<PAGE>
 
================================================================================
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                              __________________

                                   Form 10-Q
                              __________________


(Mark One)

 X  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
---                                                                   
    ACT OF 1934

For the Quarter ended September 26, 1998

___ 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: 0-19299


                           _________________________

                       INTEGRATED CIRCUIT SYSTEMS, INC.
             (Exact name of registrant as specified in its charter)



         Pennsylvania                                            23-2000174
(STATE OR OTHER JURISDICTION OF                                 (IRS EMPLOYER
INCORPORATION OR ORGANIZATION)                               IDENTIFICATION NO.)


                        2435 Boulevard of the Generals
                        Norristown, Pennsylvania 19403
                   (Address of principal executive offices)

                                (610) 630-5300
              (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____
                                  ---            

As of November 5, 1998, there were outstanding 12,196,875 shares of the
Registrant's Common Stock, no par value.

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

                                       1
<PAGE>
 
                       INTEGRATED CIRCUIT SYSTEMS, INC.
                       --------------------------------
                                        
                                     INDEX
                                     -----



                                                                         Page
                                                                        Number
                                                                        ------

PART I.    FINANCIAL INFORMATION
        
Item 1.    Consolidated Financial Statements:
        
           Consolidated Balance Sheets:
           September 26, 1998 and June 27, 1998                             3
        
           Consolidated Statements of Operations:
           Three Months Ended September 26, 1998 and
           September 27, 1997 (Unaudited)                                   4
        
           Consolidated Statements of Cash Flows:
           Three Months Ended September 26, 1998 and
           September 27, 1997                                               5
        
           Notes to Consolidated Financial Statements                       7
        
        
Item 2.    Management's Discussion and Analysis of Financial
           Condition and Results of Operations                              9
        
        
PART II.   OTHER INFORMATION
        
Item 6.    Exhibits and Reports on Form 8-K

                                       2
<PAGE>
 
ITEM  1.    CONSOLIDATED FINANCIAL STATEMENTS

               INTEGRATED CIRCUIT SYSTEMS, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                                (In thousands)

<TABLE>
<CAPTION>
                                                                                 September  26,                 June 27,
                                                                                     1998                        1998
                                                                            ---------------------         -----------------
                                                                                (Unaudited)
               <S>                                                          <C>                           <C> 
               ASSETS
 
               Current Assets:
                    Cash and cash equivalents                                     $      37,333                $     25,340
                    Marketable securities - current                                       9,872                      16,480
                    Accounts receivable, net                                             18,809                      20,335
                    Inventory, net                                                       10,897                      12,839
                    Prepaid income taxes                                                     --                       1,067
                    Deferred income taxes                                                 2,678                       2,069
                    Other current assets                                                  2,722                       2,633
                                                                                 --------------                ------------
                         Total current assets                                            82,311                      80,763
                                                                                 --------------                ------------

               Property and equipment, net                                               17,645                      17,884
               Deposits on purchase contracts                                             7,864                       7,864
               Other assets                                                               1,452                       1,498
                                                                                 --------------                ------------
                         Total assets                                            $      109,272                $    108,009
                                                                                 ==============                ============ 
               LIABILITIES AND SHAREHOLDERS' EQUITY
 
               Current Liabilities:
                    Current portion of long-term obligations                    $          139                 $        143
                    Accounts payable                                                     8,265                       11,047
                    Income tax payable                                                     329                           --
                    Accrued payroll and bonus                                              843                        1,788
                    Accrued expenses and other current liabilities                       2,987                        2,672
                                                                                --------------                 ------------ 
                         Total current liabilities                                      12,563                       15,650
                                                                                --------------                 ------------
 
               Long-term debt, less current portion                                      1,349                        1,380
               Deferred income taxes                                                     1,442                        1,211
                                                                                 -------------                 ------------ 
                         Total liabilities                                              15,354                       18,241
                                                                                 -------------                 ------------

