<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 March 31, 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



                      P L X   T E C H N O L O G Y,   I N C.
             (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 April 27, 2001, there were 23,424,922 shares of common stock, par value
$0.001 per share, outstanding.


              This Report on Form 10-Q includes 23 pages with the
                      Index to Exhibits located on page 22

<PAGE>   2

                              PLX TECHNOLOGY, INC.
                                    INDEX TO
                               REPORT ON FORM 10-Q
                        FOR QUARTER ENDED MARCH 31, 2001


<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
                         PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements (Unaudited):

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

          Condensed Consolidated Statements of Operations for the
            three months ended March 31, 2001 and 2000.....................   4

          Condensed Consolidated Statements of Cash Flows for the
            three months ended March 31, 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.........  21


                          PART II. OTHER INFORMATION

ITEM 6. Exhibits and Reports on Form 8-K...................................  22
</TABLE>

                                       2

<PAGE>   3

                          PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


                              PLX TECHNOLOGY, INC.

                     CONDENSED CONSOLIDATED BALANCE SHEETS

                                 (in thousands)

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

Current Assets:
     Cash and cash equivalents                        $   8,015          $  16,621
     Short-term investments                               3,339              3,340
     Accounts receivable, net                             4,964              4,772
     Inventories                                          7,939              4,521
     Deferred tax assets                                  4,099              4,099
     Other current assets                                 1,414              1,290
                                                      ---------          ---------
Total current assets                                     29,770             34,643


Goodwill                                                 10,480             11,308
Other intangible assets                                   2,747              2,964
Property and equipment, net                              34,119             31,277
Restricted cash and investments                          33,234             33,146
Other assets                                                209                141
                                                      ---------          ---------
Total assets                                          $ 110,559          $ 113,479
                                                      ---------          ---------

LIABILITIES

Current liabilities:
     Accounts payable                                 $   4,064          $   5,064
     Accrued compensation and benefits                    1,038              1,491
     Accrued commissions                                    245                345
     Deferred revenues                                      760              1,430
     Income tax payable                                     684                833
     Deferred tax liability                               1,100              1,100
     Other accrued expenses                               1,118              1,518
                                                      ---------          ---------
Total current liabilities                                 9,009             11,781
Long-term notes payable                                  28,500             28,500

STOCKHOLDERS' EQUITY

     Common stock, par value                                 23                 23
     Additional paid in capital                          78,536             79,715
     Deferred compensation                               (6,913)            (9,312)
     Notes receivable for employee stock purchases          (50)               (50)
     Accumulated other comprehensive income                 153                 54
     Retained earnings                                    1,301              2,768
                                                      ---------          ---------
Total stockholders' equity                               73,050             73,198
                                                      ---------          ---------
Total liabilities and stockholders' equity            $ 110,559          $ 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
                                                                          MARCH 31,
                                                                   -----------------------
                                                                     2001           2000
                                                                   --------       --------
<S>                                                                <C>            <C>
Net revenues                                                       $ 12,429       $ 14,542
Cost of revenues                                                      4,064          4,420
                                                                   --------       --------
Gross Margin                                                          8,365         10,122

Operating expenses:
     Research and development                                         5,265          2,020
     Selling, general and administrative                              3,824          3,400
     Amortization of goodwill and purchased intangible assets         1,044             --
                                                                   --------       --------
Total operating expenses                                             10,133          5,420
                                                                   --------       --------

Income (loss) from operations                                        (1,768)         4,702
Interest income and other, net                                          231            489
                                                                   --------       --------

Income (loss) before provision (benefit) for income taxes            (1,537)         5,191
Provision (benefit) for income taxes                                    (70)         1,816
                                                                   --------       --------

Net income (loss)                                                  $ (1,467)      $  3,375
                                                                   ========       ========

