OAK TECHNOLOGY INC, S-8, 1999-08-17

OAK TECHNOLOGY INC
S-8, 1999-08-17
SEMICONDUCTORS & RELATED DEVICES

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REGISTRATION NO. 333-__________

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 17, 1999

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM S-8

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

OAK TECHNOLOGY, INC.
------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 77-0161486
------------------------------- -----------------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)

139 KIFER COURT
SUNNYVALE, CALIFORNIA 94086
---------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

OAK TECHNOLOGY, INC.
EXECUTIVE STOCK OPTION PLAN
-------------------------------
(FULL TITLE OF THE PLAN)

CORPAMERICA, INC.
30 OLD RUDNICK LANE
DOVER, DELAWARE 19901
------------------------
(NAME AND ADDRESS OF AGENT FOR SERVICE)

Telephone number, including area code, of agent for service: (302) 736-4300

This Registration Statement shall hereafter become effective upon filing with
the Commission in accordance with Rule 462 promulgated under the Securities Act
of 1933.

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CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Title of Proposed Proposed
Securities Maximum Maximum Amount of
to be Amount to be Offering Price Aggregate Registration
Registered Registered(1) Per Share Offering Price Fee
- -------------------- ---------------- ------------------- ---------------------- ------------------------

- -------------------- ---------------- ------------------- ---------------------- ------------------------
<S> <C> <C> <C> <C>
Oak Technology, Inc. 1,800,000 $3.00 $5,400,000(2) $1,501.20(2)
Executive Stock shares
Option Plan Common
Stock, $0.001 par
value
- -------------------- ---------------- ------------------- ---------------------- ------------------------

- -------------------- ---------------- ------------------- ---------------------- ------------------------
Oak Technology, Inc. 200,000 $4.3125 $ 862,500(3) $ 239.78(3)
Common Stock, $0.001 shares
par value
- -------------------------------------------------------------------------------------------------------------
Total: $1,740.98
- -------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Pursuant to Rules 416 and 457 under the Securities Act of 1933, this
Registration Statement also covers such indeterminate number of
additional shares of Common Stock which become issuable under the Oak
Technology, Inc. Executive Stock Option Plan or otherwise to prevent
antidilution by reason of any stock dividend, stock split,
recapitalization or other similar transaction effected without the
Registrant's receipt of consideration which results in an increase in
the number of the outstanding shares of the Registrant's Common Stock.

(2) Pursuant to Rule 457(h)(1) under the Securities Act of 1933, the
proposed maximum aggregate offering price and amount of the
registration fee are based upon the price at which the stock options
granted under the Oak Technology, Inc. Executive Stock Option Plan may
be exercised.

(3) Pursuant to Rule 457(c) under the Securities Act of 1933, the proposed
maximum aggregate offering price and the amount of the registration fee
are calculated solely for the purposes of the resale of such shares of
Common Stock selling on the basis of the closing sales price per share
of the Registrant's Common Stock on August 11, 1999, as reported on the
Nasdaq National Market.

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EXPLANATORY NOTE

As provided in Instruction C to Form S-8, any prospectus that is to be
used for reoffers and resales of restricted securities or control securities
must be filed as part of a Registration Statement on Form S-8 or a
post-effective amendment thereto. Accordingly, the Prospectus that is to be used
for reoffers and resales of shares of Common Stock acquired either prior to the
effective date of this Registration Statement pursuant to the exercise of
certain stock options offered for sale in reliance upon the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended,
or acquired subsequent to the effective date of this Registration Statement upon
exercise of certain stock options offered for sale pursuant to this Registration
Statement, has been filed as part of this Registration Statement.

<PAGE>

PROSPECTUS

OAK TECHNOLOGY, INC.
2,000,000 SHARES OF COMMON STOCK

The President and Chief Executive Officer of Oak Technology, Inc., a
Delaware corporation, named in this Prospectus (the "SELLING SHAREHOLDER") is
selling up to 2,000,000 shares of the Company's Common Stock, 200,000 shares of
which were acquired upon exercise of a portion of the options granted to him
under the Company's Executive Stock Option Plan, and 1,800,000 shares of which
may be issued upon the exercise of options granted to him under the Company's
Executive Stock Option Plan.

The Selling Shareholder (or his permitted successors or assigns)
proposes to sell the shares from time to time in transactions occurring either
on or off the Nasdaq National Market at prevailing market prices or at
negotiated prices. Sales may be made to brokers or to dealers, who are expected
to receive customary commissions or discounts.

The Selling Shareholder and any broker-dealers or other persons acting
on his behalf in connection with the sale of Common Stock hereunder may be
deemed to be "underwriters" within the meaning of the Securities Act of 1933, as
amended (the "SECURITIES ACT"), and any commissions received by them and any
profit realized by them on their sale of Common Stock as principals may be
deemed to be underwriting compensation under the Securities Act. As of the date
hereof, there are no special selling arrangements between any broker-dealer or
other person and the Selling Shareholder.

No period of time has been fixed within which the shares will be
offered or sold. None of the proceeds from the sale of the shares will be
received by the Company. The Company will pay all expenses with respect to this
offering, except for brokerage fees and commissions and transfer taxes for the
Selling Shareholder, which will be borne by the Selling Shareholder.

AN INVESTMENT IN THE SHARES OF OAK'S COMMON STOCK OFFERED HEREBY
INVOLVES CERTAIN RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 5 OF THIS
PROSPECTUS.

The Company's Common Stock is traded on the Nasdaq National Market
under the symbol "OAKT." On August 11, 1999, the closing price per share of the
Company's Common Stock on the Nasdaq National Market was $4.3125 (4-5/16).

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED WHETHER
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

The date of this Prospectus is August 17, 1999.

<PAGE>

You should only rely on the information incorporated by reference or
provided in this Prospectus or in any supplement to this Prospectus. We have not
authorized anyone else to provide you with different information. The Common
Stock is not being offered in any state where the offer is not permitted. You
should not assume that the information in this Prospectus or any supplement
hereto is accurate as of any date other than the date on the front of those
documents.

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

TABLE OF CONTENTS

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PAGE
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Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Special Note Regarding Forward Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Selling Shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Where You Can Find More Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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CERTAIN DEFINITIONS

As used in this Prospectus, the terms the "COMPANY," "OAK" or "OAK
TECHNOLOGY" refer to Oak Technology, Inc. and its subsidiaries, and the term
"PLAN" means the Company's Executive Stock Option Plan adopted by the Company's
Board of Directors effective January 27, 1999.

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

CERTAIN STATEMENTS INCLUDED IN OR INCORPORATED BY REFERENCE INTO THIS
PROSPECTUS MAY BE CONSIDERED "FORWARD-LOOKING" STATEMENTS WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED (THE "EXCHANGE ACT"). SUCH STATEMENTS INCLUDE DECLARATIONS
REGARDING THE INTENT, BELIEF OR CURRENT EXPECTATIONS OF THE COMPANY AND ITS
MANAGEMENT. SUCH FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE
PERFORMANCE AND INVOLVE A NUMBER OF RISKS AND UNCERTAINTIES. ACTUAL RESULTS
COULD DIFFER MATERIALLY FROM THOSE INDICATED BY SUCH FORWARD-LOOKING STATEMENTS.
WE UNDERTAKE NO OBLIGATION TO PUBLICLY RELEASE THE RESULTS OF ANY REVISION TO
THESE FORWARD-LOOKING STATEMENTS WHICH MAY BE MADE TO REFLECT EVENTS OR
CIRCUMSTANCES AFTER THE DATE OF THIS PROSPECTUS OR ANY DOCUMENT INCORPORATED BY

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REFERENCE INTO THIS PROSPECTUS, OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED
EVENTS. AMONG THE IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE INDICATED BY SUCH FORWARD-LOOKING STATEMENTS ARE:

- that information is of a preliminary nature and may be subject to
further adjustment

- variability in our quarterly operating results

- general conditions in the semiconductor industry

- risks related to pending legal proceedings

- the development by competitors of new or superior products or the
entry of new competitors into our markets

- our ability to diversify our product and market base by developing
and introducing new products within designated market windows at
competitive price and performance levels

- the willingness of prospective customers to design the Company's
products into their products

- the availability of adequate foundry capacity and access to process
technologies

- our ability to protect our proprietary information and obtain
adequate access to third party technology on acceptable terms

- risks related to use of independent manufacturers and third party
assembly and test vendors

- dependence on key personnel

- reliance on a limited number of large customers

- dependence on sales of CD-ROM and CD-RW controller products and the
PC Market

- risks related to international business operations

- dependence on sales to the Asian markets

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- the ability of the Company to maintain adequate price levels and
margins with respect to its products

- risks related to acquisitions

- the ability to attract and retain qualified management and technical
personnel

- other risks identified from time to time in the Company's reports
and registration statements filed with the SEC

THE COMPANY

Oak Technology designs, develops and markets high-performance,
integrated semiconductors and related software to original equipment
manufacturers ("OEMS") worldwide who serve the optical storage, consumer
electronics and digital office equipment markets. Our products consist primarily
of integrated circuits and supporting software and firmware. These products
enable our OEM customers to deliver cost-effective, powerful systems to the
end-user for storage, digital home entertainment and imaging (copy, fax, print)
applications.

- OPTICAL STORAGE: Oak's Optical Storage Group develops technical
leading edge, integrated controller solutions for CD-ROM, CD-RW
and DVD drives. Core competencies include IDE and alternative
interfaces, error correction code (ECC), DSP/servo control, disc
write encoding, wobble servo, write strategy, system design, and
system software and firmware.

- CONSUMER ELECTRONICS: Oak's Consumer Group targets opportunities
in the emerging digital consumer entertainment market by
developing value-added integrated circuits and reference design
solutions for DVD players and terrestrial set-top boxes. Core
competencies include MPEG decoding, graphics processing, analog
integration, and software expertise at the microcode, systems and
application levels.

- DIGITAL OFFICE EQUIPMENT: Pixel Magic, Oak's wholly-owned
subsidiary headquartered in Andover, Massachusetts, designs
high-performance, full-featured compression codecs, imaging DSPs,
resolution enhancement solutions and embedded controller board
solutions for the emerging class of digital copiers, printers and
multifunction peripherals. Core competencies include strong
expertise in color/monochrome image processing pipelines, dot
modulation and resolution enhancement technology, and high-speed
compression/decompression.

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Oak's executive offices and its principal marketing, sales and product
development operations are located in Sunnyvale, California. In addition, the
Company has facilities in Andover, Massachusetts; Taipei, Taiwan; Tokyo, Japan;
Bristol England; Munich, Germany; and Shenzhen, China.