               Shareholders' Equity:
                    Preferred stock, authorized 5,000 shares, none issued                   --                           --
                    Common stock, no par value, authorized 50,000 shares;
                         issued 13,100 and 13,099 shares as of
                         September 26, 1998 and June 27, 1998, respectively             56,605                       56,604
                    Less: treasury stock, at cost ( 774 and 774 shares as of
                         September 26, 1998 and June 27, 1998, respectively            (16,742)                     (16,742)
                    Retained Earnings                                                   54,055                       49,906
                                                                                 -------------                 ------------
                         Total shareholders' equity                                     93,918                       89,768
                                                                                 -------------                 ------------
                         Total liabilities and shareholders' equity              $     109,272                 $    108,009
                                                                                 =============                 ============
</TABLE>


         See accompanying notes to consolidated financial statements.

                                       3
<PAGE>
 
               INTEGRATED CIRCUIT SYSTEMS, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                   (In thousands, except for per share data)
                                  (Unaudited)



<TABLE>
<CAPTION>
                                                                                          Three Months Ended
                                                                                          -------------------
                                                                                       Sept 26,          Sept 27,
                                                                                         1998              1997
                                                                                   ---------------    --------------
               <S>                                                                 <C>                <C>
               Revenues:                                                             $     32,200       $     38,585
 
               Cost and expenses:
                 Cost of sales                                                             17,259             21,053
                 Research and development                                                   4,760              4,236
                 Selling, general and administrative                                        4,540              5,093
                 Goodwill amortization                                                         59                 60
                                                                                     ------------       ------------   
                    Operating income                                                        5,582              8,143
                                                                                     ------------       ------------

               Interest and other (income)                                                   (775)              (523)
               Interest expense                                                                51                 23
                                                                                     ------------       ------------
                    Income before income taxes                                              6,306              8,643
               Income taxes                                                                 2,157              3,601
                                                                                     ------------       ------------
               Net income                                                            $      4,149       $      5,042
                                                                                     ============       ============

               Basic income per common share:
                    Net income                                                       $       0.34       $       0.41
                                                                                     ============       ============

                    Weighted common shares outstanding                                     12,325             12,294
 
               Diluted income per common and common equivalent share:
                    Net income                                                       $       0.33       $       0.38
                                                                                     ============       ============

                    Diluted common and common equivalent shares outstanding                12,424             13,337
</TABLE>


         See accompanying notes to consolidated financial statements.

                                       4
<PAGE>
 
               INTEGRATED CIRCUIT SYSTEMS, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)
                                (In thousands)

<TABLE> 
<CAPTION> 
                                                                                   Three Months Ended               
                                                                                  --------------------              
                                                                            Sept 26,               Sept 27,         
                                                                              1998                   1997           
                                                                            --------               --------         
<S>                                                                         <C>                    <C>              
 Cash flows from operating activities:                                                                              
     Net income                                                             $  4,149               $  5,042         
     Adjustments to reconcile net income to net                                                                     
       cash provided by operating activities:                                                                       
       Depreciation and amortization                                           1,340                  1,013         
       (Gain) loss on sale of investments                                        (76)                    --         
       Deferred income taxes                                                    (378)                  (650)        
       Accounts receivable                                                     1,526                 (5,154)       
       Inventory                                                               1,942                 (2,585)       
       Other assets, net                                                        (101)                    72         
       Accounts payable, accrued expenses and other current liabilities       (3,412)                 6,644
       Income taxes                                                            1,396                  2,492
                                                                            --------               --------      

         Net cash provided by operating activities                             6,386                  6,874
                                                                            --------               --------      
Cash flows from investing activities:
   Purchase of investments                                                   (11,420)               (12,951)
   Proceeds from sale/maturities of marketable securities                     18,096                  7,103
   Capital expenditures                                                       (1,037)                (1,498)
   Change in deposits on purchase contracts                                       --                 (1,128)
   Proceeds from sale of fixed assets                                              2                     --
                                                                            --------               --------          

