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

                      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, 2002

                                      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)

                                1390 Kifer Road
                          Sunnyvale, California 94086
          (Address of principal executive offices, including zip code)

                                (408) 523-6500
             (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 12, 2002, there were outstanding 55,802,253 shares of the
Registrant's Common Stock, par value $0.001 per share.


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




                     OAK TECHNOLOGY, INC. AND SUBSIDIARIES

                                   FORM 10-Q
                                     INDEX
                   For the Quarter Ended September 30, 2002

<TABLE>
<CAPTION>

                                                                          Page
                                                                           No.
                                                                           ---
                         PART I. FINANCIAL INFORMATION
<S>    <C>                                                                <C>
Item 1. Financial Statements (Unaudited):

          Condensed Consolidated Balance Sheets as of September 30, 2002
            and June 30, 2002.............................................  3

          Condensed Consolidated Statements of Operations for the Three
            Months Ended September 30, 2002 and 2001......................  4

          Condensed Consolidated Statements of Cash Flows for the Three
            Months Ended September 30, 2002 and 2001......................  5

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

Item 2.   Management's Discussion and Analysis of Financial Condition and
            Results of Operations......................................... 15

Item 3.   Quantitative and Qualitative Disclosures About Market Risk...... 29

Item 4.   Controls and Procedures......................................... 29


                          PART II. OTHER INFORMATION

Item 1.   Legal Proceedings............................................... 31

Item 6.   Exhibits and Reports on Form 8-K................................ 32

Signatures................................................................ 34

Exhibit Index............................................................. 39

</TABLE>


                                       2

<PAGE>


PART I - FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS


                     OAK TECHNOLOGY, INC. AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                (in thousands, except share and per share data)
                                 (Unaudited)

<TABLE>
<CAPTION>
                                                      September 30,   June 30,
                                                          2002          2002
                                                          ----          ----
<S>                                                     <C>          <C>
       ASSETS
Current assets:
  Cash and cash equivalents............................  $ 25,809     $ 38,252
  Short-term investments...............................   108,526      104,414
  Accounts receivable, net of allowance for doubtful
    accounts of $3,603 and $3,604, respectively........     9,949       10,096
  Inventories..........................................     3,731        4,929
  Prepaid expenses and other current assets............     6,128        5,535
                                                         --------     --------
      Total current assets.............................   154,143      163,226
Property and equipment, net............................    19,246       18,961
Intangible assets, net.................................    18,135       19,886
Other assets...........................................       881          803
                                                         --------     --------
Total assets...........................................  $192,405     $202,876
                                                         ========     ========

       LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable.....................................  $  8,353     $ 14,065
  Accrued expenses.....................................    16,430       16,951
  Deferred revenue.....................................     5,074        2,970
                                                         --------     --------
      Total current liabilities........................    29,857       33,986
Other long-term liabilities............................       958          899
                                                         --------     --------
Total liabilities......................................    30,815       34,885
                                                         --------     --------

Commitments and contingencies (Note 6)

Stockholders' equity:
  Preferred stock, $0.001 par value; 2,000,000 shares
    authorized; none issued and outstanding as of
    September 30, 2002 and June 30, 2002...............        --           --
  Common stock, $0.001 par value; 130,000,000 shares
    authorized at September 30, 2002 and June 30, 2002;
    60,514,733 shares issued and 55,802,253 shares
    outstanding as of September 30, 2002 and 60,285,392
    shares issued and 55,987,912 shares outstanding as
    of June 30, 2002...................................        61           60
  Additional paid-in capital...........................   247,303      246,587
  Treasury stock.......................................   (24,902)     (23,273)
  Accumulated deficit..................................   (62,099)     (56,411)

  Accumulated other comprehensive income...............     1,227        1,028
                                                         --------     --------
    Total stockholders' equity.........................   161,590      167,991
                                                         --------     --------
Total liabilities and stockholders' equity.............  $192,405     $202,876
                                                         ========     ========

</TABLE>

See accompanying notes to consolidated financial statements.


                                       3


<PAGE>

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

<TABLE>
<CAPTION>

                                                          Three Months Ended
                                                            September 30,
                                                       ------------------------
                                                            2002        2001
                                                            ----        ----
<S>                                                      <C>        <C>
Revenues:
  Product revenues.....................................   $  22,414  $  25,567
  Software and other revenues..........................       7,795      7,734
                                                          ---------  ---------

    Total revenues.....................................      30,209     33,301

Cost of revenues and operating expenses:
  Cost of product revenues.............................      10,965     15,692
  Cost of software and other revenues..................       2,208      1,366
  Research and development expenses....................      13,687     13,105
  Selling, general, and administrative expenses........       7,819      7,357
  Amortization of intangibles..........................       1,751      3,428

    Operating loss.....................................      (6,221)    (7,647)

Other non-operating income, net........................       1,161      2,121
                                                          ---------  ---------

Loss before income taxes...............................      (5,060)    (5,526)
Income tax expense.....................................         628        723
                                                          ---------  ---------
Net loss...............................................   $  (5,688) $  (6,249)
                                                          =========  =========

Net loss per basic and diluted share...................   $   (0.10) $   (0.11)
                                                          =========  =========

Shares used in computing basic and diluted net loss
  per share............................................      55,921     54,540
                                                          =========  =========

</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                       4


<PAGE>


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


<TABLE>
<CAPTION>

                                                          Three Months Ended
                                                             September 30,
                                                        -----------------------
                                                            2002        2001
                                                            ----        ----
<S>                                                      <C>        <C>
Cash flows from operating activities:
  Net loss..............................................  $  (5,688) $  (6,249)
    Adjustments to reconcile net loss to net cash
      provided by (used in) operating activities:
      Depreciation and amortization.....................      3,648      5,080
  Changes in operating assets and liabilities:
    Accounts receivable.................................        147      1,717
    Inventories.........................................      1,198      2,266
    Prepaid expenses, other current assets and other
      assets............................................       (668)     1,016
    Accounts payable and accrued expenses...............     (6,233)      (782)
    Deferred income taxes, deferred revenue and other
      liabilities.......................................      2,163        926
                                                          ---------  ---------
        Net cash provided by (used in) operating
          activities....................................     (5,433)     3,974
                                                          ---------  ---------

Cash flows from investing activities:
  Purchases of short-term investments...................    (29,988)   (10,740)
  Proceeds from matured short-term investments..........     26,075     10,769
  Additions to property and equipment, net..............     (2,185)      (627)
  Acquisition of Accel, net of cash acquired............         --     (3,238)
                                                          ---------  ---------
        Net cash used in investing activities...........     (6,098)    (3,836)
                                                          ---------  ---------
Cash flows from financing activities:
  Treasury stock acquisitions...........................     (1,629)        --
  Issuance of common stock, net.........................        717      2,053
                                                          ---------  ---------
        Net cash provided by (used in) by financing
          activities....................................       (912)     2,053
                                                          ---------  ---------
Net increase (decrease) in cash and cash equivalents....    (12,443)     2,191
Cash and cash equivalents, beginning of period..........     38,252     25,141
                                                          ---------  ---------
Cash and cash equivalents, end of period................  $  25,809  $  27,332
                                                          =========  =========

Supplemental information:
Cash paid during the period:
  Interest..............................................  $      --  $      --
                                                          =========  =========
  Income taxes..........................................  $     627  $   2,045
                                                          =========  =========

</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, 2002, included in the Oak Technology, Inc.
2002 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, 2002, the Company had short-term foreign currency exchange
contracts with face values of approximately $2.5 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
------------------------------------

     The Company adopted Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets", or SFAS 142, in the first quarter of
fiscal 2003.  SFAS 142 supersedes Accounting Principles Board Opinion No. 17,
Intangible Assets, and discontinues the amortization of goodwill.  In addition,
SFAS 142 includes provisions regarding: 1) the reclassification between
goodwill and identifiable intangible assets in accordance with the new
definition of intangible assets set forth in Statement of Financial Accounting
Standards No. 141, Business Combinations; 2) the reassessment of the useful
lives of existing recognized intangibles; and 3) the testing for impairment of
goodwill and other intangibles.  In accordance with SFAS 142, beginning July 1,
2002, goodwill is no longer amortized, but is reviewed periodically for
impairment.  The Company expects to complete the first step of the transitional
goodwill impairment test by December 31, 2002.

