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

                                  FORM 10-Q/A
   
                                AMENDMENT NO. 1
 
Mark One:

  [X]  Quarterly report pursuant to Section 13 or 15(d) of the Securities 
       Exchange Act of 1934 for the quarterly period ended March 27, 1998.
                                                           ---------------

                                      Or

  [ ]  Transition report pursuant to Section 13 or 15(d) of the Securities 
       Exchange Act of 1934 for the transition period from        to 
                                                           ------    ------
                        Commission file number 0-11879

                             VLSI TECHNOLOGY, INC.
            (Exact name of registrant as specified in its charter)


                 Delaware                               94-2597282
       ------------------------------               -------------------
       (State or other jurisdiction of              (I.R.S. Employer
        incorporation or organization)               Identification No.)

                1109 McKay Drive, San Jose, California, 95131 
       -----------------------------------------------------------------
              (Address of principal executive offices) (Zip Code)

                                (408) 434-3100
       -----------------------------------------------------------------
               (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days.

                            Yes  (X)       No  (  )

Shares outstanding of the Registrant's Common Stock as of March 27, 1998:

                                                                  45,667,680



<TABLE>
                         PART 1.  FINANCIAL INFORMATION

Item 1.  Financial Statements

                            VLSI TECHNOLOGY, INC.

                 CONSOLIDATED CONDENSED STATEMENTS OF INCOME
                     AND COMPREHENSIVE INCOME - unaudited
<CAPTION>
                     (thousands, except per share amounts)

                                                  Three Months Ended
                                               ------------------------- 
                                               March 27,       March 28,
                                                 1998            1997
                                               ---------       ---------
<S>                                             <C>             <C>
Net revenues                                    $141,286        $167,478
Cost of sales                                     82,940          99,089
                                                --------        --------
Gross profit                                      58,346          68,389
                                                --------        --------
Operating expenses:
   Research and development                       28,037          24,015
   Marketing, general and administrative          26,297          27,242
                                                --------        --------
Operating income                                   4,012          17,132

Interest income and other expenses, net            3,808           2,911
Interest expense                                  (3,484)         (4,460)
                                                --------        --------
Income from continuing operations before 
   provision for taxes on income                   4,336          15,583
Provision for taxes on income                      1,170           4,980
                                                --------        --------
Income from continuing operations                  3,166          10,603
Loss from discontinued operation, 
   net of taxes                                        -          (1,617)
                                                --------        --------
Net income                                         3,166           8,986
                                                --------        --------
Other comprehensive income, net of tax:
   Unrealized gain (loss) on available-
      for-sale securities                            483             (92)
                                                --------        --------
Comprehensive income                            $  3,649        $  8,894
                                                ========        ========
Net income (loss) per share - Basic:            
   Continuing operations                        $   0.07        $   0.23
   Discontinued operation                              -           (0.04)
                                                --------        --------
   Total                                        $   0.07        $   0.19  
                                                ========        ========
Net income (loss) per share - Diluted:
   Continuing operations                        $   0.07        $   0.22
   Discontinued operation                              -           (0.03)
                                                --------        --------
   Total                                        $   0.07        $   0.19
                                                ========        ========
Weighted-average common
   shares outstanding - Basic                     45,748          46,497
                                                ========        ========
Weighted-average common 
   shares outstanding and assumed
   conversions - Diluted                          47,415          48,197
                                                ========        ========

See accompanying Notes to Consolidated Condensed Financial Statements.
</TABLE>
<TABLE>
                             VLSI TECHNOLOGY, INC.

