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                                    UNITED STATES
                          SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON, DC  20549
                                      FORM  10-Q
                                           
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

    FOR THE QUARTERLY PERIOD ENDED.........NOVEMBER 1, 1997....................

                                          OR

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

    FOR THE TRANSITION PERIOD ENDED..............TO.............................

    COMMISSION FILE NUMBER.....................0-4187...........................
                                           
                           AMATI COMMUNICATIONS CORPORATION
                (Exact name of registrant as specified in its charter)
                                           
                                           
                     DELAWARE                             94-1675494
         (State or other jurisdiction of                (IRS Employer
          incorporation or organization)              Identification No.)


        2043 SAMARITAN DRIVE, SAN JOSE, CA                  95124
      (Address of Principal Executive Offices)            (Zip Code)


REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:     (408) 879-2000


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 AT LEAST THE PAST 90 DAYS.

                     YES  X                     NO   
                         ---                       ---

AS OF DECEMBER 5, 1997, 19,791,310 SHARES OF REGISTRANT'S COMMON STOCK WERE 
OUTSTANDING.

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<PAGE>

                                      FORM 10-Q
                                      ---------
                                      CONTENTS


PART I.  FINANCIAL INFORMATION
         ---------------------

         Item 1.     FINANCIAL STATEMENTS

                     Consolidated Condensed Statements of Operations

                     Consolidated Condensed Balance Sheets

                     Consolidated Condensed Statements of Cash Flows

                     Notes to Consolidated Condensed Financial Statements


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




PART II. OTHER INFORMATION
         -----------------

         Item 2.     CHANGES IN SECURITIES


         Item 6.     EXHIBITS AND REPORTS ON FORM 8-K


                     SIGNATURES

<PAGE>

PART I.  FINANCIAL INFORMATION
------------------------------

ITEM 1.      FINANCIAL STATEMENTS
             --------------------

                           AMATI COMMUNICATIONS CORPORATION
                   CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                        (In thousands, except per share data)

                                                    THREE MONTHS ENDED
                                                  -------------------------
                                                  NOVEMBER 1,   NOVEMBER 2,
                                                     1997          1996
                                                  -----------   -----------
     Net sales                                     $  4,702       $  4,513 
     Cost of sales                                    4,678          2,087 
                                                   --------       -------- 
        Gross margin                                     24          2,426 
                                                   --------       -------- 
     Operating expenses:                                                   
        Research and development                      2,323          1,751 
        Marketing and sales                           1,043            557 
        General and administrative                      905            720 
        Other                                           105            128 
                                                   --------       -------- 
              Total operating expenses                4,376          3,156 
                                                   --------       -------- 
              Loss from operations                   (4,352)          (730)
                                                   --------       -------- 
     Other income (expense):                                               
        Interest income                                  15              1 
        Interest expense                               (105)           (17)
                                                   --------       -------- 
              Total other income (expense)              (90)           (16)
                                                   --------       -------- 
              NET LOSS                            $  (4,442)      $   (746)
                                                   --------       -------- 
                                                   --------       -------- 
              NET LOSS PER SHARE                   $  (0.23)      $  (0.04)
                                                   --------       -------- 
                                                   --------       -------- 
     Weighted Average Number of                                            
     Common Shares and Common                                              
     Share Equivalents                               19,727         17,719 
                                                   --------       -------- 
                                                   --------       -------- 


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

                                       1

<PAGE>

                           AMATI COMMUNICATIONS CORPORATION
                        CONSOLIDATED CONDENSED BALANCE SHEETS
                                    (In thousands)

                                                  NOVEMBER 1,     AUGUST 2,
                                                     1997           1997
                                                  -----------     ---------
    ASSETS
    ------
    
    Current assets:
       Cash and cash equivalents                    $ 1,844      $   791
       Short term investments                           709          709
       Accounts receivable, less allowance of 
         $30 in 1998 and 1997                         3,166        1,369
       Stock subscriptions receivable                   ---        2,500
       Inventories                                    2,810        3,055
       Other current assets                           1,082          858
                                                    -------      -------
           Total current assets                       9,611        9,282

    Equipment and leasehold improvements - net        5,968        5,801
                                                    -------      -------
       TOTAL ASSETS                                 $15,579      $15,083
                                                    -------      -------
                                                    -------      -------

