<PAGE>   1

                                  UNITED STATES
                       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 June 30, 2001.

        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 0-25699


                              PLX TECHNOLOGY, INC.
             (Exact name of Registrant as specified in its charter)


               Delaware                             94-3008334
    (State or Other Jurisdiction of    (I.R.S. Employer Identification No.)
    Incorporation or Organization)


                      870 Maude Avenue, Sunnyvale, CA 94085
               (Address of Principal Executive Offices) (Zip Code)


       Registrant's Telephone Number, Including Area Code: (408) 774-9060


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 [ ]


As of July 31, 2001 there were 23,460,477 shares of common stock, par value
$0.001 per share, outstanding.


          This Report on Form 10-Q includes 25 pages with the Index to
                           Exhibits located on page 24



<PAGE>   2

                              PLX TECHNOLOGY, INC.
                                    INDEX TO
                               REPORT ON FORM 10-Q
                         FOR QUARTER ENDED JUNE 30, 2001

<TABLE>
<CAPTION>
                                                                                    Page
                                                                                    ----
                          PART I. FINANCIAL INFORMATION
<S>            <C>                                                                  <C>
ITEM 1.        Financial Statements (Unaudited):

                 Condensed Consolidated Balance Sheets at June 30, 2001 and
                   December 31, 2000.........................................        3

                 Condensed Consolidated Statements of Operations for the
                   three and six months ended June 30, 2001 and 2000.........        4

                 Condensed Consolidated Statements of Cash Flows for the six
                   months ended June 30, 2001 and 2000.......................        5

                 Notes to Condensed Consolidated Financial Statements........        6

ITEM 2.        Management's Discussion and Analysis of Financial Condition
                 and Results of Operations...................................       11

ITEM 3.        Quantitative and Qualitative Disclosures About Market Risk....       22

                           PART II. OTHER INFORMATION

ITEM 4.        Submission of Matters to a Vote of Security Holders...........       23

ITEM 6.        Exhibits and Reports on Form 8-K..............................       24
</TABLE>



                                       2
<PAGE>   3

                          PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                              PLX TECHNOLOGY, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (in thousands)

<TABLE>
<CAPTION>
                                                      JUNE 30,      DECEMBER 31,
                                                       2001           2000(1)
                                                    -----------     ------------
                                                     (UNAUDITED)
<S>                                                 <C>             <C>
ASSETS

Current assets:
  Cash and cash equivalents                          $   7,272       $  16,621
  Short-term investments                                 1,587           3,340
  Accounts receivable, net                               4,942           4,772
  Inventories                                            7,684           4,521
  Deferred tax assets                                    4,099           4,099
  Income tax receivable                                  1,067              --
  Other current assets                                     959           1,290
                                                     ---------       ---------
Total current assets                                    27,610          34,643

Property and equipment, net                             34,334          31,277
Goodwill                                                 9,653          11,308
Other intangible assets                                  2,530           2,964
Restricted cash and investments                         33,411          33,146
Other assets                                               239             141
                                                     ---------       ---------
Total assets                                         $ 107,777       $ 113,479
                                                     =========       =========
LIABILITIES

Current liabilities:
  Accounts payable                                   $   4,451       $   5,064
  Accrued compensation and benefits                        994           1,491
  Accrued commissions                                      323             345
  Deferred revenues                                        707           1,430
  Income tax payable                                        --             833
  Deferred tax liability                                 1,100           1,100
  Other accrued expenses                                 1,357           1,518
                                                     ---------       ---------
Total current liabilities                                8,932          11,781
Long-term notes payable                                 28,500          28,500

STOCKHOLDERS' EQUITY
  Common stock, par value                                   23              23
  Additional paid in capital                            78,350          79,715
  Deferred compensation                                 (6,029)         (9,312)
  Notes receivable for employee stock purchases            (62)            (50)
  Accumulated other comprehensive income                   143              54
  Retained earnings                                     (2,080)          2,768
                                                     ---------       ---------
Total stockholders' equity                              70,345          73,198
                                                     ---------       ---------
Total liabilities and stockholders' equity           $ 107,777       $ 113,479
                                                     =========       =========
</TABLE>

---------------
(1) The balance sheet at December 31, 2000 has been derived from the audited
financial statements as of that date.

See notes to condensed consolidated financial statements.



                                       3
<PAGE>   4

                              PLX TECHNOLOGY, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                    (in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                   THREE MONTHS ENDED             SIX MONTHS ENDED
                                                        JUNE 30,                      JUNE 30,
                                                -----------------------       -----------------------
                                                  2001           2000            2001          2000
                                                -----------------------       -----------------------
<S>                                             <C>            <C>            <C>            <C>
Net revenues                                    $  9,463       $ 16,090       $ 21,892       $ 30,632
Cost of revenues                                   4,392          4,552          8,456          8,972
                                                --------       --------       --------       --------
Gross margin                                       5,071         11,538         13,436         21,660

Operating expenses:
  Research and development                         5,237          4,609         10,502          6,629
  Selling, general and administrative              3,972          3,701          7,796          7,101
  Amortization of goodwill and purchased
     intangible assets                             1,044            449          2,088            449
  In-process research and development                 --         14,342             --         14,342
                                                --------       --------       --------       --------
Total operating expenses                          10,253         23,101         20,386         28,521
                                                --------       --------       --------       --------
Loss from operations                              (5,182)       (11,563)        (6,950)        (6,861)
Interest income and other, net                        67            548            298          1,037
                                                --------       --------       --------       --------
Loss before provision (benefit) for income
  taxes                                           (5,115)       (11,015)        (6,652)        (5,824)
Provision (benefit) for income taxes              (1,734)         1,717         (1,804)         3,533
                                                --------       --------       --------       --------

Net loss                                        $ (3,381)      $(12,732)      $ (4,848)      $ (9,357)
                                                ========       ========       ========       ========
Basic net loss per share                        $  (0.15)      $  (0.57)      $  (0.21)      $  (0.42)
                                                ========       ========       ========       ========
Shares used to compute basic per share amounts    23,180         22,428         23,163         22,100
                                                ========       ========       ========       ========

Diluted net loss per share                      $  (0.15)      $  (0.57)      $  (0.21)      $  (0.42)
                                                ========       ========       ========       ========
Shares used to compute diluted per
  share amounts                                   23,180         22,428         23,163         22,100
                                                ========       ========       ========       ========
</TABLE>

See notes to condensed consolidated financial statements.



                                       4
<PAGE>   5

                              PLX TECHNOLOGY, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                             SIX MONTHS ENDED
                                                                                 JUNE 30,
                                                                         -----------------------
                                                                           2001           2000
                                                                         --------       --------
<S>                                                                      <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES

Net loss                                                                 $ (4,848)      $ (9,357)
Adjustments to reconcile net loss to net cash provided by (used in)
  operating activities:
  Depreciation                                                              1,317            532
  Compensation related to stock options issued to non-employees                17          1,348
  Amortization of deferred compensation                                     1,580            387
  Amortization of goodwill and other purchased intangible assets            2,089            449
  In-process research and development                                          --         14,342
  Income taxes                                                                 --           (198)
  Changes in operating assets and liabilities:
    Accounts receivable                                                      (170)        (1,606)
    Inventories                                                            (3,163)           796
    Income tax receivable                                                  (1,067)            --
    Other current assets                                                      331         (2,206)
    Other assets                                                              (98)          (612)
    Accounts payable                                                         (613)         1,210
    Accrued compensation and benefits                                        (497)           387
    Accrued commissions                                                       (22)           230
    Deferred revenues                                                        (723)           275
    Income tax payable                                                       (833)          (392)
    Other accrued expenses                                                   (161)           446
                                                                         --------       --------
Net cash provided by (used in) operating activities                        (6,861)         6,031
                                                                         --------       --------

INVESTING ACTIVITIES

Purchases of short term investments                                        (3,188)       (16,350)
Sales of short term investments                                                --          3,745
Maturities of short term investments                                       14,477         17,500
Purchases of long term investments                                         (8,847)        (4,568)
Purchases of property and equipment                                        (4,374)          (638)
Cash acquired in Sebring acquisition                                           --             33
                                                                         --------       --------
Net cash used in investing activities                                      (1,932)          (278)

FINANCING ACTIVITIES

Proceeds from sale of common stock                                            403          1,011
Repurchase of common stock                                                    (83)            --
Increase in restricted cash and investments                                  (864)            --
Increase in stockholder notes receivable                                      (12)            --
                                                                         --------       --------
Net cash provided by (used in) financing activities                          (556)         1,011
                                                                         --------       --------

Increase (decrease) in cash and cash equivalents                           (9,349)         6,764
Cash and cash equivalents at beginning of the period                       16,621          8,636
                                                                         --------       --------
Cash and cash equivalents at end of the period                           $  7,272       $ 15,400
                                                                         ========       ========
</TABLE>

See notes to condensed consolidated financial statements.