Basic net income (loss) per share                                  $  (0.06)      $   0.16
                                                                   ========       ========
Shares used to compute basic per share amounts                       23,151         21,696
                                                                   ========       ========
Diluted net income (loss) per share                                $  (0.06)      $   0.15
                                                                   ========       ========
Shares used to compute diluted per share amounts                     23,151         22,981
                                                                   ========       ========
</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>
                                                                              THREE MONTHS ENDED
                                                                                   MARCH 31,
                                                                           -----------------------
                                                                              2001          2000
                                                                           --------       --------
<S>                                                                        <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss)                                                          $ (1,467)      $  3,375
Adjustments to reconcile net income to net cash provided by operating
activities:
     Depreciation                                                               617            244
     Compensation related to stock options issued to non-employees               17             --
     Amortization of deferred compensation                                      818             22
     Amortization of goodwill and other purchased intangible assets           1,044             --
     Changes in operating assets and liabilities:
         Accounts receivable                                                   (192)        (1,177)
         Inventories                                                         (3,418)           241
         Other current assets                                                  (124)          (423)
         Other assets                                                           (68)          (152)
         Accounts payable                                                    (1,000)         1,003
         Accrued compensation and benefits                                     (453)           475
         Accrued commissions                                                   (100)           237
         Income tax payable                                                    (149)         1,277
         Deferred revenues                                                     (670)           432
         Other accrued expenses                                                (400)           251
                                                                           --------       --------
Net cash provided by (used in) operating activities                          (5,545)         5,805
                                                                           --------       --------
INVESTING ACTIVITIES

Purchases of short term investments                                          (1,939)       (10,922)
Sales of short term investments                                                  --          3,250
Maturities of short term investments                                          3,193         13,500
Purchases of long term investments                                           (2,123)        (1,260)
Sales of long term investments                                                   --          1,005
Purchases of property and equipment                                          (3,459)          (137)
                                                                           --------       --------
Net cash provided by (used in) investing activities                          (4,328)         5,436

FINANCING ACTIVITIES

Proceeds from sale of common stock                                              385            735
Decrease in restricted cash and investments                                     882             --
                                                                           --------       --------
Net cash provided by financing activities                                     1,267            735
                                                                           --------       --------
Increase (decrease) in cash and cash equivalents                             (8,606)        11,976
Cash and cash equivalents at beginning of year                               16,621          8,636
                                                                           --------       --------
Cash and cash equivalents at end of period                                 $  8,015       $ 20,612
                                                                           ========       ========
</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 March 31, 2001 and for the three-month periods
      ended March 31, 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 INCOME (LOSS)

      The Company has adopted Statement of Financial Accounting Standards No.
      130, "Reporting Comprehensive Income." The Company's comprehensive net
      income (loss) for the three months ended March 31, 2001 and March 31, 2000
      was as follows:

<TABLE>
<CAPTION>
                                                    THREE MONTHS ENDED
                                                         MARCH 31,
                                                  ----------------------
                                                    2001           2000
                                                  --------       -------
                                                      (IN THOUSANDS)
<S>                                               <C>            <C>
      Net income (loss)                           $ (1,467)      $ 3,375

      Unrealized gains on investments                   99             3
                                                  --------       -------
      Comprehensive income (loss)                 $ (1,368)      $ 3,378
                                                  ========       =======
</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,
      has been adopted by the Company effective January 1, 2001, and did 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.

                                       6
<PAGE>   7

      On February 14, 2001, the Financial Accounting Standards Board issued a
      limited revision of its September 7, 1999 exposure Draft, "Business
      Combinations and Intangible Assets", that proposes to significantly change
      the accounting for goodwill acquired in a purchase business combination.
      Under the revised proposal, goodwill would not be amortized but would be
      reviewed for impairment, using a complex methodology different from the
      original proposal, when an event occurs indicating the potential for
      impairment. Goodwill impairment charges would be presented as a separate
      line item within the operating section of the income statement. The
      nonamortization approach would apply to previously recorded goodwill as
      well as goodwill arising from acquisitions completed after the application
      of the new standard. Amortization of the remaining book value of goodwill
      would cease and the new impairment-only approach would apply. The FASB
      expects to release the final statement in June 2001. The provisions of the
      proposed statement are to be applied at the beginning of the first fiscal
      quarter following its issuance for all entities.