         Net cash provided by (used in) investing activities                   5,641                 (8,474)
                                                                            --------               --------      
Cash flows from financing activities:
   Exercise of stock options                                                       1                  2,852
   Tax benefit of stock options                                                   --                  1,605
   Repayments of long-term debt                                                  (35)                   (40)
                                                                            --------               --------      
         Net cash provided by (used in) financing activities                     (34)                 4,417
                                                                            --------               --------           

Net increase in cash and cash equivalents                                     11,993                  2,817
Cash and cash equivalents:
   Beginning of period                                                        25,340                 18,425
                                                                            --------               --------      
   End of period                                                            $ 37,333               $ 21,242
                                                                            ========               ========  
</TABLE>

                                       5
<PAGE>
 
               INTEGRATED CIRCUIT SYSTEMS, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONT'D)
                                  (Unaudited)


<TABLE>
<CAPTION>
                                                          Three Months Ended  
                                                        ----------------------  
                                                        Sept 26,      Sept 27,  
                                                          1998          1997    
                                                        --------      --------  
<S>                                                     <C>           <C>      
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                             
   Cash payments (receipts) during the period for:                             
      Interest                                          $     51      $     23 
                                                        ========      ======== 
      Income taxes                                      $  1,093      $    (96)
                                                        ========      ========  
</TABLE>


         See accompanying notes to consolidated financial statements.

                                       6
<PAGE>
 
               INTEGRATED CIRCUIT SYSTEMS, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)   INTERIM ACCOUNTING POLICY

The accompanying financial statements have not been audited.  In the opinion of
the Company's management, the accompanying consolidated financial statements
reflect all adjustments (consisting only of normal recurring accruals) necessary
to present fairly the Company's financial position at September 26, 1998 and
results of operations and cash flows for the interim periods presented.  Certain
items have been reclassified to conform to current period presentation.

Certain footnote information has been condensed or omitted from these financial
statements.  Therefore, these financial statements should be read in conjunction
with the consolidated financial statements and related notes included in the
Company's Annual Report on Form 10-K for the year ended June 27, 1998.  Results
of operations for the three months ended September 26, 1998 are not necessarily
indicative of results to be expected for the full year.

(2)   CONSOLIDATION POLICY

The accompanying consolidated financial statements include the accounts of the
Company and all of its subsidiaries (wholly and majority-owned), after
elimination of all significant intercompany accounts and transactions.

(3) INVENTORY

Inventory is valued at the lower of standard cost which approximates actual
costs using the first-in, first-out (FIFO) method, or market.

The components of inventories are as follows (in thousands):

<TABLE>
<CAPTION>
                                                               September 26,           June 27,
                                                                    1998                 1998
                                                             ----------------       --------------
               <S>                                           <C>                    <C>
               Work-in-process                               $        7,971         $       6,370
               Finished parts                                         7,257                 9,829
               Less:  Obsolescence reserve                           (4,331)               (3,360)
                                                             ----------------       --------------
                                                             $       10,897         $      12,839
                                                             ================       ==============
</TABLE>


(4) NEW ACCOUNTING PRONOUNCEMENTS

The Company has adopted Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income", which became effective for fiscal year 1999.
Comprehensive income and net income were the same for the periods presented.

The Company has adopted Statement of Financial Accounting Standards No. 131,
"Disclosures About Segments of an Enterprise and Related Information", which
became effective for fiscal year 1999.  The Company will adopt this statement in
the current fiscal year.

The Company has adopted Statement of Financial Accounting Standards No. 132,
"Employers' Disclosures about Pensions and other Post Retirement Benefits".  The
disclosure requirements of this statement do not apply to the Company.

                                       7
<PAGE>
 
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". This statement is effective for all fiscal
quarters of all fiscal years beginning after June 15, 1999. The Company believes
that the adoption of this statement will not have a material impact on the
financial statements.

