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 6, 2002

                                       OR


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

Commission file number 0-21970

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

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

            California                                          77-0097724
  (State or other jurisdiction of                            (I.R.S. Employee
   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 April 3, 2002, as reported by the National  Market System of the
National  Association of Securities  Dealers  Automated  Quotation  System,  was
approximately  $368,000,000.  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 purpose.

     Number  of  shares  of  Common  Stock  outstanding  as of  April  3,  2002:
24,231,482.


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

                       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 6, 2002 (Parts II
and IV),  and (ii)  portions  of  Registrant's  proxy  statement  for its annual
meeting of shareholders to be held on May 24, 2002 (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 April 4,
2002, and Actel  undertakes no obligation to update such  statements,  including
forward-looking  statements. The {bracketed statements} contained in this Annual
Report on Form 10-K are  forward-looking  statements  made  pursuant to the safe
harbor  provisions  of the  Private  Securities  Litigation  Reform Act of 1995.
Actual events and results may differ materially from those expressed or forecast
in forward-looking statements due to the Risk Factors or for other reasons.

                                     PART I

ITEM 1. BUSINESS

Overview

     Actel designs, develops, and markets field programmable gate arrays (FPGAs)
and  associated  development  tools,   intellectual  property  (IP)  cores,  and
services.  FPGAs are used by designers of  communications,  computer,  consumer,
industrial,   military  and   aerospace,   and  other   electronic   systems  to
differentiate their products and get them to market faster. Actel is the leading
supplier of FPGAs based on flash and antifuse technologies.  Actel's strategy is
to add value for application  specific integrated circuit (ASIC) users and serve
markets in which  Actel's  technologies  have an  advantage,  including the ASIC
replacement, high reliability, and high-speed communications markets.

     Actel shipped its first  products in 1988 and thousands of its  development
tools are in the hands of  customers,  including  Alcatel;  The  Boeing  Company
(Boeing);  Cisco Systems,  Inc. (Cisco);  Compaq Computer Corporation  (Compaq);
General  Electric  Company  (GE);  Honeywell   International  Inc.  (Honeywell);
Lockheed  Martin  Corporation   (Lockheed  Martin);   Marconi   Corporation  plc
(Marconi);  Nortel Networks Corporation (Nortel); Samsung; Sanyo; and Siemens AG
(Siemens).  Actel has foundry relationships with BAE Systems (BAE) in the United
States; Chartered Semiconductor  Manufacturing Pte Ltd (Chartered) in Singapore;
Infineon Technologies AG (Infineon) in Germany;  Matsushita  Electronics Company
(MEC) in Japan; United Microelectronics Corporation (UMC) in Taiwan; and Winbond
Electronics Corp. (Winbond) in Taiwan.

     Actel  markets its  products  through a worldwide,  multi-tiered  sales and
distribution network. In 2001, sales made through distributors accounted for 68%
of  Actel's  net  revenues.   Two  of  Actel's  distributors,   Pioneer-Standard
Electronics,  Inc. (Pioneer) and Unique Technologies,  Inc. (Unique),  accounted
for 20% and 19%,  respectively,  of Actel's net revenues in 2001. In addition to
the two distributors, the North American sales network includes 22 sales offices
and 20 sales representative firms. Actel's European, Pan-Asia, and International
sales  networks  include  nine  sales  offices  and 24  distributors  and  sales
representative  firms.  In 2001,  sales to customers  outside the United  States
accounted for 38% of net revenues.

     Actel was incorporated in California in 1985. Actel'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.  Actel's  World Wide Web address is  http://www.actel.com.  As used in
this  Annual  Report on Form  10-K,  "Actel"  means  Actel  Corporation  and its
consolidated  subsidiaries.  The Actel name and logo and ProASIC are  registered
trademarks of Actel. This Annual Report on Form 10-K also includes  unregistered
trademarks  of  Actel  and  registered  and  unregistered  trademarks  of  other
companies.

Industry Background

     The three  principal  types of  integrated  circuits  used in most  digital
electronic   systems   are   microprocessor,   memory,   and   logic   circuits.
Microprocessors  are used for control and computing  tasks;  memory  devices are
used to store program instructions and data; and logic devices are used to adapt
these  processing  and storage  capabilities  to a specific  application.  Logic
circuits are found in virtually every electronic system.

     The logic design of competing  electronic systems is often a principal area
of  differentiation.  Unlike the  microprocessor  and memory markets,  which are
dominated  by a  relatively  few  standard  designs,  the logic market is highly
fragmented  and  includes,  among many  other  segments,  low-capacity  standard
transistor-transistor  logic circuits (TTLs) and custom-designed ASICs. TTLs are
standard logic circuits that can be purchased "off the shelf" and interconnected
on a printed circuit board (PCB), but they tend to limit system  performance and
increase  system size and cost compared with logic  functions  integrated at the
circuit (rather than the board) level. ASICs are customized  circuits that offer
electronic system  manufacturers the benefits of increased circuit  integration:
improved system performance, reduced system size, and lower system cost.

     ASICs include  conventional  gate arrays,  standard cells, and programmable
logic devices  (PLDs).  Conventional  gate arrays and standard cell circuits are
customized  to  perform  desired  logical  functions  at the time the  device is
manufactured.  Since they are "hard  wired" at the wafer  foundry,  conventional
gate  arrays  and  standard  cells are  subject  to the time and  expense  risks
associated   with  any  development   cycle  involving  a  foundry.   Typically,
conventional  gate arrays and standard  cells are first  delivered in production
volumes  months after the  successful  production of acceptable  prototypes.  In
addition,  conventional  gate arrays and standard cells cannot be modified after
they are manufactured, which subjects them to the risk of inventory obsolescence
and  constrains  the system  manufacturer's  ability to change the logic design.
PLDs, on the other hand, are manufactured as standard devices and customized "in
the field" by electronic system manufacturers using  computer-aided  engineering
(CAE) design and programming systems. PLDs are being used by a growing number of
electronic  system  manufacturers as a solution to their increasing  demands for
differentiation, rapid time to market, and manufacturing flexibility.

     PLDs include  simple PLDs,  complex PLDs (CPLDs),  and FPGA. The market for
CPLDs and FPGAs has grown rapidly because they generally offer greater capacity,
lower total cost per usable logic gate,  and lower power  consumption  than TTLs
and simple  PLDs,  and faster  time to market and lower  development  costs than
conventional  gate  arrays  and  standard  cells.  For  many  electronic  system
manufacturers,  the  time-to-market  and  manufacturing-flexibility  benefits of
CPLDs and FPGAs  outweigh their price premium over  conventional  gate arrays or
standard cells of comparable capacity.

     Before a CPLD or FPGA can be programmed,  there are various steps that must
be  accomplished  by a designer using CAE design  software.  These steps include
defining the function of the circuit,  verifying the design,  and laying out the
circuit.  Traditionally,  logic functions were defined using  schematic  capture
software,  which essentially  permit the designer to construct a circuit diagram
on the computer. As CPLD and FPGA have increased in capacity,  the time required
to create  schematic  diagrams  using  schematic  capture tools has often become
prohibitive.  To address this  problem,  designers are  increasingly  turning to
hardware  description  languages  (HDLs),  also known as high-level  description
(HLD).  VHDL and Verilog are the most common HDLs,  which permit the designer to
describe  the  circuit  functions  at  an  abstract  level  and  to  verify  the
performance of logic functions at that level. The HDL can then be fed into logic
synthesis  software that  automatically  converts the abstract  description to a
gate-level  representation  equivalent  to that  produced by  schematic  capture
tools. After a gate-level  representation of the logic function has been created
and  verified,  it must be  translated  or "layed  out" onto the  generic  logic
modules of the CPLD or FPGA.  This is  achieved  by placing  the logic gates and
routing  their  interconnections,  a process  referred  to as "place and route."
After the layout of the device has been verified by timing simulation,  the CPLD
or FPGA can be programmed.

     Electronic  system  manufacturers  program  a CPLD or FPGA to  perform  the
desired  logical  functions by using a device  programmer to change the state of
the device's  programming  elements  (such as antifuses or memory cells) through
the application of an electrical signal. Most CPLDs are programmed with erasable
programmable  read only memories or other  "floating  gate"  technologies.  Many
FPGAs are programmed with static random access memory (SRAM) technology. Actel's
FPGAs  use flash and  antifuse  programming  elements.  After  programming,  the
functionality  and  performance of the programmed CPLD or FPGA in the electronic
system must be verified.

     To a large extent,  the  characteristics  of a CPLD or FPGA are dictated by
the technology  used to make the device  programmable.  CPLDs and FPGAs based on
programming elements controlled by floating gates or SRAMs must be configured by
a  separate  boot  device,  such as the  serial  programmable  read only  memory
commonly  used with SRAM FPGAs.  The need to boot these  devices makes them less
reliable and secure and means they are not  functional  immediately on power-up,
lose their circuit  configurations  in the absence of power, and often require a
separate boot device. In addition,  SRAM FPGAs and CPLDs based on look-up tables
tend to  consume  more  power.  FPGAs  based on flash and  antifuse  programming
elements   do  not   need   to  be   booted-up   and   are   reliable,   secure,
"live-at-power-up,"  nonvolatile,  single-chip  solutions  that  operate  at low
power. These are all characteristics shared by conventional "hard-wired" ASICs.

     The technology used to make a CPLD or FPGA  programmable  dictates  whether
the device is  reprogrammable  as well  whether it's  volatile.  CPLDs and FPGAs
based on  programming  elements  controlled  by  floating  gates  or  SRAMs  are
reprogrammable but lose their circuit configuration in the absence of electrical
power. FPGAs based on antifuse  programming  elements are one-time  programmable
(OTP) and retain their circuit configuration permanently, even in the absence of
power.  FPGAs  based on  programming  elements  controlled  by flash  memory are
reprogrammable and retain their circuit configuration in the absence of power.

Actel Strategy

     Actel's flash and antifuse  technologies are differentiated  from, and have
certain advantages over, the SRAM and other technologies used in competing PLDs.
Actel's  strategy  is to add value for ASIC  users  and serve  markets  in which
Actel's  technologies have an advantage,  including the ASIC  replacement,  high
reliability, and high-speed communications markets.

     ASIC Replacement

     The  ASIC  replacement  market,  which is  driven  primarily  by  cost,  is
addressed  by Actel's  general  purpose  FPGAs.  Like ASICs,  Actel's  flash and
antifuse  FPGAs  are  nonvolatile,  "live-at-power-up,"  low-power,  single-chip
solutions.  Like other programmable  devices,  Actel's FPGAs reduce design risk,
inventory  investment,  and time to market.  In addition,  logic  designers  can
choose to use either ASIC or FPGA software tools and design  methodologies,  and
the  architectures  of Actel's  FPGAs enable the  utilization  of  predefined IP
cores, which can be reused across multiple designs or product versions.

     High Reliability

     The high reliability  market,  which is driven primarily by  nonvolatility,
security, and resistance to radiation effects, is addressed by Actel's military,
avionics,  and space-grade  FPGAs. Actel is the world's leading supplier of high
reliability PLDs. Actel's antifuse and flash FPGAs are nonvolatile, offer levels
of design security beyond SRAM-based FPGAs and even conventional  ASICs, and are
not susceptible to configuration  corruption  caused by radiation.  During 2001,
Actel  began  shipping  RTSX-S  FPGAs,  the  second  family  of  PLDs  developed
specifically to address radiation effects. Actel's RadHard family was the first.

     High-Speed Communications

     Much of the  communications  market is driven by speed,  which has been the
strength of Actel's antifuse FPGAs. To leverage this strength,  Actel launched a
"BridgeFPGA"  initiative  in 2001 to address  the  input-output  (I/O)  problems
created  within the high-speed  communications  market by the  proliferation  of
interface  standards.  The adoption of these interface standards has created the
need  for  designers  to  implement  interface  bridging  functions  to  connect
incompatible  interface  standards.  {The  first  BridgeFPGA  product  will be a
high-speed antifuse FPGA with dedicated high-speed I/O circuits that can support
multiple interface  standards.  Subsequent  BridgeFPGA  products are expected to
include embedded high-speed interface protocol controllers.}

Products and Services

     Actel's  product line consists of FPGAs,  including  general purpose FPGAs,
high  reliability  FPGAs,  and the  recently-announced  BridgeFPGA  programmable
interface  products.  {Actel expects to introduce the initial BridgeFPGA product
in 2002.} In support of its FPGAs,  Actel offers  development  tools,  including
design  software,  device  programmers,  verification  and debugging  tools, and
prototyping  sockets.  In addition,  Actel makes VariCore embedded  programmable
gate array (EPGA) and other IP cores  available  for licensing and offers design
and programming services.

     FPGAs

     The  capacity of FPGAs is measured in "gates,"  which  traditionally  meant
four  transistors.  As FPGAs grew larger and their  architectures  more complex,
counting  gates  became  more  challenging  and no standard  counting  technique
emerged. The appearance of FPGAs with memory further complicated matters because
memory gates cannot be counted in the same way as logic gates.  Unless otherwise
indicated,  "gate" or "gates" means "maximum system  equivalent gates" when used
in this Annual Report on Form 10-K to describe the capacity of FPGAs.

     To meet the diverse customer  requirements in the broad  programmable logic
market,  all Actel  FPGAs  (except  the two  RadHard  devices)  are offered in a
variety of speed grades,  package types, and/or ambient temperature  tolerances.
Commercial  devices are  guaranteed to operate at ambient  temperatures  ranging
from  0(degree)C  to +70(0)C.  Industrial  devices are  guaranteed to operate at
ambient temperatures ranging from -40(degree)C to +85(degree)C. Military devices
are guaranteed to operate at ambient  temperatures  ranging from -55(degree)C to
+125(0)C.