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>
                                                  MARCH 31,       DECEMBER 31,
                                                  ---------------------------
                                                   2001              2000
                                                  ------            ------
                                                       (IN THOUSANDS)
<S>                                               <C>               <C>
      Work in Process ................            $  641            $  646
      Finished goods .................             7,298             3,875
                                                  ------            ------
          Total ......................            $7,939            $4,521
                                                  ======            ======
</TABLE>


3.    NET INCOME (LOSS) PER SHARE

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

<TABLE>
<CAPTION>
                                                            THREE MONTHS ENDED MARCH 31,
                                                            ---------------------------
                                                               2001             2000
                                                            ---------         ---------
                                                              (IN THOUSANDS, EXCEPT
                                                                 PER SHARE DATA)
<S>                                                          <C>               <C>
      Net income (loss) ...............................      $ (1,467)         $  3,375
                                                             --------          --------
      Weighted average shares of common stock
          outstanding .................................        23,215            21,986
      Less weighted average shares of common
          stock subject to repurchase .................           (64)             (290)
                                                             --------          --------
      Shares used in computing basic net income
          per share ...................................        23,151            21,696
                                                             --------          --------
      Net income (loss) per share -- Basic ............      $  (0.06)         $   0.16
                                                             --------          --------
      Shares used in computing basic net income
          (loss) per share ............................        23,151            21,696
      Effect of dilutive securities:
          Stock options ...............................            --               995
          Unvested restricted stock ...................            --               290
                                                             --------          --------
      Shares used in computing diluted net
          income (loss) per share .....................        23,151            22,981
                                                             --------          --------
      Net income (loss) per share -- diluted ..........      $  (0.06)         $   0.15
                                                             --------          --------
</TABLE>

                                       7
<PAGE>   8

      As the Company incurred a loss for the three month period ended March 31,
      2001, the effect of dilutive securities, totaling 2.0 million equivalent
      shares, 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 MARCH 31,
                                             ----------------------------
                                                2001              2000
                                             ----------        ----------
                                                    (IN THOUSANDS)
<S>                                          <C>               <C>
      Revenues:
        United States                          $ 7,295           $ 9,318
        France                                   1,664             1,239
        Europe -- excluding France               1,733             1,912
        Asia                                     1,737             2,073
                                               -------           -------
      Total                                    $12,429           $14,542
                                               =======           =======
</TABLE>


      For the three months ended March 31, 2001, Unique Technologies, the
      Company's U.S. distributor, and A2M, a European distributor accounted for
      23% and 13% of net revenues, respectively. In March 2001, the Company
      decided to terminate its relationship with Unique Technologies and service
      all of its U.S. customers directly or through manufacturers'
      representatives. For the three months ended March 31, 2001, sales to IBM
      accounted for 14% of net revenues and sales to Cisco Systems accounted for
      11% of net revenues, in each case taking into account sales through the
      Company's distributors as well as direct sales. No other individual
      customer represented greater than 10% of net revenues.

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 $33.2 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 March 31, 2001). The loan
      requires monthly interest payments with the outstanding principal balance
      due and payable on November 6, 2005. At March 31, 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 the 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

<TABLE>
<CAPTION>
     (in thousands)
<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.

      The $14.3 million allocation of the purchase price to the acquired
      in-process technology 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 March 31, 2001, the Company estimates
      that the project was approximately 95% complete.

      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 three months ended March 31, 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.

<TABLE>
<CAPTION>
                                                               THREE MONTHS ENDED MARCH 31,
                                                               ----------------------------
                                                                          2000
                                                                          ----
                                                                       (UNAUDITED)
                                                          (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                       <C>
      Net revenues                                                      $ 14,542
      Net loss                                                          $    404
      Net loss per share -- basic and diluted                           $  (0.02)
      Number of shares used in per share calculations --
        basic and diluted                                                 22,657
</TABLE>

                                       9
<PAGE>   10

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 March 31, 2001, no shares had been repurchased.

8.    INCOME TAXES

      Income tax benefit for the three months ended March 31, 2001 was $70,000
      on a pretax loss of $1,537,000, compared to income tax expense of
      $1,816,000 on pretax income of $5,191,000 for the three months ended March
      31, 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.

