<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                                       
                                  FORM 10-Q
                                       
                                       
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES    
    EXCHANGE ACT OF 1934
                                       
              FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
                                       
                                      OR
                                       
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  
    EXCHANGE ACT OF 1934

            For the Transition Period from __________ to __________
                                       
                         COMMISSION FILE NO. 0-25298
                                       
                             OAK TECHNOLOGY, INC.
            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
                                       
                DELAWARE                               77-0161486
      (STATE OR OTHER JURISDICTION OF               (I.R.S. EMPLOYER
      INCORPORATION OR ORGANIZATION)               IDENTIFICATION NO.)

                               139 KIFER COURT
                         SUNNYVALE, CALIFORNIA 94086
         (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
                                       
                                (408) 737-0888
             (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
                                       
Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports) and (2) has been subject to 
such filing requirements for the past 90 days.  YES  X   NO    .
                                                    ---     ---

As of September 30, 1997, there were outstanding 41,745,450 shares of the 
Registrant's Common Stock, par value $0.001 per share.

<PAGE>
                    OAK TECHNOLOGY, INC. AND SUBSIDIARIES
                                       
                                    INDEX

PART  I - FINANCIAL INFORMATION                                           PAGE
                                                                          ----

Item 1.  Financial Statements
         
            Consolidated Balance Sheets as of September 30, 1997
            and June 30, 1997. . . . . . . . . . . . . . . . . . . . . .    3
   
            Consolidated Statements of Operations for the
            Three Months ended September 30, 1997 and 1996 . . . . . . .    4
   
            Consolidated Statements of Cash Flows for the
            Three Months Ended September 30, 1997 and 1996 . . . . . . .    5
   
            Notes to Consolidated Financial Statements . . . . . . . . .    6

Item 2.  Management's Discussion and Analysis of 
         Financial Condition and Results of Operations . . . . . . . . .   11

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . .   23

Item 2.  Changes in Securities and Use of Proceeds . . . . . . . . . . .   24

Item 6.  Exhibits and Reports on Form 8-K  . . . . . . . . . . . . . . .   25

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   29

EXHIBIT INDEX  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   30


                                       2
<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                    OAK TECHNOLOGY, INC. AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
               (in thousands, except share and per share data)
                                       
                                    ASSETS
<TABLE>
<CAPTION>
                                                                                 September 30,     June 30,
                                                                                     1997            1997
                                                                                 ------------   ------------
                                                                                 (Unaudited)
<S>                                                                              <C>            <C>
Current assets:    
    Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . .   $   91,440     $   87,609
    Short-term investments. . . . . . . . . . . . . . . . . . . . . . . . . . .       55,349         57,660
    Accounts receivable, net of allowance for doubtful accounts of 
         $663 and $663, respectively. . . . . . . . . . . . . . . . . . . . . .       27,002         24,872
    Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       10,520         12,322
    Current portion of foundry deposits . . . . . . . . . . . . . . . . . . . .       15,415         15,015
    Deferred tax asset. . . . . . . . . . . . . . . . . . . . . . . . . . . . .        4,350          4,350
    Prepaid expenses and other current assets . . . . . . . . . . . . . . . . .        4,434          4,107
                                                                                 ------------   ------------
         Total current assets . . . . . . . . . . . . . . . . . . . . . . . . .      208,510        205,935
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . .       22,597         19,958
Foundry deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       18,745         19,145
Investment in foundry venture . . . . . . . . . . . . . . . . . . . . . . . . .       39,618         39,618
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        2,956          2,939
                                                                                 ------------   ------------
         Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  292,426     $  287,595
                                                                                 ------------   ------------
                                                                                 ------------   ------------

                     LIABILITIES AND STOCKHOLDERS' EQUITY
                                       
Current liabilities:
    Notes payable and current portion of long-term debt . . . . . . . . . . . .   $    6,619     $    7,264
    Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       14,569         16,144
    Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        8,582          9,882
    Income taxes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . .        6,660          3,893
    Deferred revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          532            584
                                                                                 ------------   ------------
         Total current liabilities. . . . . . . . . . . . . . . . . . . . . . .       36,962         37,767
Long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        2,400          2,496
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        4,151          6,344
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . .        2,265          2,291
                                                                                 ------------   ------------
         Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . .       45,778         48,898
                                                                                 ------------   ------------

Stockholders' equity:
    Preferred stock, $0.001 par value; 2,000,000 shares authorized; 
       none issued and outstanding as of September 30, 1997 and
       June 30, 1997  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            -              -
    Common stock, $0.001 par value; 60,000,000 shares authorized;
       41,745,450 and 41,086,754 shares issued and outstanding as of
       September 30, 1997 and June 30, 1997, respectively . . . . . . . . . . .           42             41
    Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . . . .      161,658        159,901
    Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       84,948         78,755
                                                                                 ------------   ------------
         Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . .      246,648        238,697
                                                                                 ------------   ------------
         Total liabilities and stockholders' equity . . . . . . . . . . . . . .   $  292,426     $  287,595
                                                                                 ------------   ------------
                                                                                 ------------   ------------
</TABLE>
                                       
          See accompanying notes to consolidated financial statements.       

                                       3
<PAGE>

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

<TABLE>
<CAPTION>
                                                                Three Months Ended
                                                                   September 30,
                                                            -------------------------
                                                                1997          1996
                                                            -----------   -----------
<S>                                                         <C>           <C>
Net revenues. . . . . . . . . . . . . . . . . . . . . .      $  43,293     $  18,926 
Cost of revenues. . . . . . . . . . . . . . . . . . . .         20,755        10,216 
                                                            -----------   -----------
         Gross profit . . . . . . . . . . . . . . . . .         22,538         8,710 
Research and development expenses . . . . . . . . . . .         10,831         8,094 
Selling, general and administrative expenses. . . . . .          6,311         4,293 
                                                            -----------   -----------
         Operating income (loss). . . . . . . . . . . .          5,396        (3,677) 
Nonoperating income . . . . . . . . . . . . . . . . . .          4,131         1,134
                                                            -----------   -----------
         Income (loss) before income taxes. . . . . . .          9,527        (2,543)
Income taxes (benefit). . . . . . . . . . . . . . . . .          3,334          (890)
                                                            -----------   -----------
         Net income (loss). . . . . . . . . . . . . . .      $   6,193     $  (1,653)
                                                            -----------   -----------
                                                            -----------   -----------
Net income (loss) per share . . . . . . . . . . . . . .      $    0.15     $   (0.04)
                                                            -----------   -----------
                                                            -----------   -----------
Shares used in computing net income (loss) per share. .         42,569        40,297
                                                            -----------   -----------
                                                            -----------   -----------
</TABLE>
                                       
          See accompanying notes to consolidated financial statements.

                                       4
<PAGE>

                     OAK TECHNOLOGY, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (in thousands)
                                 (Unaudited)
<TABLE>
<CAPTION>
                                                                             Three Months Ended
                                                                                September 30,
                                                                          -------------------------
                                                                             1997          1996
                                                                          -----------   -----------
<S>                                                                       <C>           <C>

Cash flows from operating activities:
    Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . .      $  6,193      $ (1,653)
    Adjustments to reconcile net income to net cash provided by 
         operating activities:
         Depreciation and amortization. . . . . . . . . . . . . . . .         1,577         1,273
         Inventory related adjustments. . . . . . . . . . . . . . . .         1,077        (1,990)
         Equity in loss of unconsolidated affiliates. . . . . . . . .             -           119
         Deferred income taxes. . . . . . . . . . . . . . . . . . . .        (2,193)       (1,146)
         Changes in operating assets and liabilities:
             Accounts receivable. . . . . . . . . . . . . . . . . . .        (2,130)        4,908
             Inventories. . . . . . . . . . . . . . . . . . . . . . .           725         4,726
             Prepaid expenses and other current assets. . . . . . . .          (429)          534
             Accounts payable and accrued expenses. . . . . . . . . .        (2,875)       (2,018)
             Income taxes payable, deferred revenue and other 
                 liabilities  . . . . . . . . . . . . . . . . . . . .         3,016           312
                                                                          -----------   -----------
                 Net cash provided by operating activities. . . . . .         4,961         5,065
                                                                          -----------   -----------
Cash flows from investing activities:
         Purchases of short-term investments. . . . . . . . . . . . .       (21,401)      (11,340)
         Proceeds from matured short-term investments . . . . . . . .        23,712        10,182
         Additions to property and equipment, net . . . . . . . . . .        (4,131)       (1,336)
         Utilization of foundry deposits. . . . . . . . . . . . . . .             -           934
         Other assets . . . . . . . . . . . . . . . . . . . . . . . .             -           (21)
                                                                          -----------   -----------
                 Net cash used in investing activities. . . . . . . .        (1,820)       (1,581)
                                                                          -----------   -----------
Cash flows from financing activities:
    Issuance of debt. . . . . . . . . . . . . . . . . . . . . . . . .         1,551        10,362
    Repayment of debt . . . . . . . . . . . . . . . . . . . . . . . .        (2,292)      (12,409)
    Issuance of common stock, net . . . . . . . . . . . . . . . . . .         1,431           480
                                                                          -----------   -----------
                 Net cash provided by (used in) financing activities.           690        (1,567)
                                                                          -----------   -----------
Net increase in cash and cash equivalents . . . . . . . . . . . . . .         3,831         1,917
Cash and cash equivalents, beginning of period. . . . . . . . . . . .        87,609        44,934
                                                                          -----------   -----------
Cash and cash equivalents, end of period. . . . . . . . . . . . . . .      $ 91,440      $ 46,851
                                                                          -----------   -----------
                                                                          -----------   -----------
Supplemental information:
    Cash paid during the period:
         Interest . . . . . . . . . . . . . . . . . . . . . . . . . .      $     90      $    107
                                                                          -----------   -----------
                                                                          -----------   -----------
         Income taxes . . . . . . . . . . . . . . . . . . . . . . . .      $  2,322      $     20
                                                                          -----------   -----------
                                                                          -----------   -----------
Noncash investing and financing activities:
    Benefit related to stock plans. . . . . . . . . . . . . . . . . .      $    327      $    281
                                                                          -----------   -----------
                                                                          -----------   -----------
    Adjustment to foundry commitments . . . . . . . . . . . . . . . .      $      -      $(14,400)
                                                                          -----------   -----------
                                                                          -----------   -----------
</TABLE>

