<PAGE>
                                           
                          SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C.  20549

                                  ----------------
                                           
                                      FORM 10-Q
                                           
(Mark One)

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

      For the quarterly period ended March 31, 1997

                                 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:  0-27246
                                           
                                           
                                  ZORAN CORPORATION
                (Exact name of registrant as specified in its charter)
                                           
                                           
    DELAWARE                                              94-2794449
(State or other jurisdiction of                        (I.R.S. Employer
incorporation or organization)                        Identification No.)


              3112 SCOTT BOULEVARD, SANTA CLARA, CALIFORNIA 95054
         (Address of principal executive offices)           (Zip Code)
                                           
      Registrant's telephone number, including area code:  (408) 919-4111
                                           
                                           
   Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days.

                              Yes X                      No 
                                 ----                      ----


The number of outstanding shares of the registrant's Common Stock, $.001 par
value, as of May 5, 1997 was 9,310,771.

<PAGE>

                               ZORAN CORPORATION
                                           
                                    INDEX
                                           
                                                                     PAGE NO.
                                                                     --------

                        PART I.    FINANCIAL INFORMATION

Item 1.        Financial Statements

                    Condensed Consolidated Balance Sheets
                       March 31, 1997 and December 31, 1996             3

                    Condensed Consolidated Income Statements
                       Three Months Ended March 31, 1997 and 1996       4

                    Condensed Consolidated Statements of Cash Flows
                       Three Months Ended March 31, 1997 and 1996       5
               
                    Notes to Condensed Consolidated Financial 
                       Statements                                       6

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



                           PART II.   OTHER INFORMATION
                                           

Item 6.        Exhibits and Reports on Form 8-K                        15


SIGNATURES                                                              15

                                    2
<PAGE>

                              ZORAN CORPORATION
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                      (IN THOUSANDS, EXCEPT SHARE DATA)
                                (UNAUDITED)

<TABLE>
<CAPTION>
                                                        MARCH 31,     DECEMBER 31,
                                                          1997            1996
                                                        ---------     ------------
<S>                                                     <C>           <C>
ASSETS

Current assets:
  Cash and cash equivalents                             $  9,741      $  11,176
  Short-term investments                                  11,865         12,243
  Accounts receivable, net                                 9,275         11,088
  Inventory                                                1,039          1,799
  Prepaid expenses and other current assets                1,529          1,219
                                                       ---------      ---------
    Total current assets                                  33,449         37,525


Property and equipment, net                                4,380          3,857
                                                       ---------      ---------

    Total assets                                       $  37,829      $  41,382 
                                                       ---------      ---------
                                                       ---------      ---------


LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                      $  2,709      $  5,868 
  Accrued expenses and other liabilities                   5,881         6,984
                                                       ---------     ---------
    Total current liabilities                              8,590        12,852
                                                       ---------     ---------

Stockholders' equity:
  Common Stock, $0.001 par value;
    20,000,000 shares authorized;
    9,168,651 and 9,029,365 shares
    issued and outstanding                                     9             9
  Additional paid-in capital                              77,887        77,855
  Accumulated deficit                                    (48,657)      (49,334)
                                                       ---------     ---------
    Total stockholders' equity                            29,239        28,530
                                                       ---------     ---------

    Total liabilities and stockholders' equity         $  37,829     $  41,382
                                                       ---------     ---------
                                                       ---------     ---------
</TABLE>


            The accompanying notes are an integral part of 
           these condensed consolidated financial statements.


                                       3
<PAGE>

                               ZORAN CORPORATION
                  CONDENSED CONSOLIDATED INCOME STATEMENTS
                    (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                 (UNAUDITED)

<TABLE>
<CAPTION>

                                                     THREE MONTHS ENDED 
                                                         MARCH 31,
                                                 ------------------------
                                                    1997          1996
                                                 ----------    ----------
<S>                                             <C>            <C>
Revenues:
  Product sales                                  $  6,316      $  6,381 
  Software, licensing and development               3,751         1,187
                                                 --------       -------
    Total revenues                                 10,067         7,568
                                                 --------       -------

Costs and expenses:
  Cost of product sales                             3,526         3,425
  Research and development                          3,312         1,580
  Selling, general and administrative               2,604         2,063
                                                 --------       -------
    Total costs and expenses                        9,442         7,068
                                                 --------       -------

Operating income                                      625           500
Interest and other income (expense), net              278           244
                                                 --------       -------

Income before income taxes                            903           744
Provision for income taxes                            226            83
                                                 --------       -------

Net income                                       $    677      $    661
                                                 --------       -------
                                                 --------       -------

Net income per share                             $   0.06      $   0.06
                                                 --------       -------
                                                 --------       -------

Weighted average common shares
  and equivalents                                  11,070        10,175
                                                 --------       -------
                                                 --------       -------


</TABLE>

                The accompanying notes are an integral part of 
               these condensed consolidated financial statements.