(5)  EARNINGS PER SHARE

The following represents the reconciliation of basic and diluted earnings per
share in accordance with SFAS No. 128, "Earnings per Share":

<TABLE>
<CAPTION>
                                                      Three months ended
                                                    -----------------------  
                                                    Sept. 26,     Sept. 27,
                                                      1998           1997
                                                    ---------     ---------
<S>                                                 <C>           <C>
Basic
-----

Net income                                         $ 4,149         $ 5,042
                                                   =======         ======= 
Common and  share outstanding:                     
   Weighted average common share outstanding        12,325          12,294
                                                   =======         =======
Earnings per common share                          $  0.34         $  0.41
                                                   =======         =======

Diluted                                            
-------                                            

Net income                                         $ 4,149         $ 5,042
                                                   =======         =======
Common and common equivalent share outstanding:    
   Weighted average common shares outstanding       12,325          12,294
   Assumed exercise of stock options                    99           1,043
                                                   =======         =======
                                                    12,424          13,337
                                                   =======         =======
Earnings per common  and common equivalent         
   Share                                           $  0.33         $  0.38
                                                   =======         =======  
</TABLE>


SUBSEQUENT EVENTS

On October 7, 1998, the Company entered into an additional wafer purchase
contract with Chartered Semiconductor Manufacturing PTE Ltd. ("CSM"). The
agreement requires the Company to advance $12.0 million as part of a mutual
commitment for CSM to supply and the Company to purchase an agreed minimum
quarterly quantity of wafers over a two-year period from October 1, 1998 to
December 31, 2000. The agreement requires CSM to refund the deposit to the
Company in progressive installments based upon the volume of purchases made by
the Company. On October 21, 1998, the Company funded the $12.0 million required
by this agreement.

                                       8
<PAGE>
 
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS
Forward-Looking Statements

The statements contained or incorporated by reference in this Form 10-Q that are
not historical facts or statements of current condition are forward-looking
statements. Such forward-looking statements may be identified by, among other
things, the use of forward-looking terminology such as "believes," "forecasts,"
"estimates," "plans," "continues," "may," "will," "should," "anticipates" and
"intends," or the negative thereof or other variations thereon or comparable
terminology, or by discussions of strategy or intentions. These forward-looking
statements, such as statements regarding Year 2000, anticipated future new
product introductions, revenues, capital expenditures, acquisitions, management
and production activities, and other statements regarding matters that are not
historical facts, involve predictions. The Company's actual results, performance
or achievements could differ materially from the results expressed in, or
implied by, these forward-looking statements. Potential risks and uncertainties
that could affect the Company's results, performance or achievements include,
but are not limited to, the "Risk Factors" disclosed in the annual report on
Form 10-K for period ending June 27, 1998, and general economic conditions,
including economic conditions related to the semiconductor and PC industries.
Given these uncertainties, current or prospective investors are cautioned not to
place undue reliance on any such forward-looking statements. Furthermore, the
Company disclaims any obligation or intent to update any such factors or 
forward-looking statements to reflect future events or developments.

Results of Operations

The following table sets forth, for the periods indicated, the percentage
relationship to revenue of certain cost, expense and income items. The table and
the subsequent discussion should be read in conjunction with the financial
statements and the notes thereto:


<TABLE> 
<CAPTION> 
                                                     Three Months Ended
                                                     -------------------
                                                 Sept 26,         Sept 27,
                                                   1998            1997
                                               ----------       --------- 
                                                 
<S>                                            <C>              <C>
     Revenues:                                   100.0%           100.0%
                                                               
     Cost and expenses:                                        
       Cost of sales                              53.6             54.6
       Research and development                   14.8             11.0
       Selling, general and administrative        14.1             13.2
       Goodwill amortization                       0.2              0.1
                                               ----------       ---------   
     Operating income                             17.3             21.1
                                               ----------       ---------

     Interest and other (income)                  (2.4)            (1.4)
     Interest expense                              0.1              0.1
                                               ----------       --------- 
       Income before income taxes                 19.6             22.4
     Income taxes                                  6.7              9.3
                                               ----------       --------- 
       Net income                                 12.9%            13.1%
                                               ==========       =========
</TABLE>


FIRST QUARTER FISCAL 1999 AS COMPARED TO FIRST QUARTER FISCAL 1998

Consolidated revenue decreased $6.4 million or 16.5% for the first quarter ended
September 26, 1998 as compared to the prior year quarter.  The decrease is
primarily due to the decline in revenue generated by networking transceiver
products.