    LIABILITIES AND STOCKHOLDERS' EQUITY
    ------------------------------------
    Current liabilities:
       Notes payable - bank                         $   428      $   428
       Accounts payable and accrued expenses          4,838        3,326
       Accrued employee compensation                  1,121        1,035
       Bridge loan payable                            3,050          ---
       Current maturities of capitalized 
         lease obligations                              769          728
                                                    -------      -------
            Total current liabilities                10,206        5,517
                                                    -------      -------
    Long-term liabilities:
       Long term portion of deferred revenue          2,100        2,000
       Capitalized lease obligations, net of 
         current maturities                           2,033        2,086
       Obligations under lease commitments              454          454
                                                    -------      -------
           Total long-term liabilities                4,587        4,540
                                                    -------      -------
    Stockholders' equity                                786        5,026
                                                    -------      -------
    
       TOTAL LIABILITIES AND STOCKHOLDERS' 
         EQUITY                                     $15,579      $15,083
                                                    -------      -------
                                                    -------      -------

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


                                       2

<PAGE>

                           AMATI COMMUNICATIONS CORPORATION
                   CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                    (In thousands)

                                                    THREE MONTHS ENDED
                                                 ----------------------------
                                                 NOVEMBER 1,      NOVEMBER 2
                                                    1997             1996
                                                 -----------      -----------
Cash flows from operating activities:
    NET LOSS                                        $(4,442)       $  (746)
    Adjustments to reconcile net loss to net
     cash used for operating activities:
         Depreciation and amortization                  425            164 
         Loss on retirement of capital equipment        ---             51 
         Increase in accounts receivable             (1,797)        (2,683)
         Decrease (increase) in inventories             245           (233)
         Increase in other assets                      (224)           (52)
         Increase in accounts payable, accrued
             expenses and employee compensation       1,699          2,063 
                                                    -------        -------
         NET CASH USED FOR OPERATING ACTIVITIES      (4,094)        (1,436)
                                                    -------        -------
Cash flows from investing activities:
     Purchase of equipment and leasehold 
       improvements                                    (408)        (1,415)
                                                    -------        -------
        NET CASH USED FOR INVESTING ACTIVITIES         (408)        (1,415)
                                                    -------        -------

Cash flows from financing activities:
     Payments on capital lease obligations             (197)           ---
     Proceeds from bridge loan                        3,050            ---
     Proceeds from equity financing, net of 
       issuance costs                                 2,464          5,000
     Proceeds from exercise of stock 
       options/warrants                                 238             72
                                                    -------        -------
        NET CASH PROVIDED BY FINANCING ACTIVITIES     5,555          5,072
                                                    -------        -------

NET INCREASE IN CASH AND CASH EQUIVALENTS             1,053          2,221
BEGINNING BALANCE - CASH AND CASH EQUIVALENTS           791            886
                                                    -------        -------
ENDING BALANCE - CASH AND CASH EQUIVALENTS          $ 1,844        $ 3,107
                                                    -------        -------
                                                    -------        -------

Supplemental disclosures of cash flow information:
    Cash paid during the period for interest        $    94        $    55
                                                    -------        -------
                                                    -------        -------


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


                                       3

<PAGE>


                           AMATI COMMUNICATIONS CORPORATION
                 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                   NOVEMBER 1, 1997
                                           
NOTE A - BASIS OF PRESENTATION

The accompanying unaudited consolidated condensed financial statements have been
prepared in accordance with the rules and regulations of the Securities and
Exchange Commission and do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements.  In the opinion of management, all adjustments (consisting of normal
recurring entries) considered necessary for a fair presentation have been
included.  For further information, refer to the financial statements and
footnotes included in the Company's Annual Report on Form 10-K for the year
ended August 2, 1997.  The results for the period are not necessarily indicative
of results for the full fiscal year.  

NOTE B - NET LOSS PER SHARE

Net loss per share is based on the weighted average number of shares outstanding
of common stock. No common stock equivalents have been included in fiscal years
1998 and 1997 because the effect would decrease the loss per share.

In February 1997, the FASB issued SFAS No. 128, Earnings Per Share, which 
simplifies the standards for computing earnings per share previously found in 
Accounting Principles Board Opinion ("APB") No. 15.  SFAS No. 128 replaces 
the presentation of primary earnings per share with a presentation of basic 
earnings per share, which excludes dilution.  SFAS No. 128 also requires dual 
presentation of basic and diluted earnings per share on the face of the 
income statement for all entities with complex capital structures and 
requires reconciliation.  Diluted earnings per share are computed similarly 
to fully diluted earnings per share pursuant to APBO No. 15.  SFAS No. 128 
must be adopted for financial statements issued for periods ending after 
December 15, 1997, including interim periods, earlier application is not 
permitted.  SFAS No. 128 requires restatement of all prior period earnings 
per share presented.  The Company does not anticipate that SFAS No. 128 will 
have a material impact on its earnings per share calculation.