                                       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 research and development,
selling, general and administrative operations, and deferred compensation 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 revenue 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
                                                              MARCH 31,
                                                        --------------------
                                                         2001          2000
                                                        -----         -----
<S>                                                     <C>           <C>
Net revenues                                            100.0%        100.0%
Cost of revenues                                         32.7          30.4
                                                        -----         -----
Gross margin                                             67.3          69.6
Operating expenses:
  Research and development                               42.3          13.9
  Selling, general and administrative                    30.8          23.4
  Amortization of goodwill and purchased
    intangible assets                                     8.4            --
                                                        -----         -----
Total operating expenses                                 81.5          37.3
                                                        -----         -----
Income (loss) from operations                           (14.2)         32.3
Interest income and other, net                            1.8           3.4
                                                        -----         -----
Income (loss) before provision (benefit) for            (12.4)         35.7
  income taxes
Provision (benefit) for income taxes                     (0.6)         12.5
                                                        -----         -----
Net income (loss)                                       (11.8)%        23.2%
</TABLE>


NET REVENUES

Net revenues for the three months ended March 31, 2001 were $12.4 million, a
decrease of 15% from $14.5 million for the three months ended March 31, 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
March 31, 2001, Unique Technologies, our U.S. distributor, and A2M, a European
distributor accounted for 23% and 13% of net revenues, respectively. In March
2001, we decided to terminate our relationship with Unique Technologies and
service all of our U.S. customers directly or through manufacturers'
representatives. For the three months ended March 31, 2001, sales to IBM
accounted for 14% of net revenues and sales to Cisco Systems accounted for 11%
of net revenues, in each case taking into account sales through our distributors
as well as direct sales. No other individual customer represented greater than
10% of net revenues.

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 March 31, 2001 was $8.4
million, a decrease of 17% from $10.1 million for the three months ended March
31, 2000. Gross profit as a percentage of net revenues was 67.3% for the three
months ended March 31, 2001, as compared to 69.6% for the three months ended
March 31, 2000. The slight decline in our gross profit was primarily due to a
shift in our product mix.

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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 March 31, 2001 were $5.3 million, an increase of 161% from $2.0 million
for the three months ended March 31, 2000. The increase in absolute dollars was
primarily due to amortization of deferred compensation associated with the May
2000 acquisition of Sebring Systems, 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 42.3% for the three months ended March 31, 2001, as compared to
13.9% for the three months ended March 31, 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. We expect that research and development expenses in absolute dollars
will continue to increase in future periods.

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 March 31, 2001 were $3.8
million, an increase of 12% from $3.4 million for the three months ended March
31, 2000. Selling, general and administrative expenses as a percentage of net
revenues were 30.8% for the three months ended March 31, 2001, as compared to
23.4% for the three months ended March 31, 2000. The percentage increase was
primarily due to a decline in revenues.

AMORTIZATION OF GOODWILL AND PURCHASED INTANGIBLE ASSETS

Amortization of goodwill and purchased intangible assets increased by $1.0
million for the three months ended March 31, 2001. 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.

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 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 $818,000 and $22,000 for each of the three months ended March 31,
2001 and 2000, respectively, and has substantially all been included in research
and development expenses in our results of operations. The amount of deferred
compensation is amortized ratably over the vesting period of the applicable
stock grants. We expect to record compensation expenses 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 $231,000 for the three months ended March 31, 2001
from $489,000 for the three months ended March 31, 2000. This decrease was
primarily due to interest expense related to the 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

Income tax benefit for the three months ended March 31, 2001 was $70,000 on a
pretax loss of $1,537,000, compared to an income tax expense of $1,816,000 on a
pretax income of $5,191,000 for the three months ended March 31, 2000. Our 2001
income tax benefit differs from the expected benefit derived by applying the
applicable

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<PAGE>   14

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.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2001, we had $20.8 million in working capital and $8.0 million in
cash and cash equivalents. Our operating activities used cash of $5.5 million
for the three months ended March 31, 2001, and generated cash of $5.8 million
for the three months ended March 31, 2000. The $5.5 million in cash used by
operations was primarily attributable to a net loss of $1.5 million, an increase
in inventories of $3.4 million and a decrease in accounts payable of $1.0
million.