                                       9
<PAGE>
 
Frequency Timing Generators ("FTG") component revenue increased $1.0 million for
the first quarter of fiscal 1999, as compared to the prior year quarter.  FTG
unit volume increased 8.4% while experiencing a slight decrease in average
selling prices ("ASP").  FTG component revenue contributed 68.8% of consolidated
revenue for the first quarter in fiscal 1999 which represented an increase from
54.7 % for the prior year quarter.

Data Communication component revenue decreased $6.3 million for the first
quarter of fiscal 1999, as compared to the prior year quarter. While ASP has
declined by 36.0%, volume has decreased by 42.8%.  Data Communications component
revenue comprised 11.3% of consolidated revenue for the first quarter of fiscal
1999 as compared to 25.7% for the prior year quarter.

Systems Technology component revenue decreased $1.1 million for the first
quarter of fiscal 1999, as compared to the prior year quarter.  Systems
Technologies component revenue comprised 19.9% of consolidated revenue for the
first quarter of fiscal 1999 versus 19.6% for the prior year quarter

Foreign revenue (which includes shipments of integrated circuits ("ICs") to
offshore subsidiaries of US multinational companies) was 67.1% of total revenue
for the first quarter of fiscal 1999 as compared to 70.0% of total revenue in
the prior year quarter.  The percentage decrease represented declines in
overseas shipments.

Cost of sales as a percentage of total revenue was 53.6% for the first quarter
of fiscal 1999 as compared to 54.6% in the prior year quarter.  This decrease in
the cost of sales percentage was primarily the result of favorable product mix
and material cost reduction.

Research and development expense increased $0.6 million to $4.8 million for the
first quarter of fiscal 1999 from $4.2 million in the prior year quarter.  The
increase is primarily attributable to continued emphasis on research and
development.

Selling, general and administrative expense decreased $0.5 million to $4.5
million for the first quarter of fiscal 1999 as compared to the prior year
period.  The decrease was attributable to the prior year's amount including
start up costs of the Singapore operations and changes related to Voyetra.  As a
percentage of total revenue, selling, general and administrative expenses
increased as a result of the proportion of these primarily fixed costs over
decreased sales volume.

The Company's effective income tax rate was 34.2% for the first quarter of 1999
as compared to 41.7% in the prior year period.  The decrease in the tax rate is
primarily attributable to the tax benefits of the Singapore operations.


INDUSTRY FACTORS

The Company's strategy has been to develop new products and introduce them ahead
of the competition in order to have them selected for design into products of
leading OEMs.  The Company's newer components, which include advanced
motherboard FTG components, data communication components and PC multimedia
audio and graphics components, are examples of this strategy.  However, there
can be no assurance that the Company will continue to be successful in these
efforts or that further competitive pressures would not have a material impact
on revenue growth or profitability.

The Company's backlog as of September 26, 1998 was $21.4 million as compared to
$48.5 million at September 27, 1997. The Company includes in its backlog
customer released orders, which may be canceled generally with 30 days advance
notice without significant penalty to the customers.  Accordingly, the Company
believes that its backlog, at any time, should not be used as a measure of
future revenues.