Oak Technology is incorporated in Delaware. The principal executive
office of the Company is located at 139 Kifer Court, Sunnyvale, California
94086; its telephone number is (408) 737-0888.

RISK FACTORS

The following risk factors should be carefully considered by you in
evaluating whether you wish to make an investment in Oak's Common Stock.

RISKS RELATED TO OAK'S BUSINESS

VARIABILITY OF QUARTERLY OPERATING RESULTS. Our quarterly revenues and
operating results have varied significantly in the past and are likely to vary
substantially from quarter to quarter in the future. Our operating results are
affected by a wide variety of factors, including factors that generally affect
everyone in our industry and factors that are more specific to our business and
product lines. The principal risk we face in our business and one which has had,
and is expected to continue to have, a significant effect on our operating
results is our dependence on the optical storage market. Other factors specific
to our business and product lines include the following:

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

- The current market for our products

- The loss or gain of important customers

- The timing of significant orders and order cancellations or
rescheduling

- Pricing policy changes by us and our competitors and suppliers

- The potential for significant inventory exposure

- The timing of the development and introduction of our new products or
enhanced versions of our existing products

- Market acceptance of our new products

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- Increased competition in our product lines

- Barriers to entry into new product lines

- The competitiveness of our customers

In addition, the Company's quarterly operating results could be
materially adversely affected by legal expenses incurred in connection with, or
any judgment in, the Company's ongoing shareholder legal proceedings. We believe
that quarterly revenue and operating results are likely to continue to vary
significantly in the future and that period-to-period comparisons of our
operating results are not necessarily meaningful. You should not rely on
period-to-period comparisons as indications of future performance.

You should also be aware that if quarterly results fail to meet public
expectations, the price of Oak's Common Stock may decline. If the price of our
stock declines, the value of your investment could be negatively affected,
depending upon the price paid by you for the Common Stock offered for sale under
this Prospectus.

Other factors generally affecting the semiconductor industry include
the following:

- Rapid technological change

- Rapid product obsolescence

- Availability of foundry capacity

- Fluctuations in manufacturing yields

- Availability and cost of raw materials

- The cyclical nature of the semiconductor industry

- Seasonal customer demand

- Potential for erosion of product prices

- General economic conditions

The semiconductor industry historically has been characterized by rapid
technological change, cyclical market patterns, significant price erosion,
periods of over-capacity, periods of production shortages, variations in
manufacturing costs and yields, and significant expenditures for capital
equipment and product development. In addition,

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the industry has experienced significant economic downturns at various times,
characterized by diminished product demand and accelerated erosion of product
prices. Any downturns in the industry would have a material adverse effect on
our business and results of operations.

Oak has experienced in the past and we may in the future experience
substantial period-to-period fluctuations in operating results due to general
semiconductor industry conditions. The downturns in the industry often occur in
connection with, or in anticipation of, maturing product cycles (of both the
semiconductor companies and their customers) and declines in general economic
conditions. These downturns have been characterized by abrupt fluctuations in
product demand, production over-capacity and subsequent accelerated erosion of
average selling prices, and in some cases have lasted for more than a year. Even
if customers' aggregate demand were not to decline, the availability of
additional capacity can adversely impact pricing levels, which can also depress
revenue levels.

Any one or a combination of the above factors may adversely affect the
business and financial condition of Oak.

HISTORY OF OPERATING LOSSES. Although we experienced periods of
profitability following our reincorporation in Delaware in October 1994 in
connection with our IPO (we were first incorporated in California in 1987),
we also sustained losses following our IPO. Further, while we had net income
of $5.9 million in fiscal 1998, we experienced a net loss of $50.7 million in
fiscal 1999 (unaudited). Our current loss trend began in calendar year 1998,
resulting in an operating loss of $9.1 million for fiscal 1998 and an
operating loss of $62.1 million for fiscal 1999 (unaudited) (in each case
before adjustments for non-operating income or loss, or income tax expense or
benefit). Our operating losses generally have been due to the Company's
dependence on its optical storage business, which historically has accounted
for approximately 80% of the Company's business. In fiscal 1998, the Company
failed to timely and/or adequately develop its integrated CD-ROM controller
product and second generation CD-RW product. Consequently, for fiscal 1999,
the Company was dependent on mature CD-ROM products and its first generation
CD-RW product. These mature products have continued to decline in both
quantity and average sales price in each successive quarter. These losses and
our continued failure to achieve profitability will have a material adverse
effect on our business and may affect the value of your investment in our
Common Stock.

RISKS ASSOCIATED WITH USE OF INDEPENDENT FOUNDRIES AND ASSEMBLY AND
TEST VENDORS; EFFECT OF MINIMUM PURCHASE REQUIREMENTS. We contract with
independent foundries to manufacture all of our products, and with independent
vendors to assemble and test our products. Under our foundry agreements, we are
required to place non-cancelable orders and purchase our products on an
approximately three-month rolling basis. Also, we are currently committed under
agreements with two of our foundries to purchase certain minimum amounts of
capacity.

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In the fourth quarter of fiscal 1999, we reserved against our deposit amount
with one of these foundries, by including in our cost of goods sold a $2.8
million loss provision.

Our customers, on the other hand, generally place purchase orders with
us less than four weeks prior to delivery that may be rescheduled or under
certain circumstances may be cancelled without significant penalty. Due to our
relatively narrow customer base for certain devices and the short product life
cycles of our products, these cancellations can leave us with significant
inventory exposure. Consequently, if anticipated sales and shipments in any
quarter are rescheduled, canceled or do not occur as quickly as expected, our
expense in inventory levels could be disproportionately high, which would
materially adversely affect our business, financial condition and results of
operations for that quarter or for the year.

In addition, we are dependent on our foundries to allocate to us a
portion of their foundry capacity sufficient to meet our needs to produce
products of acceptable quality and with acceptable manufacturing yield and to
deliver products to us in a timely manner. These foundries fabricate products
for other companies and some manufacture products of their own design. If there
is a decrease in available foundry capacity, it is likely that the lead time
required to manufacture our products will increase, which may materially
adversely affect our results of operations and financial condition. In periods
of manufacturing capacity shortages, we may not be able to meet our customers'
required delivery time. Also, if we are not able to timely respond to our
customers' needs, we may lose customer orders. Insufficient orders will result
in under-utilization of our manufacturing facilities and our prepayments with
two of our foundries for certain minimum amounts of capacity, which also will
adversely affect our business, financial condition and operating results.

Product supply and demand fluctuations common to the semiconductor
industry are historically characterized by periods of manufacturing capacity
shortages immediately followed by periods of overcapacity, which are caused by
the addition of manufacturing capacity in large increments. The industry has
moved from a period of capacity shortages in 1995 to what has been a period of
excess capacity for approximately the last twelve months, although capacity
currently appears to be tightening. During a period of industry overcapacity,
profitability can drop sharply as factory utilization declines and high fixed
costs of operating a wafer fabrication facility are spread over a lower net
revenue base. We cannot assure you that the Company can or will achieve timely,
cost-effective access to such capacity when needed.

Factors which could damage relationships with our current and
prospective customers or provide an advantage to our competitors include:

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- The loss of any foundry as a supplier

- Our inability in a period of increased demand for our products to
expand foundry capacity

- Our inability to obtain timely and adequate deliveries from current or
future suppliers

- Delays in shipments of our products

- Disruption of operations at any of our manufacturing facilities

- Product defects and the difficulty of detecting and remedying product
defects

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

- The unavailability of, or interruption in access to, certain process
technologies

- Reduced control over delivery schedules, quality assurance and costs

Such problems with supply could adversely affect our business,
financial condition and operating results. As Oak generally does not use
multiple services of supply for its products, the consequences of these factors
occurring is magnified.

In addition, as a result of our dependence on foreign subcontractors,
we are subject to the risks of conducting business internationally, including
foreign government regulation and general political risks, which include the
risks described under the heading "Risks Pertaining to International Business"
below.

NEW PRODUCT INTRODUCTIONS. The markets for our products are
characterized by evolving industry standards, rapid technological change and
product obsolescence. The Company's performance is highly dependent upon the
successful development and timely introduction of our next generation CD-RW
controller, MPEG-2 decoder for the DVD player market, and imaging processing
chip for the digital office equipment market. Our financial performance is
highly dependent upon timely and successful execution of next generation and new
products, particularly in light of the continued decline in sales from our
mature CD-ROM and CD-RW products and the Company's failure to timely develop new
products in fiscal 1998 and 1999. (See "Dependence on CD-ROM and CD-RW
Controller Product" below.)

If we fail to introduce new products successfully or our new products
fail to achieve market acceptance, our business, financial condition and results
of operations

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will be materially adversely affected. The success of new product
introductions is dependent on several factors, including:

- Recognition of market requirements

- Product cost

- Timely completion and introduction of new product designs

- Quality of new products

- Differentiation of our products from those of our competitors

- Improvements in existing technologies

- Development and implementation of new process technologies to:

- Reduce semiconductor die size

- Improve device performance in manufacturing yield

- Adapt product and processes to technological changes

- Adopt emerging industry standards

In both the optical storage and consumer electronics markets,
particularly DVD, a variety of standards and formats are being proposed, making
it difficult to develop product to market requirements, and making it even more
difficult for the market to develop.

The success of the Company's efforts is also dependent upon securing
sufficient foundry capacity for volume manufacturing of wafers and achievement
of acceptable manufacturing yields from our contract manufacturers. (See the
discussion of risks related to foundry capacity under the Heading "Risks
Associated with Use of Independent Foundries and Assembly and Test Vendors;
Effect of Minimum Purchase Rights" above.) Due to the design complexity of our
products, especially with the increased levels of integration that are required,
we have experienced delays in completing development and introduction of new
products, particularly in our products for the optical storage market and the
digital office equipment market.

We cannot assure you that the Company will successfully identify new
product opportunities and develop and bring new products to market in a timely
manner or that our products will be selected for design into the products of our
targeted customers. Also, there can be no assurance that the products of our
customers will be successfully

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introduced into the market. If we fail in our new product development efforts
or our products fail to achieve market acceptance, the Company's business,
financial condition and results of operations will be materially adversely
affected and the value of your investment in our Common Stock will be
negatively affected.

DEPENDENCE ON CD-ROM AND CD-RW CONTROLLER PRODUCT. Oak's future revenue
generation is highly dependent on the successful introduction of our next
generation CD-RW product and first generation PC DVD, although we can provide no
assurance that these products will achieve customer acceptance. Although sales
of CD-ROM and CD-RW controller products are expected to continue to account for
a substantial portion of our total revenues for the foreseeable future, we
expect that sales of our CD-ROM controller products will continue to decline. We
are no longer developing any CD-ROM controllers, but are instead focusing our
development efforts on CD-RW DVD controllers for CD-RW and DVD drives. If we
experience delays in our product development efforts or fail to achieve market
acceptance, we will need other sources of revenue to offset the continued
decline in sales of our CD-ROM controllers.