     Based on criteria set out in SFAS 142, the Company reclassified $0.7
million of net assets previously classified as intangible assets to goodwill
resulting in total goodwill of $13.3 million as of July 1, 2002 and has
discontinued its amortization.  Intangible assets subject to amortization are
being amortized using the straight-line method over the following useful lives:
purchased technology, three to four years; and patents and tradenames, five
years.  No changes were made to the useful lives of amortizable intangible
assets in connection with the adoption of SFAS 142.


                                       6


<PAGE>

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

     Goodwill and intangible assets are comprised of the following (in
thousands):

<TABLE>
<CAPTION>
                                 September 30, 2002         June 30, 2002
                               ----------------------   ---------------------
                                Gross                   Gross
                               Carrying  Accumulated   Carrying  Accumulated
                                Amount   Amortization   Amount   Amortization
                               -------   ------------   ------   ------------
<S>                           <C>         <C>           <C>            <C>
Amortized Intangible Assets:
  Purchased Technology         $21,989     $(18,089)     $21,989   $(16,444)
  Patents                        1,448         (796)       1,448       (724)
  Tradename                        684         (376)         684       (342)

Unamortized Intangible Assets:
  Goodwill (*)                  13,275           --       13,275         --
                               -------     --------      -------   --------
Total                          $37,396     $(19,261)     $37,396   $(17,510)
                               =======     ========      =======   ========

</TABLE>

 (*) Goodwill is net of accumulated amortization immediately prior to the
     adoption of SFAS No. 142


     Reconciliation of net loss excluding amortization of goodwill is as
follows (in thousands, except per share data):


<TABLE>
<CAPTION>

                             Three Months Ended        Fiscal Year Ended
                               September 30,               June 30,
                            --------------------  ----------------------------
                              2002      2001       2002      2001      2000
                              ----      ----       ----      ----      ----
<S>                        <C>       <C>        <C>       <C>       <C>
Net loss as reported        $(5,688)  $(6,249)   $(26,950) $(30,632) $(32,862)
  Add back amortization of
    goodwill                     --     1,399       5,179     5,179     2,589
                            -------   -------    --------  --------  --------
Total adjusted net loss     $(5,688)  $(4,850)   $(21,771) $(25,453) $(30,273)
                            =======   =======    ========  ========  ========

Basic and diluted earnings
  per share:
  As reported               $ (0.10)  $ (0.11)   $  (0.49) $  (0.56) $  (0.71)
                            =======   =======    ========  ========  ========
  As adjusted               $ (0.10)  $ (0.09)   $  (0.39) $  (0.47) $  (0.66)
                            =======   =======    ========  ========  ========
</TABLE>

     Estimated future intangible amortization expense, based on current
balances, as of September 30, 2002 is as follows (in thousands):

<TABLE>
<CAPTION>

                 Fiscal Year                       Amount
                 -----------                       ------
               <S>                                <C>
                2003 (remaining nine months)       $ 3,092
                2004                                 1,555
                2005                                   213
                                                   -------
                Total                              $ 4,860
                                                   =======

</TABLE>

     On October 3, 2001, the FASB issued SFAS 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS 144 supersedes SFAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be disposed of." The primary objectives of SFAS 144 are to develop one
accounting model based on the framework established in SFAS 121 for long-lived
assets to be disposed of by sale, and to address


                                       7


<PAGE>

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

significant implementation issues. The Company has adopted SFAS 144 for its
fiscal year beginning July 1, 2002.  The adoption of SFAS 144 did not have a
material effect on the Company's financial position or results of operations.

     In June 2002, the FASB issued SFAS No. 146, "Accounting for Exit or
Disposal Activities'" ("SFAS 146"). SFAS 146 addresses significant issues
regarding the recognition, measurement, and reporting of costs that are
associated with exit and disposal activities, including restructuring
activities that are currently accounted for under EITF No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit
an Activity (including Certain Costs Incurred in a Restructuring)." The scope
of SFAS 146 also includes costs related to terminating a contract that is not a
capital lease and termination benefits that employees who are involuntarily
terminated receive under the terms of a one-time benefit arrangement that is
not an ongoing benefit arrangement or an individual deferred-compensation
contract.  SFAS 146 will be effective for exit or disposal activities that are
initiated after December 31, 2002 and early application is encouraged.  The
Company will adopt SFAS 146 for the third fiscal quarter beginning January 1,
2003 and does not expect that the adoption will have a material 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,
                                                          2002          2002
                                                          ----          ----
    <S>                                               <C>          <C>
     Purchased parts and work in process               $ 2,174        $ 1,056
     Finished goods                                      1,557          3,873
                                                       -------        -------
                                                       $ 3,731        $ 4,929
                                                       =======        =======

</TABLE>

3. Net Loss Per Share
   ------------------

     Basic and diluted net 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."


                                       8

<PAGE>

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

     The following table provides a reconciliation of the components of the
basic and diluted net loss per share computations (in thousands, except per
share data):

<TABLE>
<CAPTION>
                                                          Three Months Ended
                                                            September 30,
                                                       ------------------------
                                                            2002        2001
                                                            ----        ----
<S>                                                      <C>        <C>
Net loss from continuing operations                       $ (5,688)  $ (6,249)
                                                          ========   ========

Basic common shares                                         55,921     54,540
Effect of dilutive securities:
  Common stock options                                          --         --
                                                           -------    -------
Dilutive weighted average shares                            55,921     54,540
                                                           =======    =======

Net loss per share from continuing operations:
  Basic                                                    $ (0.10)   $ (0.11)
                                                           =======    =======
  Diluted                                                  $ (0.10)   $ (0.11)
                                                           =======    =======

</TABLE>

     For the three month period ended September 30, 2002 and 2001, there were
approximately 9,678,000 and 3,072,000 weighted average options outstanding,
respectively, which were excluded from the calculation of diluted weighted
average shares outstanding as inclusion of these options would have had an
anti-dilutive effect.


4. Share Repurchase Program
   -------------------------

     On July 29, 2002, the Company's Board of Directors approved a stock
repurchase authorizing the repurchase of up to four million shares of Oak
Technology common stock in the open market or privately negotiated transactions
over a two-year period, unless further extended by the Board.  The plan
authorized but does not require the Company to repurchase all four million
shares.  The number of shares to be purchased and the timing of purchases will
be based on several conditions, including the price of the Company's common
stock, general market conditions and other factors.  During the quarter ended
September 30, 2002, the Company repurchased 415,000 shares at an average
acquisition price of approximately $3.92 per share which represents the total
shares that have been repurchased to date under this program.


5. 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 $3.1 million which is not
being amortized in accordance with the provisions of SFAS 141 and 142.

