<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
                               December 31, 2000

                                      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 January 31, 2001, there were 189,986,286 shares of $0.01 par value
common stock outstanding.

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

                       VITESSE SEMICONDUCTOR CORPORATION

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

<TABLE>
<CAPTION>
                                                                                  Page Number
<S>                                                                               <C>
PART I       FINANCIAL INFORMATION

   Item 1    Financial Statements:

             Condensed Consolidated Balance Sheets as of December 31, 2000              2
             (unaudited) and September 30, 2000

             Unaudited Condensed Consolidated Statements of Operations for              3
             the three months ended December 31, 2000, and December 31, 1999

             Unaudited Condensed Consolidated Statements of Cash Flows for              4
             the three months ended December 31, 2000 and December 31, 1999

             Notes to Unaudited Condensed Consolidated Financial Statements             6

   Item 2    Management's Discussion and Analysis of                                    7
             Financial Condition and Results of Operations

   Item 3    Quantitative and Qualitative Disclosure About Market Risk                 15

PART II      OTHER INFORMATION

   Item 2    Changes in Securities                                                     16

   Item 6    Exhibits and Reports on Form 8-K                                          16
</TABLE>

                                       1
<PAGE>

                                    PART I
                             FINANCIAL INFORMATION

                       VITESSE SEMICONDUCTOR CORPORATION
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                       (in thousands, except share data)

<TABLE>
<CAPTION>
                                                                               Dec. 31, 2000  Sept. 30, 2000
                                                                               -------------  --------------
                                                                                 (Unaudited)
<S>                                                                            <C>            <C>
                                                      ASSETS

Current assets:
   Cash and cash equivalents                                                  $   392,883      $   257,081
   Short-term investments                                                         357,678          442,475
   Accounts receivable, net                                                       152,988          113,172
   Inventories, net                                                                50,559           43,715
   Prepaid expenses and other current assets                                        6,841            6,969
   Deferred tax assets, net                                                         2,390           13,730
                                                                              -----------      -----------
     Total current assets                                                         963,339          877,142
                                                                              -----------      -----------

Long-term investments                                                             222,364          292,698
Property and equipment, net                                                       193,448          141,874
Restricted long-term deposits                                                      80,791           75,804
Intangible assets, net                                                            444,776          452,895
Deferred tax assets, net                                                           43,506           43,506
Other assets                                                                       16,199           17,147
                                                                              -----------      -----------
                                                                              $ 1,964,423      $ 1,901,066
                                                                              ===========      ===========

                                       LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Current portion of long-term debt                                          $       458      $     4,227
   Accounts payable                                                                17,164           21,813
   Accrued expenses and other current liabilities                                  47,467           34,944
   Accrued interest expense                                                         8,480            1,280
   Income taxes payable                                                            11,026            8,307
                                                                              -----------      -----------
         Total current liabilities                                                 84,595           70,571
                                                                              -----------      -----------
Long-term debt                                                                         --            3,587
Convertible subordinated debt                                                     720,000          720,000

Minority interest                                                                   2,456            1,506
Shareholders' equity:
   Common stock, $.01 par value.  Authorized 500,000,000
     shares; issued and outstanding 180,655,041 and
     180,049,153 shares on Dec. 31, 2000 and Sept. 30, 2000,
     respectively                                                                   1,807            1,801
   Additional paid-in capital                                                   1,035,502          998,537
   Deferred compensation                                                          (32,061)         (18,958)
   Retained earnings                                                              152,124          124,022
                                                                              -----------      -----------
         Total shareholders' equity                                             1,157,372        1,105,402
                                                                              -----------      -----------
                                                                              $ 1,964,423      $ 1,901,066
                                                                              ===========      ===========
</TABLE>

See accompanying Notes to Unaudited 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
                                                                         ------------------------------------------
                                                                         Dec. 31, 2000               Dec. 31, 1999
                                                                         -------------               --------------
                                                                                                        (Restated)
<S>                                                                      <C>                         <C>
Revenues                                                                 $  165,066                  $    89,279

Costs and expenses:
   Cost of revenues                                                          52,347                       31,839
   Engineering, research and development                                     33,665                       18,231
   Selling, general and administrative                                       17,665                       11,957
   Amortization of goodwill and intangible assets                            20,334                          360
                                                                         ----------                  -----------
     Total costs and expenses                                               124,011                       62,387
                                                                         ----------                  -----------

