<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
                                March 31, 1999
                                      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 March 31, 1999, there were 76,022,394 shares of $0.01 par value
                           common stock outstanding.

================================================================================
<PAGE>
 
                       VITESSE SEMICONDUCTOR CORPORATION

                               TABLE OF CONTENTS
                               -----------------


<TABLE> 
<CAPTION> 
                                                                          Page Number


PART I                             FINANCIAL INFORMATION

<S>            <C>                                                             <C>

   Item 1      Financial Statements:

               Condensed Consolidated Balance Sheets as of March 31, 1999       2
               and September 30, 1998

               Condensed Consolidated Statements of Operations for the Three    3
               Months ended March 31, 1999, March 31, 1998 and
               December 31, 1998 and the Six Months ended March 31, 1999
               and March 31, 1998

               Condensed Consolidated Statements of Cash Flows for the          4
               Six Months ended March 31, 1999 and March 31, 1998

               Notes to Condensed Consolidated Financial Statements             6

   Item 2      Management's Discussion and Analysis of                          8
               Financial Condition and Results of Operations

   Item 3      Quantitative and Qualitative Disclosure About Market Risk       14

PART II        OTHER INFORMATION

   Item 4      Submission of Matters to a Vote of Security Holders             15

   Item 6      Exhibits and Reports on Form 8-K                                15
</TABLE>

                                       1
<PAGE>
 
                                    PART I
                             FINANCIAL INFORMATION
                       VITESSE SEMICONDUCTOR CORPORATION
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                       (in thousands, except share data)


<TABLE> 
<CAPTION> 

                                                         Mar. 31, 1999         Sept. 30, 1998           
                                                         -------------         --------------       
                                    ASSETS                (Unaudited)           
Current assets:                                                                              
<S>                                                      <C>                 <C>                  
 Cash and cash equivalents                                    $ 97,569               $ 70,684
 Short-term investments                                         87,870                 91,610
 Accounts receivable, net                                       48,124                 39,953
 Inventories, net                                               20,493                 16,795
 Prepaid expenses                                                4,823                  3,008
 Deferred tax asset                                             27,396                 20,982
                                                              --------               --------
  Total current assets                                         286,275                243,032
                                                              --------               --------
Property and equipment, net                                     65,649                 56,455
Restricted long-term deposits                                   67,110                 68,704
Intangible assets                                               15,321                    ---
Other assets                                                     5,647                    220
                                                              --------               --------
                                                              $440,002               $368,411
                                                              ========               ========
</TABLE> 

                      LIABILITIES AND SHAREHOLDERS' EQUITY       

<TABLE>
<CAPTION>


Current liabilities:
<S>                                                          <C>          <C>
 Accounts payable                                             $ 13,421               $ 13,898
 Accrued expenses and other current liabilities                 13,052                  9,481
 Income taxes payable                                              ---                  4,199
 Capital lease obligations                                          69                    145
                                                              --------               --------
     Total current liabilities                                  26,542                 27,723
                                                              --------               --------
Other liabilities                                                2,725                    ---
Shareholders' equity:
 Common stock, $.01 par value.  Authorized 100,000,000
  shares; issued and outstanding 76,022,394 shares on
  Mar. 31, 1999, and 73,788,136 shares on Sept. 30, 1998           760                    738
 Additional paid-in capital                                    337,078                299,503
 Retained earnings                                              72,897                 40,447
                                                              --------               --------
     Total shareholders' equity                                410,735                340,688
                                                              --------               --------
                                                              $440,002               $368,411
                                                              ========               ========

</TABLE>

See accompanying Notes to Condensed Consolidated Financial Statements.