               CONSOLIDATED CONDENSED BALANCE SHEETS - unaudited
                                 (thousands) 
<CAPTION>

                                                 March 27,    December 26,
                                                   1998           1997
                                                 ---------    ------------
<S>                                               <C>             <C>
ASSETS

Current assets:
   Cash and cash equivalents                      $183,847        $193,899
   Marketable securities                            98,196          89,585
   Accounts receivable, net of allowance
      for doubtful accounts and customer
      returns of $2,000
      ($2,000 at December 26, 1997)                 94,439         110,869
   Inventories:
      Raw materials                                  2,448           2,565
      Work-in-process                               37,929          40,796
      Finished goods                                12,025           8,514
                                                  --------        --------
Total inventories                                   52,402          51,875

Deferred and refundable income taxes                82,465          82,870
Prepaid expenses and other current assets	           5,892           4,779
                                                  --------        --------
      Total current assets                         517,241         533,877

Property, plant and equipment, at cost             777,294         777,316
Accumulated depreciation and amortization         (400,438)       (396,412)
                                                  --------        --------
   Net property, plant and equipment               376,856         380,904

Other assets                                         9,097           7,297
                                                  --------        --------
TOTAL ASSETS                                      $903,194        $922,078
                                                  ========        ========


See accompanying Notes to Consolidated Condensed Financial Statements.
</TABLE>




<TABLE>

                            VLSI TECHNOLOGY, INC.

         CONSOLIDATED CONDENSED BALANCE SHEETS - unaudited (Continued)
                      (thousands, except per share amounts)

<CAPTION>

                                                March 27,    December 26,
                                                  1998           1997
                                                ---------    ------------

<S>                                              <C>             <C>
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable                              $ 54,983        $ 57,469
   Accrued compensation and benefits               30,563          31,091
   Income taxes                                    12,083          11,436
   Patent matters                                  23,710          23,738
   Other accrued liabilities                       54,468          59,620
   Current portion of long-term debt                    -           2,874
                                                 --------        --------
      Total current liabilities                   175,807         186,228

Long-term debt                                    172,500         182,039
Other long-term obligations                        25,500          24,960
Deferred income taxes                              12,456          12,456

Stockholders' equity:
   Preferred Shares, $.01 par value                     -               -
   Common Shares, $.01 par value                      473             473
   Treasury Common Shares, at cost                (34,990)        (32,653)
   Additional paid-in capital                     458,763         459,539
   Retained earnings                               94,566          91,400
   Accumulated other comprehensive income          (1,881)         (2,364)
                                                 --------        --------
        Total stockholders' equity                516,931         516,395
                                                 --------        --------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY       $903,194        $922,078
                                                 ========        ========


See accompanying Notes to Consolidated Condensed Financial Statements.
</TABLE>
<TABLE>
 
                                 VLSI TECHNOLOGY, INC.

             CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS - unaudited
                                      (thousands)
<CAPTION>
                                                                Three Months Ended
                                                           ---------------------------
                                                           March 27,        March 28,
                                                              1998            1997
                                                           ---------      ------------
                                                           Increase (decrease) in
                                                           cash and cash equivalents
<S>                                                         <C>              <C>
Operating activities: 
 Net income                                                 $  3,166         $  8,986
 Adjustments to reconcile net income
  to cash generated by operations:
   Depreciation and amortization                              25,338           26,763
   Deferred income taxes                                      (1,475)           4,511
   Changes in operating assets and liabilities:
    Accounts receivable                                       16,430            9,741
    Inventories                                                 (527)            (693)
    Refundable income taxes                                    1,880                -
    Accounts payable, income taxes payable and 
     accrued liabilities                                     (11,089)             984
    Other                                                     (3,205)          (5,616)
                                                            --------         --------
 Cash generated by operations                                 30,518           44,676
                                                            --------         --------
Investing activities:
 Purchases of marketable securities                          (83,822)         (98,350)
 Proceeds from maturities of marketable securities            75,861           47,512
 Purchases of property, plant and equipment                  (33,157)         (25,150)
 Sale of property, plant and equipment                        16,361                -
                                                            --------         --------
  Net cash flow used for investing activities                (24,757)         (75,988)
                                                            --------         --------
Financing activities:
 Payments on debt and capital lease obligations              (12,710)          (2,146)
 Repurchase Treasury Common Shares                            (4,564)         (15,838)
 Issuance of Common and Treasury Shares, net                   1,461              856
                                                            --------         --------
  Net cash flow used for financing activities                (15,813)         (17,128)
                                                            --------         --------

