<PAGE>
 
================================================================================

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

                                   Form 10-Q
                                        
                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                         For the quarterly period ended
                                 June 30, 1998

                                       or

               TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                For the transition period from ...... to ......
                                        
                         Commission file number 0-19654
                                        
--------------------------------------------------------------------------------

                       VITESSE SEMICONDUCTOR CORPORATION
             (Exact name of registrant as specified in its charter)

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


          Delaware                                              77-0138960
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                             Identification No.)

                                741 CALLE PLANO
                              Camarillo, CA  93012
                    (Address of principal executive offices)
                                 (805) 388-3700
              (Registrant's telephone number, including area code)

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


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

     As of June 30, 1998, there were 73,224,698 shares of $0.01 par value common
stock outstanding.

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<PAGE>
 
                       VITESSE SEMICONDUCTOR CORPORATION

                               TABLE OF CONTENTS
                               -----------------
<TABLE> 
<CAPTION> 
                                                                       Page Number
<S>                                                                        <C> 

PART I      FINANCIAL INFORMATION                                        
                                                                         
   Item 1   Financial Statements:                                        
                                                                         
            Consolidated Balance Sheets as of June 30, 1998                  2 
            and September 30, 1997                                             
                                                                               
            Consolidated Statements of Operations for the Three              3 
            Months ended June 30, 1998, June 30, 1997,                         
            and March 31, 1998, and the Nine Months                            
            ended June 30, 1998 and June 30, 1997.                             
                                                                               
            Consolidated Statements of Cash Flows for the Nine               4 
            Months ended June 30, 1998 and June 30, 1997                       
                                                                               
            Notes to Consolidated Financial Statements                       5 
                                                                               
   Item 2   Management's Discussion and Analysis of                          6 
            Financial Condition and Results of Operations                      
                                                                               
PART II     OTHER INFORMATION                                                  
                                                                               
   Item 6   Exhibits and Reports on Form 8-K                                12 
</TABLE>

                                       1
<PAGE>
 
                                     PART I
                             FINANCIAL INFORMATION
                       VITESSE SEMICONDUCTOR CORPORATION
                          CONSOLIDATED BALANCE SHEETS
                       (in thousands, except share data)
                                        
<TABLE> 
<CAPTION> 
                                                          June 30, 1998  Sept. 30, 1997
                                                          -------------  --------------
                                                           (Unaudited)
<S>                                                        <C>            <C> 
                                     ASSETS
Current assets:
 Cash and cash equivalents                                    $ 64,435      $ 97,358
 Short-term investments                                         85,785        58,486
 Accounts receivable, net                                       34,725        21,072
 Inventories, net:                                                                 
  Raw material                                                   3,397         2,421
  Work in process                                                8,884         6,762
  Finished goods                                                 2,702         2,626
                                                              --------      --------
                                                                14,983        11,809

 Prepaid expenses                                                2,782         1,121
 Deferred tax asset                                             17,700        14,800
                                                              --------      --------
  Total current assets                                         220,410       204,646
                                                              --------      --------
Property and equipment, net                                     55,227        41,684
Restricted long-term deposits                                   65,736        45,556
Other assets                                                       220           394
                                                              --------      --------
                                                              $341,593      $292,280
                                                              ========      ========
                                                                                   
                      LIABILITIES AND SHAREHOLDERS' EQUITY                         
                                                                                   
Current liabilities:                                                               
Current installments of capital lease obligations and                              
  term loans                                                  $    148      $    256
 Accounts payable                                               15,003        19,758
 Accrued expenses and other current liabilities                 12,297         7,017
                                                              --------      --------
     Total current liabilities                                  27,448        27,031
                                                              --------      --------
Capital lease obligations and term loans, less                                      
 current installments                                               33           147
Shareholders' equity:                                                               
 Common stock, $.01 par value.  Authorized 100,000,000                              
  shares; issued and outstanding 73,224,698 shares on                               
  June 30, 1998, and 71,827,476 shares on Sept. 30, 1997           732           718
 Additional paid-in capital                                    289,444       276,810
 Retained earnings (accumulated deficit)                        23,936       (12,426)
                                                              --------      --------
     Net shareholders' equity                                  314,112       265,102
                                                              --------      --------
                                                              $341,593      $292,280
                                                              ========      ========
</TABLE>                                                                  

                                       2
<PAGE>
 
                       VITESSE SEMICONDUCTOR CORPORATION                  
                     CONSOLIDATED STATEMENTS OF OPERATIONS                
                                  (UNAUDITED)                             
                (in thousands, except share and per share data)           

