<PAGE>   1
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                       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       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 0-15012
                                                -------

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


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


                  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 September 30, 1997, the registrant had 22,138,865 shares of common
stock outstanding.

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                                     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                          6
                 Statements

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

Item 3.        Quantitative and Qualitative Disclosures About Market Risk      Not applicable


PART II.       OTHER INFORMATION

Item 1.        Legal Proceedings                                                           14

Item 2.        Changes in Securities                                           Not applicable

Item 3.        Defaults upon Senior                                            Not applicable
                 Securities

Item 4.        Submission of Matters to a Vote of Security Holders             Not applicable

Item 5.        Other Information                                               Not applicable

Item 6.        Exhibits and Reports on Form 8-K                                            15

</TABLE>


                                     Page 2
<PAGE>   3

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS


                          CHIPS AND TECHNOLOGIES, INC.
                 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                    SEPTEMBER 30,   JUNE 30,
In thousands, except share amounts                                      1997          1997
-----------------------------------------------------------------   -------------   ---------
<S>                                                                   <C>           <C>    
ASSETS
Current assets:
      Cash and cash equivalents                                       $36,983       $31,815
      Short-term investments                                           57,996        56,725
      Accounts receivable, net of allowance for
          doubtful accounts of $1,555 and $1,555, respectively         13,797        14,714
      Inventory                                                         3,343         4,677
      Prepaid and other assets                                          8,787         8,505
                                                                    ---------     ---------
Total current assets                                                  120,906       116,436
Property and equipment, net                                            15,245        14,029
Other assets                                                           18,138        18,569
                                                                    ---------     ---------
                      TOTAL ASSETS                                   $154,289      $149,034
                                                                    =========     =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
      Accounts payable                                                $12,089       $10,326
      Current capital lease obligations                                 1,044         1,016
      Accrued compensation                                              2,485         4,105
      Other accrued liabilities                                         7,465         5,889
                                                                    ---------     ---------
Total current liabilities                                              23,083        21,336
Long-term capital lease obligations                                       537           851
                                                                    ---------     ---------
Total liabilities                                                      23,620        22,187
                                                                    ---------     ---------

Stockholders' equity:
      Convertible preferred stock, $.01 par value; 5,000,000
         shares authorized; none issued and outstanding                    --            --
      Common stock, $.01 par value; 100,000,000 shares 
         authorized; 22,139,000 and 22,003,000 shares issued 
         and outstanding                                                  221           220
      Capital in excess of par value                                   89,367        88,390
      Notes receivable from officer                                       (25)          (53)
      Unrealized gain/ (loss) on investments                             (138)            1
      Retained earnings                                                41,244        38,289
                                                                    ---------     ---------
Total stockholders' equity                                            130,669       126,847
                                                                    ---------     ---------
                      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $154,289      $149,034
                                                                    =========     =========
</TABLE>

       See notes to Unaudited Condensed Consolidated Financial Statements


                                     Page 3
<PAGE>   4

                          CHIPS AND TECHNOLOGIES, INC.
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                           
                                                     THREE MONTHS ENDED
                                                        SEPTEMBER 30,
In thousands, except per share amounts             1997             1996
-----------------------------------------        -------          --------
<S>                                              <C>              <C>    
Net sales                                        $35,954          $44,486

Cost of sales                                     18,243           23,203
                                                 -------          -------

Gross profit                                      17,711           21,283
                                                 -------          -------

Operating expenses
    Research and development                       7,298            4,534
    Selling, general and administrative            7,203            6,871
                                                 -------          -------

Total operating expenses                          14,501           11,405
                                                 -------          -------

Income from operations                             3,210            9,878
Interest income and other, net                     1,336              623
                                                 -------          -------

Income before taxes                                4,546           10,501

Provision for income taxes                         1,591            1,050
                                                 -------          -------

Net Income                                        $2,955           $9,451
                                                 =======          =======


Net income per share                               $0.13            $0.42
                                                 =======          =======


Shares used in per share calculation              23,235           22,485
                                                 =======          =======