          General Purpose FPGAs

          Actel's general purpose FPGAs include the flash-based ProASIC Plus and
     ProASIC  families  and the  antifuse-based  eX,  SX-A,  SX,  MX, and legacy
     families.

               ProASIC Plus

               On January 7, 2002,  Actel  announced the launch of ProASIC Plus,
          the  second-generation   family  of  flash-based  FPGAs.  Based  on  a
          0.22-micron   process,   the   single-chip,   nonvolatile,   in-system
          programmable (ISP) ProASIC Plus family consists of six devices ranging
          in capacity from 150,000 to 1,000,000 gates.  ProASIC Plus devices are
          "live  at  power  up,"   highly   secure,   and  require  no  separate
          configuration  memory, all characteristics  shared by ASICs. The first
          members  of  the  ProASIC  Plus  family  are  currently  available  as
          engineering samples.

               ProASIC

               The ProASIC family of FPGAs,  which was first shipped for revenue
          in 1999,  consists of four products:  the  98,000-gate  A500K050,  the
          287,000-gate A500K130, the 369,000-gate A500K180, and the 473,000-gate
          A500K270.  On  April  10,  2001,  Actel  announced  that it had  begun
          sampling the A500K180  and A500K270  devices.  The family is currently
          manufactured  on a 0.25-micron  embedded flash process at Infineon and
          offered in three  packages.  Actel  announced the shipment of A500K050
          and A500K130 devices  qualified to industrial  specifications on April
          10, 2001, and the shipment of A500K180 and A500K270 devices  qualified
          to industrial specifications on September 10, 2001.

               The flash-based ProASIC family brings the advantages of ASICs and
          the benefits of PLDs to designers of high-density  logic.  Like ASICs,
          ProASIC devices are single-chip and live at power up,  eliminating the
          need for a separate boot device,  and operate at low power. Like other
          PLDs,  ProASIC  devices reduce time to market and minimize design risk
          and  investment,  requiring no mask sets or silicon  re-spins.  Unlike
          other PLDs available on the market today, which are either volatile or
          non-reprogrammable,    ProASIC    devices    are    nonvolatile    and
          reprogrammable.

               ProASIC devices also exhibit a high level of portability  between
          PLD and ASIC design flows.  Actel's ProASIC solutions make it possible
          to create  high-density  systems  using  existing  ASIC or FPGA design
          flows  and  tools,  shortening  time to  production.  Conversion  to a
          standard ASIC is also facilitated by ProASIC's  ASIC-like design flow.
          In addition,  the design methodology enables designers to use IP cores
          from  proprietary and  third-party  sources,  eliminating  much of the
          architecture-specific re-engineering required by other PLDs.

               eX

               The eX family of FPGAs,  which was first  shipped  for revenue in
          2001,  consists of three devices:  the 3,000-gate eX64, the 6,000-gate
          eX128, and the 12,000-gate eX256. The family is currently manufactured
          on a 0.25-micron antifuse process at UMC. The eX family can be ordered
          in approximately 55 speed, package, and temperature variations.

               The  eX  family  was  designed  for  the  e-appliance  market  of
          internet-related  consumer  electronics  and  includes a sleep mode to
          conserve  battery power.  eX devices also provide a small form factor,
          high design security, and an undemanding design process. The eX family
          is currently positioned as a single-chip  programmable replacement for
          low-capacity ASICs.

               SX-A and SX

               The SX-A family of FPGAs,  which was first shipped for revenue in
          1999,  consists  of  four  products:  the  12,000-gate  A54SX08A,  the
          24,000-gate A54SX16A,  the 48,000-gate A54SX32A,  and the 108,000-gate
          A54SX72A.  The  family  is  currently  manufactured  on a  0.22-micron
          antifuse process at UMC and on a 0.25-micron  antifuse process at MEC.
          The SX-A family can be ordered in  approximately  215 speed,  package,
          and temperature variations.

               The SX family of FPGAs,  which was first  shipped  for revenue in
          1998,  consists  of  four  products:   the  12,000-gate  A54SX08,  the
          24,000-gate A54SX16 and A54SX16P,  and the 48,000-gate A54SX32. The SX
          family is currently  manufactured on a 0.35-micron antifuse process at
          Chartered.  The SX family can be ordered in  approximately  180 speed,
          package, and temperature variations.

               SX was the first family to be built on Actel's fine-grained, "sea
          of modules" architecture, which delivers performance without the power
          penalty  common to  SRAM-based  FPGAs.  The SX-A and SX  families  are
          currently  positioned as  programmable  devices with ASIC-like  speed,
          power consumption,  and pricing in volume production. In addition, the
          SX-A family  offers I/O  capabilities  that  provide  full support for
          "hot-swapping."  Hot  swapping  allows  system  boards to be exchanged
          while systems are running,  a capability  important to many  portable,
          consumer, networking,  telecommunication, and fault-tolerant computing
          applications.

               MX

               The MX family of FPGAs,  which was first  shipped  for revenue in
          1997, consists of six products: the 3,000-gate A40MX02, the 6,000-gate
          A40MX04,   the  14,000-gate  A42MX09,  the  24,000-gate  A42MX16,  the
          36,000-gate  A42MX24,  and the  54,000-gate  A42MX36.  The  family  is
          currently  manufactured on 0.45-micron antifuse processes at Chartered
          and Winbond.  The MX family can be ordered in approximately 300 speed,
          package, and temperature variations.

               The MX family was Actel's  first line of  ASIC-alternative  FPGAs
          and ramped to volume the  fastest of any  product in Actel's  history.
          The largest MX devices include system logic integration functions. The
          MX family is currently positioned as a line of low-cost,  single-chip,
          mixed-voltage programmable ASICs for 5.0-volt applications.

               Legacy Products

               The MX family  includes the best features of Actel's legacy FPGAs
          and over time ought to replace those earlier  products in new 5.0-volt
          commercial designs.  Legacy products include the DX, XL, ACT 3, ACT 2,
          and ACT 1 families.

                    DX and XL

                    The  3200DX  family of FPGAs,  which was first  shipped  for
               revenue  in 1995,  consists  of five  products:  the  12,000-gate
               A3265DX, the 20,000-gate A32100DX,  the 24,000-gate A32140DX, the
               36,000-gate A32200DX, and the 52,000-gate A32300DX. The DX family
               is currently  manufactured  on a 0.6-micron  antifuse  process at
               Chartered and can be ordered in approximately 180 speed, package,
               and temperature variations.

                    The  1200XL  family of FPGAs,  which was first  shipped  for
               revenue  in 1995,  consists  of three  products:  the  6,000-gate
               A1225XL, the 9,000-gate A1240XL, and the 16,000-gate A1280XL. The
               XL family is  currently  manufactured  on a  0.6-micron  antifuse
               process at  Chartered  and can be ordered  in  approximately  125
               speed, package, and temperature variations.

                    The DX and XL families  were  designed to  integrate  system
               logic  previously  implemented  in  multiple  programmable  logic
               circuits. The DX family also offers fast dual-port SRAM, which is
               typically used for high-speed buffering.

                    ACT 3

                    The ACT 3 family of  FPGAs,  which  was  first  shipped  for
               revenue in 1993, consists of five products: the 3,000-gate A1415,
               the 6,000-gate  A1425,  the  9,000-gate  A1440,  the  11,000-gate
               A1460,  and the  20,000-gate  A14100.  The  family  is  currently
               manufactured on a 0.6-micron  antifuse process at Chartered and a
               0.8-micron  antifuse process at Winbond.  The ACT 3 family can be
               ordered in  approximately  215 speed,  package,  and  temperature
               variations.  The family was designed for  applications  requiring
               high speed and a high number of I/Os.

                    ACT 2

                    The ACT 2 family of  FPGAs,  which  was  first  shipped  for
               revenue  in 1991,  consists  of three  products:  the  6,000-gate
               A1225,  the 9,000-gate  A1240,  and the  16,000-gate  A1280.  The
               family is currently  manufactured on 1.0- and 0.9-micron antifuse
               processes  at MEC and can be ordered in  approximately  80 speed,
               package,   and   temperature   variations.   ACT  2  was  Actel's
               second-generation   FPGA   family  and   featured  a   two-module
               architecture  optimized for  combinatorial  and sequential  logic
               designs.

                    ACT 1

                    The ACT 1 family of  FPGAs,  which  was  first  shipped  for
               revenue in 1988,  consists of two products:  the 2,000-gate A1010
               and the 4,000-gate A1020. The family is currently manufactured on
               1.0- and 0.9-micron  antifuse processes at MEC and can be ordered
               in approximately 115 speed, package, and temperature  variations.
               ACT 1 was the original family of antifuse FPGAs.

          High Reliability FPGAs

          Actel  is the  world's  largest  supplier  of high  reliability  PLDs.
     Actel's  military,  avionics,  and  space-grade  FPGAs have advantages over
     ASICs that are significant to complex,  multi-national  and  cost-sensitive
     military and aerospace programs,  including  increased  flexibility to make
     design  changes  after board  layout is complete,  shorter lead times,  and
     lower cost of  ownership  with fewer  vendors  to qualify  and no  up-front
     engineering  expenses.  Since  1990,  Actel FPGAs have been  designed  into
     numerous  military and aerospace  applications,  including command and data
     handling,  attitude  reference  and  control,  command  and  communications
     processors,  and scientific  instrument  interfaces.  Actel space-qualified
     FPGAs  have  been  on  board  more  than  100  launches   and   flight-unit
     applications on more than 300 satellites.

          All Actel antifuse FPGAs (except for the three eX devices) are offered
     in plastic packages qualified to military temperature specifications. Actel
     has received complete Qualified  Manufacturers  Listing (QML) certification
     for  the  full  line  of  plastic-packaged  antifuse  FPGAs,  which  can be
     integrated  into  design   applications   that  would   otherwise   require
     higher-cost  ceramic-packaged  devices. The QML plastic  certification also
     permits customers to integrate  commercial and military  production without
     compromising  quality or  reliability.  Actel's  MIL/Av,  RadTolerant,  and
     RadHard families are offered in hermetic packages.

               MIL/Av

               The MIL/Av  family of FPGAs  consists  of fifteen  products:  the
          2,000-gate  A1010B,  the 4,000-gate A1020B, the 6,000-gate A1425A, the
          11,000-gate   A1460A,   the  16,000-gate   A1280A  and  A1280XL,   the
          20,000-gate  A14100A  and  A32100DX,   the  24,000-gate  A32140DX  and
          A54SX16,  the  36,000-gate  A32200DX,   the  48,000-gate  A54SX32  and
          A54SX32A,  the 54,000-gate  A42MX36,  and the  108,000-gate  A54SX72A.
          MIL/Av FPGAs are shipped with Class B (MIL-STD-883) qualification.

               RadTolerant

               The  RadTolerant  family of FPGAs consists of nine products:  the
          4,000-gate RT1020, the 6,000-gate  RT1425A,  the 11,000-gate  RT1460A,
          the 16,000-gate  RT1280A,  the 20,000-gate  RT14100A,  the 24,000-gate
          RT54SX16, the 48,000-gate RT54SX32 and RT54SX32S, and the 108,000-gate
          RT54SX72S.  RadTolerant FPGAs are offered with Class B through Class E
          (extended  flow/space)  qualification,  and total dose  radiation test
          reports are provided on each segregated lot of devices.

               RadTolerant FPGAs are designed to meet the logic requirements for
          all types of military,  commercial,  and civilian space  applications,
          including  satellites,  launch vehicles,  and deep-space probes.  They
          provide cost-effective  alternatives to radiation-hardened devices. In
          addition,   RadTolerant   devices  have  design-  and   pin-compatible
          commercial versions for prototyping.

               On July 17, 2001, Actel announced the  qualification and shipment
          of  RT54SX32S,  the  first  member  of the  radiation-tolerant  RTSX-S
          family,  which was specifically  designed to address heavy ion-induced
          single-event  upsets  (SEUs)  in  space.  The  RTSX-S  family  is  the
          industry's  first  qualified  FPGA solution  built using  SEU-hardened
          latches,  eliminating  the need for  user-instantiated  triple  module
          redundancy   (TMR).   To  implement   TMR  in  a   traditional   FPGA,
          approximately two-thirds of the device's available logic (or capacity)
          is consumed by  redundancy  and therefore  unavailable  for the user's
          design.  The largest  member of the RTSX-S  family,  the  108,000-gate
          RT54SX72S FPGA, more than quadrupled the amount of programmable  logic
          previously available for applications requiring high SEU resistance.

               RadHard

               The RadHard family of FPGAs,  which was first shipped for revenue
          in 1996,  consists  of two  products:  the  4,000-gate  RH1020 and the
          16,000-gate RH1280. The family is manufactured on a radiation-hardened
          0.8-micron  antifuse  process by BAE at its QML  facility in Manassas,
          Virginia. RadHard devices are shipped with full QML Class V screening.
          The RadHard  family was  designed to meet the demands of  applications
          requiring guaranteed levels of radiation  survivability.  Applications
          for RadHard FPGAs include military and civilian satellites, deep space
          probes, and planetary missions.

