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

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                   FORM 10-K

(Mark One)
          [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                   THE SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended September 30, 1997

                                       or

          [_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                   THE SECURITIES EXCHANGE ACT OF 1934
                   For the transition period from ...... to ......


                         COMMISSION FILE NUMBER 0-19654



                       VITESSE SEMICONDUCTOR CORPORATION
             (Exact name of registrant as specified in its charter)

         DELAWARE                               NO. 77-0138960
   (State or other jurisdiction of              (I.R.S. Employer
   incorporation or organization)               Identification No.)


                     741 CALLE PLANO, CAMARILLO, CA  93012
                   (Address of principal executive offices)

      Registrant's telephone number, including area code:  (805) 388-3700


       Securities registered pursuant to Section 12(b) of the Act:  NONE


          Securities registered pursuant to Section 12(g) of the Act:

                         COMMON STOCK, $0.01 PAR VALUE

                                (TITLE OF CLASS)



     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  [_]


     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]


     The aggregate market value of the voting stock held by non-affiliates of
the registrant, based upon the closing sale price of the Common Stock on
September 30, 1997 as reported on the Nasdaq National Market, was approximately
$1,358,898,330.  Shares of Common Stock held by each officer and director and by
each person who owns 5% or more of the outstanding Common Stock have been
excluded in that such persons may be deemed to be affiliates.  This
determination of affiliate status is not necessarily a conclusive determination
for other purposes.


     As of September 30, 1997, the registrant had outstanding 35,913,738 shares
of Common Stock.

================================================================================
<PAGE>
 
                                    PART I



ITEM 1.   BUSINESS

     Certain statements in this Annual Report on Form 10-K, including certain
statements contained in "Business" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations," constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act"), and Section 21E of the Securities Exchange Act
of 1934, as amended (the "Exchange Act").  Such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements.  See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Factors Affecting
Future Operating Results."

     Vitesse is a leader in the design, development, manufacturing and marketing
of digital GaAs ICs. The Company's products incorporate its proprietary H-GaAs
(high integration gallium arsenide) technology to produce high-performance ICs
primarily for telecommunications, data communications and automated test
equipment (ATE) systems providers.  The Company believes H-GaAs technology
provides significant advantages over silicon-based IC technologies in addressing
the combination of speed, power dissipation and complexity requirements of these
high-performance systems providers.  In fiscal 1997, sales of
telecommunications, data communications and ATE products represented 52%, 22%
and 22%, respectively, of the Company's total revenues.  The Company's major
customers include Alcatel, Credence, Ericsson, Lucent, Schlumberger, Seagate,
Tellabs and Teradyne.

BACKGROUND

 Telecommunications Market

     As a result of deregulation and heightened competition in the worldwide
telecommunications industry over the past decade, domestic and foreign public
network service providers have been forced to differentiate themselves by being
more responsive and offering new and better services at lower costs.  The volume
of information required to be transmitted across public networks has increased
significantly in recent years as a result of a variety of factors, including the
increase in data transmission and facsimile use and the development of new
applications such as video conferencing and multimedia.  Public network service
providers, including interexchange long distance carriers ("IXCs") and local
exchange carriers ("LECs"), have been required to upgrade their infrastructure
to provide high-speed data services to customers to meet these needs in addition
to providing their standard telephone services.  Infrastructure improvements to
public networks have most prominently included a dramatic increase in the
deployment of fiber optic technology to replace conventional copper wire.  Since
optical fiber offers substantially greater capacity, is less error prone and is
easier to administer than copper wire, it has become the transmission medium of
choice for IXCs and, increasingly, LECs.

     As fiber optic technology has spread, existing network standards for the
transmission of information, which had been developed primarily for copper wire
networks, have presented limitations to simultaneously transmitting voice and
data.  As a result, the SONET (Synchronous Optical Network) standard in the
United States and the equivalent SDH (Synchronous Digital Hierarchy) standard in
the rest of the world emerged as the next generation standards for high-speed
optical fiber transmission.  The SONET/SDH standard facilitates high data
integrity and improved performance in terms of network reliability and reduces
maintenance and other operations costs by standardizing interoperability among
different vendors' equipment.

     More recently, the demand for system bandwidth is being addressed by
transmitting multiple channels on a single fiber by a technique called
wavelength division multiplexing ("WDM").  The adoption of WDM has enabled
system operators to significantly increase system bandwidth without having to
bury additional fiber cables, a long and costly process.  While WDM increases
the bandwidth carried by each optical fiber, it does not reduce the number of
electronic components required.  Instead, WDM has accelerated the growth of
SONET/SDH deployment by eliminating fiber installation as a growth limiter.
<PAGE>
 
     Asynchronous transfer mode ("ATM") is a data transmission standard
complementary to SONET/SDH that is in an early stage of development.  ATM takes
advantage of the additional capacity provided by fiber optic technology.  The
SONET/SDH standard relates to the system through which data is transmitted,
while ATM is a protocol for the packaging of data for transmission over the
SONET/SDH system.  ATM technology enables LAN, WAN and public network systems
designers to provide increasingly improved services to network users.  LAN and
WAN equipment vendors must enable the integration of mixed high-speed, high-
volume data communications, voice, video and imaging applications, reduce
bandwidth limitations of current LANs and WANs, lower equipment costs and ease
administrative burdens imposed by current system architectures.  Similarly,
equipment vendors must provide systems that can handle integrated switched high-
speed, high-volume data communications, voice, video and imaging services.
Public network equipment vendors must also seamlessly integrate their products
with both LAN and WAN equipment to reduce overall networking costs.

     Fiber optic applications designed to the SONET/SDH and ATM standards use
data transmission rates of 155 MHz, 622 MHz, 2.488 GHz or 10 GHz.  The Company
believes that SONET/SDH transmission systems installed by network providers
generally operate at 2.488 GHz and above.  The Company also believes that
silicon-based approaches are not practicable solutions at such frequencies and,
as a result, telecommunications systems manufacturers increasingly look to GaAs
solutions because of their requirements for high bandwidth.

 Data Communications Market

     Performance improvements in processors and peripherals, along with the
transition to distributed architectures such as client/server, have spawned
increasingly data-intensive and high-speed networking applications.  This has
led to a focus on the methods of connecting high-performance computers to
peripheral equipment in the data communications industry.

