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


                                    FORM 10-K

(Mark One)

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

For the fiscal year ended January 2, 2000

                                       OR


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

Commission file number 0-21970

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                                ACTEL CORPORATION
             (Exact name of Registrant as specified in its charter)

                California                                      77-0097724
      (State or other jurisdiction of                        (I.R.S. Employer
      incorporation or organization)                       Identification No.)
          955 East Arques Avenue
           Sunnyvale, California                                94086-4533
 (Address of principal executive offices)                       (Zip Code)

                                 (408) 739-1010
              (Registrant's telephone number, including area code)

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

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

           Securities registered pursuant to Section 12(g) of the Act:
                          Common Stock, $.001 par value
                                (Title of class)

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

          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

         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 Annual Report on Form
10-K or any amendment to this Annual Report on Form 10-K.

         The aggregate  market value of the voting stock held by  non-affiliates
of the Registrant,  based upon the closing price for shares of the  Registrant's
Common Stock on March 31, 2000, as reported by the National Market System of the
National  Association of Securities  Dealers  Automated  Quotation  System,  was
approximately  $613,642,000.  In calculating such aggregate market value, shares
of Common Stock owned of record or beneficially by all officers,  directors, and
persons  known to the  Registrant  to own more than five percent of any class of
the  Registrant's  voting  securities were excluded  because such persons may be
deemed to be affiliates.  The  Registrant  disclaims the existence of control or
any admission thereof for any other purpose.

          Number of shares of Common  Stock  outstanding  as of March 31,  2000:
23,036,802.


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

                       DOCUMENTS INCORPORATED BY REFERENCE

         The following documents are incorporated by reference in Parts II, III,
and IV of this Annual Report on Form 10-K: (i) portions of  Registrant's  annual
report to security  holders for the fiscal year ended  January 2, 2000 (Parts II
and IV),  and (ii)  portions  of  Registrant's  proxy  statement  for its annual
meeting of shareholders to be held on May 19, 2000 (Part III).

<PAGE>
         All  information  contained or incorporated by reference in this Annual
Report on Form 10-K should be read in conjunction with and in the context of the
Risk  Factors set forth at the end of Part I. Unless  otherwise  indicated,  the
statements contained in this Annual Report on Form 10-K are made as of March 31,
2000,  and the Company  undertakes  no  obligation  to update  such  statements,
including all forward-looking statements.

                                     PART I

ITEM 1.  BUSINESS

Overview

         Actel designs,  develops,  and markets field  programmable  gate arrays
("FPGAs")  and  associated  design  and  development  software  and  programming
hardware. FPGAs are used by designers of communications,  computer, consumer and
internet-appliance, industrial, military/aerospace, and other electronic systems
to  differentiate  their  products and get them to market  faster.  Actel is the
leading supplier of FPGAs based on antifuse  technology,  and in 1999 introduced
FPGAs based on flash technology. Actel's strategy is to be The Programmable ASIC
Solutions  Company,  a complete solution  provider for programmable  application
specific integrated circuit ("ASIC") systems.

         Actel  shipped  its  first  products  in  1988  and  thousands  of  its
development  systems are in the hands of  customers,  including  Alcatel,  Allen
Bradley/Rockwell,  Cabletron,  General  Electric,  Honeywell,  Hughes  Aircraft,
Lockheed  Martin,  Lucent  Technologies,  Marconi,  Nortel,  and Siemens.  Actel
derived 9% of its net revenues for 1999 from Nortel and expects to derive 10% or
more of net revenues for 2000 from Nortel. Actel has foundry  relationships with
Chartered  Semiconductor  Manufacturing Pte Ltd ("Chartered  Semiconductor")  in
Singapore;  Lockheed Martin Space Electronics & Communications ("Lockheed Martin
SEC") in the United States; Matsushita Electronics Company ("MEC") in Japan; UMC
Corp. ("UMC") in Taiwan; and Winbond Electronics Corp. ("Winbond") in Taiwan.

         Actel's  product  line  consists of eleven  families of  antifuse-based
FPGAs;  Designer  Series  Development  System,  DeskTOP,  and CoreHDL  software;
Silicon Sculptor device  programmers;  Silicon Explorer debugging and diagnostic
tools;  and an  evaluation  board  and  sockets.  To meet the  diverse  customer
requirements in the broad FPGA market, each member of a product family generally
is offered in a variety of speed grades, package types,  reliability screenings,
and ambient temperature  tolerances.  Designers can use Actel's integrated suite
of design tools  (DeskTOP) or  third-party  software for circuit design and then
translate  the design into a  programmed  FPGA using  Actel's  highly  automated
software  (Designer Series Development  System) and device programmers  (Silicon
Sculptor).  CoreHDL  blocks or  "cores"  can  reduce  development  time by being
"dropped into" designs, and Silicon Explorer can reduce design-verification time
by enabling the user to monitor the  functionality of a programmed FPGA in "real
time." The evaluation  board allows designers to assess the suitability of their
designs for specific  applications,  and sockets permit  designers to replace an
FPGA  without  damaging  the  board.  Actel  also  offers  system-level  design,
prototyping, and consulting services through its Protocol Design Services Group.

         In 1999,  Actel  introduced  the SX-A family of antifuse  FPGAs,  which
currently is manufactured at MEC using 0.25-micron design rules. This means that
Actel is  manufacturing  antifuse  FPGAs at the same geometry as the  mainstream
process  technology used for static random access memory ("SRAM") FPGAs, such as
those offered by Xilinx, Inc. ("Xilinx") and Altera Corporation ("Altera"). As a
result,  the cost,  performance,  and power advantages  inherent in the antifuse
have again  become  evident.  The SX-A  family is  currently  positioned  as the
industry's   price/performance/power   leader,   permitting   customers  to  use
programmable  devices with ASIC-like speed,  power  consumption,  and pricing in
volume  production.  The new family is  particularly  well  suited for  products
enabling  the  portability  of the  internet,  or  "e-appliances,"  such  as MP3
players,  digital cable set-top boxes,  digital  cameras,  digital film, and DSL
modems. In addition, radiation-tolerant versions of SX-A devices will help Actel
maintain its  position as the world's  leading  supplier of FPGAs to  commercial
satellites and other military/aerospace applications.

         Actel  refocused  its  reprogrammable  SRAM  strategy  in  1999.  Actel
believes that the size and power advantages of its SRAM  architecture can now be
used to  greatest  efficacy in the  emerging  market for  embedded  programmable
products. A strategic product marketing team has been formed to position Actel's
SRAM technology at the forefront of this emerging market. Actel also renewed its
commitment in the area of intellectual property ("IP") cores in 1999. Actel's IP
program is aimed at  addressing  customers'  design and  design  reuse  needs by
providing immediate access to pre-verified soft logic cores implemented in Actel
silicon.  The  strategic  product  marketing  team's  charter in this area is to
aggressively  pursue  third-party  strategic  relationships  and  proprietary IP
programs.

         In  1999,   Actel   introduced  the  ProASIC  family  of  non-volatile,
single-chip,  very low power,  "live-at-power-up"  family of reprogrammable gate
arrays. The product family,  which will consist of seven devices have capacities
ranging  up  to  512,000   gates,   was   developed  by  GateField   Corporation
("GateField").  The ProASIC  family is currently  manufactured  on a mainstream,
0.25-micron  embedded flash process at Infineon  Technologies  (formerly Siemens
Semiconductor)  in Germany.  Flash-based  ProASIC  products  offer benefits over
other  programmable  logic devices ("PLDs") available on the market today, which
are either volatile or non-reprogrammable.  ProASIC devices are non-volatile and
reprogrammable. ProASIC devices also exhibit a high level of portability between
PLD and ASIC design flows.  ProASIC  devices  permit ASIC designers to use their
standard design flow,  with no new design  methodologies  to learn,  and also be
seamlessly  migrated to  standard  ASIC  designs.  The design  methodology  also
enables  designers  to  "drop  in" IP cores  from  proprietary  and  third-party
sources,  eliminating much of the architecture-specific  re-engineering required
by other  PLDs.  ProASIC  products  are  closely  coupled  with  the  ASICmaster
automated  place-and-route  electronic design automation ("EDA") software, which
is optimized for hardware  description  language ("HDL") design and methodology.
ASICmaster  performs place and route of the design into the selected  device and
provides  back-annotated  delay  information for simulation.  Once the design is
verified,  ASICmaster  downloads  the layout into a device  programmer  for chip
programming. Actel is currently engaged in limited software and silicon sampling
of ProASIC at selected customers throughout the world.

         As part of its strategic  alliance with GateField entered into in 1998,
Actel acquired the exclusive right to market and sell standard  ProASIC products
in process  geometries of  0.35-micron  and smaller,  as well as the  ASICmaster
design tool  software.  In 1999, the Company loaned $8.0 million to GateField in
exchange for a promissory  note that is convertible  (at Actel's  election) into
1,230,769  shares of GateField  common stock.  In addition,  Actel increased its
ownership  of GateField  common stock during 1999 from 16,500  shares to 190,529
shares.  As a result  of these  developments,  Actel  began  accounting  for its
interests in GateField under the equity method of accounting during 1999.

         In 1999,  Actel also completed its acquisition of AutoGate Logic,  Inc.
("AGL") in a transaction accounted for as a purchase. AGL developed a wide range
of very large scale integration  (VLSI)  development  tools,  including FPGA and
custom integrated  circuit ("IC") place and route and timing analysis  software.
The  purchase  price of $7.2  million  included the issuance by Actel of 285,943
shares of Common Stock and the  assumption of options to purchase  89,057 shares
of Common  Stock.  Goodwill of $4.9  million and  completed  technology  of $2.1
million  associated  with  the AGL  acquisition  will  be  amortized  using  the
straight-line  method  over a period  of five  years  beginning  with the  first
quarter of fiscal year 2000.  The $0.2 million  value  assigned to the assembled
workforce is being amortized over an estimated useful life of six months.

         For 1999,  Actel's pre-tax net income was reduced by $1.1 million under
the equity  method of  accounting  as a result of  Actel's  equity  interest  in
GateField  and by  $1.9  million  due to  amortization  of  goodwill  and  other
acquisition-related  charges.  These  amounts are expected to increase in future
years.

         During the second quarter of 1999, Actel completed a restructuring plan
that  included  a  reduction  in force  as well as the  elimination  of  certain
projects and  non-critical  activities.  The total pretax  restructure and other
charges for these  activities,  including  employee  severance and  outplacement
expenses and the write-off of prepaid license and abandoned capital assets,  was
$2.0 million.  These measures were taken to bring overall  spending in line with
revenue  projections  for the year and to sharpen  Actel's  focus on new product
development. For the year, Actel's selling, general, and administrative expenses
increased by more (on a percentage basis) than net revenues, principally because
of an  accrual  of  estimated  settlement  costs of claims  for  alleged  patent
infringement, an increased level of sales and marketing activities in support of
new products, and expenses related to the termination of a distributor.

         Actel  was  named as one of the "200 Best  Small  Companies"  by Forbes
magazine in its issue dated  November 1, 1999.  In addition,  Actel was added to
the Standard & Poor's "SmallCap 600 Index" after the close of trading on January
7, 2000. Actel is included in the S&P SmallCap 600 Electronics  (Semiconductors)
industry group. No significant disruptions were experienced by Actel as a result
of either the September 1999 earthquake in Taiwan or the Year 2000 date change.

         Actel markets its products through a worldwide,  multi-tiered sales and
distribution  network.  In 1999,  a majority of Actel's  sales were made through
distributors.  Actel's principal distributors are Pioneer-Standard  Electronics,
Inc. ("Pioneer") and Unique  Technologies,  Inc. ("Unique") in North America and
Arrow Electronics, Inc. and Zeus Electronics (collectively,  "Arrow") worldwide.
In  1999,  Arrow,   Pioneer,  and  Unique  accounted  for  16%,  12%,  and  13%,
respectively, of Actel's net revenues. In addition to the three major industrial
distributors,  the North  American  sales network  includes 20 sales  management
and/or technical sales offices and 20 manufacturers'  representative  firms. The
European network  includes five sales offices and 12 distributors.  The Pan-Asia
network includes four sales  management  offices and seven  distributors.  Three
additional distributors serve the remaining international markets in which Actel
offers its  products.  In 1999,  sales to  customers  outside the United  States
accounted  for 29% of Actel's net  revenues,  compared with 33% for 1998 and 31%
for 1997.

         Actel was incorporated in California in 1985 and has been authorized by
shareholders to reincorporate as a Nevada  corporation.  The Company's principal
facilities  and  executive  offices  are  located  at 955  East  Arques  Avenue,
Sunnyvale,  California  94086-4533,  and its telephone number at that address is
(408) 739-1010.  The Company's World Wide Web address is  http://www.actel.com .
As used in this Annual Report on Form 10-K, "Actel" and "the Company" mean Actel
Corporation  and its  consolidated  subsidiaries;  and "gate" or  "gates"  means
"ASIC-equivalent" gates, unless otherwise indicated.

         "Actel" and the Actel logo are  registered  trademarks  of the Company,
and "ProASIC" and  "ASICmaster"  are  registered  trademarks of GateField.  This
Annual Report on Form 10-K also includes unregistered  trademarks of the Company
and trademarks of companies other than Actel.

Actel Strategy

         Actel's strategy is to be The Programmable ASIC Solutions Company.  For
customers  requiring  discrete logic  solutions,  the Company's  FPGAs offer the
benefits of both ASICs and programmable devices:

         -        Like ASICs,  the Company's FPGA devices provide  non-volatile,
                  "live-at-power-up,"  low-power,  single-chip solutions at very
                  low  prices  in volume  production.  Like  other  programmable
                  devices,  the Company's  FPGAs reduce  design risk,  inventory
                  investment, and time to market.

         -        To further  shorten  the design  cycle,  logic  designers  can
                  choose to use either  ASIC or FPGA  software  tools and design
                  methodologies,  and the  architectures  of the Company's FPGAs
                  enable the  utilization  of predefined IP cores,  which can be
                  reused across multiple designs or product versions.

         -        Depending upon their  requirements or  preferences,  customers
                  can choose to use either  FPGAs based on antifuse  technology,
                  which are one-time  programmable  and have ASIC-like speed; or
                  FPGAs based on flash technology, which are reprogrammable.  In
                  either  case,  the Company can provide  programming  services,
                  making the offering a "virtual ASIC" from the customer's point
                  of view.

         For  customers   requiring   integrated  logic  (or   system-on-a-chip)
solutions,  the Company's  SRAM-based  logic core (or standard cell) will enable
the integration of  reprogrammable  logic with predefined  functions on a single
chip using a standard process.

         For customers  requiring either discrete or integrated  solutions,  the
Company's  IP cores  and  design  services  can be  provided  as  needed to help
customers accelerate design creation and verification,  prototyping, and time to
market.

Products and Services

         The   Company's   product   line   consists   of  eleven   families  of
antifuse-based FPGAs;  Designer Series Development System,  DeskTOP, and CoreHDL
software;  Silicon  Explorer  debugging and diagnostic  tools;  Silicon Sculptor
device  programmers;  and an evaluation board and sockets.  In 1999, the Company
introduced  the  SX-A  family  of  antifuse  FPGAs  and the  ProASIC  family  of
reprogrammable  gate  arrays.  The  Company  also  offers  system-level  design,
prototyping, and consulting services through its Protocol Design Services Group.

         Antifuse FPGAs

         To meet the diverse  customer  requirements  in the broad  programmable
logic market,  each of the Company's  antifuse FPGA families (except the RadHard
family)  is offered in a variety of speed  grades,  package  types,  reliability
screenings,  and ambient temperature  tolerances.  The five members of the ACT 1
and ACT 2  families,  for  example,  can be  ordered  in more  than  100  speed,
packaging, screening, and tolerance variations.

                  ACT 1

                  The ACT 1  family  of  FPGAs  consists  of two  products:  the
         1,200-gate A1010,  which was first shipped for revenue in 1988; and the
         2,000-gate  A1020,  which was first  shipped for revenue in 1989.  This
         family of devices  was  introduced  at 2.0  micron and is  manufactured
         using 1.0-micron design rules.
         The Company offers 5.0- and 3.3-volt versions of both ACT 1 products.

                  ACT 2

                  The ACT 2 family  of FPGAs  consists  of three  products:  the
         4,000-gate A1240 and the 8,000-gate A1280, which were first shipped for
         revenue in 1991; and the 2,500-gate A1225,  which was first shipped for
         revenue in 1992.  This family of devices was  introduced  at 1.2 micron
         and is manufactured using 1.0-micron design rules.

                  ACT 3

                  The ACT 3  family  of FPGAs  consists  of five  products:  the
         2,500-gate A1425 and the 6,000-gate A1460, which were first shipped for
         revenue in 1993; and the 1,500-gate  A1415,  the 4,000-gate  A1440, and
         the 10,000-gate  A14100,  which were first shipped for revenue in 1994.
         The ACT 3 family was designed for applications requiring high speed and
         a high number of inputs and outputs  ("I/Os").  The five members of the
         ACT 3 family  can be  ordered in  approximately  150 speed,  packaging,
         screening,  and  tolerance  variations.  The  Company  offers  5.0- and
         3.3-volt  versions  of all five  ACT 3  products,  as well as  versions
         (A1460BP and A14100BP) that are compliant with the peripheral component
         interconnect  ("PCI") standard.  The ACT 3 family was introduced at 0.8
         micron and is manufactured using 0.6-micron design rules.

                  XL

                  The  1200XL  family of FPGAs,  which  was  first  shipped  for
         revenue in 1995,  consists of three products:  the 2,500-gate  A1225XL,
         the 4,000-gate A1240XL, and the 8,000-gate A1280XL. Taking advantage of
         0.6  micron  design  rules  and   redesigned   I/O  modules  and  clock
         distribution   networks,   1200XL  products  offer  system  performance
         significantly  in  excess  of  that  offered  by  pin-compatible  ACT 2
         devices.  The Company  offers 5.0- and  3.3-volt  versions of all three
         members of the 1200XL family, which can be ordered in approximately 100
         speed, packaging, screening, and tolerance variations.

                  DX

                  The 3200DX  family of FPGAs  consists  of five  products:  the
         6,500-gate  A3265DX,  which was first shipped for revenue in 1995;  the
         14,000-gate  A32140DX and the  20,000-gate  A32200DX,  which were first
         shipped  for  revenue in 1996;  and the  10,000-gate  A32100DX  and the
         30,000-gate A32300DX, which were first shipped for revenue in 1997. The
         3200DX family  permits  designers to integrate  the  register-intensive
         datapath  functions of FPGAs,  the control and decode modules  commonly
         implemented  in CPLDs,  and the fast  dual-port SRAM typically used for
         high-speed buffering. Supported by the Company's extensive selection of
         automated  design  tools,  the 3200DX family is optimized for synthesis
         design methodologies to yield predictable  performance for system logic
         integration.  To further assist  designers,  most members of the family
         offer JTAG  boundary scan logic,  which  permits  testing of the design
         during  manufacture.  The Company offers 5.0- and 3.3-volt  versions of
         all five  members of the 3200DX  family,  which is  manufactured  using
         0.6-micron  design rules and can be ordered in approximately 150 speed,
         packaging, screening, and tolerance variations.