NOTE C - INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out) or market and
are comprised of the following:

                                      NOVEMBER 1, 1997          AUGUST 2, 1997
                                      ----------------          --------------

       Finished goods                     $  137                   $  448
       Work in process                     1,710                    1,783
       Purchased and service parts           963                      824
                                          ------                   ------
                                          $2,810                   $3,055
                                          ------                   ------
                                          ------                   ------


                                       4

<PAGE>

                           AMATI COMMUNICATIONS CORPORATION
                 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                   NOVEMBER 1, 1997
                                           
NOTE D - PROPOSED MERGER 

On September 30, 1997, the Company and Westell Technologies, Inc. entered 
into a proposed merger wherein Amati would have become a wholly owned 
subsidiary of Westell Technologies, Inc.

Holders of outstanding Amati Common Stock were to receive in exchange for 
each share, 0.9 shares of Westell Class A Common Stock.  Under the provisions 
of a Loan and Security Agreement dated September 30, 1997, Westell 
Technologies, Inc. could extend financing to the Company of up to $5,000,000 
secured by a promissory note due on or before September 30, 1999 with 
interest payable at the following rates: prime plus 2% for the first $1 
million and prime plus 21/2% for all borrowings in excess of $1 million.  As 
of November 1, 1997, $3,050,000 was outstanding under the Westell Loan, 
subsequently increased to $3,550,000.

Following the end of the current fiscal quarter, the Company terminated the 
agreement with Westell Technologies, Inc. paying a $14.8 million fee in 
connection with such termination.  On November 19, 1997 the Company entered 
into an Agreement and Plan of Merger with Texas Instruments, Incorporated 
("TI") providing for an all-cash tender offer for all outstanding shares of 
the Company's Common Stock at $20 per share to commence on November 25, 1997 
and ending on December 23, 1997, unless extended.  Following completion of 
the tender offer, and upon consummation of a merger with a wholly owned 
subsidiary of TI, the Company will become a wholly owned subsidiary of TI. 

Under the provisions of a Loan and Security Agreement dated November 19, 1997,
Texas Instruments agreed to grant a term loan in the amount of $14,774,000 and a
revolving loan in the amount of $5,000,000 to the Company secured by a
promissory note due September 30, 1999 with interest at the rate of prime plus
2%.  As of December 5, 1997, $18,763,000 was outstanding under the TI loan.
Proceeds from these borrowings were used to repay in full all amounts owing to
Westell under the Loan and Security Agreement dated September 30, 1997, all
amounts owing to the Silicon Valley Bank under its revolving line of credit
agreement, and to pay a termination fee to Westell Technologies, Inc.


                                       5

<PAGE>

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

INTRODUCTION  

Other than for statements of historical fact, statements made in this 
Quarterly Report on Form 10-Q, including Management's Discussion and 
Analysis of Financial Condition and Results of Operations regarding financial 
projections, information or expectations about the Company's products or 
markets, are forward-looking and are subject to a number of risks and 
uncertainties that could cause actual results to differ materially from the 
statements made.  These include, among others, successful and timely 
development and acceptance of new products, the availability of sufficient 
funding to complete development of new products and other factors described 
below. In addition, such risks and uncertainties also include the matters 
identified under the heading "Risk Factors" below.

OVERVIEW

Amati Communications Corporation ("Amati" or the "Company") is a leading 
developer of advanced transmission equipment utilizing Discrete Multi-tone 
("DMT") technology for the Asymmetrical Digital Subscriber Line ("ADSL"), 
Very high-speed Digital Subscriber Line ("VDSL") and cable modem markets.  
The Company is the holder of the ADSL/DMT patents and has licensed the 
technology to companies such as Motorola, NEC, Nortel and Analog Devices, 
Inc.  The Company is also a provider of network connectivity systems for the 
internetworking and OEM marketplaces, which include local area network 
gateways, client-based workstation software and network data communications 
interfaces.

RESULTS OF OPERATIONS

Total net sales in the first quarter of 1998 increased 4% to $4,702,000 from 
sales of $4,513,000 in the first quarter of the prior fiscal year.  Revenues 
recognized during both fiscal quarters include revenues recorded under the 
Company's previously announced joint development agreement with NEC Japan.  
VDSL development efforts in conjunction with NEC Japan are ongoing.  Sales to 
IBM accounted for 32% of the Company's revenue in the first quarter of fiscal 
1998 compared with 44% for the comparable period of fiscal 1997.  In February 
1997, the Company signed an extended contract with IBM for the development 
and manufacture of its next generation internetworking products.  The Company 
expects that IBM will continue to account for a substantial portion of the 
Company's revenues until development and commercialization of its ADSL 
products are completed. 

