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 December 29, 1996

                                       OR

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

Commission file number 0-21970

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

               California                                      77-0097724
    (State or other jurisdiction of                         (I.R.S. Employer
     incorporation or organization)                       Identification No.)

         955 East Arques Avenue
         Sunnyvale, California                                 94086-4533
(Address of principal executive offices)                       (Zip Code)

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

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

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

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

     Indicate  by check mark  whether the  Registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant  was required to file such  reports) and (2) has been subject to such
filing requirements for the past 90 days.     Yes X           No

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference in Part III of this Annual Report on Form 10-K or any
amendment to this Annual Report on Form 10-K.

     The aggregate  market value of the voting stock held by  non-affiliates  of
the  Registrant,  based upon the  closing  price for shares of the  Registrant's
Common Stock on March 27, 1997, as reported by the National Market System of the
National  Association of Securities  Dealers  Automated  Quotation  System,  was
approximately  $281,810,000.  In calculating such aggregate market value, shares
of Common Stock owned of record or beneficially by all officers,  directors, and
persons  known to the  Registrant  to own more than five percent of any class of
the  Registrant's  voting  securities were excluded  because such persons may be
deemed to be affiliates.  The  Registrant  disclaims the existence of control or
any admission thereof for any other purpose.

     Number  of  shares  of  Common  Stock  outstanding  as of March  30,  1997:
20,814,611.

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

                       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 December 29, 1996 (Parts II
and IV),  and (ii)  portions  of  Registrant's  proxy  statement  for its annual
meeting of shareholders to be held on May 2, 1997 (Part III).

                                     PART I

ITEM 1.  BUSINESS

Overview

     Actel  designs,  develops,  and  markets  field  programmable  gate  arrays
("FPGAs") and associated  development system software and programming  hardware.
FPGAs  are  used  by  designers   of   communications,   computer,   industrial,
military/aerospace, and other electronic systems to differentiate their products
and get them to market  faster.  The  Company is the  leading  supplier of FPGAs
based on  antifuse  switching  elements,  which  are  smaller  than  alternative
switching  elements (such as static random access memories ("SRAMs") or erasable
programmable read only memories ("EPROMs")), permitting reduced circuit size and
cost and increased design efficiencies. Actel shipped its first products in 1988
and has sold more than 7,500 development  systems to customers,  including Allen
Bradley/Rockwell,   AST  Computer,   Alcatel,  Bay  Networks,   Cabletron,   DSC
Communications,  Hughes  Aircraft,  Lockheed-Martin,  Lucent  Technologies,  and
Siemens.  The Company has foundry  relationships  with  Chartered  Semiconductor
Manufacturing Pte Ltd ("Chartered Semiconductor") in Singapore,  Lockheed-Martin
Federal Systems Company ("Lockheed-Martin FSC") in the United States, Matsushita
Electronics   Company  and   Matsushita   Electrical   Industry   Company   Ltd.
(collectively,  "Matsushita") in Japan, Texas Instruments Incorporated ("TI") in
the  United  States,  and  Winbond  Electronics  Corp.  ("Winbond")  in  Taiwan,
permitting  Actel to focus its  resources on its core  strengths  of  designing,
developing, and marketing FPGAs.

     The Company's  FPGAs are based on two proprietary  technologies:  the Actel
antifuse  and a circuit  architecture  that  takes  advantage  of the  Company's
antifuse.  The principal  advantages of the antifuse over alternative  switching
elements are smaller size and lower electrical  resistance.  The smaller size of
the antifuse  generally  permits  Actel to make  programmable  circuits that are
smaller,  and hence less costly,  than  circuits of comparable  performance  and
capacity  made  under   comparable   design  rules  using   alternative   switch
technologies.   Similarly,   for  circuits  of  comparable   size  and  capacity
manufactured under comparable design rules, the antifuse  facilitates the design
of circuits with a greater number of switches,  which,  in combination  with the
lower electrical resistance of the antifuse, tends to enhance flexibility and/or
performance.   In  addition,   the  Company  believes  that  its  antifuse-based
architecture  is better suited for the high-level  tools  generally  employed to
design higher capacity devices than existing  architectures using other types of
switching  elements.  Actel  believes  that the  advantages  of its antifuse and
architecture  become more  pronounced  in higher  capacity  devices and that the
demand  for  higher  capacity   devices  will  increase  faster  than  that  for
programmable  devices  as a whole.  Accordingly,  the  Company is  focusing  its
attention  on the  transition  to higher  capacity  devices  and the  associated
high-level  design  methodologies.  Actel's strategy is to provide the best FPGA
solutions by giving logic designers the capability to move up to higher capacity
designs with confidence and be successful.

     The  Company's  product line  currently  consists of six families of FPGAs,
Designer  Series  Development  System and  CoreHDL  software,  Activator  Device
Programmers,  and a family of mask-programmed gate arrays ("MPGAs"). To meet the
diverse customer requirements in the broad FPGA market, each member of a product
family  generally  is  offered  in a variety  of speed  grades,  package  types,
reliability screenings, and ambient temperature tolerances.  Designers typically
use popular  third-party  software  for circuit  design and then  translate  the
design  into a  programmed  FPGA using  Actel's  proprietary,  highly  automated
software  (Designer Series  Development  System) and hardware  (Activator Device
Programmers).  Customers  with  high-volume  Actel  FPGA  designs  may choose to
convert to lower-cost MPGAs.

     In  1996,  Actel  introduced  its  CorePCI  models,  which  are  Peripheral
Component  Interface (PCI) compliant  blocks or "cores" that can be used to save
development  time by being "dropped  into" designs for ACT 3 PCI devices,  which
were also introduced in 1996. In addition, the Company announced agreements with
two core providers to offer  Actel-optimized  cores, the first six of which were
immediately  available.  In 1996, Actel also announced an alliance with Synopsys
Inc.  ("Synopsys")  to produce a new  category of logic  devices  called  system
programmable  gate  arrays  ("SPGAs"),  which will permit  designers  to combine
complex  system  elements  with  traditional  programmable  logic  to  implement
programmable  "systems-on-a-chip."  In addition,  the Company announced that its
first SPGA  offering  will be an "ES" product  family that permits  designers to
target system functional cores into Actel's new ES reprogrammable  architecture.
The Company  believes  the ES product  family will  eventually  include  devices
containing embedded mask-programmed  functional blocks for improved performance,
efficiency, and cost.

     Actel  markets its  products  through a worldwide,  multi-tiered  sales and
distribution  network.  The North American  network includes 11 sales management
offices, 21 manufacturers'  representative  firms, and three  distributors.  The
European  network  includes sales  management  offices in England,  France,  and
Germany, as well as 23 distributors and two manufacturers'  representatives.  In
Japan,  the Company  markets  its  products  through  three  distributors.  Nine
additional distributors serve the remaining international markets in which Actel
offers its products.

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

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-density  standard
transistor-transistor  logic circuits ("TTLs") and  custom-designed  application
specific integrated  circuits  ("ASICs").  TTLs are standard logic circuits that
can be purchased "off the shelf" and  interconnected on a printed circuit board,
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  higher  levels  of  circuit   integration:   improved  system
performance, reduced system size, and lower system cost.

     ASICs include  conventional  gate arrays and  programmable  logic circuits.
Conventional  gate arrays 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 are  subject to the time and  expense  risks
associated   with  any  development   cycle  involving  a  foundry.   Typically,
conventional gate arrays are first delivered in production  volumes months after
the successful production of acceptable  prototypes.  In addition,  conventional
gate arrays 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.  Programmable  logic circuits,  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. Programmable logic circuits 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.  While  conventional  gate array designs are generally more complex
than  programmable  logic circuit designs,  the average capacity (or "gates" per
circuit) of both  conventional  gate arrays and programmable  logic circuits has
increased over time.  This indicates that long-term  growth in sales within each
market segment has increased faster for circuits with higher capacities.

     Programmable logic circuits include programmable logic devices ("PLDs") and
FPGAs. The market for complex PLDs ("CPLDs") and FPGAs has grown rapidly because
they  generally  offer  greater  capacity,  lower  total  cost,  and lower power
consumption  than TTLs and  simple  PLDs,  and  faster  time to market and lower
development  costs than  conventional  gate arrays.  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 of
comparable  capacity.  This is particularly  true with respect to communications
applications.

     Electronic system  manufacturers  customize  programmable logic circuits to
perform the desired  logical  functions by using CAE systems to change the state
of the device's programming elements (such as fuses,  antifuses, or transistors)
through the  application  of an  electrical  signal.  Most CPLDs  currently  are
programmed  with  EPROM  or  other  "floating  gate"  technologies.  Many  FPGAs
currently are programmed with SRAM technology.  The principal  limitation on the
wider use of CPLDs and FPGAs has been the difficulty in developing  devices with
price and performance  factors approaching those of conventional gate arrays. On
current architectures,  programming elements based on EPROM or SRAM technologies
occupy  relatively  large  amounts  of area  within a  circuit,  which  tends to
increase the overall size and, in turn,  the cost of each circuit.  In addition,
on current  architectures  the size of the EPROM and SRAM  programming  elements
tends to limit  the  number  of  interconnect  points in a  circuit,  which,  in
combination  with the relatively  high  electrical  resistance of EPROM and SRAM
programming elements, tends to limit performance.