                  MX

                  The  MX  family  of  FPGAs  consists  of  six  products:   the
         4,000-gate  A40MX04  and the  16,000-gate  A42MX16,  which  were  first
         shipped for revenue in 1997; and the 2,000-gate A40MX02, the 9,000-gate
         A42MX09, the 24,000-gate  A42MX24,  and the 36,000-gate A42MX36,  which
         were first shipped for revenue in 1998. The MX family includes the best
         features from the Company's ACT 1, ACT2,  1200XL,  and 3200DX  families
         and should,  over time,  replace those earlier families in new 5.0-volt
         commercial  designs.  The  largest  MX  devices  include  system  logic
         integration functions, such as embedded SRAM and decode logic, that are
         used by designers to integrate  disparate functions in data networking,
         telecommunication,  and industrial control applications.  The MX family
         is manufactured  using  0.45-micron  design rules,  which permits it to
         work in pure  5.0-volt,  pure  3.3-volt,  and mixed  5.0- and  3.3-volt
         systems.  The family can be ordered in more than 200 speed,  packaging,
         screening, and tolerance variations.

                  As the  Company's  first line of  low-cost,  single-chip  ASIC
         alternatives, the MX family ramped to volume the fastest of any product
         in  Actel's  history.   In  March  1999,  only  eighteen  months  after
         introduction,   the   Company   announced   that  it  had  shipped  the
         two-millionth MX device.  In April 1999, the Company  announced that it
         had shipped one million  units of the MX04 device.  This  milestone was
         achieved   just   thirteen    months   after   the    availability   of
         production-qualified  devices.  In January 2000, the Company  announced
         that it had shipped  one  million  units of the MX family in the fourth
         calendar quarter of 1999. The unit volume of MX shipments  demonstrates
         the acceptance of antifuse technology in high-volume applications, such
         as  those  serving  the  internet,  and is  evidence  that  electronics
         engineers are opting with increasing  frequency for the  time-to-market
         advantage  of  FPGAs  over  the  longer  lead  times   associated  with
         traditional ASICs.

                  In July 1999, the Company  announced the  availability of "-3"
         speed grade MX  devices,  which  resulted  from a  proprietary  process
         breakthrough by Actel's foundry partner,  Chartered. The -3 speed grade
         improves  overall  speed by 35%  compared  with the  standard  MX speed
         grade.  The MX family is  currently  positioned  as a line of low-cost,
         single-chip,   mixed-voltage   ASIC-alternative   FPGAs  for   5.0-volt
         applications.

                  SX

                  The SX family of FPGAs consists of four products, all of which
         were first shipped for revenue in 1998:  the  8,000-gate  A54SX08,  the
         16,000-gate A54SX16 and A54SX16P,  and the 32,000-gate  A54SX32. The SX
         family is manufactured  using 0.35-micron  design rules. All SX devices
         have full pin  compatibility  within the family and provide  mixed 5.0-
         and 3.3-volt  support with 3.3-volt output drive and 5.0-volt  tolerant
         inputs. The SX family can be ordered in more than 200 speed, packaging,
         screening,   and  tolerance  variations,   and  approximately  50  more
         variations are planned.

                  SX  was  the  first  family  to  be  built  on  the  Company's
         triple-layer metal, "sea of modules"  architecture.  The foundation for
         the  architecture is a "sea" of logic modules laid out as a grid across
         the entire silicon floor.  This  sea-of-modules  design  minimizes chip
         area by  covering  almost  the  entire  silicon  substrate  with  logic
         resources.   To  further   increase   design   efficiency   and  device
         performance,  these modules have been organized  into  "superclusters."
         Two different levels of local routing  resources  within  superclusters
         give  designers  the  ability to  achieve  very fast  performance.  The
         interconnect  resources  are  located on the upper two layers of metal.
         The result is dramatically  reduced die size  (regardless of capacity),
         increased device performance, and reduced cost.

                  The SX family's combination of performance and density enables
         designers  to  combine  multiple  high-performance  CPLDs into a single
         FPGA,  thereby  cutting  power  consumption,  saving board  space,  and
         reducing costs. In May 1999, the Company  announced the availability of
         "-3" speed grade SX devices,  which are 35% faster than the standard SX
         speed grade and were then the world's fastest FPGAs.  The SX family and
         the SX-A family,  discussed below, are currently positioned as industry
         price/performance/power    leaders,   permitting   customers   to   use
         programmable  devices with  ASIC-like  speed,  power  consumption,  and
         pricing in volume production.

                  SX-A

                  The SX-A family of FPGAs,  which was first shipped for revenue
         in 1999, currently consists of four products:  the 8,000-gate A54SX08A,
         the 16,000-gate A54SX16A, the 32,000-gate A54SX32A, and the 72,000-gate
         A54SX72A.  The SX-A  family  currently  is  manufactured  at MEC  using
         0.25-micron  design rules.  This means that, for the first time in more
         five years,  the Company is  manufacturing  antifuse  FPGAs at the same
         geometry as the mainstream process technology used for SRAM FPGAs. As a
         result,  the cost,  performance,  and power advantages  inherent in the
         antifuse have again become evident.

                  The SX-A family was introduced in September 1999. The family's
         fine-grained  "sea-of-modules"  antifuse architecture and small process
         geometry   permit  the  Company  to  offer  the  world's   fastest  and
         lowest-power FPGAs at very competitive  prices. This combination of low
         cost and  industry-leading  performance and power dissipation  delivers
         what the Company calls "performance without penalty":  system designers
         can reach their  performance  targets in less time,  avoiding  weeks or
         months of struggle to meet performance  goals,  using fast devices that
         consume less power and cost less than  alternative  PLDs.  In addition,
         the SX-A family offers I/O  capabilities  that provide full support for
         "hot-swapping."  Hot-swapping  permits  boards  to be  exchanged  while
         systems  are running (or "hot"),  which is a  capability  important  in
         networking,    telecommunication,    and    fault-tolerant    computing
         applications. The SX-A family includes other I/O features, such as slew
         rate control,  and supports  mixed-voltage  (2.5-,  3.3-, and 5.0-volt)
         systems. SX-A devices are available in variety of plastic flat pack and
         ball grid array ("BGA") packages.

                  In March 2000, the Company  announced that it had successfully
         developed a 0.22-micron  antifuse  process  technology at UMC. This new
         technology,  which has already yielded working silicon and is currently
         being  qualified  for  production,  should  reduce  die size by 20% and
         improve   performance  by  10%  compared  with  the  Company's  current
         0.25-micron SX-A devices.  The new 0.22-micron process was developed in
         record time,  as was also true of the  0.25-micron  process.  In recent
         years,   most  standard  logic   processes  have  adopted  the  use  of
         multi-voltage  transistors  and polishing  methods that were previously
         unique to antifuse FPGAs. This, together with the narrowing  difference
         in mask sets between standard and antifuse processes, has significantly
         reduced the time  required to bring up new  antifuse  processes.  Early
         indications are that the Company is also on an accelerated  development
         cycle for its next-generation family of antifuse products.

                  HiRel/Military

                  HiRel and  military  devices are  designed for use in military
         and extreme  temperature  environments.  The Company's  HiRel  offering
         includes all members of the  Company's ACT 1, ACT 2, ACT 3, XL, DX, MX,
         and SX  families  in plastic as well as  ceramic  packages.  All of the
         HiRel devices offered in plastic  packages are certified for commercial
         (0 to  +70(0)C),  industrial  (-40 to  +85(0)C),  or  military  (-55 to
         +125(0)C)  temperature  ranges.  All of the HiRel  devices  offered  in
         ceramic  packages are certified for commercial or military  temperature
         ranges or with Class B (MIL-STD-883) qualification.

                  In March 1999, the Company  announced that it has been awarded
         Full Certification to Qualified  Manufacturers  Listing ("QML") status.
         This  certification  confirms that the Company has an approved  quality
         system and control of its  processes  and  procedures  according to the
         standards set forth in the MIL-PRF-38535.  QML certification,  which is
         granted  by  the  Defense  Supply  Center,   Columbus,  Ohio  ("DSCC"),
         qualifies  processes and materials  rather than individual  products or
         production  lots.  In June  1999,  the  Company  announced  that it had
         completed  QML  certification  for its  full  line of  plastic-packaged
         antifuse  FPGAs,   giving  customers  using  commercial   off-the-shelf
         ("COTS")  components  access to a wide range of package type,  density,
         performance,  and price  points.  With QML plastic  certification,  the
         entire line of Actel devices can be integrated into design applications
         that would  otherwise  require  higher-cost  ceramic  package  devices,
         thereby   providing   designers   with  a  lower-cost   solution.   The
         certification  also permits the  integration of commercial and military
         production without  compromising  quality or reliability.  In addition,
         many suppliers of  microelectronic  components have  implemented QML as
         their primary  worldwide  business  standard.  Appropriate  use of this
         standard helps not only in the implementation of advanced technologies,
         but also in providing more effective  logistical support throughout the
         life cycle of the product.

                  In January 2000, the Company  announced that it had registered
         as a STACK International supplier.  STACK International members consist
         of a  distinguished  worldwide  group  of  major  electronic  equipment
         manufacturers serving the high-reliability and communications  markets.
         STACK  registration  signifies formal  acceptance by the Company of the
         requirements   in  the  "STACK   Purchase   Specification   --  General
         Requirements for Integrated  Circuits."  Registration is the first step
         in acquiring full STACK Certification.

                  RT

                  RadTolerant  devices are designed to meet all types of digital
         logic  requirements  for  space  applications,   including  commercial,
         military,  and civilian satellites as well as deep-space probes.  These
         devices are offered in ceramic  packages  and  certified  for  military
         temperature ranges with either Class B or Class E (extended flow/space)
         qualification and include complete total dose radiation test reports on
         every lot of devices. In addition, all RadTolerant devices have design-
         and  pin-compatible   commercial  versions  for  easy  and  inexpensive
         prototyping.

                  The RadTolerant  family of FPGAs  currently  consists of seven
         products: the 2,000-gate RT1020, the 2,500-gate RT1425A, the 6,000-gate
         RT1460A,  the  8,000-gate  RT1280A,  the  10,000-gate   RT14100A,   the
         16,000-gate  RT54SX16,  and the  32,000-gate  RT54SX32.  The RTSX16 and
         RTSX32  products,  which were  introduced in 1999, are capable of up to
         100  Krads  of  total  dose   immunity.   RadTolerant   FPGAs   provide
         cost-effective   alternatives   to   radiation-hardened   devices   for
         applications  requiring high  reliability.  One such application is the
         growing  market for  commercial  satellites,  which are widely  used in
         telecommunications  for cellular phones, pagers, and global positioning
         system products and services.

                  In November 1999,  the Company  announced a plan to expand its
         line of  RadTolerant  FPGAs  with a new  family  based  on  0.25-micron
         antifuse SX-A devices. This new RTSX-S family of parts will be enhanced
         for space  applications by the addition of a hardened  register module,
         which will improve the new family's  tolerance to device  upsets caused
         by the  bombardment of external  radiation and space  particulate.  Two
         devices for the new RadTolerant family have been identified.  The first
         part, the RTSX32S  device with a density of 32,000 gates,  is currently
         expected to complete  qualification  in the third quarter of 2000.  The
         second part, the RTSX72S device with a density of 72,000 gates, will be
         the Company's largest HiRel FPGA. When qualified,  these RTSX-S devices
         are  expected to be the fastest and  lowest-power  FPGAs  operating  in
         space,  permitting  design  engineers to increase  system  performance,
         reduce  power   consumption,   and  lighten   payload   through  system
         integration.  Both the RTSX and RTSX-S families are fabricated in Japan
         by the Company's long-time foundry partner, MEC.

                  RH

                  The  RadHard  family of FPGAs  consists of two  products:  the
         8,000-gate RH1280, which was first shipped for revenue in 1996; and the
         2,000-gate RH1020, which was first shipped for revenue in 1998. RadHard
         devices are offered in ceramic  packages  and  certified  with Class VQ
         (QML) qualification. Actel's RadHard FPGAs are manufactured by Lockheed
         Martin  SEC  at  its  QML  facility  in  Manassas,  Virginia,  using  a
         high-reliability,  radiation-hardened  0.8-micron process.  The Company
         and Lockheed  Martin SEC jointly  developed the RadHard  family to meet
         the demands of applications  requiring guaranteed levels of performance
         and radiation survivability,  including the growing  telecommunications
         satellite  market.  Additional  applications  for RadHard FPGAs include
         satellites for military use, deep space probes and planetary  missions,
         and ground-based military applications in which radiation survivability
         is required.

         Software

         A key element of the Company's  strategy is to support users' EDA tools
of choice by facilitating the use of leading synthesis software as a "front end"
to Actel's proprietary Designer Series Development System software.  Rather than
developing this capability alone, the Company has established the Actel Industry
Alliance,  which the Company uses to maintain relationships with EDA vendors and
to develop  interfaces  between such vendors' EDA tools and Actel's  proprietary
software.  Under the Alliance program,  the Company provides members with access
to  Actel's  proprietary  software  specifications,  early  access  to  software
revisions,  verification services, and participation in joint marketing efforts.
The Alliance currently has more than 20 members, including all major EDA vendors
supporting  high-level  design for both VHDL and Verilog.  The Company  provides
comprehensive  HDL solutions for the EDA  environments of Aldec,  Cadence Design
Systems,  Exemplar Logic,  Mentor Graphics,  OrCAD,  Synopsys,  Synplicity,  and
Viewlogic.

          Designer Series Development System

          The Designer  Series  Development  System tool set is a software suite
built on an  object-oriented  database  that helps  optimize and  simplify  FPGA
circuit design,  implementation,  and testing. In 1999, Designer Series software
was integrated  into Actel's  DeskTOP suite of design tools to perform place and
route tasks.

          In June 1999,  the Company  announced the release of its free Designer
Series R1 1999 software update,  which included a timing-driven  place and route
("TDPR") software module designed to increase performance for applications using
the SX family.  In November  1999,  the Company  announced the release of its R2
1999 design tool update,  which included support for the SX-A product family and
a series of performance and ease-of-use  enhancements.  The Designer Series TDPR
software  was  enhanced  to provide  support  for all of the  Company's  product
families.  Users can now specify the required performance of their designs using
parameters (such as system frequency,  clock-to-out,  input setup time, and path
delay)  and the TDPR  software  will  automatically  place and route the  design
utilizing  those  parameters.  Due to the abundance of routing  resources in the
Company's  antifuse  FPGAs,  the  TDPR  software  can  typically  meet  the most
demanding  design  requirements  and improve the design's  performance by 15% or
more. In addition,  the R2 1999 release  included new ACTGen macros that provide
barrel  shifter,  register  file,  and FIFO  capabilities  for both  SX-A and SX
devices.  Additional support was provided for a new 66MHz, 64-bit  Target+Master
PCI soft core in the SX32A device.

          DeskTOP

          In February 1999, the Company became the first PLD supplier to offer a
free integrated suite of design tools. The Actel DeskTOP is a three-vendor suite
of logic  design  tools from  Synplicity,  VeriBest  (now wholly owned by Mentor
Graphics),  and Actel,  with  technical  support  provided  by Actel.  The basic
DeskTOP  version  (for users  designing  Actel FPGAs of up to 50,000  gates) was
offered at no charge to qualified  designers through January 31, 2000. The basic
Actel  DeskTOP  design tool suite  integrates  the  functionality  of VeriBest's
Design View, Design Manager,  schematic entry, and VHDL simulator;  Synplicity's
Synplify synthesis software; and Actel's Designer Series place and route tool.

          In June 1999,  the  Company  announced  the  expansion  of the DeskTOP
integrated  suite of design tools to include Actel DeskTOP Pro and Actel DeskTOP
Open as migration path options from the basic  DeskTOP.  These products take the
software offerings from VeriBest,  Synplicity, and Actel to the highest level of
functional  performance and  productivity,  according to the needs of each Actel
customer.  DeskTOP Pro is a reasonably priced,  complete tool suite solution for
power  users  designing  high  gate  count,   system-level  devices.  It  offers
feature-rich  design solutions with no maximum size limitation for all supported
Actel devices. DeskTOP Open provides an open synthesis environment for customers
who have  already  invested  in their own  synthesis  tools.  It also offers the
ability  to design  with no maximum  size  limitation  for all of the  Company's
current and planned antifuse devices. Like DeskTOP Pro, the DeskTOP Open upgrade
provides VeriBest's  Compliant VHDL simulator,  VeriBest's state diagram editor,
and Actel's  Designer  Advantage.  It also provides easy integrated  support for
Synplicity's Synplify and Synopsys's FPGA Express synthesis software.

          In July 1999, the Company announced the expansion of its Actel DeskTOP
integrated suite of design tools to include Verilog design entry and simulation.
With the  integration  of Verilog into Actel  DeskTOP,  users can choose between
VHDL or Verilog  versions for  seamless  design  entry and  simulation  of Actel
antifuse  device designs of up to 50,000 gates.  In September  1999, the Company
announced  that it had  already  filled  more  than  4,000  individual  software
registration requests for the three versions of Actel DeskTOP.

          CoreHDL Intellectual Property

          As  integrated  circuits  move to ever higher  levels of capacity  and
integration,  the use of IP in the  form of cores  becomes  more  important.  In
offering  CoreHDL IP, the Company is targeting  high-density  FPGA designers who
are interested in combining customized logic with predefined functions optimized
for high performance  applications.  By using predefined  cores,  designers save
engineering  resources  for the  value-added  portions  of their  designs  while
shortening the design cycle.  In addition,  the portable nature of cores enables
design reuse across multiple product versions.

          The Company's CoreHDL IP portfolio  consists of seven cores, which are
available in either  Verilog-HDL or VHDL source code:  Core 8b/10b (8 bit/10 bit
encoder/decoder   interface);   CoreARBITER   (PCI   arbiter);   CoreASYNC  (PCI
asynchronous    backend    interface);    CoreCRC   (cyclic    redundancy   code
generator/checker);  CorePCI (peripheral component interface);  CoreSDRAM (SDRAM
controller interface); and CoreUART (serial communication controller).