<TABLE>                                                                   
<CAPTION>                                                                 
                                                         Three Months Ended                       Nine Months Ended
                                            ---------------------------------------------   -----------------------------
                                            June 30, 1998   June 30, 1997   Mar. 31, 1998   June 30, 1998   June 30, 1997
                                            -------------   -------------   -------------   -------------   -------------
<S>                                         <C>             <C>              <C>             <C>             <C>
                                                                          
Revenues, net                                 $    46,108     $    27,607     $    40,212     $   121,021     $    74,001
                                                                          
Costs and expenses:                                                       
 Cost of revenues                                  18,168          11,875          16,012          48,374          32,566
 Engineering, research and development              7,375           4,427           6,462          19,392          11,821
 Selling, general and administrative                5,635           3,684           4,849          14,746           9,889
                                              -----------     -----------     -----------     -----------     -----------
  Total costs and expenses                         31,178          19,986          27,323          82,512          54,276
                                              -----------     -----------     -----------     -----------     -----------
                                                                           
Income from operations                             14,930           7,621          12,889          38,509          19,725
                                              -----------     -----------     -----------     -----------     -----------
Other income, net                                   2,467           2,329           2,181           6,931           5,540
                                              -----------     -----------     -----------     -----------     -----------
Income before income taxes                         17,397           9,950          15,070          45,440          25,265
Income taxes                                        3,470             995           3,014           9,078           2,525
                                              -----------     -----------     -----------     -----------     -----------
Net income                                    $    13,927     $     8,955     $    12,056     $    36,362     $    22,740
                                              ===========     ===========     ===========     ===========     ===========
                                                                           
Net income per share                                                       
 Basic                                        $      0.19     $      0.13     $      0.17     $      0.50     $      0.34
                                              ===========     ===========     ===========     ===========     ===========
 Diluted                                      $      0.18     $      0.12     $      0.15     $      0.46     $      0.30
                                              ===========     ===========     ===========     ===========     ===========
                                                                           
Basic weighted average                                                     
 common shares outstanding                     72,978,699      70,291,811      72,355,878      72,433,897      67,417,033
                                              ===========     ===========     ===========     ===========     ===========
                                                                           
Diluted weighted average                                                   
 common shares outstanding                     79,347,508      77,405,325      78,776,600      78,702,546      75,180,427
                                              ===========     ===========     ===========     ===========     ===========
</TABLE>

                                       3
<PAGE>
 
                       VITESSE SEMICONDUCTOR CORPORATION
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                             Nine Months Ended
                                                                      -------------------------------
                                                                      June 30, 1998    June 30, 1997
                                                                      --------------   --------------
<S>                                                                   <C>              <C>
Cash flows from operating activities:
Net income                                                                 $ 36,362         $ 22,740
Adjustments to reconcile net income to net cash
provided by operating activities:
 Depreciation and amortization                                                9,591            4,734
  (Increase) decrease in:
   Receivables, net                                                         (13,653)          (1,071)
   Inventories                                                               (3,174)          (1,028)
   Prepaid expenses                                                          (1,661)            (122)
   Other assets                                                                 174               42
  Increase (decrease) in:
   Accounts payable                                                          (4,755)           5,090
   Accrued expenses and other current liabilities                            10,106            5,232
                                                                           --------         --------
     Net cash provided by operating activities                               32,990           35,617
                                                                           --------         --------
 
Cash flows from investing activities:
 Short-term investments                                                     (27,299)         (47,777)
 Capital expenditures                                                       (23,134)         (17,306)
 Restricted long-term investment                                            (20,180)         (16,800)
                                                                           --------         --------
     Net cash used in investing activities                                  (70,613)         (81,883)
                                                                           --------         --------
 
Cash flows from financing activities:
 Principal payments under capital lease obligations & term loans               (222)            (718)
 Proceeds from issuance of common stock, net                                  4,922          122,349
                                                                           --------         --------
     Net cash provided by financing activities                                4,700          121,631
                                                                           --------         --------
 
     Net (decrease) increase in cash & cash equivalents                     (32,923)          75,365
Cash & cash equivalents at beginning of period                               97,358           52,436
                                                                           --------         --------
Cash & cash equivalents at end of period                                   $ 64,435         $127,801
                                                                           ========         ========
 