                                       2
<PAGE>
 
                       VITESSE SEMICONDUCTOR CORPORATION
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (Unaudited)
                     (in thousands, except per share data)
<TABLE>
<CAPTION>


                                                         Three Months Ended                       Six Months Ended
                                            ---------------------------------------------   -----------------------------
                                            Mar. 31, 1999   Mar. 31, 1998   Dec. 31, 1998   Mar. 31, 1999   Mar. 31, 1998
                                            -------------   -------------   -------------   -------------   -------------
<S>                                         <C>             <C>             <C>             <C>             <C>

Revenues, net                                 $    66,863     $    40,212     $    60,179     $   127,042     $    74,913

Costs and expenses:
 Cost of revenues                                  24,907          16,012          22,961          47,868          30,206
 Engineering, research & development               10,669           6,462           9,565          20,234          12,017
 Selling, general & administrative                  7,688           4,849           7,019          14,707           9,111
                                              -----------     -----------     -----------     -----------     -----------
  Total costs & expenses                           43,264          27,323          39,545          82,809          51,334
                                              -----------     -----------     -----------     -----------     -----------

Income from operations                             23,599          12,889          20,634          44,233          23,579
Other income, net                                   2,735           2,181           2,409           5,144           4,464
                                              -----------     -----------     -----------     -----------     -----------

Income before income taxes                         26,334          15,070          23,043          49,377          28,043
Income taxes                                        8,689           3,014           7,605          16,294           5,608
                                              -----------     -----------     -----------     -----------     -----------

Net income                                    $    17,645     $    12,056     $    15,438     $    33,083     $    22,435
                                              ===========     ===========     ===========     ===========     ===========

Net income per share
 Basic                                              $0.24           $0.17           $0.21           $0.44           $0.31
                                              ===========     ===========     ===========     ===========     ===========
 Diluted                                            $0.22           $0.15           $0.19           $0.41           $0.29
                                              ===========     ===========     ===========     ===========     ===========

Shares used in per share computations:
 Basic                                             75,036          72,356          74,041          74,565          72,150    
                                              ===========     ===========     ===========     ===========     ===========
 Diluted                                           81,902          78,777          80,905          81,486          78,548
                                              ===========     ===========     ===========     ===========     ===========

</TABLE>



See accompanying Notes to Condensed Consolidated Financial Statements.

                                       3
<PAGE>
 
                       VITESSE SEMICONDUCTOR CORPORATION
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)
                                 (in thousands)
<TABLE>
<CAPTION>
                                                                             Six Months Ended
                                                                      -------------------------------
                                                                      Mar. 31, 1999    Mar. 31, 1998
                                                                      --------------   --------------
<S>                                                                   <C>              <C>
Cash flows from operating activities:
Net income                                                                 $ 33,083         $ 22,435
Adjustments to reconcile net income to net cash
provided by operating activities:
 Depreciation and amortization                                               10,068            6,144
Change in assets and liabilities:
  (Increase) decrease in, net of effects of acquisition:
   Accounts receivable, net                                                  (8,171)          (7,707)
   Inventories                                                               (3,698)          (1,681)
   Prepaid expenses                                                          (1,815)          (1,153)
   Other assets                                                                 ---             (228)
  Increase (decrease) in:
   Accounts payable                                                            (477)          (4,876)
   Accrued expenses and other current liabilities                             3,571              647
   Income taxes payable                                                       6,601            5,324
                                                                           --------         --------
     Net cash provided by operating activities                               39,162           18,905
                                                                           --------         --------

Cash flows from investing activities:
 Maturities of short-term investments                                         3,740            6,433
 Capital expenditures                                                       (18,897)         (19,826)
 Restricted long-term deposits                                                1,594          (13,113)
 Payment for purchase of company                                            (13,040)             ---
                                                                           --------         --------
     Net cash used in investing activities                                  (26,603)         (26,506)
                                                                           --------         --------

Cash flows from financing activities:
 Principal payments under capital lease obligations & term loans                (76)            (179)
 Proceeds from issuance of common stock, net                                 14,402            2,665
                                                                           --------         --------
     Net cash provided by financing activities                               14,326            2,486
                                                                           --------         --------

     Net increase (decrease) in cash and cash equivalents                    26,885           (5,115)
Cash & cash equivalents at beginning of period                               70,684           97,358
                                                                           --------         --------
Cash & cash equivalents at end of period                                   $ 97,569         $ 92,243
                                                                           ========         ========
</TABLE>

See accompanying Notes to Condensed Consolidated Financial Statements.

