<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549
                                -----------------

                                    FORM 10-Q

(Mark One)
/X/      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For quarterly period ended December 31, 1996

                                       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 0-15012

                          CHIPS AND TECHNOLOGIES, INC.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                                       <C>                                            
                             Delaware                                                    77-0047943
  (State or other jurisdiction of incorporation or organization)            (I.R.S. Employer Identification No.)
</TABLE>



                  2950 Zanker Road, San Jose, California 95134
               (Address of principal executive offices)(Zip code)

       Registrant's telephone number, including area code: (408)434-0600

________________________________________________________________________________
   Former name, former address and former fiscal year. If changed since last
                                    report.

         Indicate by check 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 
    ---      ---

      At December 31, 1996, the registrant had 21,874,590 shares of common
                               stock outstanding.

================================================================================


                                     Page 1
<PAGE>   2
                                TABLE OF CONTENTS





<TABLE>
<CAPTION>

PART I.            FINANCIAL INFORMATION                                                                            PAGE
<S>                <C>                                                                                    <C>       
  Item 1.          Unaudited Condensed Consolidated Financial Statements                                               3

                   Notes to Unaudited Condensed Consolidated Financial Statements                                      6

  Item 2.          Management's Discussion and Analysis of Financial Condition and                                     8
                     Results of Operations

  PART II.         OTHER INFORMATION

  Item 1.          Legal Proceedings                                                                      Not applicable

  Item 2.          Changes in Securities                                                                  Not applicable

  Item 3.          Defaults upon Senior Securities                                                        Not applicable

  Item 4.          Submission of Matters to a Vote of Security Holders                                                12

  Item 5.          Other Information                                                                      Not applicable

  Item 6.          Exhibits and Reports on Form 8-K                                                                   12
</TABLE>
























                                     Page 2
<PAGE>   3
                         PART I - FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

                          CHIPS AND TECHNOLOGIES, INC.
                 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                   DECEMBER 31,   JUNE 30,
In thousands, except share amounts                                    1996          1996
------------------------------------------------------------       ------------   -------
<S>                                                                <C>          <C>
ASSETS
Current assets:
      Cash and cash equivalents                                     $ 32,981    $ 23,989
      Short-term investments                                          47,888      35,356
      Accounts receivable, net of allowance for                                 
       doubtful accounts of $1,394 and $1,203, respectively           12,711      12,189
      Inventory                                                       14,929      10,197
      Prepaid and other assets                                         2,662       2,574
                                                                    --------    --------
Total current assets                                                 111,171      84,305
Property and equipment, net                                           12,849      11,223
Other assets                                                          18,379      12,543
                                                                    --------    --------
          TOTAL ASSETS                                              $142,399    $108,071
                                                                    ========    ========
                                                                                
LIABILITIES AND STOCKHOLDERS' EQUITY                                            
Current liabilities:                                                            
      Accounts payable                                              $ 16,006    $ 12,820
      Current capital lease obligations                                1,286       1,630
      Other accrued liabilities                                       11,059       9,436
                                                                    --------    --------
Total current liabilities                                             28,351      23,886
Long-term capital lease obligations                                      826         796
                                                                    --------    --------
Total liabilities                                                     29,177      24,682
                                                                    --------    ---------
                                                                                
Stockholders' equity:                                                           
      Common stock, 21,875,000 and 20,620,000 shares issued                     
      and outstanding                                                    219         206
      Capital in excess of par value                                  85,074      77,769
      Note receivable from officer                                      (51)        (80)
      Unrealized gain on investments                                   6,648       3,421
      Retained earnings                                               21,332       2,073
                                                                    --------     -------
Total stockholders' equity                                           113,222      83,389
                                                                    --------     --------
          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                $142,399    $108,071
                                                                    ========    =========
</TABLE>
  



See notes to Unaudited Condensed Consolidated Financial Statements

                                     Page 3
<PAGE>   4
                          CHIPS AND TECHNOLOGIES, INC.
            UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS



<TABLE>
<CAPTION>

                                                 THREE MONTHS ENDED      SIX MONTHS ENDED
                                                     DECEMBER 31,           DECEMBER 31,
In thousands, except per share amounts            1996       1995          1996      1995
----------------------------------------         -------    -------      --------   -------
<S>                                              <C>        <C>          <C>        <C>   
Net sales                                        $48,231    $38,259       $92,717   $75,478
                                                                         