In addition, it is anticipated that the proliferation of CD-RW and
eventually DVD drives will continue to impact the demand for our CD-ROM
controller products. Furthermore, although we currently are a leading supplier
of CD-RW controllers, due to product delays in our second generation CD-RW
product, we lost our market leadership in this market. While we are currently
sampling our next generation CD-RW product, we cannot assure you that this
product will be competitive in the marketplace or accepted by our targeted
customers. In addition, even if this product proves to be competitive and is
accepted by our targeted customers, there is no assurance that our customers
will be successful.

We also face increased competition in the emerging CD-RW and DVD-ROM
markets. Moreover, the current trend toward integrating increased functionality
on the CD-ROM and CD-RW controller potentially adds to the development and
manufacturing costs of producing the controller. Our revenues and gross margins
from our CD-ROM and CD-RW controller products will be dependent on our ability
to introduce such integrated product in a commercially competitive manner.

The decrease in the overall level of sales of, and prices for, our
CD-ROM and older generation CD-RW controller product due to introductions of
products by competitors, the decline in demand for CD-ROM controller products
generally, product obsolescence and delays in our integrated CD-ROM controller
product and our next generation CD-RW product have had a material adverse effect
on our business, financial condition and results of operations, and will
continue to have such an effect if we fail to successfully bring to market new
product introductions.

ACQUISITIONS. We have in the past pursued, and will continue to pursue,
opportunities to acquire key technology to augment our technical capabilities or
to achieve faster time to market as an alternative to developing such technology
internally.

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In this regard, we recently announced our intention to acquire Xionics
Document Technologies, Inc., a leading supplier of embedded software for the
digital office. Acquisitions, including our proposed acquisition of Xionics,
involve numerous risks, among others:

- The disruption of our ongoing business

- Our potential inability to successfully integrate the personnel,
operations, technology and products of acquired companies

- The risk of reduced management attention to normal daily operations

- The risk of a reduction in resources available to support our normal
daily operations

- The potential impairment of relationships with employees and customers

- The potential loss of key employees of the acquired company

- The risk of misappropriation of the technology of an acquired company
or lack of an adequate remedy for any such misappropriation

DEPENDENCE ON PROPRIETARY TECHNOLOGY AND INTELLECTUAL PROPERTY RIGHTS
OF THIRD PARTIES. In order to compete effectively, we must protect our
proprietary information. We rely on a combination of patents, trademarks,
copyrights, trade secret laws, confidentiality procedures and licensing
arrangements to protect and preserve our intellectual property rights. While we
take steps to protect our proprietary information, we cannot assure you that our
intellectual property rights will not be challenged, invalidated or
circumvented, or that our proprietary information will in fact provide
competitive advantages to us. For instance, we sell and license our technology
to customers in countries that do not protect, or do not protect to the same
degree as the United States, intellectual property rights, leaving us vulnerable
to misappropriation of our technology in these countries. Also, the use of
patent infringement litigation as part of a company's competitive strategy has
become much more prevalent in the United States, causing companies to incur
substantial costs in defending themselves against these actions. Our portfolio
of patents and other intellectual property is small in relation to some of our
competitors, subjecting us to the risk of having to defend ourselves against
patent infringement litigation. There is also the risk that our competitors may
be able to design around our present patents, as well as the risk that we may
not be able to design around the patents of our competitors. This is
particularly important to us in that we may not hold patents or other
intellectual property rights necessary for the conduct of our business. Further,
with the addition to chips of more functionality, it is becoming increasingly
difficult for us to develop internally all of the technology required to produce
our chips. These and other factors make us dependent on licenses from third

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parties for the rights to use necessary technology, if we cannot acquire the
technology or develop it ourself. Also, circumstances may arise where we cannot
acquire necessary technology or obtain third party licenses to such technology,
or where we cannot acquire such technology or obtain third party licenses on
reasonable terms. If we cannot protect our proprietary information or obtain
licenses from third parties on reasonable terms for technology used in our
products, our results of operations and financial condition will be adversely
affected.

RISKS PERTAINING TO INTERNATIONAL BUSINESS. During the quarters
ended March 31, 1999 and 1998, 89% and 87%, respectively, of our net revenues
were derived from international sales. A substantial portion of our
international revenues are derived from manufacturers of CD-ROM drives in
Japan, Taiwan, Korea, Belgium and Singapore. (Please see the discussion above
under the heading "Dependence on CD-ROM and CD-RW Controller Product"
regarding the risks associated with our dependence on these revenues.)
Although most of our foreign sales are negotiated in U.S. dollars, invoicing
is often done in local currency. As a result, we may be subject to the risks
of currency fluctuations.

We are subject to the additional risks of conducting business outside
of the United State. These risks include:

- Unexpected changes in, or impositions of, legislative or regulatory
requirements

- Delays resulting from difficulty in obtaining export licenses for
certain technology

- Tariffs, quotas and other trade barriers and restrictions

- Longer payment cycles

- Greater difficulty in collecting accounts receivable

- Potentially adverse taxes and adverse tax consequences

- The burdens of complying with a variety of foreign laws

- Political, social and economic instability

- Potential hostilities

- Changes in diplomatic and trade relationships

For example, we have made a significant investment in foundry capacity
in Taiwan and are subject to the risk of political instability in Taiwan,
including the

13
<PAGE>

potential for conflict between Taiwan and the People's Republic of China. In
addition, China is the primary market for our DVD and cable and satellite
products, and, therefore, any political or economic instability in China
could significantly reduce the demand for these products.

While these factors or the impact of these factors are difficult to
forecast, any one or more of these factors could adversely affect our operations
in the future or require us to modify our current business practices.

RISKS ASSOCIATED WITH LIMITED CUSTOMER BASE. Oak has derived a
substantial portion of its net revenues from a limited number of customers and
expects this concentration to continue. In the quarters ended March 31, 1999 and
1998, sales to our top ten customers accounted for approximately 71% and 76%,
respectively, of our net revenues. These customers were all purchasers of our
CD-ROM and CD-RW products. (Please see the discussion above under the heading
"Dependence on CD-ROM and CD-RW Controller Product" for a description of the
decline in revenues we have been experiencing in connection with sales of our
CD-ROM product.) At March 31, 1999, one customer accounted for approximately 40%
of accounts receivable.

In addition, we have experienced significant changes from year to year
in the composition of our major customer base, including the loss in the past
year of a customer responsible for approximately 10% of our sales in the first
nine months of fiscal year 1999, and believe this pattern will continue.
Customers generally purchase our products pursuant to short-term purchase
orders, and we have no long-term purchase agreements with any of our customers.
The loss of, or significant reduction in purchases by, current major customers
would have a material adverse effect on our business, financial condition and
operating results.

INTENSE COMPETITION. The markets in which we compete are intensely
competitive and are characterized by rapid technological change, declining unit
average sales prices and rapid product obsolescence. The Company's existing and
potential competitors include many large domestic and international companies
that have substantially greater financial, manufacturing, technical, marketing,
distribution and other resources, broader product lines and longer standing
relationships with customers than the Company. Our competitors also include a
number of emerging companies as well as some of our own customers and suppliers.
Furthermore, we are currently attempting to enter several new markets in which
we have not previously operated. These markets are intensely competitive and we
will have to compete with large domestic and international companies that have
long standing relationships with our target customers.

The willingness of prospective customers to design our products into
their products depends, to a significant extent, upon our ability to have
product available at the appropriate market window and to price our products at
a level that is cost effective for these customers. The markets for most of the
applications for the Company's products, especially in the consumer electronics
market and the optical storage market, are

14
<PAGE>

characterized by intense price competition. As the markets for our products
mature and competition increases, as has been the trend for the optical
storage and digital video disk segment of the consumer electronics market, we
anticipate that average sales prices on our products will decline. If we are
unable to reduce our costs sufficiently to offset declines in average sales
prices or are unable to successfully introduce new higher performance
products with higher average sales prices, our operating results will be
materially adversely affected. In addition, if we experience yield or other
production problems or shortages of supply that increase our manufacturing
costs, fail to reduce our manufacturing costs or fail to utilize our prepaid
deposits with two of our foundries, our business, financial condition and
operating results will be materially adversely affected.

Certain of our principal competitors maintain their own semiconductor
foundries and may therefore benefit from certain capacity, cost and
technological advantages. In addition, in the digital office equipment market,
our most intense competition comes from captive suppliers, and we also
anticipate increased competition from captive suppliers to the optical storage
market as this market transitions to DVD. Also, our ability to compete
successfully in the PC DVD and digital broadcast markets will depend on our
ability to develop partnerships with other companies established in the industry
and to gain recognition in such markets. There can be no assurance that
participation in these new markets will produce positive results for us.

We believe that our ability to compete successfully depends on a number
of factors, both within and outside of our control, including the following:

- Price, quality and performance of Oak's and its customers' products

- The timing and success of new product introductions by the Company, our
customers and competitors

- The development of technical innovations

- The ability to obtain adequate foundry capacity and sources of raw
materials

- The efficiency of production

- The rate at which our customers design our products into their products

- The market acceptance of the products of our customers

- The number and nature of our competitors in a given market

- The ability to protect our proprietary information and to obtain or
preserve our rights to the intellectual property of other parties
necessary in our business

15
<PAGE>

- General market and economic conditions

DEPENDENCE ON KEY PERSONNEL. Our performance depends, to a significant
degree, on the retention and contribution of members of our senior management as
well as other key personnel. In this regard, it is important for the Company to
retain the services of Young K. Sohn, the Selling Shareholder under this
Prospectus. Mr. Sohn was appointed President and Chief Executive Officer of the
Company in February 1999. We are in the process of recruiting replacements for
additional senior management positions as well as technical personnel. However,
competition for these persons is intense and we cannot assure you that we will
attract and retain qualified replacements or additional senior managers and
technical personnel.

IMPACT OF YEAR 2000 ISSUE. The "Year 2000 Issue" is the result of
computer programs being written using two digits rather than four to define the
applicable year. If the Company's computer programs with date-sensitive
functions are not Year 2000 compliant, they may recognize a date using "00" as
the year 1900 rather than the Year 2000. This could result in a system failure
or miscalculations causing incorrect reporting and disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices or engage in similar normal business activities. The issue spans
both information technology and non-information technology systems that use date
data. In addition to our own systems, we rely, directly and indirectly, on
external systems of our customers, suppliers, creditors, financial
organizations, utilities providers and government entities, both domestic and
international.