</TABLE>

       See notes to Unaudited Condensed Consolidated Financial Statements

                                     Page 4
<PAGE>   5

                          CHIPS AND TECHNOLOGIES, INC.
                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
                                                                           THREE MONTHS ENDED
                                                                              SEPTEMBER 30,
In thousands                                                               1997            1996
---------------------------------------------------------------------  --------------  --------------
<S>                                                                        <C>              <C>   
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income                                                                 $2,955           $9,451
Adjustments to reconcile net income to cash provided by operating
activities:
Depreciation and amortization                                               1,067              705
Gain on sale of capital assets                                                (33)              --
Changes in operating assets and liabilities:
    Accounts receivable                                                       917           (3,224)
    Inventory                                                               1,334           (2,197)
    Accounts payable                                                        1,763            3,929
    Other assets and liabilities                                              101            1,507
                                                                         --------         --------
NET CASH PROVIDED BY OPERATING ACTIVITIES                                  $8,104          $10,171
                                                                         --------         --------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                                                     (2,283)          (1,147)
  Deposit for foundry agreement                                                --           (5,880)
  Purchase of short-term investments                                       (1,410)          (1,353)
  Proceeds from sale of capital assets                                         33               --
                                                                         --------         --------
NET CASH USED IN INVESTING ACTIVITIES                                      (3,660)          (8,380)
                                                                         --------         --------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Principal payment on capital lease obligations                             (286)            (339)
  Proceeds from issuance of stock                                             978              345
  Repayment of officer's loan                                                  32               31
                                                                         --------         --------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                     724               37
                                                                         --------         --------
Net increase in cash and cash equivalents                                   5,168            1,828
Cash and cash equivalents at beginning of period                           31,815           23,989
                                                                         --------         --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                $36,983          $25,817
                                                                         ========         ========

Supplemental disclosure cash flow information:
Cash paid during the period for:
   Interest                                                                   $37              $52
   Income taxes                                                                57              176
Additions under capital lease obligations                                      --               --

</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, 1997, included in the
Company's 1997 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 September 30, 1997 and June 30, 1997
as available-for-sale. The investments are adjusted to fair market value as of
the balance sheet date and any unrealized gains or losses are recorded as a
separate component of stockholders' equity. At September 30, 1997, the Company
recorded unrealized loss of $138,000 and adjusted the fair market value of the
investments to $58.0 million.


NOTE 3.  INVENTORY

Inventory consists of the following:
<TABLE>
<CAPTION>
(In thousands)                      September 30, 1997       June 30, 1997
                                    -------------------   -----------------
<S>                                      <C>                    <C>   
Work-in-process                          $1,404                 $4,196
Finished goods                            1,939                    481
                                         ------                 ------
                                         $3,343                 $4,677
                                         ======                 ======
</TABLE>


NOTE 4.  INCOME TAXES

The Company provides for income taxes during interim reporting periods based
upon estimated annual effective tax rates of 35% and 10% in fiscal 1998 and
1997, respectively. The rate in fiscal 1997 was substantially lower than the
statutory income tax rate, reflecting the utilization of the Company's net
operating loss carryforwards and the change in valuation allowance for the
Company's deferred tax assets. The effective tax rate in fiscal 1998 reflects
full statutory rates net of ongoing taxable deductions.


                                     Page 6
<PAGE>   7
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.


NOTE 6.  RECENT ACCOUNTING PRONOUNCEMENTS

In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS 128"). The
Company is required to adopt SFAS 128 in the second quarter of fiscal 1998 and
will restate at that time earnings per share data for prior periods to conform
with SFAS 128. The statement redefines earnings per share under generally
accepted accounting principles. Under the new standard, primary earnings share
is replaced by basic earnings per share and fully diluted earnings per share is
replaced by diluted earnings per share. If the Company had adopted this
statement, the basic earnings per share would have been $0.13 and $0.46 for the
three months ended September 30, 1997 and 1996, respectively, and diluted
earnings per share would have been $0.13 and $0.42 for the three months ended
September 30, 1997 and 1996, respectively.