                                       5
<PAGE>   6

                              PLX TECHNOLOGY, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1.      BASIS OF PRESENTATION

        The accompanying unaudited condensed consolidated financial statements
        of PLX Technology, Inc. and its wholly-owned subsidiary (collectively,
        "PLX" or the "Company") as of June 30, 2001 and for the three-month and
        six-month periods ended June 30, 2001 and 2000 have been prepared in
        accordance with generally accepted accounting principles for interim
        financial information and with the instructions to Form 10-Q and Article
        10 of Regulation S-X. In the opinion of management, the condensed
        consolidated financial statements include all adjustments (consisting
        only of normal recurring accruals) that management considers necessary
        for a fair presentation of our financial position, operating results and
        cash flows for the interim periods presented. Operating results and cash
        flows for interim periods are not necessarily indicative of results for
        the entire year.

        This financial data should be read in conjunction with the audited
        consolidated financial statements and notes thereto included in our
        Annual Report on Form 10-K for the fiscal year ended December 31, 2000.

        USE OF ESTIMATES

        The preparation of financial statements in conformity with accounting
        principles generally accepted in the United States requires management
        to make estimates and assumptions that affect the amounts reported in
        the financial statements and accompanying notes. Actual results could
        differ from those estimates and such differences may be material to the
        financial statements.

        COMPREHENSIVE LOSS

        The Company has adopted Statement of Financial Accounting Standards No.
        130, "Reporting Comprehensive Income". The Company's comprehensive net
        loss for the three and six months ended June 30, 2001 and June 30, 2000
        was as follows:

<TABLE>
<CAPTION>
                                                   Three Months Ended               Six Months Ended
                                                        June 30,                        June 30,
                                                ------------------------         -----------------------
                                                 2001             2000            2001            2000
                                                -------         --------         -------         -------
                                                    (in thousands)                   (in thousands)
<S>                                             <C>             <C>              <C>             <C>
Net loss                                        $(3,381)        $(12,732)        $(4,848)        $(9,357)

Unrealized gains (losses) on investments            (10)              19              89              22
                                                -------         --------         -------         -------

Comprehensive loss                              $(3,391)        $(12,713)        $(4,759)        $(9,335)
                                                =======         ========         =======         =======
</TABLE>

        Accumulated other comprehensive income on the accompanying Consolidated
        Balance Sheets is comprised entirely of unrealized gains on investments.

        RECENT ACCOUNTING PRONOUNCEMENTS

        In June 1998, the Financial Accounting Standards Board issued Statement
        of Financial Accounting Standards No. 133, "Accounting for Derivative
        Financial Instruments and Hedging Activities" ("SFAS 133"), which
        provides a comprehensive and consistent standard for the recognition and
        measurement of derivatives and hedging activities. SFAS 133, as amended,
        was adopted by the Company effective January 1, 2001, and did



                                       6
<PAGE>   7

        not have an impact on the Company's results of operations or financial
        position, as the Company holds no derivative financial instruments and
        does not currently engage in hedging activities.

        In July 2001, the Financial Accounting Standards Board issued Statement
        of Financial Accounting Standards (SFAS) No. 141, "Business
        Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets."
        These standards become effective for fiscal years beginning after
        December 15, 2001. Beginning in the first quarter of 2002, goodwill and
        significantly all other identified intangibles will no longer be
        amortized but will be subject to annual impairment tests. Based on
        acquisitions completed as of June 30, 2001, application of the
        non-amortization provisions of these rules is currently expected to
        result in an increase in operating income of approximately $4.2 million
        per year. The new rules also require business combinations initiated
        after June 30, 2001 to be accounted for using the purchase method of
        accounting and goodwill acquired after June 30, 2001 to not be
        amortized. Goodwill existing at June 30, 2001 will continue to be
        amortized through the end of fiscal 2001. During 2002, the Company will
        test goodwill for impairment under the new rules, applying a
        fair-valued-based test. Through the end of fiscal 2001, the Company will
        test goodwill for impairment using the current method, which uses an
        undiscounted cash flow test.

2.      INVENTORIES

        Inventories are valued at the lower of cost (first-in, first-out method)
        or market (net realizable value). Inventories were as follows:

<TABLE>
<CAPTION>
                                         JUNE 30,         DECEMBER 31,
                                           2001              2000
                                         --------         ------------
                                               (in thousands)
<S>                                      <C>              <C>
Work in Process ..............            $  471            $  646

Finished goods ...............             7,213             3,875
                                          ------            ------

    Total ....................             7,684            $4,521
                                          ======            ======
</TABLE>


3.      NET LOSS PER SHARE

        The following table sets forth the computation of basic and diluted net
        loss per share:

<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED                SIX MONTHS ENDED
                                                           JUNE 30,                         JUNE 30,
                                                  -------------------------         -------------------------
                                                    2001             2000             2001             2000
                                                  --------         --------         --------         --------
                                                        (in thousands)                    (in thousands)
<S>                                               <C>              <C>              <C>              <C>
Net loss                                          $ (3,381)        $(12,732)        $ (4,848)        $ (9,357)
                                                  --------         --------         --------         --------
Weighted average shares of common stock
     outstanding                                    23,234           22,585           23,217           22,257
Less weighted average shares of common
     stock subject to repurchase                        54              157               54              157
                                                  --------         --------         --------         --------
Shares used in computing basic and diluted
     net loss per share                             23,180           22,428           23,163           22,100
                                                  ========         ========         ========         ========
Net loss per share - basic and diluted            $  (0.15)        $  (0.57)        $  (0.21)        $  (0.42)
                                                  ========         ========         ========         ========
</TABLE>

        For the three-month and six-month periods ended June 30, 2001, the
        effect of dilutive securities including all outstanding stock options
        and shares subject to repurchase, totaling 3.4 million and 3.4 million
        shares, respectively, have been excluded from the computation of diluted
        loss per share, as their impact would be anti-dilutive. For the
        three-month and six-month periods ended June 30, 2000, the effect of
        dilutive securities including all outstanding stock options and shares
        subject to repurchase, totaling 3.3 million and 3.3 million



                                       7
<PAGE>   8

        shares, respectively, have been excluded from the computation of diluted
        loss per share, as their impact would be anti-dilutive.

4.      SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION

        The Company has one operating segment, the sale of semiconductor
        devices. The President has been identified as the Chief Operating
        Decision Maker (CODM) because he has final authority over resource
        allocation decisions and performance assessment. The CODM does not
        receive discrete financial information about individual components of
        the Company's business.