     On October 7, 2002, the Company announced that it had entered into an
agreement to acquire TeraLogic, Inc., a Delaware corporation ("TeraLogic").
TeraLogic is a leading developer of video/audio processing hardware and
software for digital home entertainment platforms.  The acquisition, which
closed on October 25, 2002, is


                                       9

<PAGE>

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

comprised of a cash payment of approximately $38 million and the assumption of
approximately $12 million of TeraLogic's debt and obligations by Oak.  In
addition, Oak will reserve 2.3 million shares of the Company's common stock for
future issuance to the employees of TeraLogic pursuant to options granted to
them upon closing the transaction.  The transaction will be accounted for under
SFAS No. 141, "Business Combinations," using the purchase method of accounting.


6. Contingencies
   -------------

     Oak and various of its directors and former officers are parties to a
consolidated class action lawsuit filed on behalf of all persons who purchased
or acquired Oak 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 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.  The court
dismissed all claims except the California Corporations Code Sections
25400/25500 cause of action against Oak, four officers and Oak's investment
bankers and securities analysts.

     On July 16, 1998, the court provisionally certified a national class of
all persons who purchased Oak stock during the class period.  On August 5, 2000
the court granted Company's motion for summary judgment and entered judgment in
favor of Oak.  The plaintiffs have appealed the court's decision which is
currently under review by the Sixth District Court of Appeal.  Based on its
current information, Oak believes this suit to be without merit and will
continue to defend its position vigorously.  Although it is a remote
possibility, the court's ruling may be overturned on appeal and Oak may incur a
loss upon an adverse conclusion of these claims, an estimate of any such loss
cannot be made.

     Additionally, various Oak's directors and former officers 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 Oak during the period
July 27, 1995 through May 22, 1996, 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 Oak
common stock.  Based on its current information, Oak believes the suits to be
without merit and will defend its position vigorously.  Although it is
reasonably possible Oak 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 Oak, it would
likely have a material adverse affect on Oak's financial condition, cash flows
and results of operations.

     On October 27, 1997, Oak 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 a settlement agreement entered into by Oak and UMC as a means to
resolve an ITC action filed by Oak based on Oak's belief that UMC was violating
U.S. trade laws by the unlicensed importing or selling of certain CD-ROM
controllers that infringed one or more of Oak's United States patents. Under
the terms of the settlement agreement, effective July 31, 1997, 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 Oak's ITC complaint against UMC.

     On December 24, 1997, UMC answered Oak's complaint and counterclaimed by
asserting causes of action for rescission, 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 ITC action filed against UMC.


                                      10

<PAGE>

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

     In a related action to the lawsuit that was commenced by Oak 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 Oak 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.   Oak filed its answer on January 8, 1998, denying all the
allegations.  Oak 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 a second time as a result of the alleged breach of the
settlement agreement.  The stay was lifted due to the final resolution of the
second ITC investigation and the decision of the Federal Circuit Court of
Appeals on May 2, 2001 affirming the Commission's determination that there was
no infringement of Oak's U.S. Patent No. 5,581, 715. The Federal Circuit Court
of Appeals did not review the Commission's determination that Oak'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, and the lifting of the stay on the
consolidated action pending in the United States District Court, Northern
District of California, the parties are proceeding with the litigation.  The
trial is scheduled to commence in February 2003.

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

     On January 4, 2001 Samsung Electronics, a customer of Oak's Imaging Group,
received a notification from Pitney Bowes alleging that the resolution
enhancement technology (iRET) 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 Oak as a result of an
acquisition in the first quarter of fiscal year 1999.  The terms of the
agreement for the licensing of the iRET technology to Samsung require Oak, 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, claiming infringement of the '272 patent.  On June 28, 2001 Samsung
formally requested Oak to defend Samsung and Oak agreed to do so.  Other XLI
customers are also subject to Pitney Bowes allegation of infringement of the
'272 patent.  On September 7, 2001, Oak filed a motion to intervene on behalf
of ourselves and for the benefit of any of our customers who may be subject to
the Pitney Bowes allegations, in the District Court of Connecticut.  The motion
to intervene was granted on December 12, 2001.  On February 5, 2002, this
action was transferred to the United States District Court, District of
Kentucky.  The parties are proceeding with this litigation.

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

     In January of 2002, Oak received a notice letter of infringement from
Syndia Corporation, an assignee of U.S. Patent No. 4,702, 808 (" '808 patent")
and U.S. Patent No. 5,131,941(" '941 patent") issued to Mr. Jerome Lemelson.
The '808 and '941 patents claim certain plasma enhanced chemical vapor
deposition etch processes that are used in the manufacture of semiconductor
chips.  The notice letter asserts that Oak's use and sale of semiconductor
chips manufactured using processes claimed by the '808 and '941 patents
constitutes an infringement.  Oak uses TSMC to manufacture its semiconductor
products, and has notified TSMC of the claims made by Syndia.  The terms of an
indemnification agreement between Oak and TSMC require TSMC to indemnify Oak
from claims alleging the manufacturing processes used by TSMC infringes the
intellectual property rights of a third party.  Pursuant to the terms of the
indemnification agreement between the parties, TSMC has agreed to indemnify and
hold Oak harmless against the claims made by Syndia.


                                      11


<PAGE>


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

     If TSMC fails to indemnify and hold Oak harmless, and Syndia is successful
in its claim for infringement, it would likely have a material adverse affect
on Oak's financial condition, cash flows and results of operations.


7. Restructuring
   -------------

     During fiscal 2002, the Company recorded restructuring charges of $3.2
million related to the reduction in force of approximately 70 employees company
wide due to the restructuring of the overall business as well as additional
probable losses on a sublease where the tenant experienced financial difficulty
and abandoned the facility with approximately five years remaining on the
sublease.  The Company expects that the remaining amounts payable under the
terms of the sublease will be paid in cash by the end of fiscal 2003.  All
severance related amounts are expected to be paid in cash prior to March 31,
2003.

     The expenses relating to the restructuring charges are summarized as
follows (in thousands):

<TABLE>
<CAPTION>

                                      Severance  Facilities   Other     Total
                                      ---------  ----------   -----     -----
<S>                                   <C>        <C>        <C>      <C>
Balance, June 30, 2002                 $   384    $ 1,657    $  16    $ 2,057
Provision Recorded During
 the Quarter ended September 30, 2002       --         --       --         --
Provision Utilized During the Quarter
 ended September 30, 2002                 (122)      (306)      --       (428)
                                       -------    -------    -----    -------
Balance, September 30, 2002            $   262    $ 1,351    $  16    $ 1,629
                                       =======    =======    =====    =======


</TABLE>

8. 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 2002 and 2001, the Company has two reportable segments
which offer different product lines to each of its target markets: Optical
Storage Group and Imaging Group.  The Optical Storage Group provides high-
performance controllers for CD-ROM, CD-RW, and DVD based technologies to OEM's
who serve the optical storage market.  The Imaging Group provides high-
performance imaging systems for the digital imaging environment, including
products used in digital laser copiers and printers as well as multifunction
peripherals.   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.