          In September 1999, the Company announced its commitment in the area of
IP to aggressively pursue third-party strategic relationships and proprietary IP
programs. The Company's IP program will be aimed at addressing customers' design
and design reuse needs by providing  immediate access to pre-verified soft logic
cores  implemented in Actel silicon.  A four-fold  program  approach is planned.
First,  the program  will  include an internal  mini-core  IP program to develop
functions  such as  next-generation  PCI  buses,  UART,  and SDRAM  controllers.
Second,  the  Company  plans to create a  partnership  program  to  support  key
third-party IP suppliers who will provide  system  designers with a portfolio of
validated IP blocks.  Third,  there will be further  enhancements  to ActGEN,  a
parameterizable  function  generator with a graphical  user  interface  ("GUI").
Fourth,  the Company will offer design services  consulting for IP customization
and  system-level  integration  through its Protocol  Design  Services Group. In
January  2000,  the  Company  announced  the  appointment  of Dennis Kish to the
newly-created  position of Vice President of Strategic Marketing.  In this role,
Mr. Kish is  responsible  for  identifying  emerging  markets and  opportunities
(including third-party strategic relationships and proprietary IP programs) that
will benefit from the Company's products and technologies.

          In  September  1999,  the Company  also  announced  the release of its
CorePCI Version 5.11, which added extensive design flexibility  benefits for PCI
bus design.  The CorePCI 5.11 macro conforms to the PCI Local Bus  Specification
2.2 and provides 32/64-bit bus widths and 33/66MHz performance using SX devices.
In October  1999,  the Company  announced  that it could  deliver a  32,000-gate
programmable  device  with  Master/Target  PCI  functionality  in a 329-pin  BGA
package for under $25 in high volume.  This put an FPGA PCI solution in the same
price/performance  bracket as traditionally  lower-cost ASICs. In November 1999,
the Company  announced  the release of its CorePCI  Version  5.2,  which was the
first  programmable  64-bit,  66MHz  PCI  core  to  offer a  complete  solution,
including Target Only, Master Only, and Master/Target (containing Target+DMA and
Target+Master) functions. By offering the complete PCI solution, the Company now
provides  designers  with an even more  flexible,  cost-effective  solution  for
design reuse, as well as a low-cost migration path to ASICs and  next-generation
process technologies. A unique benefit of the Company's PCI core is the use of a
soft register  transfer level ("RTL") design flow,  which provides  complete PCI
design  portability  to  ASICs.  The RTL  implementation  also  makes it easy to
integrate with user-defined logic at a higher level of abstraction. In addition,
CorePCI cores do not require fixed placement,  further  reducing  constraints on
the design; and include SDRAM, DRAM, and FIFO controllers,  permitting designers
to create memory  interfaces as required.  In combination  with the Company's SX
and  SX-A  FPGAs,  Actel's  PCI core  provides  a  low-power,  high-performance,
cost-effective, and very flexible platform for a broad scope of PCI and embedded
PCI  needs in  communications,  consumer,  computer,  industrial,  and  military
applications.  The soft core is available as  customizable  VHDL and Verilog-HDL
code, and a firm solution can be provided as required.

          The Company also offers nine cores developed by Inicore AG, a Swiss IP
provider,  which are available  only in VHDL source code:  iniADPLL (all digital
phase locked loop); iniCAN (controller area network bus interface); iniCPU (6809
8-bit  microprocessor);  iniG704;  iniHDLC  (high  level data link  controller);
iniSCI  (I2C  master  and slave  interfaces);  iniUART  (universal  asynchronous
receiver/transmitter  interface);  iniUTOPIA (ATM interface);  and iniVME (slave
interface).  In general,  these cores are  targeted  to  telecommunications  and
industrial control applications.

         Programmers

         The Company's  FPGAs can be programmed  by Silicon  Sculptor,  a highly
reliable  programmer  that is easy to setup and use. The Company  also  supports
programmers that are offered by third parties,  including BP Microsystems  Inc.,
Data I/O,  SMS Sprint,  and System  General.  Programmers  execute  instructions
included in fuse files,  which are obtained from the Company's  Designer  Series
software, to program Actel FPGAs.

         The compact size of the Silicon Sculptor  permits  designers to program
the Company's FPGAs from their desktop PC rather than in a lab. A single adapter
module can be used to program all Actel  antifuse or all flash devices  within a
package type,  regardless of pinout.  In May 1999, the Company  announced  that,
together with BP Microsystems, it had developed single- and six-site versions of
the Silicon  Sculptor  device  programmer  that are "native mode" compliant with
Windows 95/98/NT.  Up to 12 Actel devices can be concurrently  programmed from a
single PC by daisy  chaining  two six-site  Silicon  Sculptors  together  with a
simple expansion cable.

         Silicon Explorer

         Silicon  Explorer is a powerful  debugging and  verification  tool that
enables the user to monitor the internal  operation  of a programmed  FPGA as it
performs its functions at speed within a real system.  By  permitting  real-time
probing,  Silicon Explorer can significantly reduce the amount of time necessary
to  debug  and  verify  an FPGA  design.  In June  1999,  the  Company  released
testimonials from designers at several leading  networking  companies  regarding
Silicon  Explorer's  effectiveness  and  ease  of  use.  Designers  from  Ascend
Communications,   E/O  Networks,   and  Applied  Signal  Technology  experienced
productivity   gains  by  using  the  real-time   diagnostic   tool  for  design
verification and debugging.

         In February 2000, the Company announced a new generation of its Silicon
Explorer debugging and diagnostic tool, Silicon Explorer II and Silicon Explorer
II Lite. Silicon Explorer II further optimizes design performance,  flexibility,
and ease of use for all of the  Company's  antifuse FPGA product  families.  The
logic analysis system in Silicon Explorer II was enhanced to support an external
power supply; internal probing of 5.0-, 3.3-, and 2.5-volt FPGAs; four levels of
triggering;  decompression  on  download;  and  system  acquisition  rates up to
100MHz.  In  addition  to being a logic  analyzer  that  captures  external  bus
activity,  Silicon  Explorer II includes  "Probe Pilot." Probe Pilot attaches to
the system being tested,  providing access to internal FPGA signals. Probe Pilot
hardware samples up to eighteen channels of synchronous or asynchronous  signals
in real time at system rates up to 100MHz. Its "Explore" software permits a user
to dynamically set two of its eighteen  channels to analyze signals  internal to
the FPGA.  "Action Probe," a function available only with the Company's devices,
permits  dynamic  access to any  internal  node.  The Silicon  Explorer II logic
analysis  system is compliant  with Windows  95/98/NT and offers a  Windows-like
GUI. Silicon Explorer II Lite is a less-expensive version of Silicon Explorer II
without the real-time logic analyzer.

         Evaluation Board

         In May 1999, the Company  announced the  availability  of a 16,000-gate
evaluation  board for its SX and MX families  of FPGAs.  This  evaluation  board
enables  designers  to  conduct   real-time   evaluation  of  functionality  and
performance  of both SX and MX family  devices.  In  addition,  a  connector  is
provided to allow easy access to Silicon Explorer so that internal functionality
and  delays  can be  investigated.  Since the user  prototype  area of the SX/MX
evaluation board enables  designers to interface their own surrounding  circuits
with the FPGA,  the  evaluation  board  also  permits  designers  to assess  the
suitability of their own designs for specific applications.

         Sockets

         Sockets for the Company's  FPGAs are available in prototype  quantities
from the  Company  and in  production  quantities  from  Actel-qualified  socket
manufacturers.  Sockets permit  designers to replace a chip without damaging the
board, which reduces some of the risk commonly associated with using an antifuse
FPGA in prototype board design. The complete line of sockets accommodates all of
the Company's FPGAs in TQFP, PQFP, RQFP, and VQFP packages.

         In March  1999,  the  Company  announced a range of BGA sockets for use
with its FPGAs.  The BGA sockets are well suited to the prototyping  environment
and are  compatible  with  Actel's  MX,  SX, and flash  devices.  The use of BGA
sockets facilitates  migration to full production,  reducing both time to market
and  production  costs.  The sockets are  designed to be reliable  and have zero
insertion  force,  meaning that the device is not stressed  before,  during,  or
after testing. The principal benefit of these sockets is that they are placed on
the printed  circuit  board  ("PCB") in the same pad layout as the device itself
will  eventually  occupy.  This avoids  changes to the PCB during the transition
from  prototyping  to  production.  BGA packaging is becoming more popular,  due
mainly to its ease of use and ability to be reworked.

         In November 1999,  the Company  announced the  availability  of its new
SX72A FPGA in fine-pitch  ball grid array  ("fBGA")  packaging.  This 1.0mm ball
pitch fBGA with 484 pins occupies the same space as a standard 1.27mm ball pitch
BGA with 256 pins. The increased  number of I/Os permits  designers to utilize a
smaller  package  while  supporting  higher  I/O  counts.  The very low cost and
industry-leading  performance and power dissipation of the SX72A, in combination
with the high pin count and greatly  reduced  footprint of the fBGA484,  permits
the SX72A to address the I/O requirements of high-density PLD and ASIC designs.

         ProASIC

         In  June  1999,   the  Company   introduced   the  ProASIC   family  of
non-volatile,   single-chip,  very  low  power,   "live-at-power-up"  family  of
reprogrammable  gate  arrays.  The product  family,  which will consist of seven
devices have capacities ranging up to 512,000 gates, was developed by GateField.
The family is currently manufactured on a mainstream, 0.25-micron embedded flash
process  at  Infineon  Technologies  ("Infineon")  in  Germany.  The  Company is
currently engaged in limited software and silicon sampling at selected customers
throughout the world.

         As the first  reprogrammable  gate arrays,  ProASIC  devices  offer the
benefits  of both gate  arrays and FPGAs.  Like  traditional  gate  arrays,  the
ProASIC family provides non-volatile,  high-density,  single-chip solutions.  In
addition, ProASIC reprogrammable devices have a fine-grained architecture, which
ensures  compatibility with ASIC design tools and methodologies,  and contain an
ample amount of embedded  dual-port  memory/FIFO  blocks.  The  architecture and
design  methodology  also enable designers to "drop-in" soft IP from proprietary
and  third-party   sources,   eliminating  much  of  the   architecture-specific
re-engineering  required by other PLDs.  Networking  engineers in particular are
receptive  to the  advantages  of a  non-volatile,  single-chip,  reprogrammable
device that is  designed  using ASIC tools and  methodologies.  Like other PLDs,
ProASIC  devices reduce time to market and minimize  design risk and investment,
requiring  no mask sets or  silicon  respins.  The use of ProASIC  devices  also
simplifies  board  design  and cost by  eliminating  the need for a boot  device
(e.g.,  serial PROM)  associated with SRAM FPGAs.  In addition,  ProASIC devices
operate  at very low  power,  using  only  one-third  to  one-half  of the power
consumed by SRAM FPGAs and other PLDs based on look-up tables ("LUTs"). Finally,
the  ease  of  converting  ASIC  IP  into  ProASIC  significantly  broadens  the
availability of reusable cores for FPGA designers.  In short, the ProASIC family
brings significant benefits to any designer of high-density logic.

          ASICmaster Software

          ASICmaster,  the ProASIC design suite, was designed from the beginning
to  support  both  ASIC and FPGA  design  flows.  As a  result,  it is the first
programmable  family  that allows ASIC  designers  to use all of their  existing
tools and scripts.  Thus, there is no significant  investment of money to buy or
time to learn new design tools.  The  achievement  of timing  convergence  using
standard ASIC tools was one of the key technical challenges resolved by ProASIC.
The most  significant  outcome is that the decision to choose a programmable  or
masked  silicon  solution  can be  deferred  to a much later point in the design
cycle. In addition,  it blurs the  distinction  between ASIC and FPGA designs by
permitting  engineers to focus on system  logic,  rather than  specific  silicon
solutions.

          The  ASICmaster  tool  set is based  on a  complex,  multimillion-gate
capable ASIC tool that includes TDPR.  ASICmaster  software  integrates a global
router,  static timing  analyzer,  2 1/2 D-based RC extractor,  AWE  (asymptotic
waveform extraction) delay calculator, and ECO (engineering change order) editor
into an  advanced  design  flow.  Users  have the  option of  automated  flow or
interactive control for placement and routing.  Additional  capabilities include
automated  memory   generation  with  the  ProASIC   MemoryMaster   tool,  power
estimation, and a layout viewer for identifying and optimizing critical paths.

          ProASIC tools utilize the same VHDL and Verilog HDL descriptions  that
are targeted for gate arrays and standard cells.  This allows the use of leading
EDA tools such as Design Compiler, Build Gates, PrimeTime,  Design Time, Verilog
XL, VCS, Formality, and others. As a result, ProASIC design tools can be used in
almost any ASIC design environment.  This permits ASIC designers to operate from
within their existing  design  environments,  and also frees them from having to
modify HDL code with special directives and instantiations,  as is required with
SRAM devices.  Designers utilizing an FPGA design flow value the ease of use and
fast run times  they have come to expect  from FPGA  design  tools.  ProASIC  is
supported by leading  FPGA tools such as  LeonardoSpectrum  (Exemplar)  and FPGA
Express  (Synopsys),  both of which are  discussed  below,  as well as  Synplify
(Synplicity) and the Model Technology simulation environment.

          In August  1999,  the Company  announced  the  validation  of Exemplar
Logic's  LeonardoSpectrum  99.1 synthesis tool as fully  supporting  designs for
ProASIC devices. Exemplar Logic is a wholly-owned subsidiary of Mentor Graphics.
Exemplar's  LeonardoSpectrum  synthesis  tool was  proven in both an ASIC and an
FPGA design flow. In qualifying  LeonardoSpectrum,  the Company  determined that
the tool provides optimized synthesis results in the ProASIC flow and works with
all currently  announced  high-density  ProASIC devices.  LeonardoSpectrum  also
integrates seamlessly with ASICmaster.

          In November 1999, the Company announced that Synopsys had enhanced its
support of ProASIC devices.  Synopsys offers design flow flexibility for ProASIC
devices  with  FPGA  Compiler  II and FPGA  Express.  Designers  can  choose  an
ASIC-like design flow through FPGA Compiler II or a more traditional FPGA design
flow  through FPGA  Express.  Both tools have  integrated  architecture-specific
optimization for ProASIC devices to achieve high quality of results. In addition
to  architecture-specific   optimization,   Synopsys  incorporated  several  new
features for ProASIC devices, including the following: logic replication,  which
enables the user to duplicate high-fanout logic cells in order to reduce routing
congestion and increase design performance; timing constraint file output, which
permits designers to enter constraints only once by automatically passing on the
timing  constraints to ASICmaster;  timing  back-annotation,  which  accelerates
debugging time by providing  more accurate data to the integrated  static timing
analysis tool in FPGA Compiler II and FPGA Express; and partner-designed  module
generation,  which greatly increases quality of results for arithmetic functions
by automatically using architecture-specific modules developed by the Company.

          Reusable Core/IP Integration

          Reusable  cores,  or IP,  have not yet  substantially  penetrated  the
programmable  market.  The  reasons  for  this  include  the  high  level  of IP
optimization  required  to be useful in a  LUT-based  architecture;  the lack of
security provided by SRAM  programmable  logic; and the inability to control the
number of units programmed with a single IP element, which is a critical control
factor for the standard IP business  model.  ProASIC devices solve each of these
issues. The fine-grained  architecture  ensures that little  modification to the
core will be  required.  The minimal  effort  required to retarget  from ASIC to
programmable  silicon  should make ProASIC  attractive to third-party IP vendors
and users of captive IP.  Security  features on the devices  ensure  that,  once
programmed,  the device cannot be read back.  Finally,  a proprietary  licensing
feature,  combined with factory  programming,  means that the standard  business
model for IP can be extended  to  programmable  technologies.  In addition to IP
that  can be  purchased  from the  Company,  such as PCI  cores,  a  variety  of
independent  core  vendors  (such as Sican and Inicore) are working with ProASIC
devices.

         Protocol Design Services Group

         The Company's  Protocol Design Services Group is a leading  provider of
FPGA, ASIC, software, and electronic system design solutions. With the Company's
acquisition of the Protocol Design Services Group from GateField in August 1998,
Actel became the first FPGA provider to offer  system-level  design expertise to
its customers,  expanding the Company's  capability to support a greater portion
of customers'  overall design and risk management.  The Protocol Design Services
Group is located in a secure  facility  in Mt.  Arlington,  New  Jersey,  and is
certified to handle government,  military, and proprietary designs. Protocol has
an eleven-year  history of providing  engineering  design  solutions to both the
commercial and government sectors in North America and Europe.  Protocol's focus
has been in  telecommunications  and  networking  applications,  but it also has
significant  experience in the  automotive,  computer,  military/aerospace,  and
consumer markets.  Using  industry-standard  tools and  methodologies,  Protocol
provides  varying  levels  of  design  services,   including   system-level  and
system-on-a-chip design, turnkey FPGA and ASIC design and verification, software
development, and circuit card design.

         In  January  1999,  the  Company  announced  that the  Protocol  Design
Services  Group was actively  involved with a major customer to supply a new RTL
core for a 66MHz PCI design  application in an FPGA.  The Company  believes this
PCI implementation was the first programmable  application  operating within the
PCI 66MHz specification.  This PCI solution was developed by the Protocol Design
Services  Group  for a  PC-based  accelerator  board  that also uses a number of
ProASIC  products.  The  accelerator  uses  the  Company's  66 MHz PCI core in a
16,000-gate SX antifuse  FPGA, and has a shared local bus interface  between the
PCI core and the  ProASIC  devices.  The choice of ProASIC  products as building
blocks of the solution was driven by the requirement that the accelerator  board
function as a secure  platform for IP.  ProASIC  devices  have several  security
features, including the ability to prevent read-back of design content.

         In June 1999, the Company  announced that its Protocol  Design Services
Group had  completed  50 ProASIC  reprogrammable  gate array  designs  using the
ASICmaster  design  suite.  The Protocol  Design  Services  Group  completed the
designs over the preceding three years for uses ranging from ASIC prototyping to
production. This included the frequent use of ProASIC devices as a quick path to
verified silicon design, enabling system software to be developed while the ASIC
is being  fabricated.  The Protocol  Design Services Group leveraged the ProASIC
family's unique  reprogrammable  gate array  technology and its ASIC-like design
flow and methodology to increase design  productivity and significantly  improve
time to market compared with traditional ASIC design development.

         In  February  2000,  the Company  announced  that the  Protocol  Design
Services  Group had opened a design center in the Boston area.  The new Protocol
Design Center,  located in Chelmsford,  Mass., offers a broad range of expertise
in engineering design and verification services for FPGAs, ASICs, and electronic
systems. The Boston area design center is the newest of a several North American
regional centers planned by the Protocol Design Services Group.

Market and Applications

         FPGAs can be used in a broad range of  applications  across  nearly all
electronic system market segments. Net revenues from the sale of FPGAs accounted
for 96% of the  Company's  net  revenues  for 1999,  and  virtually  all of such
revenues were derived from the sale of antifuse  FPGAs.  Most  customers use the
Company's  antifuse FPGAs in low to medium volumes in the final  production form
of their products.  Some high-volume  electronic  system  manufacturers  use the
Company's  antifuse  FPGAs as a  prototyping  vehicle and convert  production to
lower-cost  conventional  gate  arrays or  standard  cells,  while  others  with
time-to-market  constraints use Actel's FPGAs in the initial production and then
convert to  conventional  gate arrays or standard  cells. As product life cycles
continue to shorten,  foundry  capacity  becomes more  difficult to secure,  and
manufacturing   efficiencies  for  antifuse  FPGAs  increase,  some  high-volume
electronic system  manufacturers are electing to retain antifuse FPGAs in volume
production  because conversion to conventional gate arrays or standard cells may
not yield  sufficiently  attractive savings before the electronic system reaches
the end of its life. With the introduction of the MX, SX, and SX-A families, the
Company  believes  that its  antifuse  FPGAs will be used  increasingly  in high
volume production.

