Exhibit 10.65

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

AMENDMENT NUMBER FIVE

TO

WAFER SUPPLY AGREEMENT

This Amendment Number Five (the “Amendment”), effective as of December 1, 2009
(the “Amendment Effective Date”), amends the Wafer Supply Agreement effective as
of May 23, 2003 (as previously amended) (the “Agreement”), by and between X-FAB
Dresden GmbH & Co. KG (successor in interest to ZMD Analog Mixed Signal Services
GmbH & CoKG) a German corporation (the “Company”) and Power Integrations
International, Ltd. (“PI”) a Cayman Islands corporation having its principal
place of business at 4th Floor, Century Yard, Cricket Square, Elgin Avenue, P.O.
Box 32322, Grand Cayman KY 1-1209. Unless specifically designated otherwise,
capitalized terms used herein shall have the same meanings given them in the
Agreement.

RECITALS

WHEREAS, pursuant to the terms of the Agreement, PI grants to Company licenses
of certain of PI’s intellectual property for the sole purpose of PI acquiring
from Company the fabrication and supply of wafers of certain power IC products;
and

WHEREAS, PI and Company desire to amend the terms of the Agreement; and

WHEREAS, in accordance with Section 18.10 of the Agreement, the Agreement may be
amended only by an instrument in writing duly executed by authorized officers of
Company and PI.

NOW, THEREFORE, in consideration of the mutual promises contained herein and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereby amend the Agreement as follows:

AGREEMENT

 

1. Section 2.3 of the Agreement is deleted in its entirety and replaced with the
following:

PI must order at least the quantity of WAFERS by WAFER TYPE forecasted in [*]
months of the PI MONTHLY FORECAST unless SUPPLIER agrees to any change.

 

2. The following Section 2.4 is added to the Agreement:

The PI MONTHLY FORECAST will be either [*] whole weeks for each forecasted month
so as to align with SUPPLIER’s manufacturing calendar. The PI MONTHLY FORECAST
will be (a) no less than [*] WAFERS per week during the [*] of calendar year
2010 and no less than [*] WAFERS per week during the [*] of calendar year 2010
(the total annual amount of WAFERS, the “2010 Wafer Commitment”) and (b) no more
than the FOUNDRY CAPACITY (i.e., the CURRENT FOUNDRY CAPACITY or INCREASED
FOUNDRY CAPACITY, as applicable in accordance with Exhibit A).

Confidential

1 .

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Notwithstanding the foregoing, to the extent SUPPLIER is unable to fulfill any
PO from PI because of quality or any other issues (“Unfulfilled Wafers”), then
(a) PI will have no obligation to purchase the Unfulfilled Wafers, and (b) the
number of Unfulfilled Wafers will count towards PI’s satisfaction of the 2010
Wafer Commitment (i.e., the 2010 Wafer Commitment will be decreased by the
number of Unfulfilled Wafers).

Both parties agree to negotiate in good faith any changes in the terms, for
calendar years after 2010, regarding the PI MONTHLY FORECAST and the FOUNDRY
CAPACITY, at least [*] ([*]) months prior to any such changes becoming
effective.

 

3. Section 13.1 of the Agreement is deleted in its entirety and replaced with
the following:

This Agreement shall continue in full force and effect from the Effective Date
until December 31, 2012, unless earlier terminated as provided herein (“Term”).

 

4. The Agreement covers PI’s acquisition of wafer fabrication and supply
services from SUPPLIER based on [*] inch ([*]”) WAFERS. It is recognized by the
parties that the Wafer Supply Agreement amended by this Amendment number five
shall not apply to the development and manufacture of [*] inch ([*]) WAFERS. The
parties agree to negotiate in good faith regarding PI’s potential acquisition of
additional WAFER fabrication and supply services for [*] inch ([*]”) WAFERS from
SUPPLIER under a new and separate Wafer Supply Agreement as early as agreeable
but no later than [*] ([*] Wafer Supply Agreement”). If, in the process of
negotiating the [*] Wafer Supply Agreement, both parties agree that
subordination of or modifications to the Agreement are required, then such
subordination or modifications to the Agreement will be negotiated in good
faith.

 

5. [*] Machine

a. SUPPLIER has purchased (1) the following manufacturing equipment defined
below, which is an [*] machine (“[*]”): [*] Machine / Model: [*]; and
(2) installation of the [*] and fitting for [*].

b. SUPPLIER will own the [*] and, except as set forth above, will be responsible
for full installation, connection to existing equipment, testing and
qualification of the [*] at SUPPLIER’s facility. Qualification will be in
accordance with a qualification plan mutually agreed upon in writing between
SUPPLIER and PI. Qualification shall not be complete until the date PI
reasonably agrees in writing that the foregoing qualification plan has been met.

c. SUPPLIER shall keep the [*] in operating condition and available for VOLUME
PRODUCTION during the Term of this Agreement. SUPPLIER shall be responsible for
the maintenance and operation of the [*]. SUPPLIER will pay for all repairs of
the [*]. Any repairs should be completed in reasonable time provided, however,
that if a repair cannot be completed within [*] ([*]) calendar days from
discovery of the need for such repair, then SUPPLIER shall give immediate
written notice to PI describing (1) the problem preventing repair in such [*]
([*]) day period, and (2) a firm schedule for completing the repair.