                                       4
<PAGE>
 
                       VITESSE SEMICONDUCTOR CORPORATION
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, continued
                                  (Unaudited)
                                 (in thousands)
<TABLE>
<CAPTION>

                                                                         Six Months Ended
                                                                   -----------------------------
                                                                   Mar. 31, 1999   Mar. 31, 1998
                                                                   -------------   -------------
<S>                                                                <C>             <C>
Supplemental disclosures of cash flow information:
 Cash paid during the period for:
  Interest                                                               $     7            $ 25
                                                                         =======            ====
  Income taxes                                                           $ 1,582            $248
                                                                         =======            ====

Supplemental disclosures of non-cash transactions:
 Issuance of stock options in purchase acquisition                       $   300            $  0
                                                                         =======            ====
 Issuance of common stock in acquisition, net of beginning
  retained earnings adjustment                                           $ 1,109            $  0
                                                                         =======            ====
 Issuance of notes payable in acquisition                                $ 2,725            $  0
                                                                         =======            ====
 Increase in equity associated with tax benefit from exercise
 of stock options                                                        $22,643            $  0
                                                                         =======            ====
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.

                                       5
<PAGE>
 
                       VITESSE SEMICONDUCTOR CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1.  Basis of Presentation and Significant Accounting Policies

The accompanying condensed consolidated financial statements are unaudited and
include the accounts of Vitesse Semiconductor Corporation and its subsidiaries
(the "Company").  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.  This report should be read in conjunction with the
audited financial statements presented in the 1998 Annual Report. Footnotes and
other disclosures which would substantially duplicate the disclosures in the
Company's audited financial statements for fiscal year 1998 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.

Computation of Net Income per Share
-----------------------------------

In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share."  SFAS No. 128
replaced the previously reported primary and fully diluted earnings per share
with basic and diluted earnings per share and became effective for both interim
and annual periods ending after December 15, 1997.  Unlike primary earnings per
share, basic earnings per share excludes any dilutive effects of options and
convertible securities. Diluted earnings per share is very similar to previously
reported fully diluted earnings per share.  All earnings per share amounts for
all periods presented have been restated to conform to SFAS No. 128 
requirements.

The reconciliation of shares used to calculate basic and diluted income per
share consists of the following (in thousands):
<TABLE>
<CAPTION>
                                                          Three Months Ended               Six Months Ended
                                                     -----------------------------   -------------   ----------------
                                                     Mar. 31, 1999   Mar. 31, 1998   Mar. 31, 1999    Mar. 31, 1998
                                                     -------------   -------------   -------------   ----------------
<S>                                                  <C>             <C>             <C>             <C>
Shares used in basic per share computations --
     weighted average shares outstanding                    75,036          72,356          74,565             72,150
Net effect of dilutive common share equivalents
   based on treasury stock method                            6,866           6,421           6,921              6,398
                                                            ------          ------          ------             ------
Shares used in diluted per share computations               81,902          78,777          81,486             78,548
                                                            ======          ======          ======             ======
</TABLE>

Options to purchase 141,551 shares and 27,500 were outstanding at March 31, 1999
and 1998, respectively, but were not included in the computation of diluted net
income per share because the exercise price of the options was greater than the
average market price of the common shares, and therefore the effect would be
antidilutive.

Comprehensive Income
--------------------

On October 1, 1998 the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income."  This statement establishes
standards for reporting and display of comprehensive income and its components
in a full set of general-purpose financial statements.  The Company has no
components of other comprehensive income.  Therefore comprehensive income is the
same as the reported net income.