     Before an 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 FPGA,  verifying  the design,  and laying out the
circuit.  Traditionally,  logic  functions  have been  defined  using  schematic
capture  tools,  which  essentially  permit the  designer to construct a circuit
diagram on the computer.  As FPGA designers have begun to design higher capacity
circuits, the time required to create schematic diagrams using schematic capture
tools  has  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 or
high-level  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 "laid
out" onto the generic logic modules of the FPGA. This is achieved by placing the
logic gates and routing their interconnections,  a process referred to as "place
and route." As designers have begun to design higher capacity circuits, the need
for  automatic  (instead  of  manual)  place and  route  capability  has  become
increasingly important.  This transition to the use of HDLs presents a challenge
to the  designer  to learn new design  methods and to use new design  tools.  In
addition,  not all  programmable  logic circuit  architectures  are equally well
suited for use with logic synthesis and place and route tools.

Technology

     Actel's FPGAs are based on two proprietary technologies: the Actel antifuse
and a circuit  architecture that takes advantage of the Company's antifuse.  The
antifuse  is a  two-terminal  switch that is open before  being  programmed.  In
contrast to a  conventional  fuse, the  application of sufficient  voltage to an
antifuse causes the switch to close permanently, allowing current to pass. Actel
is the leading supplier of FPGAs based on antifuses.

     Antifuse

         Actel  believes  that it was  first to  achieve  volume  production  of
antifuse-based  FPGAs.  The  patented  antifuse  structure  used by Actel in its
current  product  families  consists of a "sandwich" of silicon  oxide,  silicon
nitride,  and silicon oxide  ("ONO").  This  structure is similar to that of ONO
capacitors  employed in the volume  manufacture  of many dynamic  random  access
memory (DRAM)  circuits.  The Company believes that the benefits of the antifuse
include the following:

          Small Size

          Antifuses are smaller than  alternative  switching  elements  (such as
     SRAMs and EPROMs), so antifuse-based circuits tend to be smaller, and hence
     less  costly,   than  circuits  of  comparable   performance  and  capacity
     manufactured  under  comparable  design  rules with  alternative  switching
     elements. This is particularly true of higher capacity circuits. Similarly,
     for circuits of comparable size and capacity  manufactured under comparable
     design  rules,  the  antifuse  facilitates  the design of  circuits  with a
     greater  number of  switches,  which  tends to enhance  flexibility  and/or
     performance.

          Low Resistance

          Antifuses   typically   exhibit  lower   electrical   resistance  than
     alternative  switching elements.  Lower electrical resistance also tends to
     enhances circuit performance.

          High Reliability

          The  Company  has  performed  extensive  reliability  testing  on  its
     antifuses over many years with excellent  results.  The negligible  rate of
     individual  antifuse  failure  permits  antifuses to be used in substantial
     numbers  without  degrading  overall  circuit  reliability,  which  in turn
     permits the small size and low resistance  attributes of the antifuse to be
     fully exploited.

          Nonvolatility

          After an  antifuse-based  FPGA is  programmed,  it retains its circuit
     configuration permanently, even in the absence of electrical power. This is
     not true of SRAM-based FPGAs.  Although the  reprogrammability  of SRAM and
     EPROM  switches  is  desirable  in  some  applications,   nonvolatility  is
     necessary in certain military, aerospace, and communications applications.

     Circuit Architecture

     The Company  believes  that the  principal  advantages  of its  proprietary
circuit architecture include the following:

          Synthesisizability

          All of Actel's FPGAs are  "synthesis  friendly" by virtue of their use
     of many,  relatively  simple logic  building  blocks  (referred to as "fine
     granularity") made possible by the antifuse. The Company believes that this
     characteristic will become  increasingly  important to designers as circuit
     capacities increase.

          Few Programming Elements in Interconnect Path

          Actel's circuit  architecture  usually provides for the minimum number
     of antifuses in an  interconnect  path (two),  and never  permits more than
     four antifuses in any interconnect  path. In general,  the fewer the number
     of  switches  in an  interconnect  path,  the faster the  connection.  Many
     competing FPGAs include  interconnect paths with more than four programming
     elements,   which  increase   resistance   and  therefore   impede  circuit
     performance.

          Routability

          The plentiful number of antifuses and the patented  segmented  routing
     tracks of different  lengths in Actel's  products  provide numerous routing
     alternatives  and generally  facilitate  efficient  results with  automatic
     place  and  route  software,  even  when a high  percentage  of the  FPGA's
     potential  gate capacity is used.  Actel  believes that these features make
     its circuits easier to design with than most competing FPGAs.

          Flexibility and Utilization

          A  key  competitive   factor  in  the  programmable  logic  market  is
     utilization,  or the  extent  to  which  a  particular  design  can use the
     potential  number  of  gates  available  on the  circuit.  In the  case  of
     SRAM-based FPGAs and EPROM-based CPLDs,  utilization can vary substantially
     from design to design,  so that a "8,000-gate"  circuit may in practice use
     only a fraction of that number. By contrast,  Actel's circuit  architecture
     permits its products to have a more predictable capacity over a broad range
     of applications. This permits Actel's customers to select with a relatively
     high degree of confidence the product that is most economical for a desired
     application.   Actel's  circuit   architecture  also  provides  significant
     flexibility  in  utilizing  the  logic  capacity  of the  circuit  to boost
     performance.

     The Company  believes that the advantages of its antifuse and  architecture
described above generally increase as circuit capacity  increases,  and that the
greatest growth in the  programmable  logic market will occur in higher capacity
devices.  Accordingly,  Actel is focusing  its  attention on the  transition  to
higher capacity  devices and associated  high-level  design  methodologies.  The
Company's  strategy  is to  provide  the best FPGA  solutions  by  giving  logic
designers the capability to move up to higher  capacity  designs with confidence
and be successful.

Products

     Actel's product line currently consists of six families of FPGAs,  Designer
Series Development System and Core HDL software,  Activator Device  Programmers,
and a family of MPGAs.  In 1996, the first member of the RadHard FPGA family was
shipped for revenue and an important software update was released.

     FPGAs

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

          ACT 1

          The ACT 1 family consists of two products: the 1,200-gate A1010, which
     was first shipped for revenue in 1988; and the 2,000-gate A1020,  which was
     first shipped for revenue in 1989. The A1020 is capable of integrating  the
     equivalent  of 60 TTLs into a single  package.  This family of circuits was
     introduced  at 2.0 micron and currently is  manufactured  under 1.0 and 0.9
     micron  design rules.  The Company  offers  3.3-volt  versions of its ACT 1
     products.

          ACT 2

          The ACT 2 family consists of three products:  the 4,000-gate A1240 and
     the 8,000-gate A1280, which were first shipped for revenue in 1991; and the
     2,500-gate A1225, which was first shipped for revenue in 1992. The A1280 is
     capable of integrating  the  equivalent of 240 TTLs into a single  package.
     This family of  circuits  was  introduced  at 1.2 micron and  currently  is
     manufactured under 1.0 micron design rules.

          ACT 3

          The ACT 3 family consists of five products:  the 2,500-gate  A1425 and
     the 6,000-gate A1460, which were first shipped for revenue in 1993; and the
     1,500-gate A1415, the 4,000-gate A1440, and the 10,000-gate  A14100,  which
     were first  shipped for revenue in 1994.  The ACT 3 family was designed for
     applications  requiring  high speed and a high number of inputs and outputs
     ("I/Os").  The five members of the ACT 3 family can be ordered in more than
     70 speed,  packaging,  screening,  and  tolerance  variations.  The Company
     offers 3.3-volt and, beginning in 1996, PCI-compliant versions of its ACT 3
     products.  The ACT 3 family was  introduced  at 0.8 micron and currently is
     manufactured under 0.6 micron design rules.

          1200XL

          The  1200XL  family,  which was first  shipped  for  revenue  in 1995,
     consists  of three  members  ranging  from 2,500 to 8,000 gates that can be
     ordered  in  more  than  50  speed,  packaging,  screening,  and  tolerance
     variations.  Taking advantage of 0.6 micron design rules and redesigned I/O
     modules and clock  distribution  networks,  1200XL  products  offer  system
     performance significantly in excess of that offered by pin-compatible ACT 2
     devices,  which the 1200XL family will eventually  replace.  In 1996, Actel
     began offering the 8,000-gate  A1280XL in a 208-pin  plastic quad flat pack
     ("PQFP") and the 4,000-gate A1240XL in a 100-pin PQFP.  Designers using the
     new  packages  will be able to migrate to higher  density  devices  without
     changing packages.

          3200DX

          The 3200DX family currently consists of the 6,500-gate A3265DX,  which
     was first shipped for revenue in 1995; and the 14,000-gate A32140DX and the
     20,000-gate  A32200DX,  which were first  shipped for revenue in 1996.  The
     3200DX  family,  which may range up to 40,000 gates,  permits  designers to
     integrate the  register-intensive  datapath functions of FPGAs, the control
     and decode modules  commonly  implemented in CPLDs,  and the fast dual-port
     SRAM typically used for  high-speed  buffering.  Supported by the Company's
     extensive  selection  of  automated  design  tools,  the  3200DX  family is
     optimized  for  synthesis  design   methodologies   to  yield   predictable
     performance for system logic integration. To further assist designers, most
     members of the family offer JTAG boundary scan logic, which permits testing
     of the  design  during  manufacture.  In 1996,  Actel  began  offering  the
     A32140DX  in a  176-pin  thin quad flat pack  (TQ176),  which  will  enable
     designers to easily migrate from smaller TQ176  devices.  The 3200DX family
     is based on 0.6 micron design rules.

          RadHard

          The RadHard family currently consists of the 8,000-gate RH1280,  which
     was first  shipped  for revenue in 1996 and ramped  more  quickly  than any
     other product in the Company's history.  Actel and  Lockheed-Martin FSC are
     jointly  developing the RadHard family to meet the demands of  applications
     requiring   guaranteed  levels  of  performance  and  radiation   immunity,
     including the growing  commercial  satellite market.  The RadHard family is
     based on 0.8 micron design rules.