 

Confidential

2.

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

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d. SUPPLIER shall not modify the [*] without the prior written approval of PI.
SUPPLIER will pay for any modifications of the [*]. PI shall determine whether
the approved modification requires re-qualification of the [*]. SUPPLIER agrees
to re-qualify the [*] if so determined in accordance with a mutually agreed-to,
written qualification plan. Such re-qualification will be at SUPPLIER’s expense.

e. Without PI’s prior written consent, SUPPLIER shall not (a) move or relocate
the [*], (b) lend or transfer it to any third party, or (c) encumber the [*]
with any lien or other security interest, except for the terms and conditions of
any grant by the German government.

f. The [*] will be used for manufacturing WAFERS for PI, and for PI research and
development activities. The [*] will not be used for the benefit of competitors
of PI. SUPPLIER will obtain prior written consent of PI for the use of the [*]
for third parties. Such consent will not unreasonably be withheld. The operation
of the [*] for any other use is permitted as long as delivery and FOUNDRY
CAPACITY commitments by SUPPLIER to PI are met.

g. SUPPLIER will maintain, at its sole cost and expense, the same types and
amounts of insurance for the [*] as SUPPLIER maintains for its other similar
equipment at SUPPLIER’s facility. A Certificate of Insurance indicating such
coverage shall be delivered to PI upon request. The Certificate shall indicate
that the policy will not be changed or terminated without at least [*] ([*])
days’ prior notice to PI, shall name PI as an additional named insured and shall
also indicate that the insurer has waived its subrogation rights against PI.

h. SUPPLIER hereby grants a security interest in the [*] furnished hereunder and
the proceeds therefrom, to secure full re-payment of the [*] COST to PI in
accordance with this Agreement. SUPPLIER agrees to execute any financing
statements or other documents PI requests to protect its security interest.

i. The requirements of Sections 5(d), (e), (f), (g), and (h) will expire upon
the earlier of the date that SUPPLIER delivers and PI accepts the Rebate Number
of Wafers (defined below) or upon the date that PI is paid the total amount set
forth in Section 5(k).

j. For the [*] costs, PI will pay SUPPLIER [*] U.S. dollars (U.S. $[*]) (“[*]
Cost”) (i.e., U.S. $[*] for the [*] and U.S. $[*] for installation and fitting),
provided that SUPPLIER will pay PI back for the [*] Cost in the form of [*] U.S.
dollars (U.S. $[*]) discounts per wafer after the Rebate Milestone Date until
SUPPLIER delivers and PI accepts [*] ([*]) WAFERS (“Rebate Number of Wafers”)
(i.e., U.S. $[*] x [*] = U.S. $[*]). The “Rebate Milestone Date” means the date
on which the [*] is qualified for production by PI. Upon PI’s receipt of written
confirmation of the [*] order, PI will pay SUPPLIER the [*] Cost in accordance
with the [*] purchase order payment timeframes.

 

Confidential

3.

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

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k. If this Agreement is terminated in accordance with Article 13 (“Term and
Termination”) of the Agreement before SUPPLIER delivers and PI accepts the
Rebate Number of Wafers the SUPPLIER shall immediately pay PI the following
amount:

(a) The difference of (i) the [*] minus (ii) the [*] under this Agreement after
the Rebate Milestone Date, times (b) [*] U.S. dollars (U.S. $[*]). For example,
but without limitation, if PI has accepted [*] WAFERS between the Rebate
Milestone Date and the termination date, then SUPPLIER shall pay PI ([*] – [*])
x ($[*]) = $[*].

If this Agreement expires before SUPPLIER delivers and PI accepts the Rebate
Number of Wafers, SUPPLIER will have no obligation to pay PI any funds under
this Section 5(k), provided the quantity of WAFERS delivered by SUPPLIER was not
materially adversely affected by SUPPLIER’S quality, production, or delivery
problems.

 

6. Exhibit A to the Agreement is deleted in its entirety and replaced with
Exhibit A attached hereto.

 

7. Exhibit B to the Agreement is deleted in its entirety and replaced with
Exhibit B attached hereto. Exhibit B attached hereto shall apply to all POs
submitted by PI on or after the Amendment Effective Date.

 

8. Effective as of the Amendment Effective Date, all references in the Agreement
to the “Agreement” or “this Agreement” shall mean the Agreement as amended by
this Amendment. Except as expressly amended herein, the terms of the Agreement
continue unchanged and shall remain in full force and effect. This Amendment may
be executed in one or more counterparts, each of which shall be considered an
original, but all of which counterparts together shall constitute one and the
same instrument.

IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by
their duly authorized representatives, effective as of the Amendment Effective
Date.

 

X-FAB DRESDEN GMBH & CO. KG     POWER INTEGRATIONS INTERNATIONAL, LTD. By:  

/s/ Chris Forster

    By:  

/s/ John Tomlin

Name:  

Chris Forster

    Name:  

John Tomlin

Title:  

Chief Financial Officer

    Title:  

President

By:  

/s/ TH Hariung

      Name:  

TH Hariung

      Title:  

Vice President, Marketing & Sales

     

 

Confidential

4.

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

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Exhibit A

SUPPLIER FOUNDRY CAPACITY AND PI ANNUAL FORECAST

1. SUPPLIER FOUNDRY CAPACITY

a. The following FOUNDRY CAPACITY of [*] WAFERS per week will be committed
effective from [*] through [*] (the “CURRENT FOUNDRY CAPACITY”). The committed
FOUNDRY CAPACITY will change to [*] WAFERS per week effective from [*] onwards.
The FOUNDRY CAPACITY will be increased to the INCREASED FOUNDRY CAPACITY
(defined below). PI may request and SUPPLIER may approve an increase in the
monthly CURRENT FOUNDRY CAPACITY in addition to the limits above via the PI
MONTHLY FORECAST. Notwithstanding anything to the contrary in Section 2.1 of the
Agreement, in no event will the FOUNDRY CAPACITY exceed the CURRENT FOUNDRY
CAPACITY or INCREASED FOUNDRY CAPACITY (as applicable) unless the parties agree
otherwise in writing.

b. The parties hereby agree to use commercially reasonable efforts to increase
the FOUNDRY CAPACITY up to [*] WAFERS per week or the actual increase in FOUNDRY
CAPACITY finally achieved, (the “INCREASED FOUNDRY CAPACITY”) on or before the
end of [*], and in any event as early as possible, in accordance with this
Section. Such efforts will include purchase, installation, qualification and
implementation of a new [*] machine, as well as analysis and elimination of
other potential equipment-based limits to FOUNDRY CAPACITY. SUPPLIER will
promptly notify PI in writing when the INCREASED FOUNDRY CAPACITY is available.

c. SUPPLIER will take all reasonable measures, including without limitation
those described in this Exhibit A, to expand its FOUNDRY CAPACITY to the
INCREASED FOUNDRY CAPACITY, BUT SUPPLIER DOES NOT WARRANT, NEITHER IMPLIED NOR
EXPRESSLY, THAT SUCH MEASURES WILL BE SUCCESSFUL AND LEAD TO THE INCREASED
FOUNDRY CAPACITY.

d. If the parties enter into an [*] Wafer Supply Agreement, the parties will
re-negotiate in good faith the FOUNDRY CAPACITY for [*] WAFERS that would be
replaced by [*] wafers.

2. PI’s projected PI ANNUAL FORECAST of WAFER orders

The table below summarizes the PI ANNUAL FORECAST for the next three years.
Except for the 2010 Wafer Commitment, the PI ANNUAL FORECAST are non-binding
estimates. Estimated volume for calendar year 2010 is comprised of the 2010
Wafer Commitment, and some number of WAFERS above the 2010 Wafer Commitment,
dependent upon the PI MONTHLY FORECAST and the availability of the INCREASED
FOUNDRY CAPACITY.

 

SUPPLIER (FY)

  

2009

 

2010

 

2011

 

2012

WAFERS    [*]   [*]
(inclusive of [*]

2010 Wafer

Commitment)

  [*]   [*]

 

Confidential

5.

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

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Exhibit B

PRICES

[*] Inch DC/DS PROCESS WAFER

Price:   [*] layers   less than [*]   $[*]     [*]-[*]   $[*]     [*]-[*]   $[*]
    [*]-[*]   $[*]     [*]   $[*] Pricing is [*].      

Delivery times:

   

[*]

  DC PROCESS   ENGINEERING WAFER   Price:  

Std. and non-std. run

  $[*]  

Hot run

  $[*]  

Minimum wafer lot size

  [*] wafers Delivery times:        

Standard run

  [*]  

Hot run

  [*]  

Non-Standard run

  [*]  

MASK TOOLING SET

  Price:  

[*] mask set

   

([*] [*] masks)

   

([*] [*] masks)

  $[*]  

Individual masks

   

[*] mask $[*]

   

[*] mask $[*]

  Vendors:  

[*]

 

THE ABOVE PRICES ARE FOR [*]. ALL PRICES ABOVE FOR [*] WILL BE NEGOTIATED IN THE
[*] OF THE [*] BEGINNING IN [*] AND PAID IN US DOLLARS. IF THE PARTIES ARE
UNABLE TO AGREE ON PRICING FOR [*] PRIOR TO THE [*] OF THE [*], THEN THE PRICING
FROM THE [*] WILL APPLY FOR SUCH [*].

 

Confidential

6.

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.