                                      12


<PAGE>

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

     Information about reported segment income or loss is as follows for the
three months ended September 30, 2002 and 2001 (in thousands):

<TABLE>
<CAPTION>
                                                          Three Months Ended
                                                            September 30,
                                                       ------------------------
                                                            2002        2001
                                                            ----        ----
     <S>                                                 <C>        <C>
      Net Revenues:
       Optical Storage                                    $ 17,504   $ 21,079
       Imaging                                              12,705     12,222
                                                          --------   --------
                                                          $ 30,209   $ 33,301
                                                          ========   ========

      Cost of Goods Sold and Direct Operating Expenses:
        Optical Storage                                   $ 18,064   $ 22,154
        Imaging                                              8,337      7,654
                                                          --------   --------
                                                          $ 26,401   $ 29,808
                                                          ========   ========

      Contribution Margin:
        Optical Storage                                   $   (560)  $ (1,075)
        Imaging                                              4,368      4,568
                                                          --------   --------
                                                          $  3,808   $  3,493
                                                          ========   ========

</TABLE>

     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, 2002 and 2001, is as follows (in
thousands):

<TABLE>
<CAPTION>
                                                          Three Months Ended
                                                            September 30,
                                                       ------------------------
                                                            2002        2001
                                                            ----        ----
     <S>                                                 <C>        <C>
      Contribution margin from operating segments         $  3,808   $  3,493
      Indirect operating expenses                            6,381      6,060
      Depreciation expense                                   1,897      1,652
      Amortization of intangibles                            1,751      3,428
                                                          --------   --------
      Total operating loss                                  (6,221)    (7,647)
      Non-operating income, net                              1,161      2,121
                                                          --------   --------
      Loss before income taxes                            $ (5,060)  $ (5,526)
                                                          ========   ========


</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, Germany, 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.


                                      13


<PAGE>

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


     The distribution of net revenues for the three months ended September 30,
2002 and 2001 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                          Three Months Ended
                                                            September 30,
                                                       ------------------------
                                                            2002        2001
                                                            ----        ----
     <S>                                                 <C>        <C>
      Revenue from unaffiliated customers
        originating from:
        North America                                     $  3,544   $  5,965
        Japan                                               11,608     13,697
        Korea                                                1,506      7,899
        Taiwan                                              11,108      3,297
        Philippines                                            844      1,457
        Europe                                               1,449        593
        Other                                                  150        393
                                                          --------   --------
                                                          $ 30,209   $ 33,301
                                                          ========   ========

</TABLE>



     For the three months ended September 30, 2002, three customers accounted
for 13%, 12% and 10% of total revenues, respectively.  For the same period of
the prior fiscal year, one customer accounted for 22% of total revenues.

     As of September 30, 2002, four customers accounted for 35%, 18%, 12% and
10% of total accounts receivable, respectively, and as of June 30, 2002, four
customers accounted for 34%, 24%, 14% and 12% of total net accounts receivable,
respectively.


9. 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,
                                                       ------------------------
                                                            2002        2001
                                                            ----        ----
     <S>                                                 <C>        <C>
      Net loss                                            $ (5,688)  $ (6,249)
        Other comprehensive income:
          Change in unrealized gain on
          investments, net                                     199        729
                                                          --------   --------
      Total comprehensive loss                            $ (5,489)  $ (5,520)
                                                          ========   ========

</TABLE>

10. Income Taxes
    ------------
     For the three months ended September 30, 2002 and 2001, the Company
recorded tax expense based on actual taxes incurred.


                                      14


<PAGE>


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


This Report on Form 10-Q contains  "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.  Among the important factors that could cause actual results to
differ materially from those indicated by such forward-looking statements
include those discussed below under the subheading "Factors That May Affect
Future Results" and elsewhere in this report.  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.  Readers should
carefully review the risk factors described in "Factors That May Affect Future
Results" below and any subsequently filed SEC reports.

General
-------

     Oak designs, develops and markets high performance integrated
semiconductors, software and platform solutions to original equipment
manufacturers ("OEMs") worldwide that serve the optical storage and digital
imaging equipment markets.  Our digital imaging products consist of
semiconductor hardware and software that enables users to print, scan, process
and transmit documents to computer peripherals that perform printing functions.
Our Optical Storage products consist primarily of integrated circuits and
supporting software and firmware, all designed to store and distribute digital
content, thereby enabling our customers to deliver cost effective, powerful
systems to the end users for the home and enterprise.  Our mission is to be a
leading solutions provider for the storage and distribution of digital content.

     Oak's operations are currently organized along its two market-focused
groups: the Optical Storage Group and the Imaging Group.  With the acquisition
of TeraLogic, Inc. ("TeraLogic"), Oak's future operations will be organized
along three market focused groups; Optical Storage Group, Imaging Group, and
TeraLogic Group.

     For the results of operations for the three months ended September 30,
2002 and 2001, the Company reported a net loss of $5.7 million and $6.2
million, respectively.  The Company continues to experience the effects of
decreased revenues caused by the slowdown in the PC industry as well as a
decrease in overall global economic conditions.  Oak continues to develop its
next generation CD-RW products with its CD-RW drive manufacturer customers.
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 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.


                                      15

<PAGE>


     Finally, the Company has and will continue to pursue opportunities to
acquire key technology to augment its technical capabilities or achieve faster
time to market as an alternative to developing such technology internally.  The
TeraLogic acquisition is consistent with this strategy.

     Acquisitions involve numerous risks, including difficulties in integration
of the operation, technologies, and products of the acquired companies; the
risk of diverting management's attention from normal daily operations of the
business; risks of entering markets in which the Company has no or limited
direct prior experience and where competitors in such markets have stronger
market positions; the coordination of sales, marketing and research and
development; and the potential loss of key employees of the acquired company.
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.  As a result of the acquisition of TeraLogic, the
Company expects to incur a charge related to in process research and
development during the quarter ended December 31, 2002.  The amount of this
charge will be determined based on further analysis to be performed during the
quarter ended December 31, 2002.

     Failure to manage growth effectively and successfully integrate
acquisitions made by the Company could adversely affect the Company's business
and operating results.  In addition, with such acquisitions, there is the risk
that future operating performance may be unfavorably impacted due to
acquisition related costs such as, but not limited to, in-process research and
development charges, additional development expenses, lower gross margins
generated by the sales of acquired products and restructuring costs associated
with duplicate facilities.

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

     Net Revenues. Net revenues decreased 9% to $30.2 million for the three
     ------------
months ended September 30, 2002 from $33.3 million in the comparable period of
the prior year.  The year over year decrease in revenues is a result of a
number of factors including the global economic slowdown, more specifically the
slowdown in PC related markets and increased competition in CD-RW business.

     Net revenues in the Optical Storage business segment were $17.5 million
for the first quarter of fiscal 2003, representing a 17% decrease from the
segment's net revenues of  $21.1 million reported in the same period of fiscal
2002.  Although controller shipments increased year over year, revenues
declined in part because of declining ASP's in the range of 25% in what has
become a PC market with a great deal of price and cost reduction pressure.  In
addition the Company stopped shipping a discrete companion AFE chip during the
course of 2002 and this also accounted for approximately $3 million of the
decrease in revenues year over year.

     Net revenues for the Imaging business segment were $12.7 million for the
three months ended September 30, 2002, representing a 4% increase over the
$12.2 million reported in the same quarter of the prior year.  The slight
increase is primarily the result of higher revenues related to Imaging hardware
products during the quarter ended September 30, 2002 compared to the same
period of the prior year.  This increase was offset by a decline in software
revenues of approximately $1 million due to a decline in revenues associated
with developing specific print drivers for OEM manufacturers.  This custom
driver development business declined as manufacturers shifted toward reliance
on a universal driver.

     Cost of Revenues.  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
increased to 56% for the quarter ended September 30, 2002, as compared to 49%
during the comparable period in the prior year.  Blended gross margin improved
because of a higher relative mix of Imaging business and because margins
improved in the Optical Storage business.