             See accompanying notes to consolidated financial statements.
                                       
                                       5
<PAGE>

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

1.  BASIS OF PREPARATION

    The accompanying unaudited consolidated financial statements have been 
prepared pursuant to the rules and regulations of the Securities and Exchange 
Commission (the "Commission").  In the opinion of management, the 
consolidated financial statements reflect all adjustments considered 
necessary for a fair presentation of the consolidated financial position, 
operating results and cash flows for those 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, 1997, included in the Oak Technology, Inc. (the 
"Company") 1997 Annual Report on Form 10-K filed with the Commission.

2.  EQUITY AND NET INCOME PER SHARE

    Net income per share has been computed using the weighted average number 
of shares of common stock and dilutive common equivalent shares from stock 
options and warrants outstanding (using the treasury stock method).

    The Financial Accounting Standards Board recently issued Statement of 
Financial Accounting Standards No. 128, "Earnings Per Share."  SFAS No. 128 
requires the presentation of basic earnings per share ("EPS") and, for 
companies with complex capital structures, diluted EPS.  SFAS No. 128 is 
effective for annual and interim periods ending after December 15, 1997.  The 
Company expects that basic EPS will be higher than primary earnings per share 
as presented in the accompanying consolidated financial statements and that 
diluted EPS will not differ materially from fully diluted earnings per share 
as presented in the accompanying consolidated financial statements.
    
3.  INVENTORIES

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

                                          September 30,      June 30,
                                              1997            1997
                                          --------------  ------------
Purchased parts and work in process . . .   $  4,226        $  5,521
Finished goods  . . . . . . . . . . . . .      6,294           6,801
                                          --------------  ------------
                                            $ 10,520        $ 12,322
                                          --------------  ------------
                                          --------------  ------------

                                       6
<PAGE>

                    OAK TECHNOLOGY, INC. AND SUBSIDIARIES
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
                                 (UNAUDITED)
                                 (CONTINUED)
                                       
4.  CONTINGENCIES 

    The Company and various of its current and former officers and Directors 
are parties to several lawsuits which purport to be class actions filed on 
behalf of all persons who purchased or acquired the Company's stock 
(excluding the defendants and parties related to them) for the period July 
27, 1995 through May 22, 1996.  The first, a state court proceeding 
designated IN RE OAK TECHNOLOGY SECURITIES LITIGATION, Master File No. 
CV758510 pending in Santa Clara County Superior Court in Santa Clara, 
California, consolidates five putative class actions.  This lawsuit also 
names as defendants several of the Company's venture capital fund investors, 
two of its investment bankers and two securities analysts.  The plaintiffs 
allege violations of California securities laws and statutory deceit 
provisions as well as breaches of fiduciary duty and abuse of control.  On 
December 6, 1996, the state court Judge sustained the Oak defendants' 
demurrer to all causes of action alleged in plaintiffs' First Amended 
Consolidated Complaint, but allowed plaintiffs the opportunity to amend. The 
plaintiffs' Second Amended Consolidated Complaint was filed on August 1, 1997.

    The Company and various of its current and former officers and Directors 
are also parties to four putative class action lawsuits pending in the U.S. 
District Court for the Northern District of California.  These actions have 
been consolidated as IN RE OAK TECHNOLOGY, INC. SECURITIES LITIGATION, Case 
No. C-96-20552-SW(PVT).  This action alleges certain violations of federal 
securities laws and is brought on behalf of purchasers of the Company's stock 
for the period July 27, 1995 through May 22, 1996.  This action also names as 
a defendant one of the Company's investment bankers.  On July 29, 1997, the 
federal court Judge granted the Oak defendants Motion to Dismiss the 
plaintiffs' First Amended Consolidated Complaint, but granted plaintiffs 
leave to amend most claims.  The plaintiffs' Second Amended Consolidated 
Complaint was filed on September 4, 1997.

    Additionally, various of the Company's current and former officers and 
Directors are defendants in three consolidated derivative actions pending in 
Santa Clara County Superior Court in Santa Clara, California, entitled IN RE 
OAK TECHNOLOGY DERIVATIVE ACTION.  This lawsuit, which asserts a claim for 
breach of fiduciary duty and a claim under California securities law based 
upon the officers' and Directors' trading in securities of the Company, has 
been stayed pending resolution of the class actions.

    In all of the putative state and federal class actions, the plaintiffs 
are seeking monetary damages and equitable relief.  In the derivative action, 
the plaintiffs are also seeking an accounting for the defendants' sales of 
Company stock and the payment of monetary damages to the Company.  

    All of these actions are in the early stages of proceedings and the 
Company is currently investigating the allegations.  Based  on  its  current 
information,  the Company believes the suits to be without merit and will 
defend its position vigorously.   Although it is reasonably possible the 
Company may incur a loss upon conclusion of these claims, an estimate of any 
loss or range of loss cannot be made.  No provision for any liability that 
may result upon adjudication has been made in the Company's Consolidated 
Financial Statements. 

                                       7
<PAGE>

                    OAK TECHNOLOGY, INC. AND SUBSIDIARIES
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
                                 (UNAUDITED)
                                 (CONTINUED)
                                       
4.  CONTINGENCIES (CONTINUED)

    In connection with these legal proceedings, the Company has incurred, and 
expects to continue to incur, substantial legal and other expenses.  
Shareholder suits of this kind are highly complex and can extend for a 
protracted period of time, which can substantially increase the cost of such 
litigation and divert the attention of the Company's management. 

5.  FOUNDRY AGREEMENTS AND INVESTMENT IN FOUNDRY VENTURE

FOUNDRY AGREEMENTS

    In June and November 1995, the Company entered into agreements with TSMC 
and Chartered to obtain certain additional wafer capacity through the year 
2001. The agreements call for the Company to commit to certain future wafer 
purchases and to deposit funds with the suppliers as either a portion of the 
price of the additional wafers in advance of their delivery or as a 
non-interest bearing deposit to secure the availability of additional wafers. 
The price of such wafers will be determined in the future periods in which 
specific orders are actually placed.  If the Company is not able to use, 
assign, or sell the additional wafer quantities, all or a portion of the 
deposits may be forfeited.

    In October 1996, the Company amended its previous agreement with TSMC 
resulting in a reduction of the Company's future wafer purchases required 
under the original agreement and the elimination of required future cash 
prepayments of approximately $73 million.  Under the amended agreement, no 
additional prepayment is required; however, the Company must utilize the 
entire amount of the prepayment paid to date through a certain committed 
amount of wafer purchases in the years 1997, 1998, and 1999 or a portion of 
the prepayment will be forfeited.  The Company currently believes the terms 
and conditions of the agreement as amended will be met although no assurance 
can be given in this regard.

    In September 1996, April 1997 and September 1997, the Company amended its 
agreement with Chartered.  The amendments resulted in a reduction of the 
Company's future wafer purchase commitments and the elimination of required 
future cash deposits under the original agreement of approximately $36 
million. Under the amended agreement, the required future cash deposits of 
approximately $36 million could be reinstated if certain conditions are not 
met.  The Company currently believes the terms and conditions of the 
agreement as amended will be met and that these commitments will not be 
reinstated although no assurance can be given in this regard.

    The deposits and prepayments under the amended foundry agreements 
described above are recorded at cost and total approximately $34.2 million as 
of September 30, 1997.  The Company currently anticipates being able to 
utilize and fully recover the value of all foundry prepayments and deposits 
under the terms of the amended agreements.


