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Exhibit 10.5

INTEGRATED TELECOM EXPRESS, INC.

2001 DIRECTOR OPTION PLAN

    1.  Purposes of the Plan.  The purposes of this 2001 Director Option Plan
are to attract and retain the best available personnel for service as Outside
Directors (as defined herein) of the Company, to provide additional incentive to
the Outside Directors of the Company to serve as Directors, and to encourage
their continued service on the Board.

    All options granted hereunder shall be nonstatutory stock options.

    2.  Definitions.  As used herein, the following definitions shall apply:

    (a) "Board" means the Board of Directors of the Company.

    (b) "Change of Control" shall mean any merger, acquisition, combination,
restructuring and/or reorganization of the Company (other than an offering of
Shares on the open market) in which the stockholders of record of the Company
(as a group) immediately prior to the close of such transaction do not, as of
the close of such transaction, hold more than 50% of the then outstanding Shares
of the Company (and/or the corporate entity resulting from such transaction).

    (c) "Code" means the Internal Revenue Code of 1986, as amended.

    (d) "Common Stock" means the common stock of the Company.

    (e) "Company" means Integrated Telecom Express, Inc., a Delaware
corporation.

    (f)  "Director" means a member of the Board.

    (g) "Disability" means total and permanent disability as defined in
section 22(e)(3) of the Code.

    (h) "Employee" means any person, including officers and Directors, employed
by the Company or any Parent or Subsidiary of the Company. The payment of a
Director's fee by the Company shall not be sufficient in and of itself to
constitute "employment" by the Company.

    (i)  "Exchange Act" means the Securities Exchange Act of 1934, as amended.

    (j)  "Fair Market Value" means, as of any date, the value of Common Stock
determined as follows:

    (i)  If the Common Stock is listed on any established stock exchange or a
national market system, including without limitation the Nasdaq National Market
or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value
shall be the closing sales price for such stock (or the closing bid, if no sales
were reported) as quoted on such exchange or system for the last market trading
day prior to the time of determination as reported in The Wall Street Journal or
such other source as the Board deems reliable;

    (ii) If the Common Stock is regularly quoted by a recognized securities
dealer but selling prices are not reported, the Fair Market Value of a Share of
Common Stock shall be the mean between the high bid and low asked prices for the
Common Stock for the last market trading day prior to the time of determination,
as reported in The Wall Street Journal or such other source as the Board deems
reliable; or

    (iii) In the absence of an established market for the Common Stock, the Fair
Market Value thereof shall be determined in good faith by the Board.

    (k) "Inside Director" means a Director who is an Employee.

    (l)  "Option" means a stock option granted pursuant to the Plan.

    (m) "Optioned Stock" means the Common Stock subject to an Option.

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    (n) "Optionee" means a Director who holds an Option.

    (o) "Outside Director" means a Director who is not an Employee.

    (p) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.

    (q) "Plan" means this 2001 Director Option Plan.

    (r) "Share" means a share of the Common Stock, as adjusted in accordance
with Section 10 of the Plan.

    (s) "Subsidiary" means a "subsidiary corporation," whether now or hereafter
existing, as defined in Section 424(f) of the Internal Revenue Code of 1986.

    3.  Stock Subject to the Plan.  Subject to the provisions of Section 10 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is five hundred thousand (500,000) Shares (the "Pool"). The
Shares may be authorized, but unissued, or reacquired Common Stock.

    If an Option expires or becomes unexercisable without having been exercised
in full, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated). Shares that have actually been issued under the Plan shall not be
returned to the Plan and shall not become available for future distribution
under the Plan.

    4.  Administration and Grants of Options under the Plan.  

    (a)  Procedure for Grants.  All grants of Options to Outside Directors under
this Plan shall be automatic and nondiscretionary and shall be made strictly in
accordance with the following provisions:

    (i)  No person shall have any discretion to select which Outside Directors
shall be granted Options or to determine the number of Shares to be covered by
Options.

    (ii) Each Outside Director shall be automatically granted an Option to
purchase forty thousand (40,000) Shares (the "First Option") on the date on
which such person first becomes an Outside Director, whether through election by
the stockholders of the Company or appointment by the Board to fill a vacancy;
provided, however, that current Outside Directors, and Inside Directors who
cease to be Inside Directors but who remain as Directors, shall not receive a
First Option.