                                      4
<PAGE>

                              ZORAN CORPORATION
              CONDENSED CONSOLIDATED  STATEMENTS OF CASH FLOWS
                               (IN THOUSANDS)
                                (UNAUDITED)

<TABLE>
<CAPTION>
                                                           THREE MONTHS ENDED
                                                                MARCH 31,
                                                          --------------------
                                                           1997          1996
                                                          ------        ------
<S>                                                       <C>          <C>
Cash flows from operating activities:
  Net income                                              $  677       $   661
  Adjustments:
    Depreciation and amortization                            379           264
    Changes in assets and liabilities:
      Accounts receivable                                  1,813          (931)
      Inventory                                              760            69
      Prepaid expenses and other current assets             (310)          (73)
      Accounts payable                                    (3,159)           48
      Accrued expenses and other liabilities              (1,103)          537
                                                        --------      --------
        Net cash provided by (used in) operating 
          activities                                        (943)          575
                                                        --------      --------

Cash flows from investing activities:
  Sales (purchases) of short-term investments, net           378       (15,490)
  Expenditures for property and equipment                   (892)         (658)
                                                        --------      --------
        Net cash used in investing activities               (514)      (16,148)
                                                        --------      --------

Cash flows from financing activities:
  Repayment of debt                                            -           (93)
  Proceeds from issuance of Common Stock, net                 22         3,591
                                                        --------      --------
        Net cash provided by financing activities             22         3,498
                                                        --------      --------

Net decrease in cash and cash equivalents                 (1,435)      (12,075)

Cash and cash equivalents at beginning of period          11,176        21,438
                                                        --------      --------

Cash and cash equivalents at end of period              $  9,741      $  9,363 
                                                        --------      --------
                                                        --------      --------
</TABLE>


                The accompanying notes are an integral part of 
              these condensed consolidated financial statements.


                                       5
<PAGE>

                                  ZORAN CORPORATION
                 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                     (UNAUDITED)
                                           
1.   BASIS OF PRESENTATION

     The accompanying unaudited condensed consolidated financial statements 
contain all adjustments (consisting only of normal recurring adjustments) 
which, in the opinion of management, are necessary to present fairly the 
financial information included therein.  While the Company believes that the 
disclosures are adequate to make the information not misleading, it is 
suggested that these financial statements be read in conjunction with the 
audited consolidated financial statements and accompanying notes included in 
the Company's Annual Report on  Form 10-K for the year ended December 31, 
1996.  Financial statements for the three months ended March 31, 1996 have 
been restated to reflect the acquisition of CompCore Multimedia, Inc. 
("CompCore") in December 1996 which was accounted for as a pooling of 
interests.  Results for the interim periods presented are not necessarily 
indicative of the results to be expected for the full year.

2.   BALANCE SHEET COMPONENTS

                                        March 31,        December 31,
                                          1997               1996
                                        ---------        ------------
Inventories (in thousands):
  Work-in-process                        $    165            $    382
  Finished goods                              874               1,417
                                         --------            --------
                                         $  1,039            $  1,799
                                         --------            --------
                                         --------            --------

3.   INCOME TAXES

     The provision for income taxes reflects the estimated annualized 
effective tax rate applied to earnings for the interim period.  The effective 
tax rate differs from the U.S. statutory rate due to utilization of net 
operating losses and State of Israel tax benefits on foreign earnings.  The 
provision includes primarily taxes on income in excess of net operating loss 
carryover limitations and foreign withholding taxes.

4.   NET INCOME PER SHARE

     Net income per share is computed using the weighted average number of 
common and common equivalent shares outstanding during the period.  Common 
equivalent shares consist of shares issuable upon exercise of stock options 
and warrants (using the treasury stock method).