Cost of sales                                     25,782     23,301        48,985    46,159
                                                 -------    -------       -------   -------
                                                                         
Gross margin                                      22,449     14,958        43,732    29,319
                                                                         
Operating expenses                                                       
    Research and development                       5,653      4,811        10,187     9,716
    Selling, general and administrative            6,930      5,214        13,801    10,118
                                                 -------    -------       ------    -------
                                                                         
Total operating expenses                          12,583     10,025        23,988    19,834
                                                                         
Income from operations                             9,866      4,933        19,744     9,485
Interest income and other, net                     1,032      1,297         1,655     1,665
                                                 -------    -------       -------   -------
                                                                         
Income before taxes                               10,898      6,230        21,399    11,150
                                                                         
Provision for income taxes                         1,090        623         2,140     1,115
                                                 -------    -------       -------   -------
                                                                         
Net Income                                       $ 9,808    $ 5,607       $19,259   $10,035
                                                 =======    =======       =======   =======
                                                                         
                                                                         
Net income per share                               $0.42      $0.26         $0.83     $0.46
                                                 =======   =========      =======   =======
                                                                         
Shares used in per share calculation              23,609     21,804        23,328    21,991
                                                 =======   =========      =======   =======
</TABLE>
                                                                         
                                                                         
                                                                         
                                                                         
See notes to Unaudited Condensed Consolidated Financial Statements










                                     Page 4
<PAGE>   5

                          CHIPS AND TECHNOLOGIES, INC.
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>


                                                                                    SIX MONTHS ENDED
                                                                                       DECEMBER 31,
In thousands                                                                         1996      1995
--------------------------------------------------------------------------------    -------   -------
<S>                                                                                 <C>       <C> 
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income                                                                          $19,259   $10,035
Adjustments to reconcile net income to cash provided by operating activities:
  Depreciation and amortization                                                       1,487     1,303
  Gain on sale of land                                                                   --      (949)
Changes in operating assets and liabilities:
    Accounts receivable                                                                (522)    2,359
    Inventory                                                                        (4,732)    2,362
    Accounts payable                                                                  3,186    (1,172)
    Other assets and liabilities                                                      1,579    (3,101)
                                                                                    -------   -------
NET CASH PROVIDED BY OPERATING ACTIVITIES                                           $20,257   $10,837
                                                                                    -------   -------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                                                               (2,677)     (826)
  Deposits for capacity agreement                                                    (5,880)   (2,000)
  Purchase of short-term investments                                                 (9,305)   (8,461)
  Proceeds from sale of land                                                             --     2,759
                                                                                    -------  --------
NET CASH USED IN INVESTING ACTIVITIES                                                17,862)   (8,528)
                                                                                    -------  --------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Payment for capital lease obligations                                                (750)     (555)
  Proceeds from issuance of stock                                                     7,318     3,636
  Repayment of officers' loans                                                           29        28
                                                                                    -------   -------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                             6,597     3,109
                                                                                    -------   -------
Net increase in cash and cash equivalents                                             8,992     5,418
Cash and cash equivalents at beginning of year                                       23,989    22,385
                                                                                    -------   -------
CASH AND CASH EQUIVALENTS AT END OF YEAR                                            $32,981   $27,803
                                                                                    =======   =======

Supplemental cash flow information: 
Cash paid during the period for:
   Interest                                                                        $   103   $   125
   Income taxes                                                                        753       148
Additions under capital lease obligations                                              436       778
</TABLE>



See notes to Unaudited Condensed Consolidated Financial Statements


                                     Page 5
<PAGE>   6
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1.  BASIS OF PRESENTATION

The Unaudited Condensed Consolidated Financial Statements have been prepared by
the Company pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. In the opinion of management, the financial statements reflect all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair statement of the financial position, operating results and cash flows for
those periods presented. These unaudited condensed consolidated financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto for the year ended June 30, 1996, included in the
Company's 1996 Annual Report on Form 10-K.

The results of operations for interim periods are not necessarily indicative of
the results that may be expected for the entire year.