          BridgeFPGAs

          On May 14, 2001, Actel announced its BridgeFPGA initiative, a strategy
     to address the  interoperability  problems created by the  proliferation of
     high-performance   interface   standards.   Traditionally,   interface  and
     interoperability  issues have been solved by FPGAs that are custom designed
     for each new system. This, in combination with a proliferation in interface
     standards,  has resulted in a growing  bottleneck.  To help  alleviate  the
     bottleneck,  Actel is  creating a family of devices  that  bridge  multiple
     interface protocols.

          Exploding  system  bandwidth  requirements  have left system designers
     with the  difficult  problem of moving vast  quantities of data quickly and
     reliably within and between  systems.  A multitude of high-speed  interface
     standards  have evolved to solve the problem.  Each of these new  interface
     standards  has its own  features  and  benefits,  addressing  the issues of
     reliability,  bandwidth,  cost, and operating distance in different ways to
     suit different  target  applications.  Consequently,  the adoption of these
     interface  standards  has  created  the need  for  designers  to  implement
     interface bridging functions to connect  incompatible  interface standards.
     Actel's BridgeFPGA  initiative is aimed at giving designers  cost-effective
     and easy-to-use solutions to these interfacing problems.

          As part of its  BridgeFPGA  initiative,  Actel intends to partner with
     key IP providers and application  specific  standard product (ASSP) vendors
     to provide  next-generation  technology for interfaces.  The first of these
     partnerships was also announced on May 14, 2001. Tality, a leading provider
     of IP, has teamed  with Actel to  develop  FPGAs  incorporating  versatile,
     high-performance   physical  layer  (PHY)  communication   interfaces.   In
     addition,  Actel has increased its participation in key interface standards
     associations.

          {BridgeFPGA   products   will   provide   designers   with  access  to
     high-performance  communications  interfaces  capable  of  supporting  many
     standards due to the  flexibility of the  programmable  logic.  The initial
     BridgeFPGA  device,   which  Actel  expects  to  introduce  in  2002,  will
     incorporate Tality's 3.125 Gbps LVDS transceiver and a high-speed multimode
     serializer/deserializer,  capabilities  critical  for  many  communications
     systems. Actel's BridgeFPGA programmable interface products are expected to
     also include a handful of highly  flexible  user-programmable  devices that
     support  multiple  I/O  capabilities  (such  as HSTL,  LVPECL,  and GTL+ in
     addition to 3.125 Gbps LVDS) and various embedded interface protocols (such
     as Ethernet, Fibre Channel, Infiniband, and RapidI/O)}.

     Development Tools

     The  development  tools offered by Actel include  design  software,  device
programmers,  verification and debugging tools, and prototyping  sockets.  These
tools are used in the Actel design flow, which includes design creation,  design
implementation,  device programming, and system verification. Design software is
used for design  creation and  implementation;  programmers  are used to program
devices;  and  verification  and debugging tools and prototyping  sockets may be
used for design and system verification.

     Actel's  Libero design  environment  integrates  the design tools needed to
provide schematic,  HDL, and mixed schematic-HDL  design flows. Actel's Designer
tool is  integrated  with  third-party  schematic and HDL tools to implement and
simulate  Actel  devices.  Programmers  execute  instructions  included in files
obtained  from  Designer to program  Actel FPGAs.  Actel's  Silicon  Explorer II
debugging and verification  tool permits  real-time probing of a programmed FPGA
as it performs its  functions at speed within a system,  removing the  guesswork
typically  associated  with the process of system  verification.  Sockets  allow
designers to use antifuse FPGAs in prototype boards without the risk of damaging
the board when replacing a chip.

          Design Software

          Actel is  committed  to  providing  design  software  integrated  with
     existing  electronic  design  automation  (EDA)  software and design flows.
     Actel  works  closely  with its EDA  partners  through  the Actel  Alliance
     program to provide early  technical  information  on new Actel  releases so
     that  Alliance  members can offer timely  support.  The  Alliance  includes
     Aldec,  Inc.;  Cadence  Design  Systems,  Inc.  (Cadence);  Innoveda,  Inc.
     (Innoveda);  Mentor  Graphics Corp.  (Mentor  Graphics);  SynaptiCAD,  Inc.
     (SynaptiCAD); Synopsys, Inc. (Synopsys); and Synplicity, Inc. (Synplicity).

               Libero

               On June 18, 2001, Actel introduced  Libero,  its  next-generation
          integrated  design  environment  for FPGA  development  and design.  A
          comprehensive   design  management   environment,   Libero  integrates
          industry-leading  design  tools  through  a  robust,  easy-to-navigate
          graphical user  interface;  streamlines  the design flow;  manages all
          design,  run,  and report  files;  and passes  necessary  design  data
          between tools.  Actel's  Libero design  software  includes  Innoveda's
          DxViewDraw schematic capture tool;  SynaptiCAD's  WaveFormer Lite test
          bench generation system;  Model Technology's  ModelSim  simulation and
          design   verification   software;   Synplicity's   Synplify  synthesis
          software; and Actel's Designer place-and-route software.

               The Libero  tool suite  supports  all  currently  released  Actel
          devices  and is  available  in three  versions:  Platinum,  Gold,  and
          Silver.  The Libero  Platinum  version  is a complete  tool suite with
          unlimited  design  capacity and customer  support.  A Libero  Platinum
          evaluation version may be used for 45 days free of charge. It includes
          all the integrated tools, functionality, and power of Platinum without
          the  programming  capability.  The Libero Gold version  provides  tool
          support for users  designing  system-level  devices of 50,000 gates or
          less.  The Libero  Silver  version  offers tool  support from entry to
          programming  for Actel  devices  of 10,000  gates or less.  The Libero
          Silver  version does not include  simulation,  but  designers  may use
          their own simulator  without  restrictions or compatibility  problems.
          Libero  Silver is offered at no charge to qualified  designers for one
          year.

               On  October  31,  2001,  Actel  announced  that  Libero  had been
          enhanced to include support for mixed-mode design entry input,  giving
          designers the choice of mixing either  high-level  VHDL or Verilog HDL
          language  blocks  with  schematic   modules  within  a  design.   This
          mixed-mode  capability  has become  important  as  programmable  logic
          design  capacity  increases and IP utilization and design reuse become
          essential.

               On February  25,  2002,  Actel  announced  that  Libero  supports
          Actel's  ASIC-replacement  ProASIC Plus flash-based FPGA family. Actel
          also  announced  the  availability  for the first  time of the  Libero
          Silver and Platinum  evaluation  versions as free  downloads  from the
          Actel Web site.

               Designer

               Designer is an interactive design implementation tool that allows
          designers to import a netlist  generated from a third-party  CAE tool,
          place and route (layout) the design,  perform static timing  analysis,
          extract timing information, and generate a programming file to program
          an Actel FPGA.  The Designer  tool  supports all the  established  EDA
          standards and the industry's most popular  synthesis,  schematic,  and
          simulation tools. The Designer tool is available in the same Platinum,
          Platinum  evaluation,  Gold, and Silver  versions as Libero.  Designer
          software  allows user  registration  and  automatic  software  updates
          through the Actel Web site.

               After a design is imported by Designer  and the device,  package,
          and other operating  conditions are specified,  the design is compiled
          to check for design  legality,  optimize the netlist,  and verify that
          the design fits into the selected device.  If necessary,  the designer
          can then  optimize and customize the design with the User Tools before
          running  layout.  The User Tools include  PinEdit,  ChipEdit,  ProASIC
          Layout  Viewer,  Timer,  and  Back-Annotate.  PinEdit  is a  graphical
          interface  that  allows  designers  to view  pin  locations;  manually
          assign,  edit,  and fix pin locations;  and customize I/O  attributes.
          ChipEdit is a graphical  interface  that  allows  designers  to view a
          design's macro  placement and edit the placement of both I/O and logic
          modules.  For the ProASIC  family,  the ProASIC Layout Viewer displays
          the results of place-and-route.  Timer is an interactive tool used for
          timing verification and to enter timing constraints.  Back Annotate is
          used to  extract  timing  delays  from  the  post-layout  data.  These
          extracted  delays  are put  into a file  to be  used by a  third-party
          timing simulator.

               Layout is the process of taking the netlist  information  and any
          constraints  and mapping  this  information  into the  selected  Actel
          device.  Physical  locations are assigned to unassigned  I/O and logic
          modules  (placement),  routing tracks are assigned to nets  (routing),
          and detailed  delays are calculated for all paths (delay  extraction).
          Designer  supports two modes of layout,  standard  and  timing-driven.
          Standard layout maximizes the average  performance for all paths. With
          timing-driven  layout,  the primary goal is to meet delay  constraints
          set in Timer or in a delay  constraint file.  Timing-driven  layout is
          more precise and typically  results in higher  performance.  If layout
          fails at any stage,  Designer provides information that can be used to
          determine  and  correct  the  problem.   Following  layout,   Designer
          generates the programming files.

               Designer  graphically  displays the completed steps of the design
          implementation  process,  keeps track of the  information  required to
          begin each step, and prompts the designer through all of the necessary
          steps of the flow.  Designer's pin, timing,  status, and other reports
          provide  frequently-used  information in convenient formats.  Designer
          includes  ACTgen,  a  graphical  macro  generation  tool that  creates
          optimized  logic  elements  that  can be  included  in  schematic  and
          synthesis designs.  Architecture-specific rules control the generation
          of the macros,  so no logic  verification  is  required.  The Designer
          software  also allows  designers  to run scripts in Tcl (Tool  Command
          Language) for simple or complex tasks.

          Device Programmers

          All Actel FPGAs can be  programmed  by Silicon  Sculptor  programmers.
     Actel's flash FPGAs can also be programmed by the Flash Pro Programmer.  In
     addition, Actel supports programmers offered by third parties, including BP
     Microsystems Inc., Data I/O Corporation, and System General Corporation.

               Flash Pro

               On January 7, 2002, Actel announced the availability of the Flash
          Pro  programmer,  which  provides  ISP for  Actel's  flash-based  FPGA
          families.  Designers  can configure  Actel's  ProASIC and ProASIC Plus
          FPGAs  using  only  the  portable  Flash  Pro  programmer  and a cable
          connected  to either the  parallel  or USB port of a PC. The  low-cost
          Flash Pro  programmer  gives users access to the ISP capability of the
          new ProASIC Plus devices for in-the-field  upgrades to communications,
          industrial,  and  avionics  designs.  The ISP  feature  uses  the IEEE
          standard  1149.1  Joint Test  Action  Group  (JTAG)  interface,  which
          permits  devices to be  programmed  after  they are  mounted on a PCB,
          simplifies the handling of high pin-count devices, eliminates sockets,
          and allows higher board performance. Flash Pro also supports the JEDEC
          Standard  Test and  Programming  Language  (STAPL),  which  makes  the
          programmer  independent of any specific  programming  algorithms.  The
          Flash Pro programmer will support new devices immediately upon release
          with a new STAPL  file,  eliminating  the need to wait for  programmer
          algorithm upgrades.

               Silicon Sculptor

               Actel  offers  single-  and  six-site  versions  of  the  Silicon
          Sculptor programmer.  The compact size of the Silicon Sculptor permits
          designers to program  Actel FPGAs from their desktop PC rather than in
          a lab. Up to 12 Actel devices can be  concurrently  programmed  from a
          single PC by daisy chaining two six-site  Silicon  Sculptors  together
          with an expansion  cable.  The  six-site  Silicon  Sculptor,  which is
          designed to meet the demands of high-volume  production  environments,
          programs  devices   independently  to  achieve  the  fastest  possible
          programming  times. A single adapter module can be used to program all
          Actel antifuse or flash devices  within a package type,  regardless of
          pinout.

          Verification and Debugging Tools

          Actel's  Silicon  Explorer II  diagnostic  and  verification  tool kit
     shortens  the  FPGA  design  verification   process  by  rapidly  isolating
     functional and timing problems.  Silicon Explorer II enables control of the
     ActionProbe  circuitry,  a patented architectural feature built into all of
     Actel's  antifuse  devices  that allows  access to any  internal  node from
     selected  external pins.  Silicon  Explorer II attaches to the standard COM
     port of a PC and can be used by  designers  to view  all of the  observable
     nets in a programmed  FPGA,  select  specific  nodes to probe,  and observe
     signal  activity for both probe outputs and up to 16 additional  signals on
     the target  system.  Actel also offers  Silicon  Explorer  II Lite,  a less
     expensive version of Silicon Explorer II for customers who have invested in
     a logic analysis  system.  Silicon  Explorer II Lite enables  internal node
     viewing and selection, but relies on an external scope or logic analyzer to
     display signal activity.

          Prototyping Sockets

          Actel offers a range of  surface-mount  sockets,  which make it easier
     for designers to prototype  their designs using Actel's  antifuse FPGAs. By
     using these sockets when prototyping designs, designers can avoid having to
     desolder  FPGAs  from PCBs,  which is  time-consuming  and can  potentially
     damage the PCBs.  Sockets are available in prototype  quantities from Actel
     and in production quantities from Actel-qualified socket manufacturers.

     VariCore EPGAs

     On February 19, 2001,  Actel introduced its new VariCore EPGA star IP cores
for system-on-a-chip  (SoC) applications.  The VariCore EPGA cores are the first
available  commercial  embeddable and reconfigurable "soft hardware" IP products
broadly  offered to the ASIC and ASSP  market.  VariCore  EPGA cores help reduce
design time and costs and increase SoC design  flexibility,  in part by enabling
version  variants of the same  product.  VariCore  EPGA logic is a versatile and
efficient    embedded   FPGA   core   architecture   that   provides   scaleable
reprogrammability  for ASICs and ASSPs.  These EPGA blocks have been designed in
0.18-micron SRAM technology.  VariCore  programmable  logic is proven in silicon
and  three  of  the  world's   leading  wafer   foundries  are  supporting  EPGA
reprogrammable cores: UMC and TSMC in Taiwan and Chartered in Singapore. Pricing
for VariCore  EPGA cores will vary and follow the "star IP" sliding  scale model
of license plus royalties.

