10-K405

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K

(Mark One)


[X]  Annual report pursuant to section 13 or 15(d) of the Securities and
     Exchange Act of 1934 for the fiscal year ended June 30, 2001.


[_]  Transition report pursuant to section 13 or 15(d) of the Securities and
     Exchange Act of 1934 for the Transition period from ___________ to
     ____________

                         Commission File Number 0-27026
                        Pericom Semiconductor Corporation
             (Exact Name of Registrant as Specified in Its Charter)

                   California                                 77-0254621
         (State or Other Jurisdiction of                   (I.R.S. Employer
         Incorporation or Organization)                   Identification No.)

                   2380 Bering Drive
              San Jose, California  95131                       95131
       (Address of Principal Executive Offices)               (Zip Code)

       Registrant's Telephone Number, Including Area Code: (408) 435-0800

        Securities registered pursuant to Section 12(b) of the Act: None

    Securities registered pursuant to Section 12(g) of the Act: Common Stock

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  [_]

Indicate by check mark if disclosures of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

The aggregate market value of voting stock held by non-affiliates of the
Registrant, based on the closing price of the Common Stock on September 13, 2001
as reported by the Nasdaq National Market was approximately $409,662,000.

As of September 13, 2001 the Registrant had outstanding 25,194,477 shares of
Common Stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

Parts of the Registrant's Proxy Statement for the Annual Meeting of Shareholders
to be held December 12, 2001, which will be filed subsequently, are incorporated
by reference in Part III of this report on Form 10-K.

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                        Pericom Semiconductor Corporation

                   Form 10-K for the Year Ended June 30, 2001

                                      INDEX



PART I                                                                                        Page
                                                                                              ----
                                                                                           
       Item 1:  Business                                                                        3
       Item 2:  Properties                                                                     20
       Item 3:  Legal Proceedings                                                              20
       Item 4:  Submission of Matters to a Vote of Security Holders                            20

PART II
       Item 5:  Market for Registrant's Common Stock and Related Stockholder Matters           21
       Item 6:  Selected Financial Data                                                        22
       Item 7:  Management's Discussion and Analysis of Financial Condition and Results
                of Operations                                                                  23
       Item 7A: Quantitative and Qualitative Disclosures about Market Risk                     28
       Item 8:  Financial Statements and Supplementary Data                                    29
       Item 9:  Changes in and Disagreements with Accountants on Accounting and
                Financial Disclosure                                                           29

PART III
       Item 10: Directors and Executive Officers of the Registrant                             30
       Item 11: Executive Compensation                                                         32
       Item 12: Security Ownership of Certain Beneficial Owners and Management                 32
       Item 13: Certain Relationships and Related Transactions                                 32

PART IV
       Item 14: Exhibits, Financial Statement Schedules and Reports on Form 8-K                33


       Signatures                                                                              52


                                        2



                                     PART I

ITEM 1.   BUSINESS

We design, develop and market high-performance interface integrated circuits, or
ICs, used in many of today's advanced electronic systems. Interface ICs, such as
interface logic, switches and clock management products, transfer, route and
time electrical signals among a system's microprocessor, memory and various
peripherals and between interconnected systems. Our interface products increase
system bandwidth in applications such as notebook computers, servers, network
switches and routers, storage area networks and wireless base stations. We offer
products that increase bandwidth by widening the data path, or bus (enlarging
the pipe), increasing the data rate (increasing the flow rate through the pipe),
or allowing multiple, simultaneous transactions on the bus.

We have combined our extensive design technology and applications knowledge with
our responsiveness to the specific needs of electronic systems developers to
become a leading supplier of high-performance interface ICs. We have evolved
from one product line in fiscal 1992 to four developed and growing
families--SiliconSwitch(TM), SiliconInterface(TM) Logic, SiliconClock(TM) and
SiliconConnect(TM)--with a goal of providing an increasing breadth of interface
IC solutions to our current and target customers. We currently offer over 650
products, 73 of which were introduced during fiscal year 2001 and 58 of which
were proprietary. Our worldwide customers include leading OEMs, contract
manufacturers and distributors.

INDUSTRY BACKGROUND

OVERVIEW

The presence of electronic systems and subsystems permeates our everyday life,
as evidenced by the growth of the personal computer, mobile communications,
networking and consumer electronics markets. The growth of these markets has
been driven by systems characterized by ever-improving performance, flexibility,
reliability and multi-functionality, as well as decreasing size, weight and
power consumption. Advances in ICs through improvements in semiconductor
technology have contributed significantly to the increased performance of, and
demand for, electronic systems and to the increasing representation of ICs as a
proportion of overall system cost. This technological progress has occurred at
an accelerating pace, while the cost of electronic systems has remained steady
or declined.

The development of high-performance personal computers, the requirement for
higher network performance and the increased level of connectivity among
different types of electronic devices have driven the demand for high-speed,
high-performance interface circuits to handle the transfer, routing and timing
of digital and analog signals at high speeds with minimal loss of signal
quality. High-speed signal transfer is essential to fully utilize the speed and
bandwidth of the microprocessor, the memory and the LAN or WAN. High signal
quality is equally essential to achieve optimal balance between high data
transmission rates and reliable system operation. Without high signal quality,
transmission errors occur as bandwidth increases. Market requirements for
interface circuits are driven by the same market pressures as those imposed on
microprocessors, including higher speed, reduced power consumption,
lower-voltage operation, smaller size and higher levels of integration.

Our interface products serve to increase system bandwidth in applications such
as servers, network switches and routers, storage area networks, wireless
basestations, and notebook computers. Bandwidth can be increased by widening the
datapath (widening the pipe), increasing the clock rate (increase the flowrate
through the pipe) or allowing multiple, simultaneous transactions on the bus
using a crossbar switch. We are pioneering technology in each of these areas.

The problems associated with signal quality that must be addressed by the
interface ICs are magnified by increases in the speeds at which interface ICs
must transfer, route and time electrical signals, the number of interconnected
devices that send or receive signals and the variety of types of signals
processed by the

                                        3



interface ICs. The most significant performance challenges faced by designers of
interface ICs are the requirements to transfer signals at high speed with low
propagation delay, minimize signal degradation caused by "noise," "jitter," and
"skew" and reduce electromagnetic interference ("EMI"). Minimizing propagation
delay, sources of signal degradation and interference is needed to enable
today's state-of-the-art electronic systems to function.

We believe that several major market trends make reliable operations of systems
at high frequency and high data transfer rates critical. Internet and
high-performance network applications continue to push for more data bandwidth
on system buses and across system boundaries. Computer and networking system
clock frequencies continue to increase at a very rapid rate, shortening the time
available to perform data transfers. While the data transfer rate has typically
increased every few years, the continuing desire for higher system reliability
with minimal system downtime creates increasing pressure to achieve lower data
error rates. Increasing system-wide EMI emissions resulting from
higher-frequency ICs compels system designers to develop and implement new ways
to further reduce these emissions. These factors all increase the need for very
high-speed interface circuits with outstanding performance specifications.

With processing power continuing to double every 18 months (Moore's law) the
speed at which microprocessors can access memory becomes the system bandwidth
constraint in high-speed computing. We have developed solutions with Intel and
Rambus to support higher speed processor-memory interfacing to support the
Double Data Rate ("DDR") SDRAM, PC133 SDRAM and Direct Rambus standards, both on
the system motherboard and memory modules.

In server applications, we support higher system bandwidth through the use of
bus switches to isolate the system's memory modules from the bus when they are
not being addressed. Our interface products are also used to enable live
insertion of PCI boards ("hot swapping"). This prevents system downtime when
boards need to be replaced. We have similar products for hot-docking notebook
computers and our products are used in virtually every notebook computer.

In all new high-bandwidth systems data transfer needs to be synchronized,
creating a high demand for clock products. Our clock products provide all the
precise timing signals needed to ensure reliable data transfer at high speeds in
applications ranging from notebook computers to network switches. As systems
continue to grow in processing power and complexity the demand for these
products will accelerate. The demand for higher precision will also continue to
increase as timing margins shrink in higher bandwidth systems.

Electronic systems designers and OEMs have increasingly required solutions to
the technical challenges described above in order to take advantage of
continuing speed and performance enhancements in microprocessor and memory ICs.
These customers have also continued to migrate from single-part vendors to
suppliers who can provide multiple parts for their systems, both to reduce the
number of vendors they must deal with and to address interoperability
requirements among the interface ICs within the system. Due to the short design
times and product life cycles these customers face for their own products, they
are requiring rapid response time and part availability from interface IC
vendors. Interface IC vendors are further required to accomplish these tasks in
a cost-effective manner that flexibly responds to specific customer needs.

THE PERICOM STRATEGY

We are a leading supplier of high-performance interface ICs. While our products
address a wide spectrum of applications, we have focused our resources on
solving bandwidth bottlenecks in customers' systems using our high performance
interface technology. With processing power doubling every 18 months
historically, the speed at which microprocessors can access memory becomes the
bandwidth constraint in high speed computing. We have developed solutions with
Intel, IBM and Rambus to support higher-speed processor-memory interfacing,
which support the latest memory standards, on both the system motherboard and
the memory modules. In server applications, we support higher system bandwidth
through the use of high frequency clock products, which provide timing signals
to synchronize data transfer, and bus switches that isolate a system's memory
modules from the bus when they are not being addressed.

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Products are defined in collaboration with the industry-leading OEMs and
industry enablers such as Intel and IBM, and our modular design methodology
shortens our time to market and time to volume relative to our competitors. The
key elements of our strategy are:

Market Focus. Our market strategy is to focus on the high-growth, high-
performance segments of the computing, networking and telecommunications
markets. Currently, we design and sell products for specific high-volume
applications within these target markets, including notebook computers, computer
servers, local area network, or LAN, and wide area network, or WAN, switches,
routers and hubs and multi-function office peripherals such as printers and
copiers. Our customers and end-users of our products include a number of leading
OEMs in each market:

 .    Laptop market: Acer, Apple, Compaq, Dell, Fujitsu, IBM, Sony, and Toshiba
 .    Telecommunications equipment market: Alcatel, Lucent, Motorola, Qualcomm,
     Samsung, and Huawei
 .    PC Server market supporting DDR: Compaq, Dell, Gateway, Intel, IBM, Sun
 .    Network equipment market: 3Com, Alcatel, Cabletron, Cisco, HP, Lucent,
     Nortel, ZTE
 .    Printer and copier market: Canon, HP, Lexmark and Xerox

During fiscal 2001 our penetration of the data communication and
telecommunications markets continued to increase based on the introduction of
new products targeting these markets. We believe that these markets now account
for a significant portion of our revenues.

We intend to pursue new opportunities in markets where our rapid-cycle IC design
and development expertise and understanding of the product evolution of our
customers gives us the opportunity to become a leading solution supplier.

Customer Focus. Our customer strategy is to use a superior level of
responsiveness to customer needs to continually expand our customer base as well
as sell a wider range of products to our existing customers. Key elements of our
customer strategy are:

 .    Penetrate target accounts through joint product development. We approach
     prospective customers primarily by working with their system design
     engineers at the product specification stage with the goal that one or more
     Pericom ICs will be incorporated into a new system design. Our
     understanding of our customers' requirements combined with our ability to
     develop and deliver reliable, high-performance products within our
     customers' product introduction schedules has enabled us to establish
     strong relationships with several leading OEMs.
 .    Solidify customer relationships through superior responsiveness. We believe
     that our customer service orientation is a significant competitive
     advantage. We seek to maintain short product lead times and provide our
     customers with excellent on-schedule delivery, in part by having available
     adequate finished goods inventory for anticipated customer demands. We
     emphasize product quality for our products and have been ISO-9001 certified
     since March 1995.
 .    Expand customer relationships through broad-based solutions. We aim to grow
     our business with existing customers by offering product lines that provide
     increasingly extensive solutions for our customers' high-speed interfacing
     needs. By providing our customers with superior support in existing
     programs and anticipating our customers' needs in next- generation
     products, we have often been able to substantially increase our overall
     volume of business with those customers. With larger customers we have also
     initiated electronic data interchange, or EDI, and remote warehousing
     programs, annual purchase and supply programs, joint development projects
     and other services intended to enhance our position as a key vendor.
 .    Responding to our customer requirements is one of the highest priorities of
     Pericom. In order to accomplish this, Pericom is implementing an automated
     quoting system from Azerity, a leader in e-business solutions. Pericom will
     be able to respond very quickly to our customer needs and offer them
     superior service. With the implementation of ProChannel, Pericom will be
     able to streamline a number of internal procedures.

                                        5



Technology Focus. Our technology strategy is to maintain a leading position in
the development of new, higher-performance interface ICs by continuing to design
additional core cells that address the more challenging problems of signal
interface as electronic systems become faster and require lower power and
voltages. Our primary efforts are in the creation of additional proprietary
digital, analog and mixed-signal functionality. We are working closely with our
wafer suppliers to incorporate their advanced CMOS process technologies to
improve our ability to introduce next generation products expeditiously. We
intend to expand our patent portfolio with the goal of providing increasingly
proprietary product lines.

Manufacturing Focus. Our manufacturing strategy is closely integrated with our
focus on customer needs. Central to this strategy is our intent to support
high-volume shipment requirements on short notice from customers. We design
products so that we may manufacture any one of many different ICs from a single
partially-processed wafer. Accordingly, we keep inventory in the form of wafer
banks, from which wafers can be completed to produce a variety of specific ICs
in as little as two to four weeks. This approach has enabled us to reduce our
overall work-in-process inventory while providing increased availability to
produce a variety of finished products. In addition, we keep some inventory in
the form of die banks, which can become finished product in two weeks or less.
We have established relationships with three leading foundries, Chartered
Semiconductor Manufacturing Pte, Ltd. ("Chartered"), Taiwan Semiconductor
Manufacturing Corporation ("TSMC"), and Hynix Semiconductor America, Inc
("Hynix"). We are maintaining our relationship with New Japan Radio Corporation
("NJRC") for some of our products that are manufactured in high-voltage CMOS
processes.

Strategic and Collaborative Relationships Focus. We pursue a strategy of
entering into new relationships and expanding existing relationships with
companies that engage in the product design, manufacturing and marketing of ICs.
We believe that these relationships have enabled us to access additional design
and application expertise, accelerate product introductions, reduce costs and
obtain additional needed capacity. In product design, we have engaged Pericom
Technology, Inc., an affiliated company, and other design houses to develop
interface ICs as a means of rapidly expanding our product portfolio. We have
established collaborative relationships with leading wafer manufacturers that
have high performance digital core libraries that we can use in our future
products. We have also made strategic investments in several companies with whom
we have obtained rights to certain technologies and are engaged in collaborative
research and development.

PRODUCTS

We have used our expertise in high-performance digital, analog and mixed-signal
IC design, our reusable core cell library and our modular design methodology to
achieve a rapid rate of new product introductions. Within each of our four
product lines, the product portfolio has evolved from a standard building block
into both standard products of increasing performance and application-specific
standard products, or ASSPs, which are tailored to meet a specific high volume
application. Within each product family we continue to address the common trends
of decreasing supply voltage, higher integration and faster speeds.

SiliconSwitch

Through our SiliconSwitch product line, we offer a broad range of
high-performance ICs for switching digital and analog signals. The ability to
switch or route high-speed digital or analog signals with minimal delay and
signal distortion is a critical requirement in many high-speed computers,
networking and multimedia applications. Historically, systems designers have
used mechanical relays and solid-state relays which have significant
disadvantages as compared to IC switches: mechanical relays are bulky, dissipate
significant power and have very low response times; solid-state relays are
expensive.

Digital Switches. We offer a family of digital switches in 8-, 16- and 32-bit
densities that address the switching needs of high-performance systems. These
digital switches offer performance and cost advantages over traditional switch
functions, offering low on-resistance (less than 5 ohms), low propagation delay
(less than 250 picoseconds), low standby power (less than 1 microamp) and series
resistor options that support

                                       6



low electromagnetic interference, or EMI, emission requirements. Applications
for our digital switches include 5-volt to 3.3-volt signal translation,
high-speed data transfer and switching between microprocessors and multiple
memories, and hot plug interfaces in notebook and desktop computers, servers and
switching hubs and routers. We also have two families of 3.3-volt switches
offering industry-leading performance in switching times, and low capacitance
for bus isolation applications. We continued to expand the number of devices and
the performance of these families during fiscal 2001.

Analog Switches. We offer a family of analog switches for low-voltage (2- to
5-volt) applications such as multimedia audio and video signal switching with
enhanced characteristics such as low power, high bandwidth, low crosstalk and
low distortion to maintain analog signal integrity. Our analog switches have
significantly lower distortion than traditional analog switches due to our
advanced CMOS switch design. To support space-constrained applications, such as
wireless handsets and global positioning system receivers, several of these
switches have recently been introduced in the tiny SOT-23 and SC 70 packages. To
complement this low-voltage family we also offer a higher voltage (17-volt)
analog switch family for applications requiring higher signal range, such as
instrumentation, telecommunications and industrial control.

LAN Switches and Video Switches. We offer a line of application specific
standard products ("ASSP") switches for specific applications in LANs and high
bandwidth video switches to switch between different video sources in graphic
and multi-media systems.

SiliconInterface

Through our SiliconInterface product line, we offer a broad range of high-
performance 5-volt, 3.3-volt, 2.5-volt, and 1.8-volt CMOS logic interface
circuits. These products provide logic functions to handle data transfer between
microprocessors and memory, bus exchange, backplane interface, and other logic
interface functions where high-speed, low-power, low-noise and high-output drive
characteristics are essential.

5-Volt Interface Logic. Our high-speed 5-volt interface logic products in 8- and
16-bit configurations address specific system applications, including a "Quiet
Series" family for high-speed, low-noise, point-to-point data transfer in
computing and networking systems and a "Balanced Drive" family with series
resistors at output drivers to reduce switching noise in high-performance
computers. We recently introduced a new 5-volt family that achieves lower noise
performance at high speeds, which is particularly useful for large data
communications and telecommunications switches.

3.3-Volt Interface Logic. To support the trend toward lower system voltages for
higher silicon integration, from 8-Bit to 32-Bits, system performance and power
savings we offer four families of 3.3-volt interface logic to address a range of
performance and cost requirements with very low power consumption. Increasingly,
networking, PC and memory module manufacturers are demanding application
specific logic products. We believe we are well positioned to serve this need
using our ASIC design methodology and existing cell designs to achieve rapid
product development.

2.5-Volt Interface Logic. Our 2.5-volt product families include three new logic
families to address 2.5- and 1.8-volt operation. We have a family of products
with high output current offering sub-2.5 nanosecond propagation delays and the
lowest power consumption in its class. We also have a lower balanced drive
family with a propagation delay of less than 2 nanoseconds to support high-speed
processor-memory interfacing and a balanced drive family optimized for low-noise
operation at very low voltages. The 2.5-volt family is ideal for level shifting
from 3.3-volt to 2.5-volt or 1.8-volt in applications where the memory,
microprocessor and ASIC operate at different voltages.

SiliconClock

In all new high bandwidth systems data transfer needs to be synchronized,
creating a high demand for clock products. Our clock products provide all the
precise timing signals needed to ensure reliable data transfer at high speeds in
applications ranging from notebook computers to network switches. As systems
continue to

                                       7



grow in processing power and complexity, the demand for these products is
expected to accelerate. The demand for precision will also increase as timing
margins shrink in higher bandwidth systems.

Through our SiliconClock product line, we offer a broad range of general-purpose
solutions including clock buffers, zero-delay clock drivers and frequency
synthesizer products for a wide range of microprocessor systems, as well as a
number of ASSP clock products for laser printers, networking, and set-top box
applications.

Clock Buffers And Zero-Delay Clock Drivers. Clock buffers receive a digital
signal from a frequency source and create multiple copies of the same frequency
for distribution across system boards. We offer 3.3-volt and 5-volt clock
buffers for high-speed, low-skew applications in computers and networking
equipment. Zero-delay clocks virtually eliminate propagation delays by
synchronizing the clock outputs with the incoming frequency source. Our 5-volt
and 3.3-volt zero-delay clock drivers offer frequencies of up to 266 MHz for
applications in networking switches, routers and hubs, computer servers, and
memory modules. Clock products to support the emerging double date rate, or DDR,
and Rambus memory technologies are also available.

Clock Frequency Synthesizers. Clock frequency synthesizers generate various
output frequencies using a single input frequency source. Clock frequency
synthesizers are used to provide critical timing signals to microprocessors,
memory and peripheral functions. Our clock synthesizers support a wide range of
microprocessor systems and their associated integrated chipsets for server,
notebook and desktop PC products. We also offer a clock synthesizer developed
specifically for laser printer products.

Programmable Clocks. In large computing and communications systems customers
need to provide precise timing across large printed circuit boards, or PCBs. At
the very high frequencies used today these large PCB traces can result in
significant timing delays and matching these delays (or timing skew) can be a
significant challenge for the system designer. We have responded to this
challenge with the introduction of a family of programmable skew clock products.

SiliconConnect

SiliconConnect is our newest product line and offers the highest complexity and
integration among our products. It consists of a family of high-speed serial
drivers, receivers, and transceivers and cross-bar switches. We also introduced
our first three-port PCI-to-PCI bridge that serves to expand the number of
input/output ports in systems using the peripheral component interconnect, or
PCI, bus. Applications range from network routers to telecommunication switches
and server applications.

To support higher system bandwidth at acceptable noise and power levels
customers are increasingly moving to serial rather than parallel architectures
and using differential signaling to reduce noise and EMI. We have responded to
this trend with the development of a family of drivers, receivers and
transceivers offering data rates of 660 megabits per second, or mbps, and
allowing point-to-point connections over distances greater than 10 meters. This
new low-voltage differential signaling, or LVDS, standard offers a number of
improvements over the older emitter-coupled logic, or ECL, and pseudo
emitter-coupled logic, or PECL, in applications requiring lower power
consumption and noise.

Another technology to support higher bandwidth is cross-bar switching to allow
multiple processors and memory modules to communicate on point-to-point
connections across a shared bus. This enables a significant boost in bandwidth
in data communications, telecommunications and storage area network
applications. The first product in this new family is a 10-port, 18-bit crossbar
switch that can support a bandwidth of 742 Megabytes per second.

We are continuing to enhance and refine our existing product lines, while
working to add next-generation products that address new market opportunities on
a timely basis. The failure of the Company to complete and introduce new
products in a timely manner at competitive price/performance levels would
materially and adversely affect the Company's business and results of
operations. See "Risk Factors - If we do not

                                       8



develop products that our customers and end-users design into their products, or
if their products do not sell successfully, our business and operating results
could be harmed."