     Software

     A key element of the  Company's  strategy is to support  users'  electronic
design  automation  ("EDA")  tools of choice  by  establishing  and  maintaining
relationships  with  leading  synthesis  software  vendors  for the  purpose  of
permitting  such  tools  to be used as a  "front  end"  to  Actel's  proprietary
Designer  Series  Development  System.  Rather than  developing  this capability
alone, the Company has established the Actel Industry Alliance, which Actel uses
to  establish  relationships  with EDA  vendors  for the  purpose of  developing
interfaces  between such  vendors' EDA tools and Actel's  proprietary  software.
Under the Alliance  program,  Actel provides  members with,  among other things,
access to its  proprietary  software  specifications,  early  access to software
revisions,  verification services, and participation in joint marketing efforts.
The Alliance currently has more than 20 members, including all major EDA vendors
supporting HLD for both VHDL and Verilog. The Company provides comprehensive HDL
solutions for the EDA  environments of Cadence Design Systems,  Mentor Graphics,
Synopsys, and Viewlogic.

          Designer Series Development System

          In 1996, the Company began to offer, and distributed as a free upgrade
     to Actel  customers  who  subscribe to the Company's  support  program,  an
     important  software release,  Designer Series 3.1, which supports all Actel
     FPGA families.  Designer Series 3.1 includes  improvements  to ACTmap,  the
     VHDL synthesis and  optimization  tool shipped with all versions of Actel's
     Designer Series  Development  System,  and ACTgen,  an automatic VHDL macro
     builder. In Designer Series 3.1, ACTmap handles the industry-standard array
     of VHDL constructs.  ACTgen  enhancements  include multipliers for improved
     generation  of digital  signal  processing  ("DSP")  functions and enhanced
     synthesis of the SRAM and control and decode blocks  available in the newer
     members of the 3200DX family, including the A32200DX. By combining ACTmap's
     VHDL  behavioral   language  features  with  ACTgen's  reusable  functional
     modules,  Designer Series 3.1 permits  designers to more quickly and easily
     design and verify complex,  high-capacity  designs for applications such as
     networking and telecommunications.

          CoreHDL Intellectual Property

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

          Actel's  CoreHDL IP  portfolio  currently  consists of CorePCI,  three
     telecommunications  cores,  and three  industrial  cores, all of which were
     introduced in 1996, and a Universal Serial Bus (USB) Interface. The Company
     offers seven CorePCI models, which were developed internally,  in both VHDL
     and Verilog-HDL.  The remaining cores were developed by Inicore AG, a Swiss
     IP provider. The  telecommunications  cores include an ISDN G704-EI Framer,
     an Asynchronous  Transfer Mode (ATM) UTOPIA receiver interface,  and an ATM
     UTOPIA  transmitter  interface.  The cores  targeted to industrial  control
     applications are a Universal  Asynchronous  Receiver/Transmitter  (UART), a
     Controller  Area  Network  (CAN)  Interface,   and  a  Serial  Control  Bus
     Interface.

     Activator Device Programmers

     The Company's  Activator  Device  Programmers  are used to program  Actel's
FPGAs.  The  Activator  accepts data from  Designer  Series  Development  System
software,  converts the data to the proper protocol, and applies the appropriate
electrical signals to the device so as to permanently imprint the user's circuit
design on the device.  There are  currently two  Activator  Device  Programmers,
Activator  2  and  Activator   2S,  both  of  which  execute  all   programming,
verification, and debugging functions.  Customized programming adapters for each
device type permit  different  packages to be programmed by switching  adapters.
Activator 2 programs up to four FPGAs at a time;  Activator 2S programs one at a
time.

     Actel also supports  programmers  manufactured by third parties,  including
Data  I/O,  the  leading  supplier  of  third-party  programmers.  In  1996,  BP
Microsystems  Inc.  became  the first  vendor to  successfully  receive  support
certification for all of the Company's FPGAs.

     MPGAs

     The Company offers a family of MPGAs,  which provides  high-volume users of
Actel FPGA designs with a fast, convenient,  low-cost alternative to traditional
gate array conversions.

Market and Applications

     FPGAs  can be used in a broad  range  of  applications  across  nearly  all
electronic  system market  segments.  Most customers use the Company's  FPGAs in
low- to  medium-volumes  in the final  production form of their  products.  Some
high-volume  electronic system  manufacturers use Actel's FPGAs as a prototyping
vehicle and convert  production to lower-cost  conventional  gate arrays,  while
others with  time-to-market  constraints  use the Company's FPGAs in the initial
production and then convert to conventional  gate arrays. As product life cycles
continue  to shorten,  some  high-volume  electronic  system  manufacturers  are
electing to retain FPGAs in volume production because conversion to conventional
gate arrays may not yield sufficiently  attractive savings before the electronic
system reaches the end of its life.

     Communications

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

     Representative Actel customers in the communications market include:  3Com,
ADC Kentrox, Advanced Fibre Communications,  Alcatel, Ascend Communications, Bay
Networks, Cabletron, Cascade, Cisco Systems, Chipcom, DSC Communications, Hughes
Network Systems, Lucent Technologies, Motorola, and Nortel.

     Computer Systems and Peripherals

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

     Representative   Actel  customers  in  the  computer  market  include:  AST
Computer,  Hewlett-Packard,  IBM, Olivetti,  Sky Computer,  and Tandem Computer.
Industrial Control Equipment

     Industrial Control Equipment

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

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

     Military and Aerospace

     Rigorous quality and reliability standards,  stringent volume requirements,
and the need  for  design  security  are  characteristics  of the  military  and
aerospace  market.  The  Company's  FPGAs have high  quality,  reliability,  and
capacity, and are virtually impossible to reverse engineer, making them suitable
for many military and aerospace applications.  Actel's FPGAs are especially well
suited  for  space  applications,  due to the high  radiation  tolerance  of the
Company's antifuse,  and for many aircraft and missile flight applications,  due
to the high density and performance of Actel's FPGAs.

     Representative  Actel  customers in the military  market  include:  Alliant
Technology,   Boeing,  E-Systems,   Harris,  Honeywell,   Hughes  Aircraft,  Jet
Propulsion  Labs  (JPL),  Lockheed-Martin,  Loral,  National  Aeronautics  Space
Administration (NASA),  Northrup,  Olin Corporation,  Raytheon, SCI Systems, TI,
and TRW.

Sales and Distribution

     The Company maintains a worldwide,  multi-tiered  selling organization that
includes a direct sales force, independent manufacturers'  representatives,  and
electronics distributors.

     Actel's   domestic  sales  force   currently   consists  of  48  sales  and
administrative personnel and field application engineers ("FAEs") operating from
11 sales offices  located in major  metropolitan  areas.  Direct sales personnel
call on target  accounts and support  direct  original  equipment  manufacturers
("OEMs").  Besides  overseeing  the  activities of direct sales  personnel,  the
Company's  sales  managers  also  oversee the  activities  of 21  manufacturers'
representative  firms that operate from  approximately 43 office locations.  The
manufacturers'  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-Standard Electronics, Inc. ("Pioneer"), Arrow Electronics, Inc. and Zeus
Electronics  (collectively,  "Arrow"), and Wyle Laboratories ("Wyle"). Arrow has
approximately 50 branch offices in North America;  Pioneer and Wyle have a total
of approximately 60 branch locations in North America.

     The  Company   generates  a  significant   portion  of  its  revenues  from
international  sales. Sales to customers outside the United States accounted for
approximately  33%,  38%,  and 32% of net  revenues  in 1996,  1995,  and  1994,
respectively.  Actel's  European  sales  organization  currently  consists of 23
distributors  (including  Arrow,  which has 10  subsidiary  companies in Europe)
having approximately 52 branch offices. The activities of these distributors are
supervised  from  sales  management  offices  in  Basingstoke  (England),  Paris
(France),  and  Munich  (Germany),  where a total  of 17  people  are  employed.
Matsushita,  which is a foundry and  strategic  partner of the Company,  markets
Actel's  products in Japan under the Company's  brand name.  The Company has two
additional distributors in Japan, including Innotech Corporation. Actel also has
distributors in Australia,  China,  Egypt,  Hong Kong, India,  Korea,  Malaysia,
Singapore,  South  Africa,  and  Taiwan.  In 1996,  the  Company  added  Dae Jin
Semiconductor Company as a new distributor. Dae Jin is a dominant distributor in
Korea's telecommunications market.

     After the  Company's  sales  representatives  and  distributors  evaluate a
customer's  logic design  requirements  and determine 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  the  Company  or its
distributor.  The  sales  manager  or FAE may  then  determine  that  additional
analysis is required by engineers based at Actel's  headquarters.  The Company's
sales cycle for the initial  sale of a design  system is  generally  lengthy and
requires the continued  participation  of  salespersons,  FAEs,  engineers,  and
management.

     In 1996, more than half of Actel's sales in the United States and virtually
all of  the  Company's  sales  outside  the  United  States  were  made  through
distributors. 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 Company-approved
price reductions on specific transactions to meet competition.  The Company also
generally  grants  distributors  limited  rights  to return  products.  To date,
product  returns  under this  policy  have not been  material.  Actel  maintains
reserves  against  which these  credits and returns are charged.  Because of its
price protection and return policies,  the Company  generally does not recognize
revenue on products  sold to  distributors  until the products are resold to end
customers.