     In 1988, the American National Standards Institute established a Fibre
Channel standard which is a practical, inexpensive, yet expandable method for
achieving high-speed data transfer among workstations, mainframes, data storage
devices and other peripherals.  The Fibre Channel standard addresses the need
for very fast transfers of large volumes of information, while at the same time
relieving system manufacturers from the burden of supporting the variety of
networks and channels currently in place.  Fibre Channel is especially effective
in situations where large blocks of data must be transferred within and between
buildings and over campus environments.  Fibre Channel is substantially faster
than existing network data transmission protocols.  Fibre Channel is capable of
transmitting at rates exceeding 1 gigabit per second in both directions
simultaneously and is also able to transport existing protocols over both
optical fiber and copper wire.  Currently, the most prominent use of Fibre
Channel technology is in high-density rigid disk drives of 1 gigabyte or
greater.

     In the LAN environment, Ethernet is currently the most widespread standard,
operating at 10 to 100 megabits per second.  However, LAN backbones are rapidly
being upgraded to Gigabit Ethernet and ATM in order to increase available
bandwidth.  These network protocols, which enable expanded bandwidth in excess
of one gigabit per second, are emerging as the new standards for LAN backbones.

     The Company believes that CMOS silicon approaches are not practicable
solutions at the 1 gigabit per second or higher clock rates used in the Fibre
Channel and Gigabit Ethernet standards.  The Company believes that its H-GaAs
solutions for these markets operate at lower power and greater performance
margins than competing ECL and BiCMOS ICs.

 Automated Test Equipment Market

     ATE is used for the comprehensive testing of ICs, printed circuit boards
and electronic systems.  The increasing worldwide demand for ICs in recent years
has led to an increase in the demand for IC test equipment.  The ATE industry
has experienced changes arising from the increasing complexity of ICs, as
manifested by growing pin counts, higher speeds and greater levels of
integration. These changes have created challenges for ATE systems designers,
since the equipment used to test these complex devices must be capable of
performance exceeding that of the devices themselves.

                                       2
<PAGE>
 
     These changes have also led to major revisions in ATE architectures.
Historically, ATE systems were primarily based on a central resource
architecture where timing and pattern generation hardware and software were
centralized and allocated as needed to groups of pins on the "device under test"
("DUT").  Central resource architecture works best with relatively simple ICs,
but with newer, higher complexity devices, the test environment can be
significantly different for each pin.  This has led to a "tester-per-pin"
architecture in which tester resources are dedicated to each pin of the DUT.
This rapid increase in system complexity has resulted in a marked increase in
the number of electronic components needed in the pin channel.  The Company
believes these factors have led ATE designers to seek to increase component
integration.

     For high-performance ATE systems, the Company believes that CMOS and BiCMOS
silicon ICs are too slow and that the high power dissipation in ECL silicon ICs
limits their integration capabilities.  The Company believes that the low power
dissipation and high complexity of the Company's H-GaAs ICs, which permit
systems to be built with fewer ICs, are well-suited for the increasingly
demanding requirements of present generation ATE equipment.

STRATEGY

     The Company's strategy includes the following elements:

Target Growing Markets

     Vitesse targets the growing telecommunications, data communications and ATE
markets.  Within the telecommunications and data communications markets, the
Company's products are used in emerging high-growth markets such as SONET/SDH,
ATM, Fibre Channel, and Gigabit Ethernet, which require ICs that are capable of
high-bandwidth data transmission.

Reduce Costs of High-Performance Products

     The Company continually strives to reduce the cost of its high-performance
products.  The Company endeavors to continue to increase manufacturing yields
and decrease die sizes, as well as to decrease power dissipation to enable the
use of lower-cost plastic packaging.

Perform Own Wafer Fabrication Using Proprietary Manufacturing Process Technology

     The Company operates its own advanced wafer fabrication facility in
Camarillo, California, and has recently completed the construction of an
additional wafer fabrication facility in Colorado Springs, Colorado, which is
not expected to begin production prior to the third quarter of fiscal 1998.  The
Company believes that control of wafer fabrication assures a reliable source of
supply and provides greater opportunities to enhance product quality and
reliability.  In addition, the Company believes such control facilitates new
process and product development and provides a more dependable wafer supply to
meet customer requirements.

     The Company's proprietary manufacturing process utilizes industry standard
manufacturing equipment.  This enables the Company to employ developments in
silicon manufacturing technology to continue to improve minimum feature size,
dimension control, deposition and etch capabilities.  By eliminating the need
for "custom" wafer fabrication equipment, the Company can focus its resources on
developing leading process technology rather than on developing expensive
customized manufacturing equipment.

Develop "GaAs Transparent" Products

     The Company endeavors to make the process of designing Vitesse GaAs
products "transparent" to the designer when compared to the design process for
silicon ICs.  The design of its H-GaAs products is conducted using methodologies
and CAD tools essentially identical to those used to design silicon products.
Customers designing Vitesse ASIC products can use industry standard CAD tools
(including those offered by Cadence, Mentor Graphics, Synopsys and Viewlogic) in
such a manner that there are no "GaAs-unique" factors that require special
background or training beyond those for an ASIC designer generally.  In
addition, the Company's products do not require electronic systems manufacturers
to change input/output interface levels or utilize power supply voltages unique
to Vitesse products.

                                       3
<PAGE>
 
     Establish Close Relationships with Customers' Engineering Management

     The Company establishes close relationships with its customers' engineering
management and believes these relationships enable it to better understand the
customers' needs and win designs for existing and new systems.

PRODUCTS AND CUSTOMERS

Telecommunications

     Telecommunications products accounted for 52% of the Company's total
revenues in both fiscal 1997 and fiscal 1996.  In fiscal 1997, substantially all
of the Company's sales in the telecommunications market were for SONET/SDH
applications.  In fiscal 1997, the Company's significant telecommunications
customers, each of which purchased at least $100,000 of the Company's products,
included Alcatel, Ericsson, H.Y. Associates, Lucent and Tellabs.

     The Company manufactures a variety of telecommunications IC products for
the transmission and reception of data over a fiber optic network.  The Company
supplies these products as Company standard products or as customer-designed
ASIC products.  With respect to the transmission of data, the Company's products
take parallel data, code it and serialize it (multiplexing or "mux") for
transmission.  At the receiving end of the fiber optic system, the Company's
telecommunications products decode and de-serialize the data (demultiplexing or
"demux").