Our committee for the Year 2000 issue has a Year 2000 project plan
consisting of the following four phases: Inventory/Assessment,
Conversion/Vendor Readiness, Contingency Planning, and Testing and
Implementation. We have completed testing of our own products for Year 2000
compliance, and expect to complete our entire Year 2000 project by September
1999.

At this point, we believe that the total cost of achieving Year 2000
readiness will be less than $1.5 million. As the Year 2000 project continues,
however, we may discover additional Year 2000 problems, may not be able to
develop, implement, or test remediation or contingency plans in a timely manner,
or may find the costs of these activities exceed current expectations and become
material. In many cases, we are relying on assurances from suppliers and
customers that new and upgraded information systems and other products will be
Year 2000-compliant. Although we have tested (and plan to continue to test)
certain third-party products, our tests may not be adequate in all cases, and
any problems identified by us may not be addressed by the supplier or customer
in a timely and satisfactory way.

Since the Company uses a variety of information systems and has
additional systems embedded in its operations and infrastructure, we cannot be
sure that all of our systems will work together in a Year 2000-compliant
fashion. Furthermore, we may suffer business interruptions, either because of
our own Year 2000 problems or those of

16
<PAGE>

our customers or suppliers whose Year 2000 problems may make it difficult or
impossible for them to fulfill their commitments to us. If the Company fails
to satisfactorily resolve Year 2000 issues related to its products in a
timely manner, it could be exposed to liability to third parties.

If the Company or the third parties with which it has relationships
were to cease or not successfully complete its or their Year 2000 remediation
efforts, the Company would encounter disruptions to its business that could have
a material adverse effect on its business, financial position and results of
operations. The Company could be materially and adversely impacted by widespread
economic or financial market disruption or by Year 2000 computer system failures
at third parties with which it has relationships.

When completed, our contingency plan will address certain issues
related to the failure of our suppliers or customers to comply with Year 2000
readiness. However, our contingency plan is not expected to address how we would
handle "worst-case" Year 2000 issues that may confront us. In the worst case,
the Company or its key customers and/or suppliers on which it depends may be
unable to produce reliable information or process routine transactions. Further,
in the worst case, the Company or parties on which it depends, may, for an
extended period of time, be incapable of conducting critical business
activities, which could include manufacturing and shipping products, invoicing
customers and paying vendors. Should a worst-case event actually occur, the
business, operations and financial condition of the Company would be materially
adversely affected.

Our evaluation is on-going, however, and we expect that new and
different information will become available to us as our evaluation progresses.
As a result, we are not currently able to assess whether the Year 2000 problem
will have a materially adverse effect on our operations, outside of the context
of a "worst-case" event.

RECENT DEVELOPMENTS

We recently announced that we plan to acquire Xionics Document
Technologies, Inc., a publicly traded company whose stock is listed on the
Nasdaq National Market and traded under the symbol "XION." Xionics is a leading
supplier of embedded software for the digital office and offers Oak the
opportunity to solidify its leadership in both imaging processors, the business
in which Oak's Pixel Magic subsidiary presently is engaged, and embedded
software.

Under the terms of the definitive agreement entered into between Oak
and Xionics, Xionics will merge with and into a newly-formed subsidiary of Oak.
Xionics shareholders will receive .803 shares of Oak Common Stock for each share
of Xionics stock and $2.94 in cash. Oak will assume Xionics' outstanding
options. The transaction is expected to close in the Fall of 1999, subject to
various conditions including customary

17
<PAGE>

regulatory approvals and approval by the shareholders of both Oak and
Xionics. It is expected that the stock portion of the transaction will be
tax-free. Xionics has approximately 11.5 million shares outstanding. The
acquisition will be accounted for under the purchase method of accounting.

On July 28, 1999, we issued a press release regarding our fourth
quarter and fiscal year 1999 results, for the quarter and year ended June 30,
1999. Our losses for these periods were substantial. Until such time as we have
filed with the SEC our Annual Report on Form 10-K for the fiscal year ended June
30, 1999, reference is made to our earnings release issued on July 28, 1999,
which is incorporated herein by reference to Exhibit 99.3 to the Registration
Statement of which this Prospectus is a part.

SELLING SHAREHOLDER

This Prospectus relates to shares of Common Stock that have been
acquired or will be acquired by the Selling Shareholder named below upon
exercise of the stock options granted to the Selling Shareholder pursuant to the
Company's Executive Stock Option Plan.

The Selling Shareholder is the Chief Executive Officer and President
of Oak and a director of Oak. The following table sets forth (i) the name and
principal position or positions held by the Selling Shareholder with the
Company over the past three years; (ii) the number of shares of Common Stock
the Selling Shareholder beneficially owned as of August 12, 1999; (iii) the
number of shares of Common Stock acquired by the Selling Shareholder pursuant
to the Plan and being registered hereby, some or all of which shares may be
sold pursuant to this Prospectus, and the number of shares of Common Stock
that may be acquired by the Selling Shareholder upon exercise of the stock
options granted to the Selling Shareholder pursuant to the Plan, some or all
of which shares may be sold pursuant to this Prospectus; and (iv) the number
of shares of Common Stock and the percentage, if 1% or more, of the total
class of Common Stock outstanding to be beneficially owned by the Selling
Shareholder following this offering, assuming the sale pursuant to this
offering of all shares of Common Stock acquired by the Selling Shareholder
pursuant to the Plan and registered hereby. There is no assurance that the
Selling Shareholder will sell any or all of the shares offered by him
hereunder. The address of the Selling Shareholder is c/o Oak Technology,
Inc., 139 Kifer Court, Sunnyvale, California 94086.

18
<PAGE>

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Selling Shareholder Shares
and Principal Shares Covered by Shares Beneficially
Positions with the Beneficially This Owned After This
Company Owned (1) (2) Prospectus(3) Offering
- ----------------------------------- ----------------------- ------------------- --------------------------
NUMBER PERCENT
- ----------------------------------- ----------------------- ------------------- ------------ ------------
<S> <C> <C> <C> <C>
Young Sohn, 2,029,600 2,000,000 2,029,600 4.96%
Chief Executive Officer,
President and a Director
- ----------------------------------- ----------------------- ------------------- ------------ ------------
</TABLE>

(1) Nature of beneficial ownership is sole voting and investment power
except as indicated in subsequent footnotes.

(2) Comprised of 210,000 shares held of record by the Selling Shareholder,
and 1,819,600 shares subject to options that are exercisable within 60
days of August 12, 1999.

(3) Includes 200,000 shares of Common Stock acquired by Mr. Sohn upon
exercise of a portion of the stock options granted to Mr. Sohn under
the Plan; includes up to 1,800,000 shares of Common Stock which may be
acquired by Mr. Sohn upon exercise of the balance of the stock options
granted to Mr. Sohn under the Plan.

PLAN OF DISTRIBUTION

The shares covered by this Prospectus will be sold by the Selling
Shareholder as principal for his own account. Oak Technology, Inc. will not
receive any proceeds from the sale of any shares by the Selling Shareholder.

The Selling Shareholder may sell shares pursuant to this Prospectus
from time to time in transactions (including one or more block transactions) on
the Nasdaq National Market or such other national securities exchange on which
shares of the Company's Common Stock are then-listed, in privately negotiated
transactions or through a combination of such methods of sale. Each sale may be
made either at the market price prevailing at the time of sale or at a
negotiated price. Sales may be made through agents designated from time to time,
or through underwriters or brokers, or to dealers, also to be designated from
time to time on terms to be negotiated at the time of sale. Any such
underwriters, brokers or dealers may receive compensation in the form of
commissions, discounts or otherwise in such amounts as may be negotiated by
them. As of the date of this Prospectus, no agreements had been reached for the
sale of the shares or the amount of any compensation to be paid to underwriters,
brokers or dealers in connection herewith. Any shares covered by this Prospectus
that qualify for sale pursuant to Rule 144 under the Securities Act may be sold
under Rule 144 rather than pursuant to this Prospectus.

19
<PAGE>

All expenses of registration incurred in connection with this offering
are being borne by the Company, except all brokerage commissions and other
expenses, including transfer taxes, which will be borne by the Selling
Shareholder.

The Selling Shareholder (or his permitted successors and assigns) and
any dealer acting in connection with the offering or any broker executing a sell
order on behalf of the Selling Shareholder may be deemed to be an "underwriter"
within the meaning of the Securities Act, in which event any profit on the sale
of shares by the Selling Shareholder and any commissions or discounts received
by any such broker or dealer may be deemed to be underwriting compensation under
the Securities Act. In addition, any such broker or dealer may be required to
deliver a copy of this Prospectus to any person who purchases any of the shares
from or through such broker or dealer.

In order to comply with the securities laws of certain states, if
applicable, the shares will be sold only through registered or licensed brokers
or dealers.

LEGAL MATTERS

The validity of the Common Stock offered under this Prospectus has been
passed upon for the Company by Tomlinson Zisko Morosoli & Maser LLP, 200 Page
Mill Road, Second Floor, Palo Alto, California 94306.

EXPERTS

The consolidated financial statements and the related financial
statement schedules incorporated in this Prospectus by reference from the
Company's 1998 Annual Report on Form 10-K have been incorporated by reference
herein and in the registration statement in reliance upon the report of KPMG
LLP (formerly named KPMG Peat Marwick), independent auditors, upon the
authority of such firm as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

Oak Technology, Inc., a Delaware corporation, files with the SEC
annual, quarterly and special reports, proxy statements and other information
required by the Exchange Act of 1934. You may read and copy any document we file
at the SEC's public reference room located at 450 5th Street, N.W., Washington,
D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the
SEC's public reference rooms. Our SEC filings are also available to the public
from the SEC's web site at: HTTP://WWW.SEC.GOV or at our website at:
HTTP://WWW.OAKTECH.COM.

20
<PAGE>

The Company has filed with the SEC a Registration Statement on Form S-8
under the Securities Act, with respect to the shares of the Company's Common
Stock registered hereby. This Prospectus, which constitutes a part of that
Registration Statement, does not contain all the information contained in that
Registration Statement and its exhibits. For further information with respect to
Oak Technology and its shares of Common Stock, you should consult the
Registration Statement and its exhibits. Statements contained in this Prospectus
concerning the provisions of any documents are necessarily summaries of those
documents, and each statement is qualified in its entirety by reference to the
copy of the document filed with the SEC. The Registration Statement and any of
its amendments, including exhibits filed as a part of the Registration Statement
or an amendment to the Registration Statement, are available for inspection and
copying as described above.

The SEC allows the Company to "incorporate by reference" the
information we file with them, which means that we can disclose important
information to you by referring you to the other information we have filed with
the SEC. The information that we incorporate by reference is considered to be
part of this Prospectus, and information that we file later with the SEC will
automatically update and supersede this information.

