===============================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                 -------------

                                   FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
    EXCHANGE ACT OF 1934

              For the Quarterly Period Ended September 30, 2001

                                      OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
    EXCHANGE ACT OF 1934

    For the transition period from                 to
                                  -----------------  ------------------

                          Commission File No. 0-25298

                              OAK TECHNOLOGY, INC.
            (Exact name of registrant as specified in its charter)

               Delaware                               77-0161486
    (State or other jurisdiction                  (I.R.S. Employer
of incorporation or organization)               Identification Number)


                                139 Kifer Court
                         Sunnyvale, California 94086
       (Address of principal executive offices, including zip code)

                                (408) 737-0888
           (Registrant's telephone number, including area code)


                                 -------------

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]


As of November 9, 2001, there were outstanding 54,999,023 shares of the
Registrant's Common Stock, par value $0.001 per share.

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

<PAGE>

                    OAK TECHNOLOGY, INC. AND SUBSIDIARIES

                                  FORM 10-Q

                                    INDEX

                  For the Quarter Ended September 30, 2001

<TABLE>
<CAPTION>

                                                                           Page
                                                                            No.
                                                                            ---

                        PART I. FINANCIAL INFORMATION
<S>     <C>                                                               <C>

Item 1. Financial Statements (Unaudited):

          Condensed Consolidated Balance Sheets as of September 30,
            2001 and June 30, 2001........................................   3

          Condensed Consolidated Statements of Operations for the
            Three Months Ended September 30, 2001 and 2000................   4

          Condensed Consolidated Statements of Cash Flows for the Three
            Months Ended September 30, 2001 and 2000......................   5

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

Item 2. Management's Discussion and Analysis of Financial Condition and
          Results of Operations...........................................  13

Item 3. Quantitative and Qualitative Disclosures About Market Risk........  26


                          PART II. OTHER INFORMATION

Item 1. Legal Proceedings.................................................  27

Item 6. Exhibits and Reports on Form 8-K..................................  29

Signatures................................................................  30

</TABLE>


                                      2

<PAGE>

PART I - FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS


<TABLE>
<CAPTION>

                    OAK TECHNOLOGY, INC. AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED BALANCE SHEETS
               (in thousands, except share and per share data)
                                 (Unaudited)

                                                      September 30,   June 30,
                                                          2001          2001
                                                          ----          ----
<S>                                                    <C>           <C>
     ASSETS
Current assets:
  Cash and cash equivalents...........................  $ 27,332      $ 25,141
  Short-term investments..............................    99,587        98,887
  Accounts receivable, net of allowance for doubtful
    accounts of $4,005 and $3,198, respectively.......    16,902        18,347
  Inventories.........................................     4,485         6,626
  Prepaid expenses and other current assets...........     5,969         6,884
                                                        --------      --------
Total current assets..................................   154,275       155,885
Property and equipment, net...........................    17,553        18,448
Intangible assets, net................................    28,813        29,337
Other assets..........................................       799           569
                                                        --------      --------
Total assets..........................................  $201,440      $204,239
                                                        ========      ========

     LIABILITIES AND STOCKHOLDERS' EQUITY


Current liabilities:
  Accounts payable....................................  $  8,924      $  8,161
  Accrued expenses....................................    12,628        13,680
  Deferred revenue....................................     5,240         4,337
                                                        --------      --------
    Total current liabilities.........................    26,792        26,178

Other long-term liabilities...........................       372           318
                                                        --------      --------
Total liabilities.....................................    27,164        26,496
                                                        --------      --------

Commitments and contingencies (Note 5)

Stockholders' equity:
  Preferred stock, $0.001 par value; 2,000,000 shares
    authorized; none issued and outstanding as of
    June 30, 2001 and 2000............................        --            --
  Common stock, $0.001 par value; 130,000,000 shares
    authorized at September 30, 2001 and June 30,
    2001; 59,056,103 shares issued and 54,762,623
    shares outstanding as of September 30, 2001; and
    58,628,451 shares issued and 54,330,971 shares
    outstanding as of June 30, 2001...................        59            59
  Additional paid-in capital..........................   231,333       229,280
  Treasury stock......................................   (23,273)      (23,273)
  Accumulated deficit.................................   (35,710)      (29,461)
  Accumulated other comprehensive income..............     1,867         1,138
                                                        --------      --------
    Total stockholders' equity........................   174,276       177,743
                                                        --------      --------
Total liabilities and stockholders' equity............  $201,440      $204,239
                                                        ========      ========

</TABLE>

See accompanying notes to consolidated financial statements.


                                      3

<PAGE>

<TABLE>
<CAPTION>

                     OAK TECHNOLOGY, INC. AND SUBSIDIARIES
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (in thousands, except per share data)
                                 (Unaudited)


                                                         Three Months Ended
                                                            September 30,
                                                      -------------------------
                                                         2001          2000
                                                         ----          ----
<S>                                                  <C>            <C>
Revenues:
  Product revenues..................................  $  25,567      $  40,184
  Software and other revenues.......................      7,734         10,804
                                                      ---------      ---------
    Total revenues..................................     33,301         50,988

Cost of revenues and operating expenses:
  Cost of product revenues..........................     15,692         22,494
  Cost of software and other revenues...............      1,366          2,531
  Research and development expenses.................     13,105         13,541
  Selling, general, and administrative expenses.....      7,357          9,683
  Amortization of intangibles.......................      3,428          3,679
                                                      ---------      ---------
    Operating loss..................................     (7,647)          (940)

Other non-operating income, net.....................      2,121          2,469
                                                      ---------      ---------

Income (loss) before income taxes...................     (5,526)         1,529
Income tax expense..................................        723            245
                                                      ---------      ---------
Net income (loss)...................................  $  (6,249)     $   1,284
                                                      =========      =========

Net income (loss) per basic share...................  $   (0.11)     $    0.02
                                                      =========      =========
Net income (loss) per diluted share.................  $   (0.11)     $    0.02
                                                      =========      =========

Shares used in computing basic net income (loss)
  per share.........................................     54,540         53,472
                                                      =========      =========
Shares used in computing diluted net income (loss)
  per share.........................................     54,540         63,130
                                                      =========      =========

</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                      4

<PAGE>

<TABLE>
<CAPTION>


                    OAK TECHNOLOGY, INC. AND SUBSIDIARIES
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (in thousands)
                                (Unaudited)

                                                         Three Months Ended
                                                            September 30,
                                                        --------------------
                                                           2001       2000
                                                           ----       ----
<S>                                                    <C>         <C>
Cash flows from operating activities:

  Net income (loss)...................................  $  (6,249)  $  1,284
  Adjustments to reconcile net income (loss) to net
    cash provided by operating activities:
    Depreciation and amortization.....................      5,080      5,531
    Deferred income taxes.............................         (7)        --

Changes in operating assets and liabilities:
  Accounts receivable.................................      1,717     (7,203)
  Inventories.........................................      2,266     (5,143)
  Prepaid expenses, other current assets and
    other assets......................................      1,016      4,922
  Accounts payable and accrued expenses...............       (782)     8,382
  Income taxes payable, deferred revenue and
    other liabilities.................................        933     (1,981)
                                                         --------   --------
      Net cash provided by operating activities.......      3,974      5,792
                                                         --------   --------
Cash flows from investing activities:
  Purchases of short-term investments.................    (10,740)    (8,413)
  Proceeds from matured short-term investments........     10,769      6,509
  Additions to property and equipment, net............       (627)    (2,541)
  Acquisition of Accel, net of cash acquired..........     (3,238)        --
                                                         --------   --------
      Net cash used in investing activities...........     (3,836)    (4,445)
                                                         --------   --------

Cash flows from financing activities:
  Repayment of debt...................................         --         (5)
  Issuance of common stock, net.......................      2,053      5,289
                                                         --------   --------
      Net cash provided by financing activities.......      2,053      5,284
                                                         --------   --------
Net increase in cash and cash equivalents.............      2,191      6,631
Cash and cash equivalents, beginning of period........     25,141     19,100
                                                         --------   --------
Cash and cash equivalents, end of period..............   $ 27,332   $ 25,731
                                                         ========   ========

Supplemental information:

Cash paid during the period:
  Interest............................................   $     --   $     10
                                                         ========   ========
  Income taxes........................................   $  2,045   $    268
                                                         ========   ========

</TABLE>

See accompanying notes to consolidated financial statements.


                                      5

<PAGE>


                     OAK TECHNOLOGY, INC. AND SUBSIDIARIES
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)


1. Basis of Preparation
   --------------------

     The accompanying unaudited condensed consolidated financial statements of
Oak Technology, Inc. and subsidiaries ("Oak" or the "Company") have been
prepared in conformity with accounting principles generally accepted in the
United States of America.  However, certain information or footnote disclosures
normally included in financial statements prepared in accordance with
accounting principles generally accepted in the United States of America have
been condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission (the "Commission").  In the opinion of
management, the condensed consolidated financial statements reflect all
adjustments considered necessary for a fair presentation of the consolidated
financial position, operating results and cash flows for the periods presented.
The results of operations for the interim periods presented are not necessarily
indicative of the results that may be expected for the full fiscal year or in
any future period.  This quarterly report on Form 10-Q should be read in
conjunction with the audited consolidated financial statements and notes
thereto for the year ended June 30, 2001, included in the Oak Technology, Inc.
2001 Annual Report on Form 10-K filed with the Commission.


   Reclassifications
   -----------------

     Certain prior period amounts have been reclassified to conform to the
current period presentation.


   Derivative Instruments and Hedging Activities
   ---------------------------------------------

     The Company periodically enters into economic hedges by purchasing foreign
exchange contracts as a hedge against foreign currency denominated accounts
receivables or fixed sales commitments.  The Company does not enter into
foreign exchange contracts for speculative or trading purposes.  As of
September 30, 2001, the Company had short-term foreign currency exchange
contracts with face values of approximately $1.5 million to purchase U.S.
Dollars with Japanese Yen for accounts receivables denominated in Japanese Yen
and fixed purchase commitments.  The impact of recording the fair values of the
forward contracts and unrealized gains or losses in the accounts receivable was
not material for the periods presented.


   Recently Issued Accounting Standards
   ------------------------------------

     In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations," that requires business combinations initiated after June 30,
2001, to be accounted for using the purchase method of accounting and broadens
the criteria for recording intangible assets separate from goodwill.  The
adoption of SFAS No. 141 will not change the method of accounting used in
previous business combinations accounted for under the pooling-of-interest
method.  The Company believes that the adoption of this statement will not have
a significant impact on its financial position, results of operations or cash
flows.

     In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets," that requires the use of a non-amortization approach to account for
purchased goodwill and certain intangible assets.  Under a non-amortization
approach, goodwill and certain intangible assets will not be amortized into
results of operations, but instead would be reviewed for impairment and written
down and charged to results of operations only in the periods in which the
recorded value of goodwill and certain intangible assets exceed their fair
values.  As of September 30, 2001, the Company had intangible assets with net
carrying values of approximately $28.8 million and a resulting amortization
expense of approximately $3.4 million for the quarter ended September 30, 2001
which is attributable to business combinations initiated prior to the adoption
of SFAS No. 141.  This Statement is effective for fiscal years beginning after
December 15, 2001. Oak will adopt SFAS No. 142 effective July 1, 2002.  The
Company believes that the adoption of this statement will not have a
significant impact on its financial position, results of operations or cash
flows.