                                       6
<PAGE>
 
Segment Reporting
-----------------
On October 1, 1998 the Company adopted Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information."  This statement establishes standards for reporting operating
segment information in annual financial statements and interim reports issued to
shareholders.  Disclosure will be included in the Company's annual financial
statements.

Reclassifications and Restatements
----------------------------------
Where necessary, prior periods' information has been reclassified to conform to
the current period condensed consolidated financial statement presentation.

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.


Note 2.  Business Combinations

   On November 25, 1998 the Company acquired all of the equity interests of
Vermont Scientific Technologies, Inc. (VTEK) for $13.0 million cash and $2.7
million in notes payable.  VTEK provides integrated circuit design services
primarily in the telecommunications industry.  In conjunction with the
transaction, the Company recorded goodwill and other identifiable intangibles
amounting to $9.9 million and $5.9 million, respectively, with useful lives
ranging from 5 to 15 years. The transaction is being accounted for as a
purchase.  Accordingly, the operations of VTEK are included from the date of
acquisition.  VTEK is not a significant subsidiary, and therefore proforma data
is not presented herein.

       On January 21, 1999, the Company issued 327,628 shares of its common
stock in exchange for all of the outstanding shares of Serano Systems
Corporation (Serano).  Serano is a leader in enclosure platform management
solutions for Fibre Channel and SCSI server and storage subsystems.  The
transaction was accounted for as an immaterial pooling of interests, and
accordingly, the consolidated financial statements have been prepared as if
Serano  had been combined beginning January 1, 1999.  Consolidated financial
statements for periods prior to January 1, 1999 have not been restated.  The
Company recorded an adjustment to beginning equity to reflect the 327,628 shares
issued in the transaction and Serano's shareholders equity of $633,000 at
January 1, 1999.



Note 3.    Inventories

Inventories consist of the following (in thousands):
<TABLE> 
<CAPTION> 
                                              March 31,   Sept. 30,
                                                1999        1998
                                               -------     -------
<S>                                               <C>        <C>   
Raw Materials                                  $ 3,650     $ 2,949
Work in process and finished goods              16,843      13,846
                                               -------     -------
                                               $20,493     $16,795
                                               =======     =======
</TABLE>

                                       7
<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 second quarter of fiscal 1999 were $66.9 million, a 66%
increase over the $40.2 million recorded in the second quarter of fiscal 1998
and an 11% increase over the $60.2 million recorded in the prior quarter.  For
the six months ended March 31, 1999, total revenues were $127.0 million, a 70%
increase over the $74.9 million recorded in the six months ended March 31, 1998.
The increase in total revenues in the second quarter of 1999 and in the six
months ended March 31, 1999 was primarily due to an increase in the number of
units shipped to customers in the communications and ATE markets.

   Cost of Revenues

   Cost of revenues as a percentage of total revenues in the second quarter of
fiscal 1999 was 37.3% compared to 39.8% in the second quarter of fiscal 1998 and
38.2% in the prior quarter.  The decrease in cost of revenues as a percentage of
total revenues resulted primarily from a reduction in per unit costs associated
with increased utilization of the Company's Camarillo and Colorado Springs wafer
fabrication facilities, as well as improved yields at both facilities.

   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.