     In the case of telecommunications switching, the Company offers a line of
crosspoint switches for high-speed digital switching applications including data
distribution and video switching.  The Company also offers a line of
photodetector/transimpedance amplifiers for both telecommunications and data
communications applications which offer a low noise and wide bandwidth solution
for converting light from a fiber optic communications channel into an
electrical signal.  The following is a summary of applications and related
operating frequencies which the Company's telecommunications products address:

<TABLE>
<CAPTION>
 
                          Associated              Crosspoint   Transimpedance
     SONET Hierarchy      Clock Rate   MUX/DMUX   Switches     Amplifiers
     ---------------      ----------   --------   ----------   --------------
<S>                       <C>          <C>        <C>          <C>
     STS/OC-3                155 MHz      X           X              X
     STS/OC-12               622 MHz      X           X              X
     STS/OC-48             2.488 GHz      X
     STS/OC-192               10 GHz      X
</TABLE>

 Data Communications

     Data communications products accounted for 22% and 8% of the Company's
total revenues for fiscal 1997 and fiscal 1996, respectively.  Vitesse has
developed a line of Fibre Channel products for this market, which consist
primarily of transmitters, receivers and transceivers.  In fiscal 1997, the
Company's significant data communications customers, each of which purchased at
least $100,000 of the Company's products, included Cisco, IBM, Newbridge
Networks, Seagate, and Sequent.

     Additionally, the Company has developed a physical layer interface product
for the recently emerging Gigabit Ethernet market.  The Company is also in the
process of developing additional products for this market.  To date, the
Company's revenues from sale of products in this market have not been material.
There can be no assurance that such products will ever gain market acceptance.

 Automated Test Equipment

     ATE products accounted for 22% and 24% of the Company's total revenues for
fiscal 1997 and fiscal 1996, respectively.  Vitesse provides gate arrays and
custom products that offer a combination of high complexity, low power
dissipation and high speed for ATE.  In fiscal 1997, the Company's significant
ATE customers, each of 

                                       4
<PAGE>
 
which purchased at least $100,000 of the Company's products, included Credence,
Hewlett-Packard, H.Y. Associates, Integrated Measurement Systems, LTX,
Schlumberger and Teradyne. 

     The Company's ten largest customers accounted for approximately 77% and 75%
of total revenues in fiscal 1997 and fiscal 1996, respectively.  In fiscal 1997
and fiscal 1996, sales to Lucent accounted for 20% and 25%, respectively, of the
Company's total revenues, and sales to H.Y.  Associates Co., Ltd., the Company's
Japanese distributor, accounted for 22% and 11%, respectively, of the Company's
total revenues.

TECHNOLOGY

     The Company believes the limitations of silicon-based CMOS, BiCMOS, and ECL
ICs have become more pronounced as the requirements of the telecommunications,
data communications and ATE systems providers have increased.  While CMOS offers
certain complexity advantages over the alternative silicon processes, the
Company believes it lacks the speed required for many high-performance systems.
ECL technology offers higher speeds but at the cost of high power dissipation,
which limits its use for high-complexity applications.  BiCMOS offers higher
performance than is obtainable from CMOS, but less than that offered by ECL, at
levels of complexity which are greater than that available from ECL but lower
than that provided by CMOS.  BiCMOS is slower than ECL and, the Company
believes, does not achieve the speed necessary for the highest performance
telecommunications, data communications and ATE systems.

     GaAs has inherent physical properties which allow electrons to move several
times faster than within silicon.  This higher electron mobility provides the
Company with the flexibility to manufacture ICs that operate at much higher
speeds than silicon devices or to operate at the same speeds with reduced power
consumption.  The following table compares the intrinsic transistor performance
and cost per function for H-GaAs with alternative process technologies:

<TABLE>
<CAPTION>
                             H-GaAs      ECL      BiCMOS     CMOS
                            --------   -------   --------   -------
<S>                         <C>        <C>       <C>        <C>
     Speed...............   Highest    High      Moderate   Lowest
     Power Dissipation...     Low      Highest   Moderate   Lowest
     Complexity..........   High       Lowest    Higher     Highest
     Cost per Function...   Moderate   Highest   Moderate   Lowest
</TABLE>

     The Company employs proprietary H-GaAs process technology based on a
refractory metal self-aligned gate ("SAG") process.  SAG technology is
universally used in the manufacture of complex silicon ICs.  The process
structure and logic implementation of the Company's GaAs ICs are similar to a
traditional silicon MOS process with the exception that the gate metal is
deposited directly on the GaAs substrate creating a metal-semiconductor junction
comparable to depositing the metal on a thin silicon layer grown on the silicon
substrate in the case of metal gate n-channel MOS.

     The implementation of a SAG process in GaAs or silicon requires a gate
metal structure that can withstand the high temperature of an ion implant
activation anneal.  This is in contrast to conventional microwave GaAs ("RF
GaAs") process technologies which utilize a low temperature, non-self-aligned
technology based on gold as the gate metal.  The table below compares Vitesse's
H-GaAs, traditional silicon MOS and microwave RF-GaAs:

<TABLE>
<CAPTION>
                             Silicon    Microwave
                  H-GaAs     MOS        RF-GaAs
                  ------     --------   --------
<S>               <C>        <C>        <C>
Self-Aligned      Yes        Yes        No
Interconnect      Aluminum   Aluminum   Gold
Complexity        High       Highest    Medium
</TABLE>

     Another advantage of SAG technology in GaAs is the greater control over
electrical transistor parameters compared to conventional gold gate technology.
This control of the field effect transistor ("FET") characteristics has enabled
the Company to be one of the few companies that have demonstrated the ability to
manufacture products having lower power dissipation using direct coupled FET
logic ("DCFL").  DCFL has the highest complexity, fewest elements per logic
function and best available combination of speed at low power of any n-channel
FET technology demonstrated in silicon or GaAs.

                                       5
<PAGE>
 
     The use of a high-temperature process also allows Vitesse to use silicon
industry standard aluminum interconnect technology.  This enables the Company to
utilize standard deposition and dry etch equipment for interconnects.  The
interconnect portion of the circuit represents a majority of mask levels in the
manufacturing process.

     The Company has significantly improved its process technology:

<TABLE>
<CAPTION>
                                                  H-GaAs   H-GaAs   H-GaAs   H-GaAs
                                                    I        II      III      IV
                                                  ------   ------   ------   -----
<S>                                               <C>      <C>      <C>      <C>
     Product Announcement Year.................     1986     1988     1991    1995
     Gate Length...............................   1.2um    0.8um    0.6um    0.4um
     Metal Layers..............................       2        3        4       5
     Maximum Relative Speed/(1)/...............     1.0x     1.4x     2.0x    3.0x
     Minimum Relative Power Dissipation/(1)/...     1.0x     0.7x     0.5x     0.3x
</TABLE>

-----------
(1)  Compared to H-GaAs I.