CUSTOMERS

The following is a list of some of our customers and end-users:

Computer                          Networking
     Acer                              3Com
     Apple                             Alcatel
     Compaq                            Cabletron
     Dell                              Cisco
     Futitsu                           Lucent
     Gateway                           Nortel Networks
     Hewlett Packard
     IBM
     Intel                        Telecommunications, Peripherals and Others
     Sony                              Alcatel
     Sun                               ATI
     Toshiba                           Canon
                                       Hewlett Packard
                                       Huawei
Contract Manufacturing                 IBM
     Celestica                         Lexmark
     Flextronics                       Lucent
     Jabil Circuit                     Motorola
     Natsteel                          Qualcomm
     Sanmina                           Samsung
     SCI                               Sony
     Solectron                         Xerox
                                       ZTE

Our customers include a broad range of end-user customers and OEMs in the
computer, peripherals, networking and contract manufacturing markets. Our direct
sales are billings directly to a customer who may in turn sell through to an
end-user customer. Our end-user customers may buy directly or through our
distribution or contract manufacturing channels. In fiscal 2001, our direct
sales to an international distributor accounted for 10% of net revenues, and
direct sales to our top five customers accounted for 36% of net revenues. In
fiscal 2001 one end-user customer, Cisco Systems, accounted for 12% of gross
revenues and sales to our top five end-user customers were 39% of gross
revenues. In fiscal 2000, our direct sales to an international distributor
accounted for 11% of net revenues, and direct sales to our top five customers
accounted for 37% of net revenues. In fiscal 2000 one end-user customer, Cisco
Systems, accounted for 14% of gross revenues and sales to our top five end-user
customers were 35% of gross revenues. In fiscal 1999, direct sales to an
international distributor accounted for 14% of net revenues, and direct sales to
the Company's top five customers accounted for 36% of net revenues. See "Risk
Factors--The demand for our products depends on the growth of our end-user
customer markets" and "Risk Factors--A large portion of our revenues is derived
from sales to a few customers, who may cease purchasing from us at any time."

Contract manufacturers have become important customers for us as systems
designers in our target markets are increasingly outsourcing portions of their
manufacturing. In addition, these contract manufacturers are playing an
increasingly vital role in determining which vendors' ICs are incorporated into
new designs.

DESIGN AND PROCESS TECHNOLOGY

Our design efforts focus on the development of high-performance digital, analog
and mixed-signal ICs. To minimize design cycle times of high-performance
products, we use a modular design methodology that has

                                       9



enabled us to produce many new products each year and to meet our customers'
need for fast time-to-market response. This methodology uses state-of-the-art
computer-aided design software tools such as high-level description language, or
HDL, logic synthesis, full-chip mixed-signal simulation, and automated design
layout and verification and uses our library of high-performance digital and
analog core cells. This family of core cells has been developed over several
years and contains high-performance, specialized digital and analog functions
not available in commercial ASIC libraries. Among these cells are our
proprietary mixed-voltage input/output, or I/O, cells, high-speed, low-noise I/O
cells, analog and digital phase-locked loops, or PLLs, charge pumps and data
communication transceiver circuits using low voltage differential signaling. We
have been granted 31 U.S. patents relating to our circuit designs and have at
least 17 U.S. patent applications pending. Another advantage of this modular
design methodology is that it allows the application of final design options
late in the wafer manufacturing process to determine a product's specific
function. This option gives us the ability to use pre-staged wafers, which
significantly reduces the design and manufacturing cycle time and enables us to
respond rapidly to a customer's prototype needs and volume requirements.

We use advanced CMOS processes to achieve higher performance and lower die cost.
Our process and device engineers work closely with our independent wafer foundry
partners to develop and evaluate new process technologies. Our process engineers
also work closely with circuit design engineers to improve the performance and
reliability of our cell library. We currently manufacture a majority of our
products using 0.8-, 0.6-, 0.5- and 0.35-micron CMOS process technologies and
anticipate developing new products using 0.25- and 0.18-micron technology over
the next 12 months. We are also using a high-voltage CMOS process developed by
one of our wafer suppliers in the design of higher voltage switch products.

SALES AND MARKETING

We market and distribute our products through a worldwide network of independent
sales representatives and distributors. Sales to domestic and international
distributors represented 54.4% of our net revenues in fiscal 2001, 56.4% of our
net revenues in fiscal 2000, and 57.2% of our net revenues in fiscal 1999. Our
major distributors in the United States include All American Semiconductor, Bell
Microproducts, Future Electronics, JACO Electronics, Nu Horizons Electronics,
and Pioneer Standard. Our major international distributors include EPCO
Technology Co., Ltd (Taiwan), Desner Electronics (Singapore), Internix (Japan),
MCM (Japan) and Techmosa (Taiwan).

We have five regional sales offices in the United States and international sales
offices in Taiwan, Korea, Singapore, Japan and the United Kingdom. International
sales comprised approximately 49% of our net revenues in fiscal 2001,
approximately 46% of our net revenues in fiscal 2000, and approximately 48% of
our net revenues in fiscal 1999. We also support field sales design-in and
training activities with application engineers. All marketing and product
management personnel are located at our corporate headquarters in San Jose,
California.

We focus our marketing efforts on product definition, new product introduction,
product marketing, advertising and public relations. We use advertising both
domestically and internationally to market our products independently and in
cooperation with our distributors. Pericom product information is available on
our web site, which contains technical information on all of our products and
offers design modeling support and sample-request capabilities online. We also
publish and circulate technical briefs relating to our products and their
applications.

We believe that contract manufacturing customers are strategically important and
we employ sales and marketing personnel who focus on servicing these customers
and on expanding our product sales via these customers to OEMs. In addition, we
use programs such as EDI, bonded inventories and remote warehousing to enhance
our service and attractiveness to contract manufacturers.

                                       10



MANUFACTURING

We have adopted a fabless manufacturing strategy by subcontracting our wafer
production to independent wafer foundries. We have established collaborative
relationships with selected independent foundries with whom we can develop a
strategic relationship to the benefit of both parties. We believe that our
fabless strategy enables us to introduce high performance products quickly at
competitive cost. To date, our principal manufacturing relationships have been
with Chartered Semiconductor Manufacturing Pte, Ltd., Taiwan Semiconductor
Manufacturing Corporation and Hynix Semiconductor America, Inc. We have also
used New Japan Radio Corporation, Austria Mikro Systeme GmbH and Perigrine
Semiconductor Australia as foundries.

We rely on foreign subcontractors primarily for the assembly and packaging of
our products and, to a lesser extent, for the testing of our finished products.
Some of these subcontractors are our single source supplier for certain new
packages.

COMPETITION

The semiconductor industry is intensely competitive. Significant competitive
factors in the market for high-performance ICs include the following:

 .    product features and performance;
 .    product quality;
 .    price;
 .    success in developing new products;
 .    adequate wafer fabrication capacity and sources of raw materials;
 .    efficiency of production;
 .    timing of new product introductions;
 .    ability to protect intellectual property rights and proprietary
     information; and
 .    general market and economic conditions.

Our competitors include Cypress Semiconductor Corporation, Fairchild
Semiconductor Corporation, Integrated Circuit Systems, Inc., Integrated Device
Technology, Inc., Maxim Integrated Products, Inc., and Texas Instruments, Inc.
Most of those competitors have substantially greater financial, technical,
marketing, distribution and other resources, broader product lines and
longer-standing customer relationships than we do. We also compete with other
major or emerging companies that sell products to certain segments of our
markets. Competitors with greater financial resources or broader product lines
may have a greater ability to sustain price reductions in our primary markets in
order to gain or maintain market share. We also face competition from the makers
of ASICs and other system devices. These devices may include interface logic
functions, which may eliminate the need or sharply reduce the demand for our
products in particular applications.

RESEARCH AND DEVELOPMENT

We believe that the continued timely development of new interface ICs is
essential to maintaining our competitive position. Accordingly, we have
assembled a team of highly skilled engineers whose activities are focused on the
development of signal transfer, routing and timing technologies and products.
Research and development expenses were $11.0 million in fiscal 2001, $8.1
million in fiscal 2000, and $6.0 million in fiscal 1999.

We actively seek cooperative relationships in product development. For example,
we have signed an agreement with Lexmark to license its spread spectrum
technology.

                                       11



INTELLECTUAL PROPERTY

In the United States, we hold 31 patents covering certain aspects of our product
designs and have at least 17 additional patent applications pending. We expect
to continue to file patent applications where appropriate to protect our
proprietary technologies; however, we believe that our continued success depends
primarily on factors such as the technological skills and innovation of our
personnel, rather than on our patents.

EMPLOYEES

As of June 30, 2001, we had 261 full-time employees and 3 part-time employees (7
are temporary employees), including 47 in sales, marketing and customer support,
108 in manufacturing, assembly and testing, 79 in engineering and quality
assurance and 30 in finance and administration, including information systems.
We have never had a work stoppage and no employee is represented by a labor
organization. We consider our employee relations to be good.

RISK FACTORS; FACTORS THAT MAY AFFECT OPERATING RESULTS

In addition to other information contained in this Form 10-K, investors should
carefully consider the following factors that could adversely affect our
business, financial condition and operating results as well as adversely affect
the value of an investment in our common stock. This Form 10-K includes
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. All statements other than statements of historical fact are
"forward-looking statements" for purposes of these provisions, including any
statements regarding projections of earnings, revenues or other financial items;
plans and objectives of management for future operations; proposed new products
or services and their development schedule; industry, technological or market
trends, our ability to address the need for application specific logic products;
our ability to respond rapidly to customer needs; expanding product sales;
future economic conditions or performance, and any statement of assumptions
underlying any of the foregoing. In some cases, forward-looking statements can
be identified by the use of terminology such as "may," "will," "expects,"
"plans," "anticipates," "estimates," "potential," or "continue," or the negative
thereof or other comparable terminology. Although we believe that the
expectations reflected in the forward-looking statements contained herein are
reasonable, there can be no assurance that such expectations or any of the
forward-looking statements will prove to be correct, and actual results could
differ materially from those projected or assumed in the forward-looking
statements. Our future financial condition and results of operations, as well as
any forward-looking statements, are subject to risks and uncertainties,
including but not limited to the factors set forth below and elsewhere in this
report. All forward-looking statements and reasons why results may differ
included in this Form 10-K are made as of the date hereof, and we assume no
obligation to update any such forward-looking statement or reason why actual
results may differ.

Our results of operations have been adversely affected by the recent slowdown in
the global economy.

Recently the global economy has been experiencing a slowdown due to many
factors, including decreased consumer confidence and concerns about inflation,
and reduced corporate profits and capital spending. As a result of these
unfavorable economic conditions, we have experienced lower new customer order
rates and a significant amount of previously placed orders were cancelled during
the second half of fiscal 2001. If these economic conditions in the United
States continue or worsen or if a wider or global economic slowdown occurs, our
business, financial condition and results of operations may be materially and
adversely affected.

Downturns in the semiconductor industry, rapidly changing technology and
evolving industry standards can harm our operating results.

The semiconductor industry has historically been cyclical and periodically
subject to significant economic downturns--characterized by diminished product
demand, accelerated erosion of selling prices and

                                       12



overcapacity--as well as rapidly changing technology and evolving industry
standards. The semiconductor industry is currently in such a downturn period.
Also, in the past, our operating results have been harmed by excess supply in
the semiconductor industry. For example, we believe our net revenues fell from
$41.2 million in fiscal 1996 to $33.2 million in fiscal 1997 primarily due to a
cyclical downturn in the semiconductor industry. Accordingly, we may in the
future experience substantial period-to-period fluctuations in our business and
operating results due to general semiconductor industry conditions, overall
economic conditions or other factors. Our business is also subject to the risks
associated with the effects of legislation and regulations relating to the
import or export of semiconductor products.

If we do not develop products that our customers and end-users design into their
products, or if their products do not sell successfully, our business and
operating results would be harmed.

We have relied in the past and continue to rely upon our relationships with our
customers and end-users for insights into product development strategies for
emerging system requirements. We generally incorporate new products into a
customer's or end-user's product or system at the design stage. However, these
design efforts, which can often require significant expenditures by us, may
precede product sales, if any, by a year or more. Moreover, the value to us of
any design win will depend in large part on the ultimate success of the
customer's or end-user's product and on the extent to which the system's design
accommodates components manufactured by our competitors. If we fail to achieve
design wins or if the design wins fail to result in significant future revenues,
our operating results would be harmed. If we have problems developing or
maintaining our relationships with our customers and end-users, our ability to
develop well-accepted new products may be impaired.

The trading price of our common stock and our operating results are likely to
fluctuate substantially in the future.

The trading price of our common stock has been and is likely to continue to be
highly volatile. Our stock price could fluctuate widely in response to factors
some of which are not within our control, including:

 .  general conditions in the semiconductor and electronic systems industries;
 .  quarter-to-quarter variations in operating results;
 .  announcements of technological innovations or new products by us or our
   competitors;
 .  changes in earnings estimates by analysts; and price and volume fluctuations
   in the overall stock market, which have particularly affected the market
   prices of many high technology companies.

In the past, our quarterly operating results have varied significantly and are
likely to fluctuate in the future. A wide variety of factors affect our
operating results. These factors might include the following:

 .  the timing of new product introductions and announcements by us and by our
   competitors;
 .  customer acceptance of new products introduced by us;
 .  general conditions in the semiconductor industry;
 .  changes in our product mix;
 .  a decline in the gross margins of our products;
 .  delay or decline in orders received from distributors;
 .  growth or reduction in the size of the market for interface ICs;
 .  the availability of manufacturing capacity with our wafer suppliers;
 .  changes in manufacturing costs;
 .  fluctuations in manufacturing yields;
 .  the ability of customers to pay us;
 .  expenses incurred in obtaining, enforcing, and defending intellectual
   property rights; and
 .  increased research and development expenses associated with new product
   introductions or process changes.

                                       13



All of these factors are difficult to forecast and could seriously harm our
operating results. Our expense levels are based in part on our expectations
regarding future sales and are largely fixed in the short term. Therefore, we
may be unable to reduce our expenses fast enough to compensate for any
unexpected shortfall in sales. Any significant decline in demand relative to our
expectations or any material delay of customer orders could harm our operating
results. In addition, if our operating results in future quarters fall below
public market analysts' and investors' expectations, the market price of our
common stock would likely decrease.

The markets for our products are characterized by rapidly changing technology,
and our financial results could be harmed if we do not successfully develop and
implement new manufacturing technologies or develop, introduce and sell new
products.

The markets for our products are characterized by rapidly changing technology,
frequent new product introductions and declining selling prices over product
life cycles. We currently offer over 650 products. Our future success depends
upon the timely completion and introduction of new products, across all of our
product lines, at competitive price and performance levels. The success of new
products depends on a variety of factors, including the following:

 .  product performance and functionality;
 .  customer acceptance;
 .  competitive pricing;
 .  successful and timely completion of product development;
 .  sufficient wafer fabrication capacity; and
 .  achievement of acceptable manufacturing yields by our wafer suppliers.

We may also experience delays, difficulty in procuring adequate fabrication
capacity for the development and manufacture of new products or other
difficulties in achieving volume production of these products. Even relatively
minor errors may significantly affect the development and manufacture of new
products. If we fail to complete and introduce new products in a timely manner
at competitive price and performance levels, our business would be significantly
harmed.

Intense competition in the semiconductor industry may reduce the demand for our
products or the prices of our products, which could reduce our revenues.

The semiconductor industry is intensely competitive. Our competitors include
Cypress Semiconductor Corporation, Fairchild Semiconductor Corporation,
Integrated Circuit Systems, Inc., Integrated Device Technology, Inc., Maxim
Integrated Products, Inc., and Texas Instruments, Inc. Most of those competitors
have substantially greater financial, technical, marketing, distribution and
other resources, broader product lines and longer-standing customer
relationships than we do. We also compete with other major or emerging companies
that sell products to certain segments of our markets. Competitors with greater
financial resources or broader product lines may have a greater ability to
sustain price reductions in our primary markets in order to gain or maintain
market share.

We believe that our future success will depend on our ability to continue to
improve and develop our products and processes. Unlike us, many of our
competitors maintain internal manufacturing capacity for the fabrication and
assembly of semiconductor products. This ability may provide them with more
reliable manufacturing capability, shorter development and manufacturing cycles
and time-to-market advantages. In addition, competitors with their own wafer
fabrication facilities that are capable of producing products with the same
design geometries as ours may be able to manufacture and sell competitive
products at lower prices. Any introduction of products by our competitors that
are manufactured with improved process technology could seriously harm our
business. As is typical in the semiconductor industry, our competitors have
developed and marketed products that function similarly or identically to ours.
If our products do not achieve performance, price, size or other advantages over
products offered by our competitors, our products

                                       14



may lose market share. Competitive pressures could also reduce market acceptance
of our products, reduce our prices and increase our expenses.

We also face competition from the makers of ASICs and other system devices.
These devices may include interface logic functions, which may eliminate the
need or sharply reduce the demand for our products in particular applications.

Product price declines and fluctuations may cause our future financial results
to vary.

Historically, selling prices in the semiconductor industry generally, as well as
for our products, have decreased significantly over the life of each product. We
expect that selling prices for our existing products will continue to decline
over time and that average selling prices for our new products will decline
significantly over the lives of these products. Declines in selling prices for
our products, if not offset by reductions in the costs of producing these
products or by sales of new products with higher gross margins, would reduce our
overall gross margins and could seriously harm our business.

The demand for our products depends on the growth of our end users' markets.

Our continued success depends in large part on the continued growth of markets
for the products into which our semiconductor products are incorporated. These
markets include the following:

 .  computers and computer related peripherals;
 .  data communications and telecommunications equipment;
 .  electronic commerce and the Internet; and
 .  consumer electronics equipment.

Any decline in the demand for products in these markets could seriously harm our
business, financial condition and operating results. These markets have also
historically experienced significant fluctuations in demand. We may also be
seriously harmed by slower growth in the other markets in which we sell our
products.

Our contracts with our wafer suppliers do not obligate them to a minimum supply
or set prices. Any inability or unwillingness of our wafer suppliers generally,
and Chartered Semiconductor Manufacturing Ltd. in particular, to meet our
manufacturing requirements would delay our production and product shipments and
harm our business.

In fiscal 2001, 2000 and 1999 we purchased approximately 59%, 75% and 85%,
respectively, of our wafers from Chartered Semiconductor Manufacturing Ltd. In
fiscal 2001, only five other suppliers manufactured the remainder of our wafers.
In fiscal 2000 and 1999, only four other suppliers manufactured the remainder of
our wafers. Our reliance on independent wafer suppliers to fabricate our wafers
at their production facilities subjects us to possible risks such as:

 .  lack of adequate capacity;
 .  lack of available manufactured products;
 .  lack of control over delivery schedules; and
 .  unanticipated changes in wafer prices.

Any inability or unwillingness of our wafer suppliers generally, and Chartered
in particular, to provide adequate quantities of finished wafers to meet our
needs in a timely manner would delay our production and product shipments and
seriously harm our business.

At present, we purchase wafers from our suppliers through the issuance of
purchase orders based on our rolling six-month forecasts. The purchase orders
are subject to acceptance by each wafer supplier. We do not have long-term
supply contracts which obligate our suppliers to a minimum supply or set prices.
We

                                       15



also depend upon our wafer suppliers to participate in process improvement
efforts, such as the transition to finer geometries. If our suppliers are unable
or unwilling to do so, our development and introduction of new products could be
delayed. Furthermore, sudden shortages of raw materials or production capacity
constraints can lead wafer suppliers to allocate available capacity to customers
other than us or for the suppliers' internal uses, interrupting our ability to
meet our product delivery obligations. Any significant interruption in our wafer
supply would seriously harm our operating results and our customer relations.
Our reliance on independent wafer suppliers may also lengthen the development
cycle for our products, providing time-to-market advantages to our competitors
that have in-house fabrication capacity.

In the event that our suppliers are unable or unwilling to manufacture our key
products in required volumes, we will have to identify and qualify additional
wafer foundries. The qualification process can take up to six months or longer.
Furthermore, we are unable to predict whether additional wafer foundries will
become available to us or will be in a position to satisfy any of our
requirements on a timely basis.

We depend on single or limited source assembly subcontractors with whom we do
not have written contracts. Any inability or unwillingness of our assembly
subcontractors to meet our assembly requirements would delay our product
shipments and harm our business.

We primarily rely on foreign subcontractors for the assembly and packaging of
our products and, to a lesser extent, for the testing of finished products. Some
of these subcontractors are our single source supplier for some of our new
packages. In addition, changes in our or a subcontractor's business could cause
us to become materially dependent on a single subcontractor. We have from time
to time experienced difficulties in the timeliness and quality of product
deliveries from our subcontractors and may experience similar or more severe
difficulties in the future. We generally purchase these single or limited source
components or services pursuant to purchase orders and have no guaranteed
arrangements with these subcontractors. These subcontractors could cease to meet
our requirements for components or services, or there could be a significant
disruption in supplies from them, or degradation in the quality of components or
services supplied by them. Any circumstance that would require us to qualify
alternative supply sources could delay shipments, result in the loss of
customers and limit or reduce our revenues.

We may have difficulty accurately predicting revenues for future periods.

Our expense levels are based in part on anticipated future revenue levels, which
can be difficult to predict. Our business is characterized by short-term orders
and shipment schedules. We do not have long-term purchase agreements with any of
our customers, and customers can typically cancel or reschedule their orders
without significant penalty. We typically plan production and inventory levels
based on forecasts of customer demand generated with input from customers and
sales representatives. Customer demand is highly unpredictable and can fluctuate
substantially. If customer demand falls significantly below anticipated levels,
our gross profit would be reduced.

We compete with others to attract and retain key personnel, and any loss of, or
inability to attract, key personnel would harm us.

To a greater degree than non-technology companies, our future success will
depend on the continued contributions of our executive officers and other key
management and technical personnel. None of these individuals has an employment
agreement with us and each one would be difficult to replace. We do not maintain
any key person life insurance policies on any of these individuals. The loss of
the services of one or more of our executive officers or key personnel or the
inability to continue to attract qualified personnel could delay product
development cycles or otherwise harm our business, financial condition and
results of operations.

Our future success also will depend on our ability to attract and retain
qualified technical, marketing and management personnel, particularly highly
skilled design, process and test engineers, for whom competition is intense. In
particular, the current availability of qualified engineers is limited and
competition among

                                       16



companies for skilled and experienced engineering personnel is
very strong. During strong business cycles, we expect to experience continued
difficulty in filling our needs for qualified engineers and other personnel.