                                       8
<PAGE>

                    OAK TECHNOLOGY, INC. AND SUBSIDIARIES
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
                                 (UNAUDITED)
                                 (CONTINUED)
                                       
5.  FOUNDRY AGREEMENTS AND INVESTMENT IN FOUNDRY VENTURE (CONTINUED)

INVESTMENT IN FOUNDRY VENTURE

    In October 1995, the Company entered into a series of agreements with 
United Microelectronics Corporation ("UMC") to form, along with other 
investors, a separate Taiwanese company, United Integrated Circuits 
Corporation ("UICC"), for the purpose of building and managing a 
semiconductor manufacturing facility in the Science Based Industrial Park in 
Hsin Chu City, Taiwan, Republic of China.  In January 1996, the Company made 
an initial payment of $13.7 million and in January 1997, the Company made a 
second payment of $25.9 million due under this agreement. The final payment 
under this agreement of approximately $11.3 million, based on current 
exchange rates, is due during the quarter ended December 31, 1997. The 
Company has entered into a forward contract which is effectively a hedge 
against the final payment.  If for any reason the Company does not make all 
or a portion of this final payment, a loss may have to be recognized upon 
settlement of the forward contract during the quarter ended December 31, 
1997.   Investment in the foundry venture was approximately $39.6 million as 
of September 30, 1997.  Upon completion of the final payment of approximately 
$11.3 million, the Company expects to have invested a total of approximately 
$51 million for 9.3% of the total available shares of the venture. As an 
investor in this venture, the Company will have rights to a portion of the 
total wafer capacity for the manufacture of its proprietary products.  There 
can be no assurance that a market will develop for the shares representing 
the Company's equity investment at any time in the future.

    On October 3, 1997, a fire damaged the UICC facility causing an 
undetermined amount of damage to the manufacturing equipment and to the 
building. Representations by UICC management indicate that all of the 
equipment and a significant portion of the building were completely 
destroyed.  UICC management and it's insurance carrier are in the process of 
determining whether the losses are covered by insurance, and therefore, at 
this time, no assurance can be given that the losses are covered by 
insurance.  Any uninsured losses recorded by UICC as a result of the fire 
would have a significant impact on the value of the investment and could have 
a material adverse effect on the Company's business, operating results and 
financial condition.  No charge to reflect any impairment of the investment 
has been recorded as of September 30, 1997. Representations have been made by 
UICC management that the facility's foundry capacity that has been guaranteed 
to the Company will be available through substitute capacity arrangements, 
however there can be no assurance that such substitute foundry capacity will 
be available to the Company. Additionally, there can be no assurance that a 
market will develop for the shares representing the Company's equity 
investment at any time in the future.

                                       9
<PAGE>

                    OAK TECHNOLOGY, INC. AND SUBSIDIARIES
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
                                 (UNAUDITED)
                                 (CONTINUED)
                                       

6.  SETTLEMENT AWARDS

    In September 1997, the Company received $2.6 million pursuant to a 
Settlement Agreement entered into on July 31, 1997 between the Company and 
United Microelectronics Corporation in connection with a complaint the 
Company had filed with the International Trade Commission on July 21, 1997 
based on the Company's belief that certain CD-ROM controllers infringed one 
or more of the Company's patents.  Proceeds from this settlement were 
recorded as miscellaneous income and are included in nonoperating income for 
the period ended September 30, 1997.






                                      10
<PAGE>

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

EXCEPT FOR THE HISTORICAL FINANCIAL INFORMATION CONTAINED HEREIN, THE MATTERS 
DISCUSSED IN THIS QUARTERLY REPORT ON FORM 10-Q MAY BE CONSIDERED 
"FORWARD-LOOKING" STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE 
SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES ACT OF 
1934, AS AMENDED. SUCH STATEMENTS INCLUDE DECLARATIONS REGARDING THE INTENT, 
BELIEF OR CURRENT EXPECTATIONS OF THE COMPANY AND ITS MANAGEMENT. PROSPECTIVE 
INVESTORS ARE CAUTIONED THAT ANY 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 ARE: (i) THAT THE INFORMATION IS OF A PRELIMINARY 
NATURE AND MAY BE SUBJECT TO FURTHER ADJUSTMENT, (ii) VARIABILITY IN THE 
COMPANY'S QUARTERLY OPERATING RESULTS, (iii) GENERAL CONDITIONS IN THE 
SEMICONDUCTOR INDUSTRY, (iv) RISKS RELATED TO PENDING LEGAL PROCEEDINGS, (v) 
DEVELOPMENT BY COMPETITORS OF NEW OR SUPERIOR PRODUCTS OR THE ENTRY OF NEW 
COMPETITORS INTO THE COMPANY'S MARKETS, (vi) THE COMPANY'S ABILITY TO 
DIVERSIFY ITS PRODUCT AND MARKET BASE BY DEVELOPING AND INTRODUCING NEW 
PRODUCTS WITHIN DESIGNATED MARKET WINDOWS AT COMPETITIVE PRICE AND 
PERFORMANCE LEVELS, (vii) WILLINGNESS OF PROSPECTIVE CUSTOMERS TO DESIGN THE 
COMPANY'S PRODUCTS INTO THEIR PRODUCTS, (viii) AVAILABILITY OF ADEQUATE 
FOUNDRY CAPACITY AND ACCESS TO PROCESS TECHNOLOGIES, (ix) THE COMPANY'S 
ABILITY TO PROTECT ITS PROPRIETARY INFORMATION AND OBTAIN ADEQUATE LICENSES 
OF THIRD PARTY TECHNOLOGY ON ACCEPTABLE TERMS, (x) RISKS RELATED TO USE OF 
INDEPENDENT MANUFACTURERS AND THIRD PARTY ASSEMBLY AND TEST VENDORS, (xi) 
DEPENDENCE ON KEY PERSONNEL, (xii) RELIANCE ON A LIMITED NUMBER OF LARGE 
CUSTOMERS, (xiii) DEPENDENCE ON SALES OF CD-ROM CONTROLLER PRODUCTS, (xiv) 
RISKS RELATED TO INTERNATIONAL BUSINESS OPERATIONS, (xv) ABILITY OF THE 
COMPANY TO MAINTAIN ADEQUATE PRICE LEVELS AND MARGINS WITH RESPECT TO ITS 
PRODUCTS, (xvi) MANAGEMENT OF CHANGING OPERATIONS RELATED TO THE COMPANY'S 
ATTEMPT TO DIVERSIFY ITS PRODUCT AND MARKET BASE, (xvii) CURRENT DEPENDENCE 
ON SALES TO THE ASIAN MARKETS, (xviii) THE ABILITY TO ATTRACT AND RETAIN 
QUALIFIED MANAGEMENT AND TECHNICAL PERSONNEL AND (xix) OTHER RISKS IDENTIFIED 
FROM TIME TO TIME IN THE COMPANY'S REPORTS AND REGISTRATION STATEMENTS FILED 
WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE ANNUAL REPORT ON 
FORM 10-K FOR THE YEAR ENDED JUNE 30, 1997.

    The Company designs, develops and markets high performance integrated 
semiconductors and related software to original equipment manufacturers 
worldwide that serve the PC, consumer electronics and digital office 
equipment markets.  The Company provides semiconductor products for these 
markets by leveraging its expertise in five core technologies: optical 
storage, MPEG imaging, video/graphics, audio/communications and digital 
imaging.  The Company's products typically consist of hardware, firmware and 
software to provide a complete solution for customers.

    The Company contracts with independent foundries to manufacture all of 
its products, enabling the Company to focus on its design strengths, minimize 
fixed costs and capital expenditures and gain access to advanced 
manufacturing facilities.  Except pursuant to its agreements with TSMC and 
Chartered, the Company's foundries generally are not obligated to supply 
products to the Company for any specific period, in any specific quantity or 
at a specific price.

                                      11
<PAGE>

THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE MONTHS ENDED 
SEPTEMBER 30, 1996

    NET REVENUES.  The Company's net revenues in the comparison periods were 
primarily derived from sales of its CD-ROM controller products which 
comprised 86% and 77% of the Company's net revenues in the three months ended 
September 30, 1997 and 1996 respectively.  Net revenues increased 129% to 
$43.3 million in the three months ended September 30, 1997 from $18.9 million 
in the comparable period of fiscal 1997.  This increase was primarily 
attributable to an increase in unit sales of CD-ROM controllers from the 
comparable period of fiscal 1997 partially offset by a decline in the average 
selling price ("ASP") of the CD-ROM controllers. The increase in unit sales 
is primarily the result of the relatively low unit sales in the comparable 
period of fiscal 1997 resulting from customer decisions to reduce inventory, 
an overall slowdown in the PC market and a shift in the CD-ROM industry from 
4x speed drives to 6x and 8x speed drives. Although the Company is attempting 
to diversify its revenue product base, it anticipates that CD-ROM controller 
sales will continue to account for a substantial majority of its revenue in 
the foreseeable future.  As the Company has been experiencing continued 
pressure on CD-ROM controller ASPs, increased competition and a maturation of 
the CD-ROM controller market, the Company does not anticipate year over year 
growth to continue at the same rate in the foreseeable future.  In the three 
months ended September 30, 1997 and 1996, sales to the Company's top ten 
customers accounted for approximately 82% and 79%, respectively, of the 
Company's net revenues.  International sales, principally to Taiwan, Japan, 
Korea and Singapore, accounted for approximately 96% and 92% of the Company's 
net revenues in each of the three months ended September 30, 1997 and 1996, 
respectively.  See "Factors That May Affect Future Results" below.