Backlog

     At December 31, 1996,  Actel's  backlog was  approximately  $27.0  million,
compared  with  approximately  $34.4  million at December 31, 1995.  The Company
includes in its backlog all OEM orders scheduled for delivery over the next nine
months and all  distributor  orders  scheduled  for  delivery  over the next six
months.  Actel  produces  standard  products that may be shipped from  inventory
within a short time after receipt of an order. The Company's business,  and to a
large extent that of the entire  semiconductor  industry,  is  characterized  by
short-term order and shipment schedules,  rather than volume purchase contracts.
In  accordance  with  industry  practice,  Actel's  backlog may be  cancelled or
rescheduled by the customer on short notice without  significant  penalty.  As a
result,  the  Company's  backlog  may not be  indicative  of  actual  sales  and
therefore should not be used as a measure of future revenue.

Customer Service and Support

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

     The  Company's  FAEs provide  technical  support to customers in the United
States and Europe.  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 the Company's  technical
support hotline.  In addition,  Actel offers technical  seminars on its products
and comprehensive training classes on its software.

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

Manufacturing and Assembly

     Actel's current strategy is to utilize  third-party  manufacturers  for its
wafer  requirements,  which  permits the Company to allocate  its  resources  to
product  design,  development,  and marketing.  Wafers used in Actel's FPGAs are
manufactured by Chartered  Semiconductor in Singapore, by Lockheed-Martin FSC in
the United States,  by Matsushita in Japan,  by TI in the United States,  and by
Winbond in Taiwan. The Company historically purchased wafers from Matsushita and
TI.  Chartered  Semiconductor,  Lockheed-Martin  FSC,  and Winbond were added in
1994. Actel's FPGAs are currently manufactured by Chartered  Semiconductor using
0.6 micron design rules; by  Lockheed-Martin  FSC using 0.8 micron design rules;
by  Matsushita  using 0.8,  0.9, and 1.0 micron  design  rules;  by TI using 1.0
micron design rules; and by Winbond using 0.6 and 0.8 micron design rules.

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

Research and Development

     In 1996,  1995, and 1994,  the Company spent $23.9 million,  $20.6 million,
and $14.4 million,  respectively, on research and development, which represented
approximately  16%,  19%,  and  19%,  of net  revenues,  respectively,  for such
periods.  Actel's research and development  expenditures  are currently  divided
among circuit design,  software development,  and process technology activities.
In the areas of circuit design and process  technology,  the Company's  research
and development  activities  include  continuing  efforts to reduce the cost and
improve the performance of current products,  principally by reducing the design
rules under which such products are manufactured, and to develop new families of
FPGA  products  based on  existing or emerging  technologies.  Actel's  software
research and  development  activities are dedicated to providing  customers with
access to a wide variety of CAE tools and HDL cores in a complete and  automated
desktop  design   environment  on  popular  personal  computer  and  workstation
platforms,  with the objective of giving logic  designers the capability to move
up to higher complexity designs with confidence and be successful.

     The research and  development  projects that the Company  announced in 1996
are summarized below.

     ES Architecture and ES Reprogrammable SPGA Products

     On March 6,  1995,  Actel  and BTR,  Inc.  ("BTR")  entered  into a License
Agreement  pursuant to which BTR  licensed  its  proprietary  technology  to the
Company for  development  and use in FPGAs and  certain  multichip  modules.  As
partial consideration for the grant of the license, the Company is paying to BTR
non-refundable advance royalties.  Actel has also employed the principals of BTR
to assist the Company in its  development  and  implementation  of the  licensed
technology.

     The ES  architecture  combines a new,  fine-grained  cell  structure with a
routing-centric  architecture.  The expected result is logic cells that are more
readily synthesized and more efficient than current programmable  architectures.
The key to the architectural efficiencies is a technology Actel calls MutliDrive
active  routing.  Separate  transistors are used to implement logic and to drive
the  interconnects.  By separating  these  functions,  Actel  believes that more
transistors can be included per chip, which should translate to smaller die size
and more efficient and lower-cost designs. In addition, the interconnect drivers
are tailored to routing length,  which should provide high  performance even for
cross-chip routing. The ES architecture also makes greater use of hierarchy than
current  programmable  architectures.  A  constant,  maximum  routing  delay  is
associated  with each level of hierarchy,  which should  provide the device with
fanout independent  delays.  This means that,  regardless of the number of logic
elements  being driven,  the delay should always be constant,  making the chip's
performance predictable.

     The ES  architecture  is  switch-technology  independent,  so products  can
utilize SRAM,  antifuse,  flash,  or any other basic  programming  element.  The
Company   currently  intends  to  introduce  the  initial  ES  family  based  on
reprogrammable, three-layer metal SRAM technology manufactured using 0.35 micron
design  rules.  Actel  envisions  further  products  based on  antifuse or flash
technologies in the future.

     Embedded SPGA Products

     On June 1, 1996, Actel and the Silicon Architects Group of Synopsys entered
into a Technology  License and  Services  Agreement  pursuant to which  Synopsys
licensed its cell-based  array ("CBA")  architecture to Actel. The two companies
will jointly  adapt CBA  technology  specifically  to support  SPGAs and jointly
develop Synopsys' synthesis technology to support the new device class. Embedded
SPGAs  will  combine  the  performance,   efficiency,  and  cost  advantages  of
conventional gate arrays with the time-to-market  and flexibility  advantages of
the ES architecture by embedding mask-programmed elements within the device. The
programmable  portion of the  Embedded  SPGA will  provide all the  features and
functionality  of  the   Reprogrammable   SPGA  described  above.  The  embedded
mask-programmed portion of the device will be based on CBA technology,  which is
a gate  array  architecture  with  cell-based  efficiencies.  CBA  supports  the
implementation of multiple industry-standard or proprietary functions, including
DPS filters, datapaths,  memories, and preconfigured kits of specific functional
blocks.

     The Company  believes that the Embedded SPGA will enable two  fundamentally
different  business  models.  In  the  first,  the  Actel  Embedded  SPGA  is an
application-specific device available to multiple customers as an off-the-shelf,
field-programmable  technology  that is sold  and  supported  like an  FPGA.  An
application-specific  core (such as a PCI core, for example) is already embedded
in the device,  creating  significant  value for customers who desire such cores
but cannot or do not wish to design them from  scratch.  In the second  business
model,  the  Actel  Embedded  SPGA  is  a  customer-specific   device  in  which
proprietary  functions are embedded and  field-programmability  is available for
later design variations.  Under this scenario,  the device is sold and supported
like a conventional gate array, and the customer uses the  field-programmability
of the device to support varying industry  standards or to offer  differentiated
product derivatives.

Competition

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

     The primary advantages of conventional gate arrays are high capacity,  high
speed, and low production cost in high volume.  Actel competes with conventional
gate array suppliers by offering lower design costs,  shorter design cycles, and
reduced inventory risks.  However,  some customers elect to design and prototype
with the  Company's  products  and then convert to  conventional  gate arrays to
achieve  lower  costs  for  volume  production.  For this  reason,  Actel  faces
competition  from  companies  that  specialize  in  converting  CPLDs and FPGAs,
including the Company's  products,  into conventional gate arrays.  Actel's MPGA
family offers designers a fast, convenient,  low-cost alternative to traditional
gate array conversions.

     The Company  also  competes  with  suppliers  of CPLDs.  Suppliers of these
devices  include Altera  Corporation  ("Altera"),  Advanced  Micro Devices,  and
Lattice   Semiconductor.   The  circuit  architecture  of  CPLDs  gives  them  a
performance advantage in certain lower capacity applications, but Actel believes
that its  products  are  better  suited  for higher  capacity  designs.  Altera,
however, has a larger installed base of development systems than the Company. In
addition,  CPLDs are reprogrammable,  which permits customers to reuse a circuit
multiple times during the design process  (unlike  antifuse-based  FPGAs,  which
permanently retain the programmed configuration). No assurance can be given that
Actel will be able to overcome these competitive disadvantages.

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

     Several  companies  have  either  already  marketed  antifuse-based  FPGAs,
including QuickLogic Corporation ("QuickLogic"), or announced their intention to
do so. See "Legal." On March 31, 1995, the Company  completed its acquisition of
the antifuse FPGA business of TI, which was the only  second-source  supplier of
the Company's products.  Xilinx, which is a licensee of certain of the Company's
patents,  introduced  antifuse-based  FPGAs in 1995 and  terminated 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
the first quarter of 1997.

     Actel expects  significant  additional  competition from major domestic and
international semiconductor suppliers, such as Motorola, which has announced its
intention to enter the FPGA market. All such companies are larger, offer broader
product lines, and have substantially greater financial and other resources than
the  Company,   including  the  capability  to  manufacture  their  own  wafers.
Additional  competition  could  adversely  affect  Actel's  business,  financial
condition, or results of operations.

     The Company may also face  competition  from  suppliers  of logic  products
based on new or  emerging  technologies.  For  example,  there are  other  known
techniques  for  manufacturing  antifuses  that offer  certain  advantages  over
Actel's current fuse. The Company 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.

Patents and Licenses

     The  Company  currently  has 107 United  States  patents  and  applications
pending for an  additional  48 United  States  patents.  Actel has one  European
patent and has  applications  pending for an additional  40 patents  outside the
United States.  The Company's patents cover,  among other things,  Actel's basic
circuit  architecture,  antifuse structure,  and programming method. The Company
expects to continue filing patent  applications  when 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.

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

     See  "Business  --  Research  and  Development"  for  summaries  of certain
licensing agreements to which the Company is a party.