Our limited ability to protect our intellectual property and proprietary rights
could harm our competitive position.

Our success depends in part on our ability to obtain patents and licenses and
preserve other intellectual property rights covering our products and
development and testing tools. In the United States, we hold 31 patents covering
certain aspects of our product designs and have at least 17 additional patent
applications pending. Copyrights, mask work protection, trade secrets and
confidential technological know-how are also key to our business. Additional
patents may not be issued to us or our patents or other intellectual property
may not provide meaningful protection. We may be subject to, or initiate,
interference proceedings in the U.S. Patent and Trademark Office. These
proceedings can consume significant financial and management resources. We may
become involved in litigation relating to alleged infringement by us of others'
patents or other intellectual property rights. This type of litigation is
frequently expensive to both the winning party and the losing party and takes up
significant amounts of management's time and attention. In addition, if we lose
such a lawsuit, a court could require us to pay substantial damages and/or
royalties or prohibit us from using essential technologies. For these and other
reasons, this type of litigation could seriously harm our business. Also,
although we may seek to obtain a license under a third party's intellectual
property rights in order to bring an end to certain claims or actions asserted
against us, we may not be able to obtain such a license on reasonable terms or
at all. Recently, we have been sued by Cypress Semiconductor Corporation for
patent infringement. See Item 3, "Legal Proceedings".

Because it is important to our success that we are able to prevent competitors
from copying our innovations, we intend to continue to seek patent, trade secret
and mask work protection for our technologies. The process of seeking patent
protection can be long and expensive, and we cannot be certain that any
currently pending or future applications will actually result in issued patents,
or that, even if patents are issued, they will be of sufficient scope or
strength to provide meaningful protection or any commercial advantage to us.
Furthermore, others may develop technologies that are similar or superior to our
technology or design around the patents we own.

We also rely on trade secret protection for our technology, in part through
confidentiality agreements with our employees, consultants and third parties.
However, these parties may breach these agreements. In addition, the laws of
some territories in which we develop, manufacture or sell our products may not
protect our intellectual property rights to the same extent as do the laws of
the United States.

The process technology used by our independent foundries, including process
technology that we developed with our foundries, can generally be used by them
to produce their own products or to manufacture products for other companies
including our competitors. In addition, we may not have the right to implement
key process technologies used to manufacture some of our products with foundries
other than our present foundries.

We may not provide adequate allowances for exchanges, returns and concessions.

We recognize revenue from the sale of products when shipped, less an allowance
based on future authorized and historical patterns of returns, price protection,
exchanges and other concessions. We believe our methodology and approach are
appropriate. However, if the actual amounts we incur exceed the allowances, it
could decrease our revenue and corresponding gross profit.

The complexity of our products makes us highly susceptible to manufacturing
problems, which could increase our costs and delay our product shipments.

The manufacture and assembly of our over 650 products are highly complex and
sensitive to a wide variety of factors, including:

                                       17



 .     the level of contaminants in the manufacturing environment;
 .     impurities in the materials used; and
 .     the performance of manufacturing personnel and production equipment.

In a typical semiconductor manufacturing process, silicon wafers produced by a
foundry are cut into individual die. These die are assembled into individual
packages and tested for performance. Our wafer fabrication suppliers have from
time to time experienced lower than anticipated yields of suitable die. In the
event of such decreased yields, we would incur additional costs to sort wafers,
an increase in average cost per usable die and an increase in the time to market
for our products. These conditions could reduce our net revenues and gross
margin and harm our customer relations.

We do not manufacture any of our products. Therefore, we are referred to in the
semiconductor industry as a "fabless" producer. Consequently, we depend upon
third party manufacturers to produce semiconductors that meet our
specifications. We currently have third party manufacturers that can produce
semiconductors that meet our needs. However, as the industry continues to
progress to smaller manufacturing and design geometries, the complexities of
producing semiconductors will increase. Decreasing geometries may introduce new
problems and delays that may affect product development and deliveries. Due to
the nature of the industry and our status as a "fabless" semiconductor company,
we could encounter fabrication-related problems that may affect the availability
of our products, delay our shipments or increase our costs.

A large portion of our revenues is derived from sales to a few customers, who
may cease purchasing from us at any time.

A relatively small number of customers have accounted for a significant portion
of our net revenues in each of the past several fiscal years. We expect this
trend to continue for the foreseeable future. Techmosa, an international
distributor that in turn ships to many end users, accounted for approximately
10% of net revenues during fiscal 2001. Sales to our top five customers
accounted for approximately 36% of net revenues in fiscal 2001. Of our end-user
customers, Cisco Systems accounted for approximately 12% of our gross revenues
and sales to our top five end-user customers accounted for approximately 39% of
gross revenues in fiscal 2001.

We do not have long-term sales agreements with any of our customers. Our
customers are not subject to minimum purchase requirements, may reduce or delay
orders periodically due to excess inventory and may discontinue selling our
products at any time. Our distributors typically offer competing products in
addition to ours. In fiscal 2001, sales to domestic and international
distributors represented approximately 54% of net revenues. The loss of one or
more significant customers, or the decision by a significant distributor to
carry the product lines of our competitors, could decrease our revenues.

Almost all of our wafer suppliers and assembly subcontractors are located in
southeast Asia, which exposes us to the problems associated with international
operations.

Almost all of our wafer suppliers and assembly subcontractors are located in
southeast Asia, which exposes us to risks associated with international business
operations, including the following:

 .     disruptions or delays in shipments;
 .     changes in economic conditions in the countries where these subcontractors
      are located;
 .     currency fluctuations;
 .     changes in political conditions;
 .     potentially reduced protection for intellectual property;
 .     foreign governmental regulations;
 .     import and export controls; and
 .     changes in tax laws, tariffs and freight rates.

                                       18



In particular, there is a potential risk of conflict and further instability in
the relationship between Taiwan and the People's Republic of China. Conflict or
instability could disrupt the operations of one of our principal wafer suppliers
and several of our assembly subcontractors located in Taiwan.

Because we sell our products to customers outside of the United States, we face
foreign business, political and economic risks that could seriously harm us.

In fiscal 2001, approximately 31% of our net revenues derived from sales in Asia
excluding Japan, approximately 11% from sales in Europe and approximately 7%
from sales in Japan. We expect that export sales will continue to represent a
significant portion of net revenues. We intend to expand our sales efforts
outside the United States. This expansion will require significant management
attention and financial resources and further subject us to international
operating risks. These risks include:

 .  tariffs and other barriers and restrictions;
 .  unexpected changes in regulatory requirements;
 .  the burdens of complying with a variety of foreign laws; and
 .  delays resulting from difficulty in obtaining export licenses for technology.

We are also subject to general geopolitical risks in connection with our
international operations, such as political and economic instability and changes
in diplomatic and trade relationships. In addition, because our international
sales are denominated in U.S. dollars, increases in the value of the U.S. dollar
could increase the price in local currencies of our products in foreign markets
and make our products relatively more expensive than competitors' products that
are denominated in local currencies. Regulatory, geopolitical and other factors
could seriously harm our business or require us to modify our current business
practices.

Our potential future acquisitions may not be successful because we have not made
acquisitions in the past.

We have depended on internal growth in the past and have not made any
acquisitions. As part of our business strategy, we expect to seek acquisition
prospects that would complement our existing product offerings, improve market
coverage or enhance our technological capabilities. Although we are evaluating
acquisition and strategic investment opportunities on an ongoing basis, we may
not be able to locate suitable acquisition or investment opportunities. Future
acquisitions could result in the following:

 .  potentially dilutive issuances of equity securities;
 .  large one-time write-offs;
 .  the incurrence of debt and contingent liabilities or amortization expenses
   related to goodwill and other intangible assets;
 .  difficulties in the assimilation of operations, personnel, technologies,
   products and the information systems of the acquired companies;
 .  diversion of management's attention from other business concerns; and
 .  risks of entering geographic and business markets in which we have no or
   limited prior experience and potential loss of key employees of acquired
   organizations.

We are not certain that we will be able to successfully integrate any
businesses, products, technologies or personnel that may be acquired in the
future. Our failure to do so could seriously harm our business.

Our operations and financial results could be severely harmed by natural
disasters.

Our headquarters and some of our major suppliers' manufacturing facilities are
located near major earthquake faults. One of the foundries we use is located in
Taiwan, which suffered a severe earthquake during fiscal 2000. We did not
experience significant disruption to our operations as a result of that

                                       19



earthquake. However, if a major earthquake or other natural disaster were to
affect our suppliers, our sources of supply could be interrupted, which would
seriously harm our business.

ITEM 2.    PROPERTIES

We lease approximately 66,300 square feet of space in San Jose, California in
which our headquarters, technology and product development and testing
facilities are located. The facility is leased through May 2005, with renewal
options. Approximately 12,900 square feet of this space has been subleased for
18 months effective October 1, 2001. We also have North American sales offices
located in California, Texas, Pennsylvania, Illinois, and North Carolina as well
as International sales offices in Taiwan, Korea, Japan, Singapore and the United
Kingdom. We believe our current facilities are adequate to support our needs
through the end of fiscal 2002.

ITEM 3.    LEGAL PROCEEDINGS

The semiconductor industry is characterized by frequent litigation regarding
patent and other intellectual property rights, and there can be no assurance
that we will not be subject to infringement claims by other parties.

On July 20, 2001, a complaint was filed with the U.S. International Trade
Commission ("USITC"), under section 337 of the Tariff Act of 1930, as amended,
19 U.S.C. (S)1337, on behalf of Cypress Semiconductor Corporation ("Cypress"),
of San Jose, California, a competitor of Pericom. Supplements to the complaint
were filed on July 30, August 1, and August 3, 2001. The complaint, as
supplemented, alleges violations of section 337 in the importation into the
United States, the sale for importation and the sale within the United States
after importation of certain power saving integrated circuits and products
containing those power saving integrated circuits that infringe claims 1-4,
6-10, and 12-15 of United States Patent No. 5,949,261 entitled "Method and
Circuit for Reducing Power and/or Current Consumption." ("the `261 patent"). The
complaint further alleges that an industry in the United States exists as
required by subsection (a)(2) of section 337. Among the power saving integrated
circuits and products that Cypress alleges infringe the `261 patent are certain
of Pericom products. In the complaint, Cypress requested that the USITC
institute an investigation and, after the investigation, issue a permanent
exclusion order and permanent cease and desist order. On August 16, 2001, the
USITC ordered that (1) Pursuant to subsection (b) of section 337 of the Tariff
Act of 1930, as amended, an investigation be instituted to determine whether
there is a violation of subsection (a)(1)(B) of section 337 in the importation
into the United States, the sale for importation, or the sale within the United
States after importation of certain power saving integrated circuits and
products containing same by reason of infringement of claims 1-4, 6-10, 12-14,
or 15 of the `261 patent and whether an industry in the United States exists as
required by subsection (a)(2) of section 337. Pericom disputes Cypress' claims
and intends to defend the lawsuit vigorously.

On July 24, 2001, Cypress Semiconductor Corporation ("Cypress") filed suit in
Federal District Court in the Eastern District of Texas - Sherman Division,
generally alleging that Pericom infringes United States Patent No. 5,949,261
entitled "Method and Circuit for Reducing Power and/or Current Consumption." The
suit seeks injunctive relief, damages, costs, attorney fees, and pre-judgment
and post-judgment interest, and further alleges that Pericom's infringement is
willful and that any damages awarded should be trebled. Pericom disputes
Cypress' claims and intends to defend the lawsuit vigorously.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.

                                       20


                                     PART II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

COMMON STOCK PRICE RANGE

The Common Stock of the Company began trading publicly on the Nasdaq National
Market on October 31, 1997 under the symbol PSEM. Prior to that date, there was
no public market for the Common Stock. The Company has not paid cash dividends
and has no present plans to do so. It is the policy of the Company to reinvest
earnings of the Company to finance expansion of the Company's operations, and
the Company does not expect to pay dividends in the foreseeable future. The
following table sets forth for the periods indicated the high and low sale
prices of the Common Stock on the Nasdaq National Market. As of June 30, 2001
there were approximately 8,200 holders of record of the Company's Common Stock.
During fiscal year 2001, the Company did not sell any unregistered securities.

                                                    High            Low
                                                    ----            ---

Fiscal year ended June 30, 1999:
          First Quarter                              4.38            2.16

          Second Quarter                             5.91            2.10

          Third Quarter                              7.07            3.44

          Fourth Quarter                             5.82            3.07

Fiscal year ended June 30, 2000:
          First Quarter                              8.82            5.57

          Second Quarter                            15.00            6.38

          Third Quarter                             28.63           11.88

          Fourth Quarter                            40.94           13.63

Fiscal year ended June 30, 2001:
          First Quarter                             42.63           22.50

          Second Quarter                            44.50           13.00

          Third Quarter                             27.00           11.31

          Fourth Quarter                            18.82           10.13

                                       21



          ITEM 6.     SELECTED FINANCIAL DATA

          The following selected financial data of the Company is qualified by
          reference to and should be read in conjunction with the Financial
          Statements, including the Notes thereto, and Management's Discussion
          and Analysis of Financial Condition and Results of Operations included
          elsewhere herein. The Statement of Income Data for each of the years
          in the three-year period ended June 30, 2001 and the Balance Sheet
          Data as of June 30, 2001 and 2000 are derived from, and are qualified
          by reference to, the Financial Statements included herein. The
          Statement of Income Data for the years ended June 30, 1998, and 1997
          and the Balance Sheet Data as of June 30, 1999, 1998 and 1997 are
          derived from audited financial statements not included herein. The
          selected financial data gives effect to the two-for-one stock split
          effected on September 8, 2000.



                                                                            Fiscal Year Ended June 30,
                                                         -------------------------------------------------------------
                                                            2001         2000         1999         1998         1997
                                                            ----         ----         ----         ----         ----
                                                                     (in thousands, except per share data)
                                                                                            
Statement of Income Data:

Net revenues                                              $108,313      $90,977      $59,797      $49,198     $33,166
Cost of revenues                                            62,388       52,540       35,484       29,285      20,986
                                                         ------------------------------------------------------------
     Gross profit                                           45,925       38,437       24,313       19,913      12,180
Operating expenses:
     Research and development                               10,993        8,118        5,976        5,065       4,187
     Selling, general and administrative                    15,150       12,449        9,175        7,793       5,989
     Restructuring charge                                      522            0            0            0           0
                                                         ------------------------------------------------------------
          Total operating expenses                          26,665       20,567       15,151       12,858      10,176
                                                         ------------------------------------------------------------
Income from operations                                      19,260       17,870        9,162        7,055       2,004
Other income, net                                            7,888        3,263        1,098          738         351
                                                         ------------------------------------------------------------
Income before income taxes                                  27,148       21,133       10,260        7,793       2,355
Provision for income taxes                                   9,789        7,918        3,488        2,629         777
                                                         ------------------------------------------------------------
Net income                                                 $17,359      $13,215       $6,772      $ 5,164      $1,578
                                                         ============================================================
Basic earnings per share                                     $0.70        $0.63        $0.36        $0.36       $0.36
                                                         ============================================================
Diluted earnings per share                                   $0.64        $0.56        $0.33        $0.27       $0.11
                                                         ============================================================
Shares used in computing basic earnings per share (1)       24,914       20,906       18,790       14,166       4,330
                                                         ============================================================
Shares used in computing diluted earnings per share (1)     27,242       23,578       20,558       18,824      14,632
                                                         ============================================================






                                                                               As of June 30,
                                                         ---------------------------------------------------------
                                                          2001         2000       1999         1998       1997
                                                          ----         ----       ----         ----       ----
                                                                             (in thousands)
                                                                                           
Balance Sheet Data:

Working capital                                           $168,066     $153,273    $37,642      $32,751   $12,984
Total assets                                               196,427      180,366     55,925       47,401    23,581
Shareholders' equity                                       187,190      164,772     46,380       38,611    16,795



  (1)   See Note 1 of Notes to Financial Statements for an explanation of the
        method used to determine the number of shares used in computing basic
        and diluted earnings per share.

                                       22



ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

This Annual Report includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act if 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements other than
statements of historical fact are "forward-looking statements" for purposes of
these provisions, including any statements regarding projections of earnings,
revenues or other financial items; plans and objectives of management for future
operations; proposed new products or services and their development schedule;
industry, technological or market trends, our ability to address the need for
application specific logic products; our ability to respond rapidly to customer
needs; expanding product sales; future economic conditions or performance, and
any statement of assumptions underlying any of the foregoing. In some cases,
forward-looking statements can be identified by the use of terminology such as
"may," "will," "expects," "plans," "anticipates," "estimates," "potential," or
"continue," or the negative thereof or other comparable terminology. Although we
believe that the expectations reflected in the forward-looking statements
contained herein are reasonable, there can be no assurance that such
expectations or any of the forward-looking statements will prove to be correct,
and actual results could differ materially from those projected or assumed in
the forward-looking statements. Our future financial condition and results of
operations, as well as any forward-looking statements, are subject to risks and
uncertainties, including but not limited to the factors set forth herein under
the heading "Risk Factors" and elsewhere in this report. All forward-looking
statements and reasons why results may differ included in this Annual Report are
made as of the date hereof, and we assume no obligation to update any such
forward-looking statement or reason why actual results may differ.

OVERVIEW

Pericom Semiconductor Corporation was incorporated in June 1990. We completed
our first profitable fiscal year on June 30, 1993 and have been profitable in
each of our last thirty-four quarters. We design, manufacture and market high
performance digital, analog and mixed-signal integrated circuits used for the
transfer, routing, and timing of digital and analog signals within and between
computer, networking, data communications and telecommunications systems. Our
first volume sales occurred in fiscal 1993 and consisted exclusively of 5-volt
8-bit interface logic circuits. Since then we have expanded our product offering
by introducing the following products, among others:

 .    3.3-volt 16-bit logic circuits and 8-bit digital switches in fiscal 1994;

 .    clock generators, 3.3-volt clock synthesizers and buffers, and high-speed
     interface products for the networking industry in fiscal 1995;

 .    32-bit logic, 16-bit digital switches and Pentium, 56K modem and laser
     printer clock synthesizers in fiscal 1996;

 .    an analog switch family, mixed-voltage logic and a family of clock
     generators in fiscal 1997;

 .    a family of advanced 3.3-volt CMOS logic; clock devices for Pentium and
     Pentium II mobile computers; a complete solution for the PC100 memory
     module standard; and a 3.3-volt bus switch family offering the fastest bus
     switches on the market in fiscal 1998;

 .    three families of 2.5-volt zero-delay clock drivers for the networking and
     telecommunications markets; a family of application-specific bus switches
     and integrated clock generators to support the latest Pentium III(TM) and
     Celeron(TM) Intel processors and a complete interface solution for the
     PC133 memory module standard in fiscal 1999; and

                                       23



 .  a crossbar switch for backplane applications like server clusters,
   networking, industrial computing and Storage Area Networks; a family of
   drivers, receivers, and transceivers supporting the "Low Voltage Differential
   Signaling" interface standard; the "SuperClock" programmable skew clock
   family targeting networking, telecommunications and Storage Area Network
   applications; a complete interface solution for the new double data rate
   (DDR) SDRAM memory standard; a family of LVDS cross-point switches to route
   signals in OC12 networks; and the AVC+ family of high speed interface logic
   in fiscal 2000.

 .  in fiscal 2001 2.5 volt switch products and complimentary complete clock
   interface solution for use in Double Data Rate (DDR) synchronous DRAM
   modules; LVDS products for the networking market including both dual and quad
   crosspoint switches for both point-to-point and bus communications; several
   "hot-plug' switches that support the growing demand for 24/7 operations;
   expansion of the 2.5 volt AVC family; low voltage bus switch products that
   provide 3.3 volt to 2.5 volt and 2.5 volt to 1.8 volt level translation.

As is typical in the semiconductor industry, we expect selling prices for our
products to decline over the life of each product. Our ability to increase net
revenues is highly dependent upon our ability to increase unit sales volumes of
existing products and to introduce and sell new products in quantities
sufficient to compensate for the anticipated declines in selling prices of
existing products. We seek to increase unit sales volume through increased wafer
fabrication capacity allocations from our existing foundries, qualification of
new foundries, increased number of die per wafer through die size reductions and
improved yields of good die through the implementation of advanced process
technologies, but there can be no assurance that we will be successful in these
efforts. In fiscal 2001, 2000 and 1999, respectively, approximately 59%, 75%,
and 85% of the wafers for our semiconductor products were manufactured by
Chartered. We qualified AMS as a wafer supplier in fiscal 1991, NJRC in fiscal
1995, TSMC in fiscal 1997, Hyundai/Hynix in 1998 and Peregrine Semiconductor
Australia in fiscal 2001.

Declining selling prices will adversely affect gross margins unless we are able
to offset such declines with the sale of new higher margin products or achieve
commensurate reductions in unit costs. We seek to improve our overall gross
margin through the development and introduction of selected new products that we
believe will ultimately achieve higher gross margins. A higher gross margin for
a new product is typically not achieved until some period after the initial
introduction of the product -- after start-up expenses for that product have
been incurred and once volume production begins. In general, costs are higher at
the introduction of a new product due to the use of a more generalized design
schematic, lower economies of scale in the assembly phase and lower die yield.
Our ability to decrease unit cost depends on our ability to shrink the die sizes
of our products, improve yields, obtain favorable subcontractor pricing, and
make in-house test and assembly operations more productive and efficient. There
can be no assurance that these efforts, even if successful, will be sufficient
to offset declining selling prices.

Product revenue is generally recognized when persuasive evidence of an
arrangement exists, delivery has occurred, the fee is fixed and determinable and
collectibility is probable. Estimated costs for exchanges, returns, price
protection and other concessions are accrued in the period that sales are
recognized. Although we believe that, to date, we have provided adequate
allowances for exchanges, returns, price protection and other concessions, and,
to date, actual amounts incurred have not differed materially from the
allowances, there can be no assurance that actual amounts incurred will not
exceed our allowances, particularly in connection with the introduction of new
products, enhancements to existing products or price reductions.

                                       24



RESULTS OF OPERATIONS

The following table sets forth certain statement of income data as a percentage
of net revenues for the periods indicated.