    GROSS MARGIN.  Cost of revenues includes the cost of wafer fabrication, 
assembly and testing performed by third-party vendors and direct and indirect 
costs associated with the procurement, scheduling and quality assurance 
functions performed by the Company.  The Company's gross margin increased to 
52.1% in the three month period ended September 30, 1997 as compared to 46.0% 
during the comparable period in the prior year.  Gross margin in the three 
month period ended September 30, 1996 included the impact of a favorable 
manufacturing cost adjustment of $1.5 million.  Excluding the effect of this 
adjustment, gross margin would have been 38.1%. The increase in gross margin, 
during the comparison periods, is primarily the result of a product mix shift 
to higher margin CD-ROM controllers during the comparison periods.  The 
Company's overall gross margin is subject to change due to various factors, 
including, among others, competitive product pricing, yields, wafer costs, 
assembly and test costs and product mix.  The Company expects that ASPs for 
its existing products will continue to decline over time and that ASPs for 
each new product will decline significantly over the life of the product.  
The Company is currently experiencing severe price pressure on its CD-ROM 
controller and MPEG products and expects such price erosion to continue.   A 
decline in ASPs that is not offset by a reduction in production costs or by 
sales of new products with higher gross margins would decrease the Company's 
overall gross margin and could materially adversely affect the Company's 
operating results.  In addition, the Company believes that gross margins for 
new products in all of its core technologies will be lower than historical 
levels and that, 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 increased 34% to 
$10.8 million in the three months ended September 30, 1997 from $8.1 million 
in the comparable period in the prior year.  This 

                                      12
<PAGE>

increase was principally the result of the hiring of additional technical 
personnel and associated expenses. Research and development expenses 
decreased as a percentage of net revenues to 25.0% during the three months 
ended September 30, 1997 from 42.8% in the comparable period in the prior 
year due primarily to the significant increase in the Company's net revenues 
in the current period compared to the comparable period of fiscal 1997.  The 
Company will continue to invest substantial resources in research and 
development, including hiring additional technical personnel, in an effort to 
maintain its technological leadership in the CD-ROM controller market and 
diversify its product development in its other core technologies: 
video/graphics, MPEG imaging, audio/communication and digital imaging.  As a 
result, the Company expects to incur higher absolute research and development 
expenses in the remainder of fiscal 1998. 

    SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.  Selling, general and 
administrative expenses increased 47% to $6.3 million in the three months 
ended September 30, 1997 from $4.3 million in the comparable period in the 
prior year. This increase was principally the result of the hiring of 
additional management and administrative personnel and associated expenses. 
Selling, general and administrative expenses decreased as a percentage of net 
revenues to 14.6% in the three months ended September 30, 1997 from 22.7% 
during the comparable period in fiscal 1997, due primarily to a significant 
increase in the Company's net revenues in the comparison periods.  As a 
result of the continuing efforts to develop the Company's support 
infrastructure and hire additional senior management personnel, the Company 
expects to incur higher absolute selling, general and administrative expenses 
in the remainder of fiscal 1998.

    NONOPERATING INCOME.  During the three months ended September 30, 1997, 
nonoperating income increased to $4.1 million from $1.1 million during the 
comparable three months of fiscal 1997.  This increase was primarily the 
result of the receipt of approximately $2.6 million related to the settlement 
agreement between the Company and United Microelectronics Corporation in 
connection with a complaint the Company had filed with the International 
Trade Commission on July 21, 1997.  See ("Legal Proceedings")

    INCOME TAXES. The overall effective tax rate for the three months ended 
September 30, 1997 as well as the comparable period of fiscal 1997 was 35.0%.

FACTORS THAT MAY AFFECT FUTURE RESULTS

    The following factors should be carefully considered in evaluating the 
Company and its business.

    The Company's operating results are subject to quarterly and other 
fluctuations due to a variety of factors, including the gain or loss of 
significant customers, increased competitive pressures, the timing of new 
product introductions by the Company or its competitors and market acceptance 
of new or enhanced versions of the Company's and its customers' products.  
Other factors include the availability of foundry capacity, fluctuations in 
manufacturing yields, availability and cost of raw materials, the cyclical 
nature of both the semiconductor industry, the market for PCs and the markets 
addressed by the Company's products, seasonal customer demand, the Company's 
ability to diversify its product offerings, the competitiveness of the 
Company's customers, the timing of significant orders and order cancellations 
or rescheduling, significant increases in expenses associated with the 
expansion of operations and development of the Company's support 
infrastructure, and changes in pricing policies by the Company, its 
competitors or its suppliers, including decreases in ASPs of the Company's 
products.  In addition, the Company's quarterly operating results could be 
materially 

                                      13
<PAGE>

adversely affected by legal expenses incurred in connection with, or any 
adverse judgment in, the Company's ongoing shareholder legal proceedings.  
The Company's operating results could also be adversely affected by economic 
conditions generally in various geographic areas where the Company or its 
customers do business, or by order cancellations or rescheduling.  These 
factors are difficult to forecast, and these or other factors could 
materially affect the Company's quarterly or annual operating results.  There 
can be no assurance as to the level of sales or earnings that may be attained 
by the Company in any given period in the future.

    The Company currently places noncancelable orders to purchase its 
products from independent foundries on an approximately three month rolling 
basis and is currently committed with two of its foundries for certain 
minimum amounts of capacity for the next several years, while its customers 
generally place purchase orders with the Company less than four weeks prior 
to delivery that may be rescheduled or under certain circumstances may be 
canceled without significant penalty.  Consequently, if anticipated sales and 
shipments in any quarter are rescheduled, canceled, or do not occur as 
quickly as expected, expense and inventory levels could be disproportionately 
high and the Company's business, financial condition and results of 
operations for that quarter or for the year would be materially adversely 
affected.

    The semiconductor industry has historically been characterized by rapid 
technological change, cyclical market patterns, significant price erosion, 
periods of over-capacity and production shortages, variations in 
manufacturing costs and yields and significant expenditures for capital 
equipment and product development.  In addition, the industry has experienced 
significant economic downturns at various times, characterized by diminished 
product demand and accelerated erosion of product prices.  The Company may 
experience substantial period-to-period fluctuations in operating results due 
to general semiconductor industry conditions.

    The Company and various of its current and former officers and Directors 
are parties to certain legal proceedings.  See "Legal Proceedings."  All of 
these actions are in the early stages of proceedings and the Company is 
currently investigating the allegations.  Based on its current information, 
the Company believes the suits to be without merit and will defend its 
position vigorously.  No provision for any liability that may result upon 
adjudication has been made in the Company's Consolidated Financial 
Statements.  In connection with these legal proceedings, the Company has 
incurred, and expects to continue to incur, substantial legal and other 
expenses.  Shareholder suits of this kind are highly complex and can extend 
for a protracted period of time, which can substantially increase the cost of 
such litigation and divert the attention of the Company's management.

    The markets in which the Company competes are intensely competitive and 
are characterized by rapid technological change, declining unit ASP's and 
rapid product obsolescence.  The Company expects competition to increase in 
the future from existing competitors and from other companies that may enter 
the Company's existing or future markets with solutions that may be less 
costly or provide higher performance or additional features.  The Company's 
existing and potential competitors include many large domestic and 
international companies that have substantially greater financial, 
manufacturing, technical, marketing, distribution and other resources, 
broader product lines and longer standing relationships with customers than 
the Company.  The Company's competitors also include a number of emerging 
companies as well as some of the Company's own customers and suppliers.  The 
Company is currently attempting to enter several new markets in which the 
Company has not previously operated.  These markets are intensely competitive 
and the Company will have to compete with large domestic and international 
companies that have long standing relationships with 

                                      14
<PAGE>

the Company's target customers.  Certain of the Company's principal 
competitors maintain their own semiconductor foundries and may therefore 
benefit from certain capacity, cost and technological advantages.  The 
Company believes that its ability to compete successfully depends on a number 
of factors, both within and outside of its control, including the price, 
quality and performance of the Company's and its customers' products, the 
timing and success of new product introductions by the Company, its customers 
and its competitors, the emergence of new PC standards, the development of 
technical innovations, the ability to obtain adequate foundry capacity and 
sources of raw materials, the efficiency of production, the rate at which the 
Company's customers design the Company's products into their products, the 
market acceptance of the Company's customers products, the number and nature 
of the Company's competitors in a given market, the assertion of intellectual 
property rights and general market and economic conditions.  There can be no 
assurance that the Company will be able to compete successfully in the future.