Income from operations                                                       41,055                       26,892

Interest income                                                              15,412                        2,820
Interest (expense)                                                           (8,305)                         (26)
                                                                         ----------                  -----------

Income before income taxes                                                   48,162                       29,686
Income taxes                                                                 20,060                        9,796
                                                                         ----------                  -----------
Net income                                                               $   28,102                   $   19,890
                                                                         ==========                   ==========

Net income per share
   Basic                                                                 $     0.16                   $     0.12
                                                                         ==========                   ==========
   Diluted                                                               $     0.15                   $     0.11
                                                                         ==========                   ==========

Shares used in per share computations:
   Basic                                                                    180,434                      171,008
                                                                         ==========                   ==========
   Diluted                                                                  193,084                      184,442
                                                                         ==========                   ==========
</TABLE>

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

                                       3
<PAGE>

                       VITESSE SEMICONDUCTOR CORPORATION
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)
                                (in thousands)

<TABLE>
<CAPTION>
                                                                                        Three Months Ended
                                                                                -----------------------------------
                                                                                 Dec. 31, 2000        Dec. 31, 1999
                                                                                --------------        -------------
                                                                                                       (Restated)
<S>                                                                             <C>                   <C>
Cash flows from operating activities:
Net income                                                                      $     28,102          $   19,890
Adjustments to reconcile net income to net cash
provided by operating activities:
   Depreciation and amortization                                                      30,925               6,628
   Amortization of debt issue costs and debt discount                                    971                  --
   Amortization of deferred compensation                                               2,619                 421
   Increase in equity associated with tax
     benefit from exercise of stock options                                            5,720              13,581
   Change in assets and liabilities:
     (Increase) decrease in, net of effects of acquisitions:
       Accounts receivable, net                                                      (39,816)             (6,578)
       Inventories                                                                    (6,844)             (2,471)
       Prepaid expenses and other current assets                                         128               1,051
       Other assets                                                                       --                 201
     Increase (decrease) in, net of effects of acquisitions:
       Accounts payable                                                               (4,649)             (3,793)
       Accrued expenses and other current liabilities                                 12,215                (811)
       Accrued interest expense                                                        7,200                  --
       Income taxes payable                                                           14,059              (2,087)
                                                                                ------------          ----------
         Net cash provided by operating activities                                    50,630              26,032
                                                                                ------------          ----------
Cash flows from investing activities:
   Investments, net                                                                  155,131             (28,212)
   Capital expenditures                                                              (62,096)            (13,418)
   Restricted long-term deposits                                                      (4,987)             (8,781)
   Payment for purchase of companies, net of cash acquired                              (934)                 --
                                                                                ------------          ----------
         Net cash provided by (used in) investing activities                          87,114             (50,411)
                                                                                ------------          ----------
Cash flows from financing activities:
   Principal payments under long-term debt and capital leases                         (7,379)             (1,948)
   Capital contributions by minority interest limited partners                           950                  --
   Proceeds from issuance of common stock, net                                         4,487               6,672
                                                                                ------------          ----------
         Net cash (used in) provided by financing activities                          (1,942)              4,724
                                                                                ------------          ----------
         Net increase (decrease) in cash and cash equivalents                        135,802             (19,655)
Cash and cash equivalents at beginning of period                                     257,081              89,941
                                                                                ------------          ----------
Cash and cash equivalents at end of period                                      $    392,883          $   70,286
                                                                                ============          ==========
</TABLE>

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

                                       4
<PAGE>

                       VITESSE SEMICONDUCTOR CORPORATION
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)
                                (in thousands)

<TABLE>
<CAPTION>
                                                                                      Three Months Ended
                                                                            ---------------------------------------
                                                                            Dec. 31, 2000             Dec. 31, 1999
                                                                            -------------             -------------
                                                                                                        (Restated)
<S>                                                                         <C>                       <C>
Supplemental disclosures of cash flow information:

Cash paid during the period for:

         Interest                                                             $        265             $        26
                                                                              ============             ===========
         Income taxes                                                         $        289             $        75
                                                                              ============             ===========

Supplemental disclosures of non-cash transactions:

     Issuance of stock options in purchase transaction                        $      4,930             $
                                                                              ============             ============
     Issuance of common stock in purchase transaction                         $      6,112             $         --
                                                                              ============             ============
</TABLE>