     The Company has recently implemented H-GaAs IV, a 0.4 micron five-layer
metal GaAs FET technology capable of achieving higher complexity and lower power
dissipation than previous Vitesse technologies.  The Company has announced the
introduction of the GLX family of gate arrays and more recently the SLX family
of standard cell ICs based on H-GaAs IV technology.  The GLX family of gate
arrays has been designed to offer the same speed as the H-GaAs III family of
gate arrays but with lower power dissipation.  This is intended to enable ICs to
be packaged in a lower cost plastic package in the 100 MHz to 800 MHz range,
thereby offering the customer a lower cost solution in this performance range.
The Company has entered into contracts with a number of customers for the
development of ASICs based on the GLX product family.  A limited number of
products in the GLX family have been shipped to date.

MANUFACTURING

 Wafer Fabrication

     The Company fabricates four-inch wafers at its Camarillo plant in a 6,000
square foot clean room, which has a rating of Class 10 (meaning there are fewer
than ten particles larger than 0.5 micron per cubic foot of air).  Wafer
fabrication equipment used by the Company is generally identical to that used in
a sub-micron silicon MOS fabrication facility.  Process technology is generally
similar to that used in advanced sub-micron silicon process technologies, with
certain modifications necessary to accommodate GaAs material properties.

     As is typically the case with semiconductor manufacturing, the Company's
manufacturing yields vary significantly among products, depending on the
product's complexity and the Company's experience in manufacturing the
particular ICs.  While the Company's process technology utilizes standard
silicon semiconductor manufacturing equipment, aggregate production quantities
have been relatively low and the process technology is significantly less
developed than silicon process technology used by competitors.  This leads to
overall yields lower than levels typically achieved in the silicon process.  The
Company expects that many of its current and future products may never be
produced in high volume.

     Regardless of the process technology used, the fabrication of ICs is a
highly complex and precise process.  Defects in masks, impurities in the
materials used, contamination of the manufacturing environment, equipment
failure and other difficulties in the fabrication process can cause a
substantial percentage of wafers to be rejected or numerous die on each wafer to
be non-functional.

     The Company utilizes manufacturing equipment commonly used in the silicon
IC industry.  This enables the Company to employ developments in silicon
manufacturing technology to continue to improve minimum feature size, dimension
control, deposition and etch capabilities.  By eliminating the need for 'custom"
wafer fabrication equipment, the Company can focus its resources on developing
leading process technology rather than on developing expensive customized
manufacturing equipment.

                                       6
<PAGE>
 
     The Company has recently completed construction of a new six-inch wafer
fabrication facility in Colorado Springs, Colorado, to supplement its existing
facility in Camarillo.  The facility initially includes a 10,000 square foot
Class 1 clean room with the capability for future expansion to 15,000 feet.  The
Company is in the process of installing equipment and performing necessary
testing prior to commencing commercial production. The Company believes the new
facility will not begin commercial production prior to the third quarter of
fiscal 1998.

 Assembly and Test


     A majority of the Company's ICs are packaged in plastic by third parties.
The Company conducts ceramic package assembly for a portion of its ICs in its
Camarillo plant.  The Company employs industry standard assembly equipment in an
automated assembly line that is intended to reduce packaging time as well as to
improve quality.  For final testing, the Company utilizes advanced automated
VLSI testers and has constructed several custom testers. However, in many cases,
the Company cannot test its products at full speed and must rely on numerous 
sub-circuit path measurements to determine the performance of the IC.

 Components and Raw Materials

     The Company purchases the majority of its ceramic packages from Kyocera.
Kyocera is the world's largest supplier of multilayer, high-performance ceramic
packages and, in many cases, is the only source of these packages.  Since most
of the ceramic packages used in the Company's assembly process are designed to
the Company's specifications, there are typically no second sources for these
packages.  To date, the Company has not experienced any adverse effects due to
the sole-source nature of its ceramic packages.  The Company believes it
maintains an adequate inventory of sole-source ceramic packages.  The level of
inventory of ceramic packages carried by the Company is substantially higher
than standard plastic packages for IC companies that utilize standard packages
available from a wide variety of sources.  Since 1992, the Company has increased
its use of plastic packages, and it uses multiple contract manufacturers to
perform plastic packaging.

     GaAs substrates and other raw materials and equipment used in the
production of the Company's ICs are available from several suppliers.  Although
lead times are occasionally extended in the industry, the Company has not
experienced any material difficulty in obtaining raw materials or equipment.

ENGINEERING, RESEARCH AND DEVELOPMENT

     The market for the Company's products is characterized by rapid changes in
both GaAs and competing silicon process technologies.  Because of continual
improvements in these technologies, the Company believes that its future success
will depend largely on its ability to continue to improve its product and
process technologies, to develop new technologies in order to maintain the
performance of its products relative to competitors, to adapt its products and
process technologies to technological changes and to adopt emerging industry
standards.

 Product Research and Development

     The Company's present product research and development efforts are focused
on developing new products for its telecommunications, data communications and
ATE product lines.  Considerable design effort is being expended to increase the
speed and complexity and reduce the power dissipation of the Company's products.

 Process Research and Development

     The Company has implemented H-GaAs IV, a 0.4 micron GaAs FET technology
that offers higher complexity and lower power dissipation than previous Vitesse
technologies.  The Company is currently engaged in research and development
projects focused on other process-related improvements to increase yields and
improve the speed, complexity and power dissipation characteristics of its
devices.

     The Company's engineering, research and development expenses in fiscal
1997, 1996 and 1995 were $16,804,000, $11,045,000 and $8,689,000, respectively.

                                       7
<PAGE>
 
COMPETITION

     The high-performance semiconductor market is highly competitive and subject
to rapid technological change, price erosion and heightened international
competition.  The telecommunications, data communications and ATE industries,
which are the primary target areas for the Company, are also becoming intensely
competitive because of deregulation and heightened international competition,
among other factors.  In the telecommunications market, the Company competes
primarily against other GaAs-based companies such as Triquint Semiconductor and
the GaAs fabrication operations of systems companies such as Rockwell.  In the
data communications market and the ATE market, the Company competes primarily
against silicon ECL and BiCMOS products offered principally by semiconductor
manufacturers such as Fujitsu, Hewlett-Packard, Motorola, National Semiconductor
and Texas Instruments, and bipolar silicon IC manufacturers such as Applied
Micro Circuits Corporation and Synergy Semiconductor Corporation.  Many of these
companies have significantly greater financial, technical, manufacturing and
marketing resources than the Company.  In addition, in lower-frequency
applications, the Company faces increasing competition from CMOS-based products,
particularly as the performance of such products continues to improve.

     Competition in the Company's markets for high-performance ICs is primarily
based on price/performance, product quality and the ability to deliver products
in a timely fashion.  The Company emphasizes its products' quality and
combination of speed, complexity and power dissipation.  Some prospective
customers may be reluctant to adopt Vitesse's products because of perceived
risks relating to GaAs technology.  In addition, product qualification is
typically a lengthy process and certain prospective customers may be unwilling
to invest the time or incur the costs necessary to qualify suppliers such as the
Company.  Prospective customers may also have concerns about the relative speed,
complexity and power advantages of the Company's products compared to more
familiar ECL or BiCMOS semiconductors or about the risks associated with relying
on a relatively small company for a critical sole-sourced component.