Our investing activities used cash of $4.3 million for the three months ended
March 31, 2001 and provided cash of $5.4 million for the three months ended
March 31, 2000. The $4.3 million in cash used by investing activities was
primarily attributable to purchases of property and equipment of $3.5 million.
Cash provided by financing activities was $1.3 million and $0.7 million for the
three months ended March 31, 2001 and 2000, respectively. Cash provided by
financing activities for the three months ended March 31, 2001 is related to
exercise of employee stock options and a decrease of restricted cash and
investments.

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 March 31, 2001, no shares
had been repurchased.

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.

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<PAGE>   15

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 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. Although, historically, we have had adequate funds
from operations to devote to research and development, there can be no assurance
that such funds will be available in the future or, if available, that they will
be adequate. 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 revenue 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.

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<PAGE>   16

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.

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, as we start to sell our processor products, we will 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.

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<PAGE>   17

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 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.

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<PAGE>   18

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
three months ended March 31, 2001 and 2000, net revenues through distributors
accounted for approximately 64% and 61%, respectively, of our net revenues. Some
of our distributors also market and sell competing products.

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
decided to terminate our relationship with Unique Technologies, our U.S.
distributor that accounted for 23% of our first quarter revenues, and service
all of our U.S. customers directly or through manufacturers' representatives.
The loss of one or more of our major distributors could have a material adverse
effect on our business as we may not be successful in servicing our customers
directly or through manufacturers' representatives.

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

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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.

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 41% of our revenues for the three
months ended March 31, 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

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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,

-     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.

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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 $43.8
million at March 31, 2001. These securities are subject to interest rate
fluctuations and will decrease in market value if interest rates increase.

The primary objective of the Company's investment activities is to preserve
principal while at the same time maximizing yields without significantly
increasing risk. The Company invests 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 $0.5 million decrease (less than 2%) in the fair
value of the Company's available-for-sale securities.

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<PAGE>   22

                           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(1)      Form of Indemnification Agreement between PLX and each of its
                        Officers and Directors.

          10.2(1)(4)   1998 Stock Incentive Plan.

          10.3(1)(4)   1999 Stock Incentive Plan.

          10.4(1)      Lease Agreement dated December 20, 1995 by and
                        between Aetna Life Insurance Company as Landlord and PLX
                        as Tenant.

          10.5(1)      Lease Agreement dated October 17, 1997 between The
                        Arrillaga Foundation and The Perry Foundation as
                        Landlords and PLX as Tenant, as amended.

          10.6(1)(4)   Form of Restricted Stock Purchase Agreement used in
                        connection with the 1986 Restricted Stock Purchase Program.

          10.7(1)(4)   Form of Pledge Agreement used in connection with the 1986
                        Restricted Stock Purchase Program.

          10.8(1)(4)   Form of Promissory Note used in connection with the 1986
                        Restricted Stock Purchase Program.

          10.9 (1)     PLX Technology, Inc. Stock Restriction, Information Rights and
                        Registration Rights Agreement dated April 19, 1989.

          10.10(1)     PLX Technology, Inc. Stock Restriction, Information Rights and
                        Registration Rights Agreement dated July 3, 1991.

          10.11(3)     Loan  Agreement  dated  October 25, 2000  between  Wells  Capital
                        Management and PLX.
</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.

         (3) Incorporated by reference to Exhibit 10.11 to the Company's
             quarterly report on Form 10-Q for the quarter ended September 30,
             2000.

         (4) Management contract or compensatory plan or arrangement.

      (b)  Reports on Form 8-K. The Company did not file any reports on
           Form 8-K during the quarter ended March 31, 2001.

                                       22
<PAGE>   23

                                    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: May 8, 2001                       By /s/      Rafael Torres
                                           -------------------------------------
                                                    Rafael Torres
                                             Vice President, Finance and
                                               Chief Financial Officer
                                               (Authorized Officer and
                                             Principal Financial Officer)

                                       23