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS
130"). This statement is effective for the Company's fiscal year ending June 30,
1999. The statement establishes presentation and disclosure requirements for
reporting comprehensive income. Comprehensive income includes charges or credits
to equity that are not the result of transactions with owners. The Company plans
to adopt the disclosure requirements and report comprehensive income as part of
the Consolidated Statements of Shareholders' Equity as required under SFAS 130,
and expects there to be no material impact on the Company's financial position
and results of operations as a result of the adoption of this new accounting
standard.

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures About Segments of An
Enterprise and Related Information" ("SFAS 131"). SFAS 131 revises the required
information regarding the reporting of operating segments. It also establishes
standards for related disclosures about products and services, geographic areas
and major customers. The Company will adopt SAFS 131 beginning in fiscal 1999
and does not expect such adoption to have a material effect on the consolidated
financial statements.


                                     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, 1997, 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.


MERGER AGREEMENT

On July 27, 1997, the Company entered into a definitive agreement (the "Merger
Agreement") with Intel Corporation ("Intel") and Intel Enterprise Corporation
providing for Intel to acquire the Company by means of a cash tender offer
followed by a merger. As provided in the Merger Agreement, Intel has made a
tender offer for all outstanding shares of stock of the Company for $17.50 net
per share in cash. The tender offer currently remains open, pending satisfaction
of the conditions to closing. Following completion of the tender offer, the
Merger Agreement provides for a merger of the Company with a subsidiary of Intel
in which all untendered shares of the Company's outstanding stock will be
converted into the right to receive $17.50 per share in cash. Upon completion of
both the tender offer and the subsequent merger, the Company would become a
wholly-owned subsidiary of Intel and part of Intel's Graphics Components
Division.

The acquisition transaction is subject to regulatory approval and various other
conditions. In particular, the tender offer cannot be completed until
satisfaction of the applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvement Act of 1976 (the "HSR Act"). On August 26, 1997, the
Federal Trade Commission ("FTC") issued a "second request" to Intel and the
Company requiring the submission by the parties of additional information and
documents in connection with the FTC's antitrust review of the transaction under
the HSR Act. In light of that second request, Intel extended the tender offer
from its original expiration date of August 28, 1997 until October 17, 1997 and
subsequently to November 21, 1997. The Merger Agreement as amended on October 2,
1997 provides that the tender offer will be extended as necessary to permit
satisfaction of the conditions to closing, but does not obligate the parties to
extend the offer beyond November 30, 1997.


RESULTS OF OPERATIONS

The following table sets forth certain operating data as a percentage of net
sales:
<TABLE>
<CAPTION>
                                                                   Three Months Ended
                                                                      September 30,
                                                                   1997           1996
                                                                 ----------     -------
<S>                                                                <C>           <C>   
Net sales                                                          100.0%        100.0%
Cost of sales                                                       50.7          52.2
                                                                   -----         -----
Gross margin                                                        49.3          47.8
                                                                   -----         -----
Operating expenses
    Research and development                                        20.3          10.2
    Selling, marketing and administrative                           20.1          15.4
                                                                   -----         -----
Total operating expenses                                            40.4          25.6
                                                                   -----         -----
Income from operations                                               8.9          22.2
Interest income and other, net                                       3.7           1.4
                                                                   -----         -----
Income before taxes                                                 12.6          23.6
Provision for income taxes                                           4.4           2.4
                                                                   -----         -----
Net income                                                           8.2          21.2
                                                                   =====         ======
</TABLE>

                                     Page 8
<PAGE>   9
NET SALES

Net sales for the first quarter of fiscal 1998 were $36.0 million, a decrease of
$8.5 million or 19.2% from $44.5 million reported for the first quarter of
fiscal 1997. The decrease in net sales was mainly due to lower average selling
prices in the Company's products as the result of competitive price pressures.
The Company expects the price pressure to continue and expects its net sales for
the next quarter to remain at about the same level as the quarter just ended.

Revenue from portable graphics accelerator products comprised 90% of the
Company's net sales in the first quarter of fiscal 1998, compared to 93% of net
sales in the same the quarter of fiscal 1997.