                                      6

<PAGE>

                     OAK TECHNOLOGY, INC. AND SUBSIDIARIES
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                 (Unaudited)


     In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," that develops one accounting
model for long-lived assets that are to be disposed of by sale and expands the
scope of discontinued operations.  This Statement is effective for fiscal years
beginning after December 15, 2001.  Oak will adopt SFAS No. 144 effective July
1, 2002 and believes that the adoption of this statement will not have a
significant impact on its financial position, results of operations or cash
flows.


2. Inventories
   -----------

     Inventories are stated at the lower of cost (first in, first out) or
market and consisted of the following (in thousands):

<TABLE>
<CAPTION>
                                                 September 30,     June 30,
                                                     2001            2001
                                                     ----            ----
<S>                                               <C>             <C>
     Purchased parts and work in process.......    $ 2,886         $ 3,724
     Finished goods............................      1,599           2,902
                                                   -------         -------
                                                   $ 4,485         $ 6,626
                                                   =======         =======

</TABLE>


3. Net Income (Loss) Per Share
   ---------------------------

     Basic and diluted net income (loss) per share have been computed using the
weighted average number of shares of common stock and dilutive common
equivalent shares from stock options and warrants outstanding during the period
in accordance with Statement of Financial Accounting Standards (SFAS) No. 128,
"Earnings per Share."  The following table provides a reconciliation of the
components of the basic and diluted income (loss) per share computations:

<TABLE>
<CAPTION>

                                                          Three Months Ended
                                                             September 30,
                                                        -----------------------
                                                            2001       2000
                                                            ----       ----
     <S>                                                <C>           <C>
     Net income (loss) from continuing operations:       $ (6,249)     $  1,284
                                                         ========      ========

     Basic common shares                                   54,540        53,472
     Effect of dilutive securities:
       Common stock options                                    --         9,658
                                                         --------      --------
     Dilutive weighted average shares                      54,540        63,130
                                                         ========      ========

     Net income (loss) per share from continuing
       operations:
       Basic                                             $  (0.11)     $   0.02
                                                         ========      ========
       Diluted                                           $  (0.11)     $   0.02
                                                         ========      ========

</TABLE>

     For the three month period ended September 30, 2001, there were
approximately 3,072,000 weighted average options outstanding which were
excluded from the calculation of diluted weighted average shares outstanding as
inclusion of these options would have had an anti-dilutive effect.  For the
three month period ended September 30, 2000, there were no antidilutive common
shares excluded from the calculation.


                                       7


<PAGE>

                     OAK TECHNOLOGY, INC. AND SUBSIDIARIES
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                 (Unaudited)

4. Acquisitions
   ------------

     On July 5, 2001, the Company acquired privately held Accel Technology,
K.K. ("Accel") a Company based in Osaka, Japan which develops the mechanical
construction and design of computers and relevant equipment, such as CD-R/RW
drives and DVD players.  This acquisition allows Oak to move more quickly into
the consumer space by providing turnkey platforms to consumer electronics
customers to minimize their development efforts.  The Company paid
approximately $3.2 million in cash for all the outstanding common shares and
stock options of Accel.  The transaction has been accounted for under SFAS No.
141, "Business Combinations," using the purchase method of accounting.  The
results of operations of Accel have been included in the results of Oak's
consolidated financial statements from July 12, 2001.  The historical
operations of Accel are not material to the financial position or results of
operations of the Company; therefore, no pro forma information is presented.
The acquisition resulted in goodwill of approximately $2.9 million, which will
not be amortized in accordance with the provisions of SFAS 141.


5. Contingencies
   -------------

     The Company and various of its current and former officers and directors
are parties to a consolidated class action lawsuit filed on behalf of all
persons who purchased or acquired the Company's common stock (excluding the
defendants and parties related to them) for the period July 27, 1995 through
May 22, 1996.  This state court proceeding, designated IN RE OAK TECHNOLOGY
SECURITIES LITIGATION, Master File No. CV758510 was filed in Santa Clara County
Superior Court in Santa Clara, California.  The lawsuit originally named as
defendants several of the Company's venture capital fund investors, two of its
investment bankers and two securities analysts.  The plaintiffs alleged
violations of California securities laws and statutory deceit provisions as
well as breaches of fiduciary duty and abuse of control.  The plaintiffs sought
unspecified monetary damages.  After several rounds of demurrers, the court
dismissed all claims except the California Corporations Code Sections
25400/25500 cause of action against the Company, four officers and the
Company's investment bankers and securities analysts.

     On July 16, 1998, the court provisionally certified a national class of
all persons who purchased the Company's stock during the class period.  The
class was provisionally certified with the order held in abeyance pending
resolution of the question of whether a nationwide class may bring a California
Corporations Code Sections 25400/25500 claim.  This issue was resolved in favor
of allowing such nationwide class actions by the California Supreme Court, Case
No. 5058723, on January 4, 1999, in the DIAMOND MULTIMEDIA SECURITIES
LITIGATION appeal by the California Supreme Court.  On August 5, 2000 the court
granted Company's motion for summary judgment and entered judgment in favor of
the Company.  The plaintiffs have appealed the court's decision which in
currently under review by the Sixth District Court of Appeal.  Based on its
current information, the Company believes this suit to be without merit and
will continue to defend its position vigorously.  Although it is possible the
court's ruling may be overturned on appeal and the Company may incur a loss
upon an adverse conclusion of these claims, an estimate of any such loss cannot
be made.

     Additionally, various of the Company's current and former officers and
Directors are defendants in three consolidated derivative actions pending in
Santa Clara County Superior Court in Santa Clara, California, entitled IN RE
OAK TECHNOLOGY DERIVATIVE ACTION, Master File No. CV758510.  This lawsuit,
which asserts a claim for breach of fiduciary duty and a claim under California
securities law based upon the officers' and Directors' trading in securities of
the Company, has been stayed pending resolution of the above described class
actions.  The plaintiffs are seeking monetary damages, equitable relief and an
accounting for the defendants' sales of shares of the Company's common stock.
Based on its current information, the Company believes the suits to be without
merit and will defend its position vigorously.  Although it is reasonably
possible the Company may incur a loss upon conclusion of these claims, an
estimate of any such loss cannot be made.

     If any of the above pending actions are decided adversely to the Company,
it would likely have a material adverse affect on the Company's financial
condition, cash flows and results of operations.

                                      8

<PAGE>


                     OAK TECHNOLOGY, INC. AND SUBSIDIARIES
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                 (Unaudited)

     On July 21, 1997, the Company filed a complaint with the ITC based on the
Company's belief that certain Asian companies were violating U.S. trade laws by
the unlicensed importing or selling of certain CD-ROM controllers that
infringed one or more of the Company's United States patents.  The complaint
sought a ban on the importation into the United States of the named
respondent's infringing CD-ROM controllers or products containing such
infringing CD-ROM controllers.

     The Company's complaint identified as proposed respondents: United
Microelectronics Corporation (UMC); Lite-On Group; Lite-On Technology Corp.;
Behavior Tech Computer Corp. and Behavior Tech Computer (USA) Corp.  Prior to
the ITC's institution of the formal investigation proceeding, the Company and
UMC entered into a settlement agreement, effective July 31, 1997, pursuant to
which UMC agreed to cease and desist the manufacture and/or importation into
the United States of its specified CD-ROM controllers, except under certain
limited conditions which expired on January 31, 1998.  The settlement agreement
additionally provided for the withdrawal of the Company's ITC complaint against
UMC and the above named Lite-On and Behavior Tech companies.

     On October 27, 1997, the Company filed a complaint in the United States
District Court, Northern District of California against UMC for breach of
contract, breach of the covenant of good faith and fair dealing and fraud based
on UMC's breach of the settlement agreement arising out of the ITC action.  On
December 24, 1997, UMC answered the Company's complaint and counterclaimed by
asserting causes of action for recission, restitution, fraudulent concealment,
mistake, lack of mutuality, interference and declaratory judgment of non-
infringement, invalidity and unenforceability of the Oak patent that was the
subject of the original ITC action filed against UMC. In a related action to
the lawsuit that was commenced by the Company against UMC, on December 19,
1997, MediaTek, a UMC affiliated, Taiwanese entity, filed a complaint in the
United States District Court, Northern District of California, against the
Company for declaratory judgment of non-infringement, invalidity and
unenforceability of the Oak patent that was the subject of the original ITC
action against UMC, and intentional interference with prospective economic
advantage.   The Company filed its answer on January 8, 1998, denying all the
allegations.  The Company believes UMC's counterclaims and Mediatek's claims
to be without merit.  On June 11, 1998, the cases were consolidated for all
purposes  and stayed under 28 U.S.C. Section 1659, based on the judge's
conclusion that the civil action involves the same issues before the
International Trade Commission, initiated by Oak as a result of the alleged
breach of the settlement agreement.  The stay was lifted due to the final
resolution of the ITC investigation and the decision of the Federal Circuit
Court of Appeals on May 2, 2001 affirming the ITC's determination.  (Described
below.)

     On May 10, 1999, the ITC issued an Initial Determination terminating the
investigation as to UMC, finding that UMC's activities were licensed.  On May
17, 1999, the Company filed a petition for review of the Initial Determination.
On September 27, 1999, the ITC  affirmed that there were no unfair trade
practices committed by MediaTek under Section 337 of the Tariff Act, that there
was no infringement of the Company's U.S. Patent No. 5,581,715,  and  held
that the Company's US Patent No. 5,581,715 was valid and enforceable.  On
February 24, 2000, the Company appealed the Commission's ruling that no unfair
trade practices were committed by MediaTek under Section 337 of the Tariff Act
to the Federal Circuit Court of Appeals.  On May 2, 2001 the Federal Circuit
Court of Appeals affirmed the Commission's determination that there was no
infringement of the Company's U.S. Patent No. 5,581, 715. The Federal Circuit
Court of Appeals did not review the Commision's determination that the
Company's U.S. Patent No. 5,581,715 was valid and enforceable.

     As a result of the decision rendered by the Federal Circuit Court of
Appeals the stay was lifted on the consolidated action pending in the United
States District Court, Northern District of California, and the parties are
proceeding with the litigation.

     If any of the above pending actions with respect to UMC and MediaTek are
decided adversely to the Company, it would likely have a material adverse
affect on the Company's financial condition, cash flows and results of
operations.