SALES AND CUSTOMER SUPPORT

     The Company's principal method of selling its products in the United States
and Western Europe is through direct sales to systems manufacturers by the
Vitesse sales force.  Other international sales, principally in Japan, are
conducted through foreign distributors.

 Direct Sales

     Because of the large engineering support required in connection with the
sale of high performance ICs, the Company provides its customers with field
engineering support as well as engineering support from the Company's
headquarters.  Typically, a field engineer will accompany a salesperson to the
initial customer visit to understand and evaluate the customer's requirements.
The salesperson and field engineer will determine whether additional engineering
analysis will be required by engineers based at the Company's headquarters.  The
Company's sales cycle is typically lengthy and requires the continued
participation of salespersons, field engineers, engineers based at the Company's
headquarters, and senior management.

     The Company's sales headquarters is located in Camarillo, California.  The
Company has 11 additional sales and field application support offices in the
United States and one in Germany.

  Foreign Distributors

     Sales in Japan are made through an unaffiliated Japanese distributor, H.Y.
Associates Co., Ltd.  Sales in other countries are made through local
representatives.  Export sales were $35,403,000, $15,624,000, and $12,533,000,
in fiscal 1997, 1996, and 1995, respectively

     The Company generally warrants its products against defects in materials
and workmanship for a period of one year.

                                       8
<PAGE>
 
LICENSES AND PATENTS

     The Company has been awarded 13 U.S. patents for various aspects of design
and process innovations used in the design and manufacture of its products.  The
Company has two patent applications pending in the U.S. and three patent
applications pending in Japan and is preparing to file several more patent
applications.  The Company believes that patents are of less significance in its
industry than such factors as technical expertise, innovative skills and the
abilities of its personnel.

     As is typical in the semiconductor industry, the Company has, from time to
time, received, and may receive in the future, letters from third parties
asserting patent rights, maskwork rights or copyrights on certain of the
Company's products and processes.  None of the claims to date has resulted in
the commencement of any litigation against the Company nor has the Company to
date believed it is necessary to license any of the patent rights referred to in
such letters.

BACKLOG

     Vitesse's sales are made primarily pursuant to standard purchase orders for
delivery of products.  Quantities of the company's products to be delivered and
delivery schedules are frequently revised to reflect changes in customer needs.
For these reasons, the Company's backlog as of any particular date is not
representative of actual sales for any succeeding period and the Company
therefore believes that backlog is not a good indicator of future revenue.  The
Company's backlog scheduled to be shipped in the next six months was $62,000,000
on September 30, 1997, compared to $36,000,000 on September 30, 1996.

ENVIRONMENTAL MATTERS

     The Company is subject to a variety of federal, state and local
governmental regulations related to the use, storage, discharge and disposal of
toxic, volatile or otherwise hazardous chemicals used in its manufacturing
process.  Any failure to comply with present or future regulations could result
in the imposition of fines on the Company, the suspension of production or a
cessation of operations.  In addition, such regulations could restrict the
Company's ability to expand its facilities at its present location or operate
its manufacturing facility in Colorado Springs, Colorado, or could require the
Company to acquire costly equipment or incur other significant expenses to
comply with environmental regulations or clean up prior discharges.

     The Company uses significant amounts of water throughout its manufacturing
process.  Previous droughts in California have resulted in restrictions being
placed on water use by manufacturers and residents.  In the event of future
drought, reductions in water use may be mandated generally, and it is unclear
how such reductions will be allocated among different users.  No assurance can
be given that near term reductions in water allocations to manufacturers will
not occur, possibly requiring a reduction in the Company's level of production,
and materially adversely affecting the Company's operations.

EMPLOYEES

     As of September 30, 1997, the Company had 443 employees, including 173 in
engineering, research and development, 28 in marketing and sales, 224 in
operations and 18 in finance and administration.  The Company's ability to
attract and retain qualified personnel is essential to its continued success.
None of the Company's employees is represented by a collective bargaining
agreement, nor has the Company ever experienced any work stoppage.  The Company
believes its employee relations are good.


ITEM 2.  PROPERTIES

     The Company's executive offices and principal research and development and
fabrication facility is located in Camarillo, California, and is being leased
under a noncancellable operating lease that expires in 1999.  The total space
occupied in this building is approximately 80,000 square feet. The Company
leases an additional 10,000 square feet in Camarillo for product development and
8,000 square feet in Santa Clara, California for a product

                                       9
<PAGE>
 
development and sales office.  The Company's Colorado Springs, Colorado facility
is in a 100,000 square foot building that is being occupied on a five-year
operating lease with a purchase option at the end of the lease.  This facility
includes a 10,000 square foot clean room for wafer fabrication, and a product
development center.  The Company also leases space for two other product
development centers in Portland, Oregon and Dallas, Texas, and 12 sales and
field application support offices (11 in the United States and one in Europe).

ITEM 3.  LEGAL PROCEEDINGS

     The Company is currently involved in several legal proceedings; however, it
believes that none of them would have a material or adverse affect on the
Company.
 

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


     No matters were submitted to a vote of the Company's shareholders during
the last quarter of the fiscal year ended September 30, 1997.



                                    PART II



ITEM 5.   MARKET FOR COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS


     The information required by this item which appears on page 8 of the
Company's 1997 Annual Report to Shareholders is incorporated herein by
reference.

ITEM 6.   SELECTED FINANCIAL DATA

     The selected financial data for each of the five years ended September 30,
1997, which appears on page 7 of the Company's 1997 Annual Report to
Shareholders is incorporated herein by reference.

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

     The information required by this item which appears on pages 9 to 17 of the
Company's 1997 Annual Report to Shareholders is incorporated herein by
reference.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Information required by this item is included in pages 19 to 32 of the
Company's 1997 Annual Report to Shareholders, and is incorporated herein by
reference.

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE


  None.