Supplemental disclosures of cash flow information:
 Cash paid during the period for:
  Interest                                                                 $     30         $    153
                                                                           ========         ========
  Income taxes                                                             $  1,001         $     81
                                                                           ========         ========
</TABLE>

                                       4
<PAGE>
 
                       VITESSE SEMICONDUCTOR CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                        
Note 1.  General

   The accompanying consolidated financial statements include the accounts of
Vitesse Semiconductor Corporation and its subsidiaries.  All intercompany
accounts and transactions have been eliminated.  In management's opinion, all
adjustments (consisting only of normal recurring accruals) which are necessary
for a fair presentation of financial condition and results of operations are
reflected in the attached interim financial statements.  All amounts are
unaudited except the September 30, 1997 balance sheet.  This report should be
read in conjunction with the audited financial statements presented in the 1997
Annual Report. Footnotes and other disclosures which would substantially
duplicate the disclosures in the Company's audited financial statements for
fiscal year 1997 contained in the Annual Report have been omitted.  The interim
financial information herein is not necessarily representative of the results to
be expected for any subsequent period.

   In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings Per Share."  SFAS No. 128 specifies new standards designed to
improve the earnings per share (EPS) information provided in financial
statements by simplifying the existing computational guidelines, revising the
disclosure requirements and increasing the comparability of EPS data on an
international basis.  Some of the changes made to simplify the EPS computations
include: (a) eliminating the presentation of primary EPS and replacing it with
basic EPS, for which common stock equivalents are not considered, (b)
eliminating the modified treasury stock method and 3% materiality provision and
(c) revising the contingent share provision and the supplemental EPS data
requirements.  SFAS No. 128 also makes a number of changes to existing
disclosure statements issued for periods ending after December 15, 1997,
including interim periods.  All earnings per share amounts for all periods have
been presented and, where necessary, restated to conform to SFAS No. 128
requirements.

NOTE 2.  YEAR 2000 PROBLEM

  The "Year 2000 Problem" is the result of computer programs being written using
two digits rather than four to define the applicable year.  This can affect both
information technology ("IT") and non-IT systems, as non-IT systems typically
include embedded technology such as microcontrollers.  The Company has commenced
taking actions to correct internal IT systems, and is in the early stages of
assessing any related problems of non-IT systems.  The Company expects all IT
and non-IT systems to be compliant by the end of fiscal 1999.  The Company is
also in the early stages of conducting an audit of its third party suppliers as
to the Year 2000 compliance of their systems.  The Company does not believe that
the cost of these actions will have a material adverse affect on the Company's
business, financial condition or operating results.

Note 3.  Stock Split

   On April 21, 1998, the Board of Directors approved a 2 for 1 stock split of
the Company's Common Stock that was effected on May 26, 1998.  All references to
the number of common shares, weighted average number of common shares and per
share data for all periods presented have been adjusted to reflect the stock
split.

                                       5
<PAGE>
 
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                        
   The information set forth in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" below includes "forward looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act"), in particular, in "Results of Operations--
Revenues and Income Taxes," and in "Liquidity and Capital Resources--Investing
and Financing Activities," and is subject to the safe harbor created by that
section.  Factors that realistically could cause results to differ materially
from those projected in the forward looking statements are set forth below in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Risk Factors."

RESULTS OF OPERATIONS

   Revenues

   Total revenues in the third quarter of fiscal 1998 were $46,108,000, a 67%
increase over the $27,607,000 recorded in the third quarter of fiscal 1997 and a
15% increase over the $40,212,000 recorded in the prior quarter.  For the nine
months ended June 30, 1998, total revenues were $121,021,000, a 64% increase
over the $74,001,000 recorded in the nine months ended June 30, 1997.  The
increase in total revenues in the third quarter of 1998 and in the nine months
ended June 30, 1998 was due to an increase in production revenues as a result of
increased shipments to customers in the communications and automatic test
equipment markets.

   Cost of Revenues

   Cost of revenues as a percentage of total revenues in the third quarter of
fiscal 1998 was 39.4% compared to 43.0% in the third quarter of fiscal 1997 and
39.8% in the prior quarter.  For the nine months ended June 30, 1998 and 1997,
cost of revenues as a percentage of total revenues was 40.0% and 44.0%,
respectively.  The decrease in cost of revenues as a percentage of total
revenues was due to a reduction in per unit costs associated with increased
production, as well as increased manufacturing yields.