         Communications

         The high  density,  high  performance,  and low  power  consumption  of
antifuse  FPGAs  make  them  appropriate  for use in  communications  equipment.
Increasingly  complex  equipment must frequently be designed to fit in the space
occupied by previous  product  generations.  In addition,  the rapidly  changing
communications  environment  rewards  short  development  times and early market
entry.

         Representative  customers of the Company in the  communications  market
include: 3Com, ADC Kentrox, Advanced Fibre Communications,  Alcatel,  Cabletron,
Chipcom, Cisco Systems,  Ericsson,  Hughes Network Systems, Lucent Technologies,
Marconi, Motorola, Nokia, and Nortel. The Company derived 9% of its net revenues
for 1999 from Nortel and expects to derive 10% or more of net  revenues for 2000
from Nortel.

         Computer Systems and Peripherals

         The computer systems market is intensely competitive, placing a premium
on early  market  entry for new  products.  FPGAs  reduce the time to market and
facilitate early completion of production models so that development of hardware
and software can occur in parallel.

          Representative  customers  of  the  Company  in  the  computer  market
include: Compaq Computer, Hewlett-Packard, Hypercom, and IBM.

         Consumer and e-Appliances

         The high performance,  low power consumption,  and low cost of antifuse
FPGAs make them appropriate for use in products  enabling the portability of the
internet,  or "e-appliances," and other high-volume  electronic systems targeted
for consumers.  E-appliance  applications  include MP3  "music-off-the-internet"
players, digital cable set-top boxes, DSL and cable modems, digital cameras, and
digital film. Like the computer market,  the market for consumer and e-appliance
products  places a  premium  on  early  market  entry  for new  products  and is
characterized by short product life cycles.

         Representative  customers  of the  Company in the  consumer/e-appliance
market  include:  Diamond  Multimedia,  General  Instruments,  NEC,  NuCam,  and
PairGain.

         In February  1999,  the Company  announced that TacT Audio had launched
the  first  direct-drive  digital  amplifier  targeted  for the  top-end  of the
high-fidelity  market.  The TACT  Millennium  achieves  its  high-quality  sound
performance using two MX FPGAs (an MX09 and an MX16),  which replaced two 24-bit
DSPs and two CPLDs running at over 90MHz. The FPGAs have on-chip program storage
that is not  easily  compromised  and use  far  less  power  than  the  original
components.  The next generation will be even further  improved by replacing the
two MX parts with a single SX family  device,  which will include volume control
to create a basic  system-level  building  block for future  generations  of the
amplifier. The SX device will also enable future generations of the amplifier to
run at much higher speeds.

         In August 1999, the Company announced that Pathways  Development Group,
Inc.  will use the MX02 FPGA in its new Team Xtreme  video game  interfaces  for
people with  disabilities.  Team Xtreme is a family of products  allowing people
with  disabilities to play Nintendo video game systems without slowdown hardware
or special  software.  A disabled person using Team Xtreme can make use of up to
five switches  controlled  by his or her hands,  feet,  head,  or breath.  These
switches are combined with a standard game  controller  played by a teammate and
the two teammates  are made to look like one person to the game system.  Players
using Team Xtreme  work on  hand-eye  coordination  and motor  movement  skills,
mental and physical  endurance,  and socialization  skills while having fun. The
design  flexibility  of the MX02 device  permitted  Team  Xtreme's  designers to
develop a single circuit board that works for all three Nintento game interfaces
(standard NES, Super NES, and Nintendo 64), providing considerable cost savings.

         Industrial Control Equipment

         Industrial  control  and  instrumentation  applications  often  require
complex   electronic   functions   tailored  to  specific  needs.   FPGAs  offer
programmability and high density,  making them attractive to this segment of the
electronic equipment market.

         Representative  customers  of  the  Company  in the  industrial  market
include:    Agilent,    Allen    Bradley/Rockwell,    Eastman   Kodak,   General
Electric-Medical, Hewlett-Packard, Marquette, Siemens, and Varian.

         Military and Aerospace

         Rigorous   quality  and   reliability   standards,   stringent   volume
requirements,  and the need  for  design  security  are  characteristics  of the
military and aerospace  market.  The Company's  antifuse FPGAs have high quality
and reliability and are virtually  impossible to reverse  engineer,  making them
appropriate for many military and aerospace applications. The Company's antifuse
FPGAs  are  especially  well  suited  for  space  applications,  due to the high
radiation  tolerance of the antifuse,  and for many aircraft and missile  flight
applications,  due to the high density and high  performance of antifuse  FPGAs.
For these  reasons,  the Company is the world's  leading  supplier of  military,
radiation-tolerant, and radiation-hardened FPGAs.

         The Company's  antifuse  FPGAs were first designed into a space mission
in 1992. Since then, thousands of the Company's programmable logic circuits have
performed  aboard  manned space  vehicles,  earth  observation  satellites,  and
deep-space probes. The Company's FPGAs often perform mission-critical  functions
on important  scientific missions in space. They have, for example,  been aboard
numerous Mars missions, and were included in the controlling electronics for the
Mars Pathfinder Rover. In addition, there are Actel devices performing functions
on the repaired and revitalized Hubbell Space Telescope. The Company's FPGAs are
also being readied for the next space infrared telescope facility (SIRTF), which
is scheduled to launch in 2001. As a final example,  the Stardust  probe,  which
was launched in 1999 and is scheduled to make several large loops around the sun
and  rendezvous  with the tail of the comet Wild 2 in  January of 2004,  carries
about 100 Actel FPGAs.

         The Company  participates  in programs  administered by NASA's Goddard,
Johnson, and Marshall Space Flight Centers (including the Space Shuttle) as well
as programs at California  Institute of Technology's  Jet Propulsion  Laboratory
("JPL").  However,  the  Company's  success  has not been  limited to the United
States.  Today,  the  Company's  FPGAs can be found in  spacecraft  launched  by
virtually  every civilian space agency around the world,  including the European
Space Agency (ESA) and the Japanese National Space  Development  Agency (NASDA),
as well as on board the International Space Station (ISS).

          Representative  customers of the Company in the military and aerospace
market include:  Boeing,  Harris,  Honeywell,  Hughes  Aircraft,  JPL,  Lockheed
Martin,  Loral,  Marconi,  National Aeronautics Space  Administration  ("NASA"),
Northrup, Olin Corporation, Raytheon, SCI Systems, and TRW.

Sales and Distribution

         The Company maintains a worldwide,  multi-tiered  selling  organization
that includes a direct sales force, independent manufacturers'  representatives,
and  electronics  distributors.   In  March  1999,  the  Company  announced  the
appointment of Paul Indaco as Vice President of Worldwide Sales. In August 1999,
the Company  announced  the  expansion  and  reorganization  of its senior sales
management  team. The new sales  organization  included the  appointment of Area
Sales Managers for the Western and Central  United  States,  who joined the Area
Sales  Manager  for the  Eastern  United  States  to  form  Actel's  area  sales
management  team in North  America.  The Company  also moved to  strengthen  its
distribution  channel  management  with the  appointment  of a Director of North
American  Distribution  and  Sales  Operations,  and to  support  its  important
aerospace  product  segment  with the  appointment  of a Director  of  Worldwide
Aerospace Sales.  These new positions in the sales  organization were created to
increase sales management coverage and support for new products.

         The  Company's  North  American  sales  force  consists of 55 sales and
administrative personnel and field application engineers ("FAEs") operating from
20 sales offices  located in major  metropolitan  areas.  Direct sales personnel
call on target  accounts and support  direct  original  equipment  manufacturers
("OEMs").  Besides  overseeing  the  activities of direct sales  personnel,  the
Company's  sales  managers  also  oversee the  activities  of 20  manufacturers'
representative  firms that operate from  approximately 50 office locations.  The
manufacturers'  representatives  concentrate  on  selling  to  major  industrial
companies  in  North  America.  To  service  smaller,  geographically  dispersed
accounts in North America,  the Company has  distributor  agreements with Arrow,
Pioneer, and Unique.  Arrow,  Pioneer, and Unique have approximately 51, 39, and
26 branch offices in North America, respectively.

         Actel   generates  a   significant   portion  of  its   revenues   from
international  sales.  Sales to  customers  outside the United  States for 1999,
1998, and 1997 accounted for 29%, 33%, and 31% of net revenues, respectively. Of
these export sales, the largest portion was derived from European customers. The
Company's  European sales organization  consists of 17 employees  operating from
five sales  offices  and 12  distributors  and sales  representatives  having 31
offices  (including  Arrow and  Unique,  which have  eight and seven  offices in
Europe,  respectively).  Actel's  Pan-Asia  sales  organization  consists  of 10
employees  operating  from four sales offices and seven  distributors  having 15
offices  (including  Unique,  which  has  eight  offices  in  Pan-Asia).   Three
additional distributors serve the remaining international markets in which Actel
offers its products.

         The  Company's  sales cycle for the initial sale of a design  system is
generally  lengthy  and  often  requires  the  ongoing  participation  of sales,
engineering,   and  managerial  personnel.   After  a  sales  representative  or
distributor  evaluates a customer's logic design  requirements and determines if
there  is an  application  suitable  for the  Company's  FPGAs,  the  next  step
typically is a visit to the  qualified  customer by a regional  sales manager or
the FAE  from  Actel  or its  distributor.  The  sales  manager  or FAE may then
determine  that  additional  analysis  is  required  by  engineers  based at the
Company's headquarters.

         In  1999,  a  majority  of  the  Company's   sales  were  made  through
distributors.  As is common in the semiconductor industry, the Company generally
grants price  protection to  distributors.  Under this policy,  distributors are
granted  a  credit  upon a price  reduction  for the  difference  between  their
original  purchase price for products in inventory and the reduced  price.  From
time to time,  distributors  are also granted credit on an individual  basis for
Company-approved  price reductions on specific transactions to meet competition.
The  Company  also  generally  grants  distributors  limited  rights  to  return
products. To date, product returns under this policy have not been material. The
Company maintains  reserves against which these credits and returns are charged.
Because  of its price  protection  and return  policies,  the  Company  does not
recognize revenue on products sold to distributors until the products are resold
to end customers.

Backlog

         At December 31, 1999,  the Company's  backlog was  approximately  $49.6
million,  compared with  approximately  $25.5 million at December 31, 1998.  The
Company  includes in its backlog all OEM orders  scheduled for delivery over the
next nine months and all distributor orders scheduled for delivery over the next
six  months.  The  Company  sells  standard  products  that may be shipped  from
inventory within a short time after receipt of an order. The Company's business,
and  to  a  large  extent  that  of  the  entire  semiconductor   industry,   is
characterized  by short-term  order and shipment  schedules,  rather than volume
purchase contracts.  In accordance with industry practice, the Company's backlog
may be  cancelled  or  rescheduled  by the  customer  on  short  notice  without
significant penalty. As a result, the Company's backlog may not be indicative of
actual sales and therefore should not be used as a measure of future revenue.

Customer Service and Support

         The Company  believes  that  superior  customer  service and  technical
support are  essential for success in the FPGA market.  The Company  facilitates
service and support  through  service  team  meetings  that  address  particular
aspects of the overall service strategy and support.  The most significant areas
of customer service and technical support are regularly measured.  The Company's
customer service organization emphasizes prompt, accurate responses to questions
about product delivery and order status.

         The Company's  FAEs provide  technical  support to customers in Canada,
Europe,  Japan, Korea, Taiwan, and the United States. This network of experts is
augmented  by  FAEs  working  for  the  Company's  sales   representatives   and
distributors  throughout  the world.  Customers  in any stage of design can also
obtain  assistance  from the Company's  technical  support  hotline or web-based
technical  support  database  called  "Guru." In  addition,  the Company  offers
technical  seminars on its products and  comprehensive  training  classes on its
software.

         The Company generally warrants its products against defects in material
and workmanship for one year. The Company also warrants that its automatic place
and route  software  will  achieve gate  utilization  at not less than the rates
advertised.  To date,  the  Company  has not  experienced  significant  warranty
returns.

Manufacturing and Assembly

         The Company's strategy is to utilize third-party  manufacturers for its
wafer  requirements,  which  permits  Actel to allocate its resources to product
design,  development,  and  marketing.  Wafers used in the  Company's  FPGAs are
manufactured by Chartered  Semiconductor in Singapore; by Lockheed Martin SEC in
Manassas, Virginia; by MEC in Japan; by UMC in Taiwan; and by Winbond in Taiwan.
The Company's FPGAs in production are  manufactured  by Chartered  Semiconductor
using 0.6, 0.45, and 0.35 micron design rules;  by Lockheed Martin SEC using 0.8
micron design rules; by MEC using 1.0, 0.8, and 0.25 micron design rules; by UMC
using 0.22 micron design  rules;  and by Winbond using 0.8 and 0.6 micron design
rules. In addition, the ProASIC flash devices are being manufactured by Infineon
in Germany using 0.25 micron design rules.

         In March 1999, the Company  announced that it had, in partnership  with
MEC,  successfully  developed a  0.25-micron  antifuse  process in what was then
record  time.  In March 2000,  the Company  announced  that it had  successfully
developed a 0.22-micron  antifuse  process  technology  at UMC,  again in record
time.

         Wafers  purchased  by the Company  from its  suppliers  are  assembled,
tested,  marked,  and inspected by Actel and/or a  subcontractor  of the Company
before  shipment  to  customers.  The  Company  assembles  most  of its  plastic
commercial  products  in  Hong  Kong,  Korea,  and  Singapore.  Ceramic  package
assembly, which is generally required for military applications, is performed at
one or more  subcontractor  manufacturing  facilities,  some of which are in the
United States.

         The Company is ISO 9002 certified for the  manufacturing and testing of
its FPGAs. The certification  was granted by DSCC. The ISO standards,  developed
by the International Organization for Standardization,  provide an international
benchmark for quality systems. Specifically, ISO 9002 requires compliance in the
following  areas:   management   responsibility,   customer  service,   supplier
management,  internal quality audits,  training process control, and inspection.
As  the  Company  continues  to  establish  itself  as  a  leading  supplier  of
high-quality FPGAs, ISO certification  provides a globally recognized  benchmark
that Actel's devices have been certified for integrity in the  manufacturing and
test process.

Strategic Relationships

         In addition to strategic relationships that the Company enjoys with its
customers,  foundries, assembly houses, distributors, and sales representatives,
Actel also has the following strategic partners:

         BP Microsystems

         The Company  has worked with BP  Microsystems  of  Houston,  Texas,  to
jointly  develop  Silicon  Sculptor  based on BP's world  class  technology.  BP
Microsystems offers a wide variety of programmers,  including EPROM programmers,
universal programmers,  concurrent programming systems, and fine pitch automated
programming  systems.  The modules of the Silicon  Sculptor  are  designed to be
fully upward  compatible  with all BP  Microsystems  antifuse FPGA  programmers,
which permits design engineers to move from prototype programming to high volume
production programming.

         GateField

         In 1998, the Company  entered into a Product  Marketing  Agreement with
GateField  and  purchased  GateField  Series  C  Convertible   Preferred  Stock.
Concurrently,  the  Company  acquired  the  Design  Services  Business  Unit  of
GateField in a transaction  accounted for as a purchase.  Consideration  paid in
these transactions totaled $10.4 million, consisting entirely of cash.

                  Marketing Rights

                  During  the  term  of the  Product  Marketing  Agreement,  the
         Company has  exclusive,  worldwide  distribution  rights to GateField's
         standard   ProASIC  FPGA  products   utilizing  less  than  .35  micron
         geometries,  including FPGA products that are  integrated  with SRAM or
         flash memory.  For these rights,  the Company paid GateField an initial
         fee and agreed to pay a fee of $1  million  upon  qualification  of the
         initial .25 micron product. In addition, the Company and GateField will
         split equally the gross margins from ProASIC product sales.

                  License Rights

                  Pursuant  to  the  terms  of a  License  Agreement,  GateField
         granted  to the  Company a fully  paid,  nonexclusive,  nontransferable
         license to sell and, upon certain events,  to make, have made,  import,
         and use GateField's  standard ProASIC FPGA products utilizing less than
         .35 micron geometries.

                  Preferred Stock

                  Pursuant  to  terms of a Series  C  Preferred  Stock  Purchase
         Agreement, the Company purchased 300,000 shares of GateField's Series C
         Convertible  Preferred  Stock, par value $0.10. The Series C Shares are
         convertible  into  200,000  shares of  GateField  common  stock and are
         entitled to certain  liquidation  and redemption  rights.  In the event
         that all of GateField's  outstanding shares of Series B Preferred Stock
         are  redeemed,  the  Company  shall be  entitled to redeem its Series C
         Shares,  subject to applicable  law. The Company is entitled to certain
         registration  rights and has a right of first  refusal to purchase  its
         pro rata share of certain new securities GateField may issue.

         In May 1999, the Company paid $8.0 million to GateField in exchange for
a  convertible  promissory  note  bearing  interest  at 5.22% per  annum  with a
five-year term.  Interest is payable quarterly and the note is secured by a lien
against all the assets of GateField.  The note is  convertible  at the Company's
election  into 420,000  shares of  GateField  Series C-1  Convertible  Preferred
Stock,  which are convertible  into 1,230,769  shares of GateField common stock,
equating to a price of $6.50 per share of GateField  common stock.  In addition,
the Company  increased its ownership of GateField  common stock during 1999 from
16,500 shares to 190,529 shares.  GateField common stock, which is listed on the
National Association of Security Dealers Over-The-Counter Bulletin Board, closed
at $3.875 on December 31, 1999. The Company assesses the  recoverability  of its
investments  in  GateField,  as well as the  amounts  due from  GateField,  on a
regular basis. No impairment has been indicated to date.

         In light of the  Company's  common and  preferred  equity  interest  in
GateField,   $8.0  million  convertible  promissory  note  from  GateField,  and
marketing and licensing  agreements with GateField,  Actel began  accounting for
its interests in GateField  under the equity  method of accounting  during 1999.
The impact of this implementation was a $1.1 million charge to the Company's net
income for 1999 (consisting of $0.9 million in amortization of goodwill and $0.2
million of GateField's net loss).