        Revenues by geographic region based on customer location were as
        follows:

<TABLE>
<CAPTION>
                                  Three Months Ended June 30,   Six Months Ended June 30,
                                    2001             2000         2001             2000
                                  --------        -----------   --------        ---------
                                       (in thousands)                (in thousands)
<S>                               <C>             <C>           <C>             <C>
Revenues:
   North America                    $5,801        $ 9,966        $13,242        $19,284
   France                            1,083          1,385          2,747          2,624
   Europe - excluding France         1,170          2,826          2,903          4,738
   Asia                              1,409          1,913          3,000          3,986
                                    ------        -------        -------        -------
Total                               $9,463        $16,090        $21,892        $30,632
                                    ======        =======        =======        =======
</TABLE>


        For the three months ended June 30, 2001, two customers accounted for
        36% of net revenues, taking into account sales through the Company's
        distributors as well as direct sales. For the six months ended June 30,
        2001, two customers accounted for 25% of net revenues, taking into
        account sales through the Company's distributors as well as direct
        sales. For the three months ended June 30, 2001, two distributors
        accounted for 33% of net revenues. For the six months ended June 30,
        2001, two distributors accounted for 35% of net revenues. In March 2001,
        we terminated our relationship with Unique Technologies, our U.S.
        distributor, and since then have serviced most of our U.S. customers
        directly or through manufacturers' representatives. Unique is currently
        being phased out as our U.S. distributor.

5.      DEBT

        On October 25, 2000, the Company signed a promissory note to borrow
        $28.5 million in connection with its purchase of a facility. The loan is
        collaterized by cash, short-term and long-term investments of
        approximately $33.4 million, which are classified as restricted cash.
        The loan agreement includes covenants regarding profitability and bears
        interest at the LIBOR rate plus 0.45% (7.14% at June 30, 2001). The loan
        requires monthly interest payments with the outstanding principal
        balance due and payable on November 6, 2005. At June 30, 2001, the
        Company was in compliance with all covenants.

6.      BUSINESS COMBINATION

        On May 19, 2000, the Company purchased Sebring Systems Inc., a
        development stage company, that was developing SebringRing(TM), a
        silicon switch fabric interconnect solution, for an aggregate purchase
        price, including assumed liabilities, of $32.3 million. The transaction
        was accounted for using purchase accounting. The allocation of the
        Company's purchase price to the tangible and identifiable intangible
        assets acquired and liabilities assumed is summarized below.



                                       8
<PAGE>   9

     (in thousands)

<TABLE>
<S>                                                      <C>
Net tangible assets .........................            $ 1,165
In-process technology .......................             14,342
Goodwill and other intangible assets:
   Goodwill .................................             13,339
   Acquired employees .......................                983
   Tradename ................................                355
   Patents ..................................              2,132
                                                         -------
                                                          16,809
                                                         -------
Net assets acquired .........................            $32,316
                                                         =======
</TABLE>

        The acquired in-process technology was written-off in the second quarter
        of fiscal 2000. The estimated weighted average useful life of the
        intangible assets for patents, tradenames, and the residual goodwill,
        created as a result of the acquisition of Sebring Systems is
        approximately four years.

        Additionally, PLX recorded $12.3 million in deferred compensation on
        options granted to employees below fair market value related to the
        acquisition of Sebring. Deferred compensation is being amortized over
        the vesting period of three years.

        Approximately $14.3 million of the purchase price was allocated to the
        acquired in-process technology. This amount was determined by
        identifying research projects in areas for which technological
        feasibility had not been established and no alternative future uses
        existed. PLX acquired technology consisting of silicon switch fabric
        interconnect solutions. The value was determined by estimating the
        expected cash flows from the project once commercially viable,
        discounting the net cash flows to their present value, and then applying
        a percentage of completion to the calculated value as defined below.

        The Company estimated, as of the acquisition date, the project was 85%
        complete. The percentage of completion was determined using costs
        incurred by Sebring prior to the acquisition date compared to the
        remaining research and development to be completed to bring the project
        to technological feasibility. As of June 30, 2001, the project was
        completed. The product was taped out successfully and is currently being
        evaluated.

        UNAUDITED PRO FORMA FINANCIAL RESULTS

        The unaudited pro forma financial information combines the historical
        statements of operations of PLX Technology, Inc. and Sebring Systems,
        Inc. for the six-months ended June 30, 2000 and gives effect to the
        transaction, including the amortization of goodwill and other intangible
        assets and the recognition of deferred compensation, as if they occurred
        at the beginning of the period.

        The unaudited pro forma information is presented for illustrative
        purposes only and is not necessarily indicative of the operating results
        that would have occurred if the transactions had been consummated at the
        dates indicated, nor is it necessarily indicative of future operating
        results of the combined companies and should not be construed as
        representative of these amounts for any future periods.



                                       9
<PAGE>   10

<TABLE>
<CAPTION>
                                                              SIX MONTHS ENDED JUNE 30,
                                                                         2000
                                                              -------------------------
                                                                     (UNAUDITED)
                                                        (in thousands, except per share amounts)
<S>                                                                    <C>
Net revenues                                                           $ 30,632
Net loss                                                               $ (344)
Net loss per share -- basic and diluted                                $ (0.01)
Number of shares used in per share calculations --                      23,389
basic and diluted
</TABLE>

7.      STOCK REPURCHASE

        In January 2001, the Board of Directors of the Company approved a stock
        repurchase program whereby up to 2,000,000 shares of its Common Stock
        may be purchased in the open market or in privately negotiated
        transactions. As of June 30, 2001, 10,000 shares had been repurchased.

8.      INCOME TAXES

        The income tax benefit for the three months ended June 30, 2001 was $1.7
        million on a pretax loss of $5.1 million, compared to an income tax
        expense of $1.7 million on a pretax loss of $11.0 million for the three
        months ended June 30, 2000. The income tax benefit for the six months
        ended June 30, 2001 was $1.8 million on a pretax loss of $6.7 million,
        compared to an income tax expense of $3.5 million on a pretax loss of
        $5.8 million for the six months ended June 30, 2000. The 2001 income tax
        benefit differs from the expected benefit derived by applying the
        applicable U.S. federal statutory rate to the loss from operations
        primarily due to non-deductible acquisition related items partially
        offset by the benefit of tax exempt interest and research and
        development tax credits. Our 2000 income tax expense differs from the
        expected benefit derived by applying the applicable U.S. federal
        statutory rate to the loss from operations primarily due to
        non-deductible acquisition related items partially offset by the benefit
        of research and development tax credits.

9.      SUBSEQUENT EVENT

        In August 2001, the Company paid all amounts owed under the loan from
        Wells Capital Management, an aggregate amount of $28.5 million. The
        Company liquidated short-term and long-term securities in order to repay
        the loan.



                                       10
<PAGE>   11

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

This Report on Form 10-Q contains forward-looking statements, including
statements regarding our expectations, hopes, intentions, beliefs or strategies
regarding the future. Such forward-looking statements include, but are not
limited to, our anticipated expense levels for amortization of goodwill and
purchased intangible assets, and deferred compensation, as well as the
sufficiency of our existing resources and cash generated from operations to meet
our capital requirements under the sub-heading "Results of Operations." Actual
results could differ materially from those projected in any forward-looking
statements for the reasons detailed below under the sub-heading "Factors That
May Affect Future Operating Results" and in other sections of this Report on
Form 10-Q. All forward-looking statements included in this Form 10-Q are based
on information available to us on the date of this Report on Form 10-Q, and we
assume no obligation to update the forward-looking statements, or to update the
reasons why actual results could differ from those projected in the
forward-looking statements. See "Factors That May Affect Future Operating
Results" below, as well as such other risks and uncertainties as are detailed in
our Securities and Exchange Commission reports and filings for a discussion of
the factors that could cause actual results to differ materially from the
forward-looking statements.

The following discussion should be read in conjunction with the audited
consolidated financial statements and the notes thereto included in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2000.

OVERVIEW

PLX was founded in 1986, and since 1994 we have focused on development of I/O
interface semiconductors and related software and development tools that are
used in systems incorporating the PCI standard. In 1994 and 1995, a significant
portion of our revenues was derived from the sale of semiconductor devices that
perform similar functions as our current products, except they were based on a
variety of industry standards. Our revenues since 1996 have been derived
predominantly from the sale of semiconductor devices based on the PCI standard
to a large number of customers in a variety of applications including networking
and telecommunications, enterprise storage, imaging, industrial and other
embedded applications as well as in related adapter cards. We generate a small
portion of our revenues from sales of our software and development tools.