The following documents filed by Oak with the SEC pursuant to Section
13 of the Exchange Act (File No. 000-25298) and any future filings under
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act made prior to the
termination of the offering are incorporated by reference:

(a) The Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1998 filed with the SEC on September 28, 1998
pursuant to Section 13 of the Exchange Act;

(b) The Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended September 30, 1998, December 31, 1998 and March
31, 1999 filed with the SEC on November 16, 1998, February 16,
1998 and May 17, 1999, respectively, pursuant to Section 13 of
the Exchange Act;

(c) The Company's Reports on Form 8-K filed with the SEC on July
30, 1998, November 25, 1998, December 16, 1998, March 3, 1999
and August 12, 1999, respectively, pursuant to Section 13 of
the Exchange Act;

(d) The Company's Registration Statement No. 000-25298 on Form 8-A
filed with the SEC on December 16, 1994, in which there is
described the terms, rights and provisions applicable to the
Company's Common Stock; and

21
<PAGE>

there is described the terms, rights and provisions applicable
to the Company's Preferred Stock Purchase Rights.

The Company will provide without charge to each person to whom a copy
of this Prospectus is delivered a copy of any or all documents incorporated by
reference into this Prospectus except the exhibits to such documents (unless
such exhibits are specifically incorporated by reference in such documents).
Requests for copies can be made by writing or telephoning us at our Investor
Relations Department, Oak Technology, Inc., 139 Kifer Court, Sunnyvale,
California 94086; telephone number: (408) 737-0888.

22
<PAGE>

PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3. Incorporation of Documents by Reference.

The following documents filed by the Company with the SEC pursuant to
Section 13 of the Exchange Act (File No. 000-25298) are incorporated herein by
reference:

(a) The Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1998 filed with the SEC on September 28, 1998
pursuant to Section 13 of the Exchange Act;

(e) The Company's Registration Statement No. 000-25298 on Form
8-A12G filed with the SEC on August 21, 1997, together with
Amendment No. 1 on Form 8-A12B/A filed with the SEC on
November 25, 1998, in which there is described the terms,
rights and provisions applicable to the Company's Preferred
Stock Purchase Rights.

All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the filing of a post-effective amendment indicating that all securities
offered hereby have been sold or deregistering all securities then remaining
unsold, shall be deemed to be incorporated by reference into this Prospectus and
to be a part hereof from the date of filing of such documents.

Item 4. Description of Securities.

Not applicable.

<PAGE>

Item 5. Interests of Named Experts and Counsel.

Not applicable.

Item 6. Indemnification of Directors and Officers.

Delaware law authorizes corporations to eliminate the personal
liability of directors to corporations and their stockholders for monetary
damages for breach of the directors' "duty of care." While the relevant statute
does not change directors' duty of care, it enables corporations to limit
available relief to equitable remedies such as injunction or rescission. The
statute has no effect on directors' duty of loyalty, acts or omissions not in
good faith or involving intentional misconduct or knowing violations of law,
illegal payment of dividends and approval of any transaction from which a
director derives an improper personal benefit. The Company has adopted
provisions in its Restated Certificate of Incorporation which eliminate the
personal liability of its directors to the Company and its stockholders for
monetary damages for breach or alleged breach of their duty of care. The
Restated Bylaws of the Company provide for indemnification of its directors,
officers, employees and agents to the full extent permitted by the General
Corporation Law of the State of Delaware, the Company's state of incorporation,
including those circumstances in which indemnification would otherwise be
discretionary under Delaware law. Section 145 of the General Corporation Law of
the State of Delaware provides for indemnification in terms sufficiently broad
to indemnify such individuals, under certain circumstances, for liabilities
(including reimbursement of expenses incurred) arising under the Securities Act.

In addition, the Company has entered into indemnification agreements
with its directors and certain officers that provide for the maximum
indemnification permitted by law.

For the undertaking with respect to indemnification, see Item 9 herein.

Item 7. Exemption from Registration Claimed.

With respect to the restricted securities consisting of 200,000 shares
of the Company's Common Stock reoffered or resold pursuant to this Registration
Statement, the Company claimed an exemption from registration under the
Securities Act pursuant to Section 4(2) thereof. Such restricted securities were
issued to the Selling Shareholder in connection with his commencement of
employment as the Chief Executive Officer and President of the Company.

II-2
<PAGE>

Item 8. Exhibits.

<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
- -------------- ----------------------
<S> <C>
4 Instruments defining the rights of the Company's
stockholders. Reference is made to the Company's
Registration Statement No. 000-25298 on Form 8-A,
together with the exhibits thereto, as amended by the
Company's Registration Statement No. 000-25298 on Form
8-A12G, together with Amendment No. 1 thereto on Form
8-A12B/A, and any amendments thereto, in which there are
described the terms, rights and provisions applicable to
the Company's capital stock, which are hereby
incorporated by reference herein.

5 Opinion and consent of Tomlinson, Zisko, Morosoli & Maser
LLP.

23.1 Consent of KPMG LLP.

23.2 Consent of Tomlinson, Zisko, Morosoli & Maser LLP
included in its opinion of counsel filed as Exhibit 5.

24 Reference is made to the Power of Attorney included on
the signature pages hereto.

99.1 Oak Technology, Inc. Executive Stock Option Plan.(1)

99.2 Non-Qualified Stock Option Agreement, dated February 22,
1999, under Oak Technology, Inc. Executive Stock Option
Plan.

99.3 Press Release dated July 28, 1999.
</TABLE>

(1) Incorporated herein by reference to Exhibit 10.31 of the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1999.

Item 9. Undertakings.

The undersigned Registrant hereby undertakes:

(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement:

II-3
<PAGE>

(i) to include any prospectus required by
Section 10(a)(3) of the Securities Act;

(ii) to reflect in the Prospectus any facts or events
arising after the effective date of this Registration
Statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in this Registration Statement.
Notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered), and any deviation
from the low or high end of the estimated maximum
offering range, may be reflected in the form of
prospectus filed with the Securities and Exchange
Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent
no more than a twenty percent (20%) change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective Registration Statement;

(iii) to include any material information with respect to
the plan of distribution not previously disclosed in
this Registration Statement or any material change to
such information in this Registration Statement;
provided, however, that the undertakings set forth in
paragraphs (i) and (ii) above do not apply if the
information required to be included in a
post-effective amendment by those paragraphs is
contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in
this Registration Statement.

(b) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.

(c) To remove from registration by means of a post-effective
amendment any of the securities being registered hereby which
remain unsold at the termination of the offering.

(d) That, for purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report
pursuant to Section 13(a) or 15(d) of the Exchange Act (and,
where applicable, each filing of an

II-4
<PAGE>

employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act), that is incorporated by
reference in this Registration Statement shall be deemed to
be a new Registration Statement relating to the securities
offered herein and the offering of such securities at that
time shall be deemed to be the initial bona fide offering
thereof.

(e) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the
provisions referred to in Item 6 of this Registration
Statement, or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in such
Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by
a director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered hereby, the
Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
such Act and will be governed by the final adjudication of
such issue.

II-5
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
registrant hereby certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Sunnyvale, State of California, on the 16th day
of August, 1999.

OAK TECHNOLOGY, INC.,
a Delaware corporation

By: /s/ Young K. Sohn
--------------------------------------
Young K. Sohn
Chief Executive Officer and President

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS that each person whose signature
appears below constitutes and appoints Robert O. Hersh, Shawn M. Soderberg and
Timothy Tomlinson, and each of them his or her true and lawful
attorneys-in-fact, each with full power of substitution, for him or her in any
and all capacities, to sign any amendments to this Registration Statement on
Form S-8 and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact or their
substitute or substitutes may do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated below.

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons and
on the dates indicated.

SIGNATURES:

Principal Executive Officer:

<TABLE>
<S> <C> <C>
/s/ Young K. Sohn Chief Executive Officer, August 16, 1999
- --------------------------- President and a Director
Young K. Sohn
</TABLE>

<PAGE>

SIGNATURES (continued):

Principal Financial and Accounting Officer:

<TABLE>
<S> <C> <C>
/s/ Robert O. Hersh Vice President and Chief Financial August 16, 1999
- --------------------------- Officer
Robert O. Hersh

Additional Directors:

/s/ David D. Tsang Chairman of the Board of August 16, 1999
- --------------------------- Directors and a Director
David D. Tsang

/s/ Richard B. Black Vice-Chairman of the Board of August 16, 1999
- ---------------------------- Directors and a Director
Richard B. Black

/s/ Ta-lin Hsu Director August 16, 1999
- -----------------------
Ta-lin Hsu

/s/ Timothy Tomlinson Director and Secretary August 16, 1999
- -----------------------
Timothy Tomlinson

Director
- -------------------------------
Albert Y.C. Yu
</TABLE>

<PAGE>

EXHIBIT LIST

<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
- -------------- ----------------------
<S> <C>
4 Instruments defining the rights of the Company's
stockholders. Reference is made to the Company's
Registration Statement No. 000-25298 on Form 8-A,
together with the exhibits thereto, as amended by
Company's Registration Statement No. 000-25298 on Form
8-A12G, together with Amendment No. 1 thereto on Form
8-A12B/A, and any amendments thereto, in which there are
the described terms, rights and provisions applicable to
the Company's capital stock, which are hereby
incorporated by reference herein.

5 Opinion and consent of Tomlinson, Zisko, Morosoli & Maser
LLP.

23.1 Consent of KPMG LLP.

23.2 Consent of Tomlinson, Zisko, Morosoli & Maser LLP
included in its opinion of counsel filed as Exhibit 5.

24 Reference is made to the Power of Attorney included on
the signature pages hereto.

99.1 Oak Technology, Inc. Executive Stock Option Plan.(1)

99.2 Non-Qualified Stock Option Agreement dated February 22,
1999, under Oak Technology, Inc. Executive Stock Option
Plan.

99.3 Press Release dated July 28, 1999.
</TABLE>

- -----------------------
(1) Incorporated herein by reference to Exhibit 10.31 of the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1999.

<PAGE>

EXHIBIT 5

Tomlinson Zisko Morosoli & Maser LLP
200 Page Mill Road, Second Floor
Palo Alto, California 94306

August 16, 1999

Oak Technology, Inc.
139 Kifer Court
Sunnyvale, California 94086

Re: Registration Statement on Form S-8

Ladies and Gentlemen:

We have examined the Registration Statement on Form S-8 to be filed
by you with the Securities and Exchange Commission on or about August 16,
1999 (the "Registration Statement"), in connection with the registration
under the Securities Act of 1933, as amended, of (i) 1,800,000 shares of
Common Stock under the Oak Technology, Inc. (the "Company") Executive Stock
Option Plan adopted by the Company's Board of Directors effective as of
January 27, 1999 (the "Plan"), and (ii) 200,000 shares of Common Stock
acquired pursuant to the exercise of stock options granted under the Plan
(collectively, the "Shares").