     On January 4, 2001 Samsung Electronics, a customer of the Company's
Imaging Group, received a notification from Pitney Bowes alleging that the
resolution enhancement technology Samsung acquired from


                                      9

<PAGE>


                     OAK TECHNOLOGY, INC. AND SUBSIDIARIES
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                 (Unaudited)

Xerographic Laser Images Corporation, Inc. ("XLI") in 1996 infringes Pitney
Bowes U.S. Patent No. 4,386,272 ("272 patent").  XLI is a subsidiary of the
Company as a result of an acquisition in the first quarter of Fiscal 1999.  The
terms of the agreement for the licensing of the iRET technology to Samsung
require the Company, as successor in interest to XLI's assets and liabilities,
to defend and indemnify Samsung from claims alleging the iRET technology
supplied to Samsung infringes the intellectual property rights of a third
party.  On June 18, 2001 Pitney Bowes filed a complaint in the District Court
of Connecticut, naming Samsung and others, for infringement of the '272 patent.
On June 28, 2001 Samsung formally requested the Company to defend Samsung.
XLI's  customers, Sharp Corporation and Minolta-QMS, Inc., are also subject to
Pitney Bowes allegation of infringement of the '272 patent, and have formally
requested the Company to defend and indemnify them pursuant to the terms of
their agreements.

     If the above pending action, with respect to the Company's indemnification
obligation in such action, is decided adversely, it would likely have a
material adverse affect on the Company's financial condition, cash flows and
results of operations.


6. Segment Information
   -------------------

     SFAS No. 131 establishes standards for the reporting by public business
enterprises of information about operating segments, products and services,
geographic areas, and major customers. The method for determining what
information to report is based on the way that management organizes the
operating segments within the Company for making operational decisions and
assessments of financial performance. The Company's chief operating decision-
maker is considered to be the Chief Executive Officer ("CEO").

     For fiscal year 2001 and 2002, the Company has two reportable segments
which offer different product lines to each of its target markets: Optical
Storage Group and Imaging Group.  The Company evaluates operating segment
performance based on net revenues and direct operating expenses of the segment.
The accounting policies of the operating segments are the same as those
described in the summary of accounting policies.  No segments have been
aggregated.  The Company does not allocate assets to its individual operating
segments.

     Information about reported segment income or loss is as follows for the
three months ended September 30, 2001 and 2000 (in thousands):

<TABLE>
<CAPTION>

                                                          Three Months Ended
                                                             September 30,
                                                        -----------------------
                                                           2001        2000
                                                           ----        ----
    <S>                                                 <C>          <C>
     Net Revenues:
       Optical Storage                                   $ 21,079     $ 33,813
       Imaging                                             12,222       17,175
                                                         --------     --------
                                                         $ 33,301     $ 50,988
                                                         ========     ========

     Cost of Goods Sold and Direct Operating Expenses:
       Optical Storage                                   $ 22,154     $ 27,550
       Imaging                                              7,654       11,891
                                                         --------     --------
                                                         $ 29,808     $ 39,441
                                                         ========     ========

     Contribution Margin:
       Optical Storage                                   $ (1,075)    $  6,263
       Imaging                                              4,568        5,284
                                                         --------     --------
                                                         $  3,493     $ 11,547
                                                         ========     ========

</TABLE>

                                      10

<PAGE>


                     OAK TECHNOLOGY, INC. AND SUBSIDIARIES
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                 (Unaudited)


     A reconciliation of the totals reported for the operating segments to the
applicable line items in the condensed consolidated financial statements for
the three months ended September 30, 2001 and 2000, is as follows (in
thousands):

<TABLE>
<CAPTION>

                                                          Three Months Ended
                                                             September 30,
                                                        -----------------------
                                                           2001        2000
                                                           ----        ----
    <S>                                                 <C>          <C>
     Contribution margin from operating segments         $ 3,493      $11,547
                                                         =======      =======
       Indirect operating expenses                         6,060        6,956
       Depreciation expense                                1,652        1,852
       Amortization of intangibles                         3,428        3,679
                                                         -------      -------
     Total operating loss                                 (7,647)        (940)
       Non-operating income, net                           2,121        2,469
                                                         -------      -------
     Income (loss) before income taxes                   $(5,526)     $ 1,529
                                                         =======      =======

</TABLE>

     Indirect operating expenses include all costs and expenses not
specifically charged to the operating segments in the financial information
reviewed by the Company's chief operating decision-maker.  These include
various overhead and indirect sales expenses as well as corporate marketing and
general and administrative expenses.

     The Company maintains significant operations in the United States, United
Kingdom, Taiwan and Japan.  Activities in the United States consist of
corporate administration, product development, logistics and worldwide sales
management.  Foreign operations consist of regional sales and limited board-
level manufacturing and engineering support services.

     The distribution of net revenues for the three months ended September 30,
2001 and 2000 are as follows (in thousands):

<TABLE>
<CAPTION>

                                                          Three Months Ended
                                                             September 30,
                                                        -----------------------
                                                           2001        2000
                                                           ----        ----
     <S>                                                <C>          <C>
      Revenue from unaffiliated customers
        originating from:
        North America                                    $  5,965     $  7,926
        Japan                                              13,697       18,429
        Korea                                               7,899       22,627
        Taiwan                                              3,297          766
        Other Asia                                          1,850          547
        Europe                                                593          693
                                                         --------     --------
                                                         $ 33,301     $ 50,988
                                                         ========     ========

</TABLE>


     For the three months ended September 30, 2001, one customer accounted for
22% of total revenues.  For the same period of the prior fiscal year, two
customers accounted for 36% and 10% of total revenues, respectively.

     As of September 30, 2001, two customers accounted for 23% and 20% of total
net accounts receivable, respectively, and as of June 30, 2001, four customers
accounted for 21%, 19%, 15% and 10% of total net accounts receivable,
respectively.


                                      11

<PAGE>

                     OAK TECHNOLOGY, INC. AND SUBSIDIARIES
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                 (Unaudited)


7. Comprehensive Loss
   ------------------

     The following table presents the calculation of comprehensive loss as
required by SFAS 130.  The components of comprehensive loss, net of tax, are as
follows (in thousands):


<TABLE>
<CAPTION>

                                                          Three Months Ended
                                                             September 30,
                                                        -----------------------
                                                           2001        2000
                                                           ----        ----
     <S>                                                <C>          <C>
      Net income (loss)                                  $ (6,249)    $  1,284
        Other comprehensive income (loss):
          Change in unrealized gain (loss) on
            investments, net                                  729       (1,605)
                                                         --------     --------
      Total comprehensive loss                           $ (5,520)    $   (321)
                                                         ========     ========

</TABLE>


8. Income Taxes
   ------------

     For the three months ended September 30, 2001, the Company recorded tax
expense based on actual taxes incurred.  For the three months ended September
30, 2000, the Company recorded tax expense based on projected fiscal year 2001
operating results.


                                      12

<PAGE>


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

Except for the historical information contained herein, the matters discussed
in this Report on Form 10-K may be considered "forward-looking" statements
within the meaning of Section 27a of the Securities Act of 1933, as amended,
and Section 21e of the Securities Act of 1934, as amended.  Such statements
include declarations regarding the intent, belief or current expectations of
Oak and its management.  Such forward-looking statements are not guarantees of
future performance and involve a number of risks and uncertainties.  Actual
results could differ materially from those indicated by such forward-looking
statements.  Oak undertakes no obligation to publicly release the results of
any revision to these forward-looking statements which may be made to reflect
events or circumstances after the dates hereof or to reflect the occurrence of
unanticipated events.  Among the important factors that could cause actual
results to differ materially from those indicated by such forward-looking
statements are: (i) that the information is of a preliminary nature and may be
subject to further adjustment, (ii) variability in Oak's quarterly operating
results, (iii) general conditions in the semiconductor industry and overall
economic market, (iv) risks related to pending legal proceedings, (v)
development by competitors of new or superior products or the entry of new
competitors into Oak's markets, (vi) Oak's ability to diversify its product and
market base by developing and introducing new products within designated market
windows at competitive price and performance levels, (vii) willingness of
prospective customers to design Oak's products into their products, (viii)
availability of adequate foundry capacity and access to process technologies,
(ix) Oak's ability to protect its proprietary information and obtain adequate
access to third party technology on acceptable terms, (x) risks related to use
of independent manufacturers and third party assembly and test vendors, (xi)
dependence on key personnel, (xii) reliance on a limited number of large
customers, (xiii) dependence on sales of CD-RW and Combo controller products
and the PC market, (xiv) risks related to international business operations,
(xv)  Oak's ability to maintain adequate price levels and margins with respect
to its products, (xvi) risks related to acquisitions, (xvii) the ability to
attract and retain qualified management and technical personnel and (xviii)
other risks identified from time to time in Oak's reports and registration
statements filed with the Securities and Exchange Commission.


General
-------

     Oak designs, develops and markets high performance embedded software and
integrated semiconductor solutions to original equipment manufacturers
worldwide that serve the optical storage and digital imaging markets.  Our
products consist primarily of embedded software, integrated circuits and
supporting software and firmware to provide a complete solution for customers,
thereby enabling them to deliver cost effective, powerful systems to end users
for home and business use.  Our mission is to be a leading solutions provider
for the storage and distribution of digital content.

     In fiscal 2000, Oak restructured its operations along its two re-organized
market-focused groups: the Optical Storage Group and the Imaging Group.  The
Imaging Group is comprised of the combination of Oak's Xionics subsidiary and
Pixel Magic subsidiary, serving the digital imaging equipment market.

     For the results of operations for the three months ended September 30,
2001 and 2000, the Company reported a net loss of $6.2 million and net income
of $1.3 million, respectively.  The decrease in net income in the first quarter
of fiscal 2002 compared to the first quarter of fiscal 2001 is a result of
decreased revenues caused by the recent slowdown in the PC industry as well as
a decrease in overall global economic conditions.  Oak continues to develop its
next generation CD-RW product with six of the top seven CD-RW manufacturers.
However, the Company cannot predict the future level of customer acceptance of
the product and the product's impact on operating results.

     Oak's quarterly and annual operating results have been, and will continue
to be, affected by a wide variety of factors that could have a material adverse
effect on revenues and profitability during any particular period, including
competitive pressures on selling prices, availability and cost of foundry
capacity and raw materials, fluctuations in yield, loss of any strategic
relationships, its ability to introduce new products in accordance with OEM
design requirements and design cycles, rate of adoption of new technology, rate
of growth of the CD-RW market, changes


                                      13

<PAGE>


in product mix or distribution channels, demand for semiconductors and end-user
products incorporating semiconductors, technological difficulties and resource
constraints encountered in developing and/or using new products, new product
introductions by its competitors, and market acceptance of product sold by both
Oak and its customers.

     In addition, our operating results are subject to fluctuations in the
markets for our customers' products, particularly the consumer electronics and
personal computer markets, which have been severely impacted by the current
slow down in the semiconductor industry and the overall weak macro-economic
environment.  Oak has devoted a substantial portion of its research and
development efforts in recent quarters to developing chips used in DVD systems,
CD-RW drives and inkjet multi-function peripherals.  Our DVD, CD-RW, and
digital imaging products are subject to the new product risks described in the
preceding paragraph, including in particular our ability to timely introduce
these products and the market's acceptance of them, which could have a
materially adverse effect on our operating results.