Net decrease in cash and cash equivalents                    (10,052)         (48,440)
Cash and cash equivalents, beginning of period               193,899          139,074
                                                            --------         -------- 
Cash and cash equivalents, end of period                    $183,847         $ 90,634
                                                            ========         ========
Supplemental disclosures:
  Cash outflows for property, plant and equipment           $ 33,157         $ 25,150
   Change in accrued property, plant
         and equipment additions                                 807           (1,024)
                                                            --------         -------- 
   Property, plant and equipment additions                  $ 33,964         $ 24,126 
                                                            ========         ======== 
Interest paid                                               $    678         $  2,038 
                                                            ========         ======== 
Income taxes paid, net                                      $    407         $  1,344 
                                                            ========         ======== 

See accompanying Notes to Consolidated Condensed Financial Statements.
</TABLE>





                             VLSI  TECHNOLOGY, INC.

             NOTES  TO  CONSOLIDATED  CONDENSED  FINANCIAL  STATEMENTS

1. The accompanying interim consolidated condensed financial statements have 
   been prepared in conformance with generally accepted accounting principles, 
   consistent with those applied in the VLSI Technology, Inc. Annual Report on 
   Form 10-K for the fiscal year ended December 26, 1997 (the 1997 Annual 
   Report).  This Quarterly Report on Form 10-Q (Form 10-Q) should be read in 
   conjunction with the 1997 Annual Report.  The interim financial statements 
   are unaudited, but reflect all normal recurring adjustments that are, in 
   the opinion of management, necessary to a fair statement of results for the 
   interim periods presented.  Certain prior year first quarter amounts 
   reported have been reclassified to reflect the sale of a subsidiary, as 
   discussed in the 1997 Annual Report. The results for the quarter ended 
   March 27, 1998 are not necessarily indicative of the results that may be 
   expected for the fiscal year ending December 25, 1998.

2. Statement of Financial Accounting Standards No. 130, "Reporting 
   Comprehensive Income" (FAS 130) is effective beginning with the Company's 
   1998 first fiscal quarter. FAS 130 requires, for all periods presented, 
   comprehensive income be reported with the same prominence as other 
   financial statements. As such, the Company has included these amounts on 
   the face of the income statement.  

   Comprehensive income includes net income plus other comprehensive income.  
   Other comprehensive income for VLSI is comprised of changes in unrealized 
   gains or losses on available-for-sale securities, net of tax. 

   Accumulated other comprehensive income and changes thereto in 1998 consist 
   of (thousands):

   Accumulated other comprehensive income at
      December 26, 1997 (unrealized loss on available-
      for-sale securities, net of tax of $1,477)               $(2,364)

   Change for the three months ended March 27, 1998:
      Unrealized gain on available-for-sale securities             696
      Tax effect on unrealized gain                               (213)
                                                               -------
   Accumulated other comprehensive income at 
      March 27, 1998 (unrealized loss on 
      available-for-sale securities, net of tax)               $(1,881)
                                                               =======

   The $92,000 unrealized loss for the three months ended March 28, 1997 is 
   net of tax benefit of $43,000. 


3. Prior year's first quarter net income per share figures have been restated 
   as required by FAS 128. Net income per share, Basic and Diluted, is as 
   follows:
            
                                                        Three Months Ended
                                                     -----------------------
                                                     March 27,     March 28,
                                                       1998          1997
                                                     ---------     ---------
                                                       (thousands, except 
                                                        per share amounts)
   Net income (loss):
         Continuing operations                        $ 3,166       $10,603
         Discontinued operation                             -        (1,617)
                                                      --------      -------
         Total                                        $ 3,166       $ 8,986
                                                      =======       =======
   
   Weighted-average common shares - Basic              45,748        46,497
   Dilutive options                                     1,667         1,700
                                                      -------       -------
   Adjusted weighted-average common shares
         and assumed conversions - Diluted             47,415        48,197
                                                      =======       =======
   Net income (loss) per share - Basic:
         Continuing operations                           0.07          0.23
         Discontinued operation                             -         (0.04)
                                                      -------       -------
         Total                                        $  0.07       $  0.19
                                                      =======       =======
   Net income (loss) per share - Diluted:
         Continuing operations                           0.07          0.22
         Discontinued operation                             -         (0.03)
                                                      -------       -------
         Total                                        $  0.07       $  0.19
                                                      =======       =======