5.   FAS 128 SAB 74 REQUIREMENTS 

     In February 1997, the Financial Accounting Standards Board issued 
Statement of Financial Accounting Standards No. 128, "Earnings Per Share."  
This Statement is effective for periods ending after December 15, 1997 and 
redefines earnings per share under generally accepted accounting principals.  
Under the new standard, primary earnings per share is replaced by basic 
earnings per share and fully diluted earnings per share is replaced by 
diluted earnings per share.  If the Company had adopted this Statement for 
the quarter ended March 31, 1997, the Company's earnings per share would have 
been as follows:

                                       Three Months Ended March 31,
                                       ----------------------------
                                             1997       1966
                                            -----      -----
Basic earnings per share                    $0.07      $0.08
Diluted earnings per share                   0.06       0.06


                                      6
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
         RESULTS OF OPERATIONS

     THE FOLLOWING DISCUSSION INCLUDES FORWARD-LOOKING STATEMENTS WITH 
RESPECT TO THE COMPANY'S FUTURE FINANCIAL PERFORMANCE.  ACTUAL RESULTS MAY 
DIFFER MATERIALLY FROM THOSE CURRENTLY ANTICIPATED DEPENDING UPON A VARIETY 
OF FACTORS, INCLUDING THOSE DESCRIBED BELOW UNDER THE SUB-HEADING, "FUTURE 
PERFORMANCE AND RISK FACTORS" AND DISCUSSED MORE FULLY IN THE COMPANY'S 
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1996.

OVERVIEW

     From the Company's inception in 1981 through 1991, the Company derived 
the substantial majority of its revenue from digital filter processors 
("DFPs") and vector signal processors ("VSPs") used principally in military, 
industrial and medical applications.  In 1989, the Company repositioned its 
business to develop and market integrated circuits designed to compress video 
and audio data for commercial and consumer applications in evolving 
multimedia markets.  At that time, the Company discontinued development of 
DFP and VSP products, and in mid-1994, the Company advised its customers that 
it was discontinuing production of these products.  DFP and VSP products are 
not expected to contribute significant revenues in future periods.  The 
Company's current lines of multimedia compression products include JPEG-based 
products used in video editing systems and filmless digital cameras, 
MPEG-based products used in video playback and Dolby Digital-based audio 
products used in movie and home theater systems and DVD players which have 
been recently introduced by several manufacturers.

     In December 1996, the Company acquired CompCore, a designer of cores for 
video and audio decoder integrated circuits and a provider of software-based 
compression products.  The Company issued approximately 2.0 million shares of 
Zoran Common Stock in exchange for all of the outstanding Common Stock of 
CompCore.  The Company also assumed all outstanding options to purchase 
CompCore Common Stock which were exchanged for options to purchase 
approximately 900,000 shares of Zoran Common Stock.  The acquisition was 
accounted for as a pooling of interests, and the financial statements of the 
Company and the information herein have been restated to include the results 
of CompCore for all periods.

     Historically, average selling prices ("ASPs") in the semiconductor 
industry in general, and for the Company's products in particular, have 
decreased over the life of a particular product.  Although ASPs have 
fluctuated substantially from period to period, these fluctuations have been 
driven principally by changes in customer mix (original equipment 
manufacturer ("OEM") sales versus sales to distributors) and the transition 
from low-volume sales to high-volume production sales rather than by factors 
related to product life cycles. During 1996 and 1997, the Company reduced its 
ASPs on certain multimedia products in order to better penetrate the consumer 
market. The Company believes that, as its multimedia product lines continue 
to mature and competitive markets evolve, it is likely to experience further 
declines in the ASPs of its multimedia products, although the timing and 
amount of such future changes cannot be predicted with any certainty.  There 
can be no assurance that costs will decrease at the same rate as such 
declines in ASPs, or at all.

     The Company sells its products, either directly or through distributors 
or independent sales representatives, to OEMs worldwide. Sales prices to 
distributors are generally lower than prices for direct sales, as 
distributors are responsible for certain sales and marketing expenses, 
maintenance of inventories and customer support and training.  Lower gross 
margins on sales to distributors are partially offset by reduced selling and 
marketing expenses related to such sales.  Sales in Japan are primarily made 
through Fujifilm Microdevices Co., Ltd. ("Fujifilm"), the Company's strategic 
partner and distributor in Japan.  Fujifilm provides more sales and marketing 
support than Zoran's other distributors. 