In June 1997, the Company was selected to provide equipment to BC Tel, 
Canada's second largest telecommunications company, for its first commercial, 
standards-based ADSL services. These ADSL/DMT products will be used in the 
central switching office and by customers and will enable BC Tel to initially 
offer services such as high-speed Internet access and high-speed corporate 
LAN access to its customers.  Sales of the ADSL/DMT products in the first 
quarter of 1998 were $1,722,000 compared with $240,000 for the first quarter 
of the prior fiscal year. 


                                       6

<PAGE>

PC to Mainframe Connectivity sales of $120,000 for the first quarter of 
fiscal 1998 represents a decrease of 60% when compared with the same period 
of the prior fiscal year due to a general decline in the Company's 
connectivity market share.  The PC to Mainframe Connectivity market is highly 
competitive and is characterized by rapid advances in technology, thereby 
subjecting the Company's products to risk of technological obsolescence.  The 
Company competes directly or indirectly with a broad range of companies, many 
of who have significantly greater resources. In addition, the Company is 
competing for a limited segment of a declining market.

Gross margin as a percent of sales was less than 1% for the first quarter of 
fiscal 1998 compared with 54% for the same period of fiscal 1997.  Margins 
were lower as a result of product volume mix represented by shipments of ADSL 
products in its early stage of development comprising 37% of sales in the 
current fiscal quarter compared to 6% of sales in the first quarter of the 
prior fiscal year.

Net research and development expenses increased 33% to $2,323,000 in the 
first quarter of fiscal 1998 when compared to the same period of fiscal 1997 
largely because of the addition of engineers and the introduction of the 
Company's new ADSL/DMT modems, access system shelf products and access 
concentrators, and outside design work to support the VDSL standards. 

Marketing and sales expenses increased by $486,000 or 87% in the first 
quarter of fiscal 1998 when compared with the same period of the prior fiscal 
year.  This is primarily due to an increase in staffing and overseas travel 
in conjunction with the Overture series representation in field trials 
internationally and outside service and consultants expenses.  Sales, 
marketing and customer support operations of the Company's ADSL products, 
which cover both domestic and international markets, are handled by fourteen 
individuals.  The Company's strategy is to sell to telephone companies 
worldwide through large telecommunication suppliers who will integrate the 
Company's products into larger systems for their customers.

General and administrative expenses increased by $185,000 or 26% in the first 
quarter of fiscal 1998 when compared with the same period of the prior fiscal 
year.  This is primarily due to patent and legal expenses and higher 
depreciation and amortization expenses related to equipment and leasehold 
expenditures with the move to a larger facility.

Interest income increased to $15,000 in the three-month period of fiscal 1998 
compared to $1,000 in the same period of fiscal 1997 due to higher cash 
balances for investment purposes.

There were no provisions for income taxes for the first quarter of both 
fiscal years. 

LIQUIDITY AND CAPITAL RESOURCES

The Company had cash and short-term investments of $2,553,000 as of November 
1, 1997, compared to $1,500,000 as of August 2, 1997.  During the fiscal 
period, cash used for operating activities of $4,094,000 related primarily to 
the net loss incurred during the period.  Cash used for investing activities 
of $408,000 was primarily for leasehold improvements and capital equipment 
purchases associated with the move to a larger facility. Cash provided by 
financing activities of 


                                       7

<PAGE>

$5,555,000 resulted primarily from the completion of an equity financing 
transaction with an investors group, discussed below, and proceeds from the 
Westell loan.

In October 1996, the Company entered into an Investment Agreement (the 
"Investment Agreement") with Quantum Industrial Partners LDC, S-C Phoenix 
Holdings, L.L.C., Winston Partners, L.P., Winston Partners II LDC and Winston 
Partners II L.L.C. (collectively, the "Investors") which provided to the 
Company up to $15 million in equity financing in exchange for the issuance of 
Company Common Stock and warrants (the "Warrants") to purchase up to 600,000 
shares of Company Common Stock.  The Warrants were issued on October 3, 1996 
and are exercisable at any time between December 17, 1996 and December 17, 
2001. Warrants to purchase up to 300,000 shares of Common Stock are 
exercisable at $17.45 per share; Warrants to purchase the other 300,000 
shares are exercisable at $25 per share.  As of August 2, 1997, the Company 
has received $12,500,000 pursuant to this Investment Agreement and recorded a 
Stock Subscription Receivable of $2,500,000.  On August 7, 1997, the Company 
received the final $2,500,000 take down in equity financing.  In exchange for 
the $15,000,000 investment in the Company, the Investors received an 
aggregate of 1,242,915 shares of the Company's Common Stock.