                                                        Fiscal Year Ended
                                                            June 30,
                                                  2001        2000      1999
                                                  ----        ----      ----

Net revenues                                     100.0%      100.0%    100.0%
Cost of revenues                                  57.6        57.8      59.3
                                                ------------------------------
     Gross Margin                                 42.4        42.2      40.7
Operating expenses:
     Research and development                     10.1         8.9      10.0
     Selling, general and administrative          14.0        13.7      15.3
     Restructuring charge                          0.5        ---       ---
                                                ------------------------------
          Total operating expenses                24.6        22.6      25.3
                                                ------------------------------
Income from operations                            17.8        19.6      15.4
Other income, net                                  7.3         3.6       1.8
                                                ------------------------------
Income before income taxes                        25.1        23.2      17.2
Provision for income taxes                         9.1         8.7       5.9
                                                ------------------------------
Net income                                        16.0%       14.5%     11.3%
                                                ==============================


COMPARISON OF FISCAL 2001, 2000 AND 1999

NET REVENUES. Net revenues increased 19.0% from $91.0 million in fiscal 2000 to
$108.3 million in fiscal 2001. The increase in net revenues resulted from
overall strength in the semiconductor industry through the first six months of
fiscal 2001, continued market acceptance of our existing products and sales of
new products in our SiliconSwitch, SiliconClock and SiliconInterface product
lines, offset in part by a decline in the weighted average selling price of all
products. Net revenues increased 52.1% from $59.8 million in fiscal 1999 to
$91.0 million in fiscal 2000. The increase in net revenues resulted from overall
strength in the semiconductor industry, continued market acceptance of our
existing products and sales of new products in our SiliconSwitch, SiliconClock
and SiliconInterface product lines, offset in part by a decline in the weighted
average selling price of all products.

GROSS PROFIT. Gross profit increased 19.8% from $38.4 million in fiscal 2000 to
$46.0 million in fiscal 2001. Gross margin increased slightly from 42.2% in
fiscal 2000 to 42.4% in fiscal 2001. The increase in gross margin resulted from
the introduction and sale of new products at higher gross margins, a shift in
mix towards a higher margin product line, and cost reductions achieved through
reduced wafer, assembly and test costs. These margin increases were partially
offset by decreases in average selling prices in our various product lines.
Gross profit increased 58.1% from $24.3 million in fiscal 1999 to $38.4 million
in fiscal 2000. Gross margin increased from 40.7% in fiscal 1999 to 42.2% in
fiscal 2000. The increase in gross margin resulted from the introduction and
sale of new products at higher gross margins, a shift in mix towards a higher
margin product line, and cost reductions achieved through reduced wafer,
assembly and test costs. These margin increases were partially offset by
decreases in average selling prices in our various product lines.

RESEARCH AND DEVELOPMENT. Research and development expenses increased 35.4% from
$8.1 million in fiscal 2000 to $11.0 million in fiscal 2001. As a percentage of
net revenues, research and development expenses increased from 8.9% in fiscal
2000 to 10.1% in fiscal 2001. Research and development expenses increased 35.8%
from $6.0 million in fiscal 1999 to $8.1 million in fiscal 2000. As a percentage
of net revenues, research and development expenses decreased from 10.0% in
fiscal 1999 to 8.9% in fiscal 2000. The increase in absolute dollars in research
and development spending in each year

                                       25



was attributable to development costs for new products in each of our product
lines and expansion of engineering staff and related infrastructure as we
continued our commitment to new product development. We believe that continued
investment in research and development is critical to attaining our strategic
objectives, and as a result we expect research and development expenses to
increase in absolute dollars in future periods.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses consist primarily of personnel and related overhead costs for sales,
marketing, finance, human resources and general management. Such costs include
advertising, sales materials, sales commissions, and other marketing and
promotional expenses. Selling, general and administrative expenses increased
21.7% from $12.4 million in fiscal 2000 to $15.2 million in fiscal 2001 and
increased as a percentage of net revenues from 13.7% to 14.0%. Selling, general
and administrative expenses increased 35.7% from $9.2 million in fiscal 1999 to
$12.4 million in fiscal 2000 but decreased as a percentage of net revenues from
15.3% to 13.7%. The increase in expense in each year was primarily attributable
to increased staffing levels and increases in commissions and other incentives
due to sales and profitability growth.

RESTRUCTURING CHARGE. In fiscal 2001 there was a non-recurring restructuring
charge of $522,000 related to an unused leased facility. The facility has
subsequently been subleased and the terms of that sublease indicate that the
restructuring charge was sufficient. There were no restructuring charges in
fiscal 2000 or 1999.

OTHER INCOME, NET. Other income, net includes interest income and expense and
our allocated portion of net losses of Pericom Technology, Inc. ("PTI"), a
British Virgin Islands corporation based in Shanghai, People's Republic of
China. PTI was formed by Pericom and certain Pericom shareholders in 1994 to
develop and market semiconductors in China and certain other Asian countries
(see Note 4 of Notes to Financial Statements). Other income, net increased from
$3.3 million in fiscal 2000 to $7.9 million in fiscal 2001. Interest income
increased from $3.6 million in fiscal 2000 to $8.3 million in fiscal 2000
primarily as a result of investment of the net proceeds from our follow-on
public offering in March 2000. Our share of the net losses of PTI decreased from
$323,000 in fiscal 2000 to $68,000 in fiscal 2001, excluding $331,000 in
goodwill amortization in fiscal 2001. Other income, net increased from income of
$1.1 million in fiscal 1999 to $3.3 million in fiscal 2000. Interest income
increased from $1.4 million in fiscal 1999 to $3.6 million in fiscal 2000
primarily as a result of investment of the net proceeds from our follow-on
public offering in March 2000. Our share of the net losses of PTI increased from
$288,000 in fiscal 1999 to $323,000 in fiscal 2000, excluding $35,000 in
goodwill amortization in fiscal 2000.

PROVISION FOR INCOME TAXES. The provision for income taxes was $9,789,000,
$7,918,000 and $3,488,000 in fiscal 2001, 2000 and 1999, respectively. In each
of these fiscal years, the provision for income taxes differed from the federal
statutory rate primarily due to state income taxes and the utilization of
research and development tax credits.

LIQUIDITY AND CAPITAL RESOURCES

Operating activities provided approximately $19.4 million in cash in fiscal
2001, $18.2 million in fiscal 2000 and $4.1 million in fiscal 1999. Net cash
used for investing activities was $57.0 million, $5.5 million and $5.3 million
in fiscal 2001, 2000 and 1999, respectively. We made capital expenditures of
approximately $5.8 million in fiscal 2001, $4.2 million in fiscal 2000 and $3.0
million in fiscal 1999. We expect to spend approximately $1.5 million in fiscal
2002 to acquire software and other miscellaneous capital equipment. We used the
$100.9 million net proceeds from our follow-on public offering in March 2000 to
purchase short-term money market funds.

As of June 30, 2001, our principal source of liquidity included cash, cash
equivalents and short-term investments of approximately $150.9 million. We
believe that cash generated from operations and existing cash balances will be
sufficient to fund necessary purchases of capital equipment and to provide
working capital at least through the next 12 months. However, there can be no
assurance that future events will not

                                       26



require us to seek additional capital sooner or, if so required, that adequate
capital will be available at all or on terms acceptable to us.

A portion of our cash may be used to acquire or invest in complementary
businesses or products or to obtain the right to use complementary technologies.
From time to time, in the ordinary course of business, we may evaluate potential
acquisitions of such businesses, products or technologies. We expect to continue
evaluating investment and acquisition opportunities and consequently, we may see
an increase in investment and acquisition activity.

RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1998, the Financial Accounting Standards Board, or the FASB, issued
Statement of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities, or SFAS 133. This statement requires
companies to record derivatives on the balance sheet as assets and liabilities,
measured at fair value. Gains and losses resulting from changes in the fair
market values of those derivative instruments would be accounted for depending
on the use of instrument and whether it qualifies for hedge accounting. We
adopted SFAS 133, as amended, on July 1, 2000. The adoption of this statement
did not have an effect on our financial position, results of operations or cash
flows as we had no derivative financial instruments as of June 30, 2000 and have
not entered into any derivative transactions historically.

As a matter of policy, we do not currently enter into transactions involving
derivative financial instruments. In the event we enter into such transactions
in the future, we will account for those transactions in accordance with SFAS
133, in which case we will formally document all relationships between the
hedging instruments and hedged items, as well as its risk management objective
and strategy for undertaking such hedge transactions.

In December 1999, the Securities and Exchange Commission (SEC) released Staff
Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
Statements." This bulletin summarizes certain interpretations and practices
followed by the Division of Corporation Finance and Office of the Chief
Accountant of the SEC in administering the disclosure requirements of the
Federal securities laws in applying generally accepted accounting principles to
revenue recognition in financial statements. Application of the accounting and
disclosures desired in the bulletin is required in the fourth quarter of fiscal
2001. The adoption of this bulletin did not have significant impact on the
Company's consolidated financial position, results of operations or cash flows.

In March 2000, the FASB issued FASB Interpretation No. 44 ("FIN 44"),
"Accounting for Certain Transactions Involving Stock Compensation - an
Interpretation of APB Opinion No. 25." FIN 44 clarifies the definition of an
employee for purposes of applying APB Opinion No. 25, the criteria for
determining whether a plan qualifies as a noncompensatory plan, the accounting
consequence of various modifications to the terms of a previously fixed stock
option or award, and the accounting for an exchange of stock compensation awards
in a business combination. We adopted FIN 44 on July 1, 2000, except for
provisions that modify the definition of an employee and that directly or
indirectly reduce the exercise price of stock option awards, which were
effective after December 15, 1998. The adoption of FIN 44 did not have a
material impact on our financial position, results of operations or cash flows.

In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No 141, Business Combinations. SFAS No.
141 requires that all business combinations initiated after June 30, 2001 be
accounted for under the purchase method and addresses the initial recognition
and measurement of goodwill and other intangible assets acquired in a business
combination. Business combinations originally accounted for under the pooling of
interest method will not be changed. Management does not expect the adoption of
SFAS No. 141 to have an impact on the financial position, results of operations,
or cash flows of the Company.

In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard (SFAS) No. 142, Goodwill and Other Intangible
Assets. SFAS No. 142 addresses the initial

                                       27



recognition and measurement of intangible assets acquired outside of a business
combination and the accounting for goodwill and other intangible assets
subsequent to their acquisition. SFAS No. 142 provides that intangible assets
with finite useful lives be amortized and that goodwill and intangible assets
with indefinite lives will not be amortized, but will rather be tested at least
annually for impairment. Pericom will adopt SFAS No. 142 for its fiscal year
beginning July 1, 2001. Upon adoption of SFAS 142, we will stop the amortization
of goodwill with a net carrying value of $1,323,000 at June 30, 2001 and annual
amortization of $338,000 that resulted from business combinations initiated
prior to the adoption of SFAS 141, Business Combinations. The Company will
evaluate such goodwill under the SFAS 142 transitional impairment test and does
not expect the carrying values to significantly exceed the fair values of such
assets. Any transitional impairment loss will be recognized as a change in
accounting principle.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MARKET RISK DISCLOSURE

At June 30, 2001, our investment portfolio consisted of fixed income securities,
excluding those classified as cash equivalents, of $61.8 million (see Note 1 of
Notes to Financial Statements). These securities are subject to interest rate
risk and will decline in value if market interest rates increase. For example,
if market interest rates were to increase immediately and uniformly by 10% from
levels as of June 30, 2001, the decline in the fair value of the portfolio would
not have a material effect on our results of operations over the next fiscal
year. Due to the short duration and conservative nature of these instruments, we
do not believe that we have a material exposure to interest rate risk.

                                       28



ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

1.   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

     The following Consolidated Financial Statements are filed as part of this
report.



                                                                                          Page No.
                                                                                       
     Independent Auditors' Report .....................................................      34

     Balance Sheets as of June 30, 2001 and 2000 ......................................      35

     Statements of Income for each of the three fiscal years in the period ended
     June 30, 2001 ....................................................................      36

     Statements of Shareholders' Equity and Comprehensive Income for each of the
     three fiscal periods in the period ended June 30, 2001 ...........................      37

     Statements of Cash Flows for each of the three fiscal years in the period
     ended June 30, 2001 ..............................................................      38

     Notes to Financial Statements ....................................................      39


2.   INDEX TO SUPPLIMENTAL FINANCIAL INFORMATION

     Unaudited Interim Financial Information ..........................................      51

3.   INDEX TO FINANCIAL STATEMENT SCHEDULE

     The following financial statement schedule of Pericom Semiconductor Corp.
     for the years ended June 30, 2001, 2000, and 1999 is filed as part of this
     report and should be read in conjunction with the Financial Statements of
     Pericom Semiconductor Corp.

     Schedule II - Valuation and Qualifying Accounts for each of the three
     fiscal years in the period ended June 30, 2001 ...................................      54


     ________________

     Schedules other than that listed above have been omitted since they are
     either not required, not applicable, or the information is otherwise
     included.

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not Applicable.

                                       29



                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The executive officers and directors of the Company and their respective ages as
of June 30, 2001 are as follows:



        Name                    Age                          Position(s)
        ----                    ---                          -----------
                                   
Alex Chi-Ming Hui                44      Chief Executive Officer, President and Chairman of
                                         the Board of Directors
Chi-Hung (John) Hui, Ph.D.       46      Vice President, Technology and Director
Patrick B. Brennan               63      Vice President, Investor Relations
Michael D. Craighead             55      Vice President, Finance and Administration and Chief
                                         Financial Officer
Tat C. Choi, Ph.D.               46      Vice President, Design Engineering
Anthony V. Walker                54      Vice President, Marketing
Gerald V. Beemiller              57      Vice President, Sales
Shujong (John) Cheng             51      Vice President, Operations
Hau L. Lee, Ph.D. (1)            48      Director
Millard (Mel) Phelps (1)         73      Director
Tay Thiam Song  (1) (2)          46      Director
Jeffery Young  (2)               52      Director


_____________

(1) Member of Audit Committee.
(2) Member of Compensation Committee.

Alex Chi-Ming Hui has been Chief Executive Officer, President and a member of
the Board of Directors of the Company since its inception in June 1990, and was
elected Chairman of the Board of Directors of the Company in July 1999. From
August 1982 to May 1990, Mr. Hui was employed by LSI Logic Corporation, most
recently as its Director of Advanced Development. From August 1980 to July 1982,
Mr. Hui was a member of the technical staff of Hewlett-Packard Company. Mr. Hui
holds a B.S.E.E. from the Massachusetts Institute of Technology and an M.S.E.E.
from the University of California at Los Angeles.

Chi-Hung (John) Hui, Ph.D., has been Vice President, Technology and a member of
the Board of Directors of the Company since its inception in June 1990. From
August 1987 to June 1990, Dr. Hui was employed by Integrated Device Technology,
most recently as Manager of its Research and Development Department. From August
1984 to August 1987, Dr. Hui was a member of the technical staff of
Hewlett-Packard Company. Dr. Hui holds a B.S.E.E. from Cornell University and an
M.S.E.E. and a Ph.D. in Electrical Engineering from the University of California
at Berkeley.

Patrick B. Brennan has been Vice President, Investor Relations since October
2000. Mr. Brennan joined the company in March 1993 as the Vice President,
Finance and Administration. From February 1991 to March 1993, Mr. Brennan was
employed by Datacord, Inc., a subsidiary of Newell Research, Inc., as its Vice
President, Finance, and from July 1985 to February 1991, he was employed as the
Vice President, Finance of SEEQ Technology, Inc. From January 1980 to June 1985,
he was employed by National Semiconductor Corporation, most recently as Vice
President and Treasurer. Mr. Brennan holds a B.S. in Business Administration
from Arizona State University.

Michael D. Craighead has been Vice President, Finance and Administration and
Chief Financial Officer of the Company since October 2000. From July 1999
through October 2000 he was Corporate Controller of

                                           30



the Company. Previously, Mr. Craighead was Corporate Controller of GSS/Array
Technology, Inc. from June 1998 to July 1999 and from November 1997 to June 1998
he was Corporate Controller of DSP Technology. Mr. Craighead was also Vice
President, Finance and Administration and Chief Financial Officer of
ComputerWare from April 1996 to November 1997 and was Vice President, Finance
and Operations at Utah Scientific from September 1995 to April 1996. Previously,
Mr. Craighead has held positions as Controller of Grass Valley Group from March
1989 through May 1996 and Vice President, Finance and Administration and Chief
Financial Officer of Drexler Technology Corporation from June 1982 to March
1989. Mr. Craighead holds a BS degree in Accounting from San Jose State
University.

Tat C. Choi, Ph.D., joined the Company in April 1998 as Vice President, Design
Engineering. From September 1996 to March 1998, Dr. Choi was employed by Anacor,
Inc., an engineering design service consulting firm that he founded. Prior to
working at Anacor, Inc. Dr. Choi was employed by Chrontel, Inc. most recently as
its Vice President, Engineering from September 1989 to August 1996. Dr. Choi was
employed by Advanced Micro Devices from February 1983 to August 1989 as a Senior
Member of Technical Staff. Dr. Choi holds a B.S. and M.S. in Electrical
Engineering from the University of Minnesota and a Ph.D. in EECS from the
University of California at Berkeley.

Anthony V. Walker joined Pericom in March 2001 as Vice President of Marketing.
From January 2000 to March 2001, Mr. Walker was employed by Hi/fn, inc. as
Director of Marketing. Prior to Hi/fn he was employed from January 1998 to
January 2000 as Director of Marketing for Integrated Device Technology (IDT)
Corporation's logic and timing products. Previously, Mr. Walker held sales and
marketing management positions at the TriTech Microelectronics subsidary of
Singapore Technologies ('96-'97), Toshiba America's ASIC division ('90-'95),
Plessey Semiconductors ('88-'89) and Ferranti Semiconductors ('72-'88). He holds
a Bachelor of Science (B.Sc.) degree in Electronic Engineering and Physics from
Loughborough University of Technology, Loughborough, UK.

Gerald V. Beemiller joined Pericom in December of 2000 as Vice President of
Worldwide Sales. From July 1997 to May 2000, Mr. Beemiller was employed by Sony
Semiconductor Company of America originally as Vice President of Sales and later
as Vice President of Sales and Marketing. Prior to Sony, he was the Founder, CEO
and President of Infant Advantage, a medical device company ('89-'97). Prior to
Infant Advantage, he was the Owner/Partner of I Squared, a semiconductor
manufacturers representative firm ('74-'89). Previously, he held engineering and
sales positions at Motorola Semiconductor ('66-'73). Mr. Beemiller was educated
at Arizona State University and holds a BS Degree in Mathematics.

Shujong (John) Cheng joined Pericom in August of 2001 as Vice President of
Operations. From July 1999 to August 2001, Mr. Cheng was employed by Payton
Technology, Inc. as Vice President of Operations. Prior to Payton, he was
employed from March 1997 to July 1999 as Vice President of Global Product and
Test Engineering by Kingston Technology. Previously, he was the President of
Evergreen Testing Services from June 1995 to March 1997 and Director of
Manufacturing for Hyundai Electronics, America from April 1994 to June1995. Mr.
Cheng has also held product and test engineering management positions with ESS
Technology ('93-'94), Cypress Semiconductor ('89-'93), IDT ('84-'89), and Atari
('81-'84). Mr. Cheng holds a BSEE from Tatung Institute of Technology, Taipei,
Taiwan and a MSEE from Lamar University, Beaumont, Texas.

Hau L. Lee, Ph.D, has been a member of the Board of Directors since July 1999.
From February 1997 through the present Dr. Lee has been Kleiner Perkins,
Mayfield, Sequoia Capital Professor in the Department of Industrial Engineering
and Engineering Management and from September 1998 through the present has been
Professor of Operations, Information and Technology Management at the Graduate
School of Business at Stanford University. From September 1992 through the
present he has been Professor of Industrial Engineering and Engineering
Management at Stanford University. He is the founding and current director of
the Stanford Global Supply Chain Management Forum, and has consulted extensively
for companies such as Hewlett Packard, Sun Microsystems, IBM, Xilinx
Corporation, Motorola, and Andersen Consulting. Dr. Lee is a graduate of the
University of Hong Kong and earned his M.S. in Operational Research from the
London School of Economics and his M.S. and Ph.D. degrees in Operations Research
from the Wharton School at the University of Pennsylvania.

                                       31



Millard (Mel) Phelps has been a member of the Board of Directors since July
1999. Mr. Phelps is a retired advisory director of Hambrecht and Quist (H&Q), a
position he held from September 1994 to July 1997. Prior to joining H&Q in 1984
as a Principal in the firm and Senior Semiconductor Analyst, Mr. Phelps spent
23-years in the semiconductor industry in various management and corporate
officer positions. Mr. Phelps is currently serving as a Director of Trident
Microsystems and is also a director of four privately held companies. Mr. Phelps
holds a BSEE degree with honors from Case Reserve University.

Tay Thiam Song has been a member of the Board of Directors since June 1992. Mr.
Tay resides in Singapore, and, since 1985, has been serving as the Executive
Director of various companies in Singapore and Malaysia, including Daiman Group
(a Malaysian public company) and Chye Seng Tannery (Pte) Ltd. Mr. Tay holds a
B.A. in Accounting from the North East London Polytechnic University.

Jeffrey Young has been a member of the Board of Directors since August 1995.
Since 1988, Mr. Young has been a resident of Singapore and from 1990 to the
present has served as the Executive Director of Daiman Roof Tiles Sdn. Bhd., a
subsidiary of the Daiman Group, and from 1989 to the present as a Director of
Great Wall Brick Work Sdn. Bhd., and from 1993 to the present as a Director of
Daiman Singapore (Pte) Ltd., and has been a Director of Daiman Investments
(Australia) Pty. Ltd. from 1993 to the present. Mr. Young holds a B.S. from the
Electronic College of Canton, People's Republic of China.

All directors of the Company serve until the next annual meeting of the
shareholders of the Company and until their successors have been duly elected
and qualified. Each officer serves at the discretion of the Board of Directors.
Mr. Hui and Dr. Hui are brothers, and Mr. Young and Mr. Tay are brothers-in-law.
There are no other family relationships among any of the directors, officers or
key employees of the Company.

Information regarding delinquent filers pursuant to Item 405 of Regulation S-K
will be included in the section captioned "Section 16(a) Beneficial Ownership
Reporting Compliance" in the Proxy Statement and is incorporated herein by
reference.

ITEM 11.  EXECUTIVE COMPENSATION

The information required by this item is incorporated by reference to the
section captioned "Executive Compensation" contained in the Company's Definitive
Proxy Statement related to the Annual Meeting of Shareholders to be held
December 12, 2001, to be filed by the Company with the Securities and Exchange
Commission (the "Proxy Statement").

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this item is incorporated by reference to the
section captioned "Security Ownership of Certain Beneficial Owners and
Management" contained in the Proxy Statement.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is incorporated by reference to the
section captioned "Certain Transactions" contained in the Proxy Statement.