Employees

     At the end of 1996, the Company had 356 full-time employees,  including 113
in marketing,  sales, and customer support; 122 in research and development;  94
in  operations;  and 27 in  administration  and finance.  None of the  Company's
employees  is  represented  by a labor  union  nor does  Actel  have  employment
agreements  with any of its employees.  The Company has not experienced any work
stoppages, and believes that its employee relations are satisfactory.

Risk Factors

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

     Fluctuations In Operating Results

     The Company's quarterly and annual operating results are subject to 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.

          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 estimate quarterly revenues.
     The Company's  backlog  (which may be cancelled or deferred by customers on
     short notice  without  significant  penalty) at the  beginning of a quarter
     accounts for only a fraction of Actel's  revenues during the quarter.  This
     means that the Company  generates the rest of its  quarterly  revenues from
     orders  received  during the quarter and "turned"  for shipment  within the
     quarter,  and that any  shortfall in "turns"  orders will have an immediate
     and adverse impact on quarterly revenues. There are many factors that could
     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 (or non-programmable)
     grate  arrays,  or the loss of business to other  competitors  for price or
     other reasons.

          Historically,  Actel has shipped a disproportionately large percentage
     of its quarterly revenues in the final weeks of the quarter. Any failure by
     the  Company  to  effect  scheduled  shipments  by the end of the  quarter,
     therefore,  could have a  materially  adverse  effect on revenues  for such
     quarter.  Since Actel generally does not recognize revenue on the sale of a
     product to a distributor  until the  distributor  resells the product,  the
     Company'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 the Company's expenses do not vary with revenues.

          Supply Problems

          In a  typical  semiconductor  manufacturing  process,  silicon  wafers
     produced by a foundry  are sorted and cut into  individual  die,  which are
     then assembled into  individual  packages and tested for  performance.  The
     manufacture,  assembly,  and  testing of  semiconductor  products is highly
     complex and subject to a wide variety of risks, including defects in masks,
     impurities in the materials  used,  contaminants  in the  environment,  and
     performance  failures by personnel and  equipment.  Semiconductor  products
     intended  for  military  and  aerospace   applications   are   particularly
     susceptible  to these  conditions,  any of which  could  have a  materially
     adverse  effect on Actel's  business,  financial  condition,  or results of
     operations.

          As is common in the semiconductor industry,  Actel's independent wafer
     suppliers from time to time  experience  lower than  anticipated  yields of
     usable die. For example,  the Company experienced a yield problem at one of
     its foundries in the fourth  quarter of 1993 that was severe enough to have
     a materially adverse effect on Actel's results of operations. To the extent
     yields of usable die  decrease,  the  average  cost to the  Company of each
     usable die increases,  which reduces gross margin. Wafer yields can decline
     without  warning  and may take  substantial  time to analyze  and  correct,
     particularly  for a company  such as Actel  that does not  operate  its own
     manufacturing facility, but instead utilizes independent  facilities,  most
     of which are offshore.  Yield problems may also increase the time to market
     for the Company's products and create inventory  shortages and dissatisfied
     customers. In addition,  Actel typically experiences difficulties or delays
     in achieving  satisfactory,  sustainable  yields on new processes or at new
     foundries.  Although the Company has been able eventually to overcome these
     difficulties in the past, no assurance can be given that it will be able to
     do so with  respect  to its  current  or future  new  processes  and/or new
     foundries.  No assurance can be given that the Company will not  experience
     wafer supply  problems in the future,  or that any such  problem  would not
     have a materially adverse effect on Actel's business,  financial condition,
     or results of operations.

          Price Erosion

          The  semiconductor  industry is characterized by intense  competition.
     Historically,   average  selling  prices  in  the  semiconductor   industry
     generally,  and for the  Company's  products in  particular,  have declined
     significantly over the life of each product.  While Actel expects to reduce
     the  average  selling  prices  of its  products  over  time as the  Company
     achieves  manufacturing  cost  reductions,  Actel is sometimes  required by
     competitive  pressures  to reduce the prices of its  products  more quickly
     than such  cost  reductions  can be  achieved.  In  addition,  the  Company
     sometimes  approves price reductions on specific sales to meet competition.
     If not offset by reductions in manufacturing costs or by a shift in the mix
     of products  sold toward  higher-margin  products,  declines in the average
     selling prices of Actel's products will reduce gross margins and could have
     a materially adverse effect on the Company's business, financial condition,
     or results of operations.

     Summary of Significant Accounting Policies

          Basis of Presentation

          The  consolidated  financial  statements  include the  accounts of the
     Company and its  wholly-owned  subsidiaries.  All significant  intercompany
     accounts and transactions have been eliminated in consolidation.

          The Company's  fiscal year ends on the Sunday  closest to December 31.
     Fiscal 1996, 1995, and 1994 ended on December 29, 1996,  December 31, 1995,
     and January 1, 1995,  respectively.  For ease of presentation,  December 31
     has been  utilized  as the  fiscal  year-end,  and March 31,  June 30,  and
     September 30 have been utilized as the end of the first,  second, and third
     fiscal quarters,  respectively,  in this Annual Report on Form 10-K and the
     portions  of  the  Company's   1996  Annual  Report  to  security   holders
     incorporated herein by reference.

          The  results of  operations  for fiscal 1996 or any other year are not
     necessarily  indicative  of results  that may be  expected  for any ensuing
     year.

          Use of Estimates

          The  preparation  of  the  financial  statements  in  conformity  with
     generally  accepted  accounting  principles  requires  management  to  make
     estimates and assumptions that affect the amounts reported in the financial
     statements. Actual results could differ materially from those estimates.

          Inventories

          Inventories are stated at the lower of cost  (first-in,  first-out) or
     market (net realizable  value).  Given the volatility of the market for the
     Company's products,  the Company makes inventory provisions for potentially
     excess  and  obsolete  inventory  based on  backlog  and  forecast  demand.
     However,  such backlog demand is subject to revisions,  cancellations,  and
     rescheduling.  Actual demand will  inevitably  differ from such backlog and
     forecast  demand,  and such  differences  may be material to the  financial
     statements.  Excess  inventory  increases  handling  costs  and the risk of
     obsolescence,  is a  non-productive  use of capital  resources,  and delays
     realization  of the price and  performance  benefits  associated  with more
     advanced manufacturing processes.

     Dependence on Independent Wafer Manufacturers

     Actel does not  manufacture any of the wafers used in the production of its
FPGAs.  Currently,  such wafers are  manufactured by Chartered  Semiconductor in
Singapore,  Lockheed-Martin FSC in the United States, Matsushita in Japan, TI in
the United States,  and Winbond in Taiwan. The Company's reliance on independent
wafer  manufacturers  to  fabricate  its  wafers  involves   significant  risks,
including the risk of events limiting  production and reducing  yields,  such as
technical difficulties or damage to production facilities,  lack of control over
capacity  allocation  and delivery  schedules,  and  potential  lack of adequate
capacity.  These  risks  are  particularly  pronounced  with  respect  to wafers
intended for use in military and aerospace applications.

     Actel has from time to time experienced delays in obtaining wafers from its
foundries,  and there can be no assurance  that the Company will not  experience
similar or more severe  delays in the future.  In addition,  although  Actel has
supply  agreements  with  most of its wafer  manufacturers,  a  shortage  of raw
materials or production capacity could lead any of the Company's wafer suppliers
to allocate  available  capacity to customers  other than Actel,  or to internal
uses,  which  could  interrupt  the  Company's  capability  to meet its  product
delivery  obligations.  These risks are particularly  pronounced with respect to
wafers intended for use in military and aerospace applications. Any inability or
unwillingness  of Actel's  wafer  suppliers to provide  adequate  quantities  of
finished  wafers to satisfy the  Company'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 the Company's  current  independent wafer  manufacturers  were unable or
unwilling to manufacture Actel's products as required, the Company would have to
identify and qualify additional  foundries.  The qualification process typically
takes one year or longer.  No assurance can be given that any  additional  wafer
foundries would become available or be able to satisfy 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, the Company has
considered, and continues to consider, various possible transactions,  including
the  use of  substantial  nonrefundable  deposits  to  secure  commitments  from
foundries for specified levels of manufacturing  capacity over extended periods,
equity  investments (such as Actel's  investment in Chartered  Semiconductor) in
exchange for guaranteed  production,  and the formation of joint ventures to own
foundries. No assurance can be given as to the effect of any such transaction on
the Company's business, financial condition, or results of operations.

     Dependence on Customized Manufacturing Process

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

     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 the Company.  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,  and failure to coordinate  the design and  development of silicon and
associated  software  products  each could have a materially  adverse  effect on
Actel's business, financial condition, or results of operation.

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

     Actel is currently  scheduled  to  introduce  new members of the 3200DX and
RadHard  families  in 1997.  In  addition,  a new  family of  FPGAs,  based on a
"metal-to-metal"  antifuse and a "sea of gates"  architecture,  is being brought
into  production and is currently  scheduled for  introduction  late in 1997. No
assurance can be given that the Company's design and introduction  schedules for
such products or the supporting  software will be met or that such products will
be  well-received  by  customers.  No assurance  can be given that any other new
products  will  gain  market   acceptance  or  that  the  Company  will  respond
effectively to new technological changes or new product announcements by others.
Any  failure of Actel to  successfully  define,  develop,  market,  manufacture,
assemble,  or test  competitive  new products  could have a  materially  adverse
effect on its business, financial condition, or results of operations.

     The Company must also continue to make significant  investments in research
and  development to develop new products and achieve market  acceptance for such
products.  Actel  currently  conducts  most  of  its  research  and  development
activities   at   facilities   operated  by   Matsushita   in  Japan  and  Extel
Semiconductor,  Inc. in the United States.  Although the Company has not to date
experienced  any  significant  difficulty  in  obtaining  access to its  current
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.