On September 30, 1997, the Company and Westell Technologies, Inc. entered 
into a proposed merger wherein Amati would have become a wholly owned 
subsidiary of Westell Technologies, Inc. Holders of outstanding Amati Common 
Stock were to receive in exchange for each share, 0.9 shares of Westell Class 
A Common Stock. Under the provisions of a Loan and Security Agreement dated 
September 30, 1997, Westell Technologies, Inc. could extend financing to the 
Company of up to $5,000,000 secured by a promissory note due on or before 
September 30, 1999 with interest payable at the following rates: prime plus 
2% for the first $1 million and prime plus 21/2% for all borrowings in excess 
of $1 million.  As of November 1, 1997, $3,050,000 was outstanding under the 
Westell loan, subsequently increased to $3,550,000.

The Company has a revolving line of credit agreement with a bank, which 
expires on April 25, 1998.  The agreement provides for borrowings up to 
$2,000,000 at the bank's prime rate plus .75% (9.25 % at August 2, 1997).  
The line of credit is collateralized by the accounts receivable of the 
Company.  As of August 2, 1997, borrowings under this agreement were 
$428,000.  Borrowings under this agreement are subject to certain debt 
covenants.  At August 2, 1997, the Company was out of compliance with certain 
of these covenants relating to quick ratios and debt to net worth ratios.  
Acknowledging however, that with the $2,500,000 of cash received on August 7, 
1997 from stock subscriptions receivable shown on the balance sheet as of 
fiscal 1997 year-end the Company will be in compliance, the bank waived all 
financial covenants in default. In addition, the Company has a capital lease 
line of $1,700,000, which was fully utilized as of August 2, 1997.

Subsequent to the end of the current fiscal quarter, the Company ended the 
Agreement with Westell Technologies, Inc. paying a $14.8 million fee.  On 
November 19, 1997 the Company in connection with such termination entered 
into an Agreement and Plan of Merger with Texas Instruments, Incorporated 
("TI") providing for an all-cash tender offer for all outstanding shares of 
the Company's Common Stock at $20 per share, to commence on November 25, 1997 
and end 

                                       8

<PAGE>

on December 23, 1997, unless extended.  Following completion of the tender 
offer and upon consummation of a merger with a wholly owned subsidiary of TI, 
the Company will become a wholly owned subsidiary of TI. 

Under the provisions of a Loan and Security Agreement dated November 19, 
1997, Texas Instruments agreed to grant a term loan in the amount of 
$14,774,000 and a revolving loan in the amount of $5,000,000 to the Company 
secured by a promissory note due September 30, 1999 with interest at the rate 
of prime plus 2%.  As of December 5, 1997, $18,763,000 was outstanding under 
the TI loan. Proceeds from these borrowings were used to repay in full all 
amounts owing to Westell under the Loan and Security Agreement dated 
September 30, 1997, all amounts owing to the Silicon Valley Bank under its 
revolving line of credit agreement, and to pay the fee to Westell 
Technologies, Inc.

The Company's ability to meet its future capital requirements will depend on 
many factors, including sales levels, progress in research and development 
programs, the establishment of collaborative agreements, and costs of 
manufacturing facilities and commercialization activities. The company may 
seek additional funding through collaborative agreements or though public or 
private sale of securities prior to the commercialization of its ADSL 
products.

RISK FACTORS

Other than for statements of historical fact, the information about the 
Company included or incorporated by reference herein are forward looking 
statements that involve risks and uncertainties, including the risks detailed 
below.

HISTORY OF LOSSES.  The Company had net losses of approximately $12,243,000 
for the fiscal year ended August 2, 1997, and $4,442,000 for the fiscal 
quarter ended November 1, 1997.  The Company is not expected to operate 
profitably in the foreseeable future as the Company continues research, 
development, production and marketing activities. There can be no assurance 
that the Company will ever attain profitability.  Any long-term viability, 
profitability and growth from the Company's technology will depend upon 
successful commercialization of products resulting from its research and 
product development activities.  Extensive research and development will be 
required prior to commercialization of certain products.  There can be no 
assurance that the Company will be able to develop commercially viable 
products from its technology, generate significant revenues and/or achieve 
profitability.

NEED FOR ADDITIONAL CAPITAL. The Company's future capital requirements will 
depend on many factors, including sales levels, progress in research and 
development programs, the establishment of collaborative agreements, and 
costs of manufacturing facilities and commercialization activities. The 
Company may require funding in addition to that currently available.  There 
can be no assurance that such additional funding will be available on 
acceptable terms, if at all.  If additional funds are required and not 
available, the Company could be required to curtail significantly or defer, 
temporarily or permanently, one or more of its research and development 
programs or to obtain funds through arrangements that may require the Company 
to relinquish certain technology or product rights. 