                                       32



                                     PART IV

ITEM 14.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

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

         (1)       Financial Statements and Financial Statement Schedule - See
                   Index to Financial Statements and Financial Statement
                   Schedule at Item 8 on Page 29 of this report.

         (2)       Exhibits. The following exhibits are filed as part of, or
                   incorporated by reference into, this Report:

         3.1       Restated Articles of Incorporation of the Registrant (1)
         3.2       Amended and Restated Bylaws of the Registrant (2)
        10.1       Registrant's 1990 Stock Option Plan, including Forms of
                   Agreements thereunder (3)
        10.2       Registrant's 1995 Stock Option Plan, including Forms of
                   Agreements thereunder (3)
        10.3       Registrant's 1997 Employee Stock Purchase Plan, including
                   Forms of Agreements thereunder (3)
        10.4       Lease, dated November 29, 1993, by and between Orchard
                   Investment Company Number 510 as Landlord and Registrant as
                   Tenant, as amended (3)
        10.5       Third Amendment to Lease, dated April 23, 1999, by and
                   between CarrAmerica Realty Corporation as Landlord and
                   Registrant as Tenant (2)
        10.6       Fourth Amendment to Lease, dated January 21, 2000, by and
                   between CarrAmerica Realty Corporation as Landlord and
                   Registrant as Tenant (4)
        10.7       Fifth Amendment to Lease, dated May 1, 2000, by and between
                   CarrAmerica Realty Corporation as Landlord and Registrant as
                   Tenant (4)
        10.8       Sixth Amendment to Lease, dated October 31, 2000, by and
                   between CarrAmerica Realty Corporation as Landlord and
                   Registrant as Tenant
        10.11      Form of Indemnification Agreement (3)
        10.12      Pericom Technology Agreement, dated March 17, 1995 by and
                   between the Registrant and Pericom Technology, Inc. (3)
        10.13      Registrant's 2000 Employee Stock Purchase Plan, including
                   forms of Agreement thereunder (5)
        10.14      Registrant's 2001 Stock Incentive Plan, including forms of
                   Agreement thereunder (5)
        23.1       Consent of Independent Auditors

                   (1) Incorporated herein by reference to the Company's
                       Quarterly Report on Form 10-Q for the quarter ended March
                       31, 2001 in which the exhibit bears the same number.

                   (2) Incorporated herein by reference to the Company's fiscal
                       1999 Annual Report on Form 10-K in which the exhibit
                       bears the same number.

                   (3) Incorporated herein by reference to the Company's
                       Registration Statement on Form S-1 in which the exhibit
                       bears the same number.

                   (4) Incorporated herein by reference to the Company's fiscal
                       2000 Annual Report on Form 10-K in which the exhibit
                       bears the same number.

                   (5) Incorporated herein by reference to the Company's
                       Quarterly Report on Form 10-Q for the quarter ended
                       December 30, 2000 in which the exhibit bears the same
                       number.

    (b)            Reports on Form 8-K: The Company filed no reports on Form 8-K
                   during the fourth quarter ended June 30, 2001.

    (c)            Exhibits: See list of exhibits under (a)(2) above.

    (d)            Financial Statement Schedules: See list of schedules under
                   (a)(1) above.

                                       33



                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders of
Pericom Semiconductor Corporation:

We have audited the accompanying balance sheets of Pericom Semiconductor
Corporation as of June 30, 2001 and 2000, and the related statements of income,
shareholders' equity and comprehensive income, and of cash flows for each of the
three years in the period ended June 30, 2001. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Pericom Semiconductor Corporation at June
30, 2001 and 2000, and the results of its operations and its cash flows for each
of the three years in the period ended June 30, 2001, in conformity with
accounting principles generally accepted in the United States of America.

DELOITTE & TOUCHE LLP

San Jose, California
July 24, 2001

                                       34



                        PERICOM SEMICONDUCTOR CORPORATION

                                 BALANCE SHEETS

                        (In thousands, except share data)



                                                                                 June 30,
                                                                                 --------
                                                                             2001        2000
                                                                             ----        ----
                                                                                
                                    ASSETS
       Current assets:
            Cash and cash equivalents                                    $   89,076  $  124,115
            Short-term investments                                           61,811      16,549
            Accounts receivable:
                 Trade (net of allowances of $4,296 and $3,343)               7,096      12,012
                 Other                                                        1,050         377
            Inventories                                                      14,440      13,166
            Prepaid expenses and other current assets                           732         209
            Deferred income taxes                                             1,776       1,099
                                                                        -------------------------
                      Total current assets                                  175,981     167,527
       Property and equipment--net                                           10,473       8,246
       Investment in and advances to joint venture                            8,655       4,287
       Other assets                                                           1,318         306
                                                                        -------------------------
                      Total                                              $  196,427  $  180,366
                                                                        =========================

                     LIABILITIES AND SHAREHOLDERS' EQUITY
       Current liabilities:
            Accounts payable                                             $    4,168  $    8,983
            Accrued liabilities                                               3,747       3,561
            Income taxes payable                                                  0       1,710
                                                                        -------------------------
                      Total current liabilities                               7,915      14,254
       Deferred income taxes                                                  1,322       1,340
       Commitments and contingencies (Notes 8 and 9)
       Shareholders' equity:
            Common stock, 60,000,000 shares authorized;
                 Shares outstanding: 2001, 25,141,102; 2000, 24,493,994     136,007     130,834
            Accumulated other comprehensive loss                               (204)        (90)
            Retained earnings                                                51,387      34,028
                                                                        -------------------------
                      Total shareholders' equity                            187,190     164,772
                                                                        -------------------------
                      Total                                              $  196,427  $  180,366
                                                                        =========================


                       See notes to financial statements.

                                       35



                        PERICOM SEMICONDUCTOR CORPORATION

                              STATEMENTS OF INCOME

                    (In thousands, except per share amounts)



                                                                        Years Ended June 30,
                                                                        -------------------
                                                                 2001            2000          1999
                                                                 ----            ----          ----
                                                                                    
Net revenues                                                   $108,313      $   90,977      $ 59,797
Cost of revenues                                                 62,388          52,540        35,484
                                                           ----------------------------------------------
     Gross profit                                                45,925          38,437        24,313
Operating expenses:
     Research and development                                    10,993           8,118         5,976
     Selling, general and administrative                         15,150          12,449         9,175
     Restructuring Charge                                           522               0             0
                                                           ----------------------------------------------
          Total                                                  26,665          20,567        15,151
                                                           ----------------------------------------------
Income from operations                                           19,260          17,870         9,162
Equity in net loss of joint venture and related goodwill
     amortization                                                  (399)           (358)         (288)
Interest income
                                                                  8,287           3,621         1,386
                                                           ----------------------------------------------
Income before income taxes                                       27,148          21,133        10,260
Provision  for income taxes                                       9,789           7,918         3,488
                                                           ----------------------------------------------
Net income                                                     $ 17,359      $   13,215      $  6,772
                                                           ==============================================
Basic earnings per share                                       $   0.70      $     0.63      $   0.36
                                                           ==============================================
Diluted earnings per share                                     $   0.64      $     0.56      $   0.33
                                                           ==============================================
Shares used in computing basic earnings per share                24,914          20,906        18,790
                                                           ==============================================
Shares used in computing diluted earnings per share              27,242          23,578        20,558
                                                           ==============================================


                       See notes to financial statements.

                                       36



                        PERICOM SEMICONDUCTOR CORPORATION

           STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME

                                 (In thousands)



                                                                    Accumulated
                                                                       Other          Total
                                   Common Stock         Retained   Comprehensive   Shareholders' Comprehensive
                                   ------------
                                Shares     Amount       Earnings       (Loss)         Equity        Income
                                ------     ------       --------       ------         ------        ------
                                                                               
BALANCES, June 30, 1998         18,572      24,570       14,041          ---           38,611
Net income                         ---         ---        6,772          ---            6,772    $       6,772
Unrealized loss on
investments                        ---         ---          ---          (33)             (33)             (33)
                                                                                                 -------------
Comprehensive Income               ---         ---          ---          ---              ---    $       6,739
                                                                                                 =============
Issuance of common stock
under employee stock plans         466         737          ---          ---              737
Tax benefit resulting from
stock option transactions          ---         293          ---          ---              293
                               -------------------------------------------------------------------------------
BALANCES, June 30, 1999         19,038      25,600       20,813          (33)          46,380
Net income                         ---         ---       13,215                        13,215    $      13,215
Unrealized loss on
investments                        ---         ---          ---          (57)             (57)             (57)
                                                                                                 -------------
Comprehensive Income               ---         ---          ---          ---              ---    $      13,158
                                                                                                 =============
Issuance of common stock
In secondary offering net
of issuance costs of $427        4,400     100,949          ---          ---          100,949
Issuance of common stock
under employee stock plans       1,056       2,200          ---          ---            2,200
Tax benefit resulting from
stock option transactions          ---       2,085          ---          ---            2,085
                               -------------------------------------------------------------------------------
BALANCES, June 30, 2000         24,494    $130,834      $34,028        $ (90)        $164,772
Net income                         ---         ---       17,359                        17,359    $      17,359
Unrealized loss on
investments                        ---         ---          ---         (114)            (114)            (114)
                                                                                                 -------------
Comprehensive Income               ---         ---          ---          ---              ---    $      17,245
                                                                                                 =============
Issuance of common stock
under employee stock plans         647       2,549          ---          ---            2,549
Issuance of common stock
options to non-employees           ---         137          ---          ---              137
Tax benefit resulting from
stock option transactions          ---       2,487          ---          ---            2,487
                               -------------------------------------------------------------------------------
BALANCES, June 30, 2001         25,141    $136,007      $51,387        $(204)        $187,190
                               ===============================================================================


                       See notes to financial statements.

                                       37



                        PERICOM SEMICONDUCTOR CORPORATION

                            STATEMENTS OF CASH FLOWS

                                 (In thousands)



                                                                                              Years Ended June 30,
                                                                                              --------------------
                                                                                     2001            2000             1999
                                                                                     ----            ----             ----
                                                                                                          
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                        $  17,359       $  13,215        $   6,772
Adjustments to reconcile net income to net cash provided by
   operating activities:
     Depreciation and amortization                                                    3,519           2,470            1,601
     Loss on disposal of assets                                                           1               2               --
     Stock-based compensation                                                           137              --               --
     Equity in net loss/Goodwill amortization of joint venture                          399             358              288
     Deferred income taxes                                                             (618)            (27)             278
     Changes in assets and liabilities:
          Accounts receivable                                                         4,243          (2,324)          (4,435)
          Inventories                                                                (1,274)         (3,331)            (918)
          Prepaid expenses and other current assets                                    (523)            372             (429)
          Accounts payable                                                           (4,815)          1,688            1,178
          Accrued liabilities                                                           186           1,958             (252)
          Income taxes payable                                                          778           3,773               (3)
                                                                                  -------------------------------------------
               Net cash provided by operating activities                             19,392          18,154            4,080
                                                                                  -------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Additions to property and equipment                                             (5,779)         (4,209)          (2,988)
     Purchase of short-term investments                                             (57,214)         (6,209)         (13,054)
     Maturities of short-term investments                                            11,761           7,000           12,682
     Increase in other assets                                                        (1,012)            (64)             (49)
     Advances to and investments in joint venture                                    (4,768)         (2,034)          (1,853)
     Proceeds from sale of property and equipment                                        32              --               --
                                                                                  -------------------------------------------
               Net cash used for investing activities                               (56,980)         (5,516)          (5,262)
                                                                                  ------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Issuance of common stock, net of issuance costs                                  2,549         103,149              737
                                                                                  ------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH
   EQUIVALENTS                                                                      (35,039)        115,787             (445)
CASH AND CASH EQUIVALENTS:
     Beginning of period                                                            124,115           8,328            8,773
                                                                                  ------------------------------------------
     End of period                                                                $  89,076       $ 124,115        $   8,328
                                                                                  ==========================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION:
   Cash paid during the period for:
     Income taxes                                                                 $   8,986       $   4,171        $   3,210

                                                                                  ==========================================
SUPPLEMENTAL NONCASH FINANCING ACTIVITIES:
    Tax benefit from stock option transactions                                    $   2,487       $   2,085        $     293
                                                                                  ==========================================


                       See notes to financial statements.

                                       38



                        PERICOM SEMICONDUCTOR CORPORATION

                          NOTES TO FINANCIAL STATEMENTS

                 FISCAL YEARS ENDED JUNE 30, 2001, 2000 AND 1999

1. BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Pericom Semiconductor Corporation (the "Company") was incorporated in June 1990.
The Company designs, manufactures and markets high performance digital, analog
and mixed-signal integrated circuits used for the transfer, routing, and timing
of digital and analog signals within and between computer, networking, datacom
and telecom systems.

FINANCIAL STATEMENT ESTIMATES -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues and expenses during the
reporting period. Actual results could differ from those estimates.

BASIS OF PRESENTATION -- All share amounts and per share calculations in the
accompanying financial statements give effect to the two-for-one stock split
effected on September 8, 2000.

FISCAL PERIOD -- The Company's fiscal years in the accompanying financial
statements have been shown as ending on June 30. Fiscal years 2001, 2000, and
1999 ended on June 30, 2001, July 1, 2000 and July 3, 1999, respectively. Fiscal
2001 and fiscal 2000 each included 52 weeks and fiscal 1999 included 53 weeks.

CASH EQUIVALENTS -- The Company considers all highly liquid debt instruments
purchased with a remaining maturity of three months or less to be cash
equivalents. The recorded carrying amounts of the Company's cash and cash
equivalents approximate their fair market value.

SHORT-TERM INVESTMENTS -- The Company's policy is to invest in short-term
instruments with investment grade credit ratings. Generally, such investments
have contractual maturities of up to three years. The Company classifies its
short-term investments as "available-for-sale" securities and the cost of
securities sold is based on the specific identification method. At June 30, 2001
short-term investments, and any difference between the fair market value and the
underlying cost of such investments, consisted of the following (in thousands):

                                          Gross          Gross
                            Amortized   Unrealized      Unrealized   Market
                              Cost         Gains         Losses       Value
                              ----         -----         ------       -----

Corporate bonds and notes   $ 10,682     $     --      $   (289)    $ 10,393
Government securities         44,233            9            --       44,242
Equities                       3,776           --            --        3,776
Certificates of deposit        3,400           --            --        3,400
                            ------------------------------------------------
                            $ 62,091     $      9      $   (289)    $ 61,811
                            ================================================

INVENTORIES are stated at the lower of cost (first-in, first-out) or market.

                                       39



PROPERTY AND EQUIPMENT are stated at cost. Depreciation and amortization are
computed using the straight-line method over estimated useful lives of three to
five years.

INVESTMENT IN JOINT VENTURE is accounted for using the equity method. The
difference between the carrying value and the underlying equity in net assets of
the investment is being amortized over five years (see Note 4).

LONG-LIVED ASSETS -- The Company evaluates long-lived assets for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. The Company's policy is to review the
recoverability of all intangible assets based upon undiscounted cash flows on an
annual basis at a minimum, and in addition, whenever events or changes indicate
that the carrying amount of an asset may not be recoverable.

INCOME TAXES -- The Company accounts for income taxes under SFAS No. 109,
"Accounting for Income Taxes," which requires an asset and liability approach to
recording deferred taxes.

STOCK-BASED COMPENSATION -- The Company accounts for stock-based awards to
employees using the intrinsic value method in accordance with Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and
all of its interpretations and presents pro forma disclosures required by SFAS
No. 123, "Accounting for Stock-Based Compensation".

The Company accounts for equity instruments issued to nonemployees in accordance
with the provisions of SFAS No. 123 and Emerging Issues Task Force (EITF) Issue
No. 96-18, "Accounting for Equity Instruments That Are Issued to Other Than
Employees for Acquiring, or in Conjunction with Selling, Goods or Services,"
which requires that the fair value of such instruments be recognized as an
expense over the period in which the related services are received.

REVENUE RECOGNITION -- Revenue from product sales is recognized when persuasive
evidence of an arrangement exists, delivery has occurred, the fee is fixed and
determinable and collectibility is probable. Estimated costs for sales returns,
price protection, stock rotation and other allowances are accrued in the period
that sales are recognized. Domestic distributors are permitted a return
allowance of up to 10% of their net purchases every six months.

CONCENTRATION OF CREDIT RISK AND CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES ---
The Company sells its products primarily to large organizations and generally
does not require its customers to provide collateral or other security to
support accounts receivable. The Company maintains allowances for estimated bad
debt losses.

The Company participates in a dynamic high technology industry and believes that
changes in any of the following areas could have a material adverse effect on
the Company's future financial position or results of operations: advances and
trends in new technologies; competitive pressures in the form of new products or
price reductions on current products; changes in product mix; changes in the
overall demand for products and services offered by the Company; changes in
customer relationships; litigation or claims against the Company based on
intellectual property, patent, product, regulatory or other factors; risks
associated with changes in domestic and international economic and/or political
conditions or regulations; availability of necessary components; and the
Company's ability to attract and retain employees necessary to support its
growth.

COMPREHENSIVE INCOME -- In fiscal year 1999, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income", which requires an enterprise to report, by major components and as a
single total, the change in net assets during the period from nonowner sources.
Comprehensive income for the years ended June 30, 2001, 2000 and 1999 has been
disclosed within the statement of shareholders' equity and comprehensive income.

                                       40



RECENTLY ISSUED ACCOUNTING STANDARDS -- In June 1998, the Financial Accounting
Standards Board, or the FASB, issued Statement of Financial Accounting Standards
No. 133, Accounting for Derivative Instruments and Hedging Activities, or SFAS
133. This statement requires companies to record derivatives on the balance
sheet as assets and liabilities, measured at fair value. Gains and losses
resulting from changes in the fair market values of those derivative instruments
would be accounted for depending on the use of instrument and whether it
qualifies for hedge accounting. We adopted SFAS 133, as amended, on July 1,
2000. The adoption of this statement did not have an effect on our financial
position, results of operations or cash flows as we had no derivative financial
instruments as of June 30, 2000 and have not entered into any derivative
transactions historically.

As a matter of policy, we do not currently enter into transactions involving
derivative financial instruments. In the event we enter into such transactions
in the future, we will account for those transactions in accordance with SFAS
133, in which case we will formally document all relationships between the
hedging instruments and hedged items, as well as its risk management objective
and strategy for undertaking such hedge transactions.

In December 1999, the Securities and Exchange Commission (SEC) released Staff
Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
Statements." This bulletin summarizes certain interpretations and practices
followed by the Division of Corporation Finance and Office of the Chief
Accountant of the SEC in administering the disclosure requirements of the
Federal securities laws in applying generally accepted accounting principles to
revenue recognition in financial statements. Application of the accounting and
disclosures desired in the bulletin is required in the fourth quarter of fiscal
2001. The adoption of this bulletin did not have significant impact on the
Company's consolidated financial position, results of operations or cash flows.

In March 2000, the FASB issued FASB Interpretation No. 44 ("FIN 44"),
"Accounting for Certain Transactions Involving Stock Compensation - an
Interpretation of APB Opinion No. 25." FIN 44 clarifies the definition of an
employee for purposes of applying APB Opinion No. 25, the criteria for
determining whether a plan qualifies as a noncompensatory plan, the accounting
consequence of various modifications to the terms of a previously fixed stock
option or award, and the accounting for an exchange of stock compensation awards
in a business combination. We adopted FIN 44 on July 1, 2000, except for
provisions that modify the definition of an employee and that directly or
indirectly reduce the exercise price of stock option awards, which were
effective after December 15, 1998. The adoption of FIN 44 did not have a
material impact on our financial position, results of operations or cash flows.

In June 2001, the Financial Accounting Standards board issued Statement of
Financial Accounting Standards (SFAS) No. 141, Business Combinations. SFAS No.
141 requires that all business combinations initiated after June 30, 2001 be
accounted for under the purchase method and addresses the initial recognition
and measurement of goodwill and other intangible assets acquired in a business
combination. Business combinations originally accounted for under the pooling of
interest method will not be changed. Management does not expect the adoption of
SFAS No. 141 to have an impact on the financial position, results of operations,
or cash flows of the Company.

In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard (SFAS) No. 142, Goodwill and Other Intangible
Assets. SFAS No. 142 addresses the initial recognition and measurement of
intangible assets acquired outside of a business combination and the accounting
for goodwill and other intangible assets subsequent to their acquisition. SFAS
No. 142 provides that intangible assets with finite useful lives be amortized
and that goodwill and intangible assets with indefinite lives will not be
amortized, but will rather be tested at least annually for impairment. Pericom
will adopt SFAS No. 142 for its fiscal year beginning July 1, 2001. Upon
adoption of SFAS 142, we will stop the amortization of goodwill with a net
carrying value of $1,323,000 at June 30, 2001 and annual amortization of
$338,000 that resulted from business combinations initiated prior to the
adoption of SFAS 141, Business Combinations. The Company will evaluate such
goodwill under the SFAS 142 transitional impairment test and does not expect the
carrying values to significantly exceed the fair values of such assets. Any
transitional impairment loss will be recognized as a change in accounting
principle.



                                       41


RECLASSIFICATIONS -- Certain items in the 1999 financial statements have been
reclassified to conform with the 2000 and 2001 presentation. Such
reclassifications had no impact on net income or shareholders' equity.

EARNINGS PER SHARE -- Basic earnings per share is based upon the weighted
average number of common shares outstanding. Diluted earnings per share reflects
the potential dilution that could occur if securities or other contracts to
issue common stock were exercised or converted into common stock.

Basic and diluted earnings per share for each of the three years in the period
ended June 30, 2001 are as follows:



                                                                            Years Ended June 30,
                                                                  ---------------------------------------
                                                                      2001         2000         1999
                                                                      ----         ----         ----
                                                                                      
   Net income                                                       $17,359      $13,215      $ 6,772
                                                                  =======================================
   Computation of common shares outstanding -
   basic earnings per share:

             Weighted average common stock                           24,914       20,906       18,790
                                                                  =======================================

   Basic earnings per share                                           $0.70        $0.63        $0.36
                                                                  =======================================

   Computation of common shares outstanding -
   diluted earnings per share:

             Weighted average common stock                           24,914       20,906       18,790
             Dilutive options using the treasury stock method         2,328        2,672        1,768
                                                                  ---------------------------------------
   Shares used in computing diluted earnings per share               27,242       23,578       20,558
                                                                  =======================================

   Diluted earnings per share                                         $0.64        $0.56      $  0.33
                                                                  =======================================


Options to purchase 1,486,189 shares of Common stock at prices ranging from
$22.03 to $42.75 and options to purchase 236,472 shares of Common Stock at
prices ranging from $15.50 to $35.00 were outstanding as of June 30, 2001 and
June 30, 2000, respectively, but not included in the computation of diluted net
income per share because the options' exercise prices were greater that the
average market price of the common shares as of such dates and therefore, would
be anti-dilutive under the treasury stock method. There were no anti-dilutive
options at June 30, 1999.