We utilize a "fabless" semiconductor business model whereby we purchase packaged
and tested semiconductor devices from independent manufacturing foundries. This
approach allows us to focus on defining, developing, and marketing our products
and eliminates the need for us to invest large amounts of capital in
manufacturing facilities and work-in-process inventory.

We rely on a combination of direct sales personnel and distributors and
manufacturers' representatives throughout the world to sell a significant
portion of our products. We pay manufacturers' representatives a commission on
sales while we sell products to distributors at a discount from the selling
price. We generally recognize revenues at the time of title passage. Revenues
from sales to distributors that are made under agreements which allow the return
of products unsold by the distributor are not recognized until the distributor
ships the product to its customer. See "Certain Factors That May Affect Future
Operating Results -- A Large Portion of Our Revenues Is Derived From Sales to
Third-Party Distributors Who May Terminate Their Relationships with Us at Any
Time."

Our gross margins have fluctuated in the past and are expected to fluctuate in
the future due to changes in product mix, the position of our products in their
respective life cycles, and specific product manufacturing costs.

The time period between initial customer evaluation and design completion can
range from six to twelve months or more. Furthermore, there is typically an
additional six to twelve month or greater period after design completion before
a customer commences volume production of equipment incorporating our products.
Due to these lengthy sales cycles, we may experience significant fluctuations in
new orders from month to month. Consequently, if anticipated sales and shipments
in any quarter do not occur when expected, expenses and inventory levels could
be disproportionately high, and our results for that quarter and future quarters
could be materially and adversely affected.



                                       11
<PAGE>   12

Our long-term success will depend on our ability to introduce new products.
Although new products typically generate little or no revenues during the first
twelve months following their introduction, our revenues in subsequent periods
depend upon these new products. Due to the lengthy sales cycle and additional
time for customers to commence volume production, significant revenues from our
new products typically occur only twelve to twenty-four months after product
introduction. As a result, revenues from newly introduced products have, in the
past, produced a small percentage of our total revenues in the year the product
was introduced. See "Certain Factors That May Affect Future Operating Results --
Our Lengthy Sales Cycle Can Result in Uncertainty and Delays with Regard to Our
Expected Revenues."

RESULTS OF OPERATIONS

The following table summarizes historical results of operations as a percentage
of net revenues for the periods shown.

<TABLE>
<CAPTION>
                                               THREE MONTHS ENDED               SIX MONTHS ENDED
                                                    JUNE 30,                        JUNE 30,
                                             ----------------------          ----------------------
                                              2001            2000            2001            2000
                                             ------          ------          ------          ------
<S>                                          <C>             <C>             <C>             <C>
Net revenues                                  100.0%          100.0%          100.0%          100.0%
Cost of revenues                               46.4            28.3            38.6            29.3
                                             ------          ------          ------          ------
Gross margin                                   53.6            71.7            61.4            70.7
Operating expenses:
  Research and development                     55.3            28.6            48.0            21.6
  Selling, general and administrative          42.0            23.0            35.6            23.2

  Amortization of goodwill and
     purchased intangible assets               11.0             2.8             9.5             1.5
  In-process research and development            --            89.1              --            46.8
                                             ------          ------          ------          ------
Total operating expenses                      108.3           143.5            93.1            93.1
                                             ------          ------          ------          ------
Loss from operations                          (54.7)          (71.8)          (31.7)          (22.4)
Interest income and other, net                  0.7             3.4             1.4             3.4
                                             ------          ------          ------          ------
Loss before provision (benefit) for
 income taxes                                 (54.0)          (68.4)          (30.3)          (19.0)

Provision (benefit) for income taxes          (18.3)           10.7            (8.2)           11.5
                                             ------          ------          ------          ------
Net loss                                      (35.7)%         (79.1)%         (22.1)%         (30.5)%
</TABLE>

NET REVENUES

Net revenues for the three months ended June 30, 2001 were $9.5 million, a
decrease of 41% from $16.1 million for the three months ended June 30, 2000. For
the six months ended June 30, 2001, net revenues were $21.9 million, a decrease
of 29% from $30.6 million for the six months ended June 30, 2000. The decrease
was primarily due to lower unit shipments resulting from the current economic
slowdown in the technology sector. For the three months ended June 30, 2001, two
customers accounted for 36% of net revenues, taking into account sales through
our distributors as well as direct sales. For the six months ended June 30,
2001, two customers accounted for 25% of net revenues, taking into account sales
through our distributors as well as direct sales. For the three months ended
June 30, 2001, two distributors accounted for 33% of net revenues. For the six
months ended June 30, 2001, two distributors accounted for 35% of net revenues.
In March 2001, we terminated our relationship with Unique Technologies, our U.S.
distributor, and since then have serviced most of our U.S. customers directly or
through manufacturers' representatives. Unique is currently being phased out as
our U.S. distributor.

GROSS PROFIT

Gross profit represents net revenues less the cost of revenues. Cost of revenues
includes the cost of purchasing packaged semiconductor devices from our
independent foundries, our operating costs associated with the procurement,
storage, and shipment of products, as well as royalty expenses paid on some of
our products. Gross profit for the three months ended June 30, 2001 was $5.1
million, a decrease of 56.0% from $11.5 million for the



                                       12
<PAGE>   13

three months ended June 30, 2000. For the six months ended June 30, 2001, gross
profit was $13.4 million, a decrease of 38.0% from $21.7 million for the six
months ended June 30, 2000. Gross profit as a percentage of net revenues was
53.6% for the three months ended June 30, 2001, as compared to 71.7% for the
three months ended June 30, 2000. For the six months ended June 30, 2001, gross
profit as a percentage of net revenues was 61.4%, as compared to 70.7% for the
six months ended June 30, 2000. The decline in our gross profit was primarily
due to a $1.3 million charge taken in the second quarter related to excess
inventory as well as a shift in our product mix.

RESEARCH AND DEVELOPMENT EXPENSES

Research and development expenses consist primarily of salaries and related
costs of employees engaged in research, design, and development activities. In
addition, expenses for outside engineering consultants and non-recurring
engineering at our independent foundries are included in research and
development expenses. Research and development expenses for the three months
ended June 30, 2001 were $5.2 million, an increase of 13.6% from $4.6 million
for the three months ended June 30, 2000. For the six months ended June 30,
2001, research and development expenses were $10.5 million, an increase of 58.4%
from $6.6 million in the six months ended June 30, 2000. The increase in
absolute dollars was primarily due to the addition of personnel for the
development of new products and the enhancement of existing products, as well as
payments to outside consultants where specific resources were needed in the
development process. Research and development expenses as a percentage of net
revenues were 55.3% for the three months ended June 30, 2001, as compared to
28.6% for the three months ended June 30, 2000. For the six months ended June
30, 2001, research and development expenses were 48.0% as a percentage of net
revenues compared to 21.6% for the six months ended June 30, 2000. This
percentage increase was primarily due to lower net revenues coupled with
amortization of deferred compensation associated with the acquisition of Sebring
Systems, increased headcount and higher costs to support our continuing efforts
to develop new products.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses consist primarily of employee
related expenses, professional fees, trade show and other promotional expenses,
and sales commissions to manufacturers' representatives. Selling, general and
administrative expenses for the three months ended June 30, 2001 were $4.0
million, an increase of 7.3% from $3.7 million for the three months ended June
30, 2000. For the six months ended June 30, 2001, selling, general and
administrative expenses were $7.8 million, an increase of 9.8% from $7.1 million
for the six months ended June 30, 2000. The increase in absolute dollars was
primarily due to an increase in headcount. Selling, general and administrative
expenses as a percentage of net revenues were 42.0% for the three months ended
June 30, 2001, as compared to 23.0% for the three months ended June 30, 2000.
For the six months ended June 30, 2001, selling, general and administrative
expenses as a percentage of net revenues increased to 35.6% compared to 23.2%
for the six months ended June 30, 2000. The percentage increases for the three
and six months ended June 30, 2001 were primarily due to a decline in revenues.