                                       10
<PAGE>
 
                                   PART III



ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT


  The directors and executive officers of the Company are as follows:

<TABLE>
<CAPTION>
     Name                    Age       Position
     ----                    ---       --------
     <S>                     <C>       <C>
     Louis R. Tomasetta       48       President and Chief Executive Officer, Director
     Ian Burrows              43       Vice President, Wafer Fab
     Robert J. Cutter         42       Vice President & General Manager, Colorado Springs
     Ira Deyhimy              57       Vice President, Product Development
     Christopher R. Gardner   37       Vice President & General Manager, ATE
     Eugene F. Hovanec        45       Vice President, Finance & Chief Financial Officer
     Jeanne Johnson           56       Vice President, Human Resources
     James Mikkelson          49       Vice President, Technology Devel., Chief Technical Officer
     Michael Millhollan       53       Vice President & General Manager, Data Communications
     Robert Nunn              36       Vice President & General Manager, Telecommunications
     Neil Rappaport           51       Vice President, Sales
     Ram Venkataraman         57       Vice President, Quality
     James A. Cole            55       Director
     Pierre R. Lamond         67       Chairman of the Board
     John C. Lewis            62       Director
     Thurman J. Rodgers       49       Director
</TABLE>

     Louis R. Tomasetta, a co-founder of the Company, has been President, Chief
Executive Officer and a Director since the Company's inception in February 1987.
From 1984 to 1987, he served as President of the integrated circuits division of
Vitesse Electronics Corporation.  Prior to that, Dr. Tomasetta was the director
of the Advanced Technology Implementation department at Rockwell International
Corporation.  Dr. Tomasetta has over 20 years experience in the management and
development of GaAs based businesses, products, and technology.  He received
B.S., M.S., and Ph.D. degrees in electrical engineering from the Massachusetts
Institute of Technology.

     Ian Burrows joined the Company in February 1987 as a Process Engineering
Manager, became Director of Wafer Fabrication in December 1990, and Vice
President of Wafer Fabrication Operations in April 1995.  Prior to that, he held
the position of process engineering development manager at Honeywell's GaAs
product center and development process engineer at Mostek.  Dr. Burrows received
a B.S. in electrical engineering from Warwick University, England, and M.S. and
Ph.D. degrees in electrical engineering from Texas Tech University.

     Robert J. Cutter joined the Company in October 1996 as Vice President &
General Manager of the Colorado Springs facility.  Prior to that, Mr. Cutter was
Plant Manager, Colorado Springs, for Rockwell Semiconductor Systems.  From 1990
to 1995, he was Director of Operations for United Technologies Microelectronics
Center.  From 1981 to 1988, he held a variety of management positions at Inmos
Corporation.  Mr. Cutter graduated from University of Southhampton, United
Kingdom, with a First Class Honors Degree in Aeronautics & Astronautics.

     Ira Deyhimy, a co-founder of the Company, has been Vice President of
Product Development since the Company's inception in February 1987.  From 1984
to 1987 he was Vice President, Engineering at Vitesse Electronics Corporation.
Prior to that, Mr. Deyhimy was manager of Integrated Circuit Engineering at
Rockwell International Corporation.  He has over 20 years of experience in GaAs
electronics.  Mr. Deyhimy received a B.S. degree in physics from the University
of California at Los Angeles and an M.S. degree in physics from California State
University at Northridge.

     Christopher R. Gardner joined the Company in February 1987 and held various
engineering and engineering management positions through September 1996 when he
became Vice President & General Manager, ATE.  Prior to that, Mr. Gardner was a
member of technical staff at AT&T Bell Laboratories.  Mr. Gardner holds a B.S.
degree in electrical engineering from Cornell University and an M.S. degree in
electrical engineering from the University of California at Berkeley.

                                       11
<PAGE>
 
     Eugene F. Hovanec joined the Company as Vice President, Finance and Chief
Financial Officer in December 1993.  From 1989 to 1993, Mr. Hovanec served as
Vice President, Finance & Administration, and Chief Financial Officer at Digital
Sound Corporation.  Prior to that, from 1984 to 1989, he served as Vice
President and Controller at Micropolis Corporation. Mr. Hovanec holds a Bachelor
of Business Administration degree from Pace University, New York.  Mr. Hovanec
also serves as a Director of Interlink Electronics, Inc.

     Jeanne Johnson joined the Company in August 1987 as Director, Human
Resources and became Vice President, Human Resources in September 1997.  From
January 1984 to August 1987, Ms. Johnson was a human resources consultant in the
areas of compensation, benefits and training.  Her human resources management
experience also includes two years as Director of Human Resources for IBIS
Systems, Inc. and eight years as Employee Relations Manager for Borg-Warner
Corporation.  Ms. Johnson has a B.A. degree from the University of California,
Santa Barbara.

     James Mikkelson, a co-founder of the Company, became Chief Technical
Officer in September 1997.  He has served as Vice President of Technology
Development since the Company's inception in February 1987.  From 1984 to 1987,
he served as Vice President, Operations at Vitesse Electronics Corporation.
Prior to that, he served as Project Manager at Hewlett-Packard Company,
responsible for the development and manufacturing of MOS VLSI circuits.  Mr.
Mikkelson holds B.S. and M.S. degrees in electrical engineering from the
Massachusetts Institute of Technology.

     Michael Millhollan joined the Company in July 1989 as Director of the
Sunnyvale Product Development Center and became Vice President and General
Manager of Standard Products in October 1992.  From 1976 to 1989, he held
various senior design engineering positions with National Semiconductor
Corporation, a semi-conductor manufacturer, most recently as Director of
programmable logic product development.  Prior to that, he was at Motorola,
Inc., a semiconductor manufacturer, for seven years in various design
engineering positions.  Mr. Millhollan holds a B.S. degree in electrical
engineering from the Georgia Institute of Technology.

     Robert Nunn joined the Company in July 1989, became Director of Marketing
in January 1991 and Vice President and General Manager of ASIC Products in July
1992.  From August 1987 to July 1989 he served as product marketing manager at
Advanced Micro Devices, Inc. ("AMD"), a semiconductor manufacturer, where he
managed a staff focusing on international markets.  From March 1986 to August
1987 Mr. Nunn held various marketing positions at Monolithic Memories, Inc.
("MMI") in their Semi-custom Products and Programmable Products Divisions before
MMI merged with AMD in 1987.  Mr. Nunn holds a B.S. degree in computer
engineering from the University of California at Los Angeles and an M.B.A. from
Harvard Business School.

     Neil Rappaport joined the Company as Vice President, Sales in August 1987.
From September 1982 to 1987, Mr. Rappaport was national sales manager with
Applied Micro Circuits Corporation, a manufacturer of ECL integrated circuits.
Prior to that, he held various sales positions with Signetics Corporation, a
semiconductor manufacturer.  Prior to that, he was a design engineer at Hughes
Aircraft Company.  Mr. Rappaport has a B.S. degree from Fairleigh Dickinson
University and an A.S. degree in electronics technology from the RCA Institute.