Results of Operations
---------------------

     Net Revenues.  Net revenues decreased 35% to $33.3 million for the three
     ------------
months ended September 30, 2001 from $51.0 million in the comparable period of
fiscal 2000.  The year over year decrease in revenues is a result of the global
economic slowdown compared to the same period of the prior fiscal year.

      Net revenues in the Optical Storage business segment were $21.1 million
for the quarter ended September 30, 2001, representing a 38% decrease from the
segment's net revenues of  $33.8 million reported in the same period of fiscal
2000.  Although the Company continued shipping the 8X (9790) and 16X (9795)
products in volume, the market was impacted by the overall economic slowdown
experienced in the personal computer industry.

     Net revenues for the Imaging business segment were $12.2 million for the
three months ended September 30, 2001, representing a 29% decrease from the
$17.2 million reported in the same quarter of fiscal 2000.  The decrease is
primarily the result of a change in business model with regard to imaging
software and, to a lesser extent, a decline in revenues of imaging hardware
products due to a recent slowdown in the industry and in the economy in
general.  Over the past year, the Company has been shifting its business model
to share more completely in profit opportunities with our customers.  In the
past, the Company had licensed its technology to some customers and had
received a fixed fee from them over the life of the contract, at the end of
which the customer would have had a paid up license to the technology.  The
Company's recent practice has been to negotiate a royalty arrangement instead
of a license fee, which allows Oak to have a participation in its customers'
success and which Oak believes offers better upside potential.  The Company
expects to continue to see a period of transition over the next few quarters as
fixed contract license fees decline and royalty revenue begins to ramp as its
customers are deploying the software into their product lines.

     Gross Margin.  Cost of revenues includes the cost of wafer fabrication,
     ------------
assembly, and testing performed by third-party vendors and direct and indirect
costs associated with the procurement, scheduling and quality assurance
functions performed by the Company.  The Company's total gross margin decreased
to 49% for the three month period ended September 30, 2001, as compared to 51%
during the comparable period in the prior year.

     Gross margin for the Optical Storage business segment was 34% for the
first quarter of fiscal 2002 compared to 41% for the comparable quarter of the
prior year.  The decrease in the gross margin for the Optical Storage business
segment for the three months ended September 30, 2001 compared to the same
period in the prior fiscal year is due to a number of factors. The economic
environment for consumers and the market environment for PC related products
was much more favorable in the first quarter of fiscal 2001 than in the first
quarter of fiscal 2002.  The market for CD-RW drives in the first quarter of
fiscal 2001 was also growing rapidly as the result of what was then a new
phenomenon of downloading music from the internet. In the first quarter of
fiscal 2002, the economic environment for consumers and PC's has been bordering
on recession and, while some segments of the PC environment are growing, the
largest part of the CD-RW volume business lies with PC manufacturers who have
been in a price war for several months.  In that vain, the PC-OEM's have been
more focused on staying with older


                                      14


technologies and getting lower prices.  As a result, the now older products
used in 8X and 12X drives  have experienced declining ASP's.  This has been
offset to some degree by an increase in dollar content per controller shipped
due to a higher mix of combo and chip set products shipping which includes the
companion Analog Front End (9073).  In addition, in the first quarter of fiscal
2002, the Company experienced  a temporary yield issue on a new product being
introduced that caused gross margins to decline by approximately $600,000.
Absent this change, which has now been resolved, the gross margins in the first
quarter of fiscal 2002 would have been 36%.

     Gross margin for the Imaging business segment was 75% for the first
quarter of fiscal year 2002, representing a slight increase from the 71%
reported in the same quarter of fiscal 2001.  This is due to a relatively
higher mix of imaging software products as opposed to hardware products.

     The Company's overall gross margin is subject to change due to various
factors, including, among others, competitive product pricing, yields, product
mix, wafer, assembly and test costs.  The Company expects that average selling
prices for its existing products will continue to decline over time and that
the average selling prices for each new product will decline significantly over
the life of the product.  Given the extremely competitive nature of the optical
storage and consumer market, the Company believes that gross margins for new
products in its optical storage market and consumer market will be lower than
historical levels and, as a result, gross margins in general will decline in
the future.

     Research and Development Expenses.  Research and development costs are
     ---------------------------------
expensed as incurred.  Research and development expenses of $13.1 million for
the quarter ended September 30, 2001 remained fairly consistent decreasing $0.4
million, or 3%, from the $13.5 million recorded in the comparable period of the
previous fiscal year.  Research and development expenses were up sequentially
from the fourth quarter of fiscal 2001 due to the initial licensing of ARM and
the acquisition of Accel.  Research and development expenses increased as a
percentage of net revenues for the current fiscal period over the comparable
period in the prior year due primarily to the decrease in the Company's net
revenues in the current period compared to the comparable period of fiscal
2001.  The Company will continue to invest substantial resources in research
and development of new products in the Company's target markets: optical
storage and digital imaging.

     Selling, General and Administrative Expenses.  Selling, general and
     ---------------------------------------------
administrative (SG&A) expenses decreased by 24% to $7.4 million for the three
months ended September 30, 2001 from $9.7 million in the comparable period of
the prior year.  The decrease is a result of lower sales expenses as a result
of lower revenues in the first quarter of fiscal 2002 compared to the same
period of 2001.  SG&A expenses increased as a percentage of net revenues for
the current fiscal period over the comparable period in the prior year due
primarily to a decrease in the Company's net revenues in the current year.

     Amortization of Intangibles.  Amortization of intangible assets was $3.4
     ----------------------------
million for the three months ended September 30, 2001, a decrease of $0.3
million or 7% from the $3.7 million recorded in the same period of the prior
fiscal year.  The slight decrease for the quarter ended September 30, 2001
compared to the same period in the prior year is a result of the completion of
amortization of certain intangible assets as they became fully amortized.

     Other Non-operating Income.  During the first quarter of fiscal 2002,
     ---------------------------
other non-operating income decreased to $2.1 million from $2.5 million recorded
during the same quarter of fiscal 2001.  The amount was higher in the prior
year primarily due to interest received in conjunction with an income tax
refund.  This was offset partially by an increase in foreign currency
translation gains recognized during the first quarter of fiscal 2002 compared
to the same period of the prior year.

     Income Taxes.  For the first quarter of fiscal 2002, tax expense was
     -------------
recorded based on actual taxes incurred.  Management does not yet believe it is
more likely than not that sufficient future taxable income will be generated to
realize all of the Company's deferred tax assets.  Accordingly, a full
valuation allowance exists against all net deferred tax assets for fiscal 2001
and the first quarter of fiscal 2002.


                                      15

<PAGE>


Liquidity and Capital Resources

     Since its inception, Oak has financed its cash requirements from cash
generated from operations, the sale of equity securities, bank lines of credit
and long-term and short-term debt.  Oak's principal sources of liquidity as of
September 30, 2001 consisted of approximately $126.9 million in cash, cash
equivalents and short-term investments.  Oak also has approximately $7.8
million in lines of letters of credit with Taiwanese financial institutions,
all of which were available at September 30, 2001.

     Oak's working capital decreased by $2.2 million to $127.5 million as of
September 30, 2001 from $129.7 million as of June 30, 2001. The decrease was
primarily attributable to a decrease in inventory of approximately $2.1
million.  Oak's short-term investments were principally invested in investment
grade, interest-bearing securities.

     Oak's cash provided by operating activities decreased to $4.0 million for
the quarter ended September 30, 2001 compared to $5.8 million for the same
period of fiscal 2001.  Cash provided by operating activities for the first
quarter of fiscal 2002 was primarily a result of net changes in operating
assets and liabilities which includes decreases in inventories, prepaid
expenses, other current assets and other assets totaling $3.3 million as well
as a decrease in accounts receivable of $1.7.  This was offset by a loss of
$6.3 million less the add back of depreciation and amortization of $5.0 million
recorded during the period.

     Oak's investing activities during the quarter ended September 30, 2001
used cash of $3.8 million compared to $4.4 million during the same period of
the prior year.  Cash used in investing activities during the current period
resulted primarily from the purchase of Accel, net of cash acquired, of $3.2
million and the purchases of property and equipment of $0.6 million.

     Oak's financing activities during the quarter ended September 30, 2001
provided cash of $2.1 million compared to $5.3 million during the same period
of the prior year.  The cash provided by financing activities during the
quarter ended September 30, 2001 was a result of issuances of common stock
through the exercise of employee stock options and the employee stock purchase
plan.

     We believe that our existing cash, cash equivalents, short-term
investments and credit facilities will be sufficient to provide adequate
working capital and to fund operations over the next twelve months.  If,
however, during the next twelve to eighteen month period we fail to increase
our revenue or are unable to reduce our expenses below our revenues, then we
may be in a position where we will need to seek additional financing.  However,
there can be no assurance that we will not be required to seek other financing
sooner or that such financing, if required, will be available on terms
satisfactory to us.  We may also utilize cash to acquire or invest in
complementary businesses or products or to obtain the right to use
complementary technologies.  From time to time, in the ordinary course of
business, we evaluate potential acquisitions of such businesses, products or
technologies.  However, Oak has no present understandings, commitments or
agreements with respect to any material acquisition of other businesses,
products or technologies, other than those disclosed above or elsewhere in the
Annual Report on Form 10-K for the fiscal year ended June 30, 2001 filed with
the Securities and Exchange Commission.


Outlook
-------

The statements contained in this outlook section and within certain sections of
management's discussion and analysis are forward-looking based on current
expectations and management's estimates.  Actual results may differ materially
from those set forth in these forward-looking statements.  In addition to the
risk factors discussed in the "Factors That May Affect Future Results" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" of the Company's 2001 Annual Report on Form 10-K for the fiscal
year ended June 30, 2001 filed with the Securities and Exchange Commission, the
following factors may also affect the Company's operating results for fiscal
2002:


                                      16

<PAGE>

o  In spite of a continued weak economic environment, the Company expects to
   achieve seasonal growth in the December quarter and anticipates revenues for
   the quarter will increase by approximately 5-10 percent compared with the
   first fiscal quarter of 2002, reported today.

o  Gross margin is expected to improve modestly for the December quarter.

o  For the December quarter, the Company expects to report a sequential
   improvement in the pro forma bottom line.

o  Given the current uncertainties in the industry, the Company will refrain
   from commenting on quarterly expectations beyond the current quarter;
   however, the Company expects to post year over year revenue growth and be
   profitable on a pro forma basis for the second half of fiscal 2002.

     The Company's procedure for publishing and updating this outlook is as
follows. Following the publication of the outlook in its quarterly earnings
release and this Quarterly Report on Form 10-Q, Oak will continue its current
practice of having corporate representatives meet during the quarter with
investors, the media, investment analysts and others to discuss the published
outlook and publicly disclosed material related to the outlook. This outlook
will not be updated during the quarter unless Oak Technology publishes a notice
stating otherwise.


Factors That May Affect Future Results
--------------------------------------

     You should read the following factors in conjunction with the factors
discussed elsewhere in this and our other filings with the SEC and in materials
incorporated by reference in these filings.  The following is intended to
highlight certain factors that may affect the financial condition and results
of operations of Oak and are not meant to be an exhaustive discussion of risks
that apply to companies with broad international operations, such as Oak.  Like
other businesses, Oak is susceptible to macroeconomic downturns in the United
States or abroad that may affect the general economic climate and performance
of Oak or its customers.