AMORTIZATION OF GOODWILL AND PURCHASED INTANGIBLE ASSETS

Amortization of goodwill and purchased intangible assets for the three months
ended June 30, 2001 was $1.0 million compared to $449,000 for the three months
ended June 30, 2000. For the six months ended June 30, 2001, amortization of
goodwill and purchased intangible assets was $2.1 million compared to $449,000
for the six months ended June 30, 2000. Amortization of goodwill and purchased
intangible assets includes the amortization of goodwill and other purchased
intangible assets relating to the May 2000 acquisition of Sebring Systems. The
amount for the six months ended June 30, 2000 reflects amortization beginning on
the date of the acquisition through the end of the second quarter. We expect
that amortization of goodwill and purchased intangible assets will be constant
through the quarter ended December 31, 2001. However, effective January 1, 2002,
in accordance with SFAS No. 142, we will cease amortization of goodwill and
significantly all other identified intangibles.

IN-PROCESS RESEARCH AND DEVELOPMENT

The $14.3 million expensed to in-process research and development in the three
and six months ended June 30, 2000 were related to the acquisition of Sebring
Systems.

DEFERRED COMPENSATION

In connection with the grant of restricted stock and stock options to our
employees during 1997 and 1998, we recorded aggregate deferred compensation of
$361,000, representing the difference between the deemed value of our



                                       13
<PAGE>   14

common stock for accounting purposes and the restricted stock purchase price or
stock option exercise price at the date of grant. The amount of deferred
compensation is presented as a reduction of stockholders' equity and amortized
ratably over the vesting period of the applicable stock grants. We also recorded
deferred compensation of $12.3 million related to stock options granted below
fair market value to employees in relation to the acquisition of Sebring Systems
in May 2000. Additionally, we recorded deferred compensation of $3.5 million in
connection with the grant of stock options below fair market value to our
employees in September 2000. Amortization of deferred compensation was
approximately $762,000 and $23,000 for each of the three months ended June 30,
2001 and 2000, respectively, and has substantially all been included in research
and development expenses in our results of operations. For each of the six
months ended June 30, 2001 and 2000, amortization of deferred compensation was
approximately $1,580,000 and $387,000, respectively. The amount of deferred
compensation is amortized ratably over the vesting period of the applicable
stock grants. We expect to record a compensation expense related to deferred
compensation of approximately $800,000 per quarter through September 30, 2003.

INTEREST INCOME AND OTHER, NET

Interest income and other income, net reflects interest earned on average cash,
cash equivalents, short-term and long-term investment balances. Interest income
and other, net decreased to $67,000 for the three months ended June 30, 2001
from $548,000 for the three months ended June 30, 2000. For the six months ended
June 30, 2001, interest income and other, net decreased to $298,000 from
$1,037,000 in the six months ended June 30, 2000. The decrease was primarily due
to interest earned on lower cash and investment balances plus interest expense
related to the November 2000 loan of $28.5 million in connection with our
purchase of a facility in Sunnyvale, California, partially offset by rental
income from two tenants in the new facility.

PROVISION FOR INCOME TAXES

The income tax benefit for the three months ended June 30, 2001 was $1.7 million
on a pretax loss of $5.1 million, compared to an income tax expense of $1.7
million on a pretax loss of $11.0 million for the three months ended June 30,
2000. The income tax benefit for the six months ended June 30, 2001 was $1.8
million on a pretax loss of $6.7 million, compared to an income tax expense of
$3.5 million on a pretax loss of $5.8 million for the six months ended June 30,
2000. The 2001 income tax benefit differs from the expected benefit derived by
applying the applicable U.S. federal statutory rate to the loss from operations
primarily due to non-deductible acquisition related items partially offset by
the benefit of tax exempt interest and research and development tax credits. Our
2000 income tax expense differs from the expected benefit derived by applying
the applicable U.S. federal statutory rate to the loss from operations primarily
due to non-deductible acquisition related items partially offset by the benefit
of research and development tax credits.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2000, we had $18.7 million in working capital and $7.3 million in
cash and cash equivalents. Our operating activities used cash of $6.9 million
for the six months ended June 30, 2001, and generated cash of $6.0 million for
the six months ended June 30, 2000. The $6.9 million of cash used by operations
was primarily attributable to a net loss of $4.8 million, an increase in
inventories of $3.2 million and an increase in income tax receivable of $1.1
million, partially offset by non-cash charges of $5.0 million.

Our investing activities used cash of $1,932,000 and $278,000 for the six months
ended June 30, 2001 and the six months ended June 30, 2000, respectively. Cash
used by investing activities for the six months ended June 30, 2001 was
primarily attributable to the purchases of property and equipment, partially
offset by net proceeds from the purchase/sale of investments. Financing
activities used cash of $556,000 during the six months ended June 30, 2001 and
generated cash of $1,011,000 during the six months ended June 30, 2000. Cash
used by financing activities for the six months ended June 30, 2001 is primarily
related to an increase of restricted cash and investment partially offset by the
exercise of employee stock options.

In January 2001, our Board of Directors approved a stock repurchase program
whereby up to 2,000,000 shares of our common stock may be purchased in the open
market or in privately negotiated transactions. As of June 30, 2001, 10,000
shares had been repurchased.



                                       14
<PAGE>   15

In August 2001, we paid all amounts owed under the loan from Wells Capital
Management, an aggregate amount of $28.5 million. This loan was secured with
approximately $33.4 million in restricted cash and investments. We liquidated
these restricted cash and investments in order to repay the loan. Approximately
$5.0 million became available to us for operating working capital after the
repayment of the loan.

We believe that our existing resources, together with cash generated from our
operations will be sufficient to meet our capital requirements for at least the
next twelve months.

FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS

This quarterly report on Form 10-Q contains forward-looking statements which
involve risks and uncertainties. Our actual results could differ materially from
those anticipated by such forward-looking statements as a result of certain
factors, including those set forth below.

RESULTS MAY FLUCTUATE SIGNIFICANTLY DUE TO FACTORS WHICH ARE NOT WITHIN OUR
CONTROL

Our quarterly operating results have fluctuated significantly in the past and
are expected to fluctuate significantly in the future based on a number of
factors, many of which are not under our control. Our operating expenses, which
include product development costs and selling, general and administrative
expenses, are relatively fixed in the short-term. If our revenues are lower than
we expect because we sell fewer semiconductor devices, delay the release of new
products or the announcement of new features, or for other reasons, we may not
be able to quickly reduce our spending in response.

Other circumstances that can affect our operating results include:

-       our ability to develop, introduce and market new products and
        technologies on a timely basis,

-       the timing of significant orders, order cancellations and reschedulings,

-       changes in our pricing policies or those of our competitors or
        suppliers, including decreases in unit average selling prices of our
        products,

-       introduction of products and technologies by our competitors,

-       shifts in our product mix toward lower margin products,

-       the availability of production capacity at the fabrication facilities
        that manufacture our products, and

-       the availability and cost of materials to our suppliers.

These factors are difficult to forecast, and these or other factors could
adversely affect our business. Any shortfall in our revenues would have a direct
impact on our business. In addition, fluctuations in our quarterly results could
adversely affect the market price of our common stock in a manner unrelated to
our long-term operating performance.

OUR LENGTHY SALES CYCLE CAN RESULT IN UNCERTAINTY AND DELAYS WITH REGARD TO OUR
EXPECTED REVENUES

Our customers typically perform numerous tests and extensively evaluate our
products before incorporating them into their systems. The time required for
test, evaluation and design of our products into the customer's equipment can
range from six to twelve months or more. It can take an additional six to twelve
months or more before a customer commences volume shipments of equipment that
incorporates our products. Because of this lengthy sales cycle, we may
experience a delay between the time when we increase expenses for research and
development and sales and marketing efforts and the time when we generate higher
revenues, if any, from these expenditures.

In addition, the delays inherent in our lengthy sales cycle raise additional
risks of customer decisions to cancel or change product plans. When we achieve a
design win, there can be no assurance that the customer will ultimately



                                       15
<PAGE>   16

ship products incorporating our products. Our business could be materially
adversely affected if a significant customer curtails, reduces or delays orders
during our sales cycle or chooses not to release products incorporating our
products.