   The Company's manufacturing yields vary significantly among products,
depending on a particular IC's complexity and the Company's experience in
manufacturing it.  Historically, the Company has experienced difficulties
achieving acceptable yields on some ICs, which  has resulted in shipment delays.
The Company's overall yields are lower than yields experienced in a silicon
process because of the large number of different products manufactured in
limited volume and because the Company's H-GaAs process technology is
significantly less developed.  The Company expects that many of its current and
future products may never be produced in volume.

   Regardless of the process technology used, the fabrication of semiconductors
is a highly complex and precise process.  Defects in masks, impurities in the
materials used, contamination of the manufacturing environment, equipment
failure and other difficulties in the fabrication process can cause a
substantial percentage of wafers to be rejected or numerous die on each wafer to
be nonfunctional.

                                       6
<PAGE>
 
   Because the majority of the Company's costs of manufacturing are relatively
fixed, maintenance of the number of shippable die per wafer is critical to the
Company's results of operations.  Yield decreases can result in substantially
higher unit costs and may result in reduced gross profit and net income.  There
can be no assurance that the Company will not suffer periodic yield problems in
connection with new or existing products which could cause the Company's
business, operating results and financial condition to be materially adversely
affected.

   Inventory is valued at the lower of cost or market.  Because allocable
manufacturing costs can be high, new product inventory is often valued at
market.  In addition, a portion of work-in-process inventory consists of wafers
in various stages of fabrication.  Consequently, the Company estimates yields
per wafer in order to estimate the value of inventory.  If yields are materially
different than projected, work-in-process inventory may need to be revalued.
There can be no assurance that such adjustments will not occur in the future and
have a material adverse effect on the Company's results of operations.

   Engineering, Research and Development Costs

   Engineering, research and development expenses were $7,375,000 in the third
quarter of fiscal 1998 compared to $4,427,000 in the third quarter of fiscal
1997 and $6,462,000 in the prior quarter.  For the nine months ended June 30,
1998, engineering, research and development costs were $19,392,000 compared to
$11,821,0000 in the nine months ended June 30, 1997.  The increases were
principally due to increased headcount and higher costs to support the Company's
continuing efforts to develop new products.  As a percentage of total revenues,
engineering, research and development costs were 16% in the third quarters of
1998 and 1997, and in the prior quarter, and in the nine months ended June 30,
1998 and 1997.  The Company's engineering, research and development costs are
expensed as incurred.

   Selling, General and Administrative Expenses

   Selling, general and administrative expenses (SG&A) were $5,635,000 in the
third quarter of 1998, compared to $3,684,000 in the third quarter of 1997 and
$4,849,000 in the prior quarter.  For the nine months ended June 30, 1998, SG&A
expenses were $14,746,000 compared to $9,889,000 in the same period in 1997.
The increase in SG&A expenses was due to increased headcount and salary
increases.  As a percentage of total revenues, SG&A expenses decreased to 12% in
the third quarter of 1998 from 13% in the third quarter of 1997 and was
unchanged from the prior quarter.  For the nine months ended June 30, 1998, SG&A
expenses as a percentage of total revenues decreased to 12% from 13% in the
comparable period a year ago.  These decreases were the result of the Company's
revenues growing faster than SG&A expenses.

   Other Income, Net

   Other income consists of interest income, net of interest and other expenses.
Other income increased to $2,467,000 in the third quarter of fiscal 1998 from
$2,329,000 in the third quarter of 1997 and $2,181,000 in the prior quarter.
For the nine months ended June 30, 1998, other income increased to $6,931,000
from $5,540,000 in the comparable period a year ago.  These increases were the
result of a higher average cash balance in the third quarter of fiscal 1998 as

                                       7
<PAGE>
 
compared to the third quarter of 1997, and the first nine months of fiscal 1998
as compared to the same period of fiscal 1997.

   Income Taxes

   The Company recorded a provision for income taxes in the amount of $3,470,000
in the third quarter of fiscal 1998 and $995,000 in the third quarter of fiscal
1997 principally for federal alternative minimum taxes, state income taxes, and 
taxes due to foreign jurisdictions.  The Company has a net deferred tax asset 
balance in the amount of $17,700,000 as of June 30, 1998, net of a valuation
allowance of $3,531,000.  The Company has net operating loss carryforwards of 
$30,046,000 for federal income tax purposes. In determining the future
realizability of deferred tax assets associated with net operating loss
carryforwards, the Company has determined that it is more likely than not that
it will fully realize the deferred tax asset. The Company has considered the
full realization of the deferred tax asset in establishing the effective tax
rate for fiscal 1998.