                                      7
<PAGE>

     Zoran has historically generated a significant percentage of its total 
revenues from development contracts, primarily with key customers.  These 
development contracts have provided the Company with partial funding for the 
development of certain of its products.  Payments received by the Company 
under these development contracts are recorded as development revenue.  The 
Company classifies all development costs, including costs related to these 
development contracts, as research and development expenses.  The Company 
retains ownership of the intellectual property developed by it under these 
development contracts. While the Company intends to continue to enter into 
development contracts with certain strategic partners, it expects development 
revenue to decrease as a percentage of total revenues.

     The Company is a party to certain research and development agreements 
with the Office of the Chief Scientist in Israel's Ministry of Trade and 
Industry Department (the "Chief Scientist") and the Israel-United States 
Binational Industrial Research and Development Foundation ("BIRDF"), which 
fund up to 50% of incurred project costs for approved products up to 
specified contract maximums.  These agreements require the Company to use its 
best efforts to achieve specified results and require the Company to pay 
royalties at rates of 2 1/2% to 5% of resulting product sales, and up to 30% 
of resulting license revenues, up to a maximum of 100% to 150% of total 
funding received.  Reported research and development expenses are net of 
these grants, which fluctuate from period to period.

     The Company conducts a substantial portion of its research and 
development and certain sales and marketing and administrative operations in 
Israel through its wholly-owned Israeli subsidiary.  As a result, certain 
expenses are incurred in Israeli shekels. Until May 1995, substantially all 
of the Company's product sales were made from the Company's U.S. facility.  
In May 1995,  the Company restructured its manufacturing and sales 
organizations and began selling a portion of its products directly from its 
facility in Israel.  To date, substantially all of the Company's product 
sales and its software, licensing and development revenue have been 
denominated in U.S. dollars and most costs of product sales have been 
incurred in U.S. dollars.  The Company expects that most of its revenues and 
costs of  product sales will continue to be denominated and incurred in U.S. 
dollars for the foreseeable future.  The Company has not experienced material 
losses or gains as a result of currency exchange rate fluctuations and has 
not engaged in hedging transactions to reduce is exposure to such 
fluctuations.  The Company intends to actively monitor its foreign exchange 
exposure and to take appropriate action to reduce its foreign exchange risk, 
if such risk becomes material.

RESULTS OF OPERATIONS

REVENUES

     Total revenues for the quarter ended March 31, 1997 were $10.1 million, 
an increase of 33% from $7.6 million for the same period in 1996.  Product 
sales of $6.3 million for the current quarter were approximately the same as 
the first quarter of last year.  Unit sales of the Company's JPEG-based 
products increased during the current quarter compared to the comparable 
quarter last year. Despite the increase in unit sales, revenue from this 
product line declined slightly due to a shift in product mix toward lower 
priced, higher volume devices such as lower cost desk-top video editing 
products and digital filmless cameras.  Due to the continued delays in the 
development of the DVD market and uncertainty regarding the timing of volume 
production and shipment of DVD players, unit sales and revenues of the 
Company's Dolby Digital audio compression ICs decreased.  These sales 
decreases were almost entirely offset by increased unit sales of other 
products.   Software, licensing and development revenue of $3.8 million for 
the quarter ended March 31, 1997 more than tripled compared to the first 
quarter of 1996.  This increase was due to the higher unit volume of software 
and hardware products sold by the Company's customers and significant new 
licensing contracts. 

     Sales to Fujifilm, the Company's strategic partner and distributor in 
Japan, as well as an OEM customer, accounted for 10% of the Company's total 
revenues in the quarter ended March 31, 1997 compared to 13% in the 
comparable 1996 quarter. Three other  customers accounted for 20%, 8% and 
below 1% of total revenues in the current quarter compared to 29%, below 1% 
and 19%, respectively, in the quarter ended March 31, 1996.

                                      8
<PAGE>

PRODUCT GROSS PROFIT

     Product gross margin was 44% during the quarter ended March 31, 1997, 
compared to 46% in the first quarter of 1996.  The margin rate decrease was 
primarily due to a shift in product mix to higher unit volume sales of 
relatively lower priced, lower margin JPEG-based devices.  The Company's 
product gross margin is dependent on product mix and on the percentage of 
products sold directly to the Company's OEM customers versus indirectly 
through its marketing partners who purchase the Company's products at lower 
prices but absorb most of the associated marketing and sales support 
expenses.  The Company expects product and customer mix to continue to 
fluctuate in future quarters, causing further fluctuations in margins. 

