of $13.3
million that the Company received during 2000. Net product sales decreased 23%
to $7.6 million as compared to net product sales of $9.9 million in 2000. This
decrease in net products sales for 2001, was attributable to a decline in
embedded core logic sales, offset in part, by an increase in USB controller
sales.

   Gross margin for 2001 decreased to approximately 53% as compared to
approximately 72% in 2000. This decrease in gross margin is attributable to the
license revenue of $13.3 million in 2000, which had no associated cost of goods
sold. Gross margin as a percent of net product sales in 2001 was approximately
53% as compared to 35% in 2000. This increase in gross margin as a percentage
of net product sales during 2001, was attributable to the Company selling
previously written down product during the year and lower costs of
manufacturing that the Company was able to secure during 2001.

   Research and development ("R&D") expenses for 2001 decreased approximately
9% to $509,000, compared with $559,000 in 2000. This decrease in R&D expenses
for 2001 was related to the Companies decision to terminate all future product
development in July of 2001. In the future the Company may hire consultants to
provide some R&D.

   Selling, general and administrative ("SG&A") expenses for 2001 were $4.3
million as compared to $7.0 million for 2000. This represented an approximate
39% decrease in SG&A expenses year over year. This decrease was primarily
related to the reduction in costs and expenses in defending and settling the
Crystal litigation of approximately $2.4 million, as well as decreased costs
related to reduced headcount expenses and lower costs relating to reduced net
sales.

   Net interest and other income for 2001 was $1.7 million as compared to $2.1
million in 2000. Interest and other income consists principally of interest
income and has primarily decreased due to lower average interest rates in 2001
as compared to 2000, offset in part, by $0.2 million the Company received by
selling its bankruptcy claim against TriTech Microelectronics of Singapore.

   The Company's effective tax rate was 1% for 2001 and 2% for 2000. The
Company's effective tax rate differed from the federal statutory rate in 2001
and 2000 primarily due to the utilization of prior year tax losses carried
forward.

   2000 Compared to 1999--Net sales for the year ended December 31, 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

                                      18

<PAGE>

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.

   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 peripheral products, 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 would be comparable to the 35% of net product gross margin in 1999.

   Research and development 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.

   Selling, general and administrative 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.

   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 and
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 2001, the Company provided cash from operations of approximately
$0.9 million primarily due to a decrease in inventory of $1.0 million and net
income for the year of $0.9 million, offset in part, by a decrease in accounts
payable of $0.8 million. 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 $4.0
million as the Company made a payment to Crystal as settlement of the patent
litigation.

   The Company's investing activities provided cash of approximately $9.6
million during 2001. The cash provided in investing activities was primarily
attributable to the net maturity of $9.7 million in short term investments. In
2000, 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 2001, financing activities of the Company used approximately $0.1 million
in cash relating to the repurchase of common stock. In 2000, financing
activities provided the Company approximately $0.2 million relating to the
exercise of stock options.

   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

                                      19

<PAGE>

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, 2001, the Company's principal sources of liquidity
included cash and cash equivalents and short term investments of approximately
$34.8 million and working capital of approximately $35.5 million. After the
cash distribution paid by the Company in February 2002 of $17.5 million, and
the proposed distribution of Tripath Technology stock, valued at $3.4 million
at December 31, 2001, the Company believes that the remaining sources of
liquidity will satisfy the Company's projected working capital and other cash
requirements through at least the next twelve months.

Item 7A.  Quantitative and Qualitative Disclosure About Market Risk

  Tripath Technology

   Tripath Technology, Inc. ("Tripath"), an investment held by the Company,
became publicly traded in August 2000. This investment is reflected in the
Company's December 31, 2001 balance sheet under short term investments at a
value of approximately $3.4 million. Tripath to date has a limited operating
history as it began to ship products in 1998 and many of their products have
only recently been introduced. Tripath also has a history of losses. As of
December 31, 2001, Tripath had an accumulated deficit of approximately $138
million. They incurred net losses of approximately $27 million in 2001, $41
million in 2000 and $32 million in 1999. They expect to continue to incur net
losses and these losses may be substantial.

  Interest Rate Sensitivity

   We maintain our cash and cash equivalents primarily in money market funds.
We do not have any derivative financial instruments. As of December 31, 2001,
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.

                                      20

<PAGE>

                                   PART III

Item 10.  Directors and Executive Officers of the Registrant

   The information concerning our directors required by this Item is
incorporated by reference to our Proxy Statement under the heading "Proposal
No. 1 Election of Directors".

Item 11.  Executive Compensation

   The information required by this Item is incorporated by reference to our
Proxy Statement under the heading "Executive Compensation and Other
Information".