LIQUIDITY AND CAPITAL RESOURCES

   Operating Activities

   The Company generated $32,990,000 and $35,617,000 from operating activities
in the nine-month periods ended June 30, 1998 and 1997, respectively.

   Investing Activities

   Capital expenditures, principally for manufacturing and test equipment, were
$23,134,000 in the nine-month period ended June 30, 1998 compared to $17,306,000
in the nine-month period ended June 30, 1997.  The Company intends to continue
investing in manufacturing, test and engineering equipment and currently expects
to spend an additional $5 to $10 million for capital expenditures in fiscal
1998, which the Company intends to finance with working capital.

   Financing Activities

   In the nine month period ended June 30, 1998, the Company generated
$4,700,000 in financing activities.  Net  proceeds from the issuance of common
stock was $4,922,000, offset by $222,000 in payments on debt obligations.

                                       8
<PAGE>
 
                   FACTORS AFFECTING FUTURE OPERATING RESULTS
                                        
CUSTOMER AND INDUSTRY CONCENTRATION

   The Company is, and intends to continue, focusing its sales efforts on a
relatively small number of companies in the telecommunications, data
communications and ATE markets that require high performance ICs.  Certain of
these companies are also competitors of Vitesse.

VARIABILITY OF QUARTERLY RESULTS

   The Company's quarterly results of operations have varied significantly in
the past and may continue to do so in the future.  These variations have been
due to a number of factors, including: the loss of major customers; variations
in manufacturing yields; the timing and level of new product and process
development costs; changes in inventory levels; changes in the type and mix of
products being sold; changes in manufacturing capacity and variations in the
utilization of this capacity; and customer design changes, delays or
cancellations.  The Company has also from time to time incurred significant new
product and process development costs due to the Company's policy of expensing
costs as incurred relating to the manufacture of new products and the
development of new process technology.  There can be no assurance that the
Company will not incur such charges or experience revenue declines in the
future.

MANUFACTURING CAPACITY LIMITATIONS; NEW PRODUCTION FACILITY

   The Company has begun volume commercial production from its six-inch wafer
fabrication facility in Colorado Springs, Colorado.  The facility includes a
10,000 square foot Class 1 clean room with the capability for future expansion
to 15,000 square feet.

   The successful continued operation of the new wafer fabrication facility, as
well as the Company's overall production operations, will be subject to
numerous risks.  The Company has no prior experience with the operation of
equipment or the processes involved in producing finished six-inch wafers, which
differ significantly from those involved in the production of four-inch wafers.
The Company does not have excess production capacity at its Camarillo facility
to offset any failure of the new facility to meet planned production goals.  As
a result of these and other factors, the failure of the Company to successfully
operate the new wafer fabrication facility could have a material adverse effect
on its business, operating results or financial condition.   The Company also
has to effectively coordinate and manage the Colorado Springs and Camarillo
facilities to successfully meet its overall production goals.  The Company has
limited experience in coordinating and managing full-scale production facilities
which are located at different sites.  The failure to successfully coordinate
and manage the two sites could adversely affect the Company's overall production
and could have a material adverse effect on its business, operating results or
financial condition.

COMPETITION

   The high-performance semiconductor market is highly competitive and subject
to rapid technological change, price erosion and heightened international
competition.  The telecommunications, data communications and ATE industries,
which are the primary target 

                                       9
<PAGE>
 
markets for the Company, are also becoming intensely competitive because of
deregulation and heightened international competition, among other factors. The
Company currently competes against other GaAs-based companies such as Triquint
Semiconductor, the GaAs fabrication operations of system companies such as
Rockwell, and Silicon IC manufacturers employing ECL and BiCMOS technologies
such as Fujitsu, Hewlett Packard, Motorola, National Semiconductor, Texas
Instruments, Applied Micro Circuits Corporation and Synergy Semiconductor
Corporation. Many of these companies have significantly greater financial,
technical, manufacturing and marketing resources than the Company. In addition,
in lower-frequency applications, the Company faces increasing competition from
CMOS-based products, particularly as the performance of such products continues
to improve.

   Competition in the Company's markets for high-performance ICs is primarily
based on price/performance, product quality and the ability to deliver products
in a timely fashion.  Some prospective customers may be reluctant to adopt
Vitesse's products because of perceived risks relating to GaAs technology.  In
addition, product qualification is typically a lengthy process and certain
prospective customers may be unwilling to invest the time or incur the costs
necessary to qualify suppliers such as the Company.  Prospective customers may
also have concerns about the relative speed, complexity and power advantages of
the Company's products compared to more familiar ECL of BiCMOS semiconductors or
about the risks associated with relying on a relatively small company for a
critical sole-sourced component.