                                       9

<PAGE>

MARKET FOR ADSL PRODUCTS STILL UNDER DEVELOPMENT; PRINCIPAL ADSL MARKET 
OUTSIDE OF THE UNITED STATES.  ADSL was developed to transmit digital video 
over copper wire and also has application in providing access to the Internet 
over copper wire.  Although the current infrastructure in the local 
distribution networks of telephone companies is based on copper wire, there 
can be no assurance that telephone companies will pursue the deployment of 
ADSL systems or, if deployment occurs, as to the volume and timing of such 
deployment.  Significant deployment may be prevented or delayed by a number 
of factors, including cost, regulatory barriers, lack of programming content, 
lack of consumer demand and the availability of alternative technologies.  
Access systems with high performance broadband capability, such as the ADSL 
system, may be attractive to telephone companies only to the extent that the 
telephone companies plan to offer broadcast video, video-on-demand or 
Internet access services which utilize the full features of a high 
performance local distribution network.  Substantial amounts of time, effort 
and money will be required to develop such high performance services.  There 
can be no assurance that sufficient programming content for video services 
will be developed to justify deploying digital video transmission systems, or 
that programming content will be both attractive to consumers and offered at 
prices that will create a mass market.  If such high performances services 
are offered, and there is demand for them, there can be no assurance that 
telephone companies will select ADSL over competing technologies, such as 
fiber-to-the-curb, hybrid fiber-coaxial ("HFC"), and wireless communications. 
 Fiber-to-the curb, HFC and wireless systems have greater bandwidth than the 
ADSL products being developed by the Company.  Although Internet access 
services may provide a market for ADSL in the United States, because foreign 
telephone companies currently face less competition from cable companies than 
telephone companies face in the United States, the Company believes that its 
principal markets for ADSL video applications will be outside the United 
States. 

PRICE COMPETITIVENESS OF ADSL PRODUCTS.  The Company believes that in order 
to design and manufacture commercially acceptable ADSL products, cost 
improvements beyond those available with current technology will be 
necessary.  The future success of the Company will depend, in part, on its 
ability to develop ADSL products that compete effectively on the basis of 
price and performance. Current prices are significantly higher than those 
that the Company believes would be necessary for mass deployment of ADSL 
products.  There can be no assurance that the Company will be successful in 
developing ADSL products that can be sold at prices that are viable in the 
market.

RAPID TECHNOLOGICAL CHANGE; COMPETITION IN THE TELECOMMUNICATION TRANSMISSION 
BUSINESS.  Competition from existing companies, including major 
communications companies, is expected to increase.  Most of the Company's 
competitors in the communications industry are more established, benefit from 
greater market recognition and have greater financial, technical, production 
and marketing resources than the Company.  Some competitors are developing 
alternate access technologies, such as HFC, fiber-to-curb and wireless 
systems, that may prove technologically superior or more cost effective than 
the Company's technology. There can be no assurance that developments by 
others will not render the Company's products or technologies obsolete or 
noncompetitive or that the Company will be able to keep pace with new 
technological developments. 


                                       10

<PAGE>

COMPETITION IN THE PC TO MAINFRAME CONNECTIVITY BUSINESS.  The PC to 
Mainframe Connectivity market is highly competitive and is characterized by 
rapid advances in technology which frequently result in the introduction of 
new products with improved performance characteristics, thereby subjecting 
the Company's products to the risk of technological obsolescence.  The 
Company's ability to compete is dependent on several factors, including 
reliability, product performance, quality, features, distribution channels, 
name awareness, customer support, product development capabilities, and the 
ability to meet delivery schedules. The Company competes, directly or 
indirectly, with a broad range of companies in the PC-Connectivity business, 
many of who have significantly greater financial and other resources.  In 
addition, the Company is only competing for a limited and declining segment 
of the PC-Connectivity market, which is itself declining and expected to 
continue to decline.  The Company expects revenues from its PC-Connectivity 
business to continue to decline.

COMPETITION FOR VDSL STANDARDS.  The Company expects to apply its DMT 
technology to the development of VDSL products for the transmission of 
digital video service in connection with a fiber-optic backbone to cover the 
distance from this platform or node to subscribers' homes over copper wire or 
coaxial cable. ANSI has not yet awarded the standard for VDSL technology and 
the competition for the American National Standards Institute ("ANSI") 
standard for VDSL is expected to be intense.  Other companies with greater 
resources than the Company are expected to compete for these standards.  
There is no assurance that the Company's DMT technology will be successful in 
obtaining the ANSI VDSL standard.

DEPENDENCE ON COMPLEMENTARY PRODUCTS.  Widespread use of ADSL and VDSL 
products will depend on the commercial availability of other products and 
components, including the content, digital switches, servers, encode/decode 
equipment, and set-top boxes in subscribers' homes. There can be no assurance 
that other suppliers will develop and market these complementary components 
effectively or that these components, when combined with the Company's ADSL 
and VDSL products, will be a cost-effective means of transmitting data 
dialtone or video dialtone services.