Item 12.  Security Ownership of Certain Beneficial Owners and Management

   The information required by this Item is incorporated by reference to our
Proxy Statement under the headings "Proposal No. 1 Election of Directors" and
"Security Ownership of Certain Beneficial Owners and Management".

Item 13.  Certain Relationship and Related Transactions

   The information required by this Item is incorporated by reference to our
Proxy Statement under the heading "Certain Relationships and Related
Transactions".

                                      21

<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, 2001 and 2000.......................... F-2
Consolidated Statements of Operations for the years ended December 31, 2001, 2000
  and 1999....................................................................... F-3
Consolidated Statements of Shareholders' Equity for the years ended December 31,
  2001, 2000 and 1999............................................................ F-4
Consolidated Statements of Cash Flows for the years ended December 31, 2001, 2000
  and 1999....................................................................... 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  Promissary 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 Coporation 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)
 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. (7)
</TABLE>

                                      22

<PAGE>

<TABLE>
<CAPTION>
           Exhibit
           Number  Description
           ------  -----------
           <C>     <S>
            21.1   Subsidiaries of Registrant
            23.1   Consent of Ernst & Young LLP, Independent Auditors
            24.1   Power of Attorney (see page 24, 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.
(7) Incorporated by reference to the Annual Report on Form 10-K for the Fiscal
    Year Ended December 31, 2000, of OPTi Inc.

   (b) Reports on Form 8-K.

      No reports on Form 8-K were filed during the last quarter of 2001.

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

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

                                      23

<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 Mountain View, State of California on the day of March 4, 2002.

                                          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:

          Signatures                    Title                    Date
          ----------                    -----                    ----

     /s/  BERNARD MARREN  President and Chief Executive      March 4, 2002
     --------------------   Officer and Chairman of the
          Bernard Marren    Board (Principal executive
                            officer)

     /s/  MICHAEL MAZZONI Chief Financial Officer (Principal March 4, 2002
     --------------------   Financial and Accounting
          Michael Mazzoni   Officer)

     /s/  STEPHEN DUKKER  Director                           March 4, 2002
     --------------------
          Stephen Dukker

       /s/  KAPIL NANDA   Director                           March 4, 2002
     --------------------
          Kapil K. Nanda

     /s/  WILLIAM WELLING Director                           March 4, 2002
     --------------------
          William Welling


                                      24

<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, 2001 and 2000, and the related consolidated statements of
operations, shareholders' equity, and cash flows for each of the three years in
the period ended December 31, 2001. Our audits also included the financial
statement 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, 2001 and 2000, and the consolidated results of its operations and
cash flows for each of the three years in the period ended December 31, 2001,
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 basic 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 15, 2002

                                      F-1

<PAGE>

                                   OPTi Inc.

                          CONSOLIDATED BALANCE SHEETS
                     (In thousands, except share amounts)

<TABLE>
<CAPTION>
                                                                    December 31,
                                                                 -----------------
                                                                  2001      2000
                                                                 -------  --------
<S>                                                              <C>      <C>
                          ASSETS
Current assets:
   Cash and cash equivalents.................................... $22,564  $ 12,146
   Short-term investments.......................................  12,283    45,980
   Accounts receivable, net of allowance for doubtful
     accounts of $50 in 2001 and $200 in 2000...................   1,091     1,131
   Inventories..................................................     189     1,140
   Prepaid expenses and other current assets....................     502       359
                                                                 -------  --------
       Total current assets.....................................  36,629    60,756
Property and equipment:
   Machinery and equipment......................................     185    10,359
   Furniture and fixtures.......................................      54       819
                                                                 -------  --------
                                                                     239    11,178
   Accumulated depreciation.....................................    (194)  (11,021)
                                                                 -------  --------
                                                                      45       157
Other assets....................................................     287       359
                                                                 -------  --------
       Total assets............................................. $36,961  $ 61,272
                                                                 =======  ========

           LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilites:
   Accounts payable............................................. $   136  $    900
   Accrued expenses.............................................     652     1,013
   Accrued employee compensation................................     315       309
   Deferred tax liability.......................................      65     1,584
                                                                 -------  --------
       Total current liabilities................................   1,168     3,806