We have reviewed the Company's charter documents and the corporate
proceedings taken by the Company in connection with the authorization of Shares
under the Plan. Based on such review, we are of the opinion that if, as, and
when the Shares have been issued and sold (and the consideration therefore
received) in accordance with the provisions of the Plan and in accordance with
the Registration Statement, such Shares will be duly authorized, legally issued,
fully paid and non-assessable.

This opinion is rendered as of the date first written above and we
disclaim any obligation to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinion expressed herein. Our opinion is expressly
limited to the matters set forth above and we render no opinion, whether by
implication or otherwise, as to any other matters relating to the Company, the
Plan or the Shares.

<PAGE>

We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever appearing in the
Registration Statement and any amendment thereto.

Very truly yours,

/s/ Tomlinson Zisko Morosoli & Maser LLP

Tomlinson Zisko Morosoli & Maser LLP

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITORS

The Board of Directors
Oak Technology, Inc.:

We consent to incorporation herein by reference in the registration statement
on Form S-8 of Oak Technology, Inc. to be filed on or about August 16, 1999
of our report dated July 28, 1998, except as to Note 14, which is as of
August 12, 1998, relating to the consolidated balance sheets of Oak
Technology, Inc. and subsidiaries as of June 30, 1998 and 1997, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the years in the three-year period ended June 30, 1998 and
related financial statement schedule, which report appears in the September
28, 1998, annual report on Form 10-K of Oak Technology, Inc. We also consent
to the reference to our firm under the heading "Experts" in the registration
statement.

/s/ KPMG LLP

KPMG LLP

Mountain View, California
August 16, 1999

<PAGE>

EXHIBIT 99.2

OAK TECHNOLOGY, INC.

NON-QUALIFIED STOCK OPTION AGREEMENT
------------------------------------

THIS NON-QUALIFIED STOCK OPTION AGREEMENT (this "AGREEMENT") by and
between Oak Technology, Inc., a Delaware corporation (the "COMPANY"), and Young
Sohn (the "EMPLOYEE"), is made as of February 22, 1999 (such date being
sometimes referred to herein as the "DATE OF GRANT").

R E C I T A L S

A. The Company has adopted and implemented its Executive Stock Option
Plan (the "PLAN") permitting the grant of stock options to employees and
consultants of the Company or any Parent or Subsidiary (each as defined in the
Plan) of the Company, some of which are intended to be non-qualified stock
options in that they do not qualify as incentive stock options within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"CODE"), to purchase shares of the authorized but unissued Common Stock or
treasury shares of the Company, $0.001 par value ("COMMON STOCK").

B. The Board of Directors of the Company (the "BOARD") or the Committee
(as defined in the Plan) (subsequent references herein to the Board shall also
mean the Committee, if such Committee has been appointed) has authorized the
granting of a non-qualified stock option to Employee, thereby allowing Employee
to acquire an ownership interest (or increase his or her existing ownership
interest) in the Company. Unless otherwise defined in this Agreement or the
context otherwise requires, all capitalized terms used in this Agreement shall
have the respective meanings assigned to those terms in the Plan.

A G R E E M E N T

NOW, THEREFORE, in reliance on the foregoing Recitals and in
consideration of the mutual covenants hereinafter set forth, the parties hereby
agree as follows:

1. GRANT OF STOCK OPTION. The Company hereby grants to the Employee a
non-transferable and non-assignable option to purchase an aggregate of up to
2,000,000 shares of the Company's Common Stock at the exercise price of Three
Dollars ($3.00) per share, upon the terms and conditions set forth herein (such
purchase right being sometimes referred to herein as "the Option" or "this
Option").

2. TERM AND TYPE OF OPTION. Unless earlier terminated in accordance
with Sections 4 or 5.2 hereof, this Option and all rights of the Employee to
purchase Common Stock hereunder shall expire with respect to all of the shares
then subject to this Agreement at 5:00 p.m. Pacific time on February 21, 2009
(the "OPTION EXPIRATION DATE"). This Option is a non-qualified stock option in
that it is not intended to qualify as an incentive stock option within the
meaning of Section 422 of the Code. Accordingly, the Employee understands that
under current law he or she will recognize ordinary income for federal income
tax purposes upon exercise of this Option in an amount equal to the excess (if
any) of the Fair Market Value (as defined in the Plan) of the shares of Common
Stock so purchased over the exercise price paid for such shares.

3. EXERCISE SCHEDULE. Subject to the remaining provisions of this
Agreement, this Option shall be exercisable in full on and after the Date of
Grant and prior to the expiration of the Option term, provided that the Employee
agrees that the Company has the right to repurchase (the "REPURCHASE OPTION")
any shares acquired upon exercise of the Option which have not vested (the
"UNVESTED SHARES") pursuant to the terms of this Section 3. For each full month
of the Employee's continuous employment with the Company (or any Parent or
Subsidiary) after his employment commencement date, 1/48 of the shares subject
to the Option shall become vested; provided, however, that vesting of shares
subject to the Option shall accelerate to the extent provided in the Employment
Agreement between the Company and the Employee. In addition, the Company may
require the Employee to

<PAGE>

deposit the certificate(s) evidencing the Unvested Shares which are acquired
upon exercise of the Option with an agent designated by the Company under the
terms and conditions of an escrow agreement approved by the Company.

3.1 EXERCISE OF REPURCHASE OPTION. If the Employee's
employment with the Company is terminated for any reason or for no reason, with
or without cause, or if the Employee or the Employee's legal representative
attempts to dispose of any Unvested Shares other than as allowed in this
Agreement, the Company may exercise the Repurchase Option by written notice to
the Employee or the Employee's legal representative within sixty (60) days after
such termination or after the Company has received notice of the attempted
disposition.

3.2 PAYMENT FOR SHARES AND RETURN OF SHARES. The purchase
price for each Unvested Share being repurchased shall be an amount equal to the
Employee's original cost per share (as adjusted pursuant to Section 5). Payment
by the Company to the Employee or the Employee's legal representative shall be
made in cash within thirty (30) days after the date of the mailing of the
written notice of exercise of the Repurchase Option. For purposes of the
foregoing, cancellation of any promissory note of the Employee to the Company
shall be treated as payment to the Employee in cash to the extent of the unpaid
principal and any accrued interest canceled. The shares being repurchased shall
be delivered by the Employee to the Company at the same time as the delivery of
the repurchase price to the Employee.

3.3 TRANSFERS NOT SUBJECT TO THE REPURCHASE OPTION. The
Repurchase Option shall not apply to (1) a transfer to the Employee's ancestors,
descendants or spouse or to a trustee for their benefit or the benefit of the
Employee, provided that such transferee shall agree in writing (in a form
satisfactory to the Company) to take the stock subject to all the terms and
conditions of this Agreement, including this Section 3 providing for a
Repurchase Option, or (2) a Change in Control (provided that any securities or
property to which the Employee is entitled by reason of his ownership of the
Unvested Shares shall continue to be subject to the Repurchase Option).

3.4 LEGENDS. The Company may at any time place a legend or
legends referencing the Repurchase Option on any certificates evidencing
Unvested Shares.

3.5 ASSIGNMENT OF REPURCHASE OPTION. The Company shall have
the right to assign the Repurchase Option, at any time, whether or not such
option is then exercisable, to one or more persons as may be selected by the
Company.

4. RIGHTS ON TERMINATION OF EMPLOYMENT. Upon the termination
of the Employee's employment with the Company (or with any Parent or
Subsidiary of the Company), the Employee's right to exercise this Option
shall be limited in the manner set forth in this Section 4 (and this Option
shall terminate in the event not so exercised), provided that in any event,
the Option may not be exercised after the Option Expiration Date.

4.1 DEATH. If the Employee's employment is terminated by
death, the Employee's estate may, for a period of twelve (12) months following
the date of such termination, exercise the Option to the extent it was
exercisable by the Employee on the date of such termination. The Employee's
estate shall mean the Employee's legal representative upon death or any person
who acquires the right to exercise the Option by reason of such death in
accordance with Section 6.2.

4.2 RETIREMENT. If the Employee's employment is terminated by
voluntary retirement at or after reaching sixty-five (65) years of age, the
Employee may, within three (3) months following the date of such termination,
exercise the Option to the extent it was exercisable by the Employee on the date
of such termination unless the Employee dies prior thereto, in which event the
Employee shall be treated as though the Employee had died on the date of
retirement and the provisions of Section 4.1 above shall apply.

4.3 DISABILITY. If the Employee's employment is terminated
because of a Disability, the Employee may, within twelve (12) months following
the date of such termination, exercise the Option to the extent it was
exercisable by the Employee on the date of such termination unless the Employee
dies prior to the expiration of such period, in which event the Employee shall
be treated as though the Employee's death occurred on the date of termination
because of Disability and the provisions of Section 4.1 above shall apply.

<PAGE>

4.4 OTHER TERMINATION. If the Employee's employment is
terminated for any reason other than provided in Sections 4.1, 4.2 and 4.3
above, the Employee or the Employee's estate may, within three (3) months after
the date of the Employee's termination, exercise the Option to the extent it was
exercisable by the Employee on the date of such termination.

4.5 TRANSFER OF EMPLOYMENT TO RELATED CORPORATION. In the
event the Employee leaves the employ of the Company to become an employee of any
Parent or Subsidiary of the Company or if the Employee leaves the employ of any
such Parent or Subsidiary to become an employee of the Company or of another
Parent or Subsidiary, the Employee shall be deemed to continue as an employee of
the Company for all purposes of this Agreement for so long as employment with a
Parent or Subsidiary continues.

5. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR CHANGE OF
CONTROL.

5.1 STOCK SPLITS AND SIMILAR EVENTS. Appropriate adjustments
shall be made in the number and class of shares of capital stock subject to the
Option and in the exercise price of the Option in the event of a stock dividend,
stock split, reverse stock split, recapitalization, combination,
reclassification, or like change in the capital structure of the Company. In the
event a majority of the shares which are of the same class as the shares that
are subject to the Option are exchanged for, converted into, or otherwise become
shares of another corporation (the "NEW SHARES"), the Company may unilaterally
amend the Option to provide that the Option is exercisable for New Shares. In
the event of any such amendment, the number of shares subject to and the
exercise price of the Option shall be adjusted in a fair and equitable manner.