2. INVENTORIES

Inventories consist of (in thousands):
                                                  As of June 30,
                                             --------------------------
                                                 2001          2000
                                                 ----          ----
             Finished goods                    $ 5,425       $ 4,403
             Work-in-process                     3,341         6,285
             Raw materials                       5,674         2,478
                                             --------------------------
                                               $14,440       $13,166
                                             ==========================

                                       42





3. PROPERTY AND EQUIPMENT

Property and equipment consist of (in thousands):

                                                     As of June 30,
                                                -----------------------
                                                   2001           2000
                                                   ----           ----
   Machinery and equipment                      $ 11,617       $  8,788
   Computer equipment and software                 7,220          5,720
   Furniture and fixtures                            746            451
   Leasehold improvements                          1,087            398
   Construction-in-progress                          555            246
                                                --------       --------
   Total                                          21,225         15,603
   Accumulated depreciation and amortization     (10,752)        (7,357)
                                                --------       --------
   Property and equipment - net                 $ 10,473       $  8,246
                                                ========       ========

Construction-in-progress is primarily software that has not been placed in
service, and machinery and equipment that has not been accepted.

4. INVESTMENT IN JOINT VENTURE

In fiscal 1994, the Company purchased 1,500,000 shares of Series A Convertible
Preferred Stock issued by Pericom Technology, Inc. ("PTI") for $750,000 (an
18.4% equity investment at the time). Such preferred stock is convertible at the
option of the Company into 1,500,000 shares of PTI common stock, does not bear
dividends, has a liquidation preference up to the purchase price and votes based
on the number of common shares into which it is convertible. In fiscal 2000, the
Company purchased an additional 909,090 shares of Series B Convertible Preferred
Stock for $1 million and converted $3.5 million in debt to purchase an
additional 3,181,818 shares of Series B Convertible Preferred Stock. The Series
B issue has liquidation preference over the Series A issue and all common
shares. With the fiscal 2000 additional investment, the Company had a 43.3%
equity investment in PTI. After the additional investment there was
approximately a $1.7 million difference between the carrying value and the
underlying equity in net assets of the investment which is being amortized over
five years. Amortization expense was approximately $331,000 for the year ended
June 30, 2001. In fiscal 2001, the Company purchased an additional 3,000,000
shares of Series C Convertible Preferred Stock for approximately $5 million. The
Series C issue has liquidation preference over all other classes of stock. With
the fiscal 2001 additional investment, the Company now has a 45.0% equity
investment in PTI. The investment in PTI is accounted for using the equity
method due to the Company's significant influence over its operations. In
addition, several of the directors of the Company are also directors of PTI, and
certain shareholders of the Company are also shareholders of PTI. PTI was
incorporated in 1994 and in 1995 established a design center and sales office to
pursue opportunities and participate in joint ventures in China. During the
years ended June 30, 1999 and 2000, the Company sold $65,000 and $29,000
respectively, in services to PTI. During the year ended June 30, 2001, the
Company did not sell any services to PTI. During the years ended June 30, 1999,
2000 and 2001, the Company purchased $72,000, $890,000 and $1,300,000 in
services from PTI, respectively. In fiscal 2000 the Company began purchasing
test and other manufacturing services from PTI. At June 30, 1999, 2000 and 2001,
$2,611,000, $233,000 and $134,000 respectively, was owed to the Company by PTI
for reimbursement of certain administrative expenses incurred by the Company on
behalf of PTI and for advances made to PTI by the Company. Condensed financial
information of the joint venture at June 30, 2001 and June 30, 2000 is as
follows (in thousands):

                                       43



                                                         2001           2000
                                                         ----           ----
  Total assets                                         $14,479        $ 3,926
  Total liabilities                                        865            285
  Total equity                                          13,614          3,641

  Revenue                                              $ 5,640        $ 1,105
  Cost of revenues                                       3,600            609
                                                   ---------------------------
  Gross profit                                           2,040            496

  Expenses                                               2,283          1,649
                                                   ---------------------------
  Operating Loss                                          (243)        (1,153)
  Interest and other income/(expense)                      114            (27)
                                                   ---------------------------
  Net loss                                             $  (129)       $(1,180)
                                                   ===========================

5. ACCRUED LIABILITIES

Accrued liabilities consist of (in thousands):

                                                          As of June 30,
                                                      ------------------------
                                                         2001         2000
                                                         ----         ----

  Accrued compensation                                  $ 1,598     $ 2,066
  External sales representative commissions                 819         975
  Other accrued expenses                                  1,330         520
                                                      ------------------------
                                                        $ 3,747     $ 3,561
                                                      ========================

6. SHAREHOLDERS' EQUITY

In March 2000, the Company completed a secondary public offering of 4,400,000
shares of its common stock at a price of $24.25 per share.

PREFERRED STOCK

The number of shares of preferred stock authorized to be issued is 5,000,000.
The Board of Directors is authorized to issue the preferred stock from time to
time in one or more series and to fix the rights, privileges and restrictions of
the shares of such series. As of June 30, 2001, no shares of preferred stock
were outstanding.

STOCK OPTION PLANS

Under the Company's 2001, 1995, and 1990 Stock Option Plans, incentive and
nonqualified stock options to purchase up to 6,938,490 shares of common stock
have been reserved at June 30, 2001 for issuance to employees, officers,
directors, independent contractors and consultants of the Company.

The options may be granted at not less than the fair value and not less than 85%
of the fair value on grant date for incentive stock options and nonqualified
stock options, respectively. Options vest over periods of up to 48 months as
determined by the Board of Directors. Options granted under the Plans expire 10
years from grant date.

                                       44



Activity in the Company's option plans is summarized below:



                                                                                         Weighted
                                                                                          Average
                                                                                         Exercise
                                                                             Shares        Price
                                                                             ------        -----
                                                                        
    Balance June 30, 1998 (1,278,000 exercisable at a weighted              3,188,648       2.07
    average price of $1.03)
         Granted (weighted average fair value of $2.12 per share)           2,585,350       3.11
         Exercised                                                           (275,808)      1.03
         Canceled                                                          (1,652,500)      3.57
                                                                          ----------------------
    Balance, June 30, 1999 (1,769,834 exercisable at a weighted             3,845,690       2.20
    average price of $1.50)
         Granted (weighted average fair value of $14.09 per share)          1,805,000      16.33
         Exercised                                                           (836,154)      1.94
         Canceled                                                            (287,672)      4.37
                                                                          ----------------------
    Balance, June 30, 2000 (1,886,648 exercisable at a weighted             4,526,864       7.76
    average price of $2.38)
         Granted (weighted average fair value of $18.91 per share)          1,897,555      22.62
         Exercised                                                           (534,216)      2.92
         Canceled                                                          (1,143,702)     24.22
                                                                          ----------------------
    Balance, June 30, 2001                                                  4,746,501   $  10.28
                                                                          ======================


At June 30, 2001, 2,191,989 shares were available for future issuance under the
option plans.

Additional information regarding options outstanding as of June 30, 2001 is as
follows:



                                             Options Outstanding                        Options Exercisable
                                             -------------------                        -------------------
                                                  Weighted
                                                   Average            Weighted                              Weighted
       Range of                                   Remaining           Average                                Average
       Exercise               Number             Contractual          Exercise           Number             Exercise
        Prices              Outstanding         Life (Years)           Price           Exercisable            Price
        ------              -----------         ------------           -----           -----------            -----

                                                                                             
   $ 0.10 -  2.20           1,106,777              4.67               $ 1.33            1,098,486            $ 1.32
   $ 2.28 -  3.69             994,213              6.94                 2.75              657,176              2.75
   $ 3.72 - 13.96           1,166,806              8.64                 9.23              365,140              7.15
   $14.00 - 24.56           1,041,210              9.21                19.76              184,673             21.09
   $24.69 - 42.75             437,495              9.04                30.29               91,819             30.45
----------------------------------------------------------------------------------------------------------------------
    $0.10 - 42.75           4,746,501              7.52               $10.28            2,397,294            $ 5.24
======================================================================================================================


In fiscal 1999, the Company canceled options to purchase 1,277,950 shares of
common stock with exercise prices ranging from $2.63 to $4.82 per share and
issued replacement options with an exercise price of $2.40 per share.

On April 6, 2001, we announced a voluntary stock option exchange program for our
employees. Under the program, our employees were given the opportunity to elect
to cancel outstanding stock options held by them with an exercise price of
$15.00 or more per share in exchange for an equal number of replacement options
to be granted at a future date not less than six months and a day after the
options were canceled. The elections to cancel options were effective on May 4,
2001. The exchange resulted in the voluntary cancellation by 59 employees of
610,405 employee stock options with exercise prices ranging from $18.50 to
$42.75 in exchange for the same number of replacement options. The replacement
options will be

                                       45



granted on or about November 5, 2001. The replacement options will have the same
terms and conditions as each optionee's cancelled options, including the
expiration date of the cancelled options, except that: (1) 12.5% of the
replacement options will vest on the grant date and the remainder will vest at a
rate of 1/48 per month for 42 months, (2) the replacement options will have an
exercise price equal to the fair market value of our common stock on the date of
the grant and (3) the optionee must be an employee of Pericom Semiconductor
Corp. on the date of grant of the replacement options in order to receive
replacement options. Employees were eligible to participate in the program,
although Board members were ineligible. We believe that there will be no
compensation charge for accounting purposes in connection with the program.

1997 EMPLOYEE STOCK PURCHASE PLAN

In 1997, the Company approved the 1997 Employee Stock Purchase Plan (the "Stock
Purchase Plan"), which allows eligible employees of the Company to purchase
shares of Common Stock through payroll deductions. A total of 600,000 shares of
the Company's Common Stock was reserved for issuance under the Stock Purchase
Plan. The Stock Purchase Plan permits eligible employees to purchase Common
Stock at a discount through payroll deductions, during 24-month purchase
periods, except that the first purchase period will be 27 months. Each purchase
period will be divided into eight consecutive three-month accrual periods,
except that the first accrual period will be six months. The price at which
stock is purchased under the Stock Purchase Plan is equal to 85% of the fair
market value of the Common Stock on the first day of the purchase period or the
last day of the accrual period, whichever is lower. The initial purchase period
commenced upon the effective date of the Company's initial public offering of
Common Stock in October 1997 and ended on January 30, 2000. The maximum number
of shares of Common Stock that any employee may purchase under the Stock
Purchase Plan during any accrual period is 1,000 shares. During fiscal year
2001, 2000 and 1999, respectively, the Company issued 80,223, 219,358 and
189,876 shares of common stock under the Stock Purchase Plan at a weighted
average price of $5.42, $2.63 and $2.39, respectively. The weighted average fair
value of the fiscal 2001, 2000, and 1999 awards for each year was $9.66, $2.21
and $1.15 per share. The last issuance under the 1997 Employee Stock Purchase
Plan was on July 31, 2000.

2000 EMPLOYEE STOCK PURCHASE PLAN

In 2000, the Company approved the 2000 Employee Stock Purchase Plan (the "Stock
Purchase Plan"), which allows eligible employees of the Company to purchase
shares of Common Stock through payroll deductions. A total of 600,000 shares of
the Company's Common Stock has been reserved for issuance under the Stock
Purchase Plan. The Stock Purchase Plan permits eligible employees to purchase
Common Stock at a discount through payroll deductions, during 24-month purchase
periods. Each purchase period will be divided into eight consecutive three-month
accrual periods. The price at which stock is purchased under the Stock Purchase
Plan is equal to 85% of the fair market value of the Common Stock on the first
day of the purchase period or the last day of the accrual period, whichever is
lower. The maximum number of shares of Common Stock that any employee may
purchase under the Stock Purchase Plan during any accrual period is 1,000
shares. During fiscal year 2001, the Company issued 32,669, shares of common
stock under the Stock Purchase Plan at a weighted average price of $16.90. The
weighted average fair value of the fiscal 2001 awards was $9.21 per share.

ADDITIONAL STOCK PLAN INFORMATION

As discussed in Note 1, the Company continues to account for its stock-based
awards using the intrinsic value method in accordance with Accounting Principles
Board No. 25, "Accounting for Stock Issued to Employees," and its related
interpretations. Accordingly, no compensation expense has been recognized in the
financial statements for employee stock arrangements.

SFAS No. 123, "Accounting for Stock-Based Compensation," (SFAS 123), requires
the disclosure of pro forma net income as if the Company had adopted the fair
value method as of the beginning of fiscal 1996. Under SFAS 123, the fair value
of stock-based awards to employees is calculated through the use of option

                                       46



pricing models, even though such models were developed to estimate the fair
value of freely tradable, fully transferable options without vesting
restrictions, which significantly differ from the terms of the Company's stock
option awards. These models also require subjective assumptions, including
expected time to exercise, which greatly affect the calculated values. The
Company's calculations were made using the Black-Scholes option pricing model
with the following weighted average assumptions for the Company's stock option
grants:

                                     2001            2000           1999
                                     ----            ----           ----
  Expected life                     5 years         5 years        5 years
  Risk-free interest rate             5.35%           6.21%          5.25%
  Volatility                           118%             91%            83%
  Dividend yield                      0.00%           0.00%          0.00%

The following weighted average assumptions are included in the estimated grant
date fair value calculations for rights to purchase stock under the Stock
Purchase Plan:

                                     2001            2000           1999
                                     ----            ----           ----
  Expected life                    3 months        3 months       3 months
  Risk-free interest rate          4.5-6.3%        4.7-5.8%       4.3-4.7%
  Volatility                      101%-139%         66%-99%        66%-88%
  Dividend yield                      0.00%           0.00%          0.00%

PRO FORMA NET INCOME AND EARNINGS PER SHARE

Had the Company amortized to expense the computed fair values of the 2001, 2000
and 1999 awards under the 1990 Stock Option Plan, 1995 Stock Option Plan, 2001
Stock Option Plan, 2000 Employee Stock Purchase Plan, and 1997 Employee Stock
Purchase Plan, the Company's pro forma net income and earnings per share for the
three fiscal years in the period ended June 30, 2001 would have been as follows:

                                          2001             2000          1999
                                          ----             ----          ----
  Pro forma net income                $10,930,000      $11,297,000    $5,734,000

  Pro forma earnings per share:
      Basic earnings per share        $      0.44      $      0.54    $     0.31
      Diluted earnings per share      $      0.40      $      0.48    $     0.28

ISSUANCE OF STOCK OPTIONS TO NONEMPLOYEES

The Company issued nonstatutory options to a nonemployee for the purchase of
20,000 shares of common stock at an exercise price of $18.19. These options were
valued and revalued using the Black-Scholes pricing model. In accordance with
SFAS No. 123, its related interpretations and EITF 96-18, the Company accounted
for this award under the fair value method and as a variable award. Accordingly,
the Company recorded deferred compensation at the grant date equal to the fair
value of the options and the vesting schedule (using the Black-Scholes option
pricing model) and adjusted the deferred compensation expense at the end of each
period until the award vested and became fixed. The related compensation expense
of $137,000 was recognized as selling, general and administrative expense in the
accompanying statement of income.

                                       47



7. INCOME TAXES

The provision for income taxes consists of (in thousands):

                                                Fiscal Year Ended June 30,
                                                --------------------------
                                               2001          2000       1999
                                               ----          ----       ----
  Federal:
     Current                                  $5,863        $5,428     $2,774
     Deferred                                    585          (116)       235
                                             ---------------------------------
                                              $6,448        $5,312      3,009
  State:
     Current                                     744           432        143
     Deferred                                    110            89         43
                                             ---------------------------------
                                                 854           521        186
  Charge in lieu of taxes attributable to
  employee stock plans                         2,487         2,085        293
                                             ---------------------------------
  Provision for income taxes                  $9,789        $7,918     $3,488
                                             =================================


A reconciliation between the Company's effective tax rate and the U.S. statutory
rate is as follows:

                                                  Fiscal Year Ended June 30,
                                                  --------------------------
                                                 2001        2000        1999
                                                 ----        ----        ----
  Tax at federal statutory rate                  35.0%       35.0%       35.0%
  State income taxes, net of federal benefit      2.1         2.9         1.5
  Tax exempt investment income                   (1.8)        ---         ---
  Research and development tax credits           (2.3)       (2.1)       (2.7)
  Other                                           3.1         1.7          .2
                                               -------------------------------
  Provision for income taxes                     36.1%       37.5%       34.0%
                                               ===============================


The components of the net deferred tax assets (liabilities) were as follows (in
thousands):

                                                                As of June 30,
                                                               ---------------
                                                               2001       2000
                                                               ----       ----
  Deferred tax assets:
    Accruals and reserves recognized in different periods    $ 1,099    $   428
    Other                                                        677        671
                                                             -------------------
                                                               1,776      1,099
                                                             -------------------
  Deferred tax liabilities:
    Basis difference in fixed assets                            (702)    (1,351)
    Other                                                       (620)        11
                                                             -------------------
                                                              (1,322)    (1,340)
                                                             -------------------
  Net deferred tax assets (liabilities)                      $   454    $  (241)
                                                             ===================

                                       48



8. LEASES

The Company leases certain facilities under operating leases through May 2005,
with two consecutive options to extend for an additional three years each upon
termination of the original lease term. The future minimum operating lease
commitments at June 30, 2001 are as follows (in thousands):

             Fiscal Year:
                2002                 1,555
                2003                 1,608
                2004                 1,663
                2005                   649
                                ----------
                                    $5,475
                                ==========

Rent expense for operating leases for the years ended June 30, 2001, 2000 and
1999 was $1,322,000, $1,081,000 and $623,000, respectively.

9. CONTINGENCIES

The semiconductor industry is characterized by frequent claims and related
litigation regarding patent and other intellectual property rights. The Company
settled an outstanding claim of this nature in fiscal 1999 without material
adverse effect on the Company's financial position or results of operations.

On July 20, 2001, a complaint was filed with the U.S. International Trade
Commission ("USITC") on behalf of Cypress Semiconductor Corporation ("Cypress"),
a competitor, claiming infringement on one of its patents by certain features in
certain of our products seeking an investigation and, after the investigation, a
permanent exclusion order and permanent cease and desist order. Pericom disputes
Cypress' claims and intends to defend itself vigorously. On July 24, 2001,
Cypress filed suit in Federal District Court in the Eastern District of Texas -
Sherman Division, generally alleging that Pericom infringes the same Patent and
seeking injunctive relief and unspecified monetary damages. Pericom disputes
Cypress' claims and intends to defend the lawsuit vigorously. However, any
litigation, whether or not determined in our favor, can result in significant
expense to us and can divert the efforts of our technical and management
personnel from productive tasks. In the event of an adverse ruling in any
litigation involving intellectual property, we might be required to discontinue
the use of certain processes, cease the manufacture, use and sale of infringing
products, expend significant resources to develop non-infringing technology or
obtain licenses to the infringed technology, and may suffer significant monetary
damages, which could include treble damages. In the event we attempt to license
any allegedly infringed technology, there can be no assurance that such a
license would be available on reasonable terms or at all. In the event of a
successful claim against us and our failure to develop or license a substitute
technology on commercially reasonable terms, our business and results of
operations would be materially and adversely affected. There can be no assurance
that any potential infringement claims by other parties (or claims for indemnity
from customers resulting from any infringement claims) will not materially and
adversely affect our business, financial condition and results of operations. No
provision for any loss which may occur has been recorded in the accompanying
financial statements.

10. INDUSTRY AND SEGMENT INFORMATION

In fiscal year 1999, the Company adopted SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information", which establishes annual and
interim reporting standards for an enterprise's business segments and related
disclosures about its products, services, geographical areas and major
customers. The Company operates in one reportable segment.

                                       49



11. MAJOR CUSTOMERS AND GEOGRAPHIC OPERATING INFORMATION

In fiscal 2001 one end customer who purchases through distribution and contract
manufacturing channels represented 12% of net revenues, one end customer who
purchases directly from the company and through the contract manufacturing
channel represented 11% of net revenues and one distributor who sells to
multiple end customers represented 10% of net revenues. At June 30, 2001, one
customer represented 13% of trade accounts receivable. In fiscal 2000 one end
customer who purchases through distribution and contract manufacturing channels
represented 14% of net revenues, and one distributor who sells to multiple end
customers represented 11% of net revenues. At June 30, 2000, three customers
represented 14%, 11% and 11%, respectively, of trade accounts receivable. In
fiscal 1999, one customer represented 14% of net revenues, and three customers
each represented 11% of trade accounts receivable at June 30, 1999.

                                            Fiscal Year Ended June 30,
                                            --------------------------
                                          2001        2000          1999
                                          ----        ----          ----
Net sales to geographic regions:
     United States                     $ 54,850      $48,850      $31,094
     Europe                              12,228        7,852        4,784
     Asia                                41,235       34,275       23,919
                                     ------------------------------------
Total Net Sales                        $108,313      $90,977      $59,797
                                     ====================================

12. EMPLOYEE BENEFIT PLAN

The Company has a 401(k) tax-deferred savings plan under which eligible
employees may elect to have a portion of their salary deferred and contributed
to the plan. Employer matching contributions are determined by the Board of
Directors and are discretionary. There were no employer matching contributions
in fiscal 2001, 2000 or 1999.

13. RESTRUCTURING CHARGE

In fiscal 2001 there was a non-recurring restructuring charge of $522,000
related to an unused leased facility. The facility has subsequently been
subleased and the terms of that sublease indicate that the restructuring charge
was sufficient. There were no restructuring charges in fiscal 2000 or 1999.

14.  SUBSEQUENT EVENT

On July 2, 2001, the Company entered into a transaction with Vaishali
Semiconductor LLC ("Vaishali") whereby the Company made a senior secured loan to
Vaishali of up to $2,000,000. The Company received a security interest in the
assets of Vaishali for the purpose of facilitating the loan transaction.
Attached to the senior loan is a warrant agreement, which allows the Company to
acquire up to approximately 10% of Vaishali's common stock for $.25 per share.

As of July 24, 2001, the Company had transferred Vaishali $750,000 related to
the loan agreement. Subject to certain conditions, the balance of the loan
amount will be transferred by December 27, 2001.