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

                                       5
<PAGE>

                       VITESSE SEMICONDUCTOR CORPORATION

        NOTES TO UNAUDITED 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").  The condensed consolidated financial statements
for all prior periods presented have been restated to reflect the Company's
acquisition of SiTera Incorporated ("SiTera") on May 31, 2000, which was
accounted for under the pooling-of-interests method.  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 2000 Annual
Report.  Footnotes and other disclosures which would substantially duplicate the
disclosures in the Company's audited financial statements for fiscal year 2000
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

     The reconciliation of shares used to calculate basic and diluted income per
share consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                         Three Months Ended
                                                   ------------------------------
                                                   Dec. 31,  2000   Dec. 31, 1999
                                                   --------------   -------------
<S>                                                <C>              <C>
Shares used in basic per share computations -
weighted average shares outstanding                       180,434         171,008
Net effect of dilutive common share equivalents
based on treasury stock method                             12,650          13,434
                                                   --------------  --------------
Shares used in diluted per share computations             193,084         184,442
                                                   ==============  ==============
</TABLE>

     Common stock equivalents to purchase 7,141,522 and 20,174 shares that were
outstanding at December 31, 2000 and 1999, respectively, were not included in
the computation of diluted net income per share, as their effect of their
inclusion would have been antidilutive. The common stock equivalents at December
31, 2000 consist primarily of the convertible subordinated debentures that are
convertible into the Company's common stock at a conversion price of $112.19.


     Reclassifications and Restatements

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

                                       6
<PAGE>

Note 2. Purchase Accounting Business Combinations

     On October 3, 2000, the Company acquired all of the equity interests of
FirstPass, Inc. ("FirstPass") in exchange for 70,800 shares of common stock
valued at $6.1 million, the assumption of stock options to purchase 378,028
shares of common stock valued at $4.9 million, net of deferred compensation, and
cash consideration of $0.8 million.  The consideration was allocated based on
the fair values of the tangible and intangible assets and liabilities acquired,
including identifiable intangible assets of $4.0 million, with the excess
consideration of $7.9 million recorded as goodwill.  These intangible assets
will be amortized over their estimated useful lives ranging from 5 to 7 years.
The transaction is being accounted for as a purchase, and accordingly, the
operations of First Pass are included from the date of acquisition.  Pro forma
data is not presented herein as FirstPass operations are immaterial.

Note 3. Inventories, net

     Inventories consist of the following (in thousands):

                                      Dec. 31, 2000  Sept. 30, 2000
                                      -------------  --------------
Raw materials                            $ 5,237         $ 4,184
Work in process and finished goods        45,322          39,531
                                         -------         -------
                                         $50,559         $43,715
                                         =======         =======

Item 2.  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 -
Engineering, Research and Development Costs - Selling, General, and
Administrative Expense - Amortization of Goodwill and Intangible Assets 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 management believes 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
"Factors That May Affect Future Operating Results."

Results of Operations

     Revenues

     Total revenues in the first quarter of fiscal 2001 were $165.1 million, an
85% increase over the $89.3 million recorded in the first quarter of fiscal 2000
and a 20% increase over the $138.0 million recorded in the prior quarter.  The
increase in total revenues was due to unit growth in shipments of existing
products, as well as the introduction of new products to customers in the
communications markets.

                                       7
<PAGE>

   Cost of Revenues

   Cost of revenues as a percentage of total revenues in the first quarter of
fiscal 2001 was 31.7% compared to 35.7% in the first quarter of fiscal 2000 and
32.7% 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 our Colorado Springs wafer fabrication facility,
as well as improved manufacturing yields during the first quarter of fiscal
2001.

   Engineering, Research and Development Costs

   Engineering, research and development expenses were $33.7 million in the
first quarter of fiscal 2001 compared to $18.2 million in the first quarter of
fiscal 2000 and $27.0 million in the prior quarter.  The increases were
principally due to increased headcount from recent acquisitions and new hires
and higher costs to support our continuing efforts to develop new products.  As
a percentage of total revenues, engineering, research and development costs were
20.4% in the first quarter of fiscal 2001, 20.4% in the first quarter of fiscal
2000, and 19.5% in the prior quarter.  We expect these costs to continue to
increase in absolute dollars as a result of continued efforts to develop new
products and increased headcount related to recent acquisitions. Our
engineering, research and development costs are expensed as incurred.