RAPID TECHNOLOGICAL CHANGE COULD MAKE OUR PRODUCTS OBSOLETE

We operate in an industry that is subject to evolving industry standards, rapid
technological changes, rapid changes in customer demands and the rapid
introduction of new, higher performance products with shorter product life
cycles. As a result, we expect to continue to make significant investments in
research and development. However, we may not have adequate funds from
operations or otherwise to devote to research and development, forcing us to
reduce our research and development efforts. Also, we must manage product
transitions successfully, since announcements or introductions of new products
by us or our competitors could adversely affect sales of our existing products
because these existing products can become obsolete or unmarketable for specific
purposes. There can be no assurance that we will be able to develop and
introduce new products or enhancements to our existing products on a timely
basis or in a manner which satisfies customer needs or achieves widespread
market acceptance. Any significant delay in releasing new products could
adversely affect our reputation, give a competitor a first-to-market advantage
or allow a competitor to achieve greater market share. The failure to adjust to
rapid technological change could harm our business, financial condition, results
of operations and cash flows.

FAILURE OF OUR PRODUCTS TO GAIN MARKET ACCEPTANCE WOULD ADVERSELY AFFECT OUR
FINANCIAL CONDITION

We believe that our growth prospects depend upon our ability to gain customer
acceptance of our products and technology. Market acceptance of products depends
upon numerous factors, including compatibility with existing manufacturing
processes and products, perceived advantages over competing products and the
level of customer service available to support such products. Moreover,
manufacturers often rely on a limited number of equipment vendors to meet their
manufacturing equipment needs. As a result, market acceptance of our products
may be adversely affected to the extent potential customers utilize a
competitor's manufacturing equipment. There can be no assurance that growth in
sales of new products will continue or that we will be successful in obtaining
broad market acceptance of our products and technology.

We expect to spend a significant amount of time and resources to develop new
products and refine existing products. In light of the long product development
cycles inherent in our industry, these expenditures will be made well in advance
of the prospect of deriving revenues from the sale of any new products. Our
ability to commercially introduce and successfully market any new products is
subject to a wide variety of challenges during this development cycle, including
start-up bugs, design defects and other matters that could delay introduction of
these products to the marketplace. In addition, since our customers are not
obligated by long-term contracts to purchase our products, our anticipated
product orders may not materialize, or orders that do materialize may be
cancelled. As a result, if we do not achieve market acceptance of new products,
we may not be able to realize sufficient sales of our products in order to
recoup research and development expenditures. The failure of any of our new
products to achieve market acceptance would harm our business, financial
condition, results of operation and cash flows.

WE MUST MAKE SIGNIFICANT RESEARCH AND DEVELOPMENT EXPENDITURES PRIOR TO
GENERATING REVENUES FROM PRODUCTS

To establish market acceptance of a new semiconductor device, we must dedicate
significant resources to research and development, production and sales and
marketing. We incur substantial costs in developing, manufacturing and selling a
new product, which often significantly precede meaningful revenues from the sale
of this product. Consequently, new products can require significant time and
investment to achieve profitability. Prospective investors should note that our
efforts to introduce new semiconductor devices or other products or services may
not be successful or profitable. In addition, products or technologies developed
by others may render our products or technologies obsolete or noncompetitive.

We record as expenses the costs related to the development of new semiconductor
devices and other products as these expenses are incurred. As a result, our
profitability from quarter to quarter and from year to year may be adversely
affected by the number and timing of our new product launches in any period and
the level of acceptance gained by these products.



                                       16
<PAGE>   17

OUR INDEPENDENT MANUFACTURERS MAY NOT BE ABLE TO MEET OUR MANUFACTURING
REQUIREMENTS

We do not manufacture any of our semiconductor devices. Therefore, we are
referred to in the semiconductor industry as a "fabless" producer of
semiconductors. Consequently, we depend upon third party manufacturers to
produce semiconductors that meet our specifications. We currently have third
party manufacturers that can produce semiconductors which meet our needs.
However, as the semiconductor industry continues to progress to smaller
manufacturing and design geometries, the complexities of producing
semiconductors will increase. Decreasing geometries may introduce new problems
and delays that may affect product development and deliveries. Due to the nature
of the semiconductor industry and our status as a "fabless" semiconductor
company, we could encounter fabrication related problems that may affect the
availability of our semiconductor devices, may delay our shipments or may
increase our costs.

OUR RELIANCE ON SINGLE SOURCE MANUFACTURERS OF OUR SEMICONDUCTOR DEVICES COULD
DELAY SHIPMENTS AND INCREASE OUR COSTS

None of our semiconductor devices is currently manufactured by more than one
supplier. We place our orders on a purchase order basis and do not have a long
term purchase agreement with any of our existing suppliers. In the event that
the supplier of a semiconductor device was unable or unwilling to continue to
manufacture this product in the required volume, we would have to identify and
qualify a substitute supplier. Introducing new products or transferring existing
products to a new third party manufacturer or process may result in unforeseen
device specification and operating problems. These problems may affect product
shipments and may be costly to correct. Silicon fabrication capacity may also
change, or the costs per silicon wafer may increase. Manufacturing-related
problems may have a material adverse effect on our business.

INTENSE COMPETITION IN THE MARKETS IN WHICH WE OPERATE MAY REDUCE THE DEMAND FOR
OR PRICES OF OUR PRODUCTS

Competition in the semiconductor industry is intense. If our main target market,
the embedded systems market, continues to grow, the number of competitors may
increase significantly. In addition, new semiconductor technology may lead to
new products that can perform similar functions as our products. Some of our
competitors and other semiconductor companies may develop and introduce products
that integrate into a single semiconductor device the functions performed by our
semiconductor devices. This would eliminate the need for our products in some
applications.

In addition, competition in our markets comes from companies of various sizes,
many of which are significantly larger and have greater financial and other
resources than we do and thus can better withstand adverse economic or market
conditions. Also, with our processor products, we compete with established
embedded microprocessor companies and others. Many of these indirect competitors
and microprocessor companies have significantly greater financial, technical,
marketing and other resources than we. Therefore, we cannot assure you that we
will be able to compete successfully in the future against existing or new
competitors, and increased competition may adversely affect our business.

FAILURE TO HAVE OUR PRODUCTS DESIGNED INTO THE PRODUCTS OF ELECTRONIC EQUIPMENT
MANUFACTURERS WILL RESULT IN REDUCED SALES

Our future success depends on electronic equipment manufacturers that design our
semiconductor devices into their systems. We must anticipate market trends and
the price, performance and functionality requirements of current and potential
future electronic equipment manufacturers and must successfully develop and
manufacture products that meet these requirements. In addition, we must meet the
timing requirements of these electronic equipment manufacturers and must make
products available to them in sufficient quantities. These electronic equipment
manufacturers could develop products that provide the same or similar
functionality as one or more of our products and render these products obsolete
in their applications.

We do not have purchase agreements with our customers that contain minimum
purchase requirements. Instead, electronic equipment manufacturers purchase our
products pursuant to short-term purchase orders that may be canceled without
charge. We believe that in order to obtain broad penetration in the markets for
our products, we must maintain and cultivate relationships, directly or through
our distributors, with electronic equipment manufacturers that are leaders in
the embedded systems markets. Accordingly, we will often incur significant
expenditures in order to build relationships with electronic equipment
manufacturers prior to volume sales of new



                                       17
<PAGE>   18

products. If we fail to develop relationships with additional electronic
equipment manufacturers, to have our products designed into new embedded systems
or to develop sufficient new products to replace products that have become
obsolete, our business would be materially adversely affected.

LOWER DEMAND FOR OUR CUSTOMERS' PRODUCTS WILL RESULT IN LOWER DEMAND FOR OUR
PRODUCTS

Demand for our products depends in large part on the development and expansion
of the high-performance embedded systems markets including networking and
telecommunications, enterprise storage, imaging and industrial applications. The
size and rate of growth of these embedded systems markets may in the future
fluctuate significantly based on numerous factors. These factors include the
adoption of alternative technologies, capital spending levels and general
economic conditions. Demand for products that incorporate high-performance
embedded systems may not grow.