GROSS MARGIN

The gross margin percentage was 49.3% in the first quarter of fiscal 1998,
compared to 47.8% for the first quarter of fiscal 1997. The improvement in gross
margin was primarily due to declining wafer costs. The Company expects its gross
margin percentage for the next quarter to decrease slightly as compared to the
quarter just ended. The integration of memory onto certain graphics controller
chip products is putting downward pressure on margins for these products. As the
Company's embedded memory products, first entering production in late calendar
1997, come to comprise a greater proportion of the Company's sales, the Company
expects its overall gross margin percentage to decline. Increased competition in
the overall portable graphics controller market is also putting downward
pressure on gross margins due to lower average selling prices.


RESEARCH AND DEVELOPMENT EXPENSES

Research and development expenses for the first quarter of fiscal 1998 were $7.3
million, an increase of $2.8 million or 61.0% from $4.5 million reported for the
first quarter of fiscal 1997. Research and development expenses were
approximately 20% of net sales in the first quarter of fiscal 1998, compared to
10% in the first quarter of fiscal 1997. The increase in research and
development expenses was mainly due to increases in engineering staffing levels,
depreciation expenses and higher non-recurring engineering charges. The Company
expects to continue to increase its investment in hardware and software
engineering, particularly in the areas of 3D graphics and flat panel monitor
products. The Company is also investing in research and development relating to
broadband media opportunities outside the personal computer. The broadband media
and flat panel monitor projects may involve significant development expenses and
technology acquisition costs during this fiscal year but are not expected to
generate meaningful revenue during this year. The Company expects its research
and development expenses to increase in both absolute dollars and as a
percentage of net sales during the next quarter.


SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses for the first quarter of fiscal
1998 were $7.2 million, an increase of $0.3 million or 4.8% from $6.9 million
reported for the first quarter of fiscal 1997. Selling, general and
administrative expenses were approximately 20% of net sales in the first quarter
of fiscal 1998, compared to 15% in the first quarter of fiscal 1997. Selling,
general and administrative expenses increased mainly due to legal expenses
associated with the Company's proposed merger with Intel and related legal
proceedings (see Part II, item I- Legal Proceedings). The increases were
partially offset by the lower commissions paid to sales representatives as the
result of lower sales. The Company expects that selling, general and
administrative expenses in the next quarter will remain at about the same level
as compared to the quarter just ended.


INCOME TAXES

The Company provides for income taxes during interim reporting periods based
upon estimated annual effective tax rates of 35% and 10% in fiscal 1998 and
1997, respectively. The rate in fiscal 1997 was substantially lower than the
statutory 


                                     Page 9
<PAGE>   10

income tax rate, reflecting the utilization of the Company's net operating loss
carryforwards and the change in valuation allowance for the Company's deferred
tax assets. The effective tax rate in fiscal 1998 reflects full statutory rates
net of ongoing taxable deductions.


LIQUIDITY AND CAPITAL RESOURCES

Cash, cash equivalents and short-term investments were $95.0 million on
September 30, 1997, an increase of $6.5 million as compared to $88.5 million on
June 30, 1997. This increase was primarily attributable to cash generated from
operating activities.

Accounts receivable on September 30, 1997 were $13.8 million, a decline of $0.9
million from the balance on June 30, 1997. This decrease was mainly due to lower
sales in the first quarter of fiscal 1998. Inventory on September 30, 1997 was
$3.3 million, a decline of $1.4 million as compared to $4.7 million on June 30,
1997. This decrease was mainly due to higher sales of older inventory during the
first quarter of fiscal 1998.

The Company has foundry agreements with Taiwan Semiconductor Manufacturing
Company and Chartered Semiconductor Manufacturing PTE LTD. To date, the Company
has made deposits totaling $25.8 million under these agreements. The Company
will pay the remaining deposit balance of $6.0 million in calendar year 1998. A
portion of the deposits will be recovered over the term of the contracts as
rebates or credits against wafer purchases, and the Company expects to recover
the remainder at the expiration of the agreements, not later than December 31,
2000.