     Ram Venkataraman joined the Company as Director of Quality in January 1990
and in August 1990 he became Vice President, Quality.  From November 1984 to
January 1990, he held various positions, including manager of reliability and
quality assurance and Director of Wafer Fabrication Operations, at GigaBit
Logic, Inc., a gallium arsenide semiconductor manufacturer.  Mr. Venkataraman
has over 20 years of experience in IC quality assurance and reliability spanning
both silicon and GaAs technologies.  Mr. Venkataraman holds B.S. degrees in
physics and electrical engineering from Madras University, India, and an M.S.
degree in electrical engineering from the Indian Institute of Technology, India.

     James A. Cole has served as a Director of the Company since February 1987.
He is a General Partner of Windward Ventures and Spectra Enterprise Associates.
He was a founder and Executive Vice President of Amplica, Inc., a GaAs microwave
IC and sub-system company.  Mr. Cole also serves as a Director of Giga-Tronics,
Inc., Spectrian Corporation, and eight privately held companies.

                                       12
<PAGE>
 
     Pierre R. Lamond has been the Chairman of the Board of Directors since the
Company's inception in February 1987.  Since August 1981, he has been a General
Partner of Sequoia Capital, a venture capital firm.  Sequoia has financed
companies such as Cypress Semiconductor Corporation, Cisco, and C-Cube
Microsystems.  Mr. Lamond was founder and Vice President of National
Semiconductor Corporation.  He is also a Director of Cypress Semiconductor
Corporation.

     John C. Lewis became a Director of the Company in January 1990.  He is
currently Chairman of the Board of Directors of Amdahl Corporation, a
manufacturer of large general purpose computer storage systems and software
products.  Before joining Amdahl in 1977, he was President of Xerox Business
Systems.  Mr. Lewis also serves as a Director of Cypress Semiconductor
Corporation, Pinnacle Systems and Infinity Financial Technology, Inc.

     Thurman J. Rodgers has served as a Director of the Company since September
1987.  He is the co-founder and since 1982 has been President and Chief
Executive Officer of Cypress Semiconductor Corporation ("Cypress").  Prior to
forming Cypress, Dr. Rodgers managed the design, technical development, and
engineering for the static RAM business of Advanced Micro Devices.  He also
serves as a Director of C-Cube Microsystems.

ITEM 11.  EXECUTIVE COMPENSATION

     This item is answered by reference to the information set forth under the
captions "Executive Compensation," "Stock Option Plans," "1991 Employee Stock
Purchase Plan," "401(k) Plan" and "Certain Transactions" in the Company's Proxy
Statement for the 1998 Annual Meeting of Shareholders to be filed with the
Commission on or before December 31, 1997.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     This item is answered by reference to the information set forth under the
caption "Principal Share Ownership" in the Company's Proxy Statement for the
1998 Annual Meeting of Shareholders to be filed with the Commission on or before
December 31, 1997.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     This item is answered by reference to the information set forth under the
caption "Certain Transactions" in the Company's Proxy Statement for the 1998
Annual Meeting of Shareholders to be filed with the Commission on or before
December 31, 1997.

                                       13
<PAGE>
 
                                    PART IV


ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K


     (a)  The following documents are filed as part of this report:

                                                                      Page in
                                                                      -------
                                                                   Annual Report
                                                                   -------------
          1.   Financial Statements:                  
                                                                   
               The financial statements of the Company listed 
               below are incorporated herein by reference to 
               the following pages of the 1997 Annual Report 
               to Shareholders:
 
               Independent Auditors' Report                              18
               Balance Sheets as of September 30, 1997 and 1996          19
               Statements of Operations for the years ended 
               September 30, 1997, 1996 and 1995                         20
               Statements of Shareholders' Equity for the years 
               ended September 30, 1997, 1996 and 1995                   21
               Statements of Cash Flows for the years ended 
               September 30, 1997, 1996 and 1995                         22
               Notes to Financial Statements                             23
 
                                                                       Page
                                                                       ----
          2.   Financial Statement Schedules:                  

 
               The financial statement schedules of the Company 
               are included in Part IV of this report on the 
               pages indicated:
 
               Independent Auditors' Report on Financial 
               Statement Schedule                                        18
 
               For the three fiscal years ended September 30, 1997--
                     II  -- Valuation and Qualifying Accounts            19

               All other schedules are omitted because they are not 
               applicable or are not required.

          3.   Exhibits:

               See Item 14(c) below.

     (b)  Reports on Form 8-K

          No reports on Form 8-K were filed during the last quarter of the
          fiscal year ended September 30, 1997.


     (c)  Exhibits


          The exhibits listed on the accompanying index immediately following
          the signature page are filed as part of this report.

     (d)  Financial Statement Schedules

          See Item 14(a) above.

                                       14
<PAGE>
 
                                  SIGNATURES



     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.



                                       VITESSE SEMICONDUCTOR CORPORATION



Date:  December 19, 1997               By:     /s/ Eugene F. Hovanec
                                         ---------------------------------------
                                                 Eugene F. Hovanec
                                               Vice President, Finance
                                              & Chief Financial Officer



     Pursuant to the requirements of the Securities Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.


          Signature                      Title                  Date
          ---------                      -----                  ----


    /s/ Louis R. Tomasetta        President and              December 19, 1997
    -------------------------     Chief Executive
       Louis R. Tomasetta         Officer (Principal 
                                  Executive Officer)  


    /s/ Eugene F. Hovanec         Vice President, Finance    December 19, 1997
    -------------------------     and Chief Financial 
       Eugene F. Hovanec          Officer



    /s/ James A. Cole             Director                   December 19, 1997
    -------------------------
       James A. Cole



    /s/ Pierre R. Lamond          Chairman of the Board      December 19, 1997
    -------------------------     of Directors
       Pierre R. Lamond



    /s/ John C. Lewis             Director                   December 19, 1997
    -------------------------
       John C. Lewis



    /s/ T. J. Rodgers             Director                   December 19, 1997
    -------------------------
       T.J. Rodgers