RESEARCH AND DEVELOPMENT

     Research and development ("R&D") expenses of $3.3 million for the 
quarter ended March 31, 1997 were approximately 110% above the comparable 
period of 1996.  The increase  was a result of the planned growth in the 
Company's development capabilities in conjunction with the Company's growth 
in general and its increased software, licensing and development revenue.  
The Company continues to believe that significant investments in R&D are 
required for it to remain competitive, and anticipates that such expenses in 
terms of absolute dollars may increase in future periods, although such 
expenses as a percentage of total revenues may fluctuate.

SELLING, GENERAL AND ADMINISTRATIVE

     Selling, general and administrative ("SG&A") expenses increased 26% to 
$2.6 million for the current quarter from $2.1 million for the first quarter 
of 1996. SG&A expenses, however, decreased slightly as a percentage of total 
revenues. The increase in absolute dollars for the current period was due 
primarily to increased sales, marketing and applications infrastructure 
growth to support increased sales levels and increased administrative 
expenses associated the Company's status as a publicly-traded company.  The 
Company expects that SG&A expenses may continue to increase in order to 
support the growth of the Company.

INTEREST AND OTHER INCOME (EXPENSE), NET

     Net interest and other income and expense resulted in net other income 
of $278,000 for the quarter ended March 31, 1997, compared to $244,000 for 
the comparable quarter last year.  The increase resulted primarily from 
decreased interest expense as a result of the repayment of the Company's 
remaining debt during 1996.

PROVISION FOR INCOME TAXES

     The Company's estimated effective tax rate increased to 25% for the 
current year from 11% last year.  The increase was primarily due to taxes on 
income in excess of the net operating loss carryover limitation and foreign 
withholding taxes.


                                      9
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

     Net proceeds from the initial public offering of the Company's Common 
Stock (the "IPO") in December 1995 and the exercise of certain warrants in 
connection with the IPO totaled $17.5 million.  The Company also received net 
proceeds of $3.5 million in January 1996 upon the exercise of the 
underwriters' over-allotment option.  At March 31, 1997, the Company had 
$21.6 million of cash, cash equivalents and short-term investments.

     The Company's operating activities used cash of $943,000 in the quarter 
ended March 31, 1997.  Cash used in operating activities reflected changes in 
working capital, partially offset by net income and depreciation and 
amortization.  The principal change in working capital during the quarter was 
a decrease in accounts payable and accrued expenses of $4.3 million due 
partially to payments of expenses related to the acquisition of CompCore in 
December 1996.  During the quarter, the Company's capital expenditures were 
$892,000.  The Company had no bank debt at December 31, 1996 or at March 31, 
1997.

     The Company believes that its current balances of cash, cash equivalents 
and short-term investments and anticipated cash flow from operations, will 
satisfy the Company's anticipated working capital and capital equipment 
requirements through the balance of 1997. 


                                     10
<PAGE>

FUTURE PERFORMANCE AND RISK FACTORS

     THE COMPANY'S FUTURE BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION 
ARE SUBJECT TO VARIOUS RISKS AND UNCERTAINTIES, INCLUDING THOSE DESCRIBED 
BELOW.

     PRODUCT CONCENTRATION; EVOLVING MARKETS.  Since the Company's markets 
are still evolving, only a limited number of commercial and consumer 
products that incorporate the Company's integrated circuits are currently in 
volume production.  Current applications for the Company's products include 
professional and consumer video editing systems, PC-based and stand-alone 
video CD and DVD players, digital audio systems, filmless digital cameras and 
video conferencing systems.  During 1994 and 1995, the Company derived a 
majority of its product revenues from the sale of integrated circuits for 
video editing applications.  Sales of audio products accounted for an 
increased percentage of product sales in 1996.  The Company expects that 
sales of its devices for digital audio and video editing applications will 
continue to account for a significant portion of its revenues for the near 
future. Over the longer term, the Company's ability to generate increased 
revenues will be dependent on the expansion of sales of its products for use 
in other existing applications, as well as the development and acceptance of 
new applications for the Company's technologies and products.  The potential 
size of the markets for new applications and the timing of their development 
and acceptance is uncertain.  The Company's future success will depend upon 
whether manufacturers select the Company's integrated circuits and software 
for incorporation into their products, and upon the successful marketing of 
these products by the manufacturers.  There can be no assurance that demand 
for existing applications will be sustained, that new markets will develop or 
that manufacturers developing products for any of these markets will design 
the Company's integrated circuits into their products or successfully market 
them.  The failure of existing and new markets to develop or to be receptive 
to the Company's products would have a material adverse effect on the 
Company's business, operating results and financial condition.