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--11,633,903 in 2001,
         and 11,655,303 in 2000.................................  22,567    22,646
Accumulated other comprehensive Income..........................   2,616    25,088
Retained earnings...............................................  10,610     9,732
                                                                 -------  --------
   Total shareholders' equity...................................  35,793    57,466
                                                                 -------  --------
   Total liabilities and shareholders' equity................... $36,961  $ 61,272
                                                                 =======  ========
</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,
                                                       ------------------------
                                                        2001     2000    1999
                                                       -------  ------- -------
<S>                                                    <C>      <C>     <C>
Sales:
   Product sales...................................... $ 7,566  $ 9,887 $22,257
   Licence sales......................................      --   13,311      --
                                                       -------  ------- -------
Net sales.............................................   7,566   23,198  22,257
Costs and expenses:
   Cost of product sales..............................   3,555    6,453  14,403
   Research and development...........................     509      559   5,611
   Selling, general and administrative................   4,267    7,019  11,165
                                                       -------  ------- -------
Total costs and expenses..............................   8,331   14,031  31,179
                                                       -------  ------- -------
Operating income (loss)...............................    (765)   9,167  (8,922)
Interest income and other.............................   1,655    2,138   3,231
Interest expense......................................      --       --    (261)
                                                       -------  ------- -------
Income (loss) before provision for income taxes.......     890   11,305  (5,952)
Provision for income taxes............................      12      261      59
                                                       -------  ------- -------
Net income (loss)..................................... $   878  $11,044 $(6,011)
                                                       =======  ======= =======
Basic net income (loss) per share..................... $  0.08  $  0.95 $ (0.54)
                                                       =======  ======= =======
Shares used in computing basic per share amounts......  11,638   11,644  11,059
                                                       =======  ======= =======
Diluted net income (loss) per share................... $  0.08  $  0.95 $ (0.54)
                                                       =======  ======= =======
Shares used in computing diluted per share amounts....  11,639   11,653  11,059
                                                       =======  ======= =======
</TABLE>


                            See accompanying notes.

                                      F-3

<PAGE>

                                   OPTi Inc.

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

<TABLE>
<CAPTION>
                                             Common Stock       Accumulated                Total
                                         --------------------  Comprehensive Retained  Shareholders'
                                           Shares     Amount      Income     Earnings     Equity
                                         ----------  --------  ------------- --------  -------------
<S>                                      <C>         <C>       <C>           <C>       <C>
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
   Net income...........................         --        --          --      11,044      11,044
   Unrealized gain on marketable
     securities.........................         --        --      25,088          --      25,088
                                                                                         --------
   Comprehensive income.................                                                   36,132
   Sale of common stock.................     34,333       152          --          --         152
                                         ----------  --------    --------    --------    --------
Balance at December 31, 2000............ 11,655,303    22,646      25,088       9,732      57,466
   Net income...........................         --        --          --         878         878
   Unrealized loss on marketable
     securities.........................         --        --     (22,472)         --     (22,472)
                                                                                         --------
   Comprehensive loss...................                                                  (21,594)
   Repurchase of common stock...........    (21,400)      (79)         --          --         (79)
                                         ----------  --------    --------    --------    --------
Balance at December 31, 2001............ 11,633,903  $ 22,567    $  2,616    $ 10,610    $ 35,793
                                         ==========  ========    ========    ========    ========
</TABLE>



                            See accompanying notes

                                      F-4

<PAGE>

                                   OPTi Inc.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In thousands)

<TABLE>
<CAPTION>
                                                                Year Ended December 31,
                                                             ----------------------------
                                                               2001      2000      1999
                                                             --------  --------  --------
<S>                                                          <C>       <C>       <C>
Operating activities
Net income (loss)........................................... $    878  $ 11,044  $ (6,011)
Adjustments to reconcile net income (loss) to net cash
  provided by (used in) operating activities:
   Depreciation and amortization............................      212       465     3,717
   Loss on sale of OPTi Japan...............................       --       (50)       --
   Changes in operating assets and liabilities:
       Accounts receivable..................................       40       (61)    1,773
       Inventories..........................................      951      (919)      894
       Prepaid expenses and other assets....................      (71)      672       (14)
       Accounts payable.....................................     (764)      488    (4,790)
       Accrued expenses.....................................     (361)   (4,021)    3,442
       Accrued employee compensation........................        6      (203)     (540)
                                                             --------  --------  --------
Net cash provided by (used in) operating activities.........      891     7,415    (1,529)

Investing activities
Purchases of property and equipment.........................     (115)      (44)     (248)
Sale of Property and equipment..............................       15        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..........................  (36,871)  (50,127)  (36,150)
Maturity of short term investments..........................   46,577    31,544    40,400
                                                             --------  --------  --------
Net cash provided by (used in) investing activities.........    9,606   (19,143)   14,042