   Selling, General and Administrative Expenses

   Selling, general and administrative expenses (SG&A) were $17.7 million in the
first quarter of 2001, compared to $12.0 million in the first quarter of 2000
and $14.5 million in the prior quarter.  The increase in SG&A expenses in
absolute dollars was due principally to increased amortization of deferred
compensation, compensation resulting from recent acquisitions, and increases in
legal fees.  As a percentage of total revenues, SG&A expenses were 10.7% in the
first quarter of 2001, compared to 13.4% in the first quarter of 2000 and 10.5%
in the prior quarter.   We expect these costs to continue to increase in
absolute dollars as a result of expected future growth.

   Amortization of Goodwill and Intangible Assets

   Amortization of goodwill and identifiable intangible assets was $20.3 million
and $0.4 million for the three months ended December 31, 2000 and 1999,
respectively.  Amortization of goodwill and identifiable intangible assets
primarily relates to the purchase of Orologic, Inc. ("Orologic") and other
acquisitions completed in fiscal 2000.  Amortization of goodwill and
identifiable intangible assets will continue to at this level and will increase
to the extent that we acquire companies and technologies.

   Interest Income and Interest Expense

   Interest income was $15.4 million in the first quarter of fiscal 2001
compared to $2.8 million in the first quarter of 2000 and $15.8 million in the
prior quarter.  Interest expense was $8.3 million in the first quarter of fiscal
2001 and $8.7 million in the prior quarter.  We incurred only a minimal amount
of interest expense in the first quarter of fiscal 2000.  The increase in
interest income is due to higher average cash, short-term investments, long-term
investments and

                                       8
<PAGE>

long-term deposit balances resulting from increased profitability from the first
quarter of fiscal 2000 and proceeds received from the convertible debenture
offering in March 2000. Increased interest expense relates to the debentures and
amortization of debt issuance costs. As a result of the convertible debenture
offering, we expect to record additional interest expense of approximately $8.1
million per quarter in future periods.

   Income Taxes

   Our year to date effective income tax rate is 41.6 % for the quarter ended
December 31, 2000 compared to 33.0% for the same period in the prior year.
Excluding the effects of nondeductible goodwill amortization, the effective
income tax rate is approximately 33.0%.

Liquidity and Capital Resources

   Operating Activities

   We generated $50.6 million and $26.0 million from operating activities in the
three months ended December 31, 2000 and 1999, respectively.  The increase in
cash flow from operations was principally due to an improvement in
profitability of $8.2 million and adjustment of non-cash items for depreciation
and amortization of $30.9 million.

   Investing Activities

   We generated $87.1 million from investing activities during the three months
ended December 31, 2000.  The cash generated in investing activities was
primarily due to the maturity of net investments of $155.1 million, in held to
maturity debt and equity securities.  This was partially offset by capital
expenditures, principally for manufacturing and test equipment, of $62.1
million.  We used $50.4 million in investing activities during the first quarter
of fiscal 2000.  The cash used in investing activities was primarily due to the
purchase of net investments of $28.2 million, in held to maturity debt and
equity securities and capital expenditures of  $13.4 million and investment in
restricted long term deposits of $8.8 million.  We intend to continue investing
in manufacturing, test and engineering equipment.

   In December 2000, we entered into an operating lease transaction providing
for the financing of $17.2 million for the acquisition of certain test
equipment.  If at the end of the lease term we do not purchase the equipment, we
would guarantee the residual value to the lessor equal to a specified percentage
of the lessor's cost of the equipment.  As of December 31, 2000, the lessor
advanced a total of $17.2 million under this lease and held $5.0 million as cash
collateral, which amount is included in restricted long-term deposits.

   Financing Activities

   We used $1.9 million for financing activities for the three months ended
December 31, 2000, primarily due to repayments of debt obligations of $7.4
million, partially offset by proceeds of $4.5 million received from the issuance
and sale of common stock pursuant to our stock option and stock purchase plans.
Our financing activities generated $4.7 million of cash for the three months
ended December 31, 1999, primarily from proceeds of $6.7 million received from
the issuance and sale of common stock pursuant to our stock option and stock
purchase plans, offset by $1.9 million in repayments of debt obligations.

                                       9
<PAGE>

   Management believes that our cash and cash equivalents, short-term
investments, and cash flow from operations are adequate to finance our planned
growth and operating needs for the next 12 months.

Quantitative and Qualitative Disclosure About Market Risk

   At December 31, 2000, our long-term debt consists of convertible subordinated
debentures with interest at a fixed rate.  Consequently, we do not have
significant interest rate exposure on our long-term debt.