                                       10
<PAGE>
 
The semiconductor and personal computer industry, in which the Company
participates, is generally characterized by rapid technological change, intense
competitive pressure, and, as a result, products price erosion.  The Company's
operating results can be impacted significantly by the introduction of new
products, new manufacturing technologies, rapid changes in the demand for
products, decreases in the average selling price over the life of a product and
the Company's dependence on third-party wafer suppliers.  The Company's
operating results are subject to quarterly fluctuations as a result of a number
of factors, including competitive pressures on selling prices, availability of
wafer supply, fluctuation in yields, changes in the mix of products sold, the
timing and success of new product introductions and the scheduling of orders by
customers.  The Company believes that its future quarterly operating results may
also fluctuate as a result of Company-specific factors, including pricing
pressures on its more mature FTG components as well as the competitive pressure,
continuing demand for its custom ASIC products and acceptance of the Company's
newly introduced ICs, board level and software products and market acceptance of
its customers' products.  Due to the effect of these factors on future
operations, past performance may be a limited indicator in assessing potential
future performance.


LIQUIDITY AND CAPITAL RESOURCES

At September 26, 1998, the Company's principal sources of liquidity included
cash and investments of $47.2 million as compared to $41.8 at the June 27, 1998
balance.  Net cash provided by operating activities was $6.4 million in the
first quarter of fiscal 1999, as compared to $6.9 million in the prior year
quarter.  This decrease represents decreased operating results offset by
decreases in accounts receivable as a result of revenue decreases and inventory
decreases relating to anticipated volume declines. The Company's days sales
outstanding increased from 52 days at June 27, 1998 to 62 days in the first
quarter of fiscal 1999, while inventory turns decreased from 6.1 times in fiscal
1998 to 5.0 times in the first quarter of fiscal 1999.

Expenditures for property and equipment were $1.0 million in the first quarter
of fiscal 1999 as compared to $1.5 million in the prior year quarter.  Prior
year included expenditures relating to the start up of the Singapore facility.

The Company did not draw on its $20.0 million revolving line of credit during
the first quarter of fiscal 1999.

The Company believes that existing sources of liquidity and funds expected to be
generated from operations will provide adequate cash to fund the Company's
anticipated working capital needs over the short term. Further expansion of the
Company's business or the completion of any material strategic acquisitions may
require additional funds which, to the extent not provided by internally
generated sources, could require the Company to seek access to debt or equity
market.

On October 7, 1998, the Company entered into an additional wafer purchase
contract with Chartered Semiconductor Manufacturing PTE Ltd. ("CSM").  The
agreement requires the Company to advance $12.0 million as part of a mutual
commitment for CSM to supply and the Company to purchase an agreed minimum
quarterly quantity of wafers over a two-year period from October 1, 1998 to
December 31, 2000.  The agreement requires CSM to refund the deposit to the
Company in progressive installments based upon the volume of purchases made by
the Company.   On October 21, 1998, the Company funded the $12.0 million
required by this agreement.

                                       11
<PAGE>
 
YEAR 2000

The Year 2000 issue is the result of computer programs being written using two
digits rather than four digits to define the applicable year.  Computer programs
that have time-sensitive software may recognize a date using "00" as the year
1900 rather than the year 2000.  This could result in a system failure or
miscalculations causing disruptions of operations, a temporarily inability to
process transactions, send invoices, or engage in normal business activities.

Currently, the Company has a formal program in process that includes analysis of
potentially affected business and process systems and replacement or correction
of all non-compliant critical business and process systems it will need in the
new millennium.  In concert with this effort, all suppliers that are critical to
the function of the Company are being surveyed to insure readiness and non-
disruption to the Company supply chain.  The Company intends to have their
internal application systems, infrastructure and procedures,  and manufacturing
and control processes Year 2000 compliant by mid-1999.

The Company will be required to modify or replace certain portions of its
internal systems.  The Company is using internal resources to reprogram or
replace and test the software for Year 2000 changes.  If these changes or
conversions to new systems are not made in time, the Year 2000 Issue could have
a material impact on the operations of the Company.

The Company relies on subcontractors for wafer manufacture, assembly and testing
of products.  The Company has sent questionnaires to these critical suppliers to
determine the extent to which the Company's operations are exposed to failure of
Year 2000 issues.  The Company has begun to receive.  There can be no assurance
that the Company will be successful in its efforts to resolve any Year 2000
issues and continue receiving products from these suppliers.  The failure of
resolving these issues could result in a shutdown of some or all the Company's
operations, which would have a material adverse effect on the Company.