         SEi

         In  October  1999,  the  Company  announced  that it had  expanded  its
strategic partnership with Space Electronics,  Inc. ("SEi") of San Diego, Calif.
by  making  SEi the  sole  authorized  selling  agent  for the  RAD-PAK  line of
radiation-tolerant   FPGAs.   RAD-PAK  FPGAs  provide  the   survivability   and
cost-effectiveness sought by growing markets using radiation-tolerant FPGAs. SEi
sells 1280A and 14100A RAD-PAK  devices of up to 10,000 gates screened to either
Class B or Class S levels.  In  addition,  SEi  brands  the  RAD-PAK  devices by
marking  the  products  with its logo and has full  responsibility  for  RAD-PAK
customer  design  support.  SEi  also  assumed  responsibility  for  maintaining
inventory, order processing, and order fulfillment.

         Synopsys

         In  November  1999,  the  Company  announced  an  extended  partnership
agreement  with  Synopsys.  The purpose of this  agreement  is to forge a closer
relationship that will produce  increasingly  better design flows and quality of
results  for  customers  using FPGA  Compiler  II or FPGA  Express to target the
Company's  programmable  logic devices.  The first outcome of this new agreement
was enhanced support of ProASIC devices (see "BUSINESS -- Products -- ProASIC --
ASICmaster").

         Synplicity and VeriBest (Mentor Graphics)

         In 1998, the Company  announced that it had,  together with  Synplicity
and VeriBest,  begun  developing an integrated  tool  environment for Actel FPGA
designs.  The Actel  DeskTOP suite of tools was released in the first quarter of
1999 (see "BUSINESS -- Products -- Software -- DeskTOP").

         Founded in 1994,  Synplicity  delivers the benefits of logic  synthesis
and  embedded   synthesis   technologies  to  programmable  logic  designers  by
developing  fast,  easy-to-use,  affordable  tools  with  excellent  quality  of
results.  Synplicity products support  industry-standard  design languages (VHDL
and Verilog),  run on popular platforms  (Windows '95, Windows NT and UNIX), and
support leading PLD manufacturers.

         VeriBest is a broad-line  supplier of enterprise  EDA tools that enable
customers to solve their critical business issues. VeriBest integrates with many
industry-leading  tool providers,  including  Actel,  Altera,  Bentley  Systems,
Dynamic Soft Analysis,  Lucent  Technologies,  Minc, Synopsys,  Synplicity,  and
Xilinx.  In November  1999,  Mentor  Graphics  Corporation  ("Mentor  Graphics")
purchased all or  substantially  all of the assets of VeriBest.  Mentor Graphics
has agreed to continue supporting the DeskTOP tool set for one year.

         Research and Development

         In 1999,  1998,  and 1997,  the  Company  spent  $32.3  million,  $31.2
million,  and $26.5 million,  respectively,  on research and development,  which
represented approximately 19%, 20%, and 17% of net revenues,  respectively,  for
such periods.  The Company's  research and development  expenditures are divided
among circuit design,  software development,  and process technology activities,
all of which are involved in the  development  of new products based on existing
or emerging technologies. In the areas of circuit design and process technology,
the  Company's  research and  development  activities  also  involve  continuing
efforts  to cut the  cost and  improve  the  performance  of  current  products,
including  reductions  in  the  design  rules  under  which  such  products  are
manufactured. The Company's software research and development activities include
enhancing the functionality, usability, and availability of high-level CAE tools
and IP cores in a complete and automated  desktop design  environment on popular
personal computer and workstation platforms.

         The  research  and  development  projects  that  the  Company  publicly
discussed in 1999 included the following:

         ES Architecture and Reprogrammable Embedded IP

         In  1996,   the  Company   announced   its   intention   to  enter  the
reprogrammable  FPGA market by offering an SRAM-based  product family  utilizing
the  new  ES  programmable   architecture.   The  ES  architecture   combines  a
fine-grained  cell structure with a routing-centric  architecture.  The expected
result is logic cells that are more readily  synthesized and more efficient than
current programmable architectures. The key to the architectural efficiencies is
a technology in which separate  transistors  are used to implement  logic and to
drive the interconnects. By separating these functions, Actel believes that more
efficient die  utilization is achievable,  resulting in lower-cost  designs.  In
addition,  the interconnect drivers are tailored to routing length, which should
provide high performance even for cross-chip  routing.  The ES architecture also
makes  greater use of  hierarchy  than  current  programmable  architectures.  A
constant,  maximum  routing  delay is  associated  with each level of hierarchy,
which should provide the device with fanout independent delays. This means that,
regardless of the number of logic elements being driven, the delay should always
be constant,  making the chip's performance predictable.  Many aspects of the ES
architecture are switch-technology independent,  making possible future variants
of the ES architecture  employing  antifuse,  flash, or other basic  programming
elements.

         In  1999,  after  experiencing   significant  delays  in  matching  the
capabilities  of its  software and the  resources  of its  silicon,  the Company
refocused its reprogrammable  SRAM strategy.  The Company believes that the size
and power advantages of the ES architecture can now be used to greatest efficacy
in the  emerging  market for  embedded  programmable  products.  The Company has
formed a strategic product marketing team to position Actel's SRAM technology at
the forefront of this emerging  market.  In January 2000, the Company  announced
the appointment of Dennis Kish to the  newly-created  position of Vice President
of Strategic  Marketing.  In this role, Mr. Kish is responsible  for leading the
Company's embedded SRAM effort.

Competition

         The FPGA market is highly  competitive,  and the Company  expects  that
competition  will  continue  to  increase  as the market  grows.  The  Company's
competitors  include  suppliers of TTLs and ASICs,  including  conventional gate
arrays,  standard  cells,  CPLDs,  and FPGAs.  Of these,  the  Company  competes
principally with suppliers of conventional gate arrays,  standard cells,  CPLDs,
and FPGAs.

         The primary  advantages of conventional  gate arrays and standard cells
are high capacity, high density, high speed, and low cost in production volumes.
The Company competes with conventional gate array and standard cell suppliers by
offering lower design costs, shorter design cycles, and reduced inventory risks.
However,  some  customers  elect to  design  and  prototype  with the  Company's
products  and then  convert to  conventional  gate arrays or  standard  cells to
achieve  lower costs for volume  production.  For this reason,  the Company also
faces  competition from companies that specialize in converting CPLDs and FPGAs,
including Actel products, into conventional gate arrays or standard cells.

         The Company also competes with  suppliers of CPLDs.  Suppliers of these
devices include Altera and Lattice-Vantis Semiconductor Corporation ("Lattice").
The  circuit  architecture  of CPLDs may give them a  performance  advantage  in
certain lower capacity  applications,  although the Company believes that its SX
and SX-A families compete favorably with CPLDs. However, Altera and Lattice have
larger  installed  bases of development  systems than the Company.  In addition,
many newer CPLDs are reprogrammable,  which permits customers to reuse a circuit
multiple times during the design process  (unlike  antifuse-based  FPGAs,  which
permanently retain the programmed configuration). No assurance can be given that
the Company will be able to overcome these competitive disadvantages.

         The Company  competes most directly with  established  FPGA  suppliers,
such as Xilinx and Lucent  Technologies  (which is a licensed  second  source of
some Xilinx  products).  While the Company  believes its products and technology
are superior to those of Xilinx in many  applications  requiring  greater speed,
lower cost, or nonvolatility, Xilinx came to market with its FPGAs approximately
three years before Actel,  has a larger  installed base of development  systems,
and its SRAM-based products are  reprogrammable.  No assurance can be given that
the Company will be able to overcome these competitive disadvantages.

         Several  companies have either already marketed  antifuse-based  FPGAs,
including QuickLogic Corporation ("QuickLogic"), or announced their intention to
do so. In 1995, the Company acquired the antifuse FPGA business of TI, which was
the only second-source  supplier of Actel products.  Xilinx, which is a licensee
of certain of the Company's patents, introduced antifuse-based FPGAs in 1995 and
abandoned its antifuse FPGA business in 1996. Cypress Semiconductor Corporation,
which  was a  licensed  second  source of  QuickLogic,  sold its  antifuse  FPGA
business to QuickLogic in 1997.  QuickLogic is also a licensee of certain of the
Company's patents. See "BUSINESS -- Patents and Licenses."

         The Company believes that important  competitive  factors in its market
are price, performance, density (concentration of usable gates), capacity (total
number of usable gates),  ease of use and  functionality  of development  system
software,  installed base of development  systems,  adaptability  of products to
specific  applications,  length of development  cycle  (including  reductions to
finer  micron  design  rules),  number  of  I/Os,  reliability,  adequate  wafer
fabrication  capacity and sources of raw  materials,  protection  of products by
effective  utilization of intellectual  property laws, and technical service and
support. Failure of the Company to compete successfully in any of these or other
areas  could  have  a  materially  adverse  effect  on its  business,  financial
condition, or results of operations.

Patents and Licenses

         As of March 31,  2000,  the Company had 174 United  States  patents and
applications pending for an additional 31 United States patents.  Actel also had
41 foreign patents and  applications  pending for 105 patents outside the United
States. The Company's patents cover,  among other things,  Actel's basic circuit
architecture, antifuse structure, and programming method. The Company expects to
continue  filing patent  applications  as appropriate to protect its proprietary
technologies.  The Company  believes  that  patents,  along with such factors as
innovation,  technological  expertise,  and experienced  personnel,  will become
increasingly important.

         The Company  attempts to protect its circuit designs,  software,  trade
secrets,  and  other  proprietary   information  through  patent  and  copyright
protection,  agreements  with customers and suppliers,  proprietary  information
agreements  with  employees,  and other security  measures.  No assurance can be
given that the steps  taken by the  Company  will be  adequate  to  protect  its
proprietary rights.

         On March 29, 2000, Unisys  Corporation  ("Unisys")  brought suit in the
United States District Court for the Northern  District of California,  San Jose
Division,  against the Company seeking  monetary  damages and injunctive  relief
based on Actel's  alleged  infringement  of four  patents  held by  Unisys.  The
Company  believes  that it has  meritorious  defenses to the claims  asserted by
Unisys  and  intends  to  defend  itself   vigorously  in  this  matter.   After
consideration  of the information  currently known, the Company does not believe
that the ultimate outcome of this case will have a materially  adverse effect on
Actel's business,  financial  condition,  or results of operations,  although no
assurance  to that  effect  can be given.  The  foregoing  is a  forward-looking
statement  subject to all of the risks and  uncertainties of a legal proceeding,
including  the  discovery  of new  information  and  unpredictability  as to the
ultimate outcome.

         In connection  with the  settlement of patent  litigation in 1993,  the
Company and Xilinx  entered into a Patent Cross License  Agreement,  under which
Xilinx was  granted a license  under  certain of Actel's  patents  that  permits
Xilinx to make and sell  antifuse-based  PLDs,  and the  Company  was  granted a
license under certain of Xilinx's  patents to make and sell SRAM-based  PLDs. In
1996, Xilinx announced that it had discontinued its antifuse-based  FPGA product
line. In 1999,  the Company  refocused its  reprogrammable  SRAM strategy on the
emerging market for embedded  programmable  products.  See "BUSINESS -- Research
and Development -- ES Architecture and Reprogrammable Embedded IP."

         In 1995,  the  Company and BTR,  Inc.  ("BTR")  entered  into a License
Agreement  pursuant to which BTR  licensed  its  proprietary  technology  to the
Company for  development  and use in FPGAs and  certain  multichip  modules.  As
partial  consideration  for the grant of the  license,  the Company  pays to BTR
non-refundable  advance royalties.  The Company has also employed the principals
of BTR to assist Actel in its  development  and  implementation  of the licensed
technology.

         In connection  with the  settlement of patent  litigation in 1998,  the
Company and  QuickLogic  entered  into a Patent  Cross  License  Agreement  that
protects all existing  FPGA  products of both  companies  for the lives of those
products.  In 1998, the Company also entered into a patent litigation settlement
agreement with the Lemelson Medical, Education & Research Foundation.

         As is typical in the semiconductor  industry,  the Company has been and
expects to be  notified  from time to time of claims  that it may be  infringing
patents owned by others.  During 1999, the Company continued to hold discussions
with several third  parties  regarding  potential  patent  infringement  issues,
including two semiconductor  manufacturers with significantly  greater financial
and  intellectual  property  resources  than Actel.  As it has in the past,  the
Company may obtain  licenses  under patents that it is alleged to infringe.  The
Company has made  provision  for the  estimated  settlement  costs of claims for
alleged  infringement  through  end of 1999.  While the  Company  believes  that
reasonable  resolution  will occur,  no assurance can be given that these claims
will be  resolved  or that  the  resolution  of  these  claims  will  not have a
materially adverse effect on Actel's business,  financial condition,  or results
of operations.  In addition,  the Company's evaluation of the probable impact of
these pending disputes could change based upon new information learned by Actel.

Employees

         At the end of 1999, the Company had 449 full-time employees,  including
136 in marketing,  sales, and customer support; 144 in research and development;
122 in operations;  13 in design services; and 34 in administration and finance.
None of the Company's  employees is  represented by a labor union nor does Actel
have  employment  agreements  with any of its  employees.  The  Company  has not
experienced  any work  stoppages,  and believes that its employee  relations are
satisfactory.

Risk Factors

         Shareholders  of  Actel  and  prospective  investors  should  carefully
consider,  along with the other  information in this Annual Report on Form 10-K,
the following risk factors:

         Acts of God

         The performance of the Company and each of its suppliers, distributors,
subcontractors,  and  agents is  subject  to events or  conditions  beyond  such
party's control, including labor disputes, acts of public enemies or terrorists,
war or other military conflicts,  blockades,  insurrections,  riots,  epidemics,
quarantine  restrictions,  landslides,  lightning,  earthquake,  fires,  storms,
floods,  washouts,  arrests,  civil  disturbances,  restraints  by or actions of
governmental bodies acting in a sovereign capacity (including export or security
restrictions  on information,  material,  personnel,  equipment,  or otherwise),
breakdowns of plant or machinery, inability to obtain transport or supplies, and
the  like.  The  occurrence  of any of these  circumstances  could  disrupt  the
Company's  operations  and may  have a  materially  adverse  effect  on  Actel's
business, financial condition, or results of operations.

         "Blank Check" Preferred Stock; Change in Control Arrangements

         The Company's Articles of Incorporation authorize the issuance of up to
5,000,000  shares of "blank check"  Preferred Stock (of which  4,000,000  shares
remain available for issuance) with such  designations,  rights, and preferences
as may be determined  from time to time by the Board of Directors.  Accordingly,
the Board is  empowered,  without  approval by holders of the  Company's  Common
Stock,  to  issue  Preferred  Stock  with  dividend,  liquidation,   redemption,
conversion, voting, or other rights that could adversely affect the voting power
or other rights of the holders of the Common Stock.  Issuance of Preferred Stock
could be used as a method of discouraging,  delaying,  or preventing a change in
control of the Company.  In addition,  such issuance could adversely  affect the
market price of the Common Stock. Although the Company does not currently intend
to issue any additional shares of its Preferred Stock, there can be no assurance
that it will not do so in the future.

         The Company has adopted an Employee  Retention  Plan that  provides for
payment of a benefit to Actel's employees who hold unvested stock options in the
event of a change of control of the  Company.  Payment  is  contingent  upon the
employee  remaining with the Company for six months after the change of control.
The Company has also entered into Management  Continuity Agreements with each of
its  executive  officers,  which provide for the  acceleration  of stock options
unvested at the time of a change of control in the event the executive officer's
employment  is  actually  or  constructively  terminated  other  than for  cause
following the change of control.

         Competition

         The   semiconductor   industry   is   intensely   competitive   and  is
characterized by rapid rates of technological change, product obsolescence,  and
price  erosion.   The  Company's  existing   competitors  include  suppliers  of
conventional  gate arrays,  standard  cells,  CPLDs,  and FPGAs.  The  Company's
principal  competitors are Xilinx,  a supplier of SRAM-based  FPGAs;  Altera,  a
supplier of CPLDs and SRAM-based FPGAs; QuickLogic, a supplier of antifuse-based
FPGAs; and Lattice, a supplier of CPLDs. The Company also faces competition from
companies that specialize in converting FPGAs, including Actel's products,  into
conventional gate arrays or standard cells. See "BUSINESS -- Competition."

         In addition,  all existing  FPGAs not based on antifuse  technology and
certain CPLDs are  reprogrammable,  a feature that makes them more attractive to
designers.  The  Company  also  believes  that,  if there were a downturn in the
market  for  CPLDs  and  FPGAs,   companies  with  broader   product  lines  and
longer-standing customer relationships may be in a stronger competitive position
than Actel.  Many of the Company's  current  competitors  offer broader  product
lines and have significantly greater financial,  technical,  manufacturing,  and
marketing resources than Actel.

         Significant  additional competition is possible from major domestic and
international  semiconductor  suppliers.  All such  companies are larger,  offer
broader  product  lines,  and have  substantially  greater  financial  and other
resources than the Company,  including the  capability to manufacture  their own
wafers.  Additional  competition could adversely affect the Company's  business,
financial condition, or results of operations.

         The Company may also face  competition from suppliers of logic products
based on new or emerging technologies. The Company seeks to monitor developments
in  existing  and  emerging  technologies.  No  assurance  can be given that the
Company will be able to compete  successfully  with suppliers  offering products
based on new or emerging technologies.  In any event, given the intensity of the
competition  and the research and  development  being done,  no assurance can be
given that the Company's technologies will remain competitive.

         Dependence on Customized Manufacturing Processes

         The Company's antifuse-based FPGAs and, to a lesser extent, flash-based
ProASIC  FPGAs  are  manufactured  using  customized  steps  that  are  added to
otherwise standard manufacturing processes of independent wafer suppliers. There
is considerably less operating history for the customized process steps than for
the  foundries'  standard  manufacturing  processes.  The dependence of Actel on
customized  processing  steps means that,  in contrast  with  competitors  using
standard manufacturing  processes,  the Company has more difficulty establishing
relationships  with independent wafer  manufacturers;  takes longer to qualify a
new wafer manufacturer; takes longer to achieve satisfactory,  sustainable wafer
yields on new processes;  may experience a higher  incidence of production yield
problems;  must pay more for wafers;  and generally will not obtain early access
to the most  advanced  processes.  Any of the above  factors could be a material
disadvantage against competitors that use standard manufacturing processes. As a
result of these factors,  the Company's  products typically have been fabricated
using  processes one or two  generations  behind the processes used by competing
products.  As a  consequence,  the Company  generally has not fully realized the
price, performance,  and power benefits of its antifuse technology.  The Company
is attempting to accelerate  the rate at which its products are reduced to finer
geometries  and is working with its wafer  suppliers to obtain earlier access to
advanced  processes,  but no  assurance  can be given that such  efforts will be
successful.

         Dependence on Design Wins

         In order for the  Company to sell an FPGA to a customer,  the  customer
must  incorporate the FPGA into the customer's  product in the design phase. The
Company  therefore  devotes  substantial  resources,  which  it may not  recover
through  product  sales,  in  support  of  potential   customer  design  efforts
(including,  among other things,  providing  development system software) and to
persuade  potential  customers to  incorporate  the Company's  FPGAs into new or
updated products. These efforts usually precede by many months (and often a year
or more) the generation of volume FPGA sales, if any, by the Company.  The value
of any design win, moreover, will depend in large part upon the ultimate success
of the customer's  product.  No assurance can be given that the Company will win
sufficient designs or that any design win will result in significant revenues.