   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 

                                       8
<PAGE>
 
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 $10.7 million in the
second quarter of fiscal 1999 compared to $6.5 million in the second quarter of
fiscal 1998 and $9.6 million in the prior quarter.  For the six months ended
March 31, 1999, engineering, research and development costs were $20.2 million
compared to $12.0 million in the six months ended March 31, 1998.  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 each of the
second quarters of 1999 and 1998, in the prior quarter, and in the six months
ended March 31, 1999 and 1998.  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 $7.7 million in the
second quarter of 1999, compared to $4.8 million in the second quarter of 1998
and $7.0 million in the prior quarter. For the six months ended March 31, 1999,
SG&A expenses were $14.7 million compared to $9.1 million in the same period in
1998.  The increase in SG&A expenses was due to increased headcount, higher
commissions earned by sales representatives resulting from increased sales, and
increased advertising costs.  As a percentage of total revenues, SG&A expenses
decreased to 11.5% in the second quarter of 1999 from 12.1% in the second
quarter of 1998, and from 11.7% in the prior quarter.  For the six months ended
March 31, 1999, SG&A expenses as a percentage of total revenues decreased to
11.6% from 12.2% in the comparable period a year ago.  The 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 $2.7 million in the second quarter of fiscal 1999 from
$2.2 million in the second quarter of 1998 and from $2.4 million in the prior
quarter. For the six months ended March 31, 1999, other income increased to $5.1
million from $4.5 million in the comparable period a year ago. The increases are
due to higher average cash, short-term investments and long-term deposit
balances.

                                       9
<PAGE>
 
   Income Taxes

   The Company recorded a provision for income taxes in the amount of $8.7
million in the second quarter of fiscal 1999 and $3.0 million in the second
quarter of fiscal 1998, representing an effective rate of 33% and 20%
respectively.  The increase in the effective tax rate is due to the full
utilization in previous years of available net operating loss carryforwards.
The Company expects the effective tax rate to be 33% in fiscal 1999.

Liquidity and Capital Resources

   Operating Activities

   The Company generated $39.2 million and $18.9 million from operating
activities in the six month periods ended March 31, 1999 and 1998, respectively.
The increase in cash flow from operations was principally due to an improvement
in profitability.

   Investing Activities

   Capital expenditures, principally for manufacturing and test equipment, were
$18.9 million in the six month period ended March 31, 1999 compared to $19.8
million in the six month period ended March 31, 1998.  The Company intends to
continue investing in manufacturing, test and engineering equipment.
Additionally, as discussed in Note 2 above, the Company paid $13.0 million in
cash for the purchase of VTEK during the first quarter of fiscal 1999.

   Financing Activities

   In the six month period ended March 31, 1999, the Company generated $14.3
million of cash from financing activities primarily from the proceeds from the
issuance of common stock.

   Management believes that the Company's cash and cash equivalents, short-tem
investments, and cash flow from operations are adequate to finance its planned
growth and operating needs for the next 12 months.

                   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 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 in the past and may
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

                                       10
<PAGE>
 
capacity; and customer design changes, delays or cancellations. In the past, the
Company has also 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 technologies.
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

   During fiscal 1998, the Company began volume commercial production at its
six-inch wafer fabrication facility in Colorado Springs, Colorado.  The facility
includes a 10,000 square-foot Class 1 clean room with the capacity 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 limited
experience with the operation of equipment or the processes involved in
producing finished six-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 continue successful operation of the new wafer
fabrication facility could have a material adverse effect on its business,
operating results or financial condition.   The Company will also have 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.

Risks Associated With Recent and Future Acquisitions

     During the past year, the Company has made two strategic acquisitions.
Acquisitions by the Company may result in the diversion of management's
attention from the day-to-day operations of the Company's business and may
include numerous other risks, including difficulties in the integration of
acquired operations, products and personnel. To the extent that efforts to
integrate recent and future acquisitions fail, there could be a material adverse
effect on results of operations.  In addition, acquisitions by the Company have
the potential to result in dilutive issuances of equity securities, the
incurrence of substantial debt, and amortization expenses related to goodwill
and other intangible assets. While the Company does not have any binding
obligations with respect to any particular material acquisition, management
frequently evaluates the strategic opportunities available to it and may in the
near-term or long-term future pursue additional acquisitions of complementary
products, technologies or businesses.

                                       11
<PAGE>
 
Competition

   The high-performance semiconductor market is highly competitive and subject
to rapid technological change, price erosion and heightened international
competition.  The communications and ATE industries, which are primary target
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 fabrication operations of
systems companies, such as Rockwell, and Silicon IC manufacturers employing ECL
and BiCMOS technologies such as Fujitsu, Hewlett Packard, Motorola, National
Semiconductor, Texas Instruments and Applied Micro Circuits 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.