     On May 21, 2001,  Actel announced a joint effort in the area of embedded IP
test with  LogicVision,  a leading  provider of embedded test IP solutions.  The
companies will work together to offer a complete embedded  self-test solution to
users of Actel's VariCore EPGA IP cores.  VariCore EPGA cores provide  designers
with the  ability to add  reconfigurability  to ASIC and ASSP SoC  applications.
LogicVision's  embedded test  capability  delivers  testability  throughout  the
design,  manufacturing,  and system  phases of the product  application  on both
conventional and low-cost testers.

     On  September  17,  2001,  Actel  announced  that it had joined The Virtual
Component  Exchange (VCX) and will use the VCX IP supply chain software solution
to market its VariCore EPGA cores.  VCX TradeFloor  tools link the  engineering,
procurement, and legal functions of buyers and sellers by internet with a common
toolset and language.  Alignment of data  evaluation,  access,  and  contracting
protocols  between buyers and sellers  accelerates the speed of semiconductor IP
transactions.

     On December 3, 2001,  Actel  announced the creation of the VariCore  Design
Alliance,  a worldwide program to train,  certify,  and support independent ASIC
design  services  companies in the  proficient  use of Actel's  VariCore EPGA IP
cores.  The program's  goal is to provide SoC designers  with the background and
expertise  necessary  to  integrate  embedded  FPGAs into  complex  system-level
designs.  Tality,  the world's  largest  independent  SoC design services and IP
provider,  signed on as the program's anchor member. On December 10, 2001, Actel
announced the addition of six new members to the VariCore Design Alliance.

     I P Cores

     Through third party strategic  relationships  and internally  developed IP,
Actel offers cores targeted for the communications,  consumer,  industrial,  and
aerospace  markets.  The IP cores currently offered to Actel customers  includes
ten bus interface,  fourteen communications,  two peripheral component interface
(PCI),  and six processor and  peripheral  cores,  all of which are available in
either register transfer level (RTL) or netlist format. Currently, six cores are
available  for  evaluation or licensing  from Actel,  eleven cores are available
from Inicore AG  (Inicore),  and fifteen cores are available  from  Inventra,  a
division of Mentor  Graphics.  IP developed by Inicore and Inventra are licensed
directly from them.

     The architectures of Actel's flash- and antifuse-based FPGAs facilitate the
porting of high-level IP cores,  enabling system level  integration.  The secure
nature of Actel's FPGAs means that IP can be safely  integrated and guarded from
reverse  engineering  or  piracy.  ProASIC  FPGAs  are  user  programmed  with a
multi-bit key that blocks external  attempts to read or alter the  configuration
settings.  Decapping  and  stripping  of the  ProASIC  device  reveals  only the
structure  of the flash cell,  not the  contents.  Antifuse  FPGAs do not need a
start-up  bitstream,  eliminating  the possibility of  configuration  data being
intercepted.  The antifuses that form the interconnections  within an Actel FPGA
do not leave an observable signature that can be electrically probed or visually
inspected. With these safeguards, Actel devices are almost impervious to copying
and reverse engineering.

     Services

     Actel  offers  design  and  volume  programming   services.   With  Actel'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.  The Protocol  Design  Services  organization  operates out of a
secure facility located in Mt. Arlington, New Jersey, and is certified to handle
government,  military,  and proprietary designs. Actel also programs significant
volumes of FPGAs each month for its customers. This makes Actel devices "virtual
ASICs" from the customer's point of view.

          Protocol Design Services

          Actel's Protocol Design Services organization has a successful history
     providing  hardware and software design  services for companies  throughout
     the world.  It provides  varying  levels of design  services to  customers,
     including  FPGA,  ASIC,  and  system  design;   software   development  and
     implementation;   and  development  of  prototypes,   first  articles,  and
     production  units.  The  Design  Services  team  has  participated  in  the
     development of optical networks, routers, cellular phones, digital cameras,
     embedded  DSP  systems,   automotive   electronics,   navigation   systems,
     compilers, custom processors, and avionics systems.

          Volume Programming

          Actel offers high volume  programming for all Actel device and package
     types in its  state-of-the-art-programming  center, which is located at the
     factory in Sunnyvale,  California. Actel's facility is ISO-9002, PURE, QML,
     and  STACK  certified  (see  "BUSINESS  --  Manufacturing  and  Assembly"),
     permitting Actel to meet customer requirements for high-quality  programmed
     devices.  Complete  documentation and tractability are provided  throughout
     the  programming   process,   including  first  article  approval.   Volume
     programming charges are based on the type of device and quantity per order.

Market and Applications

     In 2001, FPGAs accounted for 97% of Actel's net revenues,  virtually all of
which was derived from the sale of antifuse FPGAs.  FPGAs can be used in a broad
range of applications across nearly all electronic system market segments.  Most
customers  use Actel's  FPGAs in low to medium  volumes in the final  production
form of their products.  Some high-volume  electronic  system  manufacturers use
Actel FPGAs as a prototyping vehicle and convert production to lower-cost ASICs,
while  others  with  time-to-market  constraints  use Actel FPGAs in the initial
production and then convert to lower-cost ASICs. As product life cycles continue
to  shorten,   foundry  capacity  becomes  more  expensive,   and  manufacturing
efficiencies   for  FPGAs   increase,   some   high-volume   electronic   system
manufacturers  are  electing  to  retain  FPGAs  in  volume  production  because
conversion to ASICs may not yield  sufficiently  attractive  savings  before the
electronic system reaches the end of its life.

     In  general,   Actel's   antifuse  FPGAs  are  appropriate  for  high-speed
communications,  military and space, computer,  and consumer  applications,  and
Actel's flash FPGAs are better suited for general communications,  avionics, and
industrial applications.

     Communications

     In 2001,  communications  accounted  for an  estimated  49% of Actel's  net
revenues.  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. The high density,  high performance,  and low power consumption of
antifuse  FPGAs  make  them  appropriate  for use in  high-speed  communications
equipment.   The  high   capacity,   low  cost,  low  power   consumption,   and
reprogrammability   of  flash  FPGAs  make  them   suitable  for  use  in  other
communications   applications.   Representative   customers   of  Actel  in  the
communications market include: Alcatel; Cisco; Marconi; and Nortel.

     On  August  27,  2001,  Actel  announced  that  Ipsil  will  implement  its
IPMicro8932 chip within the eX family.  Ipsil chose the eX family because of its
small packaging,  flexibility,  performance,  reliability, and security. Ipsil's
IPMicro8932   chip  also  requires  low  power.   IPMicro8932   is  an  enhanced
transmission-control protocol controller with a 10BaseT Ethernet interface.

     Military and Aerospace

     In 2001,  military and aerospace  accounted for an estimated 26% of Actel's
net revenues.  Rigorous  quality and  reliability  standards,  stringent  volume
requirements,  and the need  for  design  security  are  characteristics  of the
military and aerospace market. Actel FPGAs have high quality and reliability and
are  almost  impervious  to  copying  and  reverse   engineering,   making  them
appropriate  for many military and aerospace  applications.  For these  reasons,
Actel  is  the  world's  leading   supplier  of  military  and  aerospace  PLDs.
Representative  customers of Actel in the military and aerospace market include:
BAE;  Boeing;  Fairchild  Semiconductor  Corporation;  Honeywell;  and  Lockheed
Martin.

     Actel's  antifuse FPGAs are especially well suited for space  applications,
due to the  high  radiation  tolerance  of  the  antifuse  and  the  Actel  FPGA
architecture. Actel's antifuse FPGAs were first designed into a space mission in
1991.  Since  then,  thousands  of  Actel's  programmable  logic  circuits  have
performed   flight-critical   functions  aboard  manned  space  vehicles,  earth
observation  satellites,  and  deep-space  probes.  Actel's  FPGAs often perform
mission-critical functions on important scientific missions in space. They have,
for example,  been aboard numerous Mars exploration  missions,  were included in
the controlling  electronics for the Mars Pathfinder  Rover,  and are performing
functions  on the  Hubbell  Space  Telescope.  Actel  participates  in  programs
administered  by  the  National  Aeronautics  Space  Administration's   (NASA's)
Goddard, Johnson, and Marshall Space Flight Centers (including the Space Shuttle
and the International Space Station) as well as programs at California Institute
of Technology's Jet Propulsion Laboratory. However, Actel's success has not been
limited to the United States.  Today, Actel's FPGAs can be found on board and in
spacecraft  launched by virtually  every civilian space agency around the world,
including the European Space Agency and the Japanese  National Space Development
Agency.

     On March 26, 2001, Actel announced that it had played a significant role in
the  Near  Earth  Asteroid   Rendezvous  (NEAR)  Shoemaker  mission,   providing
programmable  logic that enabled mission  managers to navigate the spacecraft to
the  surface of  asteroid  Eros and collect  scientific  data from the  asteroid
surface and surrounding  environment.  NASA's NEAR Shoemaker  spacecraft was the
first  spacecraft  ever to land, or even attempt to land, on an asteroid.  Actel
high-reliability FPGAs played an important role in the command,  telemetry,  and
scientific data collection aspects of the mission.

     Industrial

     In 2001, industrial control and instrumentation  applications accounted for
an estimated 19% of Actel's net revenues. 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
Actel  in  the  industrial   market  include:   Abbott   Laboratories;   Agilent
Technologies,  Inc.; GE Medical Systems;  Siemens;  Varian Medical Systems, Inc;
and VISTA Controls.

     On March 14, 2002,  Actel announced that Silicon  Recognition has chosen to
implement a version of its zero  instruction set computing  (ZISC) solution with
Actel's  A500K050 and  A500K130  ProASIC  devices.  Silicon  Recognition's  ZISC
solution,  a  proprietary  ASIC, is designed to provide the  ultra-fast  pattern
recognition,  information classification,  and matching performance required for
next-generation,   real-time  smart  devices,   such  as  security  cameras  and
health-monitoring equipment.

     Computer

     In 2001, computer systems and peripherals  accounted for an estimated 3% of
Actel's net  revenues.  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 Actel in the computer market include: Analogic Corporation; Compaq;
Dialogic  Corporation;   Matrox  Graphics  Inc.;  Sensis  Corporation;  and  Sky
Computer.

     On May 21,  2001,  Actel  announced  that MARGI  Systems,  Inc.,  a leading
provider of multimedia products for mobile computing,  selected Actel's A54SX08A
FPGA  for  the   hardware   module   in  its  new   "Presenter-to-Go"   product.
Presenter-to-Go enables business professionals to make PowerPoint  presentations
from a Handspring  Visor  without the use of a personal  computer.  Actel's SX-A
family was  selected  for the  Presenter-to-Go  application  due to the hot-swap
compliant I/Os and the low-power features of the architecture.

     On March 4, 2002,  Actel  announced  that  NetVision,  a supplier  of giant
light-emitting   diode  (LED)  screens,   selected  Actel's  A54SX72A  FPGA  for
NetVision's  new Magitron range of giant color outdoor LEDs. The screens utilize
SX-A FPGAs for display  circuit  control and color  correction  management.  The
Magitron circuit design specifications  required a logic integration device that
offered high performance, design security, and low power consumption.

     Consumer

     In 2001, consumer applications accounted for an estimated 3% of Actel's net
revenues. 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,
digital film,  multimedia  products,  and smart-card readers.  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 Actel in the consumer market include: Datel,
Inc.; Samsung; Sanyo; and Shinyoung Precision Co., Ltd.

     On October  16,  2001,  Actel  announced  a  technology  relationship  with
e.Digital Corp. that will allow  e.Digital's  proprietary  design to be produced
within  Actel's eX FPGAs.  e.Digital's  new  solution  is  designed  to increase
reliability and reduce the board space required for  implementation  of advanced
digital voice and music recorder/player functionality in small portable devices,
such as portable internet music players and personal digital jukeboxes.

Sales and Distribution

     Actel  maintains  a  worldwide,   multi-tiered  selling  organization  that
includes  a  direct  sales  force,   independent  sales   representatives,   and
electronics  distributors.  Actel's North  American  sales force  consists of 50
sales and  administrative  personnel  and  field  application  engineers  (FAEs)
operating  from 22 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,  Actel's  sales  managers  also  oversee the  activities  of 20 sales
representative  firms that operate from  approximately 50 office locations.  The
sales  representatives  concentrate on selling to major industrial  companies in
North America.  To service smaller,  geographically  dispersed accounts in North
America,  Actel has distributor  agreements with Pioneer and Unique. Pioneer and
Unique have approximately 39 and 28 offices in North America, respectively.

     Actel  generates a significant  portion of its revenues from  international
sales.  Sales to customers  outside the United  States  accounted for 38% of net
revenues in 2001. Sales to European customers  accounted for 28% of net revenues
in 2001. Actel's European sales organization  consists of 22 employees operating
from four sales offices and 11  distributors  and sales  representatives  having
approximately 23 offices (including Unique,  which has seven offices in Europe).
Sales  to Japan  and  other  international  customers  accounted  for 10% of net
revenues  in  2001.  Actel's  Pan-Asia  sales  organization  consists  of  seven
employees  operating  from three sales offices and nine  distributors  and sales
representatives  having  approximately 20 offices (including  Unique,  which has
nine offices in Pan-Asia).  Actel's International sales organization consists of
two employees  operating from two sales offices and four  distributors and sales
representatives (including Unique).