   The effect of convertible debt is excluded in both periods from income  
   available for shareholders and adjusted weighted-average common shares 
   because they would have been antidilutive. The following amounts have been 
   excluded:

                                                     March 27,     March 28,
                                                       1998          1997
                                                     ---------     ---------
                                                           (thousands)

   Income available to shareholders, net of tax       $ 2,597       $ 2,419
                                                      =======       =======
   Potentially dilutive shares                          3,148         3,148
                                                      =======       =======

4. Marketable securities are liquid investments with original maturities 
   greater than 90 days. The Company classifies these investments as 
   available-for-sale and records the unrealized gains and losses in a 
   separate component of equity as accumulated other comprehensive income, as 
   well as reporting the changes in such balances on the face of the income 
   statement as other comprehensive income.

5. In January 1996, the Board of Directors (Board) authorized the Company to 
   repurchase shares of the Company's Common Stock on the open market or in 
   privately negotiated transactions.  The Board authorized the Company to re-
   issue these shares at any later date through certain of its employee stock 
   plans and/or to fund stock or asset acquisitions authorized by the Board. 
   During the first quarter of 1998, the Company repurchased 240,000 shares at 
   an average per share price of $19.01. The Company may, from time to time, 
   continue to repurchase additional shares.

6. The semiconductor industry is characterized by vigorous protection and 
   pursuit of intellectual property rights and positions.  Periodically, the 
   Company is made aware that technology used by the Company in the 
   manufacture of some or all of its products may infringe on product or 
   process technology rights held by others.  Resolution of whether the 
   Company's manufacture of products has infringed on valid rights held by 
   others could have a material adverse effect on the Company's financial 
   position or results of operations and may require material changes in 
   production processes and products. The Company continually evaluates the 
   adequacy of its reserves for asserted and unasserted patent matters.  The 
   reserve is based on the best available information at the time and it is 
   reasonably possible that the Company's estimate of the exposure for patent 
   matters could materially change at any given time.

7. Subsequent events:

   In response to a claim by Motorola of infringement by VLSI of Motorola's 
   patents, in April 1998 the Company concluded a multi-year patent license 
   agreement with Motorola.  The agreement provides that the Company will pay 
   initial consideration valued at $8 million, in a combination of cash and 
   stock, and will also pay a royalty through the term of the agreement in 
   amounts not considered material to the results of any one quarter. The 
   Company had previously made sufficient reserves regarding this matter.

   ARM Holdings PLC (ARM) made an initial public offering (IPO) of its common 
   stock on April 17, 1998 at $9.72 per share. As an early stage investor in 
   ARM, the Company's investment equated to 2.5 million shares at the time of 
   the IPO, and the Company participated in the IPO by selling 473,000 of such 
   shares.  The Company's historical cost basis and carrying value of the ARM 
   shares at March 27, 1998, was not significant.



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

RESULTS OF OPERATIONS - FIRST QUARTER OF 1998 COMPARED TO THE FIRST QUARTER OF 
1997
--------------------------------------------------------------------------------

This Management's Discussion and Analysis of Financial Condition and Results 
of Operations (MDA) should be read in conjunction with the 1997 Annual Report, 
inclusive of the MDA therein.

This MDA contains forward-looking statements within the meaning of Section 27A 
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act 
of 1934.  Actual results could differ materially from those projected in the 
forward-looking statements as a result of the risk factors set forth herein 
and in the 1997 Annual Report. Statements made herein are as of the date of 
this quarterly filing with the Securities and Exchange Commission. The Company 
disclaims any obligation to update the contents of those statements subsequent 
to the filing of this Form 10-Q, except as may be required by law.