                                       50


                        PERICOM SEMICONDUCTOR CORPORATION

                            QUARTERLY FINANCIAL DATA

        (Amounts in thousands, except per share data)
        (Unaudited)




                                                                             Three Months Ended
                                                                             ------------------
                                                June 30    Mar 31      Dec 31     Sep 30   June 30    Mar 31     Dec 31     Sep 30
                                                  2001      2001        2000       2000     2000       2000       1999       1999
                                                  ----      ----        ----       ----     ----       ----       ----       ----
                                                                                                   
Net revenues                                    $13,326   $25,908     $35,719    $33,360  $30,310    $23,033    $20,009    $17,625
Cost of revenues                                  8,524    14,564      20,250     19,050   17,432     13,294     11,581     10,233
                                              ------------------------------------------------------------------------------------
  Gross profit                                    4,802    11,344      15,469     14,310   12,878      9,739      8,428      7,392
Operating expenses:
  Research and development                        2,767     2,885       2,754      2,587    2,492      2,133      1,874      1,619
  Selling, general and administrative             3,145     3,788       4,232      3,985    3,946      3,230      2,768      2,504
  Restructuring charge                              522       ---         ---        ---      ---        ---        ---        ---
                                              ------------------------------------------------------------------------------------
     Total operating expenses                     6,434     6,673       6,986      6,572    6,438      5,363      4,642      4,123
                                              ------------------------------------------------------------------------------------
Income (loss) from operations                    (1,632)    4,671       8,483      7,738    6,440      4,376      3,786      3,269
Other income, net                                 1,502     2,197       2,191      1,998    1,979        704        303        277
                                              ------------------------------------------------------------------------------------
Income (loss) before income taxes                  (130)    6,868      10,674      9,736    8,419      5,080      4,089      3,546
Provision (benefit) for income taxes               (577)    2,610       4,056      3,700    3,199      1,829      1,472      1,419
                                              ------------------------------------------------------------------------------------
Net income                                      $   447   $ 4,258     $ 6,618    $ 6,036  $ 5,220    $ 3,251    $ 2,617    $ 2,127
                                              ====================================================================================
Basic earnings per share                        $  0.02   $  0.17     $  0.27    $  0.24  $  0.21    $  0.16    $  0.13    $  0.11
                                              ====================================================================================
Diluted earnings per share                      $  0.02   $  0.16     $  0.24    $  0.22  $  0.19    $  0.14    $  0.12    $  0.10
                                              ====================================================================================
Shares used in computing basic earnings
  Per share                                      25,104    24,984      24,875     24,694   24,398     20,570     19,430     19,222
                                              ====================================================================================
Share used in computing diluted earnings
  Per share                                      27,111    27,111      27,272     27,475   27,162     23,450     22,056     21,640
                                              ====================================================================================


                                       51



                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

                                         PERICOM SEMICONDUCTOR CORPORATION


                                         By:     /s/ ALEX C. HUI
                                             -----------------------------------
                                                    Alex C. Hui
                                              Chief Executive Office, President
                                               and Chairman of the Board of
                                                     Directors

                                         Date:    September 27, 2001


Pursuant to the requirements of the Securities and Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.



         Signature                               Title                                  Date
         ---------                               -----                                  ----
                                                                            
      /s/ ALEX C. HUI           Chief Executive Officer, President and            September 27, 2001
-----------------------------   Chairman of the Board of Directors
          Alex C. Hui           (Principal Executive Officer)


  /s/ MICHAEL D. CRAIGHEAD      Vice President, Finance & Administration          September 27, 2001
-----------------------------   (Principal Financial Officer and Accounting
     Michael D. Craighead       Officer)


   /s/ JOHN CHI-HUNG HUI        Vice President, Technology and Director           September 27, 2001
-----------------------------
     John Chi-Hung Hui

     /s/ JEFFREY YOUNG          Director                                          September 27, 2001
-----------------------------
       Jeffrey Young

     /s/ TAY THIAM SONG         Director                                          September 27, 2001
-----------------------------
       Tay Thiam Song

     /s/ MILLARD PHELPS         Director                                          September 27, 2001
-----------------------------
       Millard Phelps

       /s/ HAU L LEE.           Director                                          September 27, 2001
-----------------------------
          Hau L. Lee


                                       52



INDEPENDENT AUDITORS' REPORT ON SCHEDULE

We have audited the financial statements of Pericom Semiconductor Corporation as
of June 30, 2001 and 2000 and for each of the three years in the period ended
June 30, 2001 and have issued our report thereon dated July 24, 2001; such
financial statements and report are included in this 2001 Annual Report on Form
10-K. Our audits also included the financial statement schedule of Pericom
Semiconductor Corporation, listed in Item 14(a)(2). Such financial statement
schedule is the responsibility of the Company's management. Our responsibility
is to express an opinion based on our audits. In our opinion, such financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.


DELOITTE & TOUCHE LLP

San Jose, California
July 24, 2001

                                       53



Schedule II

                        PERICOM SEMICONDUCTOR CORPORATION

                        VALUATION AND QUALIFYING ACCOUNTS
                                 (In Thousands)

                                   Balance at  Charged to             Balance at
                                   Beginning   Costs and                End of
                                   Of Period   Expenses   Deductions    Period
                                   ---------   --------   ----------    ------
Accounts receivable allowances
 June 30,
          2001                       $3,343     $   953       ---       $4,296
          2000                       $2,570     $   773       ---       $3,343
          1999                        1,559       1,011       ---        2,570

                                       54



                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                            _________________________

                                    EXHIBITS

                                       to

                                    FORM 10-K

                                      Under

                       THE SECURITIES EXCHANGE ACT OF 1934

                            _________________________

                        Pericom Semiconductor Corporation

                                       55



                                INDEX TO EXHIBITS

Exhibit
Number       Description

10.8         Sixth Amendment to Lease, dated October 31, 2000, by and between
             CarrAmerica Realty Corporation as Landlord and Registrant as Tenant
23.1         Consent of Independent Auditors

                                       56

EX-10.8

                                                                    Exhibit 10.8


                            SIXTH AMENDMENT TO LEASE
                            ------------------------

     THIS SIXTH AMENDMENT TO LEASE (this "Amendment") is dated for reference
                                          ---------
purposes only as October 31, 2000, by and between CARRAMERICA REALTY
CORPORATION, a Maryland corporation ("Landlord"), and PERICOM SEMICONDUCTOR
                                      --------
CORPORATION, a California corporation ("Tenant").
                                        ------

                                    RECITALS
                                    --------

     A. Orchard Investment Company Number 510, a California general partnership
("Orchard"), Landlord's predecessor in interest, as landlord, and Tenant, as
  -------
tenant, entered into that certain Lease (and First Addendum thereto) dated
November 29, 1993 (collectively, the "Initial Lease"), in which Orchard leased
                                      ------- -----
to Tenant and Tenant leased from Orchard, approximately 19,786 square feet
within that certain building which contains approximately 27,488 square feet
commonly known as 2380-2390 Bering Drive, San Jose, California ("Building C"),
                                                                 ----------
as more particularly described on Exhibit A attached to the Original Lease (the
"Initial Premises"). Orchard and Tenant also entered into that certain
 ----------------
Acceptance Agreement dated as of January 28, 1994 regarding the Initial
Premises.

     B. Orchard and Tenant entered into that certain First Amendment to Lease
(the "First Amendment") dated February 5, 1996 pursuant to which Tenant leased
      ---------------
an additional 7,000 rentable square feet (the "First Expansion Space") and the
                                               ---------------------
Lease Term was extended. The First Expansion Space is located in the building
containing approximately 25,888 square feet commonly known as 2340-2350 Bering
Drive, San Jose, California ("Building E"), as more particularly described on
                              ----------
Exhibit A to the First Amendment. Orchard and Tenant also entered into that
certain Interior Improvement Agreement and that certain Acceptance Agreement
regarding the First Expansion Space, each dated February 5, 1996.

     C. All of Orchard's rights, title and interest in the Initial Lease, as
amended by the First Amendment, were assigned to Landlord in connection with
Landlord's acquisition of the Project.

     D. Landlord and Tenant subsequently entered into that certain Second
Amendment to Lease (the "Second Amendment") dated July 31, 1997 pursuant to
                         ----------------
which the Tenant leased an additional 7,702 square feet (the "Second Expansion
                                                              ----------------
Space"). The Second Expansion Space is located in Building C, as more
-----
particularly described on Exhibit A of the Second Amendment. Landlord and Tenant
also entered into that certain Tenant Improvements Construction Agreement
regarding the Second Expansion Space dated July 31, 1997.

     E. Landlord and Tenant subsequently entered into that certain Third
Amendment to Lease (the "Third Amendment") dated April 23, 1999 pursuant to
                         ---------------
which the Tenant leased an additional 13,000 square feet (the "Third Expansion
                                                               ---------------
Space"). The Third Expansion Space is located in Building E, as more
-----
particularly described on Exhibit A of the Third Amendment.
                          ---------

                                       1



     F. Landlord and Tenant subsequently entered into that certain Fourth
Amendment to Lease (the "Fourth Amendment") dated January 21, 2000, pursuant to
                         ----------------
which the Tenant leased an additional containing approximately 5,888 square feet
in 2346 Bering Drive, Building E (the "Fourth Expansion Space"). The Fourth
                                       ----------------------
Expansion Space is located in Building E, as more particularly described on
Exhibit A of the Fourth Amendment. The Initial Premises as increased by the
---------
First Expansion Space, Second Expansion Space, Third Expansion Space and Fourth
Expansion Space is hereinafter collectively referred to as the "Exisitng
                                                                --------
Premises".
--------

     G. Landlord and Tenant subsequently entered into that certain Fifth
Amendment to Lease (the "Fifth Amendment") dated May 1, 2000, pursuant to which
                         ---------------
Landlord and Tenant amended the Fourth Amendment to accelerate the Fourth
Expansion Space Commencement Date and to modify the Monthly Base Rent payment
schedule accordingly.

     H. Subject to the terms and conditions set forth herein, Landlord and
Tenant now desire to further amend the Lease to increase the size of the
Existing Premises by adding the Fifth Expansion Space (as defined below in)
containing approximately 12,888 rentable square feet located in Building B at
2249 Zanker Road subject to the terms and conditions set forth herein. The Fifth
Expansion Space was described as the First Negotiation Space in the Fourth
Amendment. The Initial Lease, as amended by the First Amendment, Second
Amendment, Third Amendment, Fourth Amendment and Fifth Amendment, and as
supplemented by the Interior Improvement Agreements and Acceptance Agreements,
is hereinafter collectively referred to as the "Original Lease."
                                                --------------

                                    AMENDMENT
                                    ---------

     NOW, THEREFORE, for good and valuable consideration, the adequacy of which
is hereby acknowledged, the parties hereby mutually promise, covenant and agree
as follows:

     1. Incorporation of Recitals and Definitions. The Recitals are hereby
        -----------------------------------------
incorporated herein by this reference. In the event of any conflicts between the
Original Lease, and this Amendment, the terms of this Amendment shall control.
Capitalized terms used in this Amendment not otherwise defined herein shall have
the meaning given such terms in the Original Lease. The Original Lease, as
amended by this Amendment shall be referred to herein as the "Lease".
                                                              -----

     2. Fifth Expansion Space Commencement Date/Term and Early Occupancy Period.
        -----------------------------------------------------------------------

        (a) Fifth Expansion Space Commencement Date and Fifth Expansion Space
            -----------------------------------------------------------------
Term. The term of this Lease for the Fifth Expansion Space (the "Fifth Expansion
----                                                             ---------------
Space Term") shall commence on June 1, 2001 (the "Fifth Expansion Space
----------                                        ---------------------
Commencement Date") and terminate on May 31, 2005 (the "Fifth Expansion Space
-----------------                                       ---------------------
Termination Date"). The Fifth Expansion Space Term is not coterminous with the
----------------
term of the Lease for the Existing Premises. The Termination Date of the Lease
for the Existing Premises shall remain July 31, 2004.

                                       2



            (b) Early Occupancy. During the period commencing on April 24, 2001
                ---------------
and ending on the Fifth Expansion Space Commencement Date (the "Early Occupancy
                                                                ---------------
Period"), Tenant shall be permitted to enter the Fifth Expansion Space upon
------
receipt of notice from the Landlord. Tenant's occupancy of the Fifth Expansion
Space during the Early Occupancy Period shall be subject to all of the terms,
covenants and conditions of this Lease (including, without limitation, Tenant's
obligations to obtain Landlord's prior written consent before commencing any
alterations and Tenant's indemnity and insurance obligations), except that
Landlord agrees, subject to the last sentence of this Section 3(b), that
Tenant's obligation to pay Base Monthly Rent, Operating Cost Share Rent and Tax
Share Rent with respect to the Fifth Expansion Space during the Early Occupancy
Period shall be waived. Notwithstanding the foregoing, Tenant shall pay for all
utility and other costs incurred by Landlord to the extent they relate to
Tenant's work during the Early Occupancy Period.

         3. Prior Lease. Tenant agrees and acknowledges that Landlord has
            -----------
informed Tenant that the Fifth Expansion Space is occupied by another
tenant/subtenant as of the date of this Amendment (the "Prior Occupant") and
                                                        --------------
that in the event Landlord is unable to deliver possession of all or any portion
of the Fifth Expansion Space to Tenant on or before April 24, 2001 for any
reason (including the failure of the Prior Occupant to timely vacate and
surrender such space to Landlord in the manner required under its existing lease
with Landlord), that this Amendment shall not be void or voidable by either
party, and that Landlord shall not be liable to Tenant for any loss or damage
resulting therefrom. Tenant further agrees and acknowledges that in the event
Landlord enters into an early lease termination agreement with the Prior
Occupant pursuant to which the lease with such Prior Occupant for the Fifth
Expansion Space would terminate prior to April 23, 2001 (i.e., the existing
expiration date of the Prior Lease), then (i) Landlord shall provide Tenant with
at least two (2) weeks written notice (the "Prior Lease Termination Notice") of
the new termination date of the Prior Lease (the "Revised Prior Lease
Termination Date") and the new commencement date for the Early Occupancy Period
(the "Revised Early Occupancy Period Commencement Date"), (ii) the Revised Early
Occupancy Period Commencement Date would be the day immediately following the
Revised Prior Lease Termination Date as set forth in Landlord's Prior Lease
Termination Notice,(iii) the Fifth Expansion Space Commencement Date shall be
amended to be that date which is the thirty-ninth (39th) day after the Revised
Prior Lease Termination Date, and (iv) the Base Rent schedule set forth in
Section 5 below shall be adjusted accordingly in an amendment to this Lease.
Notwithstanding the foregoing, in the event that landlord is unable to provide
Tenant with possession of the Premises within one hundred twenty (120) days
following the Revised Early Occupancy Period Commencement Date, then Tenant
shall have a one-time right to terminate this Amendment provided that Tenant
gives Landlord a written termination notice to that effect on or prior to close
of business on the one hundred twentieth (120th) day following the Revised Early
Occupancy Period Commencement Date. Tenant agrees and acknowledges that Landlord
shall have the right to access the Fifth Expansion Space during the Early
Occupancy Period for the purpose of repainting such space and Tenant agrees to
avoid any interference with Landlord's repainting activities during such Early
Occupancy Period.

         4. Definition of Premises.
            ----------------------

                                       3




         (a) As of Fifth Expansion Space Commencement Date. As of the Fifth
             ---------------------------------------------
Expansion Space Commencement Date, Section D of the Summary of Basic Lease Terms
to the Lease is amended to revise the definition of "Premises" to include: (i)
                                                     --------
the Initial Premises (approximately 19,786 square feet), (ii) the First
Expansion Space (approximately 7,000 square feet), (iii) the Second Expansion
Space (approximately 7,702 square feet), (iv) the Third Expansion Space
(approximately 13,000 square feet), (v) the Fourth Expansion Space
(approximately 5,888 square feet), and (vi) that certain space containing
approximately 12,888 rentable square feet in 2249 Zanker Drive, Building B (the
"Fifth Expansion Space"). The Fifth Expansion Space is more particularly
 ---------------------
described in Exhibit A attached hereto. Thus, as of the Fifth Expansion Space
             -----------
Commencement Date, the Premises shall contain a total of approximately 66,264
square feet.

         (b) After Termination Date for Existing Premises. Subject to any
             --------------------------------------------
extension of this Lease pursuant to Section 8 below, as of August 1, 2004, the
definition of "Premises" shall be further amended to mean only the Fifth
               --------
Expansion Space.

     5.  Rent. As of June 1, 2001, Section K of the Summary of Basic Lease Terms
         ----
to the Original Lease shall be amended in its entirety to read as follows:

     Commencing on June 1, 2001, and on the first day of every month for the
remainder of the Term, Tenant shall pay to Landlord (in addition to all other
sums payable by Tenant under the Lease), Base Monthly Rent in the following
amounts:



------------------------------- ----------------------- ----------------------- -------------------------
                                Total Existing          Fifth Expansion Space  Total Base Rent:
                                                                               ---------------
Period:                         Base Rent:              Base Rent:
------                          ---------               ---------
------------------------------- ----------------------- ----------------------- -------------------------
                                                                       
June 1, 2001 -
November 30, 2001:              $82,732.80 per month    $45,108.00 per month    $127,840.80 per month
------------------------------- ----------------------- ----------------------- -------------------------
December 1, 2001 -
May 31, 2002:                   $85,401.60 per month    $45,108.00 per month    $130,509.62 per month
------------------------------- ----------------------- ----------------------- -------------------------
June 1, 2002 -
November 30, 2002:              $85,401.60 per month    $46,912.32 per month    $132,313.92 per month
------------------------------- ----------------------- ----------------------- -------------------------
December 1, 2002 -
May 31, 2003:                   $88,070.40 per month    $46,912.32 per month    $134,982.72 per month
------------------------------- ----------------------- ----------------------- -------------------------
June 1, 2003 -
November 30, 2003:              $88,070.40 per month    $48,788.81 per month    $136,859.21 per month
------------------------------- ----------------------- ----------------------- -------------------------
December 1, 2003 -
May 31, 2004:                   $90,739.20 per month    $48,788.81 per month    $139,528.01 per month
------------------------------- ----------------------- ----------------------- -------------------------
June 1, 2004 - July 31,
2004:                           $90,739.20 per month    $50,740.37 per month    $141,479.57 per month
------------------------------- ----------------------- ----------------------- -------------------------
August 1, 2004 -
May 31, 2005:                   N/A                     $50,740.37 per month    $50,740.37 per month
------------------------------- ----------------------- ----------------------- -------------------------



Notwithstanding the foregoing, if the Fifth Expansion Space Commencement Date is
adjusted to mean a date other than June 1, 2001 pursuant to Section 3 above,
then Tenant and Landlord agree to enter into an amendment to the Lease to make
the appropriate changes to the foregoing schedule of Monthly Base Rent payments.

                                       4



     6.  Tenant Improvements. The Fifth Expansion Space shall be delivered by
         -------------------
Landlord to Tenant in its "as-is" broom-clean condition with existing carpet as
of the Fifth Expansion Space Commencement Date, except as provided in Sections
2(b) and 3 above, without any representations or warranties of any kind. Tenant
agrees and acknowledges that Landlord shall have no obligation to make any
repairs or improvements whatsoever to the Fifth Expansion Space (or the Building
or any portion of the Existing Premises), except that Landlord shall: (i)
provide all electrical, plumbing, HVAC and roof systems within the Fifth
Expansion Space in good working condition as of the Fifth Expansion Space
Commencement Date, (ii) repaint the interior of the Fifth Expansion Space, and
(iii) provide to Tenant the "Tenant Improvement Allowance" (as described in the
                             ----------------------------
"Tenant Improvement Agreement" attached hereto as Exhibit B), subject to the
 ----------------------------                     ---------
terms and conditions set forth in the Tenant Improvement Agreement (including
the increase to the Fifth Expansion Space Base Monthly Rent described therein if
Tenant uses any portion of the Tenant Improvement Allowance). Except as
expressly noted above, Tenant shall be solely responsible for performing all
other improvements within the Building and the Fifth Expansion Space that are
desired by Tenant or which are necessary to comply with applicable Laws. Tenant
further agrees and acknowledges that the Fifth Expansion Space Commencement Date
shall not be dependent upon the completion of any of the foregoing repairs or
improvements (including those which are Landlord's responsibility

     7.  Tenant's Share.
         --------------

         (a) As of the Fifth Commencement Date, "Tenant's Share" as set forth in
Section G of the Summary of Basic Lease Terms to the Lease is amended in its
entirety to read: 100% of Building C, 100% of Building E and 49.784% of Building
B (based upon Building B containing approximately 25,888 rentable square feet)
and 39.696% of the Project (based upon the Project containing approximately
166,928 rentable square feet).

         (b) As of August 1, 2004, "Tenant's Share" as set forth in Section G of
the Summary of Basic Lease Terms to the Lease is amended in its entirety to
read: 49.784% of Building B (based upon Building B containing approximately
25,888 rentable square feet) and 7.721% of the Project (based upon the Project
containing approximately 166,928 rentable square feet).

     8.  Option to Renew. Subject to the terms and conditions set forth below,
         ---------------
Tenant may at its option extend the Lease Term for two (2) periods of three (3)
years for the Existing Premises and the Fifth Expansion Space Premises (each
period to be a "Renewal Term"). Each Renewal Term shall be upon the same terms
contained in this Lease, except that (i) Landlord shall have no obligation to
provide Tenant with any tenant improvement allowance in connection with the
Renewal Term, (ii) the Base Rent during the Renewal Term shall be calculated as
set forth below, (iii) any reference in the Lease to the "Term" of the Lease
shall be deemed to include the Renewal Term and apply thereto, unless it is
expressly provided otherwise. The extension option granted in this Section 8
replaces and supercedes any other extension or renewal options granted to Tenant
under the Lease prior to this Amendment and Tenant agrees and acknowledges that
it has no other extension or renewal options under the Lease, except as provided
in this Section 8.