5.2 CHANGE OF CONTROL. In the event of a Change of Control (as
defined below), the surviving, continuing, successor, or purchasing corporation
or parent corporation thereof, as the case may be (the "ACQUIRING CORPORATION"),
shall either assume the Company's rights and obligations under outstanding
Options or substitute options for the Acquiring Corporation's stock for such
outstanding Options. Any Options which are neither assumed or substituted for by
the Acquiring Corporation in connection with the Change of Control nor exercised
as of the date of the Change of Control shall terminate and cease to be
outstanding effective as of the date of the Change of Control. A "CHANGE OF
CONTROL" shall be deemed to have occurred in the event any of the following
occurs with respect to the Company:

5.2.1 the direct or indirect sale or exchange by the
stockholders of the Company of all or substantially all of the stock of the
Company where the stockholders of the Company before such sale or exchange do
not retain, directly or indirectly, at least a majority of the beneficial
interest in the voting stock of the Company after such sale or exchange.

5.2.2 a merger or consolidation in which the Company is a
party where the stockholders of the Company before such merger or consolidation
do not retain, directly or indirectly, at least a majority of the beneficial
interest in the voting stock of the Company after such merger or consolidation.

5.2.3 the sale, exchange, or transfer of all or
substantially all of the assets of the Company other than a sale, exchange, or
transfer to one (1) or more subsidiaries of the Company.

5.2.4 a liquidation or dissolution of the Company.

5.3 BOARD'S DETERMINATION FINAL AND BINDING UPON EMPLOYEE. To
the extent that the foregoing adjustments in this Section 5 relate to stock or
securities of the Company, such adjustments shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. The
Company agrees to give notice of any such adjustment to the Employee; provided,
however, that any such adjustment shall be effective and binding for all
purposes hereof whether or not such notice is given or received.

<PAGE>

5.4 NO RIGHTS EXCEPT AS EXPRESSLY STATED. Except as
hereinabove expressly provided in this Section 5, no additional rights shall
accrue to the Employee by reason of any subdivision or combination of shares of
the capital stock of any class or the payment of any stock dividend or any other
increase or decrease in the number of shares of any class or by reason of any
dissolution, liquidation, merger or consolidation or spin-off of assets or of
stock of another corporation, and any issue by the Company of shares of stock of
any class or of securities convertible into shares of stock of any class shall
not affect, and no adjustment by reason thereof shall be made with respect to,
the number or exercise price of shares subject to the Option. Neither the
Employee nor any person claiming under or through the Employee shall be, or have
any of the rights or privileges of, a stockholder of the Company in respect of
any of the shares issuable upon the exercise of this Option, unless and until
this Option is properly and lawfully exercised and a certificate representing
the shares so purchased is duly issued and delivered to the Employee or to his
or her estate.

5.5 NO LIMITATIONS ON COMPANY'S DISCRETION. The grant of the
Option hereby shall not affect in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or changes of its capital
or business structure or to merge or consolidate or to dissolve, liquidate, sell
or transfer all or any part of its business or assets.

6. MANNER OF EXERCISE.

6.1 GENERAL INSTRUCTIONS FOR EXERCISE. The Option shall be
exercised by the Employee by completing, executing and delivering to the Company
a Notice of Exercise (the "NOTICE OF EXERCISE"), in substantially the form
attached hereto as Exhibit A, which Notice of Exercise shall specify the number
of shares of Common Stock which the Employee elects to purchase. The Company's
obligation to deliver shares upon the exercise of this Option shall be subject
to the Employee's satisfaction of all applicable federal, state, local and
foreign income and employment tax withholding requirements, if any. Upon receipt
of such Notice of Exercise and of payment of the purchase price (and payment of
applicable taxes as provided above), the Company shall, as soon as reasonably
possible and subject to all other provisions hereof, deliver certificates for
the shares of Common Stock so purchased, registered in the Employee's name or in
the name of his or her legal representative (if applicable). Payment of the
purchase price upon any exercise of the Option shall be made by check acceptable
to the Company or in cash; provided, however, that the Committee may, in its
sole and absolute discretion, accept any other legal consideration to the extent
permitted under applicable laws and the Plan including, without limitation,
consummation of an immediate sale proceeds transaction ("IMMEDIATE SALE
PROCEEDS"), which transaction may be executed (a) through a "same day sale"
commitment from the Employee and a broker-dealer that is a member of the
National Association of Securities Dealers (a "NASD DEALER") whereby the
Employee irrevocably elects to exercise the Option and to sell a portion of the
shares of Common Stock so purchased under the Option to pay for the aggregate
exercise price, and whereby the NASD Dealer irrevocably commits upon receipt of
such shares to forward the aggregate exercise price directly to the Company or
(b) through a "margin" commitment from the Employee and a NASD Dealer whereby
the Employee irrevocably elects to exercise the Option and to pledge the shares
of Common Stock so purchased to the NASD Dealer in a margin account as security
for a loan from the NASD Dealer in the amount of the aggregate exercise price,
and whereby the NASD Dealer irrevocably commits upon receipt of such shares to
forward the aggregate exercise price directly to the Company.

6.2 EXERCISE PROCEDURE AFTER DEATH. To the extent exercisable
after the Employee's death, this Option shall be exercised only by the
Employee's executor(s) or administrator(s) or the person or persons to whom this
Option is transferred under the Employee's will or, if the Employee shall fail
to make testamentary disposition of this Option, under the applicable laws of
descent and distribution. Any such transferee exercising this Option must
furnish the Company with (1) written Notice of Exercise and relevant information
as to his, her or its status, (2) evidence satisfactory to the Company to
establish the validity of the transfer of this Option and compliance with any
laws or regulations pertaining to said transfer, and (3) written acceptance of
the terms and conditions of this Option as contained in this Agreement.

7. NON-TRANSFERABLE. The Option shall, during the lifetime of
the Employee, be exercisable only by the Employee (or the Employee's guardian
or legal representative) and shall not be transferable or assignable by the
Employee in whole or in part other than by will or the laws of descent and
distribution. If the Employee shall make

<PAGE>

any such purported transfer or assignment of the Option, such assignment
shall be null and void and of no force or effect whatsoever.

8. COMPLIANCE WITH SECURITIES AND OTHER LAWS. The Option may not
be exercised and the Company shall not be obligated to deliver any
certificates evidencing shares of Common Stock hereunder if the issuance of
shares upon such exercise would constitute a violation of any applicable
requirements of: (i) the Securities Act of 1933, as amended, (ii) the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), (iii)
applicable state or foreign securities laws, (iv) any applicable listing
requirement of any stock exchange on which the Company's Common Stock is then
listed, and (v) any other law or regulation applicable to the issuance of
such shares. Nothing herein shall be construed to require the Company to
register or qualify any securities under applicable federal, state or foreign
securities laws, or take any action to secure an exemption from such
registration and qualification for the issuance of any securities upon the
exercise of the Option. To the extent deemed necessary by the Company's
counsel, shares of Common Stock issued upon exercise of this Option shall
include such legends as in the opinion of the Company's counsel may be
required by applicable federal, state and foreign securities laws.

9. NO RIGHT TO CONTINUED EMPLOYMENT. Nothing contained in this
Agreement shall: (i) confer upon the Employee any right with respect to the
continuance of employment by the Company, or by any Parent or Subsidiary of
the Company, or (ii) limit in any way the right of the Company, or of any
Parent or Subsidiary, to terminate the Employee's employment at any time.
Except to the extent the Company and Employee shall have otherwise agreed in
writing, Employee's employment shall be terminable by the Company (or by a
Parent or Subsidiary, if applicable) at will. The Board in its sole
discretion shall determine whether any leave of absence or interruption in
service (including an interruption during military service) shall be deemed a
termination of employment for the purposes of this Agreement.

10. OPTION SUBJECT TO TERMS OF PLAN. In addition to the provisions
hereof, this Agreement and the Option are governed by, and subject to the
terms and conditions of, the Plan. The Employee acknowledges receipt of a
copy of the Plan (a copy of which is attached hereto as Exhibit B). The
Employee represents that he or she is familiar with the terms and conditions
of the Plan, and hereby accepts the Option subject to all of the terms and
conditions thereof, which terms and conditions shall control to the extent
inconsistent in any respect with the provisions of this Agreement. The
Employee hereby agrees to accept as binding, conclusive and final all
decisions and interpretations of the Board as to any questions arising under
the Plan or under this Agreement.

11. INTENT TO COMPLY WITH SEC RULE 16b-3. With respect to Insiders,
transactions under this Agreement are intended to comply with all applicable
conditions of SEC Rule 16b-3 or its successors under the Exchange Act. To the
extent any provision of this Agreement or any action by the Board fails to so
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Board. Moreover, in the event this Agreement does not
include a provision required by Rule 16b-3 to be stated herein, such
provision shall be deemed automatically to be incorporated by reference into
this Agreement insofar as Insiders are concerned.

12. NOTICES. All notices and other communications of any kind which
either party to this Agreement may be required or may desire to serve on the
other party hereto in connection with this Agreement shall be in writing and
may be delivered by personal service or by registered or certified mail,
return receipt requested, deposited in the United States mail with postage
thereon fully prepaid, addressed to the other party at the addresses
indicated on the signature page hereof or as otherwise provided below.
Service of any such notice or other communication so made by mail shall be
deemed complete on the date of actual delivery as shown by the addressee's
registry or certification receipt or at the expiration of the third (3rd)
business day after the date of mailing, whichever is earlier in time. Either
party may from time to time, by notice in writing served upon the other as
aforesaid, designate a different mailing address or a different person to
which such notices or other communications are thereafter to be addressed or
delivered.

13. FURTHER ASSURANCES. The Employee shall, upon request of the
Company, take all actions and execute all documents requested by the Company
which the Company deems to be reasonably necessary to effectuate the terms
and intent of this Agreement and, when required or permitted by any provision
of this Agreement to transfer all or any portion of the Common Stock
purchased hereunder to the Company (and its assignees), the Employee shall
deliver such Common Stock endorsed in blank or accompanied by Stock

<PAGE>

Assignments Separate from Certificate endorsed in blank, so that title
thereto will pass by delivery alone. Any sale or transfer by the Employee of
the Common Stock to the Company (and its assignees) shall be made free of any
and all claims, encumbrances, liens and restrictions of every kind, other
than those imposed by this Agreement.

14. SUCCESSORS. Except to the extent the same is specifically
limited by the terms and provisions of this Agreement, this Agreement is
binding upon the Employee and the Employee's successors, heirs and personal
representatives, and upon the Company, its successors and assigns.

15. TERMINATION OR AMENDMENT. Subject to the terms and conditions
of the Plan, the Board may terminate or amend the Plan and/or the Option at
any time; provided, however, that no such termination or amendment may
adversely affect the Option or any unexercised portion hereof without the
consent of the Employee.