     Actel'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 Actel'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 Actel's headquarters.

     Sales made through  distributors  accounted for 68% of Actel's net revenues
in 2001. Pioneer and Unique accounted for 20% and 19%, respectively,  of Actel's
net revenues in 2001. Actel consolidated its distribution channel during 2001 by
terminating Arrow Electronics,  Inc. (Arrow), which accounted for 13% of Actel's
net  revenues  in  2001.  As is  common  in the  semiconductor  industry,  Actel
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 an  approved  price  reductions  on  specific  transactions  to  meet
competition.  Actel also generally grants distributors  limited rights to return
products.  To date,  product  returns under this policy have not been  material.
Actel  maintains  reserves  against which these credits and returns are charged.
Because of its price  protection and return  policies,  Actel does not recognize
revenue on products  sold to  distributors  until the products are resold to end
customers.

Backlog

     At  January 6, 2002,  Actel's  backlog  was  approximately  $22.3  million,
compared with  approximately  $44.4 million at December 31, 2000. Actel 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.
Actel sells standard  products that may be shipped from inventory within a short
time after receipt of an order. Actel'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,  Actel's  backlog may be  cancelled  or  rescheduled  by the
customer on short  notice  without  significant  penalty.  As a result,  Actel's
backlog may not be indicative  of actual sales and therefore  should not be used
as a measure of future revenues.

Customer Service and Support

     Actel  believes that superior  customer  service and technical  support are
essential for success in the FPGA market.  Actel 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.  Actel's customer service organization
emphasizes  prompt,  accurate  responses to questions about product delivery and
order status.

     Actel's FAEs located in Canada,  England,  France, Hong Kong, Italy, Japan,
and the United States provide  technical  support to customers  worldwide.  This
network  of  experts  is   augmented   by  FAEs   working  for   Actel's   sales
representatives and distributors throughout the world. Customers in any stage of
design can also obtain  assistance from Actel's technical support hotline or the
online interactive automated technical support system. In addition, Actel offers
technical  seminars on its products and  comprehensive  training  classes on its
software.

     Actel  generally  warrants  that its  FPGAs  will be free from  defects  in
material and  workmanship  for one year,  and that its software  will conform to
Actel's published specifications for 90 days. To date, Actel has not experienced
significant warranty returns.

Manufacturing and Assembly

     Actel'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 Actel's FPGAs are manufactured by BAE
in Manassas, Virginia; by Chartered in Singapore; by Infineon in Germany; by MEC
in  Japan;  by UMC in  Taiwan;  and by  Winbond  in  Taiwan.  Actel's  FPGAs  in
production are manufactured by BAE using  0.8-micron  design rules; by Chartered
using 0.6-,  0.45-, and 0.35-micron  design rules; by Infineon using 0.25-micron
design rules; by MEC using 1.0-,  0.9-,  0.8-, and 0.25-micron  design rules; by
UMC using  0.22-micron  design rules;  and by Winbond using 0.8- and 0.45-micron
design rules.

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

     Actel is committed to continuous  improvement  in its products,  processes,
and  systems  and  to  conforming  its  quality  and   reliability   systems  to
internationally  recognized standards and requirements.  Actel is ISO 9002, QML,
STACK,  and PURE certified.  ISO 9002 and QML  certification  are granted by the
Defense Supply  Center,  Columbus,  Ohio (DSCC).  ISO  certification  provides a
globally  recognized  benchmark  that Actel's  devices have been  certified  for
integrity in the manufacturing and test process. QML certification confirms that
Actel has an approved quality system and control of its processes and procedures
according to the standards  set forth in the  MIL-PRF-38535.  In addition,  many
suppliers of  microelectronic  components have  implemented QML as their primary
worldwide  business  standard.   STACK   International   members  consist  of  a
distinguished  worldwide  group  of  major  electronic  equipment  manufacturers
serving the  high-reliability  and  communications  markets.  Certification as a
STACK  International  supplier  confirms  that  Actel's  standard  qualification
procedure and product monitor program and  manufacturing  process meet or exceed
the required  specification.  PURE, which stands for PEDs (plastic  encapsulated
devices) Used in Rugged  Environments,  is an association of European  equipment
makers dedicated to quality and reliability.  Actel's PURE  certification is for
plastic quad flat pack packages.

     On May 29, 2001,  Actel  announced the  availability of new chip-scale (CS)
packages for the eX family of FPGAs.  The eX products  were already  utilized in
portable designs due to the family's small packaging and low power features. The
new CS packages  provided the smallest  footprint in the industry for devices of
comparable  density.  On January 28, 2002,  Actel announced the  availability of
lead-free packaging options for the ProASIC, eX, and SX-A FPGA families. The new
lead-free   packages  offer   environment-friendly   alternatives   to  standard
lead-based packages at the same prices.

Strategic Relationships

     Actel  enjoys   ongoing   strategic   relationships   with  its  customers,
distributors and sales  representatives,  and foundries,  assembly  houses,  and
other suppliers of goods and services, including the following:

     Chartered

     On August 28, 2001,  Actel  announced the  availability  of its  SRAM-based
VariCore EPGA IP cores on the 0.18-micron process from Chartered.  VariCore EPGA
IP  cores  are  targeted  for use in ASIC and ASSP  SoC  devices  to help  speed
products to market and increase the life of those  products  once in the market.
See "BUSINESS -- Products and Services -- VariCore  EPGAs."  VariCore  EPGAs are
available for license by Actel directly to Chartered customers.

     Faraday Technology Corporation (Faraday)

     On   September   10,  2001,   Actel  and  Faraday   announced  a  low-risk,
cost-effective  conversion  path from current and future  generations of Actel's
single-chip,  flash-based  ProASIC FPGAs to standard cell ASICs using a standard
cell CMOS process.  Compared with a masked-PLD (MPLD) or conventional gate array
migration process, standard cell ASICs offer higher densities and reduced costs.
The new conversion path allows  companies to take products to market quickly and
then lower the system cost without taking the risks  typically  associated  with
ASIC design conversions.

     First Silicon Solutions (FS2)

     On January 7, 2002,  Actel and FS2 announced the  availability of the Flash
Pro  programmer,  which  provides  ISP  for  Actel's  flash-based  ProASIC  FPGA
families,  including the new ProASIC Plus family.  See "BUSINESS -- Products and
Services -- Development Tools -- Programmers -- Flash Pro." FS2, working closely
with  Actel,  delivered a complete  programming  solution  that gives  designers
access to an ISP  ASIC-alternative  when designing complex  applications for the
industrial, communications, networking, and avionics markets.

     Mentor Graphics and Model Technology

     On July 2, 2001,  Actel and Model  Technology,  a Mentor Graphics  company,
announced an OEM agreement to provide Actel  customers with ModelSim,  a leading
language-neutral   simulation  tool.  Actel  integrates  ModelSim  into  Libero,
allowing  customers to easily access the  simulation  tool when  developing  and
designing  Actel FPGAs.  See  "BUSINESS -- Products and Services --  Development
Tools -- Design  Software  --  Libero."  On January  7,  2002,  Actel and Mentor
Graphics  announced  that  Mentor's  LeonardoSpectrum  synthesis  tool  supports
Actel's new ProASIC Plus family of flash-based  FPGAs.  LeonardoSpectrum  offers
optimization  and  technology  mapping of HDL  designs to  architecture-specific
resources in ProASIC Plus devices.

     Synopsys

     On May 30, 2001, Actel announced that Synopsys'  Design Compiler  synthesis
tool  supports  Actel's  ProASIC 500K devices.  The addition of Design  Compiler
libraries  to the  ProASIC  design kit  enables  ASIC  designers  to work within
Synopsys' ASIC synthesis  environment  while  leveraging the benefits of Actel's
reprogrammable  ProASIC  devices,  including  shorter and more efficient  design
cycles.  On January 7, 2002,  Actel  announced  that Synopsys'  Design  Compiler
synthesis tool supports Actel's new ProASIC Plus family of flash-based FPGAs.

     Synplicity

     On April 12,  2000,  Actel and  Synplicity  announced  the renewal of their
long-term  strategic  alliance by signing a multi-year OEM agreement.  Under the
terms of the five-year agreement,  Actel will bundle Synplicity's  Synplify FPGA
synthesis  software into its  development  tools.  See "BUSINESS -- Products and
Services  --  Development  Tools -- Design  Software  --  Libero."  As a result,
designers  using Actel devices will  continue to have access to the  performance
and quality of results  offered by  Synplicity's  FPGA  synthesis  software.  On
January  7,  2002,  Actel  and  Synplicity   announced   optimized   support  in
Synplicity's  Synplify  software  products  for Actel's new ProASIC Plus family.
Synplicity's  Synplify product performs  technology mapping of HDL-based designs
directly into ProASIC Plus devices.

     Tality

     On May 14, 2001,  Actel and Tality,  a subsidiary  of Cadence,  announced a
strategic  technology  partnership  that  will  result  in  the  development  of
technology aimed at the high-speed  communications market. Actel and Tality, the
largest  provider of IP and engineering  services,  are leveraging  Actel's FPGA
devices  to  develop   products   incorporating   versatile  PHY   communication
interfaces.  {This agreement supports Actel's BridgeFPGA  corporate  initiative,
under  which  Actel  will  deliver  next-generation   communications   interface
solutions  optimized to meet designers'  increasing bridging  requirements.  See
"BUSINESS -- Products and Services -- FPGAs -- BridgeFPGAs."}

     UMC

     On February 19, 2001,  Actel  announced  that it had joined UMC's Gold IPSM
program with Actel's  VariCore EPGA star IP cores. See "BUSINESS -- Products and
Services -- VariCore  EPGAs."  Concurrently,  Actel taped out a VariCore EPGA IP
test chip in UMC's 0.18-micron fab in Taiwan.  VariCore IP is the first complete
(front  end  to  back  end),  commercially  available  product  of its  kind  in
0.18-micron  technology.  VariCore  EPGAs are  available  for  license  by Actel
directly to UMC customers.

Research and Development

     In 2001,  Actel spent  $38.2  million on research  and  development,  which
represented 29% of net revenues.  Actel'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,  Actel's research and development activities also involve continuing
efforts to reduce the cost and  improve  the  performance  of current  products,
including   "shrinks"  of  the  design  rules  under  which  such  products  are
manufactured.  Actel'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
PC and workstation platforms.

     During 2001, Actel introduced  embeddable  reprogrammable  EPGA logic cores
based on SRAM  technology.  See  "BUSINESS  -- Products and Services -- VariCore
EPGAs."  Actel  also  announced  its  next-generation   antifuse  products.  See
"BUSINESS  -- Products and Services -- FPGAs --  BridgeFPGAs"  and  "BUSINESS --
Strategic Partners -- Tality." Actel publicly disclosed in 2001 that it was also
working on next-generation flash and high reliability products,  but provided no
details regarding those research and development projects.

Competition

     The FPGA market is highly  competitive,  and Actel expects that competition
will  continue to  increase as the market  grows.  Actel's  competitors  include
suppliers of standard TTLs and  custom-designed  ASICs,  including  conventional
gate arrays,  standard cells,  simple PLDs,  CPLDs,  and FPGAs. Of these,  Actel
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.
Actel  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 Actel's products and
then  convert to  conventional  gate arrays or standard  cells to achieve  lower
costs for volume production.  For this reason, Actel also faces competition from
companies  that  specialize  in  converting  CPLDs and  FPGAs,  including  Actel
products, into conventional gate arrays or standard cells.

     Actel also  competes  with  suppliers of CPLDs.  Suppliers of these devices
include Altera Corporation (Altera) and Lattice-Vantis Semiconductor Corporation
(Lattice).  The  circuit  architecture  of  CPLDs  may give  them a  performance
advantage in certain lower capacity  applications,  although Actel believes that
its FPGAs compete favorably with CPLDs.  However,  Altera and Lattice are larger
than Actel,  offer broader product lines to more extensive  customer bases,  and
have significantly greater financial,  technical, sales, and other resources. In
addition, many newer CPLDs are reprogrammable,  which permits customers to reuse
a circuit  multiple times during the design  process.  While Actel's flash FPGAs
are  reprogrammable,   antifuse  FPGAs  are  OTP,  permanently  retaining  their
programmed  configuration.  No assurance can be given that Actel will be able to
overcome these competitive disadvantages.

     Actel  competes most  directly with  established  FPGA  suppliers,  such as
Xilinx, Inc. (Xilinx), Altera, and Lattice (which purchased the FPGA business of
Agere Systems, Inc. in 2002). While Actel believes its products and technologies
are  superior  to those  of  Xilinx  (as well as  Altera  and  Lattice)  in many
applications  requiring greater speed, lower cost,  nonvolatility,  lower power,
and/or greater  security,  Xilinx is significantly  larger than Actel,  offers a
broader  product line to a more extensive  customer base, and has  substantially
greater financial, technical, sales, and other resources. In addition, the FPGAs
of Xilinx,  Altera,  and Lattice are  reprogrammable.  No assurance can be given
that Actel will be able to overcome these competitive disadvantages.

     Several companies have marketed  antifuse-based FPGAs, including QuickLogic
Corporation (QuickLogic).  In 1995, Actel acquired the antifuse FPGA business of
TI, which was the only second-source  supplier of Actel products.  Xilinx, which
is a licensee of certain Actel 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.  Actel  believes that it compete  favorably
with  QuickLogic,  which  is also a  licensee  of  certain  Actel  patents.  See
"BUSINESS -- Patents and Licenses."