     Gross margin for the Optical Storage business segment was 42% for the
first quarter of fiscal 2003 compared to 34% for the comparable quarter of the
prior year.  The increase in the gross margin for the Optical Storage business
segment for the three months ended September 30, 2002 compared to the same
period in the prior year is due to a number of factors.  In the first quarter
of fiscal 2002, the Company experienced a temporary yield


                                      16

issue on a new product being introduced that caused gross margins to decline by
approximately $600,000.  Absent this change, the gross margins during that
period would have been 36%.  In addition, there was a change in the product mix
which resulted in the decrease in sales of a lower margin product during the
first quarter of fiscal 2003 compared to the same period of the prior year.
More specifically, the Company stopped selling a discrete AFE during the course
of 2002 and this coupled with a higher mix of high margin combo product sales
led to an improved gross margin.

     Gross margin for the Imaging business segment was 76% for the first
quarter of fiscal 2003, representing a slight increase from the 75% reported in
the same quarter of fiscal 2002.  This was due to a change in the hardware
product mix in which there was an increase in sales of higher margin hardware
products during the quarter ended September 30, 2002 compared to the same
period in the prior year.

     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 $13.7 million for
the quarter ended September 30, 2002 increased $0.6 million, or 4%, from the
$13.1 million recorded in the comparable period of the previous fiscal year.
The increase was primarily attributable to a ramp in tape-out related expenses
incurred during the first quarter of fiscal 2003 as a result of the progress in
the development of products in the Imaging group.  Research and development
expenses increased as a percentage of net revenues for the three month period
ended September 30, 2002 over the comparable period in the prior year due
primarily to the decrease in the Company's net revenues.  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 increased by 6% to $7.8 million for the three
months ended September 30, 2002 from $7.4 million in the comparable period of
the prior year.  The increase was primarily attributable to non-recurring legal
expenses incurred during the period related to an ongoing litigation which we
expect to continue in the next several quarters.  This increase was partially
offset by the decrease in sales expenses as a result of the continued decline
in revenues during the quarter ended September 30, 2002.  SG&A expenses
increased as a percentage of net revenues for the quarter ended September 30,
2002 over the comparable period in the prior year due primarily to a decrease
in the Company's net revenues.

     Amortization of Intangibles.  Amortization of intangible assets was $1.8
     ---------------------------
million for the three months ended September 30, 2002, a decrease of $1.7
million or 49% from the $3.4 million recorded in the same period of the prior
fiscal year.  The year over year decrease is a result of the completion of
amortization of certain intangible assets as they became fully amortized as
well as a result of the adoption of SFAS No. 142 for the fiscal year beginning
July 1, 2002.  As a result of the adoption of SFAS No. 142, the Company will no
longer amortize goodwill and assembled workforce with a net carrying value of
approximately $13.3 million.  The remaining intangible assets of approximately
$4.8 million as of September 30, 2002 will continue to amortize in accordance
with SFAS No. 142 and will be completely amortized by the end of fiscal 2005.

     Other Non-operating Income.  During the first quarter of fiscal 2003, non-
     --------------------------
operating income decreased to $1.2 million from the $2.1 million recorded
during the same quarter of fiscal 2002.  The decline is a result of lower
interest income received by the Company primarily as a result of a decrease in
interest rates.

     Income Taxes.  For the first quarter of fiscal 2003 tax expense was 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
existed against deferred tax


                                      17


assets as of June 30, 2002 and September 30, 2002.  No income tax benefit was
recognized with respect to operating losses incurred during the first quarter
of fiscal 2003.


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, 2002 consisted of approximately $134.3 million in cash, cash
equivalents and short-term investments.  As described below, this amount will
be substantially reduced in the December quarter as the result of an
acquisition.

     On October 25, 2002, we utilized a portion of our cash, cash equivalents
and short-term investments to acquire TeraLogic, a privately held semiconductor
company, in exchange for approximately $38 million in cash and the assumption
of approximately $12 million of TeraLogic debts and obligations.

     Oak's working capital decreased $4.9 million to $124.3 million as of
September 30, 2002 compared to $129.2 million as of June 30, 2002.  The
decrease was primarily attributable to a decrease in cash and short-term
investments of $8.3 million offset by a net decrease in accounts payable and
deferred revenues of $3.6 million during the period.  Oak's short-term
investments were principally invested in investment grade, interest-bearing
securities.

     Oak's cash used in operating activities was $5.4 million during the
quarter ended September 30, 2002 compared to cash provided by operating
activities of $4.0 million for the same period of the prior fiscal year.  Cash
used in operating activities for the first quarter of fiscal 2002 was primarily
a result of a decrease in accounts payable and accrued expenses of $6.2 million
during the quarter.

     Oak's investing activities during the quarter ended September 30, 2002
used cash of $6.1 million compared to $3.8 million during the same period of
the prior year.  Cash used in investing activities during the current period
resulted primarily from the purchase of property and equipment of $2.2 million
and net purchases of short-term investments of $3.9 million.

     Oak's financing activities during the quarter ended September 30, 2002
used cash of $0.9 million compared to proceeds of $2.1 million during the same
period of the prior fiscal year.  The cash used by financing activities during
the quarter ended September 30, 2002 was a result of the repurchase of treasury
stock of $1.6 million offset by proceeds from the issuances of common stock
through the exercise of employee stock options and the employee stock purchase
plan of $0.7 million.

     The following table summarizes our contractual payment obligations and
commitments as of June 30, 2002:

<TABLE>
<CAPTION>

                  Payment Obligations by Year (in thousands)

                       2003    2004    2005    2006    2007    Beyond    Total
                       ----    ----    ----    ----    ----    ------    -----
<S>                 <C>       <C>     <C>     <C>     <C>     <C>      <C>
Operating leases     $ 6,536   $6,308  $6,316  $6,602  $4,149  $  295   $30,206
Inventory purchase
  commitments          5,292       --      --      --      --      --     5,292
                      ------   ------  ------  ------  ------  ------   -------
  Total              $11,828   $6,308  $6,316  $6,602  $4,149  $  295   $35,498
                     =======   ======  ======  ======  ======  ======   =======

</TABLE>

     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


                                      18

<PAGE>

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, 2002 and on this
Form 10-Q for the quarter ended September 30, 2002 filed with the Securities
and Exchange Commission.


Critical Accounting Policies
----------------------------

     The discussion and analysis of our financial condition and results of
operations are based on the consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States.  Note 2 of the Notes to Consolidated Financial Statements which
has been included in the Company's 2002 Annual Report on Form 10-K describes
the significant accounting policies essential to the consolidated financial
statements.  The preparation of these financial statements requires estimates
and assumptions that affect the reported amounts and disclosures.

     We believe the following to be critical accounting policies as they
require more significant judgments and estimates used in the preparation of our
consolidated financial statements.  Although we believe that our judgments and
estimates are appropriate and correct, actual future results may differ from
our estimates.

     In general the critical accounting policies that may require judgments or
estimates relate specifically to Distributor Revenue Recognition, the Allowance
for Doubtful Accounts, Inventory Reserves for Obsolescence and Declines in
Market Value, Loss on Engineering Service Contracts, Restructuring Charges for
Severance or Facilities and Income Tax Accruals.

     We recognize product revenues when an arrangement exists, delivery has
occurred, the price is determinable and collection is reasonably assured.
During fiscal year 2002, approximately 6% of the Company's total revenues were
sold through certain distributors that are subject to agreements allowing for
limited rights of exchange of up to 5% of the total amounts sold in the
previous six-month period.  Accordingly, we do not recognize revenue for
estimated returns from all amounts sold to these distributors until the right
of exchange has expired.