The following table summarizes the Company's operating results for the three-
month period ended March 27, 1998 as compared to the three-month period ended 
March 28, 1997 (dollars in thousands):
<TABLE>
<CAPTION>                                              
                                           First Quarter
                         -----------------------------------------------------
                                     1998                       1997
                         ------------------------------- -------------------
                                    Percent    Percent              Percent
                                    of Net      Change               of Net
                         Amounts   Revenues   From 1997   Amounts   Revenues
                         -------   --------   ---------   -------   --------
<S>                     <C>          <C>       <C>       <C>         <C>
Net revenues            $141,286     100.0%    (15.6)%   $167,478    100.0%
Cost of sales             82,940      58.7     (16.3)      99,089     59.2
                        --------     -----               --------    -----
Gross profit              58,346      41.3     (14.7)      68,389     40.8
Research & development    28,037      19.9      16.7       24,015     14.3
Marketing, general and
   administrative         26,297      18.6      (3.5)      27,242     16.3
                        --------     -----               --------    -----
Operating income           4,012       2.8     (76.6)      17,132     10.2
Interest income
   (expense), net            324       0.2         *       (1,549)    (0.9)
Income taxes               1,170       0.8     (76.5)       4,980      3.0
                        --------     -----               --------    -----
Net income from 
   continuing
   operations              3,166       2.2     (70.1)      10,603      6.3

Loss from discontinued
   operation, net
   of taxes                    -       0.0         *       (1,617)    (0.9)
                        --------     -----               --------    -----
Net income              $  3,166       2.2     (64.8)    $  8,986      5.4
                        ========     =====               ========    =====

* Not meaningful
</TABLE>
The Company earned net income of $3.2 million in the first quarter of 1998, 
compared to net income of $9.0 million in the first quarter of 1997. This 
change primarily reflects decreased net revenues, as discussed below.

Net revenues in the first quarter of 1998 decreased 15.6% from the comparable 
1997 period. This decrease is due to the lower sales of computing products, as 
well as reduced end market demand of the Company's communications and consumer 
digital entertainment products reflecting business uncertainties in the Asia-
Pacific region, and inventory adjustments underway at a range of customers.

International net revenues (including export sales) decreased as a result of 
lower end market demand for communications and consumer products. However, as 
a percentage of net revenues, international net revenues increased to 55.1% of 
net revenues in the first quarter of 1998 compared to 52.7% in the first 
quarter of 1997 as a result of the lower sales of computing products in 
domestic markets.

Gross profit margins increased slightly to 41.3% in the first quarter of 1998 
from 40.8% in the first quarter of 1997 primarily as a result of changes in 
the mix of products sold.

Research and development expenditures increased by $4.0 million in the first 
quarter of 1998 over expenditures in the same 1997 period and increased as a 
percentage of net revenues from 14.3% to 19.9%, reflecting continued increased 
investments primarily in process technologies, as well as new products. 

Marketing, general and administrative expenses for the first quarter of 1998 
decreased by $0.9 million from the first quarter of the prior year yet 
increased as a percentage of net revenues from 16.3% to 18.6%.  The decrease 
in dollar spending is due to tighter expense controls.

Interest income (expense), net was income of $0.3 million in the current 
quarter as compared to expense of $1.5 million in the same period a year ago, 
reflecting the retirement of equipment loans and higher returns on higher 
average cash and investment balances.

The Company's tax rate was 27% and 32% in the first quarter of 1998 and 1997, 
respectively. The decrease is the result of a larger proportion of total pre-
tax income being earned in lower tax jurisdictions.

FACTORS AFFECTING FUTURE RESULTS

The Company's business is subject to numerous risks, any one of which, alone 
or in combination, could have a material adverse effect on future results of 
operations.  Some of these factors are:

The Company's stock price, like that of other technology companies, is subject 
to significant volatility. If revenue or earnings in any quarter fail to meet 
the investment community's expectations, there could be an immediate impact on 
the Company's stock price. The stock price may also be affected by broader 
market trends unrelated to the Company's performance. Past financial 
performance should not be considered a reliable indicator of future 
performance, and investors should not use historical trends to anticipate 
results or trends in future periods.