DEPENDENCE ON LARGE CUSTOMERS AND SYSTEM INTEGRATORS.  The Company expects to 
sell many of its telecommunication transmission products to large 
telecommunications service companies that serve as integrators for the 
various component systems that make up a video-on-demand or multimedia 
system.  These systems integrators in turn sell the systems to telephone 
companies for distribution to their subscribers.  The Company is largely 
dependent on these systems integrators for the introduction of its products 
to field trials.  There can be no assurance that systems integrators will 
select the Company's products for field trials or, if they do initially 
select the Company's products, that they will continue to use them.  In 
addition, telephone companies are when the supplier is as relatively small as 
the Company, and often require the availability of alternative sources before 
deploying a new technology.  This reluctance may put the Company at a 
competitive disadvantage relative to some of its competitors.  Further, 
acceptance of the Company's products by these customers may require the 
Company to relinquish rights to its technology or products.  There can be no 
assurance, however, that even if the Company were to relinquish such rights 
to its technology or products, telephone companies would deploy the Company's 
ADSL or VDSL products.


                                       11

<PAGE>

CUSTOMER CONCENTRATION; RELIANCE ON SALES TO IBM.  Sales to IBM for PC to 
Mainframe connectivity and related products accounted for approximately 83%, 
69% and 51% of the Company's net sales in fiscal 1995, 1996 and 1997, 
respectively, and 32% of its revenue in the first quarter of fiscal 1998.  
Since IBM considers product sales and market data confidential, the Company 
has very little ability to anticipate future demands and IBM is not obligated 
to purchase any specified amount of products.  For its PC-Connectivity 
products, the Company is highly dependent on sales to IBM and expects that 
quarterly and annual results could be volatile due to its dependence on this 
dominant customer.  In addition, there can be no assurance that IBM will 
continue to distribute and support the Company's products.  The Company's 
principal contract with IBM, which originally expired in December 1996, has 
been extended.  Further, IBM may terminate its agreements with the Company 
upon 30 days' notice without a significant penalty.

INTERNATIONAL BUSINESS.  The Company expects that sales outside of the United 
States will represent a significant portion of its future sales, especially 
of the Company's ADSL products.  Operations outside of the United States are 
subject to various risks, including exposure to currency fluctuations, the 
imposition of governmental controls, the need to comply with a wide variety 
of foreign and United States export laws, political and economic instability, 
trade restrictions, changes in tariffs and taxes, and longer payment cycles 
typically associated with international sales.  The inability of the Company 
to design products to comply with foreign standards or any significant or 
prolonged delay in the Company's international sales could have a material 
adverse effect on the Company's future business and results of operations.

REGULATORY MATTERS.  Telephone companies, which constitute the initial 
primary market for the Company's telecommunication transmission products, and 
cable television companies, which may become a future market for such 
products, are subject to extensive regulation by both the federal and state 
governments in the United States and by foreign governments.  Many of these 
regulations have the effect of limiting the economic incentive of telephone 
companies to deploy new technologies.  Restrictions on telephone companies 
and cable television companies may materially and adversely affect demand for 
the products of the Company.  Recent legislation passed by Congress will 
significantly alter the regulations on telephone companies and cable 
companies in the United States, and there can be no assurance that such 
legislation will not adversely affect the commercialization of the Company's 
products.  In addition, both in the United States and abroad, rates for 
telecommunications services are governed by tariffs or licensed carriers that 
are subject to regulatory approval.  These tariffs also could have a material 
adverse effect on the demand for the Company's products.

DEPENDENCE ON SUPPLIERS AND THIRD-PARTY MANUFACTURERS.  Certain key 
components in the Company's products, such as integrated circuits, are 
currently available only from single sources. The Company does not have any 
long-term supply contracts with its sole source vendors and purchases these 
components on a purchase order basis. In addition, certain components and 
subassemblies for the Company's products have long lead times.  While the 
Company seeks to accurately forecast its requirements, inaccuracies in its 
forecast could result in shortages or oversupplies of these components.  The 
inability to obtain sufficient quantities of sole source components or 
subassemblies as required, or to develop alternative sources as required in 
the 


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<PAGE>

future, or inaccuracies in forecasts for long lead time components or 
subassemblies could result in delays or reductions in product shipments or 
product redesigns which would materially and adversely affect the Company's 
business, operating results and financial condition.  In addition, increases 
in the prices of components for which the Company does not have alternate 
sources could materially and adversely affect the Company's operating results.