     Oak Has Experienced and Expects to Continue to Experience Significant
     ---------------------------------------------------------------------
Period-To-Period Fluctuations in Its Revenues and Operating Results, Which May
------------------------------------------------------------------------------
Result In Volatility In The Price Of Its Stock.  Oak's quarterly revenues and
-----------------------------------------------
operating results have varied significantly in the past and are likely to vary
substantially from quarter to quarter in the future.  Accordingly, you should
not rely on period-to-period comparisons as an indication of future
performance.  In addition, these variations may cause our stock price to
fluctuate.  If quarterly results fail to meet public expectations, the price of
our stock may decline.

     Oak's revenues and operating results are affected by a wide variety of
factors, including factors that generally affect everyone in its industry and
factors that are more specific to its business and product lines.  The
principal risk we face in our business is our dependence on the optical storage
market.  Other factors specific to our business and product lines include the
following:

    o  Our ability to diversify our product offerings and the markets for our
       products;

    o  Fluctuations in manufacturing costs;

    o  The loss or gain of important customers;

    o  The timing of significant orders and order cancellations or re-
       scheduling;

    o  Pricing policy changes by Oak and its competitors and suppliers;

    o  The potential for significant inventory exposure;

    o  The timing of the development and introduction of new products or
       enhanced versions of existing products;

    o  Market acceptance of new products;


                                      17

<PAGE>

    o  Increased competition in product lines, and competitive pricing
       pressure;

    o  Failure to anticipate changing customer product requirements;

    o  The competitiveness of our customers;

    o  Cyclical semiconductor industry conditions; and

    o  The inability to obtain foundry capacity.

     The above factors have affected our business in the past and may affect us
in the future.  In addition, our quarterly operating results could be
materially adversely affected by legal expenses incurred in connection with, or
any judgment or settlement in, our current or future legal proceedings.  See
"Oak is a Defendant in Several Lawsuits."

     We operate in the highly cyclical semiconductor industry, which is subject
     --------------------------------------------------------------------------
to significant downturns.  We have diversified our business so that our product
-------------------------
offerings include not only integrated circuits, but also embedded software and
platform solutions.  However, a significant portion of our revenue will
continue to come from our semiconductor product offerings.  The semiconductor
industry historically has been characterized by rapid technological change and
product obsolescence, cyclical market patterns and seasonal customer demand,
significant price erosion, periods of over-capacity and under-capacity, periods
of production shortages, variations in manufacturing costs, including raw
materials, and yields, and significant expenditures for capital equipment and
product development.

     The industry has experienced significant economic downturns at various
times.  These downturns often occur in connection with, or in anticipation of,
maturing product cycles (of both the semiconductor companies and their
customers) and declines in general economic conditions, such as those
experienced in the second half of fiscal 2001 and continue to this day.
Downturns in the semiconductor industry have been characterized by diminished
product demand, production over-capacity, high inventory levels and accelerated
erosion of product prices.  Even if customers' aggregate demand were not to
decline, the availability of additional capacity can adversely impact pricing
levels, which can also depress revenue levels.

     We have experienced in the past and may in the future experience downturns
due to general semiconductor conditions and general economic conditions. A
significant downturn in the industry may cause our business, financial
condition and results of operations to suffer.

     Oak Has a Recent History of Operating Losses and May Not Become or Remain
     -------------------------------------------------------------------------
Profitable. Oak has sustained significant losses in recent years and may not
-----------
become profitable in the future.  While Oak had net income of $5.9 million in
fiscal 1998, its current loss trend began in calendar year 1998, resulting in
an operating loss of $9.1 million for fiscal 1998, an operating loss of $61.9
million for fiscal 1999, an operating loss of $61.1 million for fiscal 2000 and
an operating loss of $19.6 for fiscal 2001 (in each case before adjustments for
non-operating income or loss, or income tax expense or benefit).  Oak's
operating losses generally have been due to its dependence on its optical
storage business, which historically has accounted for approximately 80% of its
business.  In the third quarter of fiscal 2000, Oak achieved volume production
with its next generation CD-RW product.  However, given certain evolving
dynamics in the CD-RW market, including the rate of adoption of this
technology, competition and selling prices, we cannot accurately predict the
product's impact on operating results nor whether revenue from this product
will enable Oak to return to profitability.  We expect that the average selling
prices, or ASP's, for our optical storage products will continue to decline
over time and that ASPs for each new optical storage product will decline
significantly over the life of the product.  In addition, given the extremely
competitive nature of the optical storage market, we believe that gross margins
for new products in our optical storage market will be lower than historical
levels.  However, we believe that with the additional planned software and
solution product offerings from the Optical Storage and Imaging Groups, gross
margins in general will increase in the future.  If Oak incurs additional
losses or fails to achieve profitability in the future, this will significantly
harm our business and may affect the trading price of its common stock.

     Oak's Financial Performance Is Highly Dependent On The Timely And
     -----------------------------------------------------------------
Successful Introduction Of New Products.  Our financial performance depends in
----------------------------------------
large part on our ability to successfully develop and market next generation
and new products in a rapidly changing technological environment.  If we fail
to successfully identify new

                                      18

<PAGE>

product opportunities and timely develop and introduce new products that
achieve market acceptance, we may lose our market share and our future revenue
and earnings may suffer.

     In the optical storage market, our performance is highly dependent upon
the successful development and timely introduction of our next generation CD-RW
controller, and Combo (combination DVD and CD-RW) controller.  A variety of
standards and formats are being proposed in this market, making it difficult to
develop products to market requirements, and making it even more difficult for
the market to develop.  In the digital office market, our performance depends
on our ability to successfully develop embedded imaging processing SOC
solutions for the digital office market, in particular, embedded digital color
copier technology and image processing chips for multifunction peripherals.
Among other technological changes, embedded PDF and color capability are
rapidly emerging as market requirements for printers and other imaging devices.
Some of our competitors have the capacity to supply these solutions, and some
of their solutions are well-received in the marketplace.  We face the
challenges of developing products that will require greater color and image
complexity capability including web-based documents, and to work with higher
performing devices in networked environments.  If we are unable to meet these
challenges with the development of products that can effectively compete in the
OEM software and solutions market, our future results of operations could
differ materially from current expectations.

     In the past, product delays in the Optical Storage Group have resulted
primarily from difficulties in allocating engineering personnel among competing
projects, engineering resource limitations, and unanticipated engineering
complexity.  Product delays in the Imaging Group, including our recently
acquired business, have resulted from these same factors, as well as changing
OEM customer product specifications, difficulties with independent contractors,
and changing markets or competitive requirements.  These or other factors may
also contribute to future delays.  The design complexity of our products,
especially with the increased levels of integration that are required, have
previously contributed to delays in completing development and introduction of
new products in both of our markets.  If we fail in our new product development
efforts or our products fail to achieve market acceptance, our revenues will
decline and our business, financial condition and results of operations will be
suffer.

     Oak's Future Revenues Are Highly Dependent On Sales of Its CD-RW
     ----------------------------------------------------------------
Controller Product.  Our future revenue will largely depend on the success of
-------------------
our recently introduced and next generation CD-RW product as well as our Combo
(combination DVD and CD-RW) product.  We are no longer developing any CD-ROM
controllers and since the early part of fiscal 1999, have instead been focusing
our development efforts on controllers for CD-RW and Combo drives. We cannot
predict whether these products or their successors will be competitive in the
marketplace or carried into production by targeted customers.  The current
trend toward integrating increased speed and functionality on the CD-RW or
Combo controller potentially adds to the development and manufacturing costs of
producing the controller.  Our revenues and gross margins from our optical
storage controller products will depend on our ability to introduce integrated
products for the CD-RW and Combo markets in a commercially competitive manner.
Even if our CD-RW or Combo products prove to be competitive and are accepted by
targeted customers, our customers and their products may not be successful.  If
our CD-RW product fails to achieve market acceptance, we will need other
sources of revenue to offset the loss.  In fiscal 2001, revenue generated from
Oak's optical storage CD-RW business increased by 224%, compared to the
previous year, primarily due to the ongoing success of products introduced in
fiscal 2000 and the introduction of new CD-RW products in fiscal 2001. A
decrease in the overall level of sales of, and prices for, Oak's older
generation CD-RW controller product due to introductions of newer products by
competitors, product obsolescence and delays in Oak's next generation CD-RW
product, could also adversely affect on our business, financial condition and
results of operation.

     Oak's Future Revenues Will Depend on Future Royalties from Shipment of OEM
     --------------------------------------------------------------------------
Devices.  We anticipate that the royalty streams derived from OEMs' shipments
--------
of office equipment containing Oak products, and the sale of related products
and services to manufacturers of office equipment will account for a
significant portion of our revenue for the foreseeable future, although not as
significant as CD-RW for fiscal 2002.  In order to assure that Oak will derive
future royalty streams from the shipment of OEM devices, Oak and its OEMs are
required to develop and release in a regular and timely manner new office
products with increased speed, enhanced output resolutions, reduced memory
requirements, multiple functions, and network connectivity.  OEMs are under
tremendous pressure to continually shorten the development cycles of these
products, leading to increased complexity and development costs to Oak and its
OEMs.  Our success will depend on, among other things, the rate at which OEMs
serving the digital office market outsource their technology needs, market
acceptance of our technology and products and the


                                      19


<PAGE>

office devices of our OEMs; the ability of Oak and its OEMs to meet industry
changes and market demands in a timely manner; achievement of new design wins
by Oak; successful implementation of Oak's technology and products in new
office devices being developed by its OEMs; and successful marketing of those
devices by the OEMs.

     Oak's Markets Are Intensely Competitive and Experience Rapid Technological
     --------------------------------------------------------------------------
Change.   We face intense competition in the markets in which we compete.  We
-------
expect that the level of competition will increase in the future from existing
competitors and from other companies that may enter our existing or future
markets with solutions that may be less costly or provide higher performance or
additional features. Our principal competitors in the optical storage market
include MediaTek, Sanyo, Ricoh and Cirrus Logic.  Our principal competitors in
the digital office market include Adobe Systems, Inc., Peerless Systems
Corporation, Electronics for Imaging, Inc., and in-house, captive suppliers.
We also expect increased competition from the merchant market in the future.
Many of these existing competitors as well as those customers expected to
compete in the future have substantially greater financial, manufacturing,
technical, marketing, distribution and other resources, broader product lines
and longer standing relationships with customers than we do.  In addition, much
of our success is dependent on the success of our OEM customers.  Our OEM
customers in both the optical storage and digital imaging markets compete
fiercely with one another for market share in a market characterized by rapid
development cycles, short product life cycles and ever-increasing consumer
demand for greater performance and functionality at reduced prices.

     We anticipate that we will have to continue to lower the prices of many of
our products to stay competitive.  The markets for most of the applications for
our products, especially in the optical storage market, are characterized by
intense price competition.  As the markets for these products mature and
competition increases, as has been the trend for the optical storage, we
anticipate that average sales prices on products will decline.  If we are
unable to reduce costs sufficiently to offset declines in average sales prices
or are unable to successfully introduce new higher performance products with
higher average sales prices, our operating results will suffer greatly.