    The willingness of prospective customers to design the Company's products 
into their products depends, to a significant extent, upon the ability of the 
Company to have product available at the appropriate market window and to 
price its products at a level that is cost effective for such customers.  The 
markets for most of the applications for the Company's products, particularly 
the PC market and the consumer electronics market, are characterized by 
intense price competition.  As the markets for the Company's products mature 
and competition increases, the Company anticipates that ASPs on its products 
will decline.  If the Company is unable to reduce its costs sufficiently to 
offset declines in ASPs or is unable to successfully introduce new higher 
performance products with higher ASPs, the Company's operating results will 
be materially adversely affected.  In addition, if the Company experiences 
yield or other production problems or shortages of supply that increase its 
manufacturing costs, or fails to reduce its manufacturing costs, the result 
would be a material adverse effect on the Company's business, financial 
condition and operating results.

    The markets for the Company's products are characterized by evolving 
industry standards, rapid technological change and product obsolescence.  The 
Company's performance is highly dependent upon the successful development and 
timely introduction of new products at competitive price and performance 
levels. Currently, the Company's financial performance is dependent upon the 
Company's level of success in the CD-ROM controller market.  In an effort to 
diversify its product and market base, the Company has invested substantial 
resources in optical storage as well as in its other core technologies: 
video/graphics, MPEG imaging, audio/communications, and digital imaging.  
There can be no assurance that products currently under development in these 
core technologies or any other new products will be successfully developed or 
will achieve market acceptance, thereby affecting the Company's ability to 
achieve diversification of its products and markets.  The failure of the 
Company to introduce new products successfully or the failure of new products 
to achieve market acceptance would have a material adverse effect on the 
Company's business, financial condition and results of operations.  The 
success of new product introductions is dependent on several factors, 
including recognition of market requirements, product cost, timely completion 
and introduction of new product designs, securing sufficient foundry capacity 
for volume manufacturing of wafers, quality of new products and achievement 
of acceptable manufacturing yields from the Company's contract manufacturers. 
 Due to the design complexity of its products, the Company has experienced 
delays in completing development and introduction of new products, and there 
can be no assurance that the Company will not encounter such delays in the 
development and introduction of future products.  There can be no assurance 
that the Company will successfully identify new product opportunities and 
develop and bring new products to market in a timely manner, that the 
Company's products will be selected for design into the products of its 
targeted customers or that products or technologies developed by others will 
not render the Company's products or technologies obsolete or 

                                      15
<PAGE>

noncompetitive. The failure of the Company's new product development efforts 
or the failure of the Company to achieve market acceptance of its new 
products would have a material adverse effect on the Company's business, 
financial condition and operating results.

    The Company's ability to compete is affected by its ability to protect 
its proprietary information.  The Company considers its technology to be 
proprietary and relies on a combination of patents, trademarks, copyrights, 
trade secret laws, confidentiality procedures and licensing arrangements to 
protect its intellectual property rights.  The Company currently has three 
patents granted, fourteen patents pending, twenty-two patents in preparation 
in the United States, and two international patents pending.  The Company 
intends to seek additional international patents and additional United States 
patents on its technology.  There can be no assurance that additional patents 
will issue from any of the Company's pending applications or applications in 
preparation, or be issued in all countries where the Company's products can 
be manufactured or sold, or that any claims allowed from pending applications 
or applications in preparation will be of sufficient scope or strength to 
provide meaningful protection or any commercial advantage to the Company.  
Additionally, competitors of the Company may be able to design around the 
Company's patents. The laws of certain foreign countries in which the 
Company's products are or may be manufactured or sold, including various 
countries in Asia, may not protect the Company's 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 the Company's technology and products 
more likely.  On July 21, 1997, the Company filed a complaint with the 
International Trade Commission ("ITC") against certain Asian manufacturers of 
optical storage controller devices based on the Company's belief that such 
devices infringed one or more of the Company's patents.  The complaint seeks 
a ban on the importation into the United States of any infringing CD-ROM 
controller or products containing such infringing CD-ROM controllers.  (See 
"Legal Proceedings").  There can be no assurance that the steps taken by the 
Company to protect its proprietary information will be adequate to prevent 
misappropriation of its technology or that the Company's competitors will not 
independently develop technologies that are substantially equivalent or 
superior to the Company's technology.

    The semiconductor industry is characterized by vigorous protection and 
pursuit of intellectual property rights, which has resulted in significant, 
often protracted and expensive litigation.  Although there is currently no 
pending intellectual property litigation against the Company, the Company or 
its foundries may, from time to time, be notified of claims that the Company 
may be infringing patents or other intellectual property rights owned by 
third parties. If it is necessary or desirable, the Company may seek licenses 
under such patents or other intellectual property rights.  However, there can 
be no assurance that licenses will be offered or that the terms of any 
offered licenses will be acceptable to the Company.  The failure to obtain a 
license from a third party for technology used by the Company could cause the 
Company to incur substantial liabilities and to suspend the manufacture of 
products or the use by the Company's foundries of processes requiring the 
technology. Furthermore, the Company may initiate claims or litigation 
against third parties for infringement of the Company's proprietary rights or 
to establish the validity of the Company's proprietary rights.   The Company 
recently initiated such litigation by filing a complaint with the 
International Trade Commission (See "Legal Proceedings").  Litigation by or 
against the Company could result in significant expense to the Company and 
divert the efforts of the Company's technical and management personnel, 
whether or not such litigation results in a favorable determination for the 
Company.  In the event of an adverse result in any such litigation, the 
Company 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.  There can be no assurance that the 
Company would be 

                                      16
<PAGE>

successful in such development or that such licenses would be available on 
reasonable terms, or at all, and any such development or license could 
require expenditures by the Company of substantial time and other resources.  
Patent disputes in the semiconductor industry have often been settled through 
cross-licensing arrangements.  Because the Company has a limited portfolio of 
patents, the Company may not be able to settle an alleged patent infringement 
claim through a cross-licensing arrangement.  If a successful claim is made 
against the Company, or its customers, and a license is not made available to 
the Company on commercially reasonable terms, or if the Company is required 
to pay substantial damages or awards, the Company's business, financial 
condition and operating results would be materially adversely affected.

    The Company generally enters into confidentiality agreements with its 
employees and confidentiality and license agreements with its customers and 
potential customers, and limits access to and distribution of the source and 
object code of its software and other proprietary information.  Under some 
circumstances, the Company grants licenses that give its customers limited 
access to the source code of the Company's software which increases the 
likelihood of misappropriation or misuse of the Company's technology. 
Accordingly, despite precautions taken by the Company, it may be possible for 
unauthorized third parties to copy certain portions of the Company's 
technology or to obtain and use information that the Company regards as 
proprietary.  There can be no assurance that the steps taken by the Company 
will be adequate to prevent misappropriation of its technology or to provide 
an adequate remedy in the event of a breach or misappropriation by others.

    Certain technology used in the Company's products is licensed from third 
parties.  Some of the Company's products, particularly those targeted for the 
DVD market, require certain types of copy protection software that the 
Company must license from third parties.  In addition, if the Company is to 
successfully design and develop technologically advanced products, it must 
license a variety of software design and development tools from third 
parties.  There can be no assurance that such licenses, or licenses of other 
third party technology, will be available on terms acceptable to the Company, 
if at all.  The inability of the Company to enter into such license 
arrangements on acceptable terms could have a material adverse effect on the 
Company's business, financial condition and results of operations.

    The Company contracts with independent foundries to manufacture all of 
its products, enabling the Company to focus on its design strengths, minimize 
fixed costs and capital expenditures and gain access to advanced 
manufacturing facilities.  Certain of the Company's foundry agreements 
require up-front, nonrefundable prepayments or deposits and these fixed costs 
could affect the Company's operating margins if the Company is unable to 
utilize the minimum number of wafers required under the agreements.  The 
Company is dependent on its foundries to allocate to the Company a portion of 
their foundry capacity sufficient to meet the Company's needs to produce 
products of acceptable quality and with acceptable manufacturing yields and 
to deliver products to the Company in a timely manner.  These foundries 
fabricate products for other companies and some manufacture products of their 
own design.  The Company has recently experienced a decrease in the supply of 
available foundry capacity which in turn has created an increase in the lead 
time required to manufacture the Company's products. If the Company is 
unsuccessful in getting its customers to place orders on a longer lead time, 
the Company may be unable to fulfill customer demand.  In addition, the 
Company had anticipated that it would be able to satisfy a small portion of 
its manufacturing requirements from UICC; however due to the recent fire at 
UICC the Company will not be able to utilize this foundry in the foreseeable 
future.  UICC management has indicated that capacity will be available 
through substitute capacity arrangements, however no assurance can be given 
as to the availability of such capacity. The loss of any of these foundries 
as a supplier, the 

                                      17
<PAGE>

inability of the Company in a period of increased demand for its products to 
expand the foundry capacity of its current suppliers or qualify other wafer 
manufacturers for additional foundry capacity, any inability to obtain timely 
and adequate deliveries from the Company's current or future suppliers or any 
other circumstances that would require the Company to seek alternative 
sources of supply could delay shipments of the Company's products, which 
could damage relationships with its current and prospective customers, 
provide an advantage to the Company's competitors and have a material adverse 
effect on the Company's business, financial condition and operating results.