Financing activities
Proceeds from sale of common stock..........................       --       152     4,392
Repurchase of common stock..................................      (79)       --        --
Cash dividend...............................................       --        --   (46,484)
Principal payments on capital lease obligations.............       --        --    (3,352)
                                                             --------  --------  --------
Net cash provided by (used in) financing activites..........      (79)      152   (45,444)
Net increase (decrease) in cash and cash equivalents........   10,418   (11,576)  (32,931)
Cash and cash equivalents at beginning of year..............   12,146    23,722    56,653
                                                             --------  --------  --------
Cash and cash equivalents at end of year.................... $ 22,564  $ 12,146  $ 23,722
                                                             ========  ========  ========

Supplemental cash flow information
Cash paid for interest...................................... $     --  $     --  $    261
Cash paid for income taxes.................................. $     51  $    148  $     --
</TABLE>

                            See accompanying notes.

                                      F-5

<PAGE>

                                   OPTi Inc.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1--Basis of Presentation

   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.

   Liquidation of the Company  On September 7, 2001, the Board of directors
approved a plan to liquidate and dissolve the Company. Implementation of this
plan would have required the approval of the shareholders of the Company. The
Board anticipated that, as part of the liquidation, the Company would
distribute to its shareholders cash, Tripath Technology Inc. shares, plus any
residual cash held by the Company at the end of the liquidation period.
Currently, the Company's business activities consist primarily of continued
sales of its universal serial bus controller devices and core logic products
for embedded designs. On January 3, 2002, the Company announced the
postponement of its plan. Refer to Note 13, for further details.

   The consolidated financial statements of the Company as of December 31, 2001
and December 31, 2000, respectively, were prepared under generally accepted
accounting principles for a going concern entity and do not reflect changes in
the carrying amounts of assets and liabilities which may be affected should the
shareholders approve a plan of liquidation of the Company's assets. Amounts
that may be affected include those related to the carrying value of property,
plant and equipment as well as possible adjustments of amounts related to other
assets and liabilities of the Company including additional costs for severance.

Note 2--Summary of Significant Accounting Policies

   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 sixty days. In
addition, the Company has an equity investment in Tripath Technology, Inc., a
publicly traded company. At December 31, 2001, all short-term investments are
designated as available for sale. Interest and dividends on cash investments
are included in interest income. There were no realized gains or losses on the
Company's investments during 2001. Unrealized gains and losses, net of taxes,
are recorded in accumulated other comprehensive income.

   Taxes on Earnings  Deferred tax assets and liabilities are recognized for
the expected tax consequences of temporary differences between the tax bases of
assets and liabilities and their reported amounts using enacted tax rates in
effect for the year the differences are expected to reverse. The Company
records a valuation allowance to reduce the deferred tax assets to the amount
that is more likely than not to be recognized.

   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.

                                      F-6

<PAGE>

                                   OPTi Inc.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   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 two 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.

   Accounting for Employee Stock Options  The Company accounts for employee
stock options in accordance with APB Opinion No. 25 and has adopted the
"disclosure only" alternative described in SFAS 123.

   Comprehensive Income (Loss)  Comprehensive income (loss) includes net
earnings as well as other comprehensive income (loss). The Company's other
comprehensive income (loss) consists of unrealized gains or losses on
available-for-sale securities recorded net of tax.

   Reclassifications  Certain reclassifications have been made to prior year
balances in order to conform to the current year presentation.

   Recent Pronouncements  In July 2001, the FASB issued SFAS 141 "Business
Combinations" and SFAS 142 "Goodwill and Other Intangible Assets". SFAS 141
eliminates the pooling-of-interest method of accounting for business
combinations except for qualifying business combinations that were initiated
prior to July 1, 2001. Statement 141 further clarifies the criteria to
recognize intangible assets separately from goodwill. The requirements of SFAS
141 are effective for any business combination accounted for by the purchase
method that is completed after June 30, 2001 (i.e., the acquisition date is
July 1, 2001 or after).

   The adoption of SFAS 141 and SFAS 142 will not have a material impact on the
Company's results of operations or financial position as the Company does not
currently have any goodwill or other intangible assets.

   In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS 144 amends existing
accounting guidance on asset impairment and provides a single accounting model
for long-lived assets to be disposed of. Among other provisions, the new rules
change the criteria for classifying an asset as held-for-sale. The standard
also broadens the scope of businesses to be disposed of that qualify for
reporting of discontinued operations, and changes the timing of recognizing
losses on such operations. The provisions of SFAS 144 will be effective for
fiscal year 2002. The adoption of SFAS 144 is not expected to have a material
impact on the Company's results of operations or financial position.