NOTE 2.  SHORT-TERM INVESTMENTS

The Company classified all investments on December 31, 1996 and June 30, 1996 as
available-for-sale. The fair market value and the amortized cost of the
investments are presented in the table below. The investments are adjusted to
fair market value as of the balance sheet date and any unrealized gains are
recorded as a separate component of stockholders' equity. The AMD common stock
was received in exchange for Nexgen common stock as a result of the merger of
the two companies.

<TABLE>
<CAPTION>

                                                                               December 31, 1996
                                                                   -------------------------------------------
                                                                                       Unrealized        Fair
(In thousands)                                                       Amortized           Holding        Market
                                                                       Cost               Gain           Value
--------------------------------------------------------------------------------------------------------------
<S>                                                                <C>                 <C>             <C>
AMD Common Stock                                                   $    --              $6,549         $ 6,549
U.S. Government and Corporation Obligations                         41,240                  99           41,339
---------------------------------------------------------------------------------------------------------------
Total                                                              $41,240              $6,648         $ 47,888
===============================================================================================================
</TABLE>

<TABLE>
<CAPTION>

                                                                                   June 30, 1996
                                                                   -------------------------------------------
                                                                                       Unrealized        Fair
(In thousands)                                                       Amortized           Holding        Market
                                                                       Cost            Gain/(Loss}       Value
--------------------------------------------------------------------------------------------------------------
<S>                                                                <C>                 <C>             <C>

AMD Common Stock                                                   $    --             $3,465          $ 3,465
U.S. Government and Corporation Obligations                         31,935                (44)          31,891
--------------------------------------------------------------------------------------------------------------
Total                                                              $31,935             $3,421          $35,356
==============================================================================================================
</TABLE>






                                     Page 6
<PAGE>   7


NOTE 3.  INVENTORY
<TABLE>
<CAPTION>

Inventory consists of the following:
(In thousands)
                                           December 31, 1996    June 30, 1996
                                           -----------------    -------------
<S>                                        <C>                  <C> 
Work-in-process                                      $ 9,662         $ 7,693
Finished goods                                         5,267           2,504
                                                     -------         -------

                                                     $14,929         $10,197
                                                     -------         -------
</TABLE>


NOTE 4.  INCOME TAXES

The Company provides for income taxes during interim reporting periods based
upon an estimate of the annual effective tax rate at approximately 10%. This
rate is lower than the statutory income tax rate, reflecting the expected
utilization of the Company's net operating loss carryforwards and the change in
valuation allowance for the Company's deferred tax assets. The Company expects
that its effective tax rate will increase to reflect full statutory rates net of
ongoing taxable deductions in fiscal year 1998.


NOTE 5.  NET INCOME PER SHARE

Net income per share is based on the weighted average common shares outstanding
and dilutive common equivalent shares (using the treasury stock or modified
treasury stock method, whichever applies). Common equivalent shares include
stock options and warrants.

























                                     Page 7
<PAGE>   8



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

This report includes a number of forward-looking statements which reflect the
Company's current views with respect to future events and financial performance.
These forward-looking statements are subject to certain risks and uncertainties,
including in particular those discussed below or in the Company's annual report
on Form 10-K for the fiscal year ended June 30, 1996, which could cause actual
results to differ materially from historical results or those anticipated. In
this report, the words "expect," "anticipate" and similar expressions identify
forward-looking statements. These forward-looking statements speak only as of
the date hereof. The Company undertakes no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.


RESULTS OF OPERATIONS

The following table sets forth certain operating data as a percentage of net
sales: 

<TABLE>
<CAPTION>

                                                Three Months Ended       Six Months Ended
                                                   December 31,            December 31,
                                                  1996      1995         1996       1995
                                                  ----      ----         ----       ----
<S>                                             <C>         <C>          <C>       <C>
     Net sales                                    100.0%    100.0%       100.0%    100.0%
     Cost of sales                                 53.5      60.9         52.8      61.2
                                                  -----     -----        -----     -----
     Gross margin                                  46.5      39.1         47.2      38.8
                                                  -----     -----        -----     ----- 
                                                                                    
     Operating expenses                                               
         Research and development                  11.7      12.6         11.0      12.8
                                                                                    
         Selling, marketing and administrative     14.3      13.6         14.9      13.4
                                                  -----     -----        -----     -----
     Total operating expenses                      26.0      26.2         25.9      26.2
                                                  -----     -----        -----     -----
     Income from operations                        20.5      12.9         21.3      12.6
     Interest income and other, net                 2.1       3.4          1.8       2.2
                                                  -----     -----        -----     -----
                                                                                    