16. INTEGRATED AGREEMENT. This Agreement, the Plan and the
Employment Agreement between the Company and the Employee constitute the
entire understanding and agreement of the Employee and the Company with
respect to the subject matter contained herein, and there are no agreements,
understandings, restrictions, representations, or warranties between the
Employee and the Company other than those set forth or provided for herein.
To the extent contemplated herein, the provisions of this Agreement shall
survive any exercise of the Option and shall remain in full force and effect.

17. OTHER MISCELLANEOUS TERMS. Titles and captions contained in
this Agreement are inserted only as a matter of convenience and for
reference, and in no way define, limit, extend or describe the scope of this
Agreement or the intent of any provision hereof. This Agreement shall be
governed by and construed in accordance with the laws of the State of
California, irrespective of its choice of law principles.

18. INDEPENDENT TAX ADVICE. The Employee agrees that he or she has
obtained or will obtain the advice of independent tax counsel (or has
determined not to obtain such advice, having had adequate opportunity to do
so) regarding the federal, state and/or foreign income tax consequences of
the receipt and exercise of the Option and of the disposition of Common Stock
acquired upon exercise hereof. The Employee acknowledges that he or she has
not relied and will not rely upon any advice or representation by the Company
or by its employees or representatives with respect to the tax treatment of
the Option.

<PAGE>

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

COMPANY: EMPLOYEE:

OAK TECHNOLOGY, INC.
a Delaware Corporation

/s/ Shawn M. Soderberg /s/ Young K. Sohn
- ----------------------- ------------------------------
Signature Signature

By: Shawn M. Soderberg Name Printed: Young K. Sohn
----------------
Its: Vice President, General Counsel
and Corporate Secretary Address:
----------------------
Address: 139 Kifer Court
Sunnyvale, CA 94086 ------------------------------
U.S.A.

<PAGE>

SCHEDULE OF EXHIBITS
--------------------

EXHIBIT A: Form of Notice of Exercise for Oak Technology, Inc.
Employee Non-Qualified Stock Option Agreement

EXHIBIT B: Executive Stock Option Plan

<PAGE>

EXHIBIT 99.3

PRESS RELEASE

EDITORIAL CONTACTS: INVESTOR RELATIONS:
Jonathan Bloom Robert Hersh
McGrath/Power Public Relations Oak Technology
(408) 727-0351 x-313 (408) 328-6899
[email protected]

OAK TECHNOLOGY REPORTS FOURTH QUARTER
AND FISCAL YEAR 1999 RESULTS

SUNNYVALE, Calif., July 28, 1999 -- Oak Technology, Inc. (NASDAQ:OAKT), a
provider of enabling technology to the optical storage, digital office equipment
and consumer electronics markets, today reported results for the fourth quarter
of 1999 and fiscal year ending June 30, 1999. Net sales during the fourth
quarter were $13.3 million, compared to $28.9 million for the fiscal 1998 fourth
quarter. Net loss and loss per diluted share for the quarter were $15.8 million
and $0.39 respectively, compared to a net loss of $4.8 million and loss per
diluted share of $0.12 reported for the fourth quarter of fiscal 1998.

Results for the fourth quarter of fiscal year 1999 included a $2.8
million loss provision (included in cost of goods sold) related to a foundry
agreement with one of the Company's suppliers.

For the 12 months ended June 30, 1999, net sales totaled $71.1 million
as compared to sales of $157.1 million in the prior year. The Company reported a
net loss of $50.7 million for fiscal year 1999, compared to net income of $5.9
million in the previous year. The net loss per diluted share in fiscal 1999 was
$1.24 compared with net income per diluted share of $0.14 in fiscal 1998. The
Company's year ending cash position was at $133.2 million.

Oak's Board of Directors today approved a stock repurchase plan
authorizing the purchase of up to four million shares of Oak Technology
Common Stock. Repurchases will be made from time to time in open market or
privately negotiated transactions over one year, unless further extended by
the Board. The plan authorizes, but does not require, Oak to purchase all
four million shares.

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<PAGE>

Commenting on the results, Oak's president and chief executive officer
Young Sohn stated,

"This has been a challenging year, as is reflected in our net sales and
operating results for both the fiscal year and the recent quarter. When
I joined Oak in March, I was chartered with returning the Company to
profitability and redefining its long-term business strategy. With a
new management team in place, we are now working on a strategic roadmap
that we believe will position the Company for both profitability and
sustained revenue growth."

FOURTH QUARTER BUSINESS REVIEW

OPTICAL STORAGE GROUP -- Since the introduction of the first CD-ROM controller,
Oak's optical storage products have been the choice of top-tier OEM customers
worldwide. To date, Oak has shipped over 125 million optical storage controllers
and its products are in more than 50% of the optical drive worldwide installed
base.

With Oak's next generation optical storage products, the Company is
targeting the CD-Recordable / Rewritable (CD-RW) marketplace. This market is
fueled by strong retail sales with growth being generated by the adoption of
CD-RW drives by major PC OEMs. These advanced optical solutions from Oak enable
the next generation of audio recording applications that include both standard
home recordings of CDs and the creation of custom audio CDs derived from MP3
files downloaded from the Internet.

IMAGING GROUP -- Oak Technology, through its Pixel Magic brand, is a
leading provider of advanced compression and image processors and technology for
the connected office. Oak is a key technology partner to the world's premier
digital office equipment OEMs. Oak's systems expertise and industry-leading
compression engines, imaging DSPs and resolution enhancement processors help
drive the performance capabilities of today's most advanced digital copiers,
printers, fax machines, scanners and multifunction peripherals. Oak's Pixel
Magic imaging processors provide its OEM customers with state-of-the-art
features including full speed 2x rendering (1200dpi), edge enhancement, color
capability and multi-bit printing for photo-realistic images and clean, crisp
text and line art.

THE FOREGOING STATEMENTS CONTAIN FORWARD-LOOKING STATEMENTS MADE
PURSUANT TO THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995. FACTORS THAT COULD CAUSE ACTUAL OUTCOME TO DIFFER MATERIALLY
FROM THOSE SET FORTH INCLUDE, WITHOUT LIMITATION, MARKET CONDITIONS IN THE
PERSONAL COMPUTER AND SEMICONDUCTOR INDUSTRIES, THE DEGREE OF COMPETITIVENESS OF
THE COMPANY'S CUSTOMERS, THE RATE OF ADOPTION OF NEW TECHNOLOGY, THE RATE AT
WHICH THE PC INDUSTRY MOVES TO CD-RW AND DVD DRIVES, AND THE COMPANY'S
CUSTOMERS' PERCEPTIONS THEREOF, PRODUCT DEVELOPMENT SCHEDULES, THE COMPANY'S
ABILITY TO CONTROL EXPENSES, AND OTHER RISKS THAT ARE CONTAINED IN DOCUMENTS
WHICH THE COMPANY FILES WITH THE SECURITIES AND EXCHANGE COMMISSION. FOR A
DISCUSSION OF SUCH RISKS, SEE THE COMPANY'S MOST RECENT SEC FORM 10-K AND 10-Q.

- more -

<PAGE>

ABOUT OAK TECHNOLOGY

Founded in 1987, Oak Technology, Inc. designs, develops, and markets
high-performance semiconductors and related software to original equipment
manufacturers worldwide who serve the optical storage, consumer electronics and
digital office equipment markets. Oak has subsidiaries in Japan (Oak Technology
K.K.); Taiwan (Oak Technology, Taiwan); Andover, Mass. (Oak's Imaging Group);
Bristol, U.K. (Oak Technology Ltd.); and Munich, Germany (Oak Technology GmbH).
The Company completed its initial public offering in February 1995. Additional
information about Oak Technology and its products can be found on the World Wide
Web at www.oaktech.com.

###

Oak Technology and the Oak logo are registered trademarks of Oak Technology,
Inc. All other registered trademarks and trademarks are mentioned for
identification purposes only and may belong to their respective holders.

<PAGE>

OAK TECHNOLOGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
(Unaudited)
THREE MONTHS ENDED FISCAL YEAR ENDED
JUNE 30, JUNE 30,
--------------------- ---------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net revenues $ 13,258 $ 28,910 $ 71,051 $157,106
Cost of revenues 9,004 17,426 39,619 82,558
-------- -------- -------- --------
Gross profit 4,254 11,484 31,432 74,548

Research and development expenses 13,382 14,257 51,229 49,658
Selling, general, and administrative expenses 8,292 7,936 35,110 30,905
Restructuring charges -- -- -- 1,766
Acquired in-process technology -- 1,323 7,161 1,323
-------- -------- -------- --------
Operating income (loss) (17,420) (12,032) (62,068) (9,104)

Nonoperating income 1,205 4,041 5,532 16,101
-------- -------- -------- --------
Income (loss) before income taxes (16,215) (7,991) (56,536) 6,997

Income tax expense (benefit) (432) (3,147) (5,836) 1,050
-------- -------- -------- --------
Net income (loss) $(15,783) $ (4,844) $(50,700) $ 5,947
-------- -------- -------- --------
-------- -------- -------- --------

Net income (loss) per share:
Basic $ (0.39) $ (0.12) $ (1.24) $ 0.14
-------- -------- -------- --------
-------- -------- -------- --------
Diluted $ (0.39) $ (0.12) $ (1.24) $ 0.14
-------- -------- -------- --------
-------- -------- -------- --------

Shares used in computing net income (loss) per share:
Basic 40,902 41,532 40,819 41,739
-------- -------- -------- --------
-------- -------- -------- --------
Diluted 40,902 41,532 40,819 42,493
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>

<PAGE>

OAK TECHNOLOGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

<TABLE>
<CAPTION>
(Unaudited)
JUNE 30, JUNE 30,
1999 1998
-------- --------
<S> <C> <C>
ASSETS

Current assets:

Cash and investments $133,203 $117,225
Accounts receivable, net 8,251 17,605
Inventories 1,819 7,558
Foundry deposits, current 9,061 2,944
Prepaid expenses and other current assets 10,958 16,323
-------- --------
Total current assets 163,292 161,655

Property and equipment, net 21,961 25,114
Foundry deposits 7,760 18,231
Investment in foundry venture -- 51,216
Other assets 10,586 5,195
-------- --------
Total assets $203,599 $261,411
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Notes payable and current portion of long-term debt $ 25 $ 2,625
Accounts payable 3,648 6,236
Other accrued liabilities 8,636 8,480
-------- --------
Total current liabilities 12,309 17,341

Long-term liabilities 1,899 2,862
-------- --------
Total liabilities 14,208 20,203
-------- --------
Stockholders' equity:

Common stock 155,389 156,506
Retained earnings 34,002 84,702
-------- --------
Total stockholders' equity 189,391 241,208
-------- --------
Total liabilities and stockholders' equity $203,599 $261,411
-------- --------
-------- --------
</TABLE>