Note 3--Inventories

   A summary of inventories follows (in thousands):

<TABLE>
<CAPTION>
                                                                2001  2000
                                                                ---- ------
    <S>                                                         <C>  <C>
    Finished Goods............................................. $123 $  871
    Work in Process............................................   66    269
                                                                ---- ------
       Total Inventory......................................... $189 $1,140
                                                                ==== ======
</TABLE>

                                      F-7

<PAGE>

                                   OPTi Inc.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Note 4--Cash Equivalents and Marketable Securities

   The following is a summary of available for sale securities as of December
31, 2001 and 2000:

<TABLE>
<CAPTION>
                                           2001                           2000
                              ------------------------------ ------------------------------
                                          Gross    Estimated             Gross    Estimated
                              Amortized Unrealized   Fair    Amortized Unrealized   Fair
                                Cost      Gains      Value     Cost      Gains      Value
                              --------- ---------- --------- --------- ---------- ---------
<S>                           <C>       <C>        <C>       <C>       <C>        <C>
Money Market Funds...........  $22,564        --    $22,564   $ 1,870        --    $ 1,870
Certificates of Deposit......  $    --        --    $    --   $10,276        --    $10,276
Commercial Paper.............  $    --        --    $    --   $10,338        --    $10,338
U.S. Government Bonds and
  Notes......................  $ 8,877        --    $ 8,877   $ 8,245        --    $ 8,245
Investment in Tripath
  Technology.................  $   725    $2,681    $ 3,406   $   725   $26,672    $27,397
                               -------    ------    -------   -------   -------    -------
                               $32,166    $2,681    $34,847   $31,454   $26,672    $58,126
                               =======    ======    =======   =======   =======    =======
Reported as:
Cash and cash equivalents....  $22,564        --    $22,564   $12,146        --    $12,146
Short-term investments.......  $ 9,602    $2,681    $12,283   $19,308   $26,672    $45,980
                               -------    ------    -------   -------   -------    -------
                               $32,166    $2,681    $34,847   $31,454   $26,672    $58,126
                               =======    ======    =======   =======   =======    =======
</TABLE>

   At December 31, 2001 and 2000, net unrealized gains on marketable securities
have been included in the Company's Shareholders' Equity, less the associated
deferred tax liability of $65,000 and $1,584,000, respectively.

   All available for sale securities held by the Company as of December 31,
2001 and 2000 had a maturity date of one year or less.

Note 5--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, redemption 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.

Stock Option Plans

   Pro forma information regarding net income (loss) and net income (loss) per
share is required as if the Company has accounted for its employee stock
options granted subsequent to December 31, 1994 under the fair value method.
The fair value for these options was estimated at the date of the grant using a
Black-Scholes option pricing model.

                                      F-8

<PAGE>

                                   OPTi Inc.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   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>
                                                    2001       2000       1999
                                                  ---------  ---------  ---------
<S>                                               <C>        <C>        <C>
Expected Life.................................... 4.8 years  4.8 years  4.8 years
Expected volatility..............................      0.58       0.88       0.95
Risk Free Interest Rate..........................      4.50%      6.28%      6.00%
</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>
                                                      2001   2000    1999
                                                      ----- ------- -------
    <S>                                               <C>   <C>     <C>
    Pro forma net income (loss)...................... $ 758 $10,821 $(6,415)
    Pro forma basic net income (loss) per share...... $0.07 $  0.93 $ (0.58)
    Pro forma diluted net income (loss) per share.... $0.07 $  0.93 $ (0.58)
</TABLE>

   The weighted average fair value of options granted under all employee stock
option plans was $2.86 and $5.82 for the years ending 2000 and 1999,
respectively. No options were granted to employees during fiscal year 2001.

  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 8,066,478 incentive stock options
to employees or 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.

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

<TABLE>
<CAPTION>
                                                    Outstanding Weighted Avg.
                                                      Shares    Exercise Price
                                                    ----------- --------------
  <S>                                               <C>         <C>
  Outstanding at December 31, 1998.................   362,814       $5.20
     Granted.......................................    45,000       $5.94
     Exercised.....................................  (245,877)      $5.32
     Canceled......................................        --       $  --
                                                     --------
  Outstanding at December 31, 1999.................   161,937       $5.15
     Granted.......................................        --       $  --
     Exercised.....................................   (10,000)      $5.32
     Canceled......................................   (51,937)      $6.13
                                                     --------
  Outstanding at December 31, 2000.................   100,000       $4.63
     Granted.......................................        --       $  --
     Exercised.....................................        --       $  --
     Canceled......................................        --       $  --
                                                     --------
  Outstanding at December 31, 2001.................   100,000       $4.63
                                                     ========
</TABLE>

                                      F-9

<PAGE>

                                   OPTi Inc.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   Approximately 100,000, 100,000 and 162,000 options outstanding were
exercisable as of December 31, 2001, 2000 and 1999, respectively. The weighted
average exercise price for the exercisable shares as of December 31, 2001, was
$4.63.