     Actel believes that important  competitive factors in its market are price;
performance;  capacity (total number of usable gates); density (concentration of
usable gates);  ease of use and  functionality of development  tools;  installed
base of development tools; reprogrammability; strength of sales organization and
channels; adaptability of products to specific applications and IP; ease, speed,
cost, and consistency of programming;  length of research and development  cycle
(including migration to finer process geometries);  number of I/Os; reliability;
security;  wafer  fabrication and assembly  capacity;  availability of packages,
adapters,  sockets,  programmers,  and IP;  technical  service and support;  and
utilization  of  intellectual   property  laws.  Failure  of  Actel  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, 2002,  Actel had 192 United States patents and applications
pending for an additional 56 United  States  patents.  Actel also had 50 foreign
patents and  applications  pending for 122  patents  outside the United  States.
Actel's patents cover, among other things,  Actel's basic circuit  architecture,
antifuse  structure,  and programming  method.  Actel expects to continue filing
patent  applications  as  appropriate to protect its  proprietary  technologies.
Actel   believes   that  patents,   along  with  such  factors  as   innovation,
technological  expertise,  and experienced  personnel,  will become increasingly
important.

     On March 29, 2001, Unisys  Corporation  (Unisys) brought suit in the United
States District Court for the Northern District of California, San Jose Division
(Court), against Actel seeking monetary damages and injunctive relief. Actel and
Unisys  orally  agreed to settle  the case on April 25,  2001,  and  executed  a
definitive  written  settlement  agreement on June 29, 2001. The Court dismissed
the case with  prejudice on July 13, 2001.  The  settlement  was  immaterial  to
Actel's business, financial condition, and operating results.

     In connection with the settlement of patent  litigation in 1993,  Actel and
Xilinx entered into a Patent Cross License Agreement (Xilinx  Agreement),  under
which  Xilinx was granted a license  under  certain  Actel  patents that permits
Xilinx to make and sell  antifuse-based  PLDs,  and Actel was  granted a license
under certain Xilinx patents to make and sell SRAM-based  PLDs. In 1996,  Xilinx
discontinued its antifuse-based FPGA product line.

     In 1995,  Actel  and BTR,  Inc.  (BTR)  entered  into a  License  Agreement
pursuant  to  which  BTR  licensed  its  proprietary  technology  to  Actel  for
development  and  use  in  FPGAs  and  certain  multichip  modules.  As  partial
consideration  for the grant of the  license,  Actel pays to BTR  non-refundable
advance royalties. Actel 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,  Actel and
QuickLogic  entered  into a Patent Cross  License  Agreement  that  protects the
products  of both  companies  that  were  first  offered  for sale on or  before
September 4, 2000, or that are future  generations  of such products  reflecting
the  evolution  of such  products in the ordinary  course of business.  In 1998,
Actel  also  entered  into a patent  litigation  settlement  agreement  with the
Lemelson Medical, Education & Research Foundation.

     As is typical in the semiconductor industry,  Actel has been and expects to
be notified from time to time of claims that it may be infringing  patents owned
by others.  During  2001,  Actel held  discussions  regarding  potential  patent
infringement issues with several third parties, some of which have significantly
greater financial and intellectual  property resources than Actel. When probable
and reasonably estimable,  Actel has made provision for the estimated settlement
costs of claims for alleged infringement. The provision is based on an estimated
royalty  rate  applied  to  shipments  made in the  periods  and to or from  the
geographic areas under dispute. In the absence of facts or circumstances  unique
to a  particular  dispute,  the  royalty  rate is  estimated  based  on  Actel's
understanding of royalty rates other technology companies typically agree to pay
in similar types of disputes.  As it has in the past,  Actel may obtain licenses
under  patents  that it is  alleged  to  infringe.  While  Actel  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,  Actel's  evaluation of the impact of these pending
disputes could change based upon new information  learned by Actel.  {Subject to
the foregoing,  Actel does not believe that any pending patent dispute is likely
to have a materially adverse effect on Actel's business, financial condition, or
results of operations.}

Employees

     At the end of 2001,  Actel  had 521  regular  employees,  including  143 in
marketing, sales, and customer support; 167 in research and development;  157 in
operations;  17 in  Protocol  Design  Services;  and  37 in  administration  and
finance.  Net revenues were approximately  $279,000 per employee for 2001. Actel
has no employees  represented  by a labor union,  has not  experienced  any work
stoppages, and believes that its employee relations are satisfactory.

     On May 25, 2001, Actel announced that its Board of Directors had approved a
voluntary stock option exchange program.  Under the program,  eligible employees
were given the  opportunity to cancel  options  outstanding on June 29, 2001, in
exchange  for the grant of a new stock  option  six  months  and one day  later.
Approximately  510,000 stock  options were granted to employees  under the stock
option  exchange  program at an exercise  price of $19.91,  the closing price of
Actel Common Stock on December 31, 2001. The weighted  average exercise price of
the options cancelled in the exchange program was $35.23.

     On August 7, 2001,  Actel  announced  the promotion of Jon Anderson to Vice
President  of  Finance  and Chief  Financial  Officer.  Formerly  the  corporate
controller,  Mr. Anderson joined Actel's  executive  management team and reports
directly to John East,  Actel's  President and CEO. Mr.  Anderson  replaced Hank
Perret,  who accepted the CFO position with a private company located in Austin,
Texas.  Mr. Perret has family in Austin and was employed  there prior to joining
Actel in 1996.

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:

     "Blank Check" Preferred Stock; Change in Control Arrangements

     Actel'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 Actel'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
Actel. In addition, such issuance could adversely affect the market price of the
Common Stock.  Although Actel 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.

     Actel 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 Actel.  Payment is contingent  upon the employee  remaining
with Actel or its successor  for six months after the change of control  (unless
the employee is terminated  other than for cause during such six-month  period).
Actel and each of its  executive  officers  have also  entered into a Management
Continuity  Agreement,  which  provides 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.  While these  arrangements are intended to make
executive  officers and other  employees  neutral  toward a potential  change of
control, they could have the effect of biasing some or all executive officers or
employees in favor of a change of control.

     Competition

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

     All existing  FPGAs not based on antifuse  technology and certain CPLDs are
reprogrammable,  a feature that makes them more  attractive  to  designers.  See
"BUSINESS  -- Risk  Factors --  One-Time  Programmability  (OTP)." In  addition,
Actel's  antifuse  FPGAs and (to a lesser  extent) flash FPGAs are  manufactured
using  customized steps that are added to the otherwise  standard  manufacturing
processes  of  independent  wafer  suppliers.  As  a  result,  Actel's  products
typically have been fabricated using processes one or two generations behind the
processes used by competing products. As a consequence,  Actel generally has not
fully  realized  the  benefits  of its  technologies.  Actel  is  attempting  to
accelerate  the  rate at which  its  products  are  migrated  to  finer  process
geometries  and is working with its wafer  suppliers to obtain earlier access to
advanced  processes,  but no  assurance  can be given that Actel will be able to
overcome these competitive disadvantages.

     Actel also  believes  that  companies  with  broader  product  lines,  more
extensive  customer bases, and greater financial and other resources may be in a
stronger  competitive  position than Actel. Many of Actel's current  competitors
have broader product lines,  more extensive  customer bases,  and  significantly
greater financial, technical, manufacturing, and marketing resources than Actel.
Additional  competition  is  possible  from  major  domestic  and  international
semiconductor  suppliers. All such companies are larger and have broader product
lines, more extensive  customer bases, and  substantially  greater financial and
other  resources than Actel,  including the capability to manufacture  their own
wafers.   Additional   competition  could  adversely  affect  Actel's  business,
financial condition, or results of operations.

     Actel may also face  competition  from suppliers of logic products based on
new or  emerging  technologies.  While Actel  seeks to monitor  developments  in
existing and emerging technologies, no assurance can be given that Actel 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 efforts being conducted,  no assurance can be given
that Actel's technologies will remain competitive.

     Customer Concentration

     A small number of  customers  are  responsible  for a  significant  portion
Actel's net revenues.  Actel has experienced periods in which sales to its major
customers  fluctuated  as a  percentage  of net  revenues  due to  push-outs  or
cancellations of orders,  or delays or failures to place expected orders.  Actel
believes  that sales to a limited  number of customers  will continue to account
for a substantial portion of net revenues in future periods. The loss of a major
customer,  or decreases or delays in shipments to major customers,  could have a
materially adverse effect on Actel's business,  financial condition,  or results
of operations.

     Dependence on Communications Customers

     Actel   estimates   that  sales  of  its   products  to  customers  in  the
communications  market accounted for 49% of net revenues for 2001, compared with
56% of net revenues for 2000. At various times,  the  communications  market has
experienced  economic  downturns,  which have been  characterized  by diminished
product demand,  accelerated  erosion of average selling prices,  and production
overcapacity.  Since the fourth quarter of 2000, the  communications  market has
endured perhaps its worst downturn ever. As a result, Actel has experienced, and
may again in the future experience, substantial period-to-period fluctuations in
operating results due to conditions in the communications  market or the general
economy.

     Dependence on Customized Manufacturing Processes

     Actel'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,   Actel   generally  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   using   standard
manufacturing  processes.  As  a  result  of  these  factors,  Actel's  products
typically have been fabricated using processes one or two generations behind the
processes used by competing products. As a consequence,  Actel generally has not
fully  realized  the  benefits  of its  technologies.  Actel  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 or that Actel
will be able to overcome these competitive disadvantages.

     Dependence on Design Wins

     In  order  for  Actel  to sell an FPGA to a  customer,  the  customer  must
incorporate  the FPGA into the  customer's  product in the design  phase.  Actel
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 tools) and to persuade potential customers
to incorporate Actel's FPGAs into new or updated products. These efforts usually
precede by many months (and often a year or more) the  generation of FPGA sales,
if any, by Actel.  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 Actel will win sufficient  designs or that any design win will result
in significant revenues.

     Dependence on Independent Assembly Subcontractors

     Actel  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.  Actel  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.  Actel has no long-term
contracts with its subcontractors and certain of those subcontractors  sometimes
operate  at or  near  full  capacity.  There  can  be no  assurance  that  these
subcontractors will continue to be able or willing to meet Actel's  requirements
for  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 Actel's  business,
financial condition, or results of operations.

     Dependence on Independent Software and Hardware Developers

     Actel is dependent on independent  software and hardware developers for the
development,  maintenance,  and support of certain  elements of its  development
tools, IP cores,  debugging and  verification  tools,  device  programmers,  and
sockets.  Actel'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.  No assurance can be given
that Actel'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 Actel'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  Actel's  business,   financial  condition,  or  results  of
operations.

     Dependence on Independent Wafer Manufacturers

     Actel does not  manufacture any of the wafers used in the production of its
FPGAs.  Such wafers are  manufactured by BAE in the United States,  Chartered in
Singapore,  MEC in Japan, UMC in Taiwan, and Winbond in Taiwan. Actel'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.

     Actel 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  Actel has supply
agreements with several of its wafer manufacturers,  a shortage of raw materials
or production  capacity  could lead any of Actel's  wafer  suppliers to allocate
available  capacity to customers  other than Actel,  or to internal uses,  which
could interrupt Actel's capability to meet its product delivery obligations. Any
inability  or  unwillingness  of Actel'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 Actel's business, financial condition, or results of operations.

     If Actel's current independent wafer manufacturers were unable or unwilling
to manufacture  Actel's  products as required,  Actel 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 Actel'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,  Actel 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  Actel's
business, financial condition, or results of operations.

     Dependence on International Operations

     Actel  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 Actel's business, financial condition, or results of operations.

     In order to expand  international  sales and  service,  Actel  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   managerial  attention  and
financial  resources and could adversely affect Actel's financial  condition and
operating  results.  No assurance  can be given that Actel 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 Actel is dependent in large part on the continued service of
its key  managerial,  engineering,  marketing,  sales,  and  support  employees.
Competition for qualified  personnel is intense in the  semiconductor  industry,
and the loss of Actel's  key  employees,  or the  inability  of Actel to attract
other qualified personnel, could have a materially adverse effect on Actel.

     Dependence on Military and Aerospace Customers

     Actel estimates that sales of its products to customers in the military and
aerospace  industries,  which carry higher  overall  gross margins than sales of
products to other  customers,  accounted  for 26% of net revenues  for 2001.  In
general,  Actel  believes  that  the  military  and  aerospace  industries  have
accounted for a significantly  greater  percentage of Actel's net revenues since
the  introduction of RadHard FPGAs in 1996 and of RadTolerant  FPGAs in 1998. 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 avoid  government-unique  requirements when making purchases and rely
more on the commercial marketplace. Under the "Perry initiative," the Department
of  Defense  must  strive  to  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  best-available  commercial
products.  If this trend  toward the use of  commercial  off-the-shelf  products
continues,  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 Actel'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 significant delays in the shipment of some
of Actel's FPGAs. Actel does not believe that this will have a long-term adverse
effect on its business,  although  significant delays might cause some customers
to seek an alternative solution.

     Orders  from the  military  and  aerospace  customers  tend to be large and
irregular,  which creates operational challenges and contributes to fluctuations
in Actel'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,  which  increases the  complexity  of  scheduling  and
forecasting  as well  as 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 can have a materially
adverse  effect  on  Actel's  business,   financial  condition,  or  results  of
operations.

     Dividend Policy

     Actel has never  declared or paid any cash  dividends on its capital stock.
Actel  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

     Actel'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
make it difficult to accurately  project quarterly  revenues and other operating
results and can have a materially adverse effect on Actel's business,  financial
condition, or results of operations.