The Company intends to outsource a portion of its manufacturing operations to 
independent third party manufacturers.  There are risks associated with the 
use of independent manufacturers, including unavailability of or delays in 
obtaining adequate supplies of products and reduced control of manufacturing 
quality and production costs.  There can be no assurance that the Company's 
third party manufacturers will provide adequate supplies of quality products 
on a timely basis.  The inability to obtain such products on a timely basis 
would have a material adverse effect on the Company's business, operating 
results and financial condition.

PATENTS AND TRADE SECRETS.  There can be no assurance that any patents owned 
or controlled by the Company will provide commercially significant protection 
of the Company's technology or ensure that the Company may not be determined 
to infringe valid patents of others.  The Company's patents have not been 
tested in court, and the validity and scope of the Company's proprietary 
rights could be challenged.  The Company has also received foreign patents, 
but since the patent laws of foreign countries differ from those of the 
United States, the degree of protection afforded by any foreign patents may 
be different from that available under U.S. patent laws.

The Company also relies on trade secrets and proprietary know-how, which it 
seeks to protect by confidentiality agreements with its collaborators, 
employees and consultants.  There can be no assurance that these agreements 
will not be breached, that the Company will have adequate remedies for any 
breach or that the Company's trade secrets and proprietary know-how will not 
otherwise become known or be discovered by competitors.

THE COMPANY'S RSI LAWSUIT.  The Company is a defendant in a suit brought in 
November 1993 alleging repetitive stress injuries ("RSI") resulting from the 
use of the Company's products claiming $1 million in compensatory and $10 
million in punitive damages.  The Company has tendered defense of the suit to 
its insurance carriers, but there can be no assurance that the suit will not 
have a material adverse effect on the financial position or results of 
operations of the Company.

POSSIBLE VOLATILITY OF STOCK PRICE; SHARES ELIGIBLE FOR FUTURE SALE.  The 
market price of the Company's Common Stock has been and may continue to be 
highly volatile.  Future events, many of which will be beyond the control of 
the Company, as well as announcements related to technology and product 
development and collaborative arrangements and expected quarterly 
fluctuations in revenues and financial results, may have a significant impact 
on the market price of the Company's Common Stock.  Future sales of Shares by 
the Selling Stockholders or sales of the Company's Common Stock by other 
current stockholders and by option holders and warrant holders who exercise 
Company stock options or warrants could have a depressive effect on the 
market price of the Company's Common Stock.


                                       13

<PAGE>

PART II.  OTHER INFORMATION

ITEM 2.      CHANGES IN SECURITIES

In October 1996, the Company entered into an Investment Agreement (the 
"Investment Agreement") with Quantum Industrial Partners LDC, S-C Phoenix 
Holdings, L.L.C., Winston Partners, L.P., Winston Partners II LDC and Winston 
Partners II L.L.C. (collectively, the "Investors") which will provide to the 
Company up to $15 million in equity financing in exchange for the issuance of 
Company Common Stock and warrants (the "Warrants") to purchase up to 600,000 
shares of Company Common Stock.  The Warrants were issued on October 3, 1996 
and are exercisable at any time between December 17, 1996 and December 17, 
2001. Warrants to purchase up to 300,000 shares of Common Stock are 
exercisable at $17.45 per share; Warrants to purchase the other 300,000 
shares are exercisable at $25 per share. The Company has received $15,000,000 
pursuant to this Investment Agreement.  In exchange for the $15,000,000 
investment in the Company, the Investors received an aggregate of 1,242,915 
shares of the Company's Common Stock. The Warrants and Common Stock issued in 
connection with the Investment Agreement were exempt from the registration 
requirements of the Securities Act of 1933, as amended (the "Securities 
Act"), pursuant to the exemption under Section 4(2) of the Securities Act.  
The resale of the 1,242,915 shares of Common Stock issued to the Investors, 
and the 600,000 shares of Common Stock issuable on exercise of the Warrants, 
has been registered by the Company on behalf of the Investors.

ITEM 6.      EXHIBITS AND REPORTS ON FORM 8-K

EXHIBITS

None.

Reports on Form 8-K

Form 8K filed on October 3, 1997 with respect to the proposed merger with
Westell Technologies, Inc.


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<PAGE>

                                  SIGNATURES

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

                                        AMATI COMMUNICATIONS CORPORATION
                                        --------------------------------
                                                   (Registrant)



Dated:  December 11, 1997               /S/         JAMES STEENBERGEN
                                        --------------------------------
                                        James Steenbergen   
                                        Director, President,
                                        Chief Executive Officer and
                                        Chief Financial Officer


Dated:  December 11, 1997               /S/        TERRY MEDEL
                                        --------------------------------
                                        Terry Medel
                                        Controller, Treasurer and Secretary

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