During 1997, the Company's top 20 customers represented approximately three-
quarters of the Company's net revenues.  During 1996 and 1995, the Company's 
top 20 customers represented approximately two-thirds of net revenues. The 
Company's largest customer, Ericsson, accounted for approximately 29% of net 
revenues in 1997. As a result of the concentration of the Company's customer 
base, loss of business or cancellation of orders from any of these customers, 
significant changes in scheduled deliveries to any of these customers or 
decreases in the prices of products sold to any of these customers could have 
a material adverse effect on the Company's results of operations.

The Company has a high concentration of sales to the communications and 
consumer digital entertainment markets. The communications and consumer 
digital entertainment markets are rapidly evolving and are characterized by 
intense competition among suppliers of integrated circuits, many of whom have 
substantially greater experience and resources than the Company.  If the 
Company, due to competition or other factors, is unable to capture and 
maintain significant market share in these areas, there could be a material 
adverse effect on the Company's results of operations. Since 1996, the Company 
has had a significant focus on the communications and consumer digital 
entertainment markets. As a result, the Company's revenues have followed a 
seasonal pattern, generally showing growth in the second half of the year, 
reflecting the buying pattern of customers in these markets.

The Company's success depends on its ability to continue to develop and 
introduce new products that compete effectively on the basis of price and 
performance and that satisfy customer requirements. New product development 
often requires long-term forecasting of markets, market trends, development 
and implementation of new processes and technologies and substantial capital 
commitments. In addition, semiconductor design and process methodologies are 
subject to rapid technological change. Decreases in geometries call for 
sophisticated design efforts, advanced manufacturing equipment and cleaner 
fabrication environments. If the Company is unable to design, develop, 
manufacture and market new products successfully or introduce new design and 
process methodologies in a timely manner, its operating results will be 
materially adversely affected. 

The Company sells its products under terms and conditions customarily found in 
the semiconductor industry. Sales of these products are subject to customer 
cancellation with limited advance notice to the Company prior to scheduled 
shipment. Due to the Company's relatively narrow customer base for certain 
devices and the short product life cycles of such products, such cancellations 
can leave the Company with significant inventory exposure, which could have a 
material adverse effect on the Company's operating results.

The semiconductor industry has a history of cyclicality and is characterized 
by short product life cycles, continuous evolution of process technology, high 
fixed costs, additions of manufacturing capacity in large increments and wide 
fluctuations in product supply and demand. The industry can move from a period 
of capacity shortages to a period of excess capacity, or vice versa, in a very 
short time. During a period of excess capacity, profitability can drop sharply 
as factory utilization declines and high fixed costs of operating a wafer 
fabrication facility are spread over a lower net revenue base. During a period 
of capacity shortage, there can be no assurance that the Company can achieve 
timely, cost-effective access to additional capacity if and when needed.

The fabrication of integrated circuits is an extremely complex and precise 
process consisting of hundreds of separate steps and requiring production in a 
highly controlled, clean environment. Minute impurities, errors in any step of 
the fabrication process, defects in the masks used to print circuits on a 
wafer or a number of other factors can cause a substantial percentage of 
wafers to be rejected or numerous die on each wafer to be non-functional.

Semiconductor manufacturing also requires a constant upgrading of process 
technology to remain competitive. The Company is planning to commence the 
conversion of its San Antonio facility from six-inch to eight-inch wafer 
capability in late 1998. Any significant expansion or upgrade of semiconductor 
manufacturing capacity has attendant risks. Inefficiencies caused by the work 
associated with the modifications of the manufacturing facilities could 
adversely affect the Company's results of operations. 

The Company relies on outside suppliers for a significant portion of its 
assembly and test operations. Allocations by these suppliers of assembly and 
test capacity to the Company depend on the Company's needs and supply 
availability during periods of capacity shortages. The Company has no long-
term contractual commitments from these suppliers. Any reduction in allocation 
from these suppliers could adversely affect the Company's results of 
operations. The Company's foreign subcontract manufacturing arrangements are 
also subject to risks such as changes in government policies, transportation 
delays, fluctuations in foreign exchange rates and export and tax controls.  