  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 Avg.
                                                      Shares    Exercise Price
                                                    ----------- --------------
  <S>                                               <C>         <C>
  Outstanding at December 31, 1998.................   813,768       $5.06
     Granted.......................................    45,500       $5.69
     Exercised.....................................  (542,933)      $5.04
     Canceled......................................  (266,522)      $5.19
                                                     --------
  Outstanding 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
     Granted.......................................        --       $  --
     Exercised.....................................        --       $  --
     Canceled......................................   (71,000)      $3.77
                                                     --------
  Outstanding at December 31, 2001.................    36,000       $3.75
                                                     ========
</TABLE>

   Approximately 36,000, 58,500 and 50,000 options outstanding were exercisable
as of December 31, 2001, 2000 and 1999, respectively. The weighted average
exercise price for the exercisable shares as of December 31, 2001, was $3.75.

  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.

                                     F-10

<PAGE>

                                   OPTi Inc.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   The activity under the 1993 Director Plan is as follows:

<TABLE>
<CAPTION>
                                                    Outstanding Weighted Avg.
                                                      Shares    Exercise Price
                                                    ----------- --------------
  <S>                                               <C>         <C>
  Outstanding at December 31, 1998.................    55,999       $5.64
     Granted.......................................        --       $  --
     Exercised.....................................   (21,333)      $3.44
     Canceled......................................        --       $  --
                                                      -------
  Outstanding at December 31, 1999.................    34,666       $6.99
     Granted.......................................        --       $  --
     Exercised.....................................        --       $  --
     Canceled......................................        --       $  --
                                                      -------
  Outstanding at December 31, 2000.................    34,666       $6.99
     Granted.......................................        --       $  --
     Exercised.....................................        --       $  --
     Canceled......................................        --       $  --
                                                      -------
  Outstanding at December 31, 2001.................    34,666       $6.99
                                                      =======
</TABLE>

   Approximately 35,000 options outstanding were exercisable as of December 31,
2001, 2000 and 1999, respectively. The weighted average exercise price for the
exercisable shares as of December 31, 2001, was $6.99.

Stock Options Outstanding and Stock Options Exercisable:

   The following table summarizes information about all options outstanding at
December 31, 2001:

<TABLE>
<CAPTION>
                       Options Outstanding              Options Exercisable
            ----------------------------------------- ------------------------
  Range of            Weighted Average    Weighted                 Weighted
  Exercise   Number   Contractual Life    Average      Number      Average
   Prices   of Shares    (in years)    Exercise Price of Shares Exercise Price
 ---------- --------- ---------------- -------------- --------- --------------
 <S>        <C>       <C>              <C>            <C>       <C>
      $3.75   36,000        8.53           $3.75        36,000      $3.75
      $4.63  100,000        6.97           $4.63       100,000      $4.63
 $5.31-7.50   34,666        4.65           $6.99        34,666      $6.99
</TABLE>

  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. No shares were issued under this plan in 2001, 2000 and
1999, respectively. As of December 31, 2001, 149,399 shares had been issued
under the Purchase Plan.

  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

                                     F-11

<PAGE>

                                   OPTi Inc.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

250,000 shares available. Under the Purchase Plan, qualified employees are
entitled to purchase shares at 85% of fair market value. No shares were issued
under this plan in 2001, 2000 and 1999, respectively. As of December 31, 2001,
249,998 shares had been 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, 2001, the Company has reserved shares of common stock for
future issuance as follows:

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

Note 6--Commitments

   The Company leases its facilities under noncancelable operating leases. At
December 31, 2001, future minimum commitments related to these leases are as
follows (in thousands):

<TABLE>
        <S>                                                         <C>
        2002....................................................... $644
        2003.......................................................   69
                                                                    ----
           Total................................................... $713
                                                                    ====
</TABLE>

   The Company exercised it early termination option on one of its buildings in
October 2001, with a buyout payment of $150,000, and the lease on that building
will now terminate as of October 2002. The Company has vacated the facility and
expensed the remaining lease obligation during fiscal year 2001. By exercising
the option the Company reduced its rent commitment by $251,000, $1,514,000,
$1,558,000 and $1,603,000 for the years 2002 through 2005, respectively.

   The Company entered into an agreement to sub-lease a facility in 1996 that
will reduce its commitment above by approximately $357,000 for 2002. This
sub-lease is for a facility that the Company has never occupied.