     The Allowance for Doubtful Accounts is established for estimated losses
resulting from the inability of our customers to make required payments.  The
assessment of specific receivable balances and required reserves is performed
by management and discussed with the audit committee.  We have identified
specific customers where collection is probable and have established specific
reserves, but to the extent collection is made, the allowance will be released.
Additionally, if the financial condition of our customers were to deteriorate,
resulting in an impairment of their ability to make payments, additional
allowances may be required.

     Reserves are provided for excess and obsolete inventory, which are
estimated based on a comparison of the quantity and cost of inventory on hand
to management's forecast of customer demand.  Customer demand is dependent on
many factors and requires us to use significant judgment in our forecasting
process.  We must also make assumptions regarding the rate at which new
products will be accepted in the marketplace and at which customers will
transition from older products to newer products. Generally, inventories in
excess of six months demand are reserved and the related charge is recorded as
a cost of revenue.  Once a reserve is established, it is maintained until the
product to which it relates is sold or otherwise disposed of, even if in
subsequent periods we forecast demand for the product.  This treatment is in
accordance with Accounting Research Bulletin 43 and Staff Accounting Bulletin
100 "Restructuring and Impairment Charges."

     We enter into engineering service agreements from time to time and use
either percentage of completion or completed contract methods in recognizing
the project based revenues.  Estimates of remaining costs are prepared every
quarter and compared to the estimated revenues to determine if any reserve for
loss on contracts may be required.  Estimated losses on engineering contracts
are not material to our financial position at this time.

     Restructuring Charges for Severance and Facility Abandonment have been
accrued based on specific plans for cost reduction that are established by
management prior to the end of the quarter.  The severance accrual is tied to


                                      19

<PAGE>

a plan that is generally specific by person or position that will be
eliminated.  The facility abandonment reserve is established by estimating how
long a facility may be vacant and under what market based terms might it be
released. Estimates for each given facility generally range from $200,000 to
$800,000.  We have three facilities we are attempting to sublease at this time
with a resulting reserve of $1.4 million as of September 30, 2002.  Some
portion of these reserves may prove to be too little, or in excess, which could
result in an adjustment to restructuring reserves in a future quarter.  In
general, we expect that these reserves will be used as payments are made for
rent on these abandoned facilities.  At this time we do not expect any
additional adjustments to be material to the Company's operating results.

     In general, we are in a loss position for tax purposes, and have
established a valuation allowance against deferred tax assets, as we do not
believe it is likely that we will generate sufficient taxable income in future
periods to realize the benefit of our deferred tax assets.  Predicting future
taxable income is difficult, and requires the use of significant judgment.  At
September 30, 2002, all of our deferred tax assets were reserved.  Accruals are
made for specific tax exposures and are generally not material to our operating
results or financial position, nor do we anticipate material changes to these
reserves going forward.


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, as were experienced in fiscal year 2002, and continues into
fiscal year 2003, 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
and digital imaging markets.  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 cancellation of customer orders and the resulting
       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;

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

     o Failure to anticipate changing customer product requirements;


                                      20

<PAGE>

     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 is currently experiencing a significant economic downturn, as
it previously has at various times.  These downturns, including the current
recession impacting the semiconductor industry, 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 which continues
today.  Downturns in the semiconductor industry, including the current
downturn, have been characterized by and resulted in 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.

     Should the current recession impacting the semiconductor industry continue
for a significant period of time, our business, financial condition and results
of operations will continue 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, an
operating loss of $19.6 million for fiscal 2001 and an operating loss of $29.9
million for fiscal 2002 (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 67% of its business.  Given
certain evolving dynamics in the optical storage market, including the rate of
adoption of optical technology, (including CD-RW controllers) competition and
selling prices, we cannot accurately predict the impact of our CD-RW controller
product on operating results nor whether revenue from Optical Storage products
will enable Oak to return to profitability.  We expect that the average selling
prices, or ASP's, for our Optical Storage products and certain of our imaging
hardware products, will continue to decline over time and that ASPs for each
new Optical Storage product and imaging hardware 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, price declines in hardware products may be offset by cost
reductions, higher volumes of hardware products and higher volumes of higher
margin Imaging products being sold 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 our 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 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.


                                      21

<PAGE>

     In the optical storage market, our performance is highly dependent upon
the successful development and timely introduction of our next generation CD-RW
controller, Combo (combination DVD and CD-RW) and DVD RW controller products.
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
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) and DVD RW products.  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, Combo or DVD RW
controller products potentially adds to the development and manufacturing costs
of producing the product.  Our revenues and gross margins from our optical
storage controller products will depend on our ability to introduce integrated
Optical Storage products for the markets in a commercially competitive manner.
Even if our Optical Storage products prove to be competitive and are accepted
by targeted customers, our customers and their products may not be successful.
If our Optical Storage products fail to achieve market acceptance, we will need
other sources of revenue to offset the loss.  In fiscal 2002 Optical Storage
Revenues decreased by 16%.  A decrease in the overall level of sales of, and
prices for, Oak's older generation Optical Storage Products due to
introductions of newer products by competitors, product obsolescence and delays
in Oak's next generation CD-RW product, could also adversely affect our
business, financial condition and results of operation.

     Oak's Future Imaging 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 Imaging Group revenue for the foreseeable
future.  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 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.


                                      22

<PAGE>

     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 and Ricoh; with new competitors emerging in Via
Technologies, Inc. and Ali Corporation.  Our principal competitors in the
digital office market include Adobe Systems, Inc., Peerless Systems
Corporation, Electronics for Imaging, Inc., Oasis Semiconductor, Analog
Devices, Agilent, TAK ASIC, 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 market, 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, or a
change in the way they outsource, 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 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.


                                      23

<PAGE>


     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 iRET technology infringed Pitney Bowes U.S. Patent No. 4,386,272.  Oak
is defending Samsung against this allegation of infringement pursuant to its
indemnification obligation under an earlier license agreement between Samsung
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 products of others or where infringement
arises based on modifications made by the customer to Oak's products.  In
January 2001, Samsung was notified by Pitney Bowes that its use of Oak's iRET
technology infringed Pitney Bowes U.S. Patent No. 4,386,272.  Oak is defending
Samsung against this allegation of infringement pursuant to its indemnification
obligation under an earlier license agreement between Samsung and XLI, a
subsidiary of Oak.  This indemnification practice, however, could have a
material adverse effect on the results of operations.


                                      24


<PAGE>

     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 2002, 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 2002,
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.  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, such as the inventory write off taken in the
fourth quarter of fiscal year 2002, primarily due to unforeseen and


                                      25

<PAGE>

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, and
Europe, accounted for approximately 89%, 84% and 75% of our net revenues for
fiscal 2002, 2001 and 2000, 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 occasionally
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 2002, 2001 and 2000,
sales to our top ten customers accounted for approximately 69%, 82% and 78%,
respectively, of our net revenues.  In fiscal 2002, LG Electronics accounted
for 20% of total net revenues while Mitsumi and Ionics accounted for 11% of
total net revenues individually.  In fiscal 2001, LG Electronics accounted for
31% of total net revenues. In fiscal 2000, LG Electronics accounted for 26% of
total net revenues and Hewlett-Packard Company accounted for 16%.