     Dependence on Independent Software Developers

     Actel  is  dependent   upon   independent   software   developers  for  the
development, maintenance, and support of certain elements of its Designer Series
Development  Systems software.  The Company's  reliance on independent  software
developers  involves  certain risks,  including lack of control over development
and delivery schedules and the availability of customer support.  Actel is aware
that certain of its  independent  developers are currently  experiencing  severe
financial difficulties. No assurance can be given that the Company's independent
developers will be able to complete  software  currently under  development,  or
provide  updates,  or  customer  support in a timely  manner,  which could delay
future  releases  and  disrupt  Actel's  ability  to  provide  customer  support
services.  Any significant  delays in the availability of the Company's software
would be detrimental to the capability of the Company's new families of products
to win  designs,  which  could  have a  materially  adverse  effect  on  Actel's
business, financial condition, or results of operations.

     Dependence on Design Wins

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

     Dependence on Military and Aerospace Customers

     Although  Actel is unable to determine  with certainty the ultimate uses of
its products,  the Company  estimates that sales of its products to customers in
the military and  aerospace  industries,  which  sometimes  carry higher  profit
margins  than  sales  of  products  to  commercial   customers,   accounted  for
approximately  10% to 15% of net  revenues  from 1992  through the first half of
1996. The Company believes that the military and aerospace  industries accounted
for a  significantly  greater  percentage  of the  Company's net revenues in the
second half of 1996,  following the introduction of the RH1280. No assurance can
be given that future sales to customers in the military and aerospace industries
will continue at current volume or margin  levels.  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,  increasing
the risk of failure.  It is often not  possible to  determine  before the end of
processing  and testing  whether  products  intended  for  military or aerospace
applications  will fail and, if they do fail,  a  significant  period of time is
often  required  to  process  and  test  replacements,  each of  which  makes it
difficult to accurately  estimate quarterly revenues and could have a materially
adverse  effect  on  Actel's  business,   financial  condition,  or  results  of
operations.

     Semiconductor Industry Risks

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

     Dependence on International Operations

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

     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,
CPLDs, and FPGAs. The Company's two principle competitors are Xilinx, a supplier
of FPGAs based on SRAM technology,  and Altera, a supplier principally of CPLDs.
In connection  with the settlement of patent  litigation in 1993,  Actel granted
Xilinx a license  under  certain  of  Actel's  patents  that  permits  Xilinx to
manufacture and market antifuse-based products. Xilinx announced in 1996 that it
had  discontinued its  antifuse-based  FPGA product line. The Company also faces
competition  from  companies  that  specialize  in converting  FPGAs,  including
Actel's  products,  into  conventional  gate arrays.  In  addition,  the Company
expects   significant   competition  in  the  future  from  major  domestic  and
international   semiconductor   suppliers,  and  Actel's  patents  may  not  bar
competitors  to which it has not  granted a  license  from  manufacturing  other
antifuse-based products. The Company may also face competition from suppliers of
logic products based on new or emerging technologies. Given the intensity of the
competition  and the research and  development  being done,  no assurance can be
given that Actel's antifuse and architecture technology will remain competitive.

     The Company believes that important  competitive  factors in its market are
price,  performance,  number of usable gates,  ease of use and  functionality of
development system software, installed base of development systems, adaptability
of products to specific  applications,  length of development  cycle  (including
reductions to finer micron design rules), number of I/Os, reliability,  adequate
wafer fabrication capacity and sources of raw materials,  protection of products
by effective  utilization of intellectual  property laws, and technical  service
and support.  Failure of 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.  In addition, all existing FPGAs and CPLDs
not based on antifuse technology are  reprogrammable,  a feature that makes them
more attractive to many designers. The Company also believes that, if there were
a  downturn  in the  market for CPLDs and  FPGAs,  companies  that have  broader
product lines and longer standing  customer  relationships  may be in a stronger
competitive  position than Actel.  Many of the  Company's  current and potential
competitors  offer  broader  product  lines  and  have   significantly   greater
financial, technical, manufacturing, and marketing resources than Actel.

     Patent Infringement

     As is typical  in the  semiconductor  industry,  the  Company  has been and
expects to be from time to time  notified  of claims  that it may be  infringing
patents  owned by others.  No  assurance  can be given that such claims  against
Actel will not result in  litigation.  In January  1994,  the Company  brought a
patent infringement  lawsuit against QuickLogic,  which in turn brought a patent
infringement  counterclaim against Actel in May 1995.  Management of the Company
believes that Actel has meritorious claims and defenses in this matter, and that
its  resolution  will not have a  materially  adverse  effect  on the  Company's
business, financial condition, or results of operations, but no assurance can be
given to that effect.  All  litigation,  whether or not  determined  in favor of
Actel,  can  result in  significant  expense to the  Company  and can divert the
efforts of Actel's technical and management personnel from productive tasks.

     Although  the Company has  obtained  patents  covering  aspects of its FPGA
architecture   logic  modules  and  certain  techniques  for  manufacturing  its
antifuse,  no assurance can be given that Actel's  patents will be determined to
be valid or that the claims of QuickLogic or any assertions of  infringement  or
invalidity by other parties (or claims for indemnity  from  customers  resulting
from any infringement claims) will not be successful. In the event of an adverse
ruling in the QuickLogic  case or any other  litigation  involving  intellectual
property,  the Company could suffer  significant  (and possibly treble) monetary
damages,  which  could have a  materially  adverse  effect on Actel's  business,
financial condition, and results of operations. The Company may also be required
to discontinue the use of infringing processes; cease the manufacture,  use, and
sale  of  infringing   products;   expend   significant   resources  to  develop
non-infringing   technology;  or  obtain  licenses  under  patents  that  it  is
infringing.   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.  In the event of a
successful  claim against the Company,  Actel's  failure to develop or license a
substitute  technology on commercially  reasonable terms would have a materially
adverse effect on the Company'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 the Company's business. Actel relies primarily on
a combination of nondisclosure  agreements,  other contractual  provisions,  and
patent and copyright  protection to protect its proprietary rights. No assurance
can be given that the steps taken by the Company will be adequate to protect its
proprietary  rights.  In  addition,  the laws of  certain  territories  in which
Actel's products are or may be developed,  manufactured, or sold, including Asia
and Europe,  may not protect the Company's  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 the Company's  business,  financial  condition,  or
results of operations.

     Reliance on Distributors

     In 1996, more than half of Actel's sales in the United States and virtually
all of  the  Company's  sales  outside  the  United  States  were  made  through
distributors. Three of Actel's distributors, Wyle, Arrow, and Pioneer, accounted
for approximately 14%, 14%, and 11%, respectively, of the Company's net revenues
in  1996.  No  assurance  can be  given  that  future  sales  by  these or other
distributors will continue at current levels or that the Company will be able to
retain its current distributors on terms that are acceptable to Actel.

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

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

     Reliance on International Sales

     Sales  to  customers  located  outside  the  United  States  accounted  for
approximately  33%,  38%,  and 32%, of net revenues  for 1996,  1995,  and 1994,
respectively.  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  those arising from currency
restrictions,  tariffs, trade barriers,  taxes, and export license requirements.
All of the Company's foreign sales are denominated in U.S.  dollars,  so Actel's
products  become less price  competitive in countries with  currencies  that are
declining in value against the dollar.  In addition,  since virtually all of the
Company's foreign sales are made through distributors, such sales are subject to
the risks described above in "Reliance on Distributors."

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

     Dependence on Key Personnel

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

     Management of Growth

     Actel has recently experienced and expects to continue to experience growth
in the number of its  employees  and the scope of its  operations,  resulting in
increased  responsibilities  for  management  personnel.  To manage  recent  and
potential future growth effectively,  the Company 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 current availability of
qualified design,  process, and test engineers is limited, and competition among
companies for skilled and experienced  engineering personnel is very strong. The
Company has been  attempting to hire a number of  engineering  personnel and has
experienced  delays in filling such positions.  During strong  business  cycles,
Actel  expects to  experience  continued  difficulty  in  filling  its needs for
qualified  engineers  and other  personnel.  No assurance  can be given that the
Company  will be able to  achieve or manage  effectively  any such  growth,  and
failure to do so could delay product  development and introductions or otherwise
have a materially adverse effect on Actel's business,  financial  condition,  or
results of operations.

     Volatility of Stock

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

     "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 the Company's Common Stock,
to issue Preferred  Stock with dividend,  liquidation,  redemption,  conversion,
voting,  or other rights that could  adversely  affect the voting power or other
rights of the holders of the Common Stock. Issuance of the 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 the Company does not  currently  intend to issue any
additional  shares of its Preferred Stock,  there can be no assurance that Actel
will not do so in the future.

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

     Dividend Policy

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

Executive Officers of the Registrant

     The following table identifies each executive  officer of Actel as of March
12, 1997:
<TABLE>
<CAPTION>
                  Name                       Age                                Position
-----------------------------------------   -----   -----------------------------------------------------------
<S>                                          <C>    <C>
John C. East.............................    52     President and Chief Executive Officer
David M. Sugishita.......................    49     Senior Vice President of Finance & Administration and Chief
                                                       Financial Officer
Esmat Z. Hamdy...........................    47     Senior Vice President of Technology & Operations
Jeffrey M. Schlageter....................    53     Senior Vice President of Engineering
Michelle A. Begun........................    40     Vice President of Human Resources
Douglas D. Goodyear......................    42     Vice President of Worldwide Sales
Dennis F. Nye............................    44     Vice President of Marketing
David L. Van De Hey......................    41     Vice President & General Counsel and Secretary
</TABLE>

     Mr. East has served as President and Chief Executive Officer of the Company
since  December 1988.  From April 1979 until joining  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,  he served in
various marketing, manufacturing, and engineering positions for Fairchild Camera
and Instrument Corporation, a semiconductor manufacturer.