The Company's capital requirements consist primarily of financing working
capital items and funding operational activities. The Company has an agreement
with a banking institution for a $7.0 million unsecured line of credit. This
agreement will expire in October 1998. It contains certain covenants related to
financial performance and condition, and the Company's ability to borrow is
subject to compliance with such covenants. The Company was in compliance with
all covenants as of September 30, 1997, and there was no borrowing against this
line of credit. The Company expects that its existing cash, cash equivalents,
short-term investments, line 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

As described under "Merger Agreement" above, there is currently pending a tender
offer by Intel Corporation pursuant to a Merger Agreement with the Company,
under which Intel would acquire all outstanding shares of stock of the Company
for $17.50 per share in cash. The price of the Company's Common Stock increased
substantially following announcement of the proposed acquisition. In the event
that the proposed acquisition of the Company by Intel does not occur for any
reason, there could be a material adverse effect on the Company, its results of
operations and the market price for its Common Stock. The Merger Agreement
contains a number of conditions which must be satisfied or waived by Intel or
the Company prior to consummation of the tender offer and the subsequent merger.
(For additional information concerning the conditions to consummation of these
transactions, see the Offer to Purchase transmitted by Intel to the stockholders
of the Company and the related Schedule 14D-9 filing provided by the Company,
each filed with the Securities and Exchange Commission on August 1, 1997 and
Amendment No. 1 to Schedule 14D-9 which was filed by the Company with the
Securities and Exchange Commission on October 2, 1997.) Among other conditions,
the tender offer cannot be consummated until the relevant HSR Act waiting period
has been satisfied, and at the time for consummation there must not be in effect
any injunction or other action by a court or governmental entity that prohibits
or materially adversely affects the transaction. The FTC has issued a "second
request" to Intel and the Company requiring the submission by the parties of
additional information and documents in connection with the FTC's antitrust
review of the transaction under the HSR Act. Based on the information available
to it, the Company believes that the tender offer and merger can be effected in
compliance with federal and state antitrust laws. However, the FTC could take
such action under the antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the transactions or to impose
conditions on their consummation. In addition, any state and/or private parties
could take action under the antitrust laws. There can be no assurance that a
challenge to the consummation of the proposed acquisition on antitrust grounds
will not be made or, if made, that Intel and the Company would prevail. Intel 


                                    Page 10
<PAGE>   11

is not required to close the tender offer or to extend it if the conditions to
completion of the transaction are not satisfied by November 30, 1997. There can
be no assurance that all conditions to the transaction will be satisfied or will
be satisfied on a timely basis.

Shortly after the announcement of the Merger Agreement, lawsuits were filed
against the Company and its Directors in both Delaware and California. In
addition to monetary damages, the plaintiffs in the Delaware actions requested
the court to enjoin the acquisition. On October 1, 1997, the parties to the
Delaware actions entered into an agreement in principle to settle the
litigation. That agreement is subject to court approval in Delaware. It is
expected that the California action will be subsequently dismissed. However, it
is possible that the Delaware court will not approve the settlement agreement or
that the California court will not dismiss the California action.

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. These factors
include: gain or loss of strategic relationships or design wins with customers,
new product introductions by the Company's competitors, market acceptance of the
Company's and its customers' products, the rescheduling or cancellation of
orders by the Company's 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, supply
constraints and other factors affecting the availability of other components
(such as portable display screens and memory devices) incorporated into the
Company's customers' products, pressures on selling prices, and changes in
product or customer mix.

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 during fiscal 1997 as compared to fiscal 1996. This
proportion is expected to decrease in fiscal 1998. The Company's revenues from
any specific customer can fluctuate from period to period depending on
conditions and factors affecting that customer's business. Conditions and
factors affecting the Company's customers' businesses include: the rate of
growth in the notebook computer market, the customer's market share, the
customer's inventory position, the acceptance of the customer's new products in
the marketplace, and competition, among other things. 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 volume 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' products include features and/or performance that are perceived as
valuable by the market but are not in the Company's products, and/or the Company
is not able to incorporate new technologies or features into its existing and/or
future products on a timely basis, the Company could lose future business and
lose or not achieve design wins with new and current customers. Some notebook
computer manufacturers are currently incorporating graphics technologies such as
embedded memory and 3D functionality into their new systems. The Company plans
to introduce graphics controllers incorporating these technologies in fiscal
1998. However, several of the Company's competitors have already introduced such
products and, as a result, the Company has not achieved some new design wins. To
the extent that the Company is unable to obtain new design wins with current or
new customers, there could be a material adverse effect on the Company's
business, financial condition and results of operations.