     Income before taxes                           22.6      16.3         23.1      14.8
       Provision for income taxes                   2.3       1.6          2.3       1.5
                                                  -----     -----        -----     -----
     Net income                                    20.3      14.7         20.8      13.3
                                                  =====     =====        =====     =====
</TABLE>
                                                                      
                                                                      
NET SALES                                                             
                                                                   
Net sales for the second quarter of fiscal 1997 were $48.2 million, an increase
of $9.9 million or 26.1% from $38.3 million reported for the second quarter of
fiscal 1996. Net sales for the first half of fiscal 1997 were $92.7 million, an
increase of $17.2 million from $75.5 million for the same period of fiscal 1996.
The increase in net sales was due to increases in unit shipments of portable
graphics accelerators. Revenue from portable graphics accelerator products
comprised 93% of the Company's net sales in the second quarter of fiscal 1997,
compared to 87% of net sales in the same quarter of fiscal 1996. The Company
expects the portable computer market to experience a slowdown of 5% to 10% in
the first calendar quarter as compared to the quarter just completed.
Consequently, the Company expects its net sales will decrease in the third
fiscal quarter, in an amount up to 5% to 10%, as compared to the second quarter
of fiscal 1997.

GROSS MARGIN

The gross margin percentage was 46.5% in the second quarter of fiscal 1997,
compared to 39.1% for the second quarter of fiscal 1996. For the first half of
fiscal 1997, the gross margin was 47.2%, compared to 38.8% for the same period
of fiscal 1996. The improvement in gross margin percentage was primarily due to
an improved mix of products, including higher margin portable graphics
accelerators, and declining wafer costs. The Company expects its gross margins
for the 


                                     Page 8
<PAGE>   9
third quarter will decrease moderately to the mid-40 percent range, due to a
decline in average selling prices, partially offset by expected lower wafer
costs.


RESEARCH AND DEVELOPMENT EXPENSES

Research and development expenses of $5.7 million in the second quarter of
fiscal 1997 were $0.8 million higher than in the second quarter of fiscal 1996.
The expenditures were approximately 12% of net sales in the second quarter of
fiscal 1997, compared to 13% in the second quarter of fiscal 1996. For the first
half of fiscal 1997, research and development expenses were approximately 11% of
net sales, compared to 13% in the same period of fiscal 1996. Research and
development expenses increased in absolute dollars mainly due to higher
engineering staffing and product prototyping costs. To maintain its present
market position and to expand the markets in which the Company can participate,
the Company expects to increase its investment in hardware and software
engineering, particularly in the areas of 3D graphics, integrated memory, and
MPEG II technology. The Company expects its research and development expenses to
increase in both absolute dollars and as a percentage of net sales during the
next fiscal quarter.


SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses of $6.9 million in the second
quarter of fiscal 1997 were $1.7 million higher than in the second quarter of
fiscal 1996. Selling, general and administrative expenses were approximately 14%
of net sales in the second quarter of fiscal 1997, compared to 14% in the second
quarter of fiscal 1996. For the first half of fiscal 1997, selling, general and
administrative expenses were approximately 15% of net sales, compared to 13% in
the same period of fiscal 1996. Selling, general and administrative expenses
increased in absolute dollars mainly due to higher commissions paid to sales
representatives as the result of higher sales. The Company expects these
expenses will decline slightly in absolute dollars during the next quarter as
the result of expected lower sales.


INCOME TAXES

The Company provides for income taxes during interim reporting periods based
upon an estimate of the annual effective tax rate at approximately 10%. This
rate is lower than the statutory income tax rate, reflecting the expected
utilization of the Company's net operating loss carryforwards and the change in
valuation allowance for the Company's deferred tax assets. The Company expects
that its effective tax rate will increase to reflect full statutory rates net of
ongoing taxable deductions in fiscal year 1998.


LIQUIDITY AND CAPITAL RESOURCES

Cash, cash equivalents and short-term investments were $80.9 million on December
31, 1996, $21.6 million higher than $59.3 million on June 30, 1996. This
increase was primarily attributable to cash generated from operating activities
and proceeds from issuance of stock due to stock option exercises. The increase
was partially offset by a cash deposit to a foundry. Short term investments as
of December 31, 1996 included $6.5 million of AMD Common Stock, the market value
of which increased from $3.5 million at June 30, 1996.