     The emergence of markets for the Company's integrated circuits will be 
affected by a variety of factors beyond the Company's control.  In 
particular, the Company's products are designed to conform with certain 
current industry standards.  There can be no assurance that manufacturers 
will continue to follow these standards or that competing standards will not 
emerge which will be preferred by manufacturers.  The emergence of markets 
for the Company's products is also dependent in part upon third-party content 
providers developing and marketing content for end user systems, such as 
video and audio playback systems, in a format compatible with the Company's 
products.  There can be no assurance that these or other factors beyond the 
Company's control will not adversely affect the development of markets for 
the Company's products.

     RELIANCE ON INDEPENDENT FOUNDRIES AND CONTRACTORS.  The Company does not 
operate any manufacturing facilities, and from time to time shortages of 
foundry capacity develop for certain process technologies in the 
semiconductor industry. The Company currently relies on independent foundries 
to manufacture substantially all of its products.  The Company's independent 
foundries fabricate products for other companies and may also produce 
products of their own design.  The Company does not have a long-term supply 
contract with two of its principal foundries and, therefore, neither of these 
suppliers is obligated to supply products to the Company for any specific 
period, in any specific quantity or at any specified price, except as may be 
provided in a particular purchase order.

     The Company's reliance on independent foundries involves a number of 
risks, including the inability to obtain adequate capacity, the 
unavailability of or interruption in access to certain process technologies, 
reduced control over delivery schedules, quality assurance, manufacturing 
yields and cost, and potential misappropriation of the Company's intellectual 
property.  The loss of any of the Company's foundries as a supplier, the 
inability of the Company in a period of increased demand for its products to 
expand supply or the Company's inability to obtain timely and adequate 
deliveries from its current or future suppliers could reduce or delay 
shipments of the Company's products.  Any of these developments could damage 
relationships with the Company's current and prospective customers and have a 
material adverse effect on the Company's business, operating results or 
financial condition.

                                      11
<PAGE>

     All of the Company's semiconductor products are currently being 
assembled by one of two independent contractors and tested by those 
contractors or other independent contractors. The Company's reliance on 
independent assembly and testing houses limits its control over delivery 
schedules, quality assurance and product cost. Disruptions in the provision 
of services by the Company's assembly or testing houses or other 
circumstances that would require the Company to seek alternative sources of 
assembly or testing could lead to supply constraints or delays in the 
delivery of the Company's products.  These constraints or delays could damage 
relationships with current and prospective customers and have a material 
adverse effect on the Company's business, operating results or financial 
condition.

     RECENTLY COMPLETED ACQUISITION.  On December 27, 1996, the Company 
acquired CompCore.  The managements of the Company and CompCore have 
completed the merger with the expectation that the merger will result in 
beneficial synergies for the companies.  Achieving the anticipated benefits 
of the merger will depend in part upon whether the integration of the two 
companies businesses is accomplished in an efficient and effective manner, 
and there can be no assurance that this will occur.  The combination of the 
two companies will require, among other things, integration of the companies 
respective product offerings and technology and coordination of their 
research and development, sales and marketing, and financial reporting 
efforts.  There can be no assurance that such integration will be 
accomplished smoothly or successfully.  If significant difficulties are 
encountered in the integration of the existing product lines and technology, 
resources could be diverted from new product development, resulting in delays 
in new product introductions.  The difficulties of such integration may be 
increased by the necessity of coordinating geographically separated 
organizations with distinct cultures.  The integration of certain operations 
following the merger will require the dedication of management and other 
personnel resources which may temporarily distract from the day-to-day 
business of the combined company.  Failure to successfully accomplish the 
integration of the two companies' operations could have a material adverse 
effect on the combined company's business, financial condition or results of 
operations.

     NEW PRODUCT DEVELOPMENT AND TIMELY INTRODUCTION OF NEW AND ENHANCED 
PRODUCTS. The markets for the Company's products are characterized by rapidly 
changing technologies, evolving industry standards, frequent new product 
introductions and short product life cycles.  The Company expects to increase 
its expenses relating to product development, and its future success will 
depend to a substantial degree upon its ability to develop and introduce, on 
a timely and cost-effective basis, new and enhanced products that meet 
changing customer requirements and industry standards.  There can be no 
assurance that the Company will successfully develop, introduce or manage the 
transition to new products. Future delays in the introduction or shipment of 
new or enhanced products, the inability of such products to gain market 
acceptance or problems associated with new product transitions could 
adversely affect the Company's business, operating results and financial 
condition.