The Company's business is dependent on strategic partnerships and licensing
arrangements for certain technologies. For example, two of the Company's planned
new product offerings during fiscal 1998 include embedded memory technology and
3D technology, respectively, provided by third parties. In each instance, the
Company does not currently have a readily available alternative source for that
technology. If any third party upon which the Company is relying does not
deliver technologies in a time frame consistent with the needs of the Company
and its customers, if unforeseen difficulties occur in integrating any third
party technology into the Company's products, or if any third party technology
does not perform as anticipated, the timing of the Company's introduction and
delivery of key new products could be adversely affected. In addition, the
Company's relationships with customers could be damaged.

                                    Page 11
<PAGE>   12

The Company's products contain intellectual property owned by the Company or
licensed from third parties. The Company's products and its customers' products
are from time to time the subject of claims of infringement of third parties'
intellectual property rights. Such claims could result in substantial expense to
the Company in the form of attorneys fees, sums paid to settle claims, damages
paid pursuant to court order and/or the expenses of indemnification of claims
made against customers. In addition, a claim of infringement of third party
intellectual property rights could result in court orders prohibiting the
manufacture, importation, or sale, among other things, of the Company's and/or
its customers' products.

The personal computer industry is increasingly characterized by certification
and security standards established by third parties. In some cases, for example
in connection with the incorporation of DVD-related capabilities, meeting these
standards requires the licensing of technologies from third parties. To the
extent the Company does not comply with these standards and/or is unable to
consummate the necessary licenses in a timely fashion, the introduction and
acceptance of the Company's new products could be delayed and/or impaired.

Power consumption is a significant factor in the notebook computer market. As
consumers expect more complex technologies and features, including 3D graphics
capability and faster microprocessors, to be incorporated into notebook
computers, notebook manufacturers face a growing challenge to improve battery
life despite the increased power consumption caused by added features and more
advanced technologies. If notebook computer manufacturers cannot address these
needs in a timely and satisfactory manner, the rate of growth in the portable
computer market may not occur as quickly as expected. In addition, the Company
and other suppliers to notebook computer manufacturers will be at a competitive
disadvantage if alternative providers offer products that consume less power
than the Company's products.

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 also 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, shortages of foundry capacity and/or necessary substrate
technology, 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, assembly and selling activities in Asia poses risks, including
foreign currency fluctuations, political unrest, labor shortages and economic
and trade policies, which could adversely affect demand for and supply of the
Company's products.

The market for third party wafer production has been characterized by ample
capacity and aggressive price reductions on 0.5u and 0.35u wafers. While the
Company has recently secured price reductions, there can be no assurance such
reductions are equivalent to those achieved by competitors. In addition, a
capacity constraint for more advanced processes, such as 0.25u, may emerge
during 1998. The Company currently does not have any foundry agreements to
ensure guaranteed access to this capacity. Competitors who have such agreements,
including joint ventures, may be in a position to obtain better access and lower
costs on .25u capacity. The unavailability of sufficient quantities of
competitively priced .25 micron capacity could have a material adverse effect on
the Company's business and 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 a leading supplier of graphics
controllers to the portable computer market segment, 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 

                                    Page 12
<PAGE>   13

must reduce prices to meet competition, maintain market share or meet customer
requirements, its gross margin percentages will be adversely impacted.



                                    Page 13
<PAGE>   14
                           PART II - OTHER INFORMATION


Item 1.        Legal Proceedings

               Stockholder Litigation

               In August, 1997, the Company and the members of its Board of
               Directors were sued in connection with the Company's proposed
               acquisition by Intel Corporation. Three actions, all styled as
               stockholder class action suits, were filed in Delaware and were
               subsequently consolidated into a single action. A fourth action,
               also styled as a stockholder class action, was filed in
               California. The actions contend that the directors of the Company
               breached their fiduciary duties in connection with the agreement
               to recommend that stockholders accept the cash tender offer and
               to enter into the proposed merger, and seek injunctive and
               monetary relief. The Delaware complaint was amended in September
               to add Intel as a party and to add additional allegations that
               the disclosures made by the Company to stockholders in connection
               with Intel's tender offer were incomplete.