During the first half of fiscal 1997, other assets increased $5.8 million from
$12.5 million on June 30, 1996. The increase was primarily attributable to the
payment of a cash deposit under a foundry capacity agreement. The Company has
foundry agreements with Taiwan Semiconductor Manufacturing Company and Chartered
Semiconductor Manufacturing PTE LTD, which initially required deposits totaling
$43.5 million to be paid by the Company. The Company has made deposits totaling
$19.8 million under these two agreements, and the obligation to pay the
remaining deposits has been reduced by $11.7 million to $12.0 million. The
Company will pay the remaining balance of $12.0 million in two $6.0 million
payments, one in each of calendar years 1997 and 1998. A portion of the deposits
will be recovered over the term of the contracts as rebates or credits against
wafer purchases, and the remainder is expected to be recovered at the expiration
of the agreements.

                                     Pgae 9
<PAGE>   10
The Company's capital requirements consist primarily of financing working
capital items and funding operational activities. The Company has agreements
with three banking institutions for a combined total of $21.0 million in
unsecured lines of credit. These line of credit agreements will expire at
various times from August 1997 through October 1998. There was no borrowing
against these lines of credit as of December 31, 1996. These agreements contain
certain covenants related to financial performance and condition, and the
ability to borrow under such lines is subject to compliance with such covenants.
The Company expects that its existing cash, cash equivalents, short-term
investments, bank lines of credit and funds generated from operations will be
sufficient to meet the Company's capital and operating requirements for at least
the remainder of this fiscal year.


FACTORS AFFECTING FUTURE OPERATING RESULTS

The Company's revenues, gross margin and other operating results have been and
will continue to be affected by a wide variety of factors that could have a
material adverse effect on the Company's operations and business during any
particular period. These factors include: the level of orders that are received
and can be shipped in a quarter, the rescheduling or cancellation of orders by
the Company's customers, gain or loss of any strategic relationships or design
wins with customers, the Company's ability to predict product demand and manage
its inventory, fluctuations in manufacturing yields, the timing of its
customers' qualification of the Company's products from different foundry
suppliers, new product introductions by the Company's competitors, the Company's
ability and timing in introducing new products and technologies, market
acceptance of the Company's and its customers' products, supply constraints and
price or other fluctuations for other components (such as portable display
screens and memory devices) incorporated into its customers' products, pressures
on selling prices, changes in product or customer mix, and the amount and timing
of expenditures for research and development and for selling, general and
administrative functions.

A limited number of customers account for a substantial portion of the Company's
net sales. The proportion of revenues from the Company's largest customer
increased significantly in the first half of fiscal 1997 compared to fiscal
1996. The Company's revenues from any specific customer can fluctuate from
period to period depending on the demand for that customer's computers, market
share gains or decreases, inventory holding strategy for both purchased
components and completed computers, and distribution channel policies. The
Company expects that sales to relatively few customers will account for a high
percentage of its net sales for the foreseeable future. In the event that one or
more of the Company's major customers were to reduce its level of purchases or
cancel and/or substantially reschedule orders for significant quantities of
product, the Company's results of operations could be materially adversely
affected.

The Company relies on obtaining and maintaining design wins for its products
with leading personal computer manufacturers. In the event that the Company's
competitors have or introduce product features and/or performance that are
perceived as valuable by the market but are not in the Company's products, the
Company could lose current design wins or not acquire new design wins. In
addition, other factors such as product development delays, aggressive
competition and intangible factors affecting customer relationships could also
adversely impact design wins. To the extent that the Company is unable to retain
existing design wins or obtain new design wins, particularly with major
customers, there could be a material adverse effect on the Company's business,
financial condition and results of operations.

In order for the Company to remain competitive in the market, the Company must
continuously develop more advanced products. As the Company and/or its
competitors introduce more advanced products, the Company's older product lines
may face a decline in orders which could adversely affect the Company's
revenues. Since the Company purchases its inventory from independent foundries
in advance of its customers orders, the Company also faces the risk of declining
or canceled customer orders on products already built. To the extent that the
Company does not anticipate these changes, the Company could experience
unexpected excess product inventory and/or revenue declines. A reduction of
revenue and/or excess inventory could have a material adverse effect on the
Company's business, financial condition and results of operation.