Impact of Recent Accounting Pronouncements

   In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities."  SFAS No. 133
requires recognition of all derivatives as either assets or liabilities on the
balance sheet at fair value.  The Company has adopted SFAS No. 133, as amended
by SFAS No. 137 and SFAS No. 138, in the first quarter of its fiscal year ending
September 30, 2001.  The adoption of this standard did not have a material
effect on the Company's consolidated financial statements.

   In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
Statements."   SAB 101, as amended, summarizes certain SEC's views of applying
generally accepted accounting principles to revenue recognition in financial
statements.  At this time, we do not expect SAB 101 to have a material effect on
our operations or financial position.  We are required to adopt SAB 101 in the
fourth quarter of fiscal 2001.

   In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, "Accounting for Certain Transactions involving Stock
Compensation" (FIN 44).  FIN 44 provides guidance for issues arising in applying
APB Opinion No. 25, "Accounting for Stock Issued to Employees."   FIN 44 applies
specifically to new awards, exchanges of awards in a business combination,
modification to outstanding awards, and changes in grantee status that occur on
or after July 1, 2000, except for the provisions related to repricings and the
definition of an employee which apply to awards issued after December 15, 1998.
Application of FIN 44 did not have an affect on the Company's financial
reporting.

Factors That May Affect Future Operating Results

   We are Dependent on a Small Number of Customers in a Few Industries

   We intend to continue focusing our sales effort on a small number of
customers in the communications and test equipment markets that require high-
performance integrated circuits. Some of these customers are also our
competitors. For the three months ended December 31, 2000, no single customer
accounted for greater than 10% of total revenues.  If any of our major customers
delays orders of our products or stops buying our products, our business and
financial condition would be severely affected.

                                       10
<PAGE>

    Our Operating Results May Fluctuate

   Our quarterly revenues and expenses may fluctuate in the future. These
variations may be due to a number of factors, many of which are outside our
control. Factors that could affect our future operating results include the
following:

   .  The loss of major customers

   .  Variations, delays or cancellations of orders and shipments of our
      products

   .  Reduction in the selling prices of our products

   .  Significant changes in the type and mix of products being sold

   .  Delays in introducing new products

   .  Design changes made by our customers

   .  Our failure to manufacture and ship products on time

   .  Changes in manufacturing capacity, the utilization of this capacity and
      manufacturing yields

   .  Variations in product and process development costs

   .  Changes in inventory levels; and

   .  Expenses or operational disruptions resulting from acquisitions


   In the past, we have recorded significant new product and process development
costs because our policy is to expense these costs at the time that they are
incurred. We may incur these types of expenses in the future. In future periods,
we expect a substantial increase in amortization of intangible assets resulting
from recent acquisitions and interest expense resulting from recent financing
activities.  These additional expenses will have a material and adverse effect
on our earnings in future periods.  The occurrence of any of the above mentioned
factors could have a material adverse effect on our business and on our
financial results.

   We Have Limited Manufacturing Capacity and We Depend on the Successful
Operation of our Production Facilities

   During 1998, we started producing high-performance integrated circuits at our
new six-inch wafer fabrication factory in Colorado Springs, Colorado.  We are
faced with several risks in the successful operation of this facility as well as
in our overall production operations. We had only produced finished four-inch
wafers until 1998 and therefore we have limited experience with the equipment
and processes involved in producing finished six-inch wafers. We do not have
excess production capacity at our Camarillo plant to offset failure of the new
Colorado facility to meet production goals. Further, some of our products have
been qualified for manufacture at only one of the two facilities. Consequently,
our failure to successfully operate either facility could severely damage
financial results.

   The successful operation of our Camarillo, California production facility is
also jeopardized by the recent and continuing energy shortage facing the state
of California.  We currently have available an uninterrupted power supply that
would allow us to successfully power down our production facility in the event
of a power black out.  However, this power supply is insufficient

                                       11
<PAGE>

to allow us to complete production of wafers in process in the event of a
prolonged black out, and as such, if we are affected by such a black out it
could substantially disrupt production. Any such disruptions could materially
and adversely affect our operating results.

   We also must now effectively coordinate and manage two facilities. We have
limited experience in managing production facilities located at two different
sites, and our failure to successfully do so could have a material adverse
effect on our business and operating results.