ASIAN ECONOMIC ISSUES

   The Company's international business is subject to risks customarily
encountered in foreign operations, including the recent financial turmoil in
Asia.  Although management believes that the financial turmoil in Asia will not
have a material impact on the financial statements, there can be no assurance
that the Company will not be affected by such economic issues in Asia.

PRODUCT AND PROCESS DEVELOPMENT AND TECHNOLOGICAL CHANGE

   The market for the Company's products is characterized by rapid changes in
both product and process technologies.  The Company believes that its future
success will depend, in part, upon its ability to continue to improve its
product and process technologies and develop new technologies in order to
maintain its competitive position, to adapt its products and processes to
technological changes and to adopt emerging industry standards.  There can be no
assurance that the Company will be able to improve its product and process
technologies and develop new technologies in a timely manner or that such
improvements or developments will result in products that achieve market
acceptance.  The failure to successfully improve its existing technologies or
develop new technologies in a timely manner could adversely affect the Company's
business, operating results and financial condition.

DEPENDENCE ON THIRD PARTIES

   The Company depends upon third parties for performing certain processes and
providing a variety of components and materials necessary for the production of
its H-GaAs ICs.  A majority of the Company's ICs are packaged in plastic by
third parties since the Company has no internal 

                                      10
<PAGE>
 
capability to perform such plastic packaging. The balance of the Company's ICs
are packaged in its Camarillo facility using customized ceramic packaging which
is presently sole sourced. Other components and materials for H-GaAs ICs are
available from only a limited number of sources. The inability to obtain
sufficient sole- or limited-source services or components as required could
result in delays or reductions in product shipments which could adversely affect
the Company's business, operating results and financial condition.

ENVIRONMENTAL REGULATIONS

   The Company is subject to a variety of federal, state and local governmental
regulations related to the use, storage, discharge and disposal of toxic,
volatile or otherwise hazardous chemicals used in its manufacturing process.
Any failure to comply with present or future regulations could result in the
imposition of fines on the Company, the suspension of production or a cessation
of operations.  In addition, such regulations could restrict the Company's
ability to expand its facilities at its present location or could require the
Company to acquire costly equipment or to incur other significant expenses to
comply with environmental regulations or to clean up prior discharges.

   The Company uses significant amounts of water throughout its manufacturing
process.  Previous droughts in California have resulted in restrictions being
placed on water use by manufacturers and residents in the states.  In the event
of future drought, reductions in water use may be mandated generally, and it is
unclear how such reductions will be allocated among California's different
users.  No assurance can be given that near term reductions in water allocations
to manufacturers will not occur, possibly requiring a reduction in the Company's
level of production, and materially and adversely affecting the Company's
operations.  See "Business--Environmental Matters."

MANAGEMENT OF GROWTH

   The management of the Company's growth requires qualified personnel and
systems.  In particular, the operation of the Company's wafer fabrication
facility in Colorado Springs and its integration with the Company's Camarillo
facility requires significant management, technical and administrative
resources.  There can be no assurance that the Company will be able to manage
its growth or effectively integrate its Colorado Springs wafer fabrication
facility, and failure to do so could have a material adverse effect on the
Company's business, operating results or financial condition.

DEPENDENCE ON KEY PERSONNEL

   The Company's success depends in part upon attracting and retaining the
services of its managerial and technical personnel.  The competition for
qualified personnel is intense.  There can be no assurance that the Company can
retain its key managerial and technical employees or that it can attract,
assimilate or retain other skilled technical personnel in the future, and
failure to do so could have a material adverse effect on the Company's business,
operating results or financial condition.

                                      11
<PAGE>
 
                                    PART II
                               OTHER INFORMATION
                                        

Item 6.  Exhibits & Reports on Form 8-K

   (A) EXHIBITS
 
       Exhibit 27 Financial Data Schedule.

   (B) REPORTS ON FORM 8-K

       None.

                                      12
<PAGE>
 
                                   SIGNATURES


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



                                     VITESSE SEMICONDUCTOR CORPORATION


August 12, 1998                        By: /s/  Eugene F. Hovanec
                                          -------------------------------
                                            Eugene F. Hovanec
                                            Vice President, Finance and
                                            Chief Financial Officer

                                      13