The Company's business is more dependent than it has been in the past on
strategic partnerships and licensing arrangements for certain technologies that
are to be incorporated in the Company's products. To the extent that 


                                    Page 10
<PAGE>   11
the Company relies on third parties to deliver technologies in a time frame
consistent with the needs of the Company and its customers, factors outside the
Company's control could impact the timing of the Company's introduction and
delivery of new products. Should the Company's time to market with any of its
new products be adversely affected, there could be a material adverse impact on
the Company's business and results of operations.

The Company does not own or operate a wafer fabrication facility, and all of its
semiconductor device requirements are supplied by third party foundries. All of
the Company's semiconductor products are currently assembled and tested by third
party vendors. The Company's reliance on subcontractors to manufacture, assemble
and test its products involves significant risks, including reduced control over
delivery schedules, quality assurance, the availability of advanced process
technologies, manufacturing yields and cost. Delays in delivery of the Company's
products, problems with quality or yields, cost increases and other factors
beyond the Company's control could result in the loss of customers, reductions
in the Company's revenues or margins or other material adverse effects on the
Company's business, financial condition and operating results.

The Company's manufacturing and assembly subcontractors are primarily in Asia.
Many of the Company's customers also manufacture in Asia or subcontract their
manufacturing to Asian companies. The concentration of the Company's
manufacturing and selling activities in Asia poses risks that could adversely
affect demand for and supply of the Company's products, including foreign
currency fluctuations and economic and trade policies which could affect the
relative competitiveness of customers' end products.

During the Company's customers' initial or pre-production phase of
manufacturing, the customer performs its own manufacturing validation and
testing which qualify the Company's products for production use. The Company's
products are extremely complex semiconductor devices. The Company establishes
and implements test specifications and imposes quality standards upon its
suppliers and also performs separate application-based compatibility and system
testing for its products. However, customers may discover defects in the
Company's products related to their particular applications. To the extent that
the Company is unable to remedy defects or provide product that meets its
customers' manufacturing qualification requirements, the Company may experience
lower revenues and excess inventories which could have an adverse effect on the
Company's results of operations.

The PC semiconductor market is generally characterized by price declines over
time as new competitors enter and as new semiconductor process technologies
enable lower cost manufacturing. In addition, rapid price declines may occur
when current supply exceeds demand. As the leading supplier of graphics
controllers to the portable computer market, the Company expects to experience
increased price competition, which could have a material adverse effect on the
Company's business, financial condition and results of operations. The Company
expects its competitors to aggressively price alternative solutions to attempt
to gain or maintain market share. To the extent that the Company must reduce
prices to meet competition, maintain market share or meet customer requirements,
the gross margin percentages will be adversely impacted.

The current market for third party wafer production is characterized by ample
capacity and aggressive price reductions on 0.6u and 0.5u wafers. While the
Company has secured price reductions, there can be no assurance such reductions
are equivalent to those achieved by competitors. To the extent that the
Company's competitors are able to achieve greater cost reductions than those the
Company can achieve, that could adversely affect the Company's competitive
position.

During the first half of fiscal 1997, 93% of the Company's sales were of
portable graphics accelerators. The Company expects that the vast majority of
its revenues will continue to be from sales of those products during the
remainder of fiscal 1997. While the market for PCs in general and portable
computers in particular has recently experienced substantial growth, the overall
industry has historically been cyclical and seasonal. The first calendar quarter
has traditionally shown a slight downturn in sales, and the Company expects to
see a corresponding 5% to 10% downturn in revenues in its third fiscal quarter.

                                     Page 11
<PAGE>   12
                           PART II - OTHER INFORMATION



<TABLE>
<C>       <C>                                                                             <C>
Item 1.   Legal Proceedings                                                               Not applicable
Item 2.   Changes in Securities                                                           Not applicable
Item 3.   Defaults upon Senior Securities                                                 Not applicable
Item 4.   Submission of Matters to a Vote of Security Holders


          The Annual Meeting of the Stockholders of Chips and
          Technologies, Inc. was held on November 7, 1996 in Milpitas,
          California. 17,726,200 shares of common stock or 85.9% of the
          total outstanding shares were present or represented by
          proxies at the meeting. The matters voted upon at the meeting
          and the results of those votes were as follows:


          1.  Election of two class III directors, Jim Stafford and Henri 
          Jarrat. Mr. Stafford received 17,273,786 affirmative votes and 452,434
          votes were withheld. Mr. Jarrat received 17,270,951 affirmative votes
          and 455,269 votes were withheld.