         Dependence on Independent Assembly Subcontractors

         The Company relies primarily on foreign subcontractors for the assembly
and  packaging of its products and, to a lesser  extent,  for the testing of its
finished products.  The Company generally relies on one or two subcontractors to
provide particular  services and has from time to time experienced  difficulties
with the  timeliness  and  quality of product  deliveries.  The  Company  has no
long-term contracts with its subcontractors and certain of those  subcontractors
are currently operating at or near full capacity. There can be no assurance that
these  subcontractors will continue to be able and willing to meet the Company's
requirements  for such  components or services.  Any  significant  disruption in
supplies from, or degradation in the quality of components or services  supplied
by,  these  subcontractors  could  delay  shipments  and  result  in the loss of
customers  or revenues or  otherwise  have a  materially  adverse  effect on the
Company's business, financial condition, or results of operations.

         Dependence on Independent Software and Hardware Developers

         Actel is dependent upon  independent  software and hardware  developers
for the  development,  maintenance,  and  support  of  certain  elements  of its
Designer Series Development Systems and Actel DeskTOP software, Silicon Explorer
debugging and verification tool, Silicon Sculptor device programmers, evaluation
board, and sockets.  The Company's reliance on independent software and hardware
developers  involves  certain risks,  including lack of control over development
and  delivery  schedules  and the  availability  of customer  support.  In 1999,
Boulder  Creek  Corporation,  with whom the  Company had worked  exclusively  to
jointly develop and manufacturer  Silicon Explorer,  was acquired by Altera, one
of Actel's principal competitors. Also in 1999, Mentor Graphics purchased all or
substantially all of the assets of VeriBest,  which has software included in the
Actel DeskTOP  integrated tool suite,  and Mentor Graphics  refused to assume or
agree in  writing  to be bound by the OEM  Agreement  between  VeriBest  and the
Company.  No assurance  can be given that the Company's  independent  developers
will be able to complete software and/or hardware under development,  or provide
updates or  customer  support  in a timely  manner,  which  could  delay  future
software  or FPGA  releases  and  disrupt  Actel's  ability to provide  customer
support  services.  Any significant  delays in the availability of the Company's
software  and/or  hardware could be detrimental to the capability of Actel's new
families of products to win designs,  delay  shipments and result in the loss of
customers or  revenues,  or otherwise  have a materially  adverse  effect on the
Company's business, financial condition, or results of operations.

         Dependence on Independent Wafer Manufacturers

         The  Company  does  not  manufacture  any of  the  wafers  used  in the
production of its FPGAs. Such wafers are manufactured by Chartered Semiconductor
in Singapore,  Lockheed  Martin SEC in the United States,  MEC in Japan,  UMC in
Taiwan,  and Winbond in Taiwan.  The  Company's  reliance on  independent  wafer
manufacturers to fabricate its wafers involves significant risks,  including the
risk of events  limiting  production  and  reducing  yields,  such as  technical
difficulties or damage to production  facilities,  lack of control over capacity
allocation and delivery schedules, and lack of adequate capacity.

         The  Company  has from time to time  experienced  delays  in  obtaining
wafers from its  foundries,  and no  assurance  can be given that Actel will not
experience  similar or more severe delays in the future.  In addition,  although
the Company has supply  agreements  with several of its wafer  manufacturers,  a
shortage of raw materials or production capacity could lead any of the Company's
wafer suppliers to allocate available capacity to customers other than Actel, or
to internal  uses,  which could  interrupt the Company's  capability to meet its
product  delivery  obligations.  Any inability or unwillingness of the Company's
wafer  suppliers to provide  adequate  quantities of finished  wafers to satisfy
Actel's needs in a timely manner would delay  production  and product  shipments
and could have a materially adverse effect on the Company's business,  financial
condition, or results of operations.

         If the Company's current independent wafer manufacturers were unable or
unwilling to manufacture Actel's products as required, the Company would have to
identify and qualify additional  foundries.  The qualification process typically
takes one year or longer.  No assurance can be given that any  additional  wafer
foundries   would  become   available  or  be  able  to  satisfy  the  Company's
requirements  on a timely basis or that  qualification  would be successful.  In
addition, the semiconductor industry has from time to time experienced shortages
of manufacturing  capacity.  To secure an adequate supply of wafers, the Company
has  considered,  and  continues to  consider,  various  possible  transactions,
including the use of substantial  nonrefundable  deposits to secure  commitments
from  foundries for  specified  levels of  manufacturing  capacity over extended
periods,  equity  investments  in exchange for  guaranteed  production,  and the
formation of joint  ventures to own  foundries.  No assurance can be given as to
the  effect  of any  such  transaction  on  the  Company's  business,  financial
condition, or results of operations.

         Dependence on International Operations

         The Company  purchases almost all of its wafers from foreign  foundries
and has almost all of its commercial products assembled, packaged, and tested by
subcontractors  located outside the United States.  These activities are subject
to  the  uncertainties   associated  with  international   business  operations,
including  trade  barriers and other  restrictions,  changes in trade  policies,
foreign  governmental  regulations,  currency  exchange  fluctuations,   reduced
protection  for  intellectual  property,  war  and  other  military  activities,
terrorism, changes in political or economic conditions, and other disruptions or
delays in production or shipments,  any of which could have a materially adverse
effect on the Company's business, financial condition, or results of operations.

         In order to expand  international  sales and service,  the Company will
need to maintain and expand existing foreign operations or establish new foreign
operations.   This  entails  hiring  additional  personnel  and  maintaining  or
expanding  existing  relationships  with  international  distributors  and sales
representatives.   This  will  require  significant   management  attention  and
financial resources and could adversely affect the Company's financial condition
and  operating  results.  No  assurance  can be given that the  Company  will be
successful in its maintenance or expansion of existing  foreign  operations,  in
its  establishment of new foreign  operations,  or in its efforts to maintain or
expand   its   relationships   with   international    distributors   or   sales
representatives.

         Dependence on Key Personnel

         The success of the Company is dependent in large part on the  continued
service  of its key  management,  engineering,  marketing,  sales,  and  support
employees.  Competition for qualified  personnel is intense in the semiconductor
industry, and the loss of the Company's key employees, or the inability of Actel
to attract other qualified personnel,  could have a materially adverse effect on
the Company. The Company does not have employment agreements with any of its key
employees.

         Dependence on Military and Aerospace Customers

         Although the Company is unable to determine with certainty the ultimate
uses of its products, Actel estimates that sales of its products to customers in
the military and  aerospace  industries,  which  sometimes  carry higher  profit
margins than sales of products to other customers,  accounted for  approximately
21% of net revenues for 1999. In general, the Company believes that the military
and aerospace  industries have accounted for a significantly  greater percentage
of the  Company's  net revenues  since the  introduction  of RH1280 in 1996.  No
assurance  can be given that  future  sales to  customers  in the  military  and
aerospace  industries will continue at current volume or margin levels. In 1994,
Secretary of Defense William Perry directed the Department of Defense to adopt a
new  way  of  doing   business  as  it  relates  to   acquisition   by  avoiding
government-unique  requirements and relying more on the commercial  marketplace.
Under the Perry  initiative,  the Department of Defense must increase  access to
commercial  state-of-the-art  technology  and  facilitate  the  adoption  by its
suppliers  of  business  processes  characteristic  of  world  class  suppliers.
Integration of commercial and military development and manufacturing facilitates
the  development  of dual-use  processes  and  products  and  contributes  to an
expanded  industrial  base that is  capable of  meeting  defense  needs at lower
costs. To that end, many of the cost-driving  specifications that have been part
of military procurements for many years were cancelled in the interest of buying
commercial  products.  The Company anticipates that this trend toward the use of
COTS products will continue,  and that it may erode the revenues  and/or margins
that Actel  derives  from  sales to  customers  in the  military  and  aerospace
industries,  which  could  have a  materially  adverse  effect on the  Company's
business, financial condition, or results of operations.

         Orders from the military and aerospace  customers  tend to be large and
irregular,  which creates operational challenges and contributes to fluctuations
in the Company's net revenues and gross margins. These sales are also subject to
more extensive  governmental  regulations,  including  greater import and export
restrictions.  In addition,  products for  military and  aerospace  applications
require  processing  and testing  that is more  lengthy and  stringent  than for
commercial  applications,  increasing  the  risk of  failure.  It is  often  not
possible to determine  before the end of processing and testing whether products
intended for military or aerospace  applications will fail and, if they do fail,
a significant period of time is often required to process and test replacements.
This makes it difficult to accurately estimate quarterly revenues and could have
a materially adverse effect on the Company's business,  financial condition,  or
results of operations.

         The  Strom  Thurmond  National  Defense   Authorization  Act  for  1999
required,  among other things, that communications  satellites and related items
(including  components) be controlled on the U.S.  Munitions List. The effect of
the Act was to transfer jurisdiction over commercial  communications  satellites
from the  Department  of Commerce to the  Department  of State and to expand the
scope of export  licensing  applicable  to  commercial  satellites.  The need to
obtain  additional export licenses has caused a delay in the shipment of some of
the  Company's  FPGAs.  The  Company  does not  believe  that  this  will have a
long-term effect on its business,  although  significant delays might cause some
customers to seek an alternative solution.

         Dividend Policy
         The  Company  has  never  declared  or paid any cash  dividends  on its
capital  stock.  The  Company  intends  to retain  any  earnings  for use in its
business and does not anticipate paying any cash dividends in the future.

         Fluctuations in Operating Results

         The  Company's  quarterly and annual  operating  results are subject to
fluctuations  resulting from general economic  conditions and a variety of risks
specific to Actel or  characteristic of the  semiconductor  industry,  including
booking and shipment  uncertainties,  supply problems, and price erosion. Any of
these factors can have a materially  adverse  effect on the Company's  business,
financial condition,  or results of operations,  but they also make it difficult
to accurately estimate quarterly revenues and other operating results.

                  Booking and Shipment Uncertainties

                  The  Company  typically  generates a large  percentage  of its
         quarterly  revenues from orders received during the quarter and shipped
         in the final weeks of the quarter,  making it  difficult to  accurately
         estimate  quarterly  revenues.  The  Company's  backlog  (which  may be
         cancelled or deferred by customers on short notice without  significant
         penalty) at the beginning of a quarter  accounts for only a fraction of
         Actel's  revenues  during the  quarter.  This  means  that the  Company
         generates  the rest of its  quarterly  revenues  from  orders  received
         during the quarter and "turned" for  shipment  within the quarter,  and
         that any shortfall in "turns" orders will have an immediate and adverse
         impact on quarterly  revenues.  There are many factors that can cause a
         shortfall in "turns" orders,  including but not limited to a decline in
         general  economic  conditions or the  businesses  of end users,  excess
         inventory in the channel,  conversion to conventional  gate arrays,  or
         the loss of business to other competitors for price or other reasons.

                  Historically,  the Company  has  shipped a  disproportionately
         large  percentage of its  quarterly  revenues in the final weeks of the
         quarter.  Any failure by the Company to effect  scheduled  shipments by
         the end of the quarter can have a materially adverse effect on revenues
         for such quarter.  Since the Company does not recognize  revenue on the
         sale of a product to a distributor  until the  distributor  resells the
         product,  Actel's quarterly revenues are also dependent on, and subject
         to fluctuations in, shipments by the Company's distributors. When there
         is a  shortfall  in  revenues,  operating  results  are  likely  to  be
         adversely  affected because most of the Company's  expenses do not vary
         with revenues.

                  Supply Problems

                  In a  typical  semiconductor  manufacturing  process,  silicon
         wafers  produced by a foundry are sorted and cut into  individual  die,
         which are then  assembled  into  individual  packages  and  tested  for
         performance.  The manufacture,  assembly,  and testing of semiconductor
         products  is highly  complex  and  subject to a wide  variety of risks,
         including   defects  in  masks,   impurities  in  the  materials  used,
         contaminants in the environment,  and performance failures by personnel
         and  equipment.   Semiconductor  products  intended  for  military  and
         aerospace applications are particularly susceptible to these risks.

                  As is  common in the  semiconductor  industry,  the  Company's
         independent  wafer  suppliers from time to time  experience  lower than
         anticipated yields of usable die. For example,  the Company experienced
         a yield problem at one of its  foundries in the fourth  quarter of 1993
         that was severe enough to have a materially  adverse  effect on Actel's
         operating  results.  To the extent yields of usable die  decrease,  the
         average cost to the Company of each usable die increases, which reduces
         gross  margin.  Wafer yields can decline  without  warning and may take
         substantial  time to analyze and  correct,  particularly  for a company
         such as Actel that does not operate its own manufacturing facility, but
         instead  utilizes  independent  facilities,  almost  all of  which  are
         offshore.  Yield  problems may also increase the time to market for the
         Company's  products and create  inventory  shortages  and  dissatisfied
         customers.  No  assurance  can be  given  that  the  Company  will  not
         experience wafer supply problems in the future.

                  In addition,  the Company typically  experiences  difficulties
         and  delays  in  achieving  satisfactory,  sustainable  yields  on  new
         processes or at new foundries,  particularly  when new technologies are
         involved.  For example,  the Company and GateField  have  struggled for
         more than a year to achieve  acceptable yields on the flash process for
         ProASIC devices at Infineon.  Although the Company  eventually has been
         able to overcome  these  difficulties  in the past, no assurance can be
         given that it will be able to do so with  respect to the flash  process
         at Infineon or any other new process and/or new foundry.

                  Price Erosion

                  The   semiconductor   industry  is  characterized  by  intense
         competition. Historically, the average selling price of products in the
         semiconductor  industry  generally,  and for the Company's  products in
         particular,  have declined significantly over the life of each product.
         While the Company  expects to reduce the average  selling prices of its
         products over time as it achieves manufacturing cost reductions,  Actel
         is sometimes required by competitive  pressures to reduce the prices of
         its products more quickly than such cost reductions can be achieved. In
         addition,  the Company sometimes  approves price reductions on specific
         sales to meet  competition.  Declines in the average  selling prices of
         the  Company's  products  will  reduce net  revenues  unless  offset by
         greater  unit  sales  or a shift  in the mix of  products  sold  toward
         higher-priced  products.  In addition,  declines in the average selling
         prices of the  Company's  products  will reduce  gross  margins  unless
         offset by reductions in costs or by a shift in the mix of products sold
         toward higher-margin products.

         Forward-Looking Statements

         All forward-looking  statements contained in this Annual Report on Form
10-K,  including  all  forward-looking  statements  contained  in  any  document
incorporated  herein  by  reference,  are  made  pursuant  to  the  safe  harbor
provisions of the Public Securities Litigation Reform Act of 1995. Words such as
"anticipates,"  "believes,"  "estimates," "expects," intends," "plans," "seeks,"
and  variations of such words and similar  expressions  are intended to identify
the  forward-looking   statements.   The   forward-looking   statements  include
projections  and trends  relating  to average  selling  prices;  gross  margins;
litigation;  markets; research and development expenditures;  revenues; selling,
general,  and  administrative  expenditures;  wafer  yields;  and the Year  2000
compliance   issue.  All   forward-looking   statements  are  based  on  current
expectations and projections about the  semiconductor  industry and programmable
logic market, and assumptions made by the Company's  management that reflect its
best judgment based on other factors currently known by management, but they are
not guarantees of future performance. Accordingly, actual events and results may
differ  materially  from those  expressed  or  forecast  in the  forward-looking
statements due to the risk factors  identified herein or for other reasons.  The
Company  undertakes  no  obligation  to  update  any  forward-looking  statement
contained or incorporated by reference in this Annual Report on Form 10-K.

         Future Capital Needs

         The Company must continue to make  significant  investments in research
and  development as well as capital  equipment and expansion of facilities.  The
Company's  future capital  requirements  will depend on many factors,  including
(among  others)  product  development,   investments  in  working  capital,  and
acquisitions of complementary  businesses,  products,  or  technologies.  To the
extent that existing  resources and future earnings are insufficient to fund the
Company's operations, Actel may need to raise additional funds through public or
private debt or equity  financings.  If additional  funds are raised through the
issuance of equity securities,  the percentage ownership of current shareholders
will be reduced and such equity  securities  may have  rights,  preferences,  or
privileges  senior to those of the holders of the  Company's  Common  Stock.  No
assurance can be given that  additional  financing will be available or that, if
available,  it can be  obtained  on  terms  favorable  to the  Company  and  its
shareholders.  If adequate funds are not available,  the Company may be required
to delay, limit, or eliminate some or all of its proposed operations.

         Gross Margin

         The Company's  gross margin is the  difference  between the revenues it
receives from the sale of its products and the cost of those products. The price
the  Company  can  charge  for a  product  is  constrained  principally  by  its
competitors.  While  competition has always been intense,  the Company  believes
price  competition  is  becoming  more  acute.  This  may be due in  part to the
transition  toward high-level  design  methodologies,  which permit designers to
wait until later in the design process before selecting a programmable or masked
silicon  device  and  make  it  easier  to  convert  between  PLDs  and  between
programmable  and  masked  device.  These  competitive  pressures  may cause the
Company to reduce the prices of its  products  more  quickly than it can achieve
cost  reductions,  which would reduce the Company's  gross margin and may have a
materially adverse effect on its operating results.

         One of the most important variables affecting the cost of the Company's
products  is  manufacturing  yields.  With its  customized  antifuse  and  flash
manufacturing  process requirements,  the Company almost invariably  experiences
difficulties  and delays in achieving  satisfactory,  sustainable  yields on new
processes or at new  foundries.  The Company  introduced  the ProASIC  family of
devices in 1999.  Until  satisfactory  yields are  achieved  on this new product
family,  they  generally  will be sold at lower gross margins than the Company's
mature  product  families.  Depending  upon the rate at which sales of these new
products ramp and the extent to which they displace mature  products,  the lower
gross margins could have a materially adverse effect on the Company's  operating
results.

         Management of Growth

         The Company has in the past experienced and expects to again experience
growth in the number of its employees and the scope of its operations, resulting
in increased  responsibilities for management personnel. To manage future growth
effectively,  the Company will need to continue to hire,  train,  motivate,  and
manage a growing  number of  employees.  The future  success of the Company will
also depend on its ability to attract and retain qualified technical, marketing,
and management personnel.  In particular,  the current availability of qualified
silicon design,  software design,  process,  and test engineers is limited,  and
competition among companies for skilled and experienced engineering personnel is
very strong.  During strong business  cycles,  the Company expects to experience
difficulty in filling its needs for qualified engineers and other personnel.  No
assurance  can be given  that the  Company  will be able to  achieve  or  manage
effectively  any  such  growth,  and  failure  to  do  so  could  delay  product
development and  introductions or otherwise have a materially  adverse effect on
Actel's business, financial condition, or results of operations.