    The Company's reliance on independent manufacturers and third party 
assembly and testing vendors involves a number of additional risks, including 
the unavailability of, or interruption in access to, certain process 
technologies and reduced control over delivery schedules, quality assurance 
and costs.  In addition, as a result of the Company's dependence on foreign 
subcontractors, the Company is subject to the risks of conducting business 
internationally, including foreign government regulation and general 
political risks, such as political and economic instability, potential 
hostilities, changes in diplomatic and trade relationships, currency 
fluctuations, unexpected changes in, or imposition of, regulatory 
requirements, tariffs, import and export restrictions, and other barriers and 
restrictions, potentially adverse tax consequences, the burdens of complying 
with a variety of foreign laws and other factors beyond the Company's control.

    The manufacture of semiconductors is a highly complex and precise 
process. Minute levels of contaminants in the manufacturing environment, 
defects in the masks used to print circuits on a wafer, difficulties in the 
fabrication process or other factors can cause a substantial percentage of 
wafers to be rejected or a significant number of die on each wafer to be 
nonfunctional.  Many of these problems are difficult to diagnose and time 
consuming or expensive to remedy. The Company's products are particularly 
complex and difficult to manufacture. There can be no assurance that the 
Company's foundries will not experience irregularities or adverse yield 
fluctuations in their manufacturing processes. Any yield or other production 
problems or shortages of supply experienced by the Company or its foundries 
could have a material adverse effect on the Company's business, financial 
condition and results of operations.

    Sales of the Company's CD-ROM controller products comprised 86% and 77% 
of the Company's net revenues in the three months ended September 30, 1997 
and 1996, respectively.  Sales of CD-ROM controller products are expected to 
continue to account for a substantial portion of the Company's total revenues 
for the foreseeable future.  The market for CD-ROM controller products 
continues to mature and therefore, it is expected that sales of such products 
will not necessarily continue to grow at historical rates and will be 
influenced by the traditional seasonality associated with the PC market.  In 
addition, given the continued maturation of the CD-ROM controller market, the 
Company will continue to experience increased price pressure for such 
products.   In addition, there can be no assurance that the Company will be 
able to sustain the current level of such product sales or current operating 
margins.  There can be no assurance that the market for CD-ROM controller 
products in general, or the Company's CD-ROM controller products in 
particular, will support the Company's planned operations in the future.  It 
is anticipated that the introduction of DVD-ROM drives will impact the demand 
for CD-ROM controller products.  Any decrease in the overall level of sales 
of, or the prices for, the Company's CD-ROM controller products, due to 
introductions of products by present or future competitors, a decline in 
demand for CD-ROM controller products, product obsolescence or any other 
reason would have a material adverse effect on the Company's business, 
financial condition and results of operations.

                                      18
<PAGE>

    International sales, principally to Taiwan, Japan, Korea and Singapore, 
accounted for approximately 96% and 92% of the Company's net revenues in each 
of the three months ended September 30, 1997 and 1996, respectively.  A 
substantial portion of the Company's international revenues in the comparison 
periods were derived from Japanese, Taiwanese and Korean and Singapore 
manufacturers of CD-ROM drives.  Accordingly, the Company is subject to the 
risks of conducting business outside of the United States.  These risks 
include unexpected changes in, or impositions of, legislative or regulatory 
requirements, delays resulting from difficulty in obtaining export licenses 
for certain technology, tariffs, quotas and other trade barriers and 
restrictions, longer payment cycles, greater difficulty in accounts 
receivable collection, potentially adverse tax rates, the burdens of 
complying with a variety of foreign laws and other factors beyond the 
Company's control.  The Company is also subject to general geopolitical risks 
in connection with its international operations, such as political, social 
and economic instability, potential hostilities and changes in diplomatic and 
trade relationships.  There can be no assurance that such factors will not 
adversely affect the Company's operations in the future or require the 
Company to modify its current business practices.  In addition, the laws of 
certain foreign countries in which the Company's products are or may be 
developed, manufactured or sold, including various countries in Asia, may not 
protect the Company's 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 the Company's technology and products more likely.  Most of the 
Company's foreign sales are negotiated in U.S. dollars; however, invoicing is 
often done in local currency. As a result, the Company may be subject to the 
risks of currency fluctuations. There can be no assurance that one or more of 
the foregoing factors will not have a material adverse effect on the 
Company's business, financial condition or results of operations or require 
the Company to modify its current business practices.

    A limited number of customers historically has accounted for a 
substantial portion of the Company's net revenues.  In the three months ended 
September 30, 1997 and 1996, sales to the Company's top ten customers 
accounted for approximately 82% and 79%, respectively, of the Company's net 
revenues. The Company expects that sales to a limited number of customers 
will continue to account for a substantial portion of its net revenues for 
the foreseeable future.  The Company has experienced significant changes from 
year to year in the composition of its major customer base and believes this 
pattern will continue. The Company does not have long-term purchase 
agreements with any of its customers.  Customers generally purchase the 
Company's products pursuant to cancelable short-term purchase orders.  The 
loss of, or significant reduction in purchases by, current major customers 
would have a material adverse effect on the Company's business, financial 
condition and results of operations.  There can be no assurances that the 
Company's current customers will continue to place orders or that existing 
orders will not be canceled.  If sales to current customers cease or are 
reduced, there can be no assurance that the Company will be able to continue 
to obtain the orders from new customers necessary to offset any such losses 
or reductions.

    The Company's future performance depends, to a significant degree, on the 
continued retention and contribution of members of the Company's senior 
management as well as other key personnel.  The Company is in the process of 
recruiting additional senior managers and technical personnel.  Competition 
for these persons is intense and there can be no assurance that the Company 
will be able to attract and retain qualified managers and other personnel.

    Many currently installed computer systems and software products are coded 
to accept only two digit entries in the date code field.  These date code 
fields will need to accept four digit entries to distinguish 21st century 
dates from 20th century dates.  As a result, in less than three years, 
computer systems and/or software used by many companies may need to be 
upgraded to comply with such "Year 

                                      19
<PAGE>

2000" requirements.  The Company has no way of determining whether its 
customers will be affected by these Year 2000 requirements. Therefore, the 
Company can give no assurance that the Year 2000 will not result in a 
material adverse effect on the Company's business, operating results and 
financial condition. 

LIQUIDITY AND CAPITAL RESOURCES

    Since its inception, the Company 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.  The Company's principal sources of 
liquidity as of September 30, 1997 consisted of approximately $146.8 million 
in cash, cash equivalents and short-term investments, approximately $25.0 
million in lines of credit with two Japanese financial institutions, of which 
$19.2 million was available as of September 30, 1997 and approximately $12.6 
million in lines of letters of credit with Taiwanese financial institutions 
of which approximately $11.0 million was available as September 30, 1997.

    During the three months ended September 30, 1997, operating activities 
provided net cash of approximately $5.0 million.  This cash resulted 
primarily from net income of $6.2 million and non-cash adjustments to net 
income of $0.5 million, partially offset by net changes in operating assets 
and liabilities of $1.7 million. Net income includes the impact of the 
receipt of approximately $2.6 million recorded during the three months ended 
September 30, 1997 related to the settlement agreement between the Company 
and United Microelectronics Corporation in connection with a complaint the 
Company had filed with the International Trade Commission on July 21, 1997. 
Investing and financing activities utilized cash of approximately $1.1 
million consisting primarily of purchases of property and equipment of $4.1 
million and net repayment of debt of $0.7 million, partially offset by net 
proceeds from matured short term investments of $2.3 million and proceeds 
from issuance of common stock of $1.4 million. 

    The Company believes that its existing cash, cash equivalents, short-term 
investments and credit facilities will be sufficient to provide adequate 
working capital and to fund necessary purchases of property and equipment 
through at least the next twelve months.  Capital expenditures for the 
remainder of fiscal 1998 are anticipated to be approximately $8.3 million.  
The Company may also utilize cash to acquire or invest in complementary 
businesses or products or to obtain the right to use complementary 
technologies.  From time to time, in the ordinary course of business, the 
Company evaluates potential acquisitions of such businesses, products or 
technologies.  However, the Company has no present understandings, 
commitments or agreements with respect to any material acquisition of other 
businesses, products or technologies.

    In June and November 1995, the Company entered into agreements with TSMC 
and Chartered to obtain certain additional wafer capacity through the year 
2001. The agreements call for the Company to commit to certain future wafer 
purchases and to deposit funds with the suppliers as either a portion of the 
price of the additional wafers in advance of their delivery or as a 
non-interest bearing deposit to secure the availability of additional wafers. 
 The price of such wafers will be determined in the future periods in which 
specific orders are actually placed.  If the Company is not able to use, 
assign, or sell the additional wafer quantities, all or a portion of the 
deposits may be forfeited.