          2.  Approval of increase in the share reserve under the 1994 stock
          option plan by 1,000,000 shares. The proposal received 13,723,032
          affirmative votes, 3,346,510 negative votes and 104,179 abstentions.
          The brokers' non-vote totaled 552,499.


          3. Appointment of Price Waterhouse LLP as the independent accountants 
          of the Company. The proposal received 17,652,283 affirmative votes, 
          29,782 negative votes and 44,155 abstentions.

Item 5.   Other Information                                                               Not applicable

Item 6.   Exhibits - The exhibits listed in the Exhibit Index set forth on page                       14
          page 14 of this report are incorporated herein by reference.

          Reports on Form 8-K                                                             Not applicable

</TABLE>








                                     Page 12
<PAGE>   13

                                   SIGNATURES


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


                                        CHIPS AND TECHNOLOGIES, INC.
                                        (Registrant)





                                           /s/ James F. Stafford
                                        ---------------------------------------
                                        James F. Stafford
                                        President & Chief Executive Officer





                                           /s/ Timothy R. Christoffersen
                                        ---------------------------------------
                                        Timothy R. Christoffersen
                                        Vice President of Finance
                                        Chief Financial Officer and
                                        Principal Accounting Officer



Date:    February 3, 1997



                                     Page 13
<PAGE>   14
                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>

     Exhibit
      Number                                           Description
     -------                                           -----------
<S>      <C>                                                                            <C>
3.1      (1)     Amended Certificate of Incorporation of Chips and Technologies, 
                 Inc.

3.2      (2)     Restated By-laws of Chips and Technologies, Inc.

4.1      (3)     Stockholders' Rights Agreement dated August 23, 1989.

10.1     (6) *   First Amended 1988 Nonqualified Stock Option Plan for Outside 
                 Directors dated October 1, 1993 (as amended through November 
                 9, 1995) .

10.2     (1) *   Form of Indemnity Agreement between the Company and each of 
                 its directors and executive officers.

10.3     (4) *   Promissory note to the Company from Keith Angelo dated August 
                 1, 1994.

10.4     (4) *   Independent Contractor Services Agreement between the Company
                 and Henri Jarrat dated August 11, 1994.

10.5     (6) *   Amended and Restated 1994 Stock Option Plan dated November 10,
                 1994 (as amended through November 9, 1995).

10.6     (5) *   Executive Bonus Plan dated September 21, 1995.

10.7     (6)     Option Agreement between the Company and Taiwan Semiconductor 
                 Manufacturing Company dated November 6, 1995. (**)

10.8     (6)     Deposit Agreement between the Company and Chartered 
                 Semiconductor Manufacturing PTE LTD dated November 16, 1995.
                 (**)

10.9             Amendment to Deposit Agreement between the Company and                     
                 Chartered Semiconductor Manufacturing PTE LTD dated October 
                 17, 1996. (**)

27.0             Financial Data Schedule for the quarter ended December 31, 1996            

(1)      Incorporated by reference to the Company's Annual Report on Form 10-K
         for the year ended June 30, 90.

(2)      Incorporated by reference to Registration Statement No. 33-8005
         effective October 8, 1986.

(3)      Incorporated by reference to the Company's Annual Report on Form 10-K
         for the year ended June 30, 1989.

(4)      Incorporated by reference to the Company's Annual Report on Form 10-K
         for the period ended June 30, 1994.

(5)      Incorporated by reference to the Company's Quarterly Report on Form
         10-Q for the period ended September 30, 1995.

(6)      Incorporated by reference to the Company's Quarterly Report on Form
         10-Q for the period ended December 31, 1995.

*        Denotes management contracts or compensatory plans or arrangements
         covering executive officers or directors of Chips and Technologies,
         Inc.

**       Confidential treatment has been requested for a portion of this
         document.
</TABLE>



                                     Page 14