   Rent expense for operating leases amounted to $527,000, $431,000 and
$421,000 for the years ended December 31, 2001, 2000 and 1999, respectively.

                                     F-12

<PAGE>

                                   OPTi Inc.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Note 7--Concentrations

  Tripath Technology

   Tripath Technology, Inc. ("Tripath"), an investment held by the Company,
became publicly traded in August 2000. This investment is reflected in the
Company's December 31, 2001 balance sheet under short term investments at a
value of approximately $3.4 million. Tripath to date has a limited operating
history as it began to ship products in 1998 and many of their products have
only recently been introduced. Tripath also has a history of losses. As of
December 31, 2001, Tripath had an accumulated deficit of approximately $138
million. They incurred net losses of approximately $27 million in 2001, $41
million in 2000 and $32 million in 1999. They expect to continue to incur net
losses and these losses may be substantial.

  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.
During 2001 the Company had three customers that represented more than 10% of
its sales for the year. The Company sold approximately $2.5 million of its USB
products to Holystone Enterprises Limited, a Taiwan based company, representing
approximately 32.7% of net sales for the period. The Company also sold
approximately $1.1 million of embedded core logic and USB products to Max
Components, a Hong Kong based company, representing approximately 14.7% of net
sales during 2001. Also in fiscal 2001 the Company sold to OPTi Japan, its
former subsidiary, approximately $0.9 million of embedded product representing
approximately 11.8% of net sales. 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 $2.4 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 $1.1 million in USB products, representing 11% of net sales for
that period. In 1999, the Company sold approximately $6.0 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 $6.0 million in USB products,
representing a combined 27% 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 and our representative in Taiwan, operate at very low profit margins
and undertake significant inventory risks. To the extent the Company provides
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 30% of the Company's receivables at December 31, 2001 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

                                     F-13

<PAGE>

                                   OPTi Inc.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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.

  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.
During 2002, the Company will be highly dependent on continued revenue
contributions from its USB controller products. Any significant shortfall in
sales for the Company's current products will have a material adverse effect
upon the Company's financials.

Note 8--Geographic Segments

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

<TABLE>
<CAPTION>
                                                     Year Ended December 31,
                                                     -----------------------
                                                      2001    2000    1999
                                                     ------  ------  -------
   <S>                                               <C>     <C>     <C>
   Taiwan........................................... $2,539  $2,055  $ 7,908
   Japan............................................  1,916   2,065    3,610
   USA..............................................  1,887   4,251    3,850
   Singapore........................................      8     315    6,710
   Hong Kong........................................  1,109   1,032       --
   Other Far East...................................     22       8       68
   Europe/Other.....................................     85     161      111
                                                     ------  ------  -------
      Total Export Sales............................ $7,566  $9,887  $22,257
                                                     ======  ======  =======
</TABLE>

Note 9--Taxes

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

<TABLE>
<CAPTION>
                                                          2001 2000 1999
                                                          ---- ---- ----
        <S>                                               <C>  <C>  <C>
        Federal:
           Current....................................... $12  $181 $--
           Deferred......................................  --    --  --
                                                          ---  ---- ---
                                                           12   181  --
        State:
           Current.......................................  --    30  --
           Deferred......................................  --    --  --
                                                          ---  ---- ---
                                                           --    30  --
        Foreign:
           Current.......................................  --    50  59
           Deferred......................................  --    --  --
                                                          ---  ---- ---
                                                           --    50  59
                                                          ---  ---- ---
               Total..................................... $12  $261 $59
                                                          ===  ==== ===
</TABLE>

                                     F-14

<PAGE>

                                   OPTi Inc.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


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

<TABLE>
<CAPTION>
                                                       2001    2000     1999
                                                       -----  -------  -------
<S>                                                    <C>    <C>      <C>
Income taxes computed at the federal statutory rate... $ 311  $ 3,957  $(2,104)
Net operating losses not benefited....................    --       --    2,104
Benefit of net operating income.......................  (311)  (3,957)      --
Alternative minimum taxes.............................    12      211       --
Foreign taxes.........................................    --       50       59
                                                       -----  -------  -------
                                                       $  12  $   261  $    59
                                                       =====  =======  =======
</TABLE>

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

<TABLE>
<CAPTION>
                                                         2001      2000
                                                       --------  --------
     <S>                                               <C>       <C>
     Deferred tax assets:
        Inventory reserve............................. $    250  $    656
        Credit carryforwards..........................    4,738     4,733
        Depreciation and amortization.................    1,128     1,300
        Accounts receivable reserve...................       20        80
        Reserve for sales return......................       10        20
        Net operating losses..........................    6,950     6,467
        Other individually immaterial items...........      213       117
                                                       --------  --------
            Total deferred tax assets.................   13,309    13,373
            Valuation allowance.......................  (13,309)   (4,288)
                                                       --------  --------
                                                             --     9,085
                                                       --------  --------
     Deferred tax liabilities:
     Unrealized gain on investment....................      (65)  (10,669)
                                                       --------  --------
     Net deferred tax liability....................... $    (65) $ (1,584)
                                                       ========  ========
</TABLE>