         Manufacturing Yields

         The Company  depends upon its  independent  wafer  suppliers to produce
wafers  with  acceptable  yields and to deliver  them to the Company in a timely
manner. Currently,  substantially all of the Company's revenues are derived from
products  based on the  Company's  proprietary  antifuse  process  technologies.
Successful  implementation of antifuse process technology requires a high degree
of  coordination  between the Company and its  foundry.  Therefore,  significant
lead-time is required to reach volume  production  on new processes and at a new
wafer  supply  locations.  Accordingly,  no  assurance  can be given that volume
production  on the  Company's  new  SX-A  or  next-generation  families  will be
achieved in the near term or at all.

         The Company introduced its new ProASIC family of devices in 1999. While
ProASIC products are based on a flash process technology that is less customized
than an antifuse process,  it is also leading-edge  technology and less familiar
to the Company.  In  addition,  it is  generally  more  difficult to bring up an
advanced flash process than it is to bring up an advanced antifuse process.  The
Company has always experienced  difficulty achieving  satisfactory,  sustainable
yields on new process  technologies at new foundries,  and the flash process for
ProASIC  devices  at  Infineon  has  been no  different.  Although  the  Company
eventually  has  been  able to  overcome  these  difficulties  in the  past,  no
assurance can be given that it will be able to do so with respect to the ProASIC
products.  In any  event,  until  satisfactory  yields are  achieved  on ProASIC
devices,  they  generally will be sold at lower gross margins than the Company's
mature  product  families,  which  could  have a  materially  adverse  effect on
operating results.

         The fabrication of high-performance antifuse wafers or state-of-the-art
flash  wafers is a complex  process  that  requires a high  degree of  technical
skill,  state-of-the-art  equipment, and effective cooperation between the wafer
supplier  and  the  circuit  designer  to  produce  acceptable  yields.   Minute
impurities,  errors in any step of the fabrication process, defects in the masks
used to print  circuits on a wafer,  and other  factors can cause a  substantial
percentage  of  wafers  to be  rejected  or  numerous  die on each  wafer  to be
non-functional.  As is common in the  semiconductor  industry,  the  Company has
experienced  from time to time in the past,  and  expects to  experience  in the
future,  production yield problems and delivery delays. Any prolonged  inability
to obtain adequate yields or deliveries  could have a materially  adverse effect
on the Company's business, financial condition, or results of operations.

         One-Time Programmability

         While the nonvolatility of the Company's antifuse FPGAs is necessary or
desirable  in some  applications,  logic  designers  generally  would  prefer to
prototype with a reprogrammable logic device, all other things being equal. This
is because the  designer  can reuse the device if he or she makes an error.  The
visibility  associated  with  discarding  a one-time  programmable  device often
causes  designers to select a  reprogrammable  device even when the  alternative
one-time programmable device offers significant  advantages.  This bias in favor
of designing with  reprogrammable  logic devices appears to increase as the size
of the design  increases,  and is a major  reason the  Company  decided to offer
reprogrammable ProASIC devices.

         Patent Infringement

         On March 29, 2000,  Unisys  brought suit in the United States  District
Court for the Northern  District of California,  San Jose Division,  against the
Company seeking monetary damages and injunctive  relief based on Actel's alleged
infringement  of four patents held by Unisys.  The Company  believes that it has
meritorious  defenses  to the claims  asserted  by Unisys and  intends to defend
itself  vigorously  in  this  matter.  After  consideration  of the  information
currently  known, the Company does not believe that the ultimate outcome of this
case will  have a  materially  adverse  effect on  Actel's  business,  financial
condition, or results of operations, although no assurance to that effect can be
given. The foregoing is a forward-looking  statement subject to all of the risks
and  uncertainties  of a  legal  proceeding,  including  the  discovery  of  new
information and unpredictability as to the ultimate outcome.

         As is typical in the semiconductor  industry,  the Company has been and
expects to be  notified  from time to time of claims  that it may be  infringing
patents owned by others.  During 1999, the Company continued to hold discussions
with several third  parties  regarding  potential  patent  infringement  issues,
including two semiconductor  manufacturers with significantly  greater financial
and  intellectual  property  resources  than Actel.  As it has in the past,  the
Company may obtain  licenses  under patents that it is alleged to infringe.  The
Company has made  provision  for the  estimated  settlement  costs of claims for
alleged  infringement  through  end of 1999.  While the  Company  believes  that
reasonable  resolution  will occur,  there can be no assurance that these claims
will be  resolved  or that  the  resolution  of  these  claims  will  not have a
materially adverse effect on Actel's business,  financial condition,  or results
of operations.  In addition,  the Company's evaluation of the probable impact of
these pending disputes could change based upon new information learned by Actel.

         Although patent holders commonly offer licenses to alleged  infringers,
no assurance can be given that licenses will be offered or that the terms of any
offered licenses will be acceptable to the Company.  Failure to obtain a license
for technology  allegedly  used by the Company could result in  litigation.  All
litigation,  whether or not  determined  in favor of the Company,  can result in
significant  expense  to Actel  and can  divert  the  efforts  of the  Company's
technical and management personnel from productive tasks.

         The  Company  has  obtained   patents  covering  aspects  of  its  FPGA
architecture  and logic modules and certain  techniques  for  manufacturing  its
antifuse,  but no assurance can be given that Actel's patents will be determined
to be  valid or that any  assertions  of  infringement  or  invalidity  by other
parties will not be  successful.  In addition,  the Company has agreed to defend
and indemnify customers from and against claims that Actel products infringe the
patent or other intellectual rights of third parties. In the event of an adverse
ruling in any  litigation  involving  intellectual  property,  the Company could
suffer  significant (and possibly treble) monetary  damages,  which could have a
materially adverse effect on Actel's business,  financial condition,  or results
of  operations.  The  Company may also be  required  to  discontinue  the use of
infringing  processes;  cease  the  manufacture,  use,  and  sale of  infringing
products; expend significant resources to develop non-infringing  technology; or
obtain  licenses  under  patents  that  it is  infringing.  In  the  event  of a
successful  claim against the Company,  Actel's  failure to develop or license a
substitute  technology on commercially  reasonable terms could have a materially
adverse effect on the Company's business,  financial  condition,  and results of
operations.

         Potential Acquisitions

         In pursuing its business  strategy,  the Company may acquire  products,
technologies,  or businesses  from third parties.  Identifying  and  negotiating
these  acquisitions  may  divert  substantial  management  time  away  from  the
Company's  operations.  An acquisition could absorb  substantial cash resources,
require  the  Company to incur or assume debt  obligations,  and/or  involve the
issuance of  additional  Actel equity  securities.  The  issuance of  additional
equity  securities  may dilute,  and could  represent an interest  senior to the
rights of, the holders of the Company's  Common Stock. An acquisition  accounted
for as a purchase could involve  significant  one-time  write-offs  (possibility
resulting in a loss for the fiscal year in which it is taken) and would  require
the amortization of any goodwill and indentifiable  intangibles over a number of
years,  which would adversely  affect  earnings in those years.  Any acquisition
would require attention from the Company's  management to integrate the acquired
entity into  Actel's  operations,  may require the Company to develop  expertise
outside its existing business, and could result in departures of management from
either  Actel or the  acquired  entity.  An  acquired  entity  may have  unknown
liabilities,  and its  business may not achieve the results  anticipated  at the
time it is acquired by the Company.

         Protection of Intellectual Property

         The Company has historically devoted significant  resources to research
and development and believes that the  intellectual  property  derived from such
research and  development is a valuable asset that has been and will continue to
be important to the success of Actel's business. The Company relies primarily on
a combination of nondisclosure  agreements,  other contractual  provisions,  and
patent and copyright laws to protect its proprietary rights. No assurance can be
given that the steps  taken by the  Company  will be  adequate  to  protect  its
proprietary  rights. In addition,  the laws of certain  territories in which the
Company's  products are or may be developed,  manufactured,  or sold,  including
Asia and Europe, may not protect Actel products and intellectual property rights
to the same extent as the laws of the United  States.  Failure of the Company to
enforce its patents or  copyrights  or to protect its trade secrets could have a
materially adverse effect on Actel's business,  financial condition,  or results
of operations.

         Reliance on Distributors

         In  1999,  a  majority  of  the  Company's   sales  were  made  through
distributors.  Three of the Company's distributors,  Arrow, Pioneer, and Unique,
accounted for approximately  16%, 12%, and 13%,  respectively,  of the Company's
net revenues in 1999.  No  assurance  can be given that future sales by these or
other  distributors  will continue at current levels or that the Company will be
able to retain its current distributors on terms that are acceptable to Actel.

         The  Company's   distributors   generally  offer  products  of  several
different  companies,  including  products  that are  competitive  with  Actel's
products.  Accordingly,  there is a risk that these distributors may give higher
priority to products of other suppliers, thus reducing their efforts to sell the
Company's products. In addition,  the Company's agreements with its distributors
are  generally  terminable  at the  distributor's  option.  A reduction in sales
efforts by one or more of the Company's current distributors or a termination of
any distributor's relationship with Actel could have a materially adverse effect
on the Company's business, financial condition, or results of operations.

         The Company defers  recognition of revenue on shipments to distributors
until the product is resold by the  distributor  to the end user.  The Company's
distributors  have on occasion built  inventories in anticipation of substantial
growth in sales and,  when such growth did not occur as rapidly as  anticipated,
substantially  reduced the amount of product  ordered  from Actel in  subsequent
quarters.  Such a slowdown in orders would generally reduce the Company's profit
margins on future sales of higher cost products because Actel would be unable to
take  advantage  of any  manufacturing  cost  reductions  while the  distributor
depleted its inventory at lower average selling prices.  In addition,  while the
Company  believes  that  its  major   distributors   are  currently   adequately
capitalized,  no assurance can be given that one or more of Actel's distributors
will not experience  financial  difficulties.  The failure of one or more of the
Company's  distributors  to pay for  products  ordered from Actel or to continue
operations  because of financial  difficulties or for other reasons could have a
materially adverse effect on the Company's  business,  financial  condition,  or
results of operations.

         Reliance on International Sales

         Sales to customers  outside the United  States  accounted for 29%, 33%,
and 31% of the Company's net revenues for 1999, 1998, and 1997, respectively. Of
these export sales, the largest portion was derived from European customers. The
Company expects that revenues derived from international  sales will continue to
represent a significant  portion of its total revenues.  International sales are
subject  to a  variety  of  risks,  including  longer  payment  cycles,  greater
difficulty in accounts receivable collection,  currency  restrictions,  tariffs,
trade  barriers,   taxes,  export  license  requirements,   and  the  impact  of
recessionary  environments  in economies  outside the United States.  All of the
Company's  foreign sales are denominated in U.S.  dollars,  so Actel's  products
become less price competitive in countries with currencies that are declining in
value against the dollar. In addition, since a majority of the Company's foreign
sales  are made  through  distributors,  such  sales  are  subject  to the risks
described above in "Reliance on Distributors."

         Semiconductor Industry Risks

         The   semiconductor   industry  has  historically   been  cyclical  and
periodically subject to significant economic downturns,  which are characterized
by diminished product demand,  accelerated price erosion, and overcapacity.  The
Company may in the future experience substantial  period-to-period  fluctuations
in business  and results of  operations  due to general  semiconductor  industry
conditions, overall economic conditions, or other factors, including legislation
and regulations governing the import or export of semiconductor products.

         Technological Change and Dependence on New Product Development

         The market  for the  Company's  products  is  characterized  by rapidly
changing technology,  frequent new product introductions,  and declining average
selling  prices  over  product  life  cycles,  each of which  makes  the  timely
introduction of new products a critical objective of Actel. The Company's future
success is highly  dependent upon the timely  completion and introduction of new
products at competitive price and performance  levels. In evaluating new product
decisions,  the Company must  anticipate  well in advance both the future demand
and the  technology  that will be available  to supply such  demand.  Failure to
anticipate  customer demand,  delays in developing new products with anticipated
technological  advances,  or failure to coordinate the design and development of
silicon and associated  software products could have a materially adverse effect
on the Company's business, financial condition, or results of operation.

         No assurance  can be given that the Company's  design and  introduction
schedules for new products or the  supporting  software will be met or that such
products will be well-received by customers.  No assurance can be given that any
new  products  will gain  market  acceptance  or that the Company  will  respond
effectively to new technological changes or new product announcements by others.
Any failure of the Company to successfully define, develop, market, manufacture,
assemble,  or test  competitive  new products  could have a  materially  adverse
effect on its business, financial condition, or results of operations.

         In addition,  there are greater  technological  and  operational  risks
associated with new products.  The inability of the Company's wafer suppliers to
produce advanced products;  delays in commencing or maintaining volume shipments
of new products;  the discovery of product,  process,  software,  or programming
failures;  and any related product returns could each have a materially  adverse
effect on Actel's business, financial condition, or results of operation.

         The Company  must also  continue  to make  significant  investments  in
research and  development to develop new products and achieve market  acceptance
for such  products.  The Company  conducts most of its research and  development
activities at facilities operated by its foundries. Although the Company has not
to date  experienced  any  significant  difficulty  in obtaining  access to such
facilities,  no  assurance  can be given that access will not be limited or that
such facilities will be adequate to meet Actel's needs in the future.

         Volatility of Stock

         The price of the Company's Common Stock can fluctuate  substantially on
the basis of such  factors  as  announcements  of new  products  by Actel or its
competitors,  quarterly  fluctuations in the Company's  financial results or the
financial results of other semiconductor companies, or general conditions in the
semiconductor  industry or in the financial markets. In addition,  stock markets
have  experienced  extreme price and volume  volatility  in recent  years.  This
volatility  has had a substantial  effect on the market prices of the securities
issued by high  technology  companies,  at times for  reasons  unrelated  to the
operating performance of the specific companies.

         Year 2000 Compliance

         In late 1999, the Company  completed Year 2000  remediation and testing
of its  mission-critical  computer  systems.  As a result  of its  planning  and
implementation  efforts,  the Company experienced no significant  disruptions in
information  or  non-information  technology  systems and believes those systems
successfully  responded  to the Year  2000 date  change.  The  Company  incurred
expenses of approximately  $0.4 million during 1999 and $0.5 million during 1998
in connection with the  remediation of its systems.  The Company is not aware of
any material problems resulting from Year 2000 issues,  either with its products
or internal  systems or with the  products or  services  of third  parties.  The
Company will continue to monitor its mission-critical  computer applications and
those of its  suppliers  and vendors  throughout  2000 and promptly  address any
latent Year 2000 matters that may arise. Based on its current understanding, the
Company  believes  that the Year 2000 issue will not have a  materially  adverse
effect on the Company's business,  financial position, or results of operations,
but no assurance to that effect can be given.

Executive Officers of the Registrant

         The following table identifies each executive officer of the Company as
of March 31, 2000:
<TABLE>
<CAPTION>
                  Name                      Age                                 Position
-------------------------------------      -----   --------------------------------------------------------------
<S>                                         <C>
John C. East.........................       55     President and Chief Executive Officer
Henry L. Perret......................       54     Vice President of Finance and Chief Financial Officer
Esmat Z. Hamdy.......................       50     Senior Vice President of Technology & Operations
Carl N. Burrow.......................       39     Vice President of Marketing
Anthony Farinaro.....................       37     Vice President & General Manager of Design Services
Paul V. Indaco.......................       49     Vice President of Worldwide Sales
Dennis M. Kish.......................       36     Vice President of Strategic Product Marketing
Fares N. Mubarak.....................       38     Vice President of Engineering
David L. Van De Hey..................       44     Vice President & General Counsel and Secretary
</TABLE>

          Mr. East has served as President  and Chief  Executive  Officer of the
Company since December 1988. From April 1979 until joining the Company, Mr. East
served in  various  positions  with  Advanced  Micro  Devices,  a  semiconductor
manufacturer,  including  Senior Vice  President of Logic Products from November
1986 to November 1988. From December 1976 to March 1979, he served as Operations
Manager for Raytheon  Semiconductor.  From  September 1968 to December 1976, Mr.
East served in various marketing,  manufacturing,  and engineering positions for
Fairchild Camera and Instrument Corporation, a semiconductor manufacturer.

         Mr.  Perret  joined the Company in January 1996 as  Controller  and has
been Vice President of Finance and Chief Financial Officer since June 1997. From
April  1992  until  joining  the  Company,  he was the Site  Controller  for the
manufacturing   division  of  Applied   Materials,   a  maker  of  semiconductor
manufacturing  equipment,  in Austin,  Texas. From 1978 to 1991, Mr. Perret held
various  financial  positions  with  National  Semiconductor,   a  semiconductor
manufacturer.

         Dr. Hamdy is a founder of the Company, was Vice President of Technology
from August  1991 to March 1996 and Senior Vice  President  of  Technology  from
March 1996 to September  1996,  and has been Senior Vice President of Technology
and Operations  since September 1996. From November 1985 to July 1991, he held a
number of management  positions with the Company's  technology  and  development
group.  From January 1981 to November 1985, Dr. Hamdy held various  positions at
Intel Corporation, a semiconductor manufacturer, lastly as project manager.

         Mr.  Burrow  joined the Company in January 1992 as  Southwest  Regional
Sales Manager,  was Director of Western Area Sales from February 1996 to October
1997,  and has been Vice  President of Marketing  since October 1997.  From June
1983 until January 1992, he held various sales and marketing  positions at Texas
Instruments, a semiconductor manufacturer.

         Mr.  Farinaro  joined the  Company in August  1998 as Vice  President &
General  Manager  of Design  Services.  From  February  1990 until  joining  the
Company,  he held various  engineering  and management  positions with GateField
(formally Zycad Corporation until 1997), a semiconductor  company, with the most
recent position of Vice President of Application & Design Services. From 1985 to
1990, Mr. Farinaro held various  engineering and management  positions at Singer
Kearfott,  an  aerospace   electronics  company,  and  it's  spin-off,   Plessey
Electronic Systems Corporation.

         Mr.  Indaco  joined  the  Company in March  1999 as Vice  President  of
Worldwide Sales. From January 1996 until joining the Company,  he served as Vice
President of Sales for Chip Express, a semiconductor manufacturer.  From January
Septemebr  1994 to January  1996,  Mr.  Indaco was Vice  President  of Sales for
Redwood  Microsystems,  a  semiconductor  manufacturer.  From  February  1984 to
September  1994, he held senior sales  management  positions  with LSI Logic,  a
semiconductor  manufacturer.  From June 1978 to February  1984,  Mr. Indaco held
various field engineering sales and marketing  positions with Intel Corporation,
a  semiconductor  manufacturer.  From June 1976 to June  1978,  he held  various
marketing positions with Texas Instruments, a semiconductor manufacturer.

          Mr.  Kish joined the Company in  December  1999 as Vice  President  of
Strategic  Product  Marketing.  Prior to joining  the  Company,  he held  senior
management  positions at Synopsys,  an EDA company,  and Atmel, a  semiconductor
manufacturer.  Before that, Mr. Kish held sales and  engineering  positions with
Texas Instruments, a semiconductor manufacturer.