                                      26


<PAGE>

     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, whether existing orders will be canceled, or
whether customers who have ordered products will pay invoices for delivered
products.  Our policy in Taiwan is to secure a letter of credit prior to
product shipment to minimize the risk of non-payment.  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. The current weakness in demand being experienced in semiconductor
and PC markets, coupled with the overall poor macroeconomic environment,
however, makes it difficult to forecast future financial performance.  In
addition, 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.  The current economic recession notwithstanding, 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 directors
     --------------------------------------
 and former officers 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 directors and former officers
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.  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 May Need to Continue to Invest Cash Flow in Operations as well as
     ---------------------------------------------------------------------
Capital Purchases for Tools and Equipment, 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 Research and Development, development tools 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.  As part of its business strategy, Oak may investigate and may
-------------
thereafter acquire additional businesses, products and technologies, or enter
into joint venture arrangements, that could complement or expand its business.
In October 2002, Oak acquired TeraLogic Inc.  Acquisitions involve numerous
risks and costs including:

     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;


                                      27


<PAGE>

     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 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 chairman 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.


                                      28


<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, 2002, Oak
had foreign currency forward exchange contracts to exchange Yen for
approximately $2.5 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, 2002, 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 a permanent
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.  On June 25, 2002, a stock dividend was declared to Conexant shareholders
in connection with the merger between Alpha Industries, Inc. and the wireless
communications business of Conexant to create and form Skyworks Solutions, Inc.
For each Conexant share, the Company received 0.351 shares of Skyworks
Solutions Inc., or a total of 103,121 shares, and will continue to hold their
existing Conexant shares.  For fiscal 2002, the Company reduced the combined
basis in these two investments to a book value of $1.62 per share for Conexant
shares and $5.55 per share for Skyworks shares due to a further decline in the
market value of the common stock which the Company believes to be other than
temporary.  This resulted in an additional charge to non-operating expenses of
$1.6 million during fiscal 2002.

     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, 2002, 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.


ITEM 4.    CONTROLS AND PROCEDURES
------     -----------------------

     Within the 90 days prior to the date of this report, we carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's President and Chief Executive Officer along
with the Chief Financial Officer, of the effectiveness of the design and
operation of our disclosure controls and procedures pursuant to Exchange Act
Rule 13a-14. Based upon that evaluation, the Company's President and Chief
Executive Officer along with the Chief Financial Officer have concluded that
our disclosure controls and procedures are effective in timely alerting them to
material information relating to the Company (including its consolidated
subsidiaries) required to be included in our periodic SEC filings.


                                      29

<PAGE>


     There have been no significant changes in our internal controls or in
other factors that could significantly affect internal controls subsequent to
the date we carried out this evaluation.


                                      30


<PAGE>


PART II - OTHER INFORMATION
          -----------------

ITEM 1. LEGAL PROCEEDINGS
        -----------------

     Oak and various of its directors and former officers are parties to a
consolidated class action lawsuit filed on behalf of all persons who purchased
or acquired Oak 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 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.  The court
dismissed all claims except the California Corporations Code Sections
25400/25500 cause of action against Oak, four officers and Oak's investment
bankers and securities analysts.

     On July 16, 1998, the court provisionally certified a national class of
all persons who purchased Oak stock during the class period.  On August 5, 2000
the court granted Company's motion for summary judgment and entered judgment in
favor of Oak.  The plaintiffs have appealed the court's decision which is
currently under review by the Sixth District Court of Appeal.  Based on its
current information, Oak believes this suit to be without merit and will
continue to defend its position vigorously.  Although it is a remote
possibility, the court's ruling may be overturned on appeal and Oak may incur a
loss upon an adverse conclusion of these claims, an estimate of any such loss
cannot be made.

     Additionally, various Oak's directors and former officers 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 Oak during the period
July 27, 1995 through May 22, 1996, 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 Oak
common stock.  Based on its current information, Oak believes the suits to be
without merit and will defend its position vigorously.  Although it is
reasonably possible Oak 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 Oak, it would
likely have a material adverse affect on Oak's financial condition, cash flows
and results of operations.

     On October 27, 1997, Oak 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 a settlement agreement entered into by Oak and UMC as a means to
resolve an ITC action filed by Oak based on Oak's belief that UMC was violating
U.S. trade laws by the unlicensed importing or selling of certain CD-ROM
controllers that infringed one or more of Oak's United States patents. Under
the terms of the settlement agreement, effective July 31, 1997, 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 Oak's ITC complaint against UMC.

     On December 24, 1997, UMC answered Oak's complaint and counterclaimed by
asserting causes of action for rescission, 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 ITC action filed against UMC.

     In a related action to the lawsuit that was commenced by Oak 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 Oak 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.   Oak filed its answer on January 8, 1998, denying all the
allegations.  Oak believes UMC's counterclaims and Mediatek's claims to be
without merit.


                                      31

<PAGE>


     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 a second time as a result of the alleged breach of the
settlement agreement.  The stay was lifted due to the final resolution of the
second ITC investigation and the decision of the Federal Circuit Court of
Appeals on May 2, 2001 affirming the Commission's determination that there was
no infringement of Oak's U.S. Patent No. 5,581, 715. The Federal Circuit Court
of Appeals did not review the Commission's determination that Oak'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, and the lifting of the stay on the
consolidated action pending in the United States District Court, Northern
District of California, the parties are proceeding with the litigation.  The
trial is scheduled to commence in February 2003.

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

     On January 4, 2001 Samsung Electronics, a customer of Oak's Imaging Group,
received a notification from Pitney Bowes alleging that the resolution
enhancement technology (iRET) 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 Oak as a result of an
acquisition in the first quarter of fiscal year 1999.  The terms of the
agreement for the licensing of the iRET technology to Samsung require Oak, 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, claiming infringement of the '272 patent.  On June 28, 2001 Samsung
formally requested Oak to defend Samsung and Oak agreed to do so.  Other XLI
customers are also subject to Pitney Bowes allegation of infringement of the
'272 patent.  On September 7, 2001, Oak filed a motion to intervene on behalf
of ourselves and for the benefit of any of our customers who may be subject to
the Pitney Bowes allegations, in the District Court of Connecticut.  The motion
to intervene was granted on December 12, 2001.  On February 5, 2002, this
action was transferred to the United States District Court, District of
Kentucky.  The parties are proceeding with this litigation.

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

     In January of 2002, Oak received a notice letter of infringement from
Syndia Corporation, an assignee of U.S. Patent No. 4,702, 808 (" '808 patent")
and U.S. Patent No. 5,131,941(" '941 patent") issued to Mr. Jerome Lemelson.
The '808 and '941 patents claim certain plasma enhanced chemical vapor
deposition etch processes that are used in the manufacture of semiconductor
chips.  The notice letter asserts that Oak's use and sale of semiconductor
chips manufactured using processes claimed by the '808 and '941 patents
constitutes an infringement.  Oak uses TSMC to manufacture its semiconductor
products, and has notified TSMC of the claims made by Syndia.  The terms of an
indemnification agreement between Oak and TSMC require TSMC to indemnify Oak
from claims alleging the manufacturing processes used by TSMC infringes the
intellectual property rights of a third party.  Pursuant to the terms of the
indemnification agreement between the parties, TSMC has agreed to indemnify and
hold Oak harmless against the claims made by Syndia.

     If TSMC fails to indemnify and hold Oak harmless, and Syndia is successful
in its claim for infringement, it would likely have a material adverse affect
on Oak's financial condition, cash flows and results of operations.



ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
        --------------------------------

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


                                      32

<PAGE>

<TABLE>
<CAPTION>


  Exhibit
  Number                     Exhibit Title
  ------                     -------------
 <S>     <C>
  10.1    Retention and Severance Plan for the Chief Executive Officer (a)
  10.2    Agreement of Plan Participation (a)
  10.3    Retention and Severance Plan for Executives (b)
  10.4    Agreement of Plan Participation (b)

</TABLE>

     (a) The agreement was entered into by Young K. Sohn
     (b) The agreement was entered into by Barry Cornell, Simon Dolan, John
         Edmunds, Robert Lensch, David Power, John Squire, Dawn Thompson, and
         Francis Yu

(b)  The Company did not file any reports on Form 8-K during the quarter ended
     September 30, 2002.