    In October 1996, the Company amended its previous agreement with TSMC 
resulting in a reduction of the Company's future wafer purchases required 
under the original agreement and the elimination of required future cash 
prepayments of approximately $73 million.  Under the amended 

                                      20
<PAGE>

agreement, no additional prepayment is required; however, the Company must 
utilize the entire amount of the prepayment paid to date through a certain 
committed amount of wafer purchases in the years 1997, 1998, and 1999 or a 
portion of the prepayment will be forfeited. The Company currently believes 
the terms and conditions of the agreement as amended will be met although no 
assurance can be given in this regard.

    In September 1996, April 1997 and September 1997, the Company amended its 
agreement with Chartered.  The amendments resulted in a reduction of the 
Company's future wafer purchase commitments and the elimination of required 
future cash deposits under the original agreement of approximately $36 
million. Under the amended agreement, the required future cash deposits of 
approximately $36 million could be reinstated if certain conditions are not 
met.  The Company currently believes the terms and conditions of the 
agreement as amended will be met and that these commitments will not be 
reinstated although no assurance can be given in this regard.
    
    The deposits and prepayments under the amended foundry agreements 
described above are recorded at cost and total approximately $34.2 million as 
of September 30, 1997.  The Company currently anticipates being able to 
utilize and fully recover the value of all foundry prepayments and deposits 
under the terms of the amended agreements.

    In October 1995, the Company entered into a series of agreements with 
United Microelectronics Corporation ("UMC") to form, along with other 
investors, a separate Taiwanese company, United Integrated Circuits 
Corporation ("UICC"), for the purpose of building and managing a 
semiconductor manufacturing facility in the Science Based Industrial Park in 
Hsin Chu City, Taiwan, Republic of China.  In January 1996, the Company made 
an initial payment of $13.7 million and in January 1997, the Company made a 
second payment of $25.9 million due under this agreement. The final payment 
under this agreement of approximately $11.3 million, based on current 
exchange rates, is due during the quarter ended December 31, 1997. The 
Company has entered into a forward contract which is effectively a hedge 
against the final payment.  If for any reason the Company does not make all 
or a portion of this final payment, a loss may have to be recognized upon 
settlement of the forward contract during the quarter ended December 31, 
1997.   Investment in the foundry venture was approximately $39.6 million as 
of September 30, 1997.  Upon completion of the final payment of approximately 
$11.3 million, the Company expects to have invested a total of approximately 
$51 million for 9.3% of the total available shares of the venture. As an 
investor in this venture, the Company will have rights to a portion of the 
total wafer capacity for the manufacture of its proprietary products.  
However, due to the recent fire in the UICC foundry in which the Company has 
invested, the Company will be unable to utilize its guaranteed capacity until 
sometime in the future, if at all.  Representations have been made by UICC 
management that the facility's foundry capacity that has been guaranteed to 
the Company will be available through substitute capacity arrangements, 
however there can be no assurance that such substitute foundry capacity will 
be available to the Company.  Additionally, there can be no assurance that a 
market will develop for the shares representing the Company's equity 
investment at any time in the future.

                                      21
<PAGE>

    In November 1995, the Company acquired Pixel Magic, a privately-held 
company based in Andover, Massachusetts for $10.5 million in cash, of which 
$5.0 million was contingent upon the achievement of certain performance 
criteria over a three-year period.  Approximately $4.8 million of the initial 
cash payment was allocated to in-process research and development and was 
charged to operations in fiscal 1996.  In June 1997, the Company waived 
certain of the performance criteria and agreed to pay the contingent amount 
of $5.0 million in two installments during calendar 1998.  The first payment 
of $3.0 million is due in January 1998 and the second payment of $2.0 million 
is due in December 1998.





                                      22
<PAGE>

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

    The Company and various of its current and former officers and Directors 
are parties to several lawsuits which purport to be class actions filed on 
behalf of all persons who purchased or acquired the Company's stock 
(excluding the defendants and parties related to them) for the period July 
27, 1995 through May 22, 1996.  The first, a state court proceeding 
designated IN RE OAK TECHNOLOGY SECURITIES LITIGATION, Master File No. 
CV758510 pending in Santa Clara County Superior Court in Santa Clara, 
California, consolidates five putative class actions.  This lawsuit also 
names as defendants several of the Company's venture capital fund investors, 
two of its investment bankers and two securities analysts.  The plaintiffs 
allege violations of California securities laws and statutory deceit 
provisions as well as breaches of fiduciary duty and abuse of control.  On 
December 6, 1996, the state court Judge sustained the Oak defendants' 
demurrer to all causes of action alleged in plaintiffs' First Amended 
Consolidated Complaint, but allowed plaintiffs the opportunity to amend. The 
plaintiffs' Second Amended Consolidated Complaint was filed on August 1, 1997.

    The Company and various of its current and former officers and Directors 
are also parties to four putative class action lawsuits pending in the U.S. 
District Court for the Northern District of California.  These actions have 
been consolidated as IN RE OAK TECHNOLOGY, INC. SECURITIES LITIGATION, Case 
No. C-96-20552-SW(PVT).  This action alleges certain violations of federal 
securities laws and is brought on behalf of purchasers of the Company's stock 
for the period July 27, 1995 through May 22, 1996.  This action also names as 
a defendant one of the Company's investment bankers.  On July 29, 1997, the 
federal court Judge granted the Oak defendants Motion to Dismiss the 
plaintiff's First Amended Consolidated Complaint, but granted plaintiffs 
leave to amend most claims.  The plaintiffs' Second Amended Consolidated 
Complaint was filed on September 4, 1997.

    Additionally, various of the Company's current and former officers and 
Directors are defendants in three consolidated derivative actions pending in 
Santa Clara County Superior Court in Santa Clara, California, entitled IN RE 
OAK TECHNOLOGY DERIVATIVE ACTION.  This lawsuit, which asserts a claim for 
breach of fiduciary duty and a claim under California securities law based 
upon the officers' and Directors' trading in securities of the Company, has 
been stayed pending resolution of the class actions.

    In all of the putative state and federal class actions, the plaintiffs 
are seeking monetary damages and equitable relief.  In the derivative action, 
the plaintiffs are also seeking an accounting for the defendants' sales of 
Company stock and the payment of monetary damages to the Company.  

    All of these actions are in the early stages of proceedings and the 
Company is currently investigating the allegations.  Based  on  its  current 
information,  the Company believes the suits to be without merit and will 
defend its position vigorously.  Although it is reasonably possible the 
Company may incur a loss upon conclusion of these claims, an estimate of any 
loss or range of loss cannot be made.  No provision for any liability that 
may result upon adjudication has been made in the Company's Consolidated 
Financial Statements.   

    In connection with these legal proceedings, the Company has incurred, and 
expects to continue to incur, substantial legal and other expenses.  
Shareholder suits of this kind are highly complex and can extend for a 
protracted period of time, which can substantially increase the cost of such 
litigation and divert the attention of the Company's management. 

                                      23
<PAGE>

    On July 21, 1997, the Company filed a complaint with the International 
Trade Commission ("ITC") based on the Company's belief that certain CD-ROM 
controllers infringed one or more of the Company's patents.  The complaint 
seeks a ban on the importation into the United States of any infringing 
CD-ROM controller or product containing such infringing CD-ROM controller.  A 
formal investigative proceeding was instituted by the ITC on August 19, 1997, 
naming as respondents: Winbond Electronics Corporation; Winbond Electronics 
North America Corporation; Wearnes Technology (Private) Ltd.; and Wearnes 
Electronics Malaysia Sendirian Berhad.  Discovery proceedings are now ongoing 
and a full hearing of the matter has not yet been scheduled, but is expected 
to occur in 1998.  In connection with this legal proceeding, the Company 
expects to incur substantial legal and other expenses.

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

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

    (d)      Pursuant to Item 701 of Regulation S-K, during the period 
5/14/97 (the date of the Company's Form SR previously filed) through 9/30/97, 
the Company used proceeds from the sale of securities from its initial public 
offering (Registration number 2-87518, effective 2/13/95) as follows:

             $510,823 payment to others relating to research and development. 

The Company has now completely used all the proceeds from the offering.






                                      24
<PAGE>
 
ITEM 6. EXHIBITS AND REPORTS ON FORM  8-K

(a) The following exhibits are filed herewith or incorporated by reference 
    herein.