     The future growth of the digital office market is highly dependent on
OEMs' continuing to outsource an increasing portion of their product
development work.  While the trend toward outsourcing on the part of our OEM
customers has accelerated in recent years, any reversal of this trend could
seriously harm our business.  Similarly, significant market trends leading to
changes in the way our competitors do business may enable them to compete more
effectively against Oak than they have in the past.  Additionally, changes in
strategy by our competitors, for example price reductions, new product
introductions or new marketing/distribution methods, could make it more
difficult for us to compete effectively, cause reduced market demand for our
products or render our products obsolete.

     Oak and its OEM customers may be unable to compete successfully against
current or future competitors.  Competitive pressures faced by Oak and its
customers may result in reduced revenues and profit margins and otherwise
seriously harm our business, financial condition and results of operations.

     Oak May Be Unable To Protect Its Intellectual Property and Proprietary
     ----------------------------------------------------------------------
Rights, Which May Affect Its Ability to Compete.   We consider our technology
------------------------------------------------
to be proprietary and rely on a combination of patents, trademarks, copyrights,
trade secret laws, confidentiality procedures and licensing arrangements to
protect our intellectual property rights.  However, these measures afford only
limited protection.  The steps that we take to protect our proprietary
information may not be adequate to prevent misappropriation of our technology.
For example, our competitors may be able to effectively design around our
patents, or our patents may be challenged, invalidated or circumvented.  Our
competitors may also independently develop technologies that are substantially
equivalent or superior to our technology.  In addition, the rights granted
under those patents may not necessarily provide competitive advantages.
Moreover, while Oak holds or has applied for patents relating to the design of
its products, some of its products are based in part on standards, for which it
does not hold patents or other intellectual property rights.  The laws of
certain foreign countries in which our products are or may be manufactured or
sold, including various countries in Asia, may not protect our products or
intellectual property rights to the same extent as do the laws of the United
States and thus make the possibility of piracy of our technology and products
more likely.

     While we intend to seek additional international and United States patents
on our technology, it is possible that no additional patents may be issued from
any of our applications that are pending or in the process of being prepared.
Additional patents may not be issued in all countries where our products can be
sold.  Any claims allowed


                                      20

<PAGE>


from pending applications or applications in preparation may not be of
sufficient scope or strength to provide meaningful protection or any commercial
advantage to us.

     Oak also generally enters into confidentiality agreements with its
employees and consultants and confidentiality and license agreements with its
customers and potential customers.  We generally limit access to and
distribution of the source and object code of our software and other
proprietary information.  With respect to our page description language
software and drivers for the digital office market and in limited circumstances
with respect to firmware and drivers for our optical storage products, we grant
licenses that give our customers access to and restricted use of the source
code of our software.  This increases the likelihood of misappropriation or
misuse of our technology.  Accordingly, despite our precautions, it may be
possible for unauthorized third parties to copy certain portions of our
technology or to obtain and use information that we regard as proprietary.  The
steps we take may not be adequate to prevent misappropriation of our technology
or to provide an adequate remedy in the event of a breach or misappropriation
by others.  Furthermore, we may initiate claims or litigation against third
parties for infringement of our proprietary rights or to establish the validity
of our proprietary rights and in the past has incurred significant legal
expenses in connection with claims of this type we have initiated.
Additionally, we may be required to defend and indemnify against third party
infringement claims pursuant to terms of existing agreements with our
customers.  In January 2001, Samsung was notified by Pitney Bowes that its use
of our RET technology infringed Pitney Bowes U.S. Patent No. 4,386,272 ("the
'272 patent").  Oak is also defending Sharp Corporation and Minolta-QMS, Inc.,
companies that are also alleged to infringe the '272 patent. Oak is defending
Samsung, Sharp and Minolta-QMS against this allegation of infringement pursuant
to its indemnification obligation under an earlier license agreement between
these named companies and XLI, a subsidiary of Oak.

     Any litigation by or against Oak could result in significant expense to
Oak and divert the efforts of its technical and management personnel, whether
or not that litigation results in a favorable determination for us.  In the
event of an adverse result in any litigation, we could be required to pay
substantial damages, cease the manufacture, use and sale of infringing
products, expend significant resources to develop non-infringing technology,
discontinue the use of certain processes or obtain licenses to the infringing
technology.  We may not be able to develop new technology or license the
infringing technology on reasonable terms, or at all.  Any development or
license of the technology could require us to expend substantial time and other
resources.

     Oak May Be Unable To Obtain Third Party Intellectual Property Rights or
     -----------------------------------------------------------------------
May Be Liable For Significant Damages.  Certain technology used in Oak's
--------------------------------------
products is licensed from third parties, and in connection with these licenses,
Oak is required to fulfill confidentiality obligations and, in some cases, pay
royalties.  Some of our products require various types of copy protection
software that we must license from third parties.  Should we lose our rights
to, or be unable to obtain the necessary copy protection software, we would be
unable to sell and market these products.  Oak's agreements with third parties
often have no specified term and may be terminated by either party in the event
of breach by the other.  Our business could be adversely affected by the loss
for any reason of these third-party agreements.  Given the trend to include
increasing levels of functionality on a chip, in the future it may be necessary
or desirable for Oak to seek additional licenses to intellectual property
rights held by third parties or purchase products manufactured or sold by third
parties with respect to some or all of its product offerings.  However, those
licenses or purchases may not be available on terms acceptable to Oak, if at
all.  If we are unable to enter into those license arrangements on acceptable
terms or to maintain our current licenses on acceptable terms, our business,
financial condition and results of operations could suffer.

     In addition, the semiconductor industry is characterized by vigorous
protection and pursuit of intellectual property rights, which has resulted in
significant, often protracted and expensive litigation.  Oak or its foundries
may, from time to time, be notified of claims that we may be infringing patents
or other intellectual property rights owned by third parties.  If necessary or
desirable, we may seek licenses under those patents or other intellectual
property rights.  However, these licenses may not be offered or the terms of
any offered licenses might not be acceptable to us.  If we fail to obtain a
license from a third party for technology used by Oak, we may incur substantial
liabilities and suspend the manufacture of products or the use by our foundries
of processes requiring the technology.

     Oak has historically indemnified its customers for certain costs and
damages of patent infringement in circumstances where an Oak product is the
factor creating the customer's infringement exposure. This practice generally
excludes coverage in circumstances where infringement arises out of the
combination of Oak products with


                                      21


<PAGE>

products of others or where infringement arises based on modifications made by
the customer to Oak's products Pitney Bowes has initiated a lawsuit against
several Oak's customers, alleging that  theirs use of Oak's RET technology
infringed Pitney Bowes U.S. Patent No. 4,386,272.  Oak is defending these
customers against this allegation of infringement pursuant to its
indemnification obligation under an earlier license agreements between the
named customers and XLI, a subsidiary of Oak.  This indemnification practice,
however, could have a material adverse effect on the results of operations.

     Although patent disputes in the semiconductor industry have often been
settled through cross-licensing arrangements, we may not be able in any or
every instance, to settle an alleged patent infringement claim through a cross-
licensing arrangement.  We have a more limited patent portfolio than many of
our competitors.  If a successful claim is made against Oak or its customers
and a license is not made available to us on commercially reasonable terms or
we are required to pay substantial damages or awards, our business, financial
condition and results of operations would be materially adversely affected.

     Oak Depends on Third Party Foundries And Vendors to Manufacture Products.
     -------------------------------------------------------------------------
Oak contracts with independent foundries to manufacture a majority of its
products and with independent vendors to assemble and test these products.  If
we fail to adequately manage our relationships with these foundries and
vendors, our ability to manufacture and sell our products and our results of
operations would be negatively impacted.  We rely on our foundries to allocate
to us a portion of their foundry capacity sufficient to meet our needs to
produce products of acceptable quality and with acceptable manufacturing yield
and to deliver products to us in a timely manner.  These foundries fabricate
products for other companies and some manufacture products of their own design.
If these foundries fail or are unable to satisfy our product, quality and other
requirements, our business, financial condition and results of operation could
suffer.

     We also rely on third-party subcontractors to assemble and test our
products.  If these subcontractors fail to meet our production requirements,
our business, financial condition and operating results would suffer.

     Our reliance on independent manufacturers and third party assembly and
testing vendors involve a number of additional risks, including:

     o  The loss of any foundry as a supplier;

     o  Inability to expand foundry capacity in a period of increased demand
        for our products;

     o  Inability to obtain timely and adequate deliveries from current or
        future suppliers;

     o  Delays in shipments of our products resulting in delay;

     o  Disruption of operations at any of our manufacturing facilities;

     o  Product defects and the difficulty of detecting and remedying product
defects resulting in a delay of shipment to customers or customer rejection;

     o  The unavailability of, or interruption in access to, certain process
technologies; and

     o  Reduced control over delivery schedules, quality assurance and costs.

     Oak generally does not use multiple sources of suppliers for its products.
As a result, the likelihood of and the consequences from the occurrence of
these factors are magnified.  In fiscal year 2001, Oak did not experience any
material delays of its wafer deliveries from its primary manufacturer.  While
we believe we have sufficient capacity to meet our needs through calendar 2001,
we have no firm commitments in place.  We may not be able to secure capacity
for our manufacturing needs or may experience delays in the future.

     Oak's Failure to Accurately Forecast Demand for Its Products Could
     ------------------------------------------------------------------
Negatively Impact Its Results of Operations.  Under its foundry agreements, Oak
--------------------------------------------
is required to place non-cancelable orders and purchase its products on an
approximately three-month rolling basis.  Our customers, on the other hand,
generally place purchase orders with us less than four weeks prior to delivery
that may be rescheduled or under certain circumstances may be cancelled,
without significant penalty.  This limits our ability to react to fluctuations
in demand for our products.


                                      22

<PAGE>


If we overestimate the product necessary to fill orders, or fail to foresee a
technology change that could render a product obsolete, we will build excess
inventories, which could harm our gross margins and operating results.  If we
underestimate the product necessary to fill orders, we may not be able to
obtain an adequate supply of products which could harm our revenues.  We have
experienced inventory write-offs of our optical storage products in the past
primarily due to unforeseen and rapid changes in our customers' demand, in
particular speed changes, and consequently experienced rapid product
obsolescence.

     Product supply and demand fluctuations common to the semiconductor
industry are historically characterized by periods of manufacturing capacity
shortages immediately followed by periods of overcapacity, which are caused by
the addition of manufacturing capacity in large increments.  The industry has
moved from a period of capacity shortages in the first half of calendar year
2000, to the current condition of excess capacity.  We cannot predict whether
Oak can or will achieve timely, cost-effective access to that capacity when
needed, or if there will be a capacity shortage again in the future.