The Company utilizes third-party network equipment and software products, which
may or may not be Year 2000 compliant.  The Company has begun formal
communications, through questionnaires, with critical suppliers of products and
services to determine that the suppliers' operations and the products and
services they provide are Year 2000 capable.  The Company is currently awaiting
responses to these questionnaires.  The Company does not currently have any
information concerning the Year 2000-compliance status of its customers.  If any
of the Company's significant customers and suppliers do not successfully and in
a timely manner achieve Year 2000 compliance, the Company's business or
operations could be adversely affected.  There can be no assurance that another
company's failure to ensure Year 2000 capability would not have an adverse
effect on the Company.  The products that the Company sells are not date-
sensitive, and therefore product related exposures are low.

The total expense of the Year 2000 project is currently estimated at
approximately $100,000, which is not material to the Company's business
operations or financial condition.  If required modifications to existing
software and conversions to new software are not made, or are not completed in a
timely manner, the Year 2000 could have a material impact on the operations of
the Company.  While delays in the implementation of the Year 2000 solutions, or
failure of any critical technology components to operate properly in the Year
2000, could affect the Company's operations, the Company believes that
resolution of the Year 2000 issue will not require material additional costs and
will not have a material adverse effect on the Company's results of operations.
There can be no assurance that these costs will not be material to the Company
or that the Company will be able to resolve these issues in a timely manner.
The expense of the Year 2000 project is being funded through operating cash
flows.

The Company has not yet fully developed a comprehensive contingency plan to
address situations that may result if the Company is unable to achieve Year 2000
readiness of its critical operations.  There can be no assurance that the
Company will be able to develop a contingency plan that will adequately address
issues that may arise in the year 2000.  The failure of the Company to
successfully resolve such issues could result in shutdown of some or all of the
Company's operations, which would have a material adverse effect on the Company.

The costs of the plan and the date on which the Company believes it will
complete the Year 2000 modification are based on management's best estimates,
which were derived utilizing numerous assumptions regarding future events,
including 

                                       12
<PAGE>
 
the continued availability of certain resources, third-party modification plans
and other factors. There can be no assurance that these estimates will be
achieved and actual results could differ materially from those anticipated.

NEW ACCOUNTING PRONOUNCEMENTS

The Company has adopted Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income", which became effective for fiscal year 1999.
Comprehensive income and net income were the same for the periods presented.

The Company has adopted Statement of Financial Accounting Standards No. 131,
"Disclosures About Segments of an Enterprise and Related Information", which
became effective for fiscal year 1999.  The Company will adopt this statement in
the current fiscal year.

The Company has adopted Statement of Financial Accounting Standards No. 132,
"Employers' Disclosures about Pensions and other Post Retirement Benefits".  The
disclosure requirements of this statement do not apply to the Company.

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities".  This statement is effective for all fiscal
quarters of all fiscal years beginning after June 15, 1999.  The Company
believes that the adoption of this statement will not have a material impact on
the financial statements.

                                       13
<PAGE>
 
PART II.   OTHER INFORMATION

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

               Exhibit
               Number                    Description
               ------                    -----------
 
 
                 27               Financial Data Schedule


     (b)  Reports on Form 8-K:
 
               None.
          

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<PAGE>
 
                                  SIGNATURES


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


Date: November 10, 1998               INTEGRATED CIRCUIT SYSTEMS, INC.
                            
                            
                            
                            
                                 By:  /s/ Henry Boreen
                                      --------------------------------------
                                 Henry Boreen
                                 Chairman and Interim Chief Executive Officer
                            
                            
                            
Date: November 10, 1998          By:  /s/ Hock E. Tan
                                      ---------------------------------------
                                 Hock E. Tan
                                 Senior Vice President and CFO
                                 (principal financial & accounting officer)

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