The semiconductor industry is characterized by vigorous protection and pursuit 
of intellectual property rights and positions. Periodically, the Company is 
made aware that technology used by the Company in the manufacture of some or 
all of its products may infringe on product or process technology rights held 
by others.  Resolution of whether the Company's manufacture of products has 
infringed on valid rights held by others could have a material adverse effect 
on the Company's financial position or results of operations and may require 
material changes in production processes and products. The Company continually 
evaluates the adequacy of its reserves for asserted and unasserted patent 
matters.  The reserve is based on the best available information at the time 
and it is reasonably possible that the Company's estimate of the exposure for 
patent matters could materially change at any given time.

VLSI has entered into licensing agreements and technology exchange agreements 
with various strategic partners and other third parties in order to allow VLSI 
access to third party technology or to allow third parties access to the 
Company's technology. The Company is unable to predict whether license 
agreements can be obtained or renewed on terms acceptable to the Company or 
the magnitude of the costs associated with such terms.  Failure to obtain or 
renew such licenses could have a material adverse effect on the Company's 
financial position or results of operations.

Other factors that may adversely affect the Company's future results include 
natural disasters, environmental and other governmental regulations and the 
ability to attract and retain key employees.  See "Management's Discussion and 
Analysis of Financial Condition and Results of Operations - Factors Affecting 
Future Results" in Item 7 of Part II of the 1997 Annual Report on Form 10-K.

YEAR 2000 DISCLOSURE

The Year 2000 issue is the result of computer programs being written using two 
digits rather than four to define the applicable year, thus rendering them 
incapable of properly managing and manipulating data that includes both 20th 
and 21st century dates (Year 2000 Compliant). In connection with a normal plan 
of upgrading its computer resources, the Company is currently installing 
various new internal information systems in connection with operating its 
business. These systems are believed to be Year 2000 Compliant. The Company is 
also in the process of determining what other changes to its other information 
systems are necessary in order to make them Year 2000 Compliant.  While the 
Company currently expects that the Year 2000 will not pose significant 
internal operational problems, delays in the implementation of new information 
systems, or a failure to fully identify all Year 2000 dependencies in the 
Company's systems could have a material adverse effect on the Company's 
results of operations.

The Company is assessing its products to ensure that they are Year 2000 
Compliant. To date, the ongoing assessment has not revealed any significant 
compliance issues. However, the inability of these products to properly manage 
and manipulate data in the year 2000 could result in a material adverse impact 
on the Company, including increased warranty costs, customer satisfaction 
issues and potential lawsuits.

The Company has initiated communications with its suppliers and customers to 
determine the extent to which the Company's capabilities are vulnerable to 
failure by those third parties to remediate their own Year 2000 issues. There 
is no guarantee that the systems and products of other companies on which the 
Company relies will be timely converted or that they will not have a material 
adverse effect on the Company.

While the total cost of the Year 2000 project has not yet been determined, the 
current investigation has not identified significant costs to date.  
Accordingly, the Company believes it has sufficient resources for the Year 
2000 project from currently available cash, cash equivalents, liquid 
investments, cash flow expected from operations and/or borrowings under the 
committed credit agreement.

LIQUIDITY AND CAPITAL RESOURCES

VLSI generates cash from operations, debt and equipment financings and sales 
of its securities.  Principal uses of cash include purchases of capital 
equipment needed for semiconductor manufacturing and engineering, the 
repurchase of common stock and payments of debt and lease obligations.  

At March 27, 1998, total cash, cash equivalents and marketable securities 
decreased $1.4 million from the 1997 fiscal year-end balance as discussed 
below.  Working capital decreased to $341.4 million at March 27, 1998 compared 
to $347.6 million at December 26, 1997.

During the three-month period ended March 27, 1998, the Company generated 
$30.5 million of cash from operations, a 31.7% decrease from the $44.7 million 
of cash generated for the three-month period ended March 28, 1997. Accounts 
receivable were $16.4 million lower at March 27, 1998 than at December 26, 
1997, reflecting lower sales volumes in the first quarter of 1998. Accounts 
payable, income taxes payable and accrued liabilities at March 27, 1998 
decreased by $11.1 million from December 26, 1997 primarily reflecting 
payments of San Antonio property taxes.