     COMPETITION; PRICING PRESSURES.  The Company's existing and potential 
competitors include large domestic and international companies that have 
substantially greater financial, manufacturing, technical, marketing, 
distribution and other resources, broader product lines and longer standing 
relationships with customers than the Company.  The markets in which the 
Company competes are intensely competitive and are characterized by rapid 
technological change, declining ASPs and rapid product obsolescence.

     CUSTOMER CONCENTRATION; CHANGE IN CUSTOMER MIX.  The Company's largest 
customers have accounted for a substantial percentage of its revenues, and 
sales to these large customers have varied materially from year to year. 
There can be no assurance that the Company will be able to retain its key 
customers or that such customers will not cancel purchase orders to 
reschedule or decrease their level of purchases.  In addition, sales to these 
key customers may fluctuate significantly from quarter to quarter.  Any 
development that would result in a substantial decrease or delay in sales to 
one or more key customers, including actions by competitors or technological 
changes, could have a material adverse effect on the Company's business, 
operating results or financial condition.  In addition, any development that 
would affect the collectibility of account balances from one or more key 
customers could have a material adverse effect on the Company's business, 
operating results or financial condition.


                                     12
<PAGE>

     POTENTIAL FLUCTUATIONS IN OPERATING RESULTS.  The Company's quarterly 
operating results have varied significantly due to a number of factors, 
including the timing of new product introductions by the Company and its 
competitors, market acceptance of new and enhanced versions of the Company's 
products and products of its customers, the timing of large customer orders, 
the availability of development funding and the timing of development 
revenue, changes in the mix of products sold and the mix of distribution 
channels employed and competitive pricing pressures.  The Company expects 
that its operating results will fluctuate in the future as a result of these 
factors and a variety of other factors, including the availability of 
adequate foundry capacity, fluctuations in manufacturing yields, the 
emergence of new industry standards, product obsolescence, changes in pricing 
policies by the Company, its competitors or its suppliers, the cyclical 
nature of the semiconductor industry, the evolving and unpredictable nature 
of the markets for products incorporating the Company's integrated circuits 
and software and the amount of research and development expenses associated 
with new product introductions.  The Company's operating results could also 
be adversely affected by economic conditions generally or in various 
geographic areas where the Company or its customers do business, other 
conditions affecting the timing of customer orders, a downturn in the markets 
for its customers' products, particularly the consumer electronics market, or 
order cancellations or reschedulings. These factors are difficult or 
impossible to forecast, and these or other factors could materially affect 
the Company's quarterly or annual operating results. The Company places 
orders to purchase its products from independent foundries several months in 
advance of the scheduled delivery date, often in advance of receiving 
non-cancelable orders from its customers.  If anticipated shipments or 
development revenue in any quarter are canceled or do not occur as quickly as 
expected, expense and inventory levels could be disproportionately high.  A 
significant portion of the Company's expenses is relatively fixed, and the 
timing of increases in expenses is based in large part on the Company's 
forecast of future revenues. As a result, if revenues do not meet the 
Company's expectations it may be unable to quickly adjust expenses to levels 
appropriate to actual revenues, which could have a material  adverse effect 
on the Company's business, operating results or financial condition.  To 
date, the Company's operating results have not been materially affected by 
seasonal factors.  However, as markets for consumer products incorporating 
the Company's integrated circuits mature, the Company expects that sales will 
tend to be stronger during the last several months of the calendar year than 
at other times due to increased demand for consumer products during the 
holiday season.  As a result of the foregoing, the Company's operating 
results and stock price may be subject to significant volatility, 
particularly on a quarterly basis.  Any shortfall in revenues or net income 
from levels expected by securities analysts could have an immediate and 
significant adverse effect on the trading price of the Company's Common Stock.