    Exhibit
    Number       Exhibit Title
    ------       -------------
    3.01         The Company's Restated Certificate of Incorporation, as
                 amended (1)
    
    3.02         The Company's Restated Bylaws (2)

    3.03         Certificate of Correction to the Restated Certificate of
                 Incorporation of the Company (16)

    4.01         Form of Specimen Certificate for the Company's Common Stock
                 (3)
    
    4.02         Amended and Restated Registration Rights Agreement dated as of
                 October 15, 1993 among the Company and various investors (3)
    
    4.03         The Company's Restated Certificate of Incorporation, as
                 amended (See Exhibit 3.01)
    
    4.04         The Company's Restated Bylaws (See Exhibit 3.02)
    
    4.05         Form of Certificate of Designation of Series A Junior
                 Participating Preferred Stock of the Company dated August 18,
                 1997 (16)
    
    4.06         Rights Agreement between the Company and BankBoston, N.A.
                 dated August 19, 1997 (16)
    
    10.01        1988 Stock Option Plan, as amended and related documents (3)*
    
    10.02        1994 Stock Option Plan and related documents (3) and amendment
                 thereto dated February 1, 1996 (4)*
    
    10.03        1994 Outside Directors' Stock Option Plan and related
                 documents (3)*
    
    10.04        1994 Employee Stock Purchase Plan (3)*
    
    10.05        401(k) Plan and related documents (3) and Amendment Number One
                 and Supplemental Participation Agreement thereto (5)*
    
    10.06        Lease Agreement dated August 3, 1988 between John Arrillaga,
                 Trustee, or his Successor Trustee, UTA dated 7/20/77 (John
                 Arrillaga Separate Property Trust) as amended and Richard T.
                 Peery, Trustee, or his Successor Trustee, UTA dated 7/20/77
                 (Richard T. Peery Separate Property Trust) as amended, and
                 Justin Jacobs, Jr., dba Siri-Kifer Investments, a joint
                 venture, and the Company, as amended June 1, 1990, and Consent
                 to Alterations dated March 26, 1991 (lease agreement for 139
                 Kifer Court, Sunnyvale, California) (3), and amendments
                 thereto dated June 15, 1995 and July 19, 1995 (5)
    

                                      25
<PAGE>

    
    10.07        Lease Agreement dated August 22, 1994 between John Arrillaga,
                 Trustee, or his Successor Trustee, UTA dated 7/20/77 (John
                 Arrillaga Separate Property Trust) as amended and Richard T.
                 Peery, Trustee, or his Successor Trustee, UTA dated 7/20/77
                 (Richard T. Peery Separate Property Trust) as amended, and
                 Justin Jacobs, Jr., dba Siri-Kifer Investments, a joint
                 venture, and the Company (lease agreement for 140 Kifer Court,
                 Sunnyvale, California) (3), and amendment thereto dated June
                 15, 1995 (5)
    
    10.08        Form of Indemnification Agreement, between the Company and
                 each of its Directors and executive officers (14)
    
    10.09        VCEP Agreement dated July 30, 1990 between the Company and
                 Advanced Micro Devices, Inc. (3)
    
    10.10        Product License Agreement dated April 13, 1993 between the
                 Company and Media Chips, Inc., as amended September 16, 1993
                 (3)
    
    10.11        Resolutions of the Board of Directors of the Company dated
                 July 27, 1994 setting forth the provisions of the Executive
                 Bonus Plan (3) (12)*
    
    10.12        Employee Incentive Plan effective January 1, 1995 (3)*
    
    10.13        Option Agreement between Oak Technology, Inc., and Taiwan
                 Semiconductor Manufacturing Co., Ltd. dated as of August 8,
                 1996 (14)**
    
    10.14        Foundry Venture Agreement between the Company and United
                 Microelectronics Corporation dated as of October 2, 1995 (6)
                 (12)
    
    10.15        Fab Ven Foundry Capacity Agreement among the Company, Fab Ven
                 and United Microelectronics Corporation dated as of October 2,
                 1995 (7) (12)

    10.16        Written Assurances Re: Foundry Venture Agreement among the
                 Company, United Microelectronics Corporation and Fab Ven dated
                 as of October 2, 1995 (8) (12)

    10.17        Lease Agreement dated June 15, 1995 between John Arrillaga,
                 Trustee, or his Successor Trustee, UTA dated 7/20/77 (John
                 Arrillaga Separate Property Trust) as amended and Richard T.
                 Peery, Trustee, or his Successor Trustee, UTA dated 7/20/77
                 (Richard T.Peery Separate Property Trust) as amended, and the
                 Company (lease agreement for 130 Kifer Court, Sunnyvale,
                 California) (9), and amendments thereto dated June 15, 1995
                 and August 18, 1995 (10)

    10.18        Deposit Agreement dated November 8, 1995 between Chartered
                 Semiconductor Manufacturing Ltd. and the Company (11), and
                 Amendment Agreement (No. 1) thereto dated September 25,1996
                 (13)**

    10.19        Amendment Agreement (No. 2) dated April 7, 1997 to Deposit
                 Agreement dated November 8, 1995 between Chartered
                 Semiconductor Manufacturing Ltd. and the Company(15) and
                 addendum thereto dated September 26, 1997**

    10.20        First Amendment to Plan of Reorganization and Agreement of
                 Merger dated October 27, 1995 among the Company, Oak
                 Acquisition Corporation, Pixel Magic, Inc. and the then
                 shareholders of Pixel dated June 25, 1996 and Second Amendment
                 thereto dated June 13, 1997 (16)

                                      26
<PAGE>

    10.21        First Amendment to Non-Compete and Technology Transfer
                 Agreement by and among the Company, Pixel Magic, Inc. and
                 Peter D. Besen dated June 13, 1997   (16)**

    10.22        Agreement of Termination of Employment Agreement between Pixel
                 Magic, Inc. and Peter D. Besen dated June 13, 1997 (16)

    10.23        Agreement of Termination of Employment Agreement between Pixel
                 Magic, Inc. and Don Schulsinger dated June 13, 1997 (16)

    10.24        Release and Settlement Agreement between the Company and
                 United Microelectronics Corporation dated July 31, 1997 (16)**
    
    11.01        Statement regarding computation of net income (loss) per share
        
    27.01        Financial Data Schedule

--------------------------
(1)      Incorporated herein by reference to exhibit 3.01 of the Company's
         Quarterly Report on Form 10-Q for the quarter ended March 31, 1996.
(2)      Incorporated herein by reference to exhibit 3.05 filed with the
         Company's Registration Statement on Form S-1 (File No. 33-87518)
         declared effective by the Securities and Exchange Commission  on
         February 13, 1995 (the "February 1995 Form S-1").
(3)      Incorporated herein by reference to the exhibit with the same number
         filed with the February 1995 Form S-1.
(4)      Incorporated herein by reference to Exhibit 10.1 filed with the
         Company's Registration Statement on Form S-8 (File No. 333-4334) on
         May 2, 1996.
(5)      Incorporated herein by reference to the exhibit with the same number
         filed with the Company's Annual Report on Form 10-K for the year ended
         June 30, 1996.
(6)      Incorporated herein by reference to Exhibit 2.1 filed with the
         Company's Form 8-K dated October 2, 1995 
         (the "October 1995 form 8-K").
(7)      Incorporated herein by reference to Exhibit 2.2 filed with the October
         1995 Form 8-K.
(8)      Incorporated herein by reference to Exhibit 2.3 filed with the October
         1995 Form 8-K.
(9)      Incorporated herein by reference to Exhibit 10.08 filed with the
         Company's Annual Report on Form 10-K for the year ended June 30, 1995.
(10)     Incorporated herein by reference to Exhibit 10.08 filed with the
         Company's Annual Report  on Form 10-K for the year ended 
         June 30, 1996.
(11)     Incorporated herein by reference to Exhibit 10.04 filed with the
         Company's Quarterly Report on Form 10-Q for the quarter ended December
         31, 1995.
(12)     Confidential treatment has been granted with respect to portions of
         this exhibit.
(13)     Incorporated herein by reference to Exhibit 10.17 filed with the
         Company's Annual Report on Form 10-K for the year ended June 30, 1996.
(14)     Incorporated herein by reference to the exhibit with the same number
         filed with the Company's Quarterly Report on Form 10-Q for the quarter
         ended September 30, 1996.
(15)     Incorporated herein by reference to the exhibit with the same number
         filed with the Company's Quarterly Report on Form 10-Q for the quarter
         ended March 31, 1997.
(16)     Incorporated herein by reference to the exhibit with the same number
         filed with the Company's Annual Report on Form 10-K for the year ended
         June 30, 1997.

--------------------------
*        Indicates Management incentive plan.
**       Confidential treatment granted and/or requested as to portions of the
         exhibit.

                                      27
<PAGE>

(b) Reports on Form 8-K
    The Company did not file any reports on Form 8-K during the three months
    ended  September 30, 1997.













                                      28
<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 11, 1997

                                       /S/ SIDNEY S. FAULKNER
                                       -----------------------
                                       Sidney S. Faulkner
                                       Vice President, Finance, 
                                       Chief Financial Officer and Secretary
                                       (Principal Financial and Accounting 
                                       Officer and Duly Authorized Officer)







                                      29
<PAGE>


                               EXHIBIT INDEX


    Exhibit
    Number       Exhibit Title
    ------       -------------
    10.19     Amendment Agreement (No. 2) dated April 7, 1997 to Deposit
              Agreement dated November 8, 1995 between Chartered Semiconductor
              Manufacturing Ltd. and the Company(15) and addendum thereto dated
              September 26, 1997**
    11.01     Statement regarding computation of net income (loss) per share 
    27.01     Financial Data Schedule







                                      30