   At December 31, 2001, the Company had federal and state net operating loss
carryforwards of approximately $19.3 million and $4.1 million, respectively,
expiring in the years 2003 through 2019. At December 31, 2001, 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, if
any, the timing and amount of which are uncertain. Accordingly, the net
deferred tax assets have been fully offset by a valuation allowance. The
valuation allowance increased $9.0 million and decreased $15.2 million during
2001 and 2000, respectively.

                                     F-15

<PAGE>

                                   OPTi Inc.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Note 10--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 2001 and 2000, the amount of the
Company contribution to the 401K plan was approximately $50,000 and $61,000,
respectively. Administrative costs of the plan are immaterial.

Note 11--Contingencies

   The Company has been notified of claims that it may be infringing patents,
maskwork rights, or copyrights owned by third parties. There can be no
assurance that the Company will not become involved in litigation regarding the
alleged infringements by the Company of third party intellectual property
rights. However, the Company believes that the final disposition of such
matters will not have a material adverse effect on the Company's financial
position, results of operation and cash flows.

Note 12--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, which was fully paid as of December 31, 2001.
The sale resulted in a net loss of approximately $50,000 which was recorded in
the second quarter of fiscal 2000.

Note 13--Subsequent Events

   On January 3, 2002, the Company announced a postponement of its voluntary
liquidation and dissolution. The Company also announced that it would proceed
with a distribution to its shareholders of cash and shares of stock that the
Company holds in Tripath Technology.

   The Company's Board determined that it would be prudent to postpone the
liquidation plan to allow the Company more time to evaluate its intellectual
property position, including the means by which it would pursue claims for the
potential infringement of certain of its patents. The Board decision was not
due to any change in the Company's business prospects.

   On January 25, 2002, the Company announced that its Board of Directors had
declared a cash dividend of $1.50 per share on each share of the Company's
common stock. A total dividend of approximately $17.5 million was paid on
February 15, 2002.

                                     F-16

<PAGE>

                                   OPTi Inc.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Note 14--Quarterly Financial Data (unaudited)

<TABLE>
<CAPTION>
                                      Fiscal Year 2001                    Fiscal Year 2000
                             ----------------------------------- -----------------------------------
                             December September  June     March  December September  June     March
-                            -------- --------- -------  ------- -------- --------- -------  -------
                                        (Amounts in thousands, except for per share data)
<S>                          <C>      <C>       <C>      <C>     <C>      <C>       <C>      <C>
Net sales................... $ 2,522   $ 1,272  $ 1,655  $ 2,117 $ 2,105   $ 2,415  $ 3,324  $15,354
Cost of sales...............     882       543      956    1,174   1,507     1,250    2,303    1,393
Operating expenses..........   1,458     1,295    1,086      937     906     1,017    4,026    1,629
Operating income (loss).....     182      (566)    (387)       6    (308)      148   (3,005)  12,332
Net income (loss)........... $   381   $     6  $    47  $   444 $    65   $   891  $(2,487) $12,576
Basic net and diluted income
  (loss) per share.......... $  0.03   $  0.00  $  0.00  $  0.04 $  0.01   $  0.08  $ (0.21) $  1.08
Shares used in computing
  basic per share amount....  11,634    11,634   11,634   11,647  11,655    11,646   11,646   11,628
Shares used in computing
  dilutive per share
  amounts...................  11,634    11,634   11,634   11,654  11,695    11,670   11,646   11,644
</TABLE>

                                     F-17

<PAGE>

                                   OPTi Inc.

                                  SCHEDULE II

                       VALUATION AND QUALIFYING ACCOUNTS
                                (In thousands)

<TABLE>
<CAPTION>
                                                  Additions
                                                   Charged
                                         Balance  to Costs              Balance
                                        Beginning    and               at End of
                                        of Period Expenses  Deductions  Period
                                        --------- --------- ---------- ---------
<S>                                     <C>       <C>       <C>        <C>
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
Year ended December 31, 2001
   Allowance for doubtful accounts.....   $200      $  0       $150(2)   $ 50
</TABLE>
--------
(1) Represents specific write-off of accounts.
(2) Represents a reduction in the reserve.

                                      S-1