     On October 8, 2002, the Company filed a report on Form 8-K to report that
     Oak Technology, Inc. had entered into an Agreement and Plan of Merger with
     Optic Acquisition Corp., a Delaware corporation and wholly-owned
     subsidiary of Oak and TeraLogic, Inc., a Delaware corporation
     ("TeraLogic").  Pursuant to the Agreement, Oak will acquire all of the
      issued and outstanding capital stock of TeraLogic through the merger of
      Optic Acquisition Corp. with and into TeraLogic.

      On October 30, 2002, the Company filed a report on Form 8-K to report
      that Oak Technology, Inc. had completed the acquisition of TeraLogic.



                                      33


<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, 2002
                                                /s/     JOHN S. EDMUNDS
                                                ------------------------------
                                                       John S. Edmunds
                                           Senior Vice President of Finance and
                                                  Chief Financial Officer
                                                 (Principal Financial and
                                                     Accounting Officer)


                                      34


<PAGE>

                                CERTIFICATIONS

I, Young K. Sohn, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Oak Technology, Inc.

2. Based on my knowledge, this quarterly report does not contain any untrue
   statement of a material fact or omit to state a material fact necessary to
   make the statements made, in light of the circumstances under which such
   statements were made, not misleading with respect to the period covered by
   this quarterly report.

3. Based on my knowledge, the financial statements, and other financial
   information included in this quarterly report, fairly present in all
   material respects the financial condition, results of operations and cash
   flows of the registrant as of, and for, the periods presented in this
   quarterly report.

4. The registrant's other certifying officers and I are responsible for
   establishing and maintaining disclosure controls and procedures (as defined
   in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

    a) designed such disclosure controls and procedures to ensure that material
       information relating to the registrant, including its consolidated
       subsidiaries, is made known to us by others within those entities,
       particularly during the period in which this quarterly report is being
       prepared;

    b) evaluated the effectiveness of the registrant's disclosure controls and
       procedures as of a date within 90 days prior to the filing date of this
       quarterly report (the "Evaluation Date"); and

    c) presented in this quarterly report our conclusions about the
       effectiveness of the disclosure controls and procedures based on our
       evaluation as of the Evaluation Date.

5. The registrant's other certifying officers and I have disclosed, based on
   our most recent evaluation, to the registrant's auditors and the audit
   committee of registrant's board of directors (or persons performing the
   equivalent functions):

   a) all significant deficiencies in the design or operation of internal
      controls which could adversely affect the registrant's ability to record,
      process, summarize and report financial data and have identified for the
      registrant's auditors any material weaknesses in internal controls; and

   b) any fraud, whether or not material, that involves management or other
      employees who have a significant role in the registrant's internal
      controls.

6. The registrant's other certifying officers and I have indicated in this
   quarterly report whether or not there were significant changes in internal
   controls or in other factors that could significantly affect internal
   controls subsequent to the date of our most recent evaluation, including any
   corrective actions with regard to significant deficiencies and material
   weaknesses.



    By:        /s/  Young K. Sohn
              ------------------------------
    Name:     Young K. Sohn
    Title:    Chairman of the Board of Directors, President
              and Chief Executive Officer
    Date:     November 14, 2002


                                      35


<PAGE>


I, John S. Edmunds, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Oak Technology, Inc.

2. Based on my knowledge, this quarterly report does not contain any untrue
   statement of a material fact or omit to state a material fact necessary to
   make the statements made, in light of the circumstances under which such
   statements were made, not misleading with respect to the period covered by
   this quarterly report.

3. Based on my knowledge, the financial statements, and other financial
   information included in this quarterly report, fairly present in all
   material respects the financial condition, results of operations and cash
   flows of the registrant as of, and for, the periods presented in this
   quarterly report.

4. The registrant's other certifying officers and I are responsible for
   establishing and maintaining disclosure controls and procedures (as defined
   in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)	designed such disclosure controls and procedures to ensure that material
   information relating to the registrant, including its consolidated
   subsidiaries, is made known to us by others within those entities,
   particularly during the period in which this quarterly report is being
   prepared;

b)	evaluated the effectiveness of the registrant's disclosure controls and
   procedures as of a date within 90 days prior to the filing date of this
   quarterly report (the "Evaluation Date"); and

   c) presented in this quarterly report our conclusions about the
      effectiveness of the disclosure controls and procedures based on our
      evaluation as of the Evaluation Date.

5. The registrant's other certifying officers and I have disclosed, based on
   our most recent evaluation, to the registrant's auditors and the audit
   committee of registrant's board of directors (or persons performing the
   equivalent functions):

   a) all significant deficiencies in the design or operation of internal
      controls which could adversely affect the registrant's ability to record,
      process, summarize and report financial data and have identified for the
      registrant's auditors any material weaknesses in internal controls; and

   b) any fraud, whether or not material, that involves management or other
      employees who have a significant role in the registrant's internal
      controls.

6. The registrant's other certifying officers and I have indicated in this
   quarterly report whether or not there were significant changes in internal
   controls or in other factors that could significantly affect internal
   controls subsequent to the date of our most recent evaluation, including any
   corrective actions with regard to significant deficiencies and material
   weaknesses.



    By:       /s/  John S. Edmunds
              ------------------------------
    Name:     John S. Edmunds
    Title:    Senior Vice President of Finance and Chief Financial Officer
    Date:     November 14, 2002


                                      36


<PAGE>


                   CERTIFICATION OF CHIEF EXECUTIVE OFFICER
          PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
                 SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


I, Young K. Sohn, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly
Report of Oak Technology, Inc. on Form 10-Q for the fiscal quarter ended
September 30, 2002 fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934 and that information contained in
such Quarterly Report on Form 10-Q fairly presents in all material respects the
financial condition and results of operations of Oak Technology, Inc.



                                    By:    /s/  Young K. Sohn
                                           ------------------------------
                                    Name:  Young K. Sohn

                                           Title: Chairman of the Board of
                                           Directors, President and Chief
                                           Executive Officer



                                      37


<PAGE>


                   CERTIFICATION OF CHIEF FINANCIAL OFFICER

          PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
                 SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


I, John S. Edmunds, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly
Report of Oak Technology, Inc. on Form 10-Q for the fiscal quarter ended
September 30, 2002 fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934 and that information contained in
such Quarterly Report on Form 10-Q fairly presents in all material respects the
financial condition and results of operations of Oak Technology, Inc.




                                    By:    /s/  John S. Edmunds
                                           ---------------------------------
                                    Name:  John S. Edmunds
                                    Title: Senior Vice President of Finance and
                                           Chief Financial Officer


                                      38


<PAGE>


                                Exhibit Index

<TABLE>
<CAPTION>

  Exhibit
  Number                         Description
  ------                         -----------
  <S>    <C>
   10.1   Retention and Severance Plan for the Chief Executive Officer (a)
   10.2   Agreement of Plan Participation (a)
   10.3   Retention and Severance Plan for Executives (b)
   10.4   Agreement of Plan Participation (b)

    (a) The agreement was entered into by Young K. Sohn
    (b) The agreement was entered into by Barry Cornell, Simon Dolan, John
        Edmunds, Robert Lensch, David Power, John Squire, Dawn Thompson, and
        Francis Yu

</TABLE>

                                      39