         A. The Base Monthly Rent during a Renewal Term shall be 100% of the
Market Rate (defined hereinafter) for such space for a term commencing on the
first day of the applicable

                                       5



portion of the Premises for such Renewal Term. "Market Rate" shall mean the then
prevailing market rate for a comparable term commencing on the first day of the
applicable Renewal Term for tenants of comparable size and creditworthiness for
comparable space in the Building and other R&D/office buildings of comparable
age within similar projects located in the portion of North San Jose located
within the boundaries formed by the 880, 101 and 237 highways (the "Geographic
                                                                    ----------
Area").
----

         B. The following are the notification provisions for the Option to
Renew for both the Existing Premises and the Fifth Expansion Space Premises:

              (i)   For the Existing Premises, to exercise its option to extend
the Lease Term for the Existing Premises for the first Renewal Term, Tenant must
deliver a binding notice to Landlord not sooner than nine (9) months nor later
than six (6) months prior to July 31, 2004 (i.e., the current termination date
for the Existing Premises). To exercise its option to extend the Lease Term for
such space, for the second Renewal Term, Tenant must deliver a binding notice to
Landlord not sooner than nine (9) months nor later than six (6) months prior to
July 31, 2007 (i.e., the then applicable termination date for the Existing
Premises).

              (ii)  For the Fifth Expansion Space Premises, to exercise its
option to extend the Lease Term for the Fifth Expansion Space for the first
Renewal Term, Tenant must deliver a binding notice to Landlord not sooner than
nine (9) months nor later than six (6) months prior to May 31, 2005 (i.e., the
current termination date for the Fifth Expansion Space ). To exercise its option
to extend the Lease Term for the second Renewal Term for such space, Tenant must
deliver a binding notice to Landlord not sooner than nine (9) months nor later
than six (6) months prior to May 31, 2008 (i.e., the then applicable termination
date for the Fifth Expansion Space).

         C. Market Rate shall be determined as follows:

              (i)   If Tenant provides Landlord with its written notice of
exercise pursuant to Subsection B above, then prior to the commencement date of
the applicable Renewal Term Landlord and Tenant shall commence negotiations to
agree upon the Market Rate. If Landlord and Tenant are unable to reach agreement
within twenty-one (21) days, then the Market Rate shall be determined in
accordance with (ii) below.

              (ii)  If Landlord and Tenant are unable to reach agreement on the
Market Rate within said twenty-one (21) day period, then within seven (7) days,
Landlord and Tenant shall each simultaneously submit to the other in a sealed
envelope its good faith estimate of the Market Rate. If the higher of such
estimates is not more than one hundred five percent (105%) of the lower, then
the Market Rate shall be the average of the two. Otherwise, the dispute shall be
resolved by arbitration in accordance with (iii) below.

              (iii) Within seven (7) days after the exchange of estimates, the
parties shall select as an arbitrator an independent MAI appraiser with at least
five (5) years of experience in appraising office space in the metropolitan area
in which the Project is located (a "Qualified Appraiser"). If the parties cannot
agree on a Qualified Appraiser, then within a second period of

                                        6



seven (7) days, each shall select a Qualified Appraiser and within ten (10) days
thereafter the two appointed Qualified Appraisers shall select a third Qualified
Appraiser and the third Qualified Appraiser shall be the sole arbitrator. If one
party shall fail to select a Qualified Appraiser within the second seven (7) day
period, then the Qualified Appraiser chosen by the other party shall be the sole
arbitrator.

              (iv) Within twenty-one (21) days after submission of the matter to
the arbitrator, the arbitrator shall determine the Market Rate by choosing
whichever of the estimates submitted by Landlord and Tenant the arbitrator
judges to be more accurate. The arbitrator shall notify Landlord and Tenant of
its decision, which shall be final and binding. If the arbitrator believes that
expert advice would materially assist him, the arbitrator may retain one or more
qualified persons to provide expert advice. The fees of the arbitrator and the
expenses of the arbitration proceeding, including the fees of any expert
witnesses retained by the arbitrator, shall be paid by the party whose estimate
is not selected. Each party shall pay the fees of its respective counsel and the
fees of any witness called by that party.

         D.  Tenant's option to extend is personal to Tenant and may not be
exercised or assigned, voluntarily or involuntarily, by or to any person or
entity other than Tenant without Landlord's prior written consent, which
Landlord may withhold in its sole and absolute discretion. Tenant's option to
extend this Lease is subject to the condition that, on each date that Tenant
delivers its binding notice exercising an option to extend, Tenant is not in
default under this Lease after the expiration of any applicable notice and cure
periods.

     9.  Future Expansion Right. Provided that Tenant is not then in default in
         ----------------------
the performance of any of its obligations under the Lease (beyond any applicable
notice and cure period) Landlord grants to Tenant the following one-time right
of first negotiation ("Right of First Negotiation") with respect to the space
containing approximately 13,000 rentable square feet located at 2235 Zanker
Road, San Jose, California (the "First Negotiation Space"), provided that if
such space is unavailable because Landlord and the existing tenant in such space
enter into an amendment to extend the term of such tenant's lease for such
space, then Landlord agrees the space containing approximately 13,600 rentable
square feet located at 2360 Bering Drive, San Jose, California shall
automatically become the First Negotiation Space for purposes of this Section 9.
Notwithstanding any provision herein to the contrary, Tenant agrees and
acknowledges that Landlord shall have the right to enter into an amendment with
any existing tenant of the First Negotiation Space to extend the term of such
tenant's lease for such First Negotiation Space regardless of whether such
tenant's lease contained any renewal or expansion right as of the date of this
Amendment. Subject to the terms and conditions contained in this Section 9,
Tenant shall have the Right of First Negotiation with respect to the First
Negotiation Space if such space becomes available during the Lease Term
(including any extensions thereof). Within ten (10) business days of Tenant's
receipt of Landlord's notice regarding the availability of the First Negotiation
Space ("Landlord's Availability Notice"), Tenant shall respond in writing to
        ------------------------------
Landlord of Tenant's interest in leasing the First Negotiation Space. Tenant's
failure to timely respond to Landlord's Availability Notice shall be deemed
Tenant's election to pass on the First Negotiation Space and in such event
Tenant's Right of First Negotiation shall be terminated and have no further
legal force or effect. Landlord's Availability Notice shall

                                        7



be in writing and shall include the salient business terms on which Landlord
proposes to lease the First Negotiation Space. In the event Landlord receives
timely written notice from Tenant of its interest in leasing the First
Negotiation Space, then for the twenty (20) day period following Landlord's
receipt of Tenant's notice Landlord and Tenant shall meet, confer and agree in
writing on the terms and conditions upon which Tenant would lease the First
Negotiation Space from Landlord. If Landlord and Tenant are able to agree on the
terms on which Landlord would lease the First Negotiation Space to Tenant during
such twenty (20) day period, Landlord and Tenant shall execute an amendment to
this Lease to incorporate the First Negotiation Space and those terms agreed to
by Landlord and Tenant. However, if Landlord and Tenant are unable to agree in
writing on the terms for the lease of the First Negotiation Space within such
twenty (20) day period (or in the event Tenant passes on such space, or is
deemed to have passed on such space), then Landlord shall be free to market the
First Negotiation Space to any third parties without any liability to Tenant and
Tenant's Right of First Negotiation shall be terminated and have no further
legal force or effect. Landlord and Tenant agree to negotiate in good faith
taking into consideration the rental rates of similar projects in the Geographic
Area of the Project (including the rent, operating costs, and all other monetary
payments that Landlord could obtain for the Expansion Space from a third party
desiring to lease such space, the services provided under the terms of the
Lease, and all other monetary payments then being obtained for new leases of
space comparable to such space), and assuming that the First Negotiation Space
will be used for the highest and best use allowed under the Lease.
Notwithstanding the foregoing, the parties agree that the term of the Lease with
respect to the First Negotiation Space shall expire with the Fifth Expansion
Space Term and shall in no event be less than three years. The Right of First
Negotiation described herein is personal to Tenant and may not be exercised or
assigned, voluntarily or involuntarily, by or to any person or entity other than
Tenant without Landlord's prior written consent, which Landlord may withhold in
its sole and absolute discretion.

     10. Surrender of Fifth Expansion Space. Upon the surrender of the Fifth
         ----------------------------------
Expansion Space at the expiration or earlier termination of this Lease, Landlord
agrees that Tenant is not responsible for removing any improvements to the Fifth
Expansion Space installed by Prior Tenant which were still located in the Fifth
Expansion Space as of the Fifth Expansion Space Commencement Date.

     11. Parking. As of the Fifth Expansion Space Commencement Date, Section H
         -------
of the Summary of Basic Lease Terms to the Lease is amended to add an additional
fifty (50) parking stalls, of which forty-seven (47) stalls shall be for
Tenant's nonexclusive use and three (3) stalls near the entrance to the Fifth
Expansion Space which may be marked by Tenant at its sole cost for Tenant's
exclusive use. Subject to any extension pursuant to Section 8, as of August 1,
2004, Section H of the Summary of Basic Lease Terms to the Lease shall be
further amended to provide that Tenant shall only have fifty (50) parking
stalls, of which forty-seven (47) stalls shall be for Tenant's nonexclusive use
and three (3) stalls near the entrance to the Fifth Expansion Space which may be
marked by Tenant at its sole cost for Tenant's exclusive use.

     12. Signage. Subject to Section 4.4 of the Lease, Tenant may add its name
         -------
to the existing monument sign for the Building located at 2249 Zanker Road,
subject to Landlord's reasonable

                                        8



approval of such signage (including without limitation the content, size and
materials used), which shall not be unreasonably withheld.

     13. Landlord's Recapture Right. Section 14,C of the Lease is hereby amended
         --------------------------
to delete the words "for the balance of the Term" and to insert the following
words in their place: "which would terminate at any time during the last six (6)
months of the Lease Term (including on the termination date)".

     14. Security Deposit. As of the date of this Amendment, Section M of the
         ----------------
"Summary of Basic Lease Terms" is amended to increase the amount of the Security
Deposit required hereunder to $141,479.57. Therefore, assuming Landlord is
currently holding a Security Deposit in the amount of $90,739.20, Tenant shall
deposit with Landlord an additional Security Deposit in an amount equal to
$50,740.37 at the time Tenant delivers an executed original of this Amendment to
Landlord. This additional Security Deposit shall be held by Landlord on the same
terms and conditions as the initial Security Deposit in accordance with the
terms of the Lease.

     15. Time. Time is of the essence for each and every provision of this
         ----
Amendment.

     16. Confirmation of Lease. Except as amended by this Amendment, the parties
         ---------------------
hereby agree and confirm that the Lease is in full force and effect.

                                        9



         IN WITNESS HEREOF, the parties hereto have executed this Amendment as
of the date first written above.

"Landlord"

CARRAMERICA REALTY CORPORATION,
a Maryland corporation


By:    _____________________
       Thomas A. Carr
Title: President


"Tenant"

PERICOM SEMICONDUCTOR CORPORATION,
a California corporation

By:   __________________________

Name: __________________________

Title:__________________________



EXHIBITS:

Exhibit A - Description of Premises and Project
Exhibit B - Tenant Improvement Agreement

                                       10



                                    Exhibit A

                       Description of Premises and Project

                                        1



                                    EXHIBIT B

                          TENANT IMPROVEMENT AGREEMENT

     This Tenant Improvement Agreement ("Agreement") is an integral part of the
                                         ---------
Sixth Amendment to Lease dated October 31, 2000 ("Amendment") relating to
                                                  ---------
certain Premises described therein. Capitalized terms used in this Agreement not
otherwise defined herein shall have the meaning given such terms in the
Amendment. Landlord and Tenant agree as follows with respect to the Tenant
Improvements, if any, to be installed in the Premises:

     1.  INITIAL TENANT IMPROVEMENTS.

         (a) Plans. Tenant shall cause to be performed the improvements (the
             -----
"Tenant Improvements") in and about the Premises in accordance with plans and
 -------------------
specifications prepared by Tenant and approved by Landlord (the "Plans"), which
                                                                 -----
approvals shall not be unreasonably withheld, delayed or conditioned. Tenant
shall cause the Plans to be prepared, at Tenant's cost, by a registered
professional architect and mechanical and electrical engineer(s), which are
approved, in advance, by the Landlord, provided that Landlord shall not
unreasonably withhold or delay such approval. The Plans (including any changes
thereto) shall be prepared in accordance with any guidelines for such
improvements that Landlord may have at such time. Tenant shall furnish the
initial draft of the Plans to Landlord for Landlord's review and approval which
shall not be unreasonably withheld. After receipt of the initial Plans, Landlord
shall promptly either provide comments to such Plans or approve the same. If
Landlord provides Tenant with comments to the initial draft of the Plans, Tenant
shall provide revised Plans to Landlord incorporating Landlord's comments after
receipt of Landlord's comments. Promptly following Landlord's receipt of such
revised Plans, Landlord shall either provide comments to such revised Plans or
approve such Plans. The process described above shall be repeated, if necessary,
until the Plans have been finally approved by Landlord. Tenant hereby agrees
that the Plans for the Tenant Improvements shall comply with all applicable
Laws. Landlord's approval of the Plans shall be solely for the purposes of
authorizing construction of the Tenant Improvements, and shall not be deemed to
be an approval of the technical merits of the Plans nor a verification that such
Tenant Improvements and/or the Plans comply with applicable Governmental
Requirements. Tenant shall be solely responsible for ensuring that the Tenant
Improvements are designed and constructed in accordance with all applicable
Governmental Requirements.

         (b) Construction by Tenant. Tenant shall be solely responsible for the
             ----------------------
construction of the Tenant Improvements in and about the Premises. Tenant shall
construct the Tenant Improvements in accordance with the approved Plans and in
accordance with all rules, regulations, codes, statutes, ordinances and laws of
all government and quasi-governmental authorities and in a good and workman-like
manner. Landlord shall have no responsibility whatsoever for the construction of
the Tenant Improvements. The Tenant Improvements shall be constructed with new
materials of good quality and with adequately trained and supervised labor using
currently approved methods of their particular trade.

                                        1


         (c) Contractor. Prior to commencement of construction, Tenant shall
             ----------
select a general contractor which is reasonably acceptable to Landlord
("Contractor") to construct the Tenant Improvements. The Contractor shall be
  ----------
licensed by the State of California and bondable. The construction contract
("Construction Contract") for the Tenant Improvements shall be between Tenant
  ---------------------
(not Landlord) and Contractor.

         (d) Construction Process. Tenant shall not commence the construction of
             --------------------
any Tenant Improvements until after Landlord and Tenant have agreed on the
approved Plans and selection of the Contractor. Thereafter, Tenant shall be
responsible for completing the construction of the Tenant Improvements in
accordance with the approved Plans.

         (e) Insurance. Prior to Contractor's entry onto the Premises to
             ---------
commence construction of the Tenant Improvements, Tenant shall furnish Landlord
with sufficient evidence that Tenant and Contractor are carrying worker's
compensation insurance and general liability insurance in amounts and in the
manner described in the Lease.

         (f) Compliance. The Tenant Improvements and all materials incorporated
             ----------
therein shall comply with the approved Plans, as may be revised from time to
time pursuant to the terms of this Agreement, and shall be free from all design,
material and workmanship defects. Tenant and Contractor shall comply with all
applicable laws, regulations, permits and other approvals applicable to
construction of the Tenant Improvements.

         (g) Liens. Tenant shall defend and indemnify Landlord and hold it
             -----
harmless from any and all claims, losses, demands, judgments, settlements, costs
and expenses, including reasonable attorneys' fees, resulting from any act or
omission of Tenant or anyone claiming by, through, or under Tenant, in
connection with construction of the Tenant Improvements, for any mechanics' lien
or other lien filed against the Premises or any Building or against other
property of Landlord (whether or not the lien is valid or enforceable). Tenant
shall, at its own expense, (i) cause any such liens to be discharged of record,
or (ii) cause to be recorded a bond in compliance with CC Section 3143, within a
reasonable time, not to exceed thirty (30) days, after the later of (a) Tenant's
actual notice of the lien or (b) the date of filing.

         (h) Indemnity. Tenant shall indemnify, defend (with counsel reasonably
             ---------
satisfactory to Landlord) and hold Landlord harmless from and against any and
all suits, claims, actions, loss, cost or expense (including claims for workers'
compensation, reasonable attorneys' fees and costs) based on personal injury or
property damage caused in, or contract claims (including, but not limited to
claims for breach of warranty) arising from, construction of the Tenant's
Improvements, except to the extent caused by Landlord's acts or omissions.
Tenant shall repair or replace any portion of a Building or item of Landlord's
equipment or any of Landlord's real or personal property damaged, lost or
destroyed in construction of the Tenant Improvements, except to the extent the
damage, loss or destruction is the result of Landlord's acts or omissions.
Notwithstanding the foregoing, in the event Tenant fails to complete such repair
or replacement work within ten (10) days following Tenant's receipt of
Landlord's written notice therefor (or if the nature of such work is such that
more than ten (10) days is required, then in the event Tenant fails to commence
such work within such ten (10) days and thereafter diligently prosecute such
work to completion to the reasonable satisfaction of Landlord), then Landlord

                                        2



may (but shall have no obligation to) cause such work to be performed and/or
completed at Tenant's sole cost and expense.

         (i) Project Management Fee. Landlord, or an agent of Landlord, shall
             ----------------------
provide project management services in connection with the construction of the
Tenant Improvements and the Change Orders. Such project management services
shall be performed, at Tenant's cost, for a fee (the "Construction Management
Fee") equal to three percent (3%) of all costs incurred in connection with the
preparation of the Plans and the construction of the Tenant Improvements and the
Change Orders, including the costs of any permits and approvals associated
therewith. Tenant shall pay such Construction Management Fee to Landlord within
ten (10) days of Tenant's receipt of Landlord's written invoice for the same. In
the event that Landlord does not receive full payment of the Construction
Management Fee specified in Landlord's invoice within such ten (10) day period,
Landlord reserves the right to pay any unpaid portion of the Construction
Management Fee to itself out of any Tenant Improvement Allowance available
hereunder. Notwithstanding any provision herein the contrary, Tenant agrees and
acknowledges that Landlord shall have the right to retain up to three percent
(3%) of the total Tenant Improvement Allowance until such time as Landlord has
received payment in full of the entire Construction Management Fee payable
hereunder following the completion of the Tenant Improvements and the Change
Orders.

         (j) Notices. Tenant shall notify Landlord at least ten (10) business
             -------
days prior to the commencement of construction of any Tenant Improvements and
permit Landlord to post on the Premises such notices of nonresponsibility, and
such other notices to other tenants in the Project, as Landlord may deem
reasonable under the circumstances.

     2.  CHANGE ORDERS. Tenant shall not make any change to the approved Plans
without Landlord's prior approval, which approval shall not be unreasonably
withheld or delayed; provided, however, that Landlord may withhold its consent
if such requested change would negatively affect the structural components or
exterior appearance of the Buildings. Landlord shall promptly approve or
disapprove any change requests within five (5) business days following
Landlord's receipt of a proposed change request. If Landlord does not approve of
the plans and specifications for the change order request, Landlord shall advise
Tenant of the revisions required. Tenant shall revise and redeliver the plans
and specifications to Landlord within five (5) business days of Landlord's
advice or Tenant shall be deemed to have abandoned its request for such change
order request. Tenant shall pay for all preparations and revisions of plans and
specifications, and the construction of all change order requests, subject to
Tenant Improvement Allowance. All approved change order requests to the approved
Plans shall be in writing and shall be signed by both Landlord and Tenant prior
to the change being made.

     3.  TENANT IMPROVEMENT ALLOWANCE. A Tenant Improvement Allowance (the
"Tenant Improvement Allowance") of up to $64,440.00 (i.e., $5.00 per square foot
 ----------------------------
of the Fifth Expansion Space) shall be made available to Tenant for the
construction of the Tenant Improvements on the terms and conditions set forth
herein. Tenant agrees and acknowledges that the Fifth Expansion Space Base
Monthly Rent shall be increased by $0.0254 per square foot for each $1.00 of the
Tenant Improvement Allowance that is used by Tenant. Thus, if the entire Tenant
Improvement Allowance is used by Tenant, the Fifth Expansion Space Base Monthly

                                        3



Rent would be increased by $1,636.78 per month (i.e., $64,440.00 x $0.0254). In
the event any portion of the Tenant Improvement Allowance is used by Tenant,
Landlord and Tenant agree to enter into an amendment to the Lease to reflect
such increase to the Fifth Expansion Space Base Monthly Rent. The Tenant
Improvement Allowance shall be applied against the costs and expenses incurred
in connection with the performance of the Tenant Improvements work, including
the design, permitting, demolition, procurement of supplies and materials,
construction and installation of the Tenant Improvements. The Tenant Improvement
Allowance shall be used for standard interior improvements within the Premises.
None of the Tenant Improvement Allowance shall be used for specialized
improvements, cabling, equipment, trade fixtures, rent or relocation expenses.
Not sooner than the date on which the Tenant Improvements work within the
Premises has been commenced, Tenant may submit invoices to Landlord for payment
out of the Tenant Improvement Allowance to reimburse Tenant or to pay Tenant's
contractor directly (if so requested by Tenant) for Tenant Improvements costs
incurred for work actually performed within the Premises. Following Landlord's
receipt of such invoices, Landlord shall within thirty (30) days thereafter pay
Tenant for the amount requested in such invoice; provided in no event shall
Landlord be obligated to pay Tenant more than the maximum amount of the Tenant
Improvement Allowance. Any expenses incurred by Tenant for the Tenant
Improvements work in excess of the Tenant Improvement Allowance shall be at
Tenant's sole cost and expense. Landlord shall have no obligation to disburse
any portion of the Tenant Improvement Allowance for invoices that are received
by Landlord on or after the sixtieth (60th) day following the Fifth Expansion
Space Commencement Date.

     4.  COMMENCEMENT DATE DELAY. The Commencement Date shall not be dependent
upon (and shall in no way be affected by delays in) the completion or
substantial completion of the Tenant Improvements.

     5.  AS-BUILTS. Upon completion of construction of the Tenant Improvements,
Tenant shall deliver to Landlord "as-built" drawings for the completed Tenant
Improvements.

     6.  Miscellaneous. Terms used in this Exhibit B shall have the meanings
                                           ---------
assigned to them in the Lease. The terms of this Exhibit B are subject to the
                                                 ---------
terms of the Lease and all of the covenants, obligations, promises, terms and
conditions of Landlord and Tenant which are contained in the Lease shall apply
during the Term of this agreement (notwithstanding the fact that the
Commencement Date has yet to occur).

                                        4

EX-23.1

                                                                    Exhibit 23.1

                         CONSENT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders
Pericom Semiconductor Corporation:

We consent to the incorporation by reference in Registration Statement Nos.
333-58522, 333-43934, 333-51229 and 333-43934 of Pericom Semiconductor
Corporation on form S-8 of our reports dated July 24, 2001 included and
incorporated by reference in this Annual Report on Form 10-K of Pericom
Semiconductor Corporation for the year ended June 30, 2001.

DELOITTE & TOUCHE LLP

San Jose, California
September 26, 2001