                                       12
<PAGE>
 
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 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.

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.

Year 2000

   The "Year 2000 Issue" 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.

                                       13
<PAGE>
 

   The Company is evaluating and addressing Year 2000 issues associated with its
IT and non-IT systems.  Many of the IT and non-IT systems are compliant.  Other
systems, which have been identified as noncompliant, are planned to be replaced
or upgraded.  Certain non-IT systems in Vitesse's manufacturing facility have
not been fully evaluated for Year 2000 compliance.  The Company anticipates that
remediation and testing will be substantially complete not later than July 1999
at a cost not material to the consolidated financial statements.

   The Company's products have no specific date functions or date dependencies
and will operate according to specifications through the Year 2000 date rollover
and thereafter.

   The Company may also be affected by customer or supplier Year 2000 issues.
The Company has contacted critical and significant suppliers of products and
services to determine that the suppliers' operations and the products and
services they provide are Year 2000 compliant, or to monitor their progress
toward Year 2000 compliance.  Based on inquiries made, the Company does not
anticipate any interruptions in services provided by critical suppliers.

   Management believes that Year 2000 issues will not materially impact the
Company's business, operating results or financial condition.  The most likely
worst case would be minor delays in production and shipments.  The Company has
not yet fully developed contingency plans to address any failure of its Year
2000 risk assessment plan to identify and fully remediate any significant risk
to its ongoing operations.  Development of contingency plans is in progress and
will be completed by July 1999.

   The information set forth above and elsewhere in this quarterly report
relating to Year 2000 issues constitutes a "Year 2000 Readiness Disclosure," as
such term is defined by the Year 2000 Information and Readiness Disclosure Act
of 1998, enacted October 19, 1998 (Public Law 105-271, 112 State.2386).


Item 3.  Quantitative and Qualitative Disclosure About Market Risk - None

                                       14
<PAGE>


                                    PART II
                               OTHER INFORMATION


Item 4.  Submission of Matters to a Vote of Security Holders

     On January 26, 1999, the Company held its regular Annual Meeting of
Stockholders.  The purpose of the meeting was to elect Directors to serve for
the ensuing year and to ratify the appointment of KPMG LLP as independent
auditors for the Company for the 1999 fiscal year.  The following individuals
were elected to serve as Directors for the ensuing year:


<TABLE>
<CAPTION>

Name                                            Age                 Principal Occupation
----                                            ---                 --------------------
<S>                                             <C>                 <C>
 Pierre R. Lamond                                68                 General Partner of Sequoia Capital and Chairman
                                                                    of the Board of Directors of the Company
 James A. Cole                                   56                 General Partner of Windward Ventures and
                                                                    Spectra Enterprise Associates
 Alex Daly                                       37                 President and Chief Executive Officer of Cygnus
                                                                    Solutions
 John C. Lewis                                   63                 Chairman of Amdahl Corporation
 Louis R. Tomasetta                              50                 President, Chief Executive Officer and Director of
                                                                    the Company

</TABLE>

Additionally, the following items were voted upon and approved
 by the shareholders:

<TABLE>
<CAPTION>
                                                                                          Against or              Votes
                                                                    Votes for             Withheld              Abstained
                                                                   ----------             --------              ---------
<S>                                                                <C>                    <C>                   <C>  
Ratification of appointment of KPMG LLP                            
as independent auditors for the fiscal year
ending September 30, 1999                                          66,261,755              27,938                 39,732

</TABLE>

Item 6.  Exhibits & Reports on Form 8-K

   (a) Exhibits

       Exhibit 27 Financial Data Schedule.

   (b) Reports on Form 8-K

       None.

                                       15
<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


May 13, 1999               By:   /s/ Eugene F. Hovanec
                                 _____________________________________
                                 Eugene F. Hovanec
                                 Vice President, Finance and
                                 Chief Financial Officer

                                      16