     Oak Derives A Large Portion of Its Revenues from International Sales,
     ---------------------------------------------------------------------
Depends on Foreign Subcontractors and is Subject to the Risks of Doing Business
-------------------------------------------------------------------------------
in Foreign Countries.  A large portion of our revenues are derived from
---------------------
international sales.  International sales, principally to Korea, Japan,
Singapore and Europe, accounted for approximately 84%, 75% and 86%, of our net
revenues for fiscal 2001, 2000 and 1999, respectively.  Oak also depends on
foreign subcontractors for the manufacture of its products.  Most of our
foreign sales and purchases are negotiated in US dollars, although invoicing is
often done in local currency.  As a result, we may be subject to the risks of
currency fluctuations in the foreign countries in which we do business.

     Oak also is subject to other risks of conducting business outside of the
United States.  These risks include:

     o  Unexpected changes in, or impositions of, foreign legislative or
        regulatory requirements;

     o  Delays resulting from difficulty in obtaining export licenses for
        certain technology;

     o  Tariffs, quotas and other trade barriers and restrictions;

     o  Longer payment cycles;

     o  Greater difficulty in collecting accounts receivable;

     o  Potentially adverse taxes and adverse tax consequences;

     o  The burdens of complying with a variety of foreign laws;

     o  Political, social and economic instability;

     o  Potential hostilities;

     o  Changes in government, diplomatic or trade relationships; and

     o  Fluctuations in foreign currencies

     As an example, Oak's significant investment in foundry capacity in Taiwan
exposes it to the risk of political instability in Taiwan, including the
potential for conflict between Taiwan and the People's Republic of China.  We
have several significant OEM customers in Japan, South Korea, and other parts
of Asia.  Adverse economic circumstances in Japan and elsewhere in Asia could
affect these customers' willingness or ability to do business with Oak in the
future or their success in developing and launching devices containing our
products.

     Oak Depends on a Limited Number of Customers for a Substantial Portion of
     -------------------------------------------------------------------------
Its Revenues, and a Loss Of, or a Significant Reduction in Purchases By,
------------------------------------------------------------------------
Current Major Customers Which is Not Offset by a Gain or, or a Significant
--------------------------------------------------------------------------
Increase in Purchases by, New or Current Customers, Would Significantly Reduce
------------------------------------------------------------------------------
Oak's Revenues. A limited number of customers historically have accounted for a
---------------
substantial portion of Oak's net revenues.  In fiscal 2001, 2000, and 1999,
sales to our top ten customers accounted for approximately 82%, 78%, and 70%,
respectively, of our net revenues.  In fiscal 2001, LG Electronics accounted
for 31% of total net revenues while in


                                      23


<PAGE>

fiscal 2000, LG Electronics accounted for 26% of our net revenues, and Hewlett-
Packard Company accounted for 16%.  In fiscal 1999, Yamaha Corporation
accounted for 17% and Mitsumi accounted for 10% of net revenues.

     We expect that sales to a limited number of customers will continue to
account for a substantial portion of our net revenues for the foreseeable
future.  We do not have long-term purchase agreements with any of our
customers.  Customers generally purchase our products subject to cancelable
short-term purchase orders. We cannot predict whether our current customers
will continue to place orders or whether existing orders will be canceled.  We
have experienced significant changes from year to year in the composition of
our major customer base and believe this pattern will continue. Our revenues
from the Optical Storage Group will also depend on whether our OEM customers
are successful in selling their optical drives both in aftermarket and to PC
OEM customers. In part, to address this risk, we are continuing our efforts to
increase penetration in existing large customers as well as engage new large
OEM customers. For fiscal 2002 we have commitments and product plans from
existing and new large customers to add volume so that overall, we currently
expect our Optical Storage Group to have revenues in excess of $100 million and
to have as many as four customers, including LG Electronics, who will each
represent 10% or more of our optical storage revenues. Some of our customers
have chosen, and may continue to choose, to award their design wins and
business on a project by project basis to different vendors.  For instance,
while we have design wins for several projects at LG Electronics, and we expect
that it will continue to be a significant customer, due to competition among
the drive manufacturers and changes being made in sourcing chipsets, we
currently expect that our revenue from this customer will decline in fiscal
2002.  The loss of, or a significant reduction in, purchases or commitments by
current major customers which is not offset by corresponding increases from
other current or future customers would have a material adverse effect on our
business, financial condition and results of operations.  If sales to current
customers cease or are reduced, we may be unable to obtain the orders from new
customers necessary to offset any such losses or reductions.  Moreover, we may
not be able to qualify our independent foundries for potential new customers or
do so in a timely manner.

     Oak Is A Defendant In Several Lawsuits.  Oak and various of its current
     ---------------------------------------
and former officers and directors are parties to a consolidated class action
lawsuit filed on behalf of all persons who purchased or acquired Oak common
stock for the period from July 27, 1995 to May 22, 1996, alleging state
securities law and other violations.  Additionally, various of Oak's current
and former officers and directors are defendants in three consolidated
derivative actions which allege a breach of fiduciary duty and a claim under
California securities laws.  Based on its current information, Oak believes the
class action and derivative suits to be without merit and will defend its
position vigorously.  Although it is reasonably possible we may incur losses
upon resolution of these claims, an estimate of loss or range of loss cannot be
made.  No provision for any liability that may result upon adjudication has
been made in Oak's financial statements.  Oak is also a party to various other
legal proceedings, including a number of patent-related matters, including the
indemnification of several Oak customers.  In connection with these lawsuits,
however, management time has been, and will continue to be, expended and Oak
has incurred, and expects to continue to incur, substantial legal and other
expenses.

     Oak Must Continue To Make Significant Capital Investments, And The
     ------------------------------------------------------------------
Inability to Raise the Additional Capital Necessary to Fund These Investments
-----------------------------------------------------------------------------
On Acceptable Terms Could Seriously Harm Our Business.  In order to remain
------------------------------------------------------
competitive, Oak must continue to make investments in new facilities and
capital equipment.  Significant amounts of capital additions could be required
in subsequent years.  Additionally, in order to obtain an adequate supply of
wafers, especially wafers manufactured using advanced process techniques, we
have entered into and will continue to consider various possible transactions,
including various "take or pay" contracts that commit Oak to purchase specified
quantities of wafers over extended periods.  Manufacturing arrangements such as
these may require substantial capital investment, which may require us to seek
additional financing.  We believe that existing liquid resources and funds
generated from operations, if any, combined with the ability to borrow funds
will be adequate to meet our operating and capital requirements and obligations
into the foreseeable future.   We may, from time to time, seek additional
equity or debt financing.  However, those funds, when needed, might not be
available on terms that we find acceptable.  Any future equity financing will
also lead to dilution to existing shareholders.

     Oak May Make Future Acquisitions Or Enter Into Joint Ventures That May Not
     --------------------------------------------------------------------------
Be Successful.  In the future, Oak may acquire additional businesses, products
--------------
and technologies, or enter into joint venture arrangements, that could
complement or expand its business.  Acquisitions involve numerous risks
including:


                                      24

<PAGE>

     o  Difficulties in integration of the operations, technologies, and
        products of the acquired companies;

     o  Diverting management's attention from normal daily operations of the
        business;

     o  Entering markets in which there is limited direct prior experience and
        where competitors have stronger market positions;

     o  Coordination of sales, marketing and research and development;

     o  Potential loss of key employees; and

     o  The maintenance of corporate culture, controls, procedures and
        policies.

     In addition, investments in emerging technology present risks of loss of
value of one or more of the investments due to failure of the technology to
gain the predicted market acceptance.  Also, any future acquisitions could
require Oak to issue dilutive equity securities, incur debt or contingent
liabilities, amortize goodwill and other intangibles, or write-off in-process
research and development and other acquisition-related expenses.  Further, we
may not be able to integrate acquired businesses, products or technologies with
our existing operations.  If we are unable to fully integrate an acquired
business, product or technology, we may not receive the intended benefits of
that acquisition.

     Oak Will Depend On Key Personnel To Manage Its Business, and the Loss of
     ------------------------------------------------------------------------
Any Key Personnel Could Seriously Harm Its Business.  Our future performance
----------------------------------------------------
depends, to a significant degree, on the retention and contribution of members
of Oak's senior management as well as other key personnel including highly
skilled engineering and technical employees.  In particular, it is important
for Oak to retain the services of Young K. Sohn, our current president and
chief executive officer.  We continue to recruit financial, technical and
operational personnel.  Competition for these people is intense, and we may not
be able to attract and retain qualified replacements or additional technical or
operational personnel.  We may not be successful in finding suitable
replacements for any senior management personnel who may leave Oak.

     Provisions in Oak's Charter Documents And Rights Plan Could Make It More
     ------------------------------------------------------------------------
Difficult To Acquire Oak And May Reduce The Market Price Of Oak Stock.  Our
----------------------------------------------------------------------
board of directors has the authority to issue up to 2.0 million shares of
preferred stock and to determine the price, rights, preferences, privileges and
restrictions, including voting rights, of those shares without any further vote
or action by the stockholders.  The rights of the holders of common stock, may
be subject to, and may be adversely affected by, the rights of the holders of
any preferred stock that may be issued in the future.  The issuance of
preferred stock may have the effect of delaying, deferring or preventing a
change of control of Oak without further action by the stockholders and may
adversely affect the voting and other rights of the holders of common stock.
We have no present plans to issue shares of preferred stock.  Further, certain
provisions of our charter documents, including provisions eliminating the
ability of stockholders to take action by written consent and limiting the
ability of stockholders to raise matters at a meeting of stockholders without
giving advance notice, may have the effect of delaying or preventing changes in
control or management of Oak, which could have an adverse effect on the market
price of the stock.  In addition, our charter documents do not permit
cumulative voting and provide that our board of directors will be divided into
three classes, each of which serves for a staggered three-year term, which may
also make it more difficult for a third-party to gain control of the board of
directors.

     In addition, 400,000 shares of our preferred stock are designated as
series A junior participating preferred stock under a rights plan, commonly
referred to as a "poison pill".  Under certain circumstances involving a
proposed change-in-control of Oak, the rights related to the series A junior
participating preferred stock may be triggered, the effect of which may delay
or prevent a third party from gaining control of or acquiring us.

     Oak's Business May be Affected by the Events of September 11, 2001.  Our
     -------------------------------------------------------------------
business and operating results may differ materially from our expectations due
to consequences attributable to the events that took place in New York City and
Washington D.C. on September 11, 2001.  We cannot predict the nature or effect
on Oak of any future political or economic events and policies that may arise
directly or indirectly as a result of those events.  In addition, these events
may continue to have a negative impact on the general emotions and psychology
of the marketplace, which could cause our stock price to fluctuate.