         Mr.  Mubarak  joined the  Company in  November  1992,  was  Director of
Product and Test Engineering  until October 1997, and has been Vice President of
Engineering  since  October 1997.  From 1989 until joining the Company,  he held
various   engineering   and  engineering   management   positions  with  Samsung
Semiconductor Inc., a semiconductor  manufacturer,  and its spin-off,  IC Works,
Inc. From 1984 to 1989, Mr. Mubarak held various engineering,  product planning,
and   engineering   management   positions  with  Advanced   Micro  Devices,   a
semiconductor manufacturer.

         Mr. Van De Hey joined the  Company in July 1993 as  Corporate  Counsel,
became  Secretary  in May 1994,  and has been Vice  President & General  Counsel
since August 1995.  From  November  1988 to September  1993, he was an associate
with Wilson, Sonsini, Goodrich & Rosati, Professional Corporation, a law firm in
Palo Alto, California, and the Company's outside legal counsel. From August 1985
until October 1988, he was an associate with the Cleveland office of Jones, Day,
Reavis & Pogue, a law firm.

         Executive officers serve at the discretion of the Board of Directors.

ITEM 2.  PROPERTIES

         Actel's principal administrative,  marketing,  sales, customer support,
design,  research  and  development,  and  testing  facilities  are  located  in
Sunnyvale,  California,  in three buildings that comprise  approximately 138,000
square feet. These buildings are leased through June 2003, and the Company has a
renewal option for an additional five-year term. Actel also leases sales offices
in the metropolitan areas of Atlanta,  Basingstoke (England),  Boston,  Chicago,
Dallas, Denver, Hong Kong (China), Kanata (Ontario) Los Angeles, Milano (Italy),
Minneapolis, Munich (Germany), New York, Orlando, Paris (France),  Philadelphia,
Raleigh,  Seattle,  Seoul (Korea),  Stockholm (Sweden),  Taipei (Taiwan),  Tokyo
(Japan),  and Washington  D.C., as well as the facilities of the Design Services
Group in Mt. Arlington,  New Jersey. The Company believes its facilities will be
adequate  for its needs in 2000,  but is  investigating  options  for  continued
expansion beyond that time.

ITEM 3.  LEGAL PROCEEDINGS

         Except as described below,  there are no pending legal proceedings of a
material  nature to which the Company is a party or of which any of its property
is the subject.  There are no such legal  proceedings known by the Company to be
contemplated by any governmental authority.

         Unisys v. Actel and QuickLogic (CV C-00 01114 WDB)

         On March 29, 2000,  Unisys  brought suit in the United States  District
Court for the Northern  District of California,  San Jose Division,  against the
Company seeking monetary damages and injunctive  relief based on Actel's alleged
infringement  of four patents held by Unisys.  The Company  believes that it has
meritorious  defenses  to the claims  asserted  by Unisys and  intends to defend
itself  vigorously  in  this  matter.  After  consideration  of the  information
currently  known, the Company does not believe that the ultimate outcome of this
case will  have a  materially  adverse  effect on  Actel's  business,  financial
condition, or results of operations, although no assurance to that effect can be
given. The foregoing is a forward-looking  statement subject to all of the risks
and  uncertainties  of a  legal  proceeding,  including  the  discovery  of  new
information and unpredictability as to the ultimate outcome.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters  were  submitted  to a vote of security  holders  during the
fourth quarter of the fiscal year covered by this report.

                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS

         The  information  appearing  under the caption  "Stock  Listing" in the
Registrant's annual report to security holders for the fiscal year ended January
2, 2000 (the "1999 Annual Report"), is incorporated herein by this reference.

         On  March  30,  1998,  the  Company  and  Crosspoint  Solutions,   Inc.
("Crosspoint")  entered into a Patent Sale and Purchase  Agreement,  pursuant to
which the Company purchased from Crosspoint its patents and patent  applications
in  consideration  of 25,000 shares of the Company's  Common Stock.  On the same
day,  Crosspoint  assigned its right to receive such shares to ASCII of America,
Inc. ("AOA"). The shares issued and delivered to AOA, as assignee of Crosspoint,
were exempt from  registration  pursuant to Section 4(2) of the  Securities  Act
because  such  shares  were sold to an  accredited  investor  who had  access to
financial and other relevant data concerning the Company.

         On December 21, 1999, the Company acquired AGL by merger.  The purchase
price of $7.2 million  included  the issuance of 285,943  shares of Actel Common
Stock and the  assumption  of options to purchase  89,057 shares of Actel Common
Stock.  The shares  issued and  delivered to AGL  shareholders  were exempt from
registration  pursuant to Section 4(2) of the Securities Act and/or Regulation D
promulgated  thereunder  because  such  shares were sold to  investors  who were
"accredited"  and had access to financial and other relevant data concerning the
Company or were  represented  by a qualified  "purchaser  representative"  under
Regulation D.

ITEM 6.   SELECTED FINANCIAL DATA

         The  information  appearing  under the caption  "Selected  Consolidated
Financial  Data"  in the 1999  Annual  Report  is  incorporated  herein  by this
reference.

ITEM 7.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The information  appearing under the caption  "Management's  Discussion
and  Analysis of Financial  Conditions  and Results of  Operations"  of the 1999
Annual Report is incorporated herein by this reference.

ITEM 7A.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

         The  information  appearing  under the caption  "Market Risk" under the
main caption  "Management's  Discussion and Analysis of Financial Conditions and
Results of Operations" in the 1999 Annual Report is incorporated  herein by this
reference.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The  information  appearing  under the captions  "Consolidated  Balance
Sheets,"  "Consolidated  Statements  of  Income,"  "Consolidated  Statements  of
Shareholders'  Equity,"  "Consolidated  Statements  of Cash  Flows,"  "Notes  to
Consolidated   Financial   Statements,"  and  "Report  of  Ernst  &  Young  LLP,
Independent  Auditors" in the 1999 Annual Report is incorporated  herein by this
reference.

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

         None.

                                    PART III

         Except for the information specifically  incorporated by reference from
Actel's  definitive Proxy Statement for the Annual Meeting of Shareholders to be
held on May 19, 2000,  as filed on or about April 4, 2000,  with the  Securities
and Exchange  Commission (the "2000 Proxy Statement") in Part III of this Annual
Report on Form 10-K, the 2000 Proxy Statement shall not be deemed to be filed as
part of this Report.  Without limiting the foregoing,  the information under the
captions  "Compensation  Committee Report" and "Company Stock Performance" under
the main  caption  "OTHER  INFORMATION"  in the  2000  Proxy  Statement  are not
incorporated by reference in this Annual Report on Form 10-K.

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The information regarding the identification and business experience of
Actel's directors under the caption  "Nominees" under the main caption "PROPOSAL
NO. 1 -- ELECTION OF DIRECTORS" in the 2000 Proxy  Statement and the information
under the main caption "COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE
ACT OF  1934"  in the 2000  Proxy  Statement  are  incorporated  herein  by this
reference.  For information regarding the identification and business experience
of Actel's executive officers, see "Executive Officers of the Registrant" at the
end of Item 1 in Part I of this Annual Report on Form 10-K.

ITEM 11.  EXECUTIVE COMPENSATION

         The information  under the caption  "Director  Compensation"  under the
main  caption  "PROPOSAL  NO. 1 --  ELECTION  OF  DIRECTORS"  in the 2000  Proxy
Statement and the information under the caption "Executive  Compensation"  under
the  main  caption  "OTHER   INFORMATION"   in  the  2000  Proxy  Statement  are
incorporated herein by this reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The  information  under the caption  "Share  Ownership"  under the main
caption  "INFORMATION  CONCERNING  SOLICITATION  AND  VOTING"  in the 2000 Proxy
Statement  and  the  information  under  the  caption  "Security   Ownership  of
Management"  under  the main  caption  "OTHER  INFORMATION"  in the  2000  Proxy
Statement are incorporated herein by this reference.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information under the caption "Certain Transactions" under the main
caption "OTHER  INFORMATION" in the 2000 Proxy Statement is incorporated  herein
by this reference.

                                     PART IV

ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K

         (a) The following  documents are filed as part of this Annual Report on
Form 10-K:

                  (1) Financial Statements. The following consolidated financial
         statements of Actel Corporation  included in the 1999 Annual Report are
         incorporated by reference in Item 8 of this Annual Report on Form 10-K:

                              Consolidated  balance  sheets at December 31, 1999
                              and 1998

                              Consolidated  statements of income for each of the
                              three years in the period ended December 31, 1999

                              Consolidated  statements of  shareholders'  equity
                              for each of the three  years in the  period  ended
                              December 31, 1999

                              Consolidated  statements of cash flows for each of
                              the three years in the period  ended  December 31,
                              1999

                              Notes to consolidated financial statements

                  (2) Financial  Statement  Schedule.  The  financial  statement
         schedule  listed under 14(d) hereof is filed with this Annual Report on
         Form 10-K.

                  (3) Exhibits.  The exhibits listed under Item 14(c) hereof are
         filed with, or  incorporated  by reference  into, this Annual Report on
         Form 10-K.

         (b) Reports on Form 8-K.  Actel filed no reports on Form 8-K during the
quarter ended January 2, 2000.

         (c)  Exhibits.  The  following  exhibits  are  filed  as  part  of,  or
incorporated by reference into, this Report on Form 10-K:

    Exhibit Number                         Description
-----------------------  -------------------------------------------------------


        3.1              Restated  Articles of  Incorporation  (filed as Exhibit
                         3.2 to the Registrant's  Registration Statement on Form
                         S-1 (File No. 33-64704),  declared  effective on August
                         2, 1993).

        3.2              Restated Bylaws of the Registrant (filed as Exhibit 3.3
                         to the Registrant's  Registration Statement on Form S-1
                         (File No.  33-64704),  declared  effective on August 2,
                         1993).

        10.1             (2) Form of Indemnification  Agreement for directors
                         and officers (filed as Exhibit 10.1 to the Registrant's
                         Registration  Statement on Form S-1 (File No. 33-64704)
                         , declared effective on August 2, 1993).

       10.2 (2)          1986 Incentive Stock Option Plan, as amended and
                         restated.

       10.3 (2)          1993  Directors'  Stock Option Plan, as amended and
                         restated  (filed as  Exhibit 10.3 to the Registrant's
                         Annual  Report on Form 10-K  (File No.  0-21970) for
                         the  fiscal  year  ended December 28, 1997).

       10.4 (2)          1993 Employee  Stock Purchase Plan, as amended and
                         restated  (filed as  Exhibit 10.4  to the Registrant's
                         Annual  Report on Form 10-K  (File No.  0-21970) for
                         the  fiscal  year  ended December 28, 1997).

       10.5 (2)          1995 Employee and Consultant  Stock Plan, as amended
                         and restated  (filed as Exhibit 10.5 to the
                         Registrant's  Annual Report on Form 10-K (File No.
                         0-21970) for  the fiscal year ended December 29, 1996).

       10.6              Form of Distribution  Agreement (filed as Exhibit 10.13
                         to the Registrant's  Registration Statement on Form S-1
                         (File No.  33-64704),  declared  effective on August 2,
                         1993).

       10.7 (1)          Patent Cross License Agreement dated April 22,  1993
                         between the Registrant and Xilinx, Inc. (filed as
                         Exhibit  10.14 to the  Registrant's  Registration
                         Statement on Form S-1 (File No. 33-64704), declared
                         effective on August 2, 1993).

       10.8              Subscription and Participation Agreement dated February
                         3, 1994 between the Registrant,  Singapore Technologies
                         Ventures   Pte   Ltd   and   Chartered    Semiconductor
                         Manufacturing  Pte Ltd (filed as  Exhibit  10.16 to the
                         Registrant's Annual Report on Form 10-K (File No.
                         0-21970) for the fiscal year ended January 2, 1994).

       10.9              Manufacturing  Agreement  dated  February  3, 1994
                         between  the  Registrant  and  Chartered Semiconductor
                         Manufacturing  Pte Ltd (filed as  Exhibit 10.17  to the
                         Registrant's  Annual Report on Form 10-K (File No.
                         0-21970) for the fiscal year ended January 2, 1994).

       10.10             Distribution  Agreement dated June 1, 1994, between the
                         Registrant  and  Arrow  Electronics,   Inc.  (filed  as
                         Exhibit 10.18 to the  Registrant's  Quarterly Report on
                         Form 10-Q (File No.
                         0-21970) for the quarterly period ended July 3, 1994).

       10.11             (1) Product  Development and Marketing  Agreement dated
                         August  1,  1994,  between  the  Registrant  and  Loral
                         Federal  Systems Company (filed as Exhibit 10.19 to the
                         Registrant's  Quarterly  Report on Form 10-Q  (File No.
                         0-21970)  for the  quarterly  period  ended  October 2,
                         1994).

       10.12 (1)         Foundry Agreement dated as of June 29, 1995, between
                         the Registrant and Matsushita  Electric Industrial Co.,
                         Ltd and Matsushita  Electronics  Corporation  (filed as
                         Exhibit 10.25 to the Registrant's  Quarterly  Report on
                         Form 10-Q (File No.  0-21970) for  the  quarterly
                         period ended July 2, 1995).

       10.13             Lease  Agreement  for  the   Registrant's   offices  in
                         Sunnyvale,  California,  dated May 10,  1995  (filed as
                         Exhibit 10.19 to the Registrant's Annual Report on Form
                         10-K (File No.
                         0-21970) for the fiscal year ended December 31, 1995).

       10.14 (1)         License Agreement dated as of March 6, 1995,  between
                         the Registrant and BTR, Inc. (filed as Exhibit 10.20 to
                         the Registrant's Annual Report on Form 10-K  (File No.
                         0-21970)  for the  fiscal  year  ended December 29,
                         1996).

       10.15             Asset Purchase Agreement dated August 14, 1998, between
                         GateField  Corporation and Actel Corporation  (filed as
                         Exhibit 2.1 to GateField  Corporation's  Current Report
                         on Form 8-K (File No.  0-13244) on August 14, 1998, and
                         incorporated herein by this reference).

       10.16             Series C  Preferred  Stock  Purchase  Agreement  dated
                         August 14,  1998  between  GateField Corporation and
                         Actel Corporation (filed as Exhibit 4.1 to GateField
                         Corporation's  Current Report on Form 8-K/A  (File No.
                         0-13244) on August 31, 1998, and incorporated herein by
                         this reference).

       10.17             Product  Marketing  Agreement  dated  August 14,  1998,
                         between the GateField Corporation and Actel Corporation
                         (filed  as  Exhibit  10.24 to  GateField  Corporation's
                         Quarterly  Report on Form 10-Q  (File No.  0-13244)  on
                         November  19,  1998,  and  incorporated  herein by this
                         reference.)

       10.18             License  Agreement  dated  August  14,  1998,   between
                         GateField  Corporation and Actel Corporation  (filed as
                         Exhibit  10.25  to  GateField  Corporation's  Quarterly
                         Report on Form 10-Q (File No.  0-13244) on November 19,
                         1998, and incorporated herein by this reference.)

       10.19             (1) Patent  Cross  License  Agreement  dated August 25,
                         1998,   between  Actel   Corporation   and   QuickLogic
                         Corporation.   (filed   as   Exhibit   10.19   to   the
                         Registrant's  Annual  Report  on Form  10-K  (File  No.
                         0-21970) for the fiscal year ended January 3, 1999).

       10.20             Convertible  Promissory Note dated May 25, 1999, in the
                         aggregate  principle  amount of $8.0 million  issued to
                         Actel  Corporation  (filed as Exhibit 4.1 to  GateField
                         Corporation's  Current  Report  on Form 8-K  (File  No.
                         0-13244) on May 28, 1999,  and  incorporated  herein by
                         this reference).

       10.21             Security   Agreement   dated  May  25,  1999,   between
                         GateField  Corporation and Actel Corporation  (filed as
                         Exhibit 10.1 to GateField  Corporation's Current Report
                         on Form 8-K (File No.  0-13244)  on May 28,  1999,  and
                         incorporated herein by this reference).

       10.22             Amendment  No.  1  to  the  Series  C  Preferred  Stock
                         Purchase   Agreement   dated  May  25,  1999,   between
                         GateField  Corporation and Actel Corporation  (filed as
                         Exhibit 10.2 to GateField  Corporation's Current Report
                         on Form 8-K (File No.  0-13244)  on May 28,  1999,  and
                         incorporated herein by this reference).

       10.23             Amendment No. 1 to the  Registration  Rights  Agreement
                         dated May 25, 1999,  between GateField  Corporation and
                         Actel  Corporation  (filed as Exhibit 10.3 to GateField
                         Corporation's  Current  Report  on Form 8-K  (File  No.
                         0-13244) on May 28, 1999,  and  incorporated  herein by
                         this reference).

       13                Portions of Registrant's  Annual Report to Shareholders
                         for the fiscal year ended January 2, 2000, incorporated
                         by reference into this Report on Form 10-K.

       21                Subsidiaries of Registrant (see page --)

       23                Consent of Ernst & Young LLP, Independent Auditors (see
                         page --)

       24                Power of Attorney (see page --)
-------------------------

         (1) Confidential treatment requested as to a portion of this Exhibit.

         (2) This  Exhibit is a  management  contract  or  compensatory  plan or
arrangement.

         (d) Financial  Statement  Schedule.  The following  financial statement
schedule of Actel  Corporation  is filed as part of this Report on Form 10-K and
should be read in  conjunction  with the  Consolidated  Financial  Statements of
Actel  Corporation,  including the notes thereto,  and the Report of Independent
Auditors with respect thereto:

Schedule                      Description                                  Page
--------     -------------------------------------------------------      ------
  II                  Valuation and qualifying accounts                     --

         All other  schedules  for  which  provision  is made in the  applicable
accounting  regulations  of the  Securities  and  Exchange  Commission  are  not
required under the related  instructions or are  inapplicable and therefore have
been omitted.

                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) 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.

                                            ACTEL CORPORATION


March 31, 2000                   By:        By:         /s/ John C. East
                                                ------------------------------
                                                         John C. East
                                           President and Chief Executive Officer

<PAGE>
                                                                     SCHEDULE II

                                ACTEL CORPORATION
                      --------------------------------------
                        Valuation and Qualifying Accounts
                                 (in thousands)


<TABLE>
<CAPTION>
                                                                Balance at                                Balance at
                                                                beginning                                   end of
                                                                of period     Provisions    Write-Offs      period
                                                               ------------  ------------  ------------  ------------
<S>                                                            <C>           <C>           <C>           <C>
Allowance for doubtful accounts:
   Year ended December 31, 1997...........................     $        633  $      1,611  $        612  $      1,632
   Year ended December 31, 1998...........................            1,632             5            83         1,554
   Year ended December 31, 1999...........................            1,554            --           475         1,079
</TABLE>