                                       15
<PAGE>
 
ITEM 16   EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

     (a)  Exhibits

     Exhibit Number
     --------------

      3.1/(1)/      Certificate of Incorporation of Registrant, as amended to
                    date.
      3.2/(2)/      Bylaws of Registrant as amended to date.
      4.1/(3)/      Amended Modification Agreement including Registration Rights
                    and Right of First Refusal dated June 12, 1991 between
                    Registrant and certain security holders of Registrant.
      4.2/(2)/      Specimen of Company's Common Stock Certificate.
     10.1/(2)/      1987 Stock Option Plan.
     10.2/(2)/      1989 Stock Option Plan.
     10.3/(2)/      1991 Stock Option Plan.
     10.4/(2)/      1991 Employee Stock Purchase Plan.
     10.5/(2)/      1991 Directors' Stock Option Plan.
     10.6/(2)/      Standard Form of Indemnification Agreement between
                    Registrant and its officers and directors.
     10.7/(2)/      Warrant to purchase 45,000 shares of the Series F Preferred
                    Stock of Registrant dated June 12, 1991 held by Nippon
                    Enterprise Development Corp.
     10.8/(2)(3)/   Loan and Security Agreement dated May 8, 1991 between
                    Silicon Valley Bank and Registrant.
     10.9/(1)/      Amendment to Loan Agreement dated December 28, 1992 between
                    Silicon Valley Bank and Registrant.
     10.10/(5)/     Amendment to Loan Agreement dated June 14, 1993 between
                    Silicon Valley Bank and Registrant.
     10.11/(2)/     Master Equipment Lease Agreement dated April 18, 1988
                    between Equitable Life Leasing Corporation and Registrant.
     10.12/(2)/     Master Lease Agreement dated June 21, 1991 between Dana
                    Commercial Credit Corporation and Registrant.
     10.13/(2)/     Assignment of Purchase Order dated June 12, 1991 between JLA
                    Credit Corporation and Registrant.
     10.14/(1)/     Master Equipment Lease Agreement dated October 30, 1992
                    between AT&T Commercial Finance Corporation and Registrant.
     10.15/(1)/     First Amendment to Lease between Carson Estate Company
                    (formerly Victoria Partnership) and Registrant.
     10.16/(2)/     Lease dated January 31, 1991 between Camarillo I Development
                    Corporation and Registrant.
     10.17/(2)/     Standard Form Proprietary Information Agreement.
     10.18/(2)/     Software License Agreement Standard Terms and Conditions
                    dated September 26, 1989 between Cadence Design Systems,
                    Inc. and Registrant.
     10.19/(2)/     Purchase and License Agreement effective September 11, 1987
                    between Mentor Graphics Corporation and Registrant.
     10.20/(2)/     License Agreement dated January 3, 1986 between the Regents
                    of the University of California and Registrant.
     10.21/(1)/     LASAR Software Foundry Distribution Agreement dated July 13,
                    1989 between Teradyne, Inc. and Registrant.
     10.22/(1)/     Agreement for Licensed Products dated July 13, 1989 between
                    Synopsys Incorporated and Registrant.
     10.23/(2)/     Electronic Design Automation Software License Agreement
                    dated October 21, 1989 between Teradyne, Inc. and
                    Registrant.
     10.24/(2)(3)/  International Distributor Agreement dated January 4, 1988 by
                    and between H.Y. Associates Company Ltd. and Registrant.
     10.25/(4)/     Amendment dated March 23, 1994, to the Loan Agreement dated
                    May 8, 1991, as amended, by and between Silicon Valley Bank
                    and Registrant.
     10.26/(3)(4)/  GaAs Super Microprocessor Technology Development Agreement
                    dated December 17, 1993 by and between National Institute of
                    Standards and Technology and Registrant.

     10.27/(5)/     Amendment dated December 13, 1994, to the Loan Agreement
                    dated May 8, 1991, as amended, by and between Silicon Valley
                    Bank and Registrant.

     10.28/(6)/     Amendment dated January 2, 1996, to the Loan Agreement dated
                    May 8, 1991, as amended, by and between Silicon Valley Bank
                    and Registrant.

                                       16
<PAGE>
 
     10.29          Amendment dated January 22, 1997, to the Loan Agreement
                    dated May 8, 1991, as amended, by and between Silicon Valley
                    Bank and Registrant.
     10.30          Agreement dated October 30, 1996 between ABN AMRO Bank N.V.,
     10.31          Agreement dated August 15, 1997 between ABN AMRO Bank N.V., 
                    Lease Plan North America, Inc. and Registrant.
     11.1           Statement regarding computation of [*] income per share.
     13.1           Annual Report to Security Holders
     23.1           Report on Schedule and Consent of Independent Certified
                    Public Accountants. (included on page 18)
     27             Financial Data Schedule


(1)  Incorporated by reference from the Company's annual report on Form 10-K for
     the period ended September 30, 1992.
(2)  Incorporated by reference from the Company's registration statement on Form
     S-1 (File no. 33-43548), effective December 10, 1991.
(3)  Confidential treatment previously granted as to certain portions of these
     exhibits.
(4)  Incorporated by reference from the Company's quarterly report on Form 10Q
     for the period ended March 30, 1994.
(5)  Incorporated by reference from the Company's annual report on Form 10-K for
     the period ended September 30, 1995.

(6)  Incorporated by reference from the Company's annual report on Form 10-K for
     the period ended September 30, 1996.

                         [* Confidential information]

                                       17
<PAGE>
 
                 ACCOUNTANTS' CONSENT WITH REPORT ON SCHEDULE



The Board of Directors
Vitesse Semiconductor Corporation:


The audits referred to in our report dated October 21, 1997, included the
related financial statement schedule as of September 30, 1997, and for each of
the years in the three-year period ended September 30, 1997, included in the
registration statement.  The financial statement schedule is the responsibility
of the Company's management.  Our responsibility is to express an opinion on the
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, represents fairly in all material respects the
information set forth therein.

We consent to the use of our reports or incorporated herein by reference and to
the reference of our firm under the heading "Experts" in the prospectus.



                                  KPMG PEAT MARWICK LLP


Los Angeles, California
December 22, 1997

                                       18
<PAGE>
 
                       VITESSE SEMICONDUCTOR CORPORATION
               SCHEDULE II -- Valuation and Qualifying Accounts
                 Years ended September 30, 1997, 1996 and 1995
                                (in thousands)

<TABLE>
<CAPTION>
                                           Balance at    Charged to                 Balance
                                          Beginning of   Costs and                  at end
                                             Period       Expenses    Deductions   of Period
                                          ------------   ----------   ----------   ---------
<S>                                       <C>            <C>          <C>          <C>
 
Year ended September 30, 1997
  Deducted from Inventories:
     Reserve for obsolescence                   $2,797        1,988        1,664      $3,121
  Deducted from Accounts Receivable:
     Allowance for doubtful accounts               900          500          400       1,000
 
Year ended September 30, 1996
  Deducted from Inventories:
     Reserve for obsolescence                    2,493        1,347        1,043       2,797
  Deducted from Accounts Receivable:
     Allowance for doubtful accounts               700          200          ---         900
 
Year ended September 30, 1995
  Deducted from Inventories:
     Reserve for obsolescence                    2,217          276          ---       2,493
  Deducted from Accounts Receivable:
     Allowance for doubtful accounts               700          ---          ---         700
</TABLE>

                                       19