     MANAGEMENT OF GROWTH.  The Company has recently experienced rapid growth 
and expansion which has placed, and will continue to place, a significant 
strain on its administrative, operational and financial resources and has 
resulted, and will continue to result, in a continuing increase in the level 
of responsibility for both existing and new management personnel.  The 
Company anticipates that future growth, if any, will require it to recruit 
and hire a substantial number of new engineering, managerial, sales and 
marketing personnel.  The Company's ability to manage its growth successfully 
will also require the Company to continue to expand and improve its  
administrative, operational, management and financial systems and controls.  
Many of the Company's key operations, including the major portion of its 
research and development and a significant portion of its sales and 
administrative operations, are located in Israel, while a majority of its 
sales and marketing and certain of its research and development and 
administrative personnel, including its President and Chief Executive 
Officer, are based in the United States.  The geographic separation of these 
operations is likely to place additional strain on the Company's resources 
and its ability to effectively manage its growth.  If the Company's 
management is unable to manage growth effectively,  the Company's business, 
operating results or financial condition could be materially and adversely 
affected.


                                     13
<PAGE>

     DEPENDENCE ON KEY PERSONNEL.  The Company's success depends to a 
significant degree upon the continuing contributions of its senior 
management.  The loss of key management personnel could delay product 
development cycles or otherwise have a material adverse effect on the 
Company's business, operating results or financial condition.  There can be 
no assurance that the Company will be able to retain the services of any of 
its key employees.  The Company believes that its future success will also 
depend in large part on its ability to attract and retain highly-skilled 
engineering, managerial, sales and marketing personnel, both in the United 
States and in Israel.  Competition for such personnel is intense, and there 
can be no assurance that the Company will be successful in attracting, 
integrating and retaining such personnel.  Failure to attract and retain key 
personnel could have a material  adverse effect on the Company's business, 
operating results or financial condition.

     RELIANCE ON INTERNATIONAL SALES AND OPERATIONS; RELIANCE ON OPERATIONS 
IN ISRAEL.  The Company anticipates that international sales will continue to 
represent a significant portion of total revenues.  In addition, 
substantially all of the Company's products are manufactured, assembled and 
tested outside of the United States by independent foundries and 
subcontractors.  The Company is subject to the risks of doing business 
internationally, including unexpected changes in regulatory requirements, 
fluctuations in exchange rates, imposition of tariffs and other barriers and 
restrictions and the burdens of complying with a variety of foreign laws. The 
Company is also subject to general geopolitical risks, such as political and 
economic instability and changes in diplomatic and trade relationships, in 
connection with its international operations.

     A substantial portion of the Company's research and development and 
sales operations are located in the State of Israel.  Therefore, the Company 
is directly affected by the political, economic and military conditions to 
which that country is subject.  In addition, many of the Company's expenses 
in Israel are paid in Israeli shekels, thereby subjecting the Company to the 
risk of foreign currency fluctuations and to economic pressures resulting 
from Israel's generally high rate of inflation.  There can be no assurance 
that such factors will not have a material adverse effect of the Company's 
business, operating results or financial condition.

     VOLATILITY OF STOCK PRICE.  The market price of the Company's Common 
Stock has fluctuated significantly since the IPO and is subject to material 
fluctuations in the future in response to announcements concerning the 
Company or its competitors or customers, quarterly variations in operating 
results, announcements of technological innovations, the introduction of new 
products or changes in product pricing policies by the Company or its 
competitors, proprietary rights or other litigation, changes in analysts' 
earnings estimates, general conditions in the semiconductor industry, 
developments in the financial markets and other factors.  In addition, the 
stock market has, from time to time, experienced extreme price and volume 
fluctuations that have particularly affected the market prices for technology 
companies and which have been unrelated to the operating performance of the 
affected companies.  Broad market fluctuations of this type may adversely 
affect the future market price of the Common Stock.


                                    14
<PAGE>

                     PART II.     OTHER INFORMATION


Item 6.   Exhibits and Reports on Form 8-K

          (a)  Exhibits
  
                 10.33    Sub-Sublease dated April 1, 1997 between Integrated 
                          Silicon Solution, Inc. and Zoran Corporation.
    
                 11.1     Statement re:  Computation of Net Income Per Share

                 27       Financial Data Schedule

          (b)  Reports on Form 8-K

               The Company filed one report on Form 8-K during the three 
               months ended March 31, 1997. The report was filed on 
               January 10, 1997 and reported, under Item 2, the 
               acquisition of CompCore. No financial statements were 
               filed as a part of the report.

                                   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.


                                     ZORAN CORPORATION



Date:  May 12, 1997                  /s/  Levy Gerzberg
                                     ----------------------------
                                     Levy Gerzberg
                                     President 
                                     Chief Executive Officer


Date:   May 12, 1997                 /s/  Ami Kraft
                                     ----------------------------
                                     Ami Kraft
                                     Vice President, Finance
                                     Chief Financial Officer


                                       15