   There Are Risks Associated with Recent and Future Acquisitions

   In fiscal 2000, we made two significant acquisitions. In March 2000, we
completed the acquisition of Orologic, in exchange for approximately 4.6 million
shares of our common stock.  In May 2000, we completed the acquisition SiTera
for approximately 14.7 million shares of our common stock. Also since the
beginning of fiscal 2000, we completed three smaller acquisitions for an
aggregate of approximately $48.6 million in common stock issued, stock options
assumed and cash.  These acquisitions may result in the diversion of
management's attention from the day-to-day operations of the Company's business.
Risks of making these acquisitions include difficulties in the integration of
acquired operations, products and personnel. If we fail in our efforts to
integrate recent and future acquisitions, our business and operating results
could be materially and adversely affected.

   In addition, acquisitions we will make could result in dilutive issuances of
equity securities, substantial debt, and amortization expenses related to
goodwill and other intangible assets. In particular, in connection with our
acquisition of Orologic, we were required to record acquisition related expenses
of $45.6 million in the three months ended March 31, 2000.  Further, we expect
to amortize an aggregate of approximately $505.9 million of goodwill and other
identifiable intangible assets over the next 2 to 7 years. Our management
frequently evaluates strategic opportunities available. In the future we may
pursue additional acquisitions of complementary products, technologies or
businesses.

   Our Industry Is Highly Competitive

   The high-performance semiconductor market is extremely competitive and is
characterized by rapid technological change, price erosion and increased
international competition.  We compete directly or indirectly with the following
categories of companies:

   .  High-performance integrated circuit suppliers such as Applied Micro
      Circuits Corporation, Broadcom, Conexant, Hewlett Packard, Intel, Lucent
      Technologies, Motorola, and PMC Sierra

   .  Internal integrated circuit development units of systems companies such as
      Cisco Systems, Fujitsu and Lucent Technologies

   Our current and prospective competitors include many large companies that
have substantially greater marketing, financial, technical and manufacturing
resources than we do.

   Competition in the markets that we serve is primarily based on
price/performance, product quality and the ability to deliver products in a
timely fashion. Product qualification is typically a lengthy process and some
prospective customers may be unwilling to invest the time or expense necessary
to qualify suppliers such as Vitesse. Prospective customers may also have
concerns

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about the relative advantages of our products compared to more familiar silicon-
based semiconductors. Further, customers may also be concerned about relying on
a relatively small company for a critical sole-sourced component. To the extent
we fail to overcome these challenges, there could be material and adverse
effects on our business and financial results.

   There is Risk Associated with Doing Business in Foreign Countries

   In fiscal 2000, international sales accounted for 24% of our total revenues,
and we expect international sales to constitute a substantial portion of our
total revenues for the foreseeable future.  International sales involve a
variety of risks and uncertainties, including risks related to:

   .  Reliance on strategic alliance partners

   .  Compliance with foreign regulatory requirements

   .  Variability of foreign economic conditions

   .  Changing restrictions imposed by U.S. export laws, and

   .  Competition from U.S. based companies that have firmly established
      significant international operations

   Failure to successfully address these risks and uncertainties could adversely
affect our international sales, which could in turn have a material and adverse
effect on our results of operations and financial condition.

   We Must Keep Pace with Product and Process Development and Technological
Change

   The market for our products is characterized by rapid changes in both product
and process technologies. We believe that our success to a large extent depends
on our ability to continue to improve our product and process technologies and
to develop new products and technologies in order to maintain our competitive
position. Further, we must adapt our products and processes to technological
changes and adopt emerging industry standards. Our failure to accomplish any of
the above could have a negative impact on our business and financial results.

   We Are Dependent on Key Suppliers

   We manufacture our products using a variety of components procured from
third-party suppliers. All of our high-performance integrated circuits are
packaged by third parties. Other components and materials used in our
manufacturing process are available from only a limited number of sources.
Further, we are increasingly relying on third-party semiconductor foundries for
our supply of silicon based products.  Any difficulty in obtaining sole- or
limited-sourced parts or services from third parties could affect our ability to
meet scheduled product deliveries to customers. This in turn could have a
material adverse effect on our customer relationships, business and financial
results.