DEFECTS IN OUR PRODUCTS COULD INCREASE OUR COSTS AND DELAY OUR PRODUCT SHIPMENTS

Our products are complex. While we test our products, these products may still
have errors, defects or bugs that we find only after commercial production has
begun. We have experienced errors, defects and bugs in the past in connection
with new products.

Our customers may not purchase our products if the products have reliability,
quality or compatibility problems. This delay in acceptance could make it more
difficult to retain our existing customers and to attract new customers.
Moreover, product errors, defects or bugs could result in additional development
costs, diversion of technical and other resources from our other development
efforts, claims by our customers or others against us, or the loss of
credibility with our current and prospective customers. In the past, the
additional time required to correct defects has caused delays in product
shipments and resulted in lower revenues. We may have to spend significant
amounts of capital and resources to address and fix problems in new products.

We must continuously develop our products using new process technology with
smaller geometries to remain competitive on a cost and performance basis.
Migrating to new technologies is a challenging task requiring new design skills,
methods and tools and is difficult to achieve.

FAILURE TO HIRE ADDITIONAL PERSONNEL AND TO IMPROVE OUR OPERATIONS WILL LIMIT
OUR GROWTH

We have experienced rapid growth which places a significant strain on our
limited personnel and other resources. To manage our expanded operations
effectively, we will need to further improve our operational, financial and
management systems. We will also need to successfully hire, train, motivate and
manage our employees. We may not be able to manage our growth effectively, which
could have a material adverse effect on our business. Also, we are seeking to
hire additional skilled development engineers, who are currently in short
supply. Our business could be adversely affected if we encounter delays in
hiring additional engineers.

WE COULD LOSE KEY PERSONNEL DUE TO COMPETITIVE MARKET CONDITIONS AND ATTRITION

Our success depends to a significant extent upon our senior management and key
technical and sales personnel. The loss of one or more of these employees could
have a material adverse effect on our business. We do not have employment
contracts with any of our executive officers.

Our success also depends on our ability to attract and retain qualified
technical, sales and marketing, customer support, financial and accounting, and
managerial personnel. Competition for such personnel in the semiconductor
industry is intense, and we may not be able to retain our key personnel or to
attract, assimilate or retain other highly qualified personnel in the future. In
addition, we may lose key personnel due to attrition, including health, family
and other reasons. We have experienced, and may continue to experience,
difficulty in hiring and retaining candidates with appropriate qualifications.
If we do not succeed in hiring and retaining candidates with appropriate
qualifications, our business could be materially adversely affected.

A LARGE PORTION OF OUR REVENUES IS DERIVED FROM SALES TO THIRD-PARTY
DISTRIBUTORS WHO MAY TERMINATE THEIR RELATIONSHIPS WITH US AT ANY TIME

We depend on distributors to sell a significant portion of our products. In the
six months ended June 30, 2001 and 2000, net revenues through distributors
accounted for approximately 62% and 64%, respectively, of our net revenues. Some
of our distributors also market and sell competing products.



                                       18
<PAGE>   19

Distributors may terminate their relationships with us at any time. Our future
performance will depend in part on our ability to attract additional
distributors that will be able to market and support our products effectively,
especially in markets in which we have not previously distributed our products.
We may lose one or more of our current distributors or may not be able to
recruit additional or replacement distributors. For example, in March 2001, we
terminated our relationship with Unique Technologies, our U.S. distributor, that
accounted for 22% of our year to date revenues through June 30, 2001, and since
then have serviced most of our U.S. customers directly or through manufacturers'
representatives. Unique is currently being phased out as our U.S. distributor.
The loss of one or more of our major distributors could have a material adverse
effect on our business.

THE DEMAND FOR OUR PRODUCTS DEPENDS UPON OUR ABILITY TO SUPPORT EVOLVING
INDUSTRY STANDARDS

Substantially all of our revenues are derived from sales of products which rely
on the PCI standard. If the embedded systems markets move away from this
standard and begin using new standards, we may not be able to successfully
design and manufacture new products that use these new standards. There is also
the risk that new products we develop in response to new standards may not be
accepted in the market. In addition, the PCI standard is continuously evolving,
and we may not be able to modify our products to address new PCI specifications.
Any of these events would have a material adverse effect on our business.

THE SUCCESSFUL MARKETING AND SALES OF OUR PRODUCTS DEPEND UPON OUR THIRD PARTY
RELATIONSHIPS, WHICH ARE NOT SUPPORTED BY WRITTEN AGREEMENTS

When marketing and selling our semiconductor devices, we believe we enjoy a
competitive advantage based on the availability of development tools offered by
third parties. These development tools are used principally for the design of
other parts of the embedded system but also work with our products. We will lose
this advantage if these third party tool vendors cease to provide these tools
for existing products or do not offer them for our future products. This event
could have a material adverse effect on our business. We generally have no
written agreements with these third parties, and these parties could choose to
stop providing these tools at any time.

OUR LIMITED ABILITY TO PROTECT OUR INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS
COULD ADVERSELY AFFECT OUR COMPETITIVE POSITION

Our future success and competitive position depend upon our ability to obtain
and maintain proprietary technology used in our principal products. Currently,
we have limited protection of our intellectual property in the form of patents
and rely instead on trade secret protection. Our existing or future patents may
be invalidated, circumvented, challenged or licensed to others. The rights
granted thereunder may not provide competitive advantages to us. In addition,
our future patent applications may not be issued with the scope of the claims
sought by us, if at all. Furthermore, others may develop technologies that are
similar or superior to our technology, duplicate our technology or design around
the patents owned or licensed by us. In addition, effective patent, trademark,
copyright and trade secret protection may be unavailable or limited in foreign
countries where we may need protection. We cannot be sure that steps taken by us
to protect our technology will prevent misappropriation of the technology.

We may from time to time receive notifications of claims that we may be
infringing patents or other intellectual property rights owned by third parties.
While there is currently no intellectual property litigation pending against us,
litigation could result in significant expenses to us, adversely affect sales of
the challenged product or technology. This litigation could also divert the
efforts of our technical and management personnel, whether or not the litigation
is determined in our favor. In addition, we may not be able to develop or
acquire non-infringing technology or procure licenses to the infringing
technology under reasonable terms. This could require expenditures by us of
substantial time and other resources. Any of these developments would have a
material adverse effect on our business.

THE CYCLICAL NATURE OF THE SEMICONDUCTOR INDUSTRY MAY LEAD TO SIGNIFICANT
VARIANCES IN THE DEMAND FOR OUR PRODUCTS

In the last year, the semiconductor industry has been characterized by
significant downturns and wide fluctuations in supply and demand. Also, during
this time, the industry has experienced significant fluctuations in anticipation
of changes in general economic conditions, including economic conditions in
Asia. This cyclicality has led to significant variances in product demand and
production capacity. It has also accelerated erosion of average selling prices
per unit. We may experience periodic fluctuations in our future financial
results because of industry-wide conditions.



                                       19
<PAGE>   20

BECAUSE WE SELL OUR PRODUCTS TO CUSTOMERS OUTSIDE OF NORTH AMERICA AND BECAUSE
OUR PRODUCTS ARE INCORPORATED WITH PRODUCTS OF OTHERS THAT ARE SOLD OUTSIDE OF
NORTH AMERICA WE FACE FOREIGN BUSINESS, POLITICAL AND ECONOMIC RISKS

Sales outside of North America accounted for 40% of our revenues for the six
months ended June 30, 2001. In 2000, 1999 and 1998 sales outside of North
America accounted for 39%, 35% and 34% of our revenues, respectively. We
anticipate that these sales may increase in future periods and may account for
an increasing portion of our revenues. In addition, equipment manufacturers who
incorporate our products into their products sell their products outside of
North America, thereby exposing us indirectly to foreign risks. Further, most of
our semiconductor products are manufactured outside of North America.
Accordingly, we are subject to international risks, including:

-       difficulties in managing distributors,

-       difficulties in staffing and managing foreign subsidiary and branch
        operations,

-       political and economic instability,

-       foreign currency exchange fluctuations,

-       difficulties in accounts receivable collections,

-       potentially adverse tax consequences,

-       timing and availability of export licenses,

-       changes in regulatory requirements, tariffs and other barriers,

-       difficulties in obtaining governmental approvals for telecommunications
        and other products, and

-       the burden of complying with complex foreign laws and treaties.