Cash used for investing activities was $24.8 million for the three-month 
period ended March 27, 1998, as compared to $76.0 million for the three-month 
period ended March 28, 1997.  The decrease is primarily a result of the timing 
of transactions on marketable securities, partially offset by the sale of 
property, plant and equipment in connection with sale-leaseback arrangements.

VLSI invested $34.0 million in property, plant and equipment during the first 
three months of 1998 compared to $24.1 million in the comparable 1997 period.  
VLSI currently estimates that total capital expenditures for 1998 will be 
approximately $150 million to $175 million. These expenditures are anticipated 
to be used for converting from six-inch to eight-inch wafer technology at the 
San Antonio fabrication facility, sub-micron wafer fabrication capability, EDA 
tools deployment and other equipment upgrades.  The Company expects to 
primarily utilize existing cash balances and cash from operations for its 1998 
capital expenditures.

Cash used for financing activities was $15.8 million in the first three months 
of 1998 compared to $17.1 million in the same 1997 period. The decrease is a 
result of lower purchases of treasury stock, partially offset by the repayment 
of certain secured equipment loans in conjunction with the sale-leaseback of 
equipment.

In response to a claim by Motorola of infringement by VLSI of Motorola's 
patents, in April 1998 the Company concluded a multi-year patent license 
agreement with Motorola. The agreement provides that the Company will pay 
initial consideration valued at $8 million, in a combination of cash and 
stock, and will also pay a royalty through the term of the agreement in 
amounts not considered material to the results of any one quarter. 

The Company has a committed credit agreement for $100.0 million, expiring in 
December 2000. While the Company believes that its current capital resources 
are sufficient to meet its near-term needs, in order to meet its longer-term 
needs, VLSI continues to investigate the possibility of generating financial 
resources through technology or manufacturing partnerships, additional 
equipment financings, operating leases and offerings of debt or equity 
securities.



Item 3.  Quantitative and Qualitative Disclosures About Market Risk


Not applicable




                           PART II.  OTHER INFORMATION


Item 1.  Legal Proceedings

The Company is currently a party to various legal actions arising out of the 
normal course of business, none of which are expected to have a material 
effect on the Company's financial position of results of operations.


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

     (a) Exhibits - See Index to Exhibits on Page 16.

     (b) Reports on Form 8-K - On February 9, 1998, the Company filed a Form 
         8-K dated February 9, 1998, pursuant to Item 5 of instructions to 
         Form 8-K, disclosing the effect of adoption of FAS 128, "Earnings per 
         Share", on the Annual Report on Form 10-K for the fiscal year ended 
         December 27, 1996 and the related restatement of earnings per share 
         thereon, so that such information may be incorporated by reference 
         into a Registration Statement on Form S-8. Restated selected 
         financial data for fiscal years 1992, 1993, 1994, 1995 and 1996 and 
         for the fiscal quarters of 1995, 1996 and 1997, and related 
         disclosures prescribed by FAS 128, "Earnings per Share," were filed 
         with such Form 8-K.







                                   
                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the 
Registrant has duly caused this report to be signed on its behalf by the 
undersigned thereunto duly authorized.





                                          VLSI TECHNOLOGY, INC.

                                               (Registrant)



Date:     May 6, 1998                     By:  /s/ Balakrishnan S. Iyer
      --------------------------               -------------------------------
                                               Balakrishnan S. Iyer
                                               Senior Vice President and  
                                               Chief Financial Officer  
                                               (Principal Financial Officer)




Date:     May 6, 1998                     By:  /s/ Victor K. Lee
      --------------------------               -------------------------------
                                               Victor K. Lee
                                               Vice President and Controller
                                               (Principal Accounting Officer) 






                             VLSI TECHNOLOGY, INC.

                               INDEX TO EXHIBITS


EXHIBIT
   NO.             DESCRIPTION
-------            -----------

  27.1       Financial Data Schedule