Exhibit 99.1

  APPLIED MICRO CIRCUITS CORPORATION ANNOUNCES STOCK OPTION EXCHANGE PROGRAM

   SAN DIEGO, Calif--October 18, 2001--Applied Micro Circuits Corporation
[NASDAQ: AMCC] today announced that it will be offering a voluntary stock
option exchange program to its employees, officers and board members.

   Under the program, which is expected to commence before the end of October
2001, participants will be able to tender for cancellation stock options that
have an exercise price equal to or greater than $20 per share for replacement
options to be issued on a date which is at least six months plus one day from
the date of cancellation of the tendered options. The exercise price of the
replacement options will be equal to 100 percent of the market price of AMCC
stock on the grant date of these options. The terms and conditions of the
replacement options, including the vesting schedules, will be substantially the
same as the terms and conditions of the cancelled options.

   "Our most important assets are our employees. Equity, in the form of
options, has been a major employee motivator and as such, a significant
contributor to our success in the past," Dave Rickey, Chairman and Chief
Executive Officer said. "In light of the decline in the price of our common
stock, we recognize that the exercise prices of the majority of outstanding
options to purchase our common stock, whether or not they are currently
exercisable, are higher than the price of our common stock. We believe these
options are less valuable as an incentive to retain and motivate employees. By
making this offer to exchange options, we intend to provide our employees with
the benefit of holding options that over time may have a greater potential to
increase in value, and thereby create better incentives for our employees to
remain with us and contribute to the attainment of our future business and
financial objectives and the creation of value for all of our stockholders."

   As of October 4, 2001, options to purchase approximately 59 million shares
of AMCC common stock were outstanding under the Company's stock option
programs. Options to purchase approximately 39 million of these shares are
expected to be eligible for the program.

   APPLIED MICRO CIRCUITS CORPORATION HAS NOT COMMENCED THE OFFER TO EXCHANGE
THAT IS REFERRED TO IN THIS COMMUNICATION. UPON THE COMMENCEMENT OF THE OFFER
TO EXCHANGE, AMCC WILL FILE WITH THE SECURITIES AND EXCHANGE COMMISSION A
COMPLETED SCHEDULE T/O AND RELATED EXHIBITS AND DOCUMENTS, INCLUDING THE OFFER
TO EXCHANGE. ALL AMCC OPTIONHOLDERS ELIGIBLE TO PARTICIPATE IN THE OFFER TO
EXCHANGE ARE STRONGLY ENCOURAGED TO READ THE SCHEDULE T/O AND RELATED EXHIBITS
AND DOCUMENTS, INCLUDING THE OFFER TO EXCHANGE, WHEN THESE BECOME AVAILABLE.
THESE DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION ABOUT THE OFFER TO EXCHANGE.
THE SCHEDULE T/O AND RELATED EXHIBITS AND DOCUMENTS WILL BE AVAILABLE WITHOUT
CHARGE AT THE SECURITIES AND EXCHANGE COMMISSION WEBSITE AT WWW.SEC.GOV AND
WILL BE AVAILABLE WITHOUT CHARGE FROM AMCC TO ALL AMCC OPTIONHOLDERS ELIGIBLE
TO PARTICIPATE IN THE OFFER TO EXCHANGE.

AMCC Overview

   AMCC designs, develops, manufactures and markets high-performance,
high-bandwidth silicon solutions for the world's optical networks. AMCC
utilizes a combination of high-frequency analog, mixed-signal and digital
design expertise coupled with system-level knowledge and multiple silicon
process technologies to offer integrated circuit products that enable the
transport of voice and data over fiber optic networks. The company's system
solution portfolio includes switch fabric, traffic management, network
processor, framer/mapper, PHY



and PMD devices that address the high-performance needs of the evolving
intelligent optical network. AMCC's corporate headquarters and wafer
fabrication facilities are located in San Diego. Sales and engineering offices
are located throughout the world. For further information regarding AMCC,
please visit our web site at http://www.amcc.com or call our shareholder
information line at (888) 982-AMCC (2622).

   This news release contains forward-looking statements, including statements
regarding the stock option exchange program, that are subject to certain risks
and uncertainties, including, but not limited to, those associated with
unpredictability and volatility of the market price of the Company's common
stock between the cancellation of existing options and the grant of replacement
options under the program, delays in the anticipated commencement date of the
program, changes in the accounting treatment of the program, and corporate
developments affecting the Company between the cancellation of existing options
and the grant of replacement options under the program, as well as the "Risk
Factors" set forth in the Company's Annual Report on Form 10-K for the year
ended March 31, 2001 and the most recent Quarterly Report on Form 10-Q, and the
Company's other filings with the Securities and Exchange Commission. Actual
results could differ materially, as a result of such factors, from those set
forth in the forward-looking statements.

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