                                      25

<PAGE>


ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Most of Oak's foreign sales are negotiated in US dollars; however,
invoicing is often done in local currency.  As a result, Oak may be subject to
the risks of currency fluctuations.  Assets and liabilities which are
denominated in non-functional currencies are re-measured into the functional
currency on a monthly basis and the resulting gain or loss is recorded within
non-operating income in the statement of operations.  Many of Oak's non-
functional currency receivables and payables are hedged through managing net
asset positions, product pricing and other means.  Our strategy is to minimize
its non-functional currency net assets or net liabilities in our foreign
subsidiaries.  Our policy is not to speculate in financial instruments for
profit on the exchange rate price fluctuations, trade in currencies for which
there are not underlying exposures, or enter into trades for any currency to
intentionally increase the underlying exposure.  As of September 30, 2001, Oak
had foreign currency forward exchange contracts to exchange Yen for
approximately $1.5 million.  Oak uses financial instruments, including local
currency debt arrangements, to offset the gains or losses of the financial
instruments against gains or losses on the underlying operations cash flows or
investments.  If foreign currency rates fluctuate by 10% from rates at
September 30, 2001, the effect on our consolidated financial statements would
not be material.  However, there could be a material effect on our financial
statements in the future.

     Oak's cash equivalents and short-term investments ("debt and equity
investments") are exposed to financial market risk due to fluctuation in
interest rates, which may affect its interest income and the fair values of its
investments.  Oak manages the exposure to financial market risk by performing
ongoing evaluation of its investment portfolio and investing in short-term
investment grade corporate securities and U.S. government and other agencies'
obligations, which mature within the next 24 months.  In addition, Oak does not
use investments for trading or other speculative purposes.  Not withstanding
the foregoing, due to the divestiture of the Broadband business in January
2000, we are in the unusual position of also holding an investment in 293,794
shares of Conexant Systems Inc. common stock which had an original book value
of $68.05 per share.  During fiscal 2001, Oak reduced the basis of this
investment to a book value of $8.95 per share as a result of an other than
temporary impairment in the market value of the common stock.  This resulted in
a charge to non-operating expenses of $17.4 million during the fourth quarter
of fiscal 2001.  This investment is classified as being held as an available-
for-sale security.  This is a highly volatile equity security with market
valuations in the range of $7.07 to $132.00 since mid January 2000.

     Due to the short maturities of its investments, the carrying values
generally approximate the fair value. If market interest rates were to increase
immediately and uniformly by 10% from levels as of September 30, 2001, the
decline in the fair value of the portfolio would not be material.  Further, Oak
has the ability to hold its fixed income investments until maturity and,
therefore, we would not expect to recognize such an adverse impact in income or
cash flows.


                                      26

<PAGE>



PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     The Company and various of its current and former officers and directors
are parties to a consolidated class action lawsuit filed on behalf of all
persons who purchased or acquired the Company's common stock (excluding the
defendants and parties related to them) for the period July 27, 1995 through
May 22, 1996.  This state court proceeding, designated IN RE OAK TECHNOLOGY
SECURITIES LITIGATION, Master File No. CV758510 was filed in Santa Clara County
Superior Court in Santa Clara, California.  The lawsuit originally named as
defendants several of the Company's venture capital fund investors, two of its
investment bankers and two securities analysts.  The plaintiffs alleged
violations of California securities laws and statutory deceit provisions as
well as breaches of fiduciary duty and abuse of control.  The plaintiffs sought
unspecified monetary damages.  After several rounds of demurrers, the court
dismissed all claims except the California Corporations Code Sections
25400/25500 cause of action against the Company, four officers and the
Company's investment bankers and securities analysts.

     On July 16, 1998, the court provisionally certified a national class of
all persons who purchased the Company's stock during the class period.  The
class was provisionally certified with the order held in abeyance pending
resolution of the question of whether a nationwide class may bring a California
Corporations Code Sections 25400/25500 claim.  This issue was resolved in favor
of allowing such nationwide class actions by the California Supreme Court, Case
No. 5058723, on January 4, 1999, in the DIAMOND MULTIMEDIA SECURITIES
LITIGATION appeal by the California Supreme Court.  On August 5, 2000 the court
granted Company's motion for summary judgment and entered judgment in favor of
the Company.  The plaintiffs have appealed the court's decision which in
currently under review by the Sixth District Court of Appeal.  Based on its
current information, the Company believes this suit to be without merit and
will continue to defend its position vigorously.  Although it is possible the
court's ruling may be overturned on appeal and the Company may incur a loss
upon an adverse conclusion of these claims, an estimate of any such loss cannot
be made.

     Additionally, various of the Company's current and former officers and
Directors are defendants in three consolidated derivative actions pending in
Santa Clara County Superior Court in Santa Clara, California, entitled IN RE
OAK TECHNOLOGY DERIVATIVE ACTION, Master File No. CV758510.  This lawsuit,
which asserts a claim for breach of fiduciary duty and a claim under California
securities law based upon the officers' and Directors' trading in securities of
the Company, has been stayed pending resolution of the above described class
actions.  The plaintiffs are seeking monetary damages, equitable relief and an
accounting for the defendants' sales of shares of the Company's common stock.
Based on its current information, the Company believes the suits to be without
merit and will defend its position vigorously.  Although it is reasonably
possible the Company may incur a loss upon conclusion of these claims, an
estimate of any such loss cannot be made.

     If any of the above pending actions are decided adversely to the Company,
it would likely have a material adverse affect on the Company's financial
condition, cash flows and results of operations.

     On July 21, 1997, the Company filed a complaint with the ITC based on the
Company's belief that certain Asian companies were violating U.S. trade laws by
the unlicensed importing or selling of certain CD-ROM controllers that
infringed one or more of the Company's United States patents.  The complaint
sought a ban on the importation into the United States of the named
respondent's infringing CD-ROM controllers or products containing such
infringing CD-ROM controllers.

     The Company's complaint identified as proposed respondents: United
Microelectronics Corporation (UMC); Lite-On Group; Lite-On Technology Corp.;
Behavior Tech Computer Corp. and Behavior Tech Computer (USA) Corp.  Prior to
the ITC's institution of the formal investigation proceeding, the Company and
UMC entered into a settlement agreement, effective July 31, 1997, pursuant to
which UMC agreed to cease and desist the manufacture and/or importation into
the United States of its specified CD-ROM controllers, except under certain
limited conditions which expired on January 31, 1998.  The settlement agreement
additionally provided for the withdrawal of the Company's ITC complaint against
UMC and the above named Lite-On and Behavior Tech companies.

     On October 27, 1997, the Company filed a complaint in the United States
District Court, Northern District of California against UMC for breach of
contract, breach of the covenant of good faith and fair dealing and fraud


                                      27


<PAGE>

based on UMC's breach of the settlement agreement arising out of the ITC
action.  On December 24, 1997, UMC answered the Company's complaint and
counterclaimed by asserting causes of action for recission, restitution,
fraudulent concealment, mistake, lack of mutuality, interference and
declaratory judgment of non-infringement, invalidity and unenforceability of
the Oak patent that was the subject of the original ITC action filed against
UMC. In a related action to the lawsuit that was commenced by the Company
against UMC,  on December 19, 1997, MediaTek, a UMC affiliated, Taiwanese
entity, filed a complaint in the United States District Court, Northern
District of California, against the Company for declaratory judgment of non-
infringement, invalidity and unenforceability of the Oak patent that was the
subject of the original ITC action against UMC, and intentional interference
with prospective economic advantage.   The Company filed its answer on January
8, 1998, denying all the allegations.  The Company believes UMC's counterclaims
and Mediatek's claims   to be without merit.   On June 11, 1998, the cases were
consolidated for all purposes and stayed under 28 U.S.C. Section 1659, based on
the judge's conclusion that the civil action involves the same issues before
the International Trade Commission, initiated by Oak as a result of the alleged
breach of the settlement agreement.  The stay was lifted due to the final
resolution of the ITC investigation and the decision of the Federal Circuit
Court of Appeals on May 2, 2001 affirming the ITC's determination.  (Described
below.)

     On May 10, 1999, the ITC issued an Initial Determination terminating the
investigation as to UMC, finding that UMC's activities were licensed.  On May
17, 1999, the Company filed a petition for review of the Initial Determination.
On September 27, 1999, the ITC affirmed that there were no unfair trade
practices committed by MediaTek under Section 337of the Tariff Act, that there
was no infringement of the Company's U.S. Patent No. 5,581,715, and held that
the Company's US Patent No. 5,581,715 was valid and enforceable.  On February
24, 2000, the Company appealed the Commission's ruling that no unfair trade
practices were committed by MediaTek under Section 337 of the Tariff Act to the
Federal Circuit Court of Appeals.  On May 2, 2001 the Federal Circuit Court of
Appeals affirmed the Commission's determination that there was no infringement
of the Company's U.S. Patent No. 5,581, 715. The Federal Circuit Court of
Appeals did not review the Commission's determination that the Company's U.S.
Patent No. 5,581,715 was valid and enforceable.

     As a result of the decision rendered by the Federal Circuit Court of
Appeals the stay was lifted on the consolidated action pending in the United
States District Court, Northern District of California, and the parties are
proceeding with the litigation.

     If any of the above pending actions with respect to UMC and MediaTek are
decided adversely to the Company, it would likely have a material adverse
affect on the Company's financial condition, cash flows and results of
operations.

     On January 4, 2001 Samsung Electronics, a customer of the Company's
Imaging Group, received a notification from Pitney Bowes alleging that the
resolution enhancement technology Samsung acquired from Xerographic Laser
Images Corporation, Inc. ("XLI") in 1996 infringes Pitney Bowes U.S. Patent No.
4,386,272 ("272 patent").  XLI is a subsidiary of the Company as a result of an
acquisition in the first quarter of Fiscal 1999.  The terms of the agreement
for the licensing of the iRET technology to Samsung require the Company, as
successor in interest to XLI's assets and liabilities, to defend and indemnify
Samsung from claims alleging the iRET technology supplied to Samsung infringes
the intellectual property rights of a third party.  On June 18, 2001 Pitney
Bowes filed a complaint in the District Court of Connecticut, naming Samsung
and others, for infringement of the '272 patent.  On June 28, 2001 Samsung
formally requested the Company to defend Samsung. XLI customers's Sharp
Corporation, and Minolta-QMS, Inc.  are also subject to Pitney Bowes allegation
of infringement of the '272 patent, and have formally requested the Company to
defend and indemnify them pursuant to the terms of their agreements.

     If the above pending action, with respect to the Company's indemnification
obligation in such action, is decided adversely, it would likely have a
material adverse affect on the Company's financial condition, cash flows and
results of operations.


                                      28

<PAGE>


ITEM 6. EXHIBITS AND REPORTS ON FORM  8-K

     The Company filed a report on Form 8-K on July 24, 2001 to report that Oak
Technology, Inc. had publicly announced that it had reconstituted the Company's
Board of Directors.  Oak President and CEO Young K. Sohn became Board Chairman.
In addition, David J. Rynne and K.C. Murphy joined the Board, and previous
Board Chairman David Tsang and Board member Ta-Lin Hsu have left the Board to
pursue other interests in start-up ventures and venture capital.


                                      29

<PAGE>


                                  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.


                                                OAK TECHNOLOGY, INC.
                                                --------------------
                                                    (Registrant)


Date: November 14, 2001
                                              /s/     JOHN S. EDMUNDS
                                              --------------------------
                                                   John S. Edmunds
                                        Senior Vice President of Finance and
                                               Chief Financial Officer
                                             (Principal Financial and
                                                Accounting Officer)


                                      30