     Mr.   Sugishita   has  served  as  Senior  Vice   President  of  Finance  &
Administration and Chief Financial Officer since August 1995. From April 1994 to
July 1995,  he was Senior Vice  President of Finance and  Administration,  Chief
Financial Officer, and Treasurer for Micro Component Technology, a semiconductor
automated test equipment company. From October 1991 to March 1994, Mr. Sugishita
was Vice President-Corporate Controller and Chief Accounting Officer for Applied
Materials,   the  world's  largest  semiconductor  wafer  fabrication  equipment
company. From February 1982 to September 1991, he was Vice President of Finance,
Semiconductor Group, for National Semiconductor,  a semiconductor  manufacturing
company.

     Dr. Hamdy, a founder of the Company,  has been Vice President of Technology
of Actel since  August 1991 and was  promoted to Senior Vice  President in March
1997 and to Senior Vice President of Operations in September 1997. From November
1985 to July 1991, he held a number of management  positions  with the Company's
technology and development  group. From January 1981 to November 1985, Dr. Hamdy
held  various  positions at Intel  Corporation,  a  semiconductor  manufacturer,
lastly as project manager.

     Mr.  Schlageter  joined the Company in February  1989 as Vice  President of
Engineering and was promoted to Senior Vice President of Engineering in November
1992.  From July 1985 to January  1989,  he held  various  positions at Advanced
Micro Devices,  a semiconductor  manufacturer,  where he last served as Managing
Director of  Peripheral  Products.  From February 1981 to July 1985, he was Vice
President  of  Semicustom  Products  at  Mostek  Corporation,   a  semiconductor
manufacturer.

     Ms. Begun joined Actel in May 1989 as Director of Human Resources,  and has
been Vice President of Human  Resources  since August 1991. From May 1984 to May
1989,  she  held  various  human   resources   management   positions  at  Intel
Corporation,  a  semiconductor  manufacturer,  her  last  position  being  Human
Resources  Manager.  From  October  1977 to May  1984,  she held  various  human
resources management positions at Synertek,  Inc., a subsidiary of Honeywell,  a
semiconductor manufacturer.

     Mr.  Goodyear  joined the Company in  February  1997 as Vice  President  of
Worldwide Sales. From November 1991 until joining the Company, he served as Vice
President of Sales for the components division of Sharp Electronics Corporation,
a semiconductor  manufacturer.  From January 1987 to November 1991, Mr. Goodyear
held various sales  management  positions at Hitachi  America,  a  semiconductor
manufacturer,  lastly as Western Area Sales  Manager.  From June 1983 to January
1987, he held various sales and sales  management.  positions at Advanced  Micro
Devices, a semiconductor manufacturer.

     Mr. Nye has been Vice  President  of Marketing  since  January  1994.  From
October 1990 to December 1993, he served as European Business Manager with Actel
Europe Ltd.,  the  Company's  United  Kingdom  subsidiary.  From January 1990 to
October  1990,  Mr. Nye served as  Director  of Sales of Genrad  Corporation,  a
software  company.  From  November  1986 to January  1990, he served as European
Sales Manager of Viewlogic Corporation, a software company.

     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 the Company's  outside legal  counsel.  From August 1985
until October 1988, he was an associate with the Cleveland office of Jones, Day,
Reavis & Pogue, a law firm. Mr. Van De Hey received his Juris Doctor degree from
the University of Pennsylvania in 1985.

     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 1998, and the Company has
two renewal options for  consecutive  five-year  terms.  Actel also leases sales
offices in the metropolitan areas of Atlanta, Baltimore,  Basingstoke (England),
Boston,  Chicago,   Dallas,  Denver,  Destin  (Florida),   Los  Angeles,  Munich
(Germany),  Ottawa  (Canada),  and Paris  (France).  The  Company  believes  its
facilities will be adequate for its needs in 1997.

ITEM 3.   LEGAL

     Actel  commenced  a  patent   infringement   lawsuit   against   QuickLogic
Corporation  ("QuickLogic") in the United States District Court for the Northern
District of California on January 20, 1994.  The Complaint  asserted four claims
for  infringement of Actel patents nos.  4,758,745,  4,873,459,  5,055,718,  and
5,198,705 (the "'705 Patent"),  respectively,  each relating to FPGA technology.
The Complaint sought injunctive relief, treble damages in an unspecified amount,
and attorneys' fees.

     On February 10, 1994, QuickLogic filed an Answer and Counterclaim,  denying
infringement, asserting invalidity defenses, and seeking declaratory relief.

     On  November  15,  1994,   the  Company  moved  for  summary   judgment  of
infringement of its `705 Patent.  On October 4, 1996, after extensive  discovery
and  briefing,  the  Special  Master,  to whom all  pretrial  matters  have been
referred,  filed a recommendation with the Court that Actel's motion be granted.
QuickLogic  moved the  Court to  reject  the  Special  Master's  recommendation.
Hearings on that motion were held on January 27, 1997, and February 3, 1997. The
Court has not yet acted on that motion.

     On March 15, 1995, the Company filed an Amended and Supplemental  Complaint
against QuickLogic asserting, in addition to claims previously asserted, a claim
for  infringement  of Actel patent no.  5,367,208.  The  Company's  Supplemental
Complaint sought injunctive relief, treble damages in an unspecified amount, and
attorneys' fees.

     On April 14,  1995,  QuickLogic  filed an Answer and  Counterclaim  denying
infringement,  asserting invalidity  defenses,  and asserting two claims against
Actel  for  alleged  infringement  of  QuickLogic  patents  Nos.  5,220,213  and
5,396,127.  QuickLogic's  Counterclaim sought declaratory and injunctive relief,
and treble damages in an unspecified  amount. On May 25, 1995,  QuickLogic filed
an Amended Answer and Counterclaim, adding allegations of inequitable conduct.

     In response to  QuickLogic's  counterclaims,  on June 11, 1995, the Company
filed a Reply  and  Counterclaim,  denying  infringement,  asserting  invalidity
defenses,  naming John Birkner as an individual defendant,  and asserting causes
of action  for trade  secret  misappropriation,  breach of  contract,  breach of
confidential business relationship, and unfair competition. Actel's Counterclaim
sought declaratory and injunctive relief,  damages in an unspecified amount, and
an assignment to the Company of QuickLogic's two  patents-in-suit.  In response,
both QuickLogic and Birkner denied all allegations.

     On January 18,  1996,  Actel  filed a motion  seeking  summary  judgment of
invalidity of the two QuickLogic patents-in-suit.

     On February  5, 1996,  QuickLogic  filed a motion for  summary  judgment of
infringement of QuickLogic patent no. 5,520,213.

     On February 26, 1996, QuickLogic filed a motion to disqualify the Company's
counsel, the law firm of Lyon & Lyon, on the ground that a Lyon & Lyon attorney,
in previous employment with QuickLogic counsel, Skjerven,  Morrill,  MacPherson,
Franklin & Friel, had access to confidential QuickLogic information and attorney
work  product.   The  Special  Master  issued  a  recommendation   in  favor  of
QuickLogic's   motion,  and  on  May  29,  1996,  the  Court  entered  an  Order
disqualifying  Lyon & Lyon. On June 19, 1996,  O'Melveny & Myers was substituted
as counsel of record on behalf of Actel.

     On March 7, 1996, the Company filed a Second Supplemental Complaint, adding
a claim against QuickLogic for infringement of Actel patent no. 5,479,113.

     On November 25, 1996,  QuickLogic  moved for Summary Judgment of invalidity
with respect to Claim 1 of the `705 Patent.

     On February 14, 1997,  Actel filed a motion for separate trial of its claim
that QuickLogic's  patents are invalid because the invention  disclosed in those
patents  was being sold by the  Company  more than one year prior to the date on
which QuickLogic  first applied for patent rights.  No decision has been made on
that motion.

     On February 28, 1997,  QuickLogic filed a motion with the Special Master in
which it seeks  leave to amend its  counterclaims  in the action to assert  that
Actel integrated circuits infringe  newly-issued U.S. Patent No. 5,594,364.  The
Company will oppose that motion. If the opposition is successful, it is probable
that  QuickLogic will assert claims for  infringement  of Patent  5,594,364 in a
separate  action.  Actel  believes  that it has  substantial  defenses  to these
claims.

     In opposing  QuickLogic's motion to add new patent claims, the Company will
advise  the  Court  that it  intends  to  assert  additional  claims  of  patent
infringement  against  QuickLogic,  including claims on newly-issued U.S. Patent
No. 5,610,534.  Actel will state that it recommends that such claims be filed as
a separate action,  but that the Company should have the right to assert its own
new claims if QuickLogic is allowed to assert new claims.

     By order entered March 19, 1997, the Court reserved  September 8, 1997, for
trial of Actel's  "on-sale"  defense  should its  motion for  separate  trial be
granted. It has set September 8, 1998, for trial of all remaining issues.

     After  considering the facts currently  known,  management does not believe
that the  ultimate  outcome of the  litigation  will have a  materially  adverse
effect on the Company's  business,  financial  condition,  or operating results,
although no assurance can be given to that effect.

     There are no other 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  the  Company  to  be  contemplated  by  any
governmental authority.