          Booking and Shipment Uncertainties

          Actel 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 project quarterly revenues.
     Actel'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
     Actel  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,  Actel shipped a disproportionately  large percentage of
     its quarterly  revenues in the final weeks of the quarter.  While quarterly
     shipments  have been more linear in recent  years,  any failure by Actel to
     effect scheduled  shipments by the end of the quarter can have a materially
     adverse  effect on revenues for such  quarter.  It is often  impossible  to
     determine  before  the  end of  processing  and  testing  whether  products
     intended for military or aerospace applications can be shipped and, if not,
     a  significant  period  of time is  often  required  to  process  and  test
     replacements.  Since  Actel  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 Actel's  distributors.  When there is a shortfall in revenues,
     operating  results  are likely to be  adversely  affected  because  most of
     Actel'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.  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,  Actel's independent wafer
     suppliers from time to time  experience  lower than  anticipated  yields of
     usable die. To the extent yields of usable die  decrease,  the average cost
     to Actel 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  Actel's  products  and  create  inventory
     shortages and dissatisfied  customers. No assurance can be given that Actel
     will not experience wafer supply problems in the future.

          In addition,  Actel 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,
     Actel and GateField struggled for years to achieve acceptable yields on the
     flash process for ProASIC devices at Infineon. Although Actel 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 any new process or foundry.

          Price Erosion

          The  semiconductor  industry is characterized by intense  competition.
     Historically in the semiconductor  industry, the average selling price of a
     product  declined  significantly  over  the  life  of the  product.  To win
     designs,  Actel  generally must price new products on the  assumption  that
     manufacturing cost reductions will be achieved,  which often does not occur
     as soon as  expected.  While Actel  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 new products more quickly than such cost  reductions  can
     be achieved.  In addition,  Actel  sometimes  approves price  reductions on
     specific sales to meet competition.  Declines in the average selling prices
     of Actel's products 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 Actel's products reduce
     gross margins  unless offset by reductions in  manufacturing  costs or by a
     shift in the mix of products sold toward higher-margin products.

     Force Majeure

     The   performance   of  Actel  and  each  of  its   foundries,   suppliers,
subcontractors,  distributors,  agents,  and  customers  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,
earthquakes,  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.  Actel's  foundry  partners in Japan and
Taiwan and its  operations  in  California  are  located in areas that have been
seismically active in the recent past. In addition, the countries outside of the
United  States  in  which  Actel's  foundry  partners  and  assembly  and  other
subcontractors are located have unpredictable and potentially volatile economic,
social, or political conditions,  including the risks of conflict between Taiwan
and the People's  Republic of China or between North Korea and South Korea.  The
occurrence of any of these  circumstances  could disrupt Actel's  operations and
may have a materially adverse effect on Actel's business,  financial  condition,
or results of operations.

     Actel's corporate  offices are located in California,  which was subject to
power outages and shortages  during 2001.  More extensive power shortages in the
state  could  disrupt   Actel's   operations  and  interrupt  its  research  and
development activities.

     Forward-Looking Statements

     All  {bracketed  statements}  contained in this Annual Report on Form 10-K,
including  all  {bracketed  statements}  contained in any document  incorporated
herein by  reference,  are made  pursuant to the safe harbor  provisions  of the
Private Securities Litigation Reform Act of 1995. All forward-looking statements
are made by Actel's management in the exercise of its best judgment based on the
information currently known by management, but they are not guarantees of future
performance.  Thus,  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. Actel 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

     Actel  must  continue  to make  significant  investments  in  research  and
development as well as capital  equipment and expansion of  facilities.  Actel'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.  Wafer manufacturers are
increasingly  demanding  financial  support from customers in the form of equity
investments  and  advance  purchase  price  deposits,  which in some  cases  are
substantial.  Should Actel require  additional  capacity,  it may be required to
incur significant expenditures to secure such capacity.

     To the extent that existing  resources and future earnings are insufficient
to fund Actel'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 Actel'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 Actel and its
shareholders.  If  adequate  funds are not  available,  Actel may be required to
delay, limit, or eliminate some or all of its proposed operations.

     Gross Margin

     Actel'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 Actel
can charge for a product is constrained  principally by its  competitors.  While
competition has always been intense, Actel believes price competition has become
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 or between a  programmable  and a masked  silicon  device.
These competitive pressures may cause Actel to reduce the prices of its products
more  quickly than it can achieve cost  reductions,  which would reduce  Actel's
gross margin and may have a materially adverse effect on its operating results.

     One of the most important  variables affecting the cost of Actel's products
is manufacturing  yields.  With its customized  antifuse and flash manufacturing
process  requirements,  Actel almost  invariably  experiences  difficulties  and
delays in achieving satisfactory,  sustainable yields on new processes or at new
foundries.  Until  satisfactory  yields  are  achieved,  gross  margins  on news
products will  generally be lower than on mature  products.  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 Actel's operating results.

     Management of Growth

     Actel 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,  Actel will need to continue to hire, train, motivate, and manage a
growing number of employees. The future success of Actel will also depend on its
ability to attract and retain  qualified  technical,  marketing,  and management
personnel. In particular, the availability of qualified silicon design, software
design,  process, and test engineers is limited, and competition among companies
for skilled and experienced  engineering  personnel is often strong.  Especially
during strong business cycles, Actel expects to experience difficulty in filling
its needs for qualified engineers and other personnel. No assurance can be given
that Actel 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

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

     Actel introduced the ProASIC family of devices in 1999 and the ProASIC Plus
family in 2002. While ProASIC  products are based on a flash process  technology
that is less customized than an antifuse  process,  it is also a technology less
familiar to Actel.  In addition,  it is generally  more difficult to bring up an
advanced  flash  process  than it is to bring up an advanced  antifuse  process.
Actel has always  experienced  difficulty  achieving  satisfactory,  sustainable
yields on new process  technologies  at new foundries,  and the flash process at
Infineon was no  different.  Although  Actel  believes  that it 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 new  flash  products.  In any  event,  until
satisfactory,  sustainable  yields are  achieved on ProASIC Plus  devices,  they
generally  will be sold at lower  gross  margins  than  Actel's  mature  product
families, which could have a materially adverse effect on operating results.

     The  fabrication  of antifuse  and flash  wafers is a complex  process that
requires a high  degree of  technical  skill,  state-of-the-art  equipment,  and
effective  cooperation  between  Actel and the  foundry  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,  Actel
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 Actel's business, financial condition, or results of operations.

     One-Time Programmability (OTP)

     The  nonvolatility  of Actel's  antifuse FPGAs is necessary or desirable in
some applications,  but all other things being equal, logic designers  generally
would prefer to prototype with a  reprogrammable  logic device.  This is because
the designer can reuse the device if an error is made. The visibility associated
with discarding an OTP device often causes  designers to select a reprogrammable
device even when the alternative OTP 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  Actel  decided to
offer reprogrammable  ProASIC devices. No assurance can be given that Actel will
be able to overcome this competitive disadvantage.

     Patent Infringement

     As is typical in the semiconductor industry,  Actel has been and expects to
be notified from time to time of claims that it may be infringing  patents owned
by others.  During  2001,  Actel held  discussions  regarding  potential  patent
infringement  issues with several  third  parties,  some of which  significantly
greater financial and intellectual  property  resources than Actel. As it has in
the past,  Actel  may  obtain  licenses  under  patents  that it is  alleged  to
infringe. 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 Actel.  Failure to obtain a license for
technology  allegedly used by Actel could result in litigation.  All litigation,
whether or not determined in favor of Actel,  can result in significant  expense
to Actel  and can  divert  the  efforts  of  Actel's  technical  and  management
personnel from productive tasks. While Actel 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,
Actel's evaluation of the impact of these pending disputes could change based on
new information learned by Actel.

     In February 2001, Actel introduced SRAM-based VariCore EPGA IP cores. Since
Actel did not receive any sublicensing  rights under the Xilinx  Agreement,  the
licensing of VariCore EPGAs by Actel would not be protected by the cross-license
contained in the Xilinx Agreement.

     Actel has obtained patents  covering  aspects of its FPGA  architecture and
logic modules and certain  techniques for  manufacturing  its antifuse and flash
FPGAs,  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,  Actel 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,  Actel 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. Actel
may also be required to discontinue the use of infringing  processes;  cease the
manufacture,   use,  and  sale  or  licensing  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
Actel,  Actel's  failure  to  develop  or  license a  substitute  technology  on
commercially  reasonable  terms could also have a materially  adverse  effect on
Actel's business, financial condition, and results of operations.

     Potential Acquisitions

     In  pursuing   its   business   strategy,   Actel  may  acquire   products,
technologies,  or businesses  from third parties.  Identifying  and  negotiating
these  acquisitions  may divert  substantial  management  time away from Actel's
operations.  An acquisition  could absorb  substantial  cash resources,  require
Actel 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 Actel's Common Stock.  An acquisition  could involve  significant  write-offs
(possibility  resulting  in a loss for the fiscal  year(s)  in which  taken) and
would require the amortization of any identifiable  intangibles over a number of
years,  which would adversely  affect  earnings in those years.  Any acquisition
would require attention from Actel's management to integrate the acquired entity
into Actel's  operations,  may require  Actel 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 Actel.  The occurrence of any of these  circumstances  could disrupt
Actel's operations and may have a materially adverse effect on Actel's business,
financial condition, or results of operations.

     Protection of Intellectual Property

     Actel 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.  Actel 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 Actel will be adequate to protect its  proprietary
rights. In addition,  the laws of certain  territories in which Actel'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 Actel 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 2001, sales made through  distributors  accounted for 68% of Actel's net
revenues. Two of Actel's distributors, Pioneer and Unique, accounted for 20% and
19%,  respectively,  of Actel's net revenues in 2001.  No assurance can be given
that future sales by these or other distributors will continue at current levels
or that Actel will be able to retain its current  distributors on terms that are
acceptable to Actel. During 2001, Actel consolidated its distribution channel by
terminating Arrow, which accounted for 13% of Actel's net revenues in 2001.

     Actel'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  Actel's
products.  In addition,  Actel's  agreements with its distributors are generally
terminable at the  distributor's  option. A reduction in sales efforts by one or
more of Actel's  current  distributors  or a  termination  of any  distributor's
relationship  with  Actel  could  have a  materially  adverse  effect on Actel's
business, financial condition, or results of operations.

     Actel defers  recognition of revenue on shipments to distributors until the
product is resold by the distributor to the end user. Actel's  distributors have
occasionally  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 Actel'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 Actel 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 Actel'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
Actel's business, financial condition, or results of operations.

     Reliance on International Sales

     Sales to  customers  outside  the United  States  accounted  for 38% of net
revenues  in 2001.  The  largest  portion  of export  sales is made to  European
customers,  which accounted for 28% of net revenues in 2001.  Actel 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 exchange risks, currency restrictions,
tariffs, trade barriers,  taxes, export license requirements,  and the impact of
recessionary environments in economies outside the United States. All of Actel'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 Actel'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.  Beginning in the
fourth  quarter  of  2000,  Actel  and the  semiconductor  industry  in  general
experienced reduced bookings and backlog cancellations due to excess inventories
at communications,  computer, and consumer equipment manufacturers and a general
softening in the overall economy. The downturn,  which has been severe and could
be prolonged,  resulted in lower revenues,  which in turn had a disproportionate
effect on profitability,  including Actel's.  Actel 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.

     Strategic Investments

     Actel  occasionally makes equity investments in public or private companies
for the promotion of strategic objectives. The value of these equity investments
may experience significant volatility, and Actel monitors its equity investments
for impairment on a periodic  basis.  In the event that the carrying value of an
equity  investment were to exceed its fair value,  and the decline in value were
determined to be other than  temporary,  the carrying  value would be reduced to
its current fair value,  which would have an adverse effect on Actel's operating
results that might be material.

     Technological Change and Dependence on New Product Development

     The  market for  Actel'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.  Actel'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,
Actel 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 Actel's
business, financial condition, or results of operation.

     No assurance can be given that Actel's  design and  introduction  schedules
for new products or the  supporting  software or hardware  will be met, that any
new products will gain market acceptance, or that Actel will respond effectively
to new technological changes or new product announcements by others. Any failure
of Actel to successfully define, develop, market,  manufacture,  assemble, test,
or program  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 Actel'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.

     Actel must also continue to make  significant  investments  in research and
development  to develop new  products  and achieve  market  acceptance  for such
products.  Actel  conducts  most of its research and  development  activities at
facilities operated by its foundries. Although Actel to date has not 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.

     Use of Estimates

     The  preparation of the financial  statements in conformity with accounting
principals  generally accepted in the United States requires  management to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues,  and  expenses and the related  disclosure  of  contingent  assets and
liabilities.  Actel bases its estimates on historical  experience and on various
other  assumptions that are believed to be reasonable  under the  circumstances,
the  results  of which form the basis for making  judgments  about the  carrying
values of assets  and  liabilities  that are not  readily  apparent  from  other
sources.  Actual  results  invariably  differ  from  these  estimates,  and such
differences could be material.  In addition, if these estimates or their related
assumptions  change in the future, it could have a materially  adverse effect on
Actel's operating results.

     Volatility of Stock

     The price of Actel'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 Actel's financial results or the financial results of
other  semiconductor  companies,  or  general  conditions  in the  semiconductor
industry,  financial  markets,  or economy.  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
technology   companies,   at  times  for  reasons  unrelated  to  the  operating
performance of the specific companies.