               On October 1, 1997, the parties reached an agreement in principle
               to settle the Delaware actions. This agreement is subject to
               approval by the Delaware court. It is expected that the
               California action will be subsequently dismissed. In connection
               with the settlement agreement, Intel and the Company agreed to
               amend the merger agreement to lower from $15 million to $7.5
               million the maximum fee payable by the Company to Intel in the
               event that the Company accepts an unsolicited higher offer from a
               third parties, and to extend to November 30, 1997 the date upon
               which either party can terminate the merger agreement in the
               event that the tender offer is not closed by that date. In
               addition, the Company agreed to issue a press release describing
               the terms of the settlement and to mail to stockholders
               additional disclosures concerning the events and circumstances
               leading to the decision to enter into the merger agreement. The
               Company did not agree to pay attorneys fees to plaintiffs'
               counsel. Plaintiffs' counsel reserved the right to apply to the
               Delaware court for attorneys fees and expenses; counsel for Intel
               and the Company reserved the right to oppose that application.

               Federal Trade Commission Antitrust Review

               The proposed acquisition is undergoing antitrust review under the
               Hart-Scott-Rodino Antitrust Improvements Act of 1976. On August
               26, 1997, the Federal Trade Commission ("FTC") made a request to
               Intel and the Company for additional information and documents in
               connection with that review. It is currently expected that the
               provision of documents and information in response to that
               request will be completed in mid November. The FTC will have ten
               days from receipt of Intel's completed response to the request to
               decide whether or not to take action in opposition to the
               acquisition. Based on the information available to it, the
               Company believes that the transaction can be effected in
               compliance with federal and state antitrust laws. However, there
               can be no assurance that a challenge to the acquisition on
               antitrust grounds will not be made or that, if made, it would not
               prevail, or that certain conditions to the acquisition would not
               be required.


                                    Page 14
<PAGE>   15

<TABLE>

<S>            <C>                                                                    <C>
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                    Not applicable


Item 5.        Other Information                                                      Not applicable


Item 6.        Exhibits - The exhibits listed in the Exhibit Index set forth on       17
               page 15 of this report are incorporated herein by reference.


               Reports on Form 8-K - The Company filed a report on Form 8-K on
               July 31, 1997 reporting under Item 5.
</TABLE>


                                    Page 15
<PAGE>   16

                                   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:    November 5, 1997


                                    Page 16
<PAGE>   17
                                INDEX TO EXHIBITS
<TABLE>
<CAPTION>

  Exhibit 
   Number       Description
  -------       -----------
<S>      <C>                                                                                  <C>
2.1      (8)    Agreement and Plan of Merger, dated as of July 27, 1997,
                among Intel Corporation, Intel Enterprise Corporation and the
                Company.
2.2      (9)    Amendment to Agreement and Plan of Merger among Intel
                Corporation, Intel Enterprise Corporation and the Company dated
                October 2, 1997.
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     (7)    Amendment to Deposit Agreement between the Company and Chartered
                Semiconductor Manufacturing PTE LTD dated October 17, 1996. (**)
10.10           Amendment to Option Agreement between the Company and Taiwan Semiconductor    21
                Manufacturing Company dated July 1, 1997 (**)
27.0            Financial Data Schedule for the quarter ended September 30, 1997              19

</TABLE>

(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.

                                    Page 17
<PAGE>   18

(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.

(7)      Incorporated by reference to the Company's Quarterly Report on Form 
         10-Q for the period ended December 31, 1996.

(8)      Incorporated by reference to the Company's Schedule 14D-9,
         exhibit(c)(1).

(9)      Incorporated by reference to Amendment 1 to Schedule 14D-9, filed by
         the Company October 3, 1997, exhibit(c)(2).





*  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.


                                    Page 18