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

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

                                     PART II

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

     The  information  appearing  under  the  caption  "Stock  Listing"  in  the
Registrant's  annual  report to  security  holders  for the  fiscal  year  ended
December 31, 1996 (the "1996 Annual  Report"),  is  incorporated  herein by this
reference.

ITEM 6.   SELECTED FINANCIAL DATA

     The  information   appearing  under  the  caption  "Selected   Consolidated
Financial  Data"  in the 1996  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 1996 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   Operations,"   "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 1996 Annual Report is incorporated  herein by this
reference.

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

     None.

                                    PART III

     Except for the  information  specifically  incorporated  by reference  from
Actel's  definitive Proxy Statement for the Annual Meeting of Shareholders to be
held on May 2, 1997, as filed on or about April 2, 1997, with the Securities and
Exchange  Commission  (the "1997  Proxy  Statement")  in Part III of this Annual
Report on Form 10-K, the 1997 Proxy Statement shall not be deemed to be filed as
part of this Report.  Without limiting the foregoing,  the information under the
captions  "Compensation  Committee Report" and "Company Stock Performance" under
the main  caption  "OTHER  INFORMATION"  in the  1997  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 1997 Proxy  Statement and the information
under the main caption "COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE
ACT OF  1934"  in the 1997  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 1997 Proxy  Statement
and the information under the caption  "Executive  Compensation"  under the main
caption `OTHER  INFORMATION" in the 1997 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 1997 Proxy Statement and
the information under the caption  "Security  Ownership of Management" under the
main caption "OTHER  INFORMATION" in the 1997 Proxy  Statement are  incorporated
herein by this reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     None.

                                     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 Actel's 1996 Annual Report to
     Shareholders  for the year ended  December 31, 1996,  are  incorporated  by
     reference in Item 8 of this Annual Report on Form 10-K:

               Consolidated balance sheets at December 31, 1996 and 1995

               Consolidated statements of operations for each of the three years
               in the period ended December 31, 1996

               Consolidated  statements of shareholders'  equity for each of the
               three years in the period ended December 31, 1996

               Consolidated statements of cash flows for each of the three years
               in the period ended December 31, 1996

               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. No reports on Form 8-K were filed by Actel  during
the quarter ended December 31, 1996.

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

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

        2.1 (1)          Asset Purchase Agreement dated as of February 12, 1995,
                         between   the   Registrant   and   Texas    Instruments
                         Incorporated  (filed as Exhibit 2.1 to the Registrant's
                         Current  Report on Form 8-K (File  No.  0-21970)  filed
                         with the  Securities  and Exchange  Commission on April
                         17, 1995).

        2.2              Amendment No. 1 to the Asset Purchase  Agreement  dated
                         as of March 31, 1995,  between the Registrant and Texas
                         Instruments  Incorporated  (filed as Exhibit 2.2 to the
                         Registrant's  Current  Report  on Form  8-K  (File  No.
                         0-21970)   filed  with  the   Securities  and  Exchange
                         Commission on April 17, 1995).

        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).

        3.3              Certificate of Determination of Rights, Preferences and
                         Privileges   of  Series  A   Preferred   Stock  of  the
                         Registrant  (filed as Exhibit  3.3 to the  Registrant's
                         Current  Report on Form 8-K (File  No.  0-21970)  filed
                         with the  Securities  and Exchange  Commission on April
                         17, 1995).

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

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

       10.3 (2)          1993  Directors'  Stock  Option  Plan,  as amended  and
                         restated.

       10.4 (2)          1993  Employee  Stock  Purchase  Plan,  as amended  and
                         restated.

       10.5 (2)          1995 Employee and Consultant Stock Plan, as amended and
                         restated.

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

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

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

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

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

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

       10.12 (1)         M2M Joint  Development  and Marketing  Agreement  dated
                         August  1,  1994,  between  the  Registrant  and  Loral
                         Federal  Systems Company (filed as Exhibit 10.20 to the
                         Registrant's  Quarterly  Report on Form 10-Q  (File No.
                         0-21970)  for the  quarterly  period  ended  October 2,
                         1994).

       10.13 (1)         Investor  Agreement dated as of April 1, 1995,  between
                         the  Registrant  and  Texas  Instruments   Incorporated
                         (filed as  Exhibit  10.21 to the  Registrant's  Current
                         Report on Form 8-K (File No.  0-21970)  filed  with the
                         Securities and Exchange Commission on April 17, 1995).

       10.14 (1)         License  Agreement  dated as of April 1, 1995,  between
                         the  Registrant  and  Texas  Instruments   Incorporated
                         (filed as  Exhibit  10.22 to the  Registrant's  Current
                         Report on Form 8-K (File No.  0-21970)  filed  with the
                         Securities and Exchange Commission on April 17, 1995).

       10.15 (1)         Supply Agreement dated as of April 1, 1995, between the
                         Registrant and Texas Instruments  Incorporated.  (filed
                         as Exhibit 10.23 to Amendment No. 2 to the Registrant's
                         Current  Report on Form 8-K (File  No.  0-21970)  filed
                         with the Securities  and Exchange  Commission on August
                         23, 1995).

       10.16 (1)         Development  Agreement  dated  as  of  April  1,  1995,
                         between   the   Registrant   and   Texas    Instruments
                         Incorporated   (filed   as   Exhibit   10.24   to   the
                         Registrant's  Current  Report  on Form  8-K  (File  No.
                         0-21970)   filed  with  the   Securities  and  Exchange
                         Commission on April 17, 1995).

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

       10.18 (1)         Distribution  Agreement  dated  as of  June  29,  1995,
                         between  the   Registrant   and   Matsushita   Electric
                         Industrial   Co.,   Ltd  and   Matsushita   Electronics
                         Corporation (filed as Exhibit 10.26 to the Registrant's
                         Quarterly  Report on Form 10-Q (File No.  0-21970)  for
                         the quarterly period ended July 2, 1995).

       10.19             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).

       10.20 (1)         License  Agreement  dated as of March 6, 1995,  between
                         the Registrant and BTR, Inc.

       11                Statement re  computation  of per share  earnings  (see
                         page 38).

       13                Portions of Registrant's  Annual Report to Shareholders
                         for  the  fiscal   year  ended   December   31,   1996,
                         incorporated  by  reference  into  this  Report on Form
                         10-K.

       21                Subsidiaries  of Registrant  (filed as Exhibit 10.21 to
                         the  Registrant's  Annual Report on Form 10-K (File No.
                         0-21970) for the fiscal year ended December 31, 1995).

       23                Consent of Ernst & Young LLP, Independent Auditors (see
                         page 36).

       24                Power of Attorney (see page 35)

       27                Financial Data Schedule.

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

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

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

     Pursuant to Item 601(b)(2) of Regulation  S-K, the schedules to Exhibit 2.1
have been omitted. The Registrant hereby agrees to furnish supplementally a copy
of any omitted schedule to the Securities and Exchange  Commission upon request.
The omitted schedules are listed below:

     Schedule 1.1(a)      Capital Equipment
     Schedule 1.1(b)      Expensed Assets
     Schedule 1.1(d)      Contracts
     Schedule 1.1(f)      Software
     Schedule 1.1(h)      Testing Hardware and Software
     Schedule 1.1(i)      Research and Development Projects
     Schedule 2.2         Calculation of Net Revenues of the Business
     Schedule 2.5         Inventory  Transfer Pricing
     Schedule 5.2(a)      Seller Consents
     Schedule 5.16        Seller's Knowledge
     Schedule 6.2(a)      Buyer Consents
     Schedule 6.2(b)      Buyer Violations
     Schedule 6.4         Capitalization of Buyer
     Schedule 6.7         Registration Rights
     Schedule 12.3(d)     Buyer's Knowledge

         (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             37

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


                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                  ACTEL CORPORATION




March 28, 1997                    By:              /s/ John C. East
                                     -------------------------------------------
                                                      John C. East
                                         President and Chief Executive Officer


     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.
<TABLE>
<CAPTION>
                Signature                                          Title                                Date
------------------------------------------  ------------------------------------------------  ----------------------



<S>                                         <C>                                                    <C>
              /s/ John C. East              President and Chief Executive Officer (Principal       March 28, 1997
-----------------------------------------   Executive Officer) and Director
              (John C. East)


           /s/ David M. Sugishita           Senior Vice President of Finance & Administration      March 28, 1997
-----------------------------------------   and Chief Financial Officer (Principal Financial
           (David M. Sugishita)             and Accounting Officer)


            /s/ Keith B. Geeslin            Director                                               March 28, 1997
-----------------------------------------
            (Keith B. Geeslin)


             /s/ Jos C. Henkens             Director                                               March 28, 1997
-----------------------------------------
             (Jos C. Henkens)


         /s/ Frederic N. Schwettmann        Director                                               March 28, 1997
-----------------------------------------
        (Frederic N. Schwettmann)


            /s/ Robert G. Spencer           Director                                               March 28, 1997
-----------------------------------------
           (Robert G. Spencer)
</TABLE>

                                                                     SCHEDULE II

                                ACTEL CORPORATION

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

                        Valuation and Qualifying Accounts
                                 (in thousands)
<TABLE>
<CAPTION>
                                                  Balance at
                                                 beginning of                                       Balance at end
                                                    period          Provisions       Write-Offs        of period
                                               ----------------  ----------------  ---------------  ----------------
<S>                                                     <C>              <C>               <C>              <C>
Allowance for doubtful accounts:
   Year ended December 31, 1994.............            600               --                 3              597
   Year ended December 31, 1995.............            597               --                30              567
   Year ended December 31, 1996.............            567               81                15              633
</TABLE>