Executive Officers of the Registrant

     The following table identifies each executive  officer of Actel as of March
31, 2002:

        Name             Age                  Position
----------------------  -----   ------------------------------------------------

John C. East..........   57     President and Chief Executive Officer

Esmat Z. Hamdy........   52     Senior Vice President of Technology & Operations

Jon A. Anderson.......   43     Vice President of Finance and Chief Financial
                                Officer

Anthony Farinaro......   39     Vice President & General Manager of Design
                                Services

Paul V. Indaco........   51     Vice President of Worldwide Sales

Dennis G. Kish........   38     Vice President of Marketing

Barbara L. McArthur...   51     Vice President of Human Resources

Fares N. Mubarak......   40     Vice President of Engineering

David L. Van De Hey...   46     Vice President & General Counsel and Secretary

     Mr. East has served as President and Chief Executive Officer of Actel since
December 1988.  From April 1979 until joining Actel,  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.

     Dr.  Hamdy is a founder of Actel,  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 Actel'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.  Anderson  joined Actel in March 1998 as  Controller  and has been Vice
President of Finance and Chief  Financial  Officer since August 2001.  From 1987
until  joining  Actel,   he  held  various   financial   positions  at  National
Semiconductor,  a  semiconductor  company,  with the  most  recent  position  of
Director of Finance, Local Area Networks Division.  From 1982 to 1986, he was an
auditor with Touche Ross & Co., a public accounting firm.

     Mr.  Farinaro  joined  Actel in  August  1998 as Vice  President  & General
Manager of Design  Services.  From February 1990 until  joining  Actel,  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 its spin-off,  Plessey Electronic Systems
Corporation.

     Mr. Indaco joined Actel in March 1999 as Vice President of Worldwide Sales.
From January 1996 until joining Actel,  he served as Vice President of Sales for
Chip Express,  a  semiconductor  manufacturer.  From January  September  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  Actel in December  1999 as Vice  President  of  Strategic
Product  Marketing and became Vice President of Marketing in July 2000. Prior to
joining Actel, 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.

     Ms.  McArthur  joined  Actel  in July of 2000 as Vice  President  of  Human
Resources.  From 1997  until  joining  Actel,  she was Vice  President  of Human
Resources  at Talus  Solutions.  Before  that,  Ms.  McArthur  held senior human
resource positions at Applied Materials from 1993 to 1997, 3Com Corporation from
1987 to 1993, and at Saga Corporation from 1978 to 1986.

     Mr. Mubarak joined Actel 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 Actel,  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  Actel 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 Actel'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.

     Subject  to  their  rights  under  any  contract  of  employment  or  other
agreement, 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 Actel has a
renewal option for an additional five-year term. Actel also leases sales offices
in the metropolitan areas of Atlanta,  Boston,  Chicago,  Dallas,  Denver,  Hong
Kong, Houston,  London, Los Angeles,  Milan,  Minneapolis/St.  Paul, Munich, New
York, Orlando, Paris, Ottawa (Ontario),  Philadelphia,  Raleigh, Seattle, Tokyo,
and Washington  D.C., as well as the facilities of the Design  Services Group in
Mt.  Arlington,  New Jersey,  and the facility formerly occupied by GateField in
Fremont,  California.  {Actel  believes its facilities  will be adequate for its
needs in 2002.}

ITEM 3. LEGAL PROCEEDINGS

     There are no pending legal  proceedings of a material nature to which Actel
is a party or of which any of its  property  is the  subject.  There are no such
legal  proceedings  known  by  Actel  to be  contemplated  by  any  governmental
authority.

     On March 29, 2001, Unisys  Corporation  (Unisys) brought suit in the United
States District Court for the Northern District of California, San Jose Division
(Court), against Actel seeking monetary damages and injunctive relief. Actel and
Unisys  orally  agreed to settle  the case on April 25,  2001,  and  executed  a
definitive  written  settlement  agreement on June 29, 2001. The Court dismissed
the case with  prejudice on July 13, 2001.  The  settlement  was  immaterial  to
Actel's business, financial condition, and operating results.

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

     Actel's  Common Stock has been traded on the Nasdaq  National  Market under
the symbol "ACTL" since its initial public  offering on August 2, 1993. On March
25, 2001, there were 212 shareholders of record.  Since many  shareholders  have
their  shares  held of record in the name of their  brokerage  firm,  the actual
number of  shareholders  is estimated by Actel to be about 8,300.  The following
table set forth for the  periods  indicated  the high and low sales  prices  per
share of Actel Common Stock as reported on the Nasdaq National Market.

<TABLE>
<CAPTION>
                                                                          2001                        2000
                                                                   High          Low           High          Low

<S>                                                              <C>           <C>           <C>           <C>
First Quarter.............................................     $  31.81     $   17.38     $   36.50     $   21.63

Second Quarter............................................        26.90         16.69         46.88         22.00

Third Quarter.............................................        25.00         15.27         55.38         29.63

Fourth Quarter............................................        22.14         15.54         39.00         20.00
</TABLE>

On April 3, 2002,  the  reported  last sale of Actel  Common Stock on the Nasdaq
National Market was $20.30.

Recent Sales of Unregistered Securities

     On December 21, 1999, Actel acquired  AutoGate Logic, Inc. (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 Actel or were represented by a qualified  "purchaser  representative"
under Regulation D.

     On June 2, 2000,  Actel  acquired  Prosys by merger.  The purchase price of
$24.5 million  included the issuance of 220,518 shares of Actel Common Stock and
the  assumption  of options to purchase  294,000  shares of Actel Common  Stock.
During 2001,  an  additional  54,290  shares of Actel Common Stock was issued to
Prosys security holders upon the achievement of certain technological milestones
specified in the June 2000 purchase  agreement.  The shares issued and delivered
to Prosys shareholders were exempt from registration pursuant to Section 4(2) of
the Securities Act because such shares were sold to accredited investors who had
access to financial and other relevant data concerning Actel.

ITEM 6. SELECTED FINANCIAL DATA

     The  information   appearing  under  the  caption  "Selected   Consolidated
Financial  Data"  in the 2001  Annual  Report  is  incorporated  herein  by this
reference.

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

     The information  appearing under the caption  "Management's  Discussion and
Analysis of Financial  Conditions  and Results of Operations" of the 2001 Annual
Report is incorporated herein by this reference.

ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     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 2001 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 2001 Annual Report is incorporated herein by this reference.

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

     None.


<PAGE>


                                    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 24, 2002,  as filed on or about April 8, 2002,  with the  Securities
and Exchange Commission (2002 Proxy Statement) in Part III of this Annual Report
on Form 10-K, the 2002 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," "Audit Committee Report," and "Company
Stock Performance" under the main caption "OTHER  INFORMATION" in the 2002 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 2002 Proxy  Statement and the information
under the main caption "COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE
ACT OF  1934"  in the 2002  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 2002 Proxy  Statement
and the information under the caption  "Executive  Compensation"  under the main
caption "OTHER  INFORMATION" in the 2002 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 2002 Proxy Statement and
the information under the caption  "Security  Ownership of Management" under the
main caption "OTHER  INFORMATION" in the 2002 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 2002 Proxy Statement is incorporated  herein
by this reference.


<PAGE>


                                     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 2001  Annual  Report are
     incorporated by reference in Item 8 of this Annual Report on Form 10-K:

              Consolidated balance sheets at December 31, 2001 and 2000

              Consolidated statements of operations for each of the three years
              in the period ended December 31, 2001

              Consolidated   statements  of  shareholders'   equity  and  other
              comprehensive  income/(loss)  for each of the three  years in the
              period ended December 31, 2001

              Consolidated statements of cash flows for each of the three years
              in the period ended December 31, 2001

              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. None.

     (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).

<PAGE>


     Exhibit Number                         Description
   ---------------- ------------------------------------------------------------
       10.2 (2)     1986  Incentive  Stock Option Plan,  as amended and restated
                    (filed as Exhibit 10.2 to the Registrant's  Annual Report on
                    Form 10-K  (File No.  0-21970)  for the  fiscal  year  ended
                    January 2, 2000).

       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 (2)     Employee Retention Plan, as amended and restated.

       10.7 (2)     Deferred  Compensation  Plan, as amended and restated (filed
                    as Exhibit 10.7 to the  Registrant's  Annual  Report on Form
                    10-K (File No.  0-21970) for the fiscal year ended  December
                    31, 2000).

       10.8         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).

       10.9 (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).

       10.10        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).

       10.11 (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).

<PAGE>


     Exhibit Number                         Description
     -------------- ------------------------------------------------------------
       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 (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).

       10.17        Amended  And  Restated  Agreement  and Plan of Merger by and
                    among Actel Corporation,  GateField Acquisition Corporation,
                    and GateField Corporation dated as of May 31, 2000 (filed as
                    Annex  I  to  GateField   Corporation's   Definitive   Proxy
                    Statement  on  Schedule  14A (File No.  0-13244)  on June 9,
                    2000, and incorporated herein by this reference).

       10.18        Agreement  and Plan of  Reorganization  by and between Actel
                    Corporation and Prosys Technology,  Inc., Jung-Cheun "Frank"
                    Lien,  Sheng  "Jason" Feng,  Chung Sun, Eddy Huang,  and Nan
                    Horng Yeh dated as of June 2, 2000 (filed as Exhibit 10.1 to
                    the  Registrant's  Current  Report  on Form  8-K  (File  No.
                    0-21970) on June 16, 2000, and  incorporated  herein by this
                    reference).

       13           Portions of Registrant's  Annual Report to Shareholders  for
                    the fiscal  year ended  January  6,  2002,  incorporated  by
                    reference into this Report on Form 10-K.

       21           Subsidiaries of Registrant (see page 53)

       23           Consent of Ernst & Young LLP, Independent Auditors (see page
                    51)

       24           Power of Attorney (see page 50)

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

         (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                   52

     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




                     April 4, 2002                By:   /s/ John C. East
                                                     --------------------
                                                         John C. East
                                           President and Chief Executive Officer

<PAGE>


                                   EXHIBIT 24


                                POWER OF ATTORNEY

     KNOW ALL  PERSONS  BY THESE  PRESENTS,  that each  person  whose  signature
appears below hereby constitutes and appoints John C. East, Jon A. Anderson, and
David  L.  Van  De  Hey,   and  each  of  them  acting   individually,   as  his
attorney-in-fact,  each with full power of substitution,  for him in any and all
capacities,  to sign any and all  amendments  to this Annual Report on Form 10-K
and to file the same,  with exhibits  thereto and other  documents in connection
therewith,  with the Securities and Exchange  Commission,  hereby  ratifying and
confirming  all  that  each  of said  attorneys-in-fact,  or his  substitute  or
substitutes, may do or cause to be done by virtue thereof.

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

        Signature                           Title                      Date

    /s/ John C. East       President and Chief Executive Officer
  --------------------     (Principal Executive Officer)and
     (John C. East)        Director                                April 4, 2002

   /s/ Jon A. Anderson     Vice President of Finance and Chief
  --------------------     Financial Officer (Principal Financial
    (Jon A. Anderson)      and Accounting Officer)                 April 4, 2002

  /s/ James R. Fiebiger
  ---------------------
   (James R. Fiebiger)      Director                               April 4, 2002

   /s/ Jos C. Henkens
   ------------------
    (Jos C. Henkens)        Director                               April 4, 2002

 /s/ Jacob S. Jacobsson
 ----------------------
  (Jacob S. Jacobsson)      Director                               April 4, 2002

/s/ Frederic N. Schwettmann
---------------------------
 (Frederic N. Schwettmann)  Director                               April 4, 2002

  /s/ Robert G. Spencer
  ---------------------
   (Robert G. Spencer)      Director                               April 4, 2002


<PAGE>


                                   EXHIBIT 23



               CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

     We consent to the  incorporation  by reference in this Annual  Report (Form
10-K) of Actel Corporation of our report dated January 21, 2002, included in the
2001 Annual Report to Shareholders of Actel Corporation.

     Our  audits  also  included  the  financial  statement  schedule  of  Actel
Corporation listed in Item 14(a). This schedule is the responsibility of Actel's
management.  Our responsibility is to express an opinion based on our audits. In
our opinion, the financial statement schedule referred to above, when considered
in relation to the basic financial statements as a whole, presents fairly in all
material respects the information set forth therein.

     We also  consent to the  incorporation  by  reference  in the  Registration
Statements (Form S-8 Nos. 33-74492, 333-3398, 333-71627,  333-36222,  333-43274,
333-54652,  and 333-81926) of our report dated January 21, 2002, with respect to
the  consolidated  financial  statements of Actel  Corporation  incorporated  by
reference in its Annual Report (Form 10-K) for the year ended December 31, 2001,
and our report included in the preceding paragraph with respect to the financial
statement  schedule  included  in  this  Annual  Report  (Form  10-K)  of  Actel
Corporation.


                                                          /S/ ERNST & YOUNG LLP

San Jose, California
April 5, 2002

<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, 1999..............................     $  1,554       $  --         $  475       $ 1,079
Year ended December 31, 2000..............................        1,079          91            100         1,070
Year ended December 31, 2001..............................     $  1,070       $ 572         $  314  $      1,328
</TABLE>


<PAGE>


                                   EXHIBIT 21



                                ACTEL CORPORATION

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

                                  Subsidiaries


                     Actel Europe, Ltd., a U.K. corporation

                     Actel Europe SARL, a French corporation

                        Actel GmbH, a German corporation

                Actel Pan-Asia Corporation, a Nevada corporation

             Actel Pan-Asia, Hong Kong Ltd., a Hong Kong corporation

                     Actel Japan, KK, a Japanese corporation