Because sales of our products have been denominated to date exclusively in
United States dollars, increases in the value of the United States dollar will
increase the price of our products so that they become relatively more expensive
to customers in the local currency of a particular country, which could lead to
a reduction in sales and profitability in that country.

OUR POTENTIAL FUTURE ACQUISITIONS MAY NOT BE SUCCESSFUL BECAUSE OF OUR LIMITED
EXPERIENCE WITH ACQUISITIONS IN THE PAST

There have been a significant number of mergers and acquisitions in the
semiconductor industry in the past. As part of our business strategy, we expect
to review acquisition prospects that would complement our existing product
offerings, improve market coverage or enhance our technological capabilities. In
May 2000, we acquired Sebring Systems. We have no current agreements or
negotiations underway with respect to any acquisitions, and we may not be able
to locate suitable acquisition opportunities. Future acquisitions could result
in any or all of the following:

        -       potentially dilutive issuances of equity securities,

        -       large one-time write-offs,

        -       the incurrence of debt and contingent liabilities or
                amortization expenses related to goodwill and other intangible
                assets,

        -       difficulties in the assimilation of operations, personnel,
                technologies, products and the information systems of the
                acquired companies,



                                       20
<PAGE>   21

        -       diversion of management's attention from other business
                concerns,

        -       risks of entering geographic and business markets in which we
                have no or limited prior experience, and

        -       potential loss of key employees of acquired organizations.

Since we have had limited experience with acquisitions in the past, we are not
certain that we will be able to successfully integrate any businesses, products,
technologies or personnel that may be acquired in the future. Our failure to do
so could have a material adverse effect on our business.

OUR PRINCIPAL STOCKHOLDERS HAVE SIGNIFICANT VOTING POWER AND MAY TAKE ACTIONS
THAT MAY NOT BE IN THE BEST INTERESTS OF OUR OTHER STOCKHOLDERS

Our executive officers, directors and other principal stockholders, in the
aggregate, beneficially own a substantial amount of our outstanding common
stock. Although these stockholders do not have majority control, they currently
have, and likely will continue to have, significant influence with respect to
the election of our directors and approval or disapproval of our significant
corporate actions. This influence over our affairs might be adverse to the
interests of other stockholders. In addition, the voting power of these
stockholders could have the effect of delaying or preventing a change in control
of PLX.

THE ANTI-TAKEOVER PROVISIONS IN OUR CERTIFICATE OF INCORPORATION COULD ADVERSELY
AFFECT THE RIGHTS OF THE HOLDERS OF OUR COMMON STOCK

Anti-takeover provisions of Delaware law and our Certificate of Incorporation
may make a change in control of PLX more difficult, even if a change in control
would be beneficial to the stockholders. These provisions may allow the Board of
Directors to prevent changes in the management and control of PLX. Consistent
with Delaware law, our Board of Directors may adopt additional anti-takeover
measures in the future.

Our Board of Directors has the ability to determine the terms of preferred stock
and issue preferred stock without the approval of the holders of the common
stock. Our Certificate of Incorporation allows the issuance of up to 5,000,000
shares of preferred stock. There are no shares of preferred stock outstanding.
However, because the rights and preferences of any series of preferred stock may
be set by the Board of Directors in its sole discretion without approval of the
holders of the common stock, the rights and preferences of this preferred stock
may be superior to those of the common stock. Accordingly, the rights of the
holders of common stock may be adversely affected.



                                       21
<PAGE>   22

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.


We have an investment portfolio of fixed income securities, including those
classified as cash equivalents and restricted cash of approximately $38.7
million at June 30, 2001. These securities are subject to interest rate
fluctuations and will decrease in market value if interest rates increase.

The primary objective of our investment activities is to preserve principal
while at the same time maximizing yields without significantly increasing risk.
We invest primarily in high quality, short-term and long-term debt instruments.
A hypothetical 100 basis point increase in interest rates would result in less
than $0.4 million decrease (less than 1%) in the fair value of our
available-for-sale securities.



                                       22
<PAGE>   23

                           PART II. OTHER INFORMATION


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At the Company's Annual Meeting of Stockholders held on May 22, 2001, the
following individuals were elected to the Board of Directors:

<TABLE>
<CAPTION>
Name                       Votes For          Votes Against       Votes Withheld
----                       ----------         -------------       -------------
<S>                        <C>                <C>                 <C>
Michael Salameh            20,886,186            137,102            2,398,094
D. James Guzy              20,837,797            185,491            2,398,094
Eugene Flath               20,839,566            183,722            2,398,094
Timothy Draper             20,841,191            182,097            2,398,094
Young K. Sohn              20,840,586            182,702            2,398,094
John H. Hart               20,888,486            134,802            2,398,094
</TABLE>

The following proposals were approved at the Company's Annual Meeting:

<TABLE>
<CAPTION>
                                            Affirmative Votes          Negative Votes
                                            -----------------          --------------
<S>                                         <C>                        <C>
1.  Amendments to the Company's 1999
    Stock Incentive Plan                    16,220,403                 4,781,820

2.  Ratification of the appointment of
    Ernst & Young LLP as independent
    auditors for the fiscal year ending
    December 31, 2001                       20,993,751                 21,507
</TABLE>



                                       23
<PAGE>   24

                           PART II. OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

        (a) Exhibits

<TABLE>
<CAPTION>
             EXHIBIT
              NUMBER                        DESCRIPTION
             --------                       -----------
<S>                     <C>
              2.1(2)    Agreement and Plan of Merger dated April 19, 2000 by
                        and among PLX Technology, Inc., OKW Technology
                        Acquisition Corporation and Sebring Systems, Inc.

              3.1(1)    Amended and Restated Certificate of Incorporation of
                        the Registrant.

              3.2(1)    Registrant's Amended and Restated Bylaws.

              4.1       Reference is made to Exhibit 3.1.

             10.1       1999 Stock Incentive Plan, as amended.
</TABLE>

----------
        (1)     Incorporated by reference to the same numbered exhibit
                previously filed with the Company's Registration Statement on
                Form S-1 (Registration No. 333-71795).

        (2)     Incorporated by reference to Exhibit 2.1 to Form 8-K as filed on
                June 2, 2000.


(b)     Reports on Form 8-K. The Company did not file any reports on Form 8-K
        during the quarter ended June 30, 2001.



                                       24
<PAGE>   25

                                    SIGNATURE

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.


                                                  PLX TECHNOLOGY, INC.
                                                      (Registrant)


Date: August 10, 2001                  By /s/   Rafael Torres
                                          --------------------------------------
                                                      Rafael Torres
                                              Vice President, Finance and
                                                Chief Financial Officer
                                                (Authorized Officer and
                                              Principal Financial Officer)



                                       25
<PAGE>   26

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                 DESCRIPTION
------                                 -----------
<S>         <C>
2.1(2)      Agreement and Plan of Merger dated April 19, 2000 by and among PLX
            Technology, Inc., OKW Technology Acquisition Corporation and Sebring
            Systems, Inc.

3.1(1)      Amended and Restated Certificate of Incorporation of the Registrant.

3.2(1)      Registrant's Amended and Restated Bylaws.

4.1         Reference is made to Exhibit 3.1.

10.1        1999 Stock Incentive Plan, as amended.
</TABLE>

----------
(1)  Incorporated by reference to the same numbered exhibit previously filed
     with the Company's Registration Statement on Form S-1 (Registration No.
     333-71795).

(2)  Incorporated by reference to Exhibit 2.1 to Form 8-K as filed on June 2,
     2000.