   Our Manufacturing Yields Are Subject to Fluctuation

   Semiconductor fabrication is a highly complex and precise process.  Defects
in masks, impurities in the materials used, contamination of the manufacturing
environment and equipment failures can cause a large percentage of wafers or die
to be rejected.  Manufacturing yields vary

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among products, depending on a particular high-performance integrated circuit's
complexity and on our experience in manufacturing it. In the past, we have
experienced difficulties in achieving acceptable yields on some high-performance
integrated circuits, which has led to shipment delays. Our overall yields are
lower than yields obtained in a mature silicon process because we manufacture a
large number of different products in limited volume and our process technology
is less developed. We anticipate that many of our current and future products
may never be produced in volume.

   Since a majority of our manufacturing costs are relatively fixed, maintaining
a number of shippable die per wafer is critical to our operating results.  Yield
decreases can result in higher unit costs and may lead to reduced gross profit
and net income.  We use estimated yields for valuing work-in-process inventory.
If actual yields are material different than these estimates, we may need to
revalue work-in-process inventory.  Consequently, if any of our current or
future products experience yield problems, our financial results may be
adversely affected.

   Our Business Is Subject to Environmental Regulations

   We are subject to various governmental regulations related to toxic, volatile
and other hazardous chemicals used in our manufacturing process. Our failure to
comply with these regulations could result in the imposition of fines or in the
suspension or cessation of our operations. Additionally, we may be restricted in
our ability to expand operations at our present locations or we may be required
to incur significant expenses to comply with these regulations.

   Our Failure to Manage Growth May Adversely Affect Us

   The management of our growth requires qualified personnel, systems and other
resources. In particular, the continued operation of the new facility in
Colorado Springs and its integration with the Camarillo facility will require
significant management, technical and administrative resources. Additionally, we
have recently established several product design centers worldwide. Finally, we
acquired Orologic in March 2000, SiTera in May 2000, and completed six other
acquisitions since the fall of 1998, and we have only limited experience in
integrating the operations of acquired businesses.  Failure to manage our growth
or to successfully integrate new and future facilities or newly acquired
businesses could have a material adverse effect on our business and financial
results.

   We Are Dependent on Key Personnel

   Due to the specialized nature of our business, our success depends in part
upon attracting and retaining the services of qualified managerial and technical
personnel. The competition for qualified personnel is intense. The loss of any
of our key employees or the failure to hire additional skilled technical
personnel could have a material adverse effect on our business and financial
results.

   Our Ability to Repurchase Our Debentures, If Required, With Cash, Upon a
Change of Control May be Limited

   In certain circumstances involving a change of control or the termination of
public trading of our common stock, holders of the debentures may require us to
repurchase some or all of the debentures.  We cannot assure that we will have
sufficient financial resources at such time or will be able to arrange financing
to pay the repurchase price of the debentures.

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<PAGE>

   Our ability to repurchase the debentures in such event may be limited by law,
by the indenture, by the terms of other agreements relating to our senior debt
and by such indebtedness and agreements as may be entered into, replaced,
supplemented or amended from time to time.  We may be required to refinance our
senior debt in order to make such payments.  We may not have the financial
ability to repurchase the debentures if payment of our senior debt is
accelerated.


Item 3.  Quantitative and Qualitative Disclosure About Market Risk

   At December 31, 2000, the Company's long-term debt consists of convertible
subordinated debentures with interest at a fixed rate.  Consequently, the
Company does not have significant interest rate exposure on its long-term debt.
However, the fair value of the convertible subordinated debentures is subject to
significant fluctuation due to their convertibility into shares of Vitesse
common stock.

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                                    PART II

                               OTHER INFORMATION

Item 2.   Changes in Securities

     (c)  Recent Sales Of Unregistered Securities

          On October 3, 2000, Vitesse issued 70,800 shares of its common stock
          in exchange for all of the outstanding common stock of FirstPass. In
          addition, pursuant to the terms of the acquisition of FirstPass,
          Vitesse assumed stock options to purchase 378,028 shares of common
          stock. The securities were issued in reliance on the exemption from
          registration provided by Section 4(2) of the Securities Act, based on
          the limited number of security holders of FirstPass, the relationships
          of such holders to FirstPass and the lack of any advertisement or
          general solicitation in connection with the acquisition.

Item 6.   Exhibits & Reports On Form 8-K

     (a)  Exhibits

          None.

     (b)  Reports On Form 8-K

          None.

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                                   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


February 14, 2001            By: /s/ Eugene F. Hovanec
                                 ---------------------------
                                 Eugene F. Hovanec
                                 Vice President, Finance and
                                 Chief Financial Officer

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