    (iii) Each Outside Director shall be granted an Option to purchase ten
thousand (10,000) Shares (a "Subsequent Option") on May 31st of each year,
provided that on such date, he or she is then an Outside Director, except that
each Outside Director appointed after the date that this 2001 Director Option
Plan is approved by the stockholders of the Company, shall not be granted a
Subsequent Option until the First Option has vested in its entirety.

    (iv) The terms of a First Option granted hereunder shall be as follows:

    (A) the term of the First Option shall be ten (10) years.

    (B) the First Option shall be exercisable only while the Outside Director
remains a Director of the Company, except as set forth in Sections 8 and 10
hereof.

    (C) the exercise price per Share shall be one hundred percent (100%) of the
Fair Market Value per Share on the date of grant of the First Option.

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    (D) subject to Section 10 hereof, the First Option shall become exercisable
as to thirty-four (34%) of the Shares subject to the First Option on the first
anniversary of its date of grant, and as to thirty-three (33%) of the Shares
subject to the First Option on each of the next two anniversaries of its date of
grant, provided that the Optionee continues to serve as a Director on such
dates.

    (v) The terms of a Subsequent Option granted hereunder shall be as follows:

    (A) the term of the Subsequent Option shall be ten (10) years.

    (B) the Subsequent Option shall be exercisable only while the Outside
Director remains a Director of the Company, except as set forth in Sections 8
and 10 hereof.

    (C) the exercise price per Share shall be one hundred percent (100%) of the
Fair Market Value per Share on the date of grant of the Subsequent Option.

    (D) subject to Section 10 hereof, the Subsequent Option shall become
exercisable as to one hundred percent (100%) of the Shares subject to the
Subsequent Option on the anniversary of its date of grant, provided that the
Optionee continues to serve as a Director on such date.

    (vi) In the event that any Option granted under the Plan would cause the
number of Shares subject to outstanding Options plus the number of Shares
previously purchased under Options to exceed the Pool, then the remaining Shares
available for Option grant shall be granted under Options to the Outside
Directors on a pro rata basis. No further grants shall be made until such time,
if any, as additional Shares become available for grant under the Plan through
action of the Board or the stockholders to increase the number of Shares which
may be issued under the Plan or through cancellation or expiration of Options
previously granted hereunder.

    5.  Eligibility.  Options may be granted only to Outside Directors. All
Options shall be automatically granted in accordance with the terms set forth in
Section 4 hereof.

    The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate the Director's relationship with the Company at any time.

    6.  Term of Plan.  The Plan shall become effective upon its approval by the
stockholders of the Company as described in Section 16 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 11 of the Plan.

    7.  Form of Consideration.  The consideration to be paid for the Shares to
be issued upon exercise of an Option, including the method of payment, shall
consist of (i) cash, (ii) check, (iii) other Shares, provided Shares acquired
from the Company, (x) have been owned by the Optionee for more than six
(6) months on the date of surrender, and (y) have a Fair Market Value on the
date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised, (iv) consideration received by the Company
under a cashless exercise program implemented by the Company in connection with
the Plan, or (v) any combination of the foregoing methods of payment.

    8.  Exercise of Option.  

    (a)  Procedure for Exercise; Rights as a Stockholder.  Any Option granted
hereunder shall be exercisable at such times as are set forth in Section 4
hereof; provided, however, that no Options shall be exercisable until
stockholder approval of the Plan in accordance with Section 16 hereof has been
obtained.

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    An Option may not be exercised for a fraction of a Share.

    An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may consist of any consideration and method of payment
allowable under Section 7 of the Plan. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a stockholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
A share certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date the stock certificate is issued, except as provided in Section 10 of
the Plan.

    Exercise of an Option in any manner shall result in a decrease in the number
of Shares which thereafter may be available, both for purposes of the Plan and
for sale under the Option, by the number of Shares as to which the Option is
exercised.

    (b)  Termination of Continuous Status as a Director.  Subject to Section 10
hereof, in the event an Optionee's status as a Director terminates (other than
upon the Optionee's death or Disability), the Optionee may exercise his or her
Option, but only within thirty (30) days following the date of such termination,
and only to the extent that the Optionee was entitled to exercise it on the date
of such termination (but in no event later than the expiration of its ten
(10) year term). To the extent that the Optionee was not vested as to his or her
entire Option on the date of such termination, the Shares covered by the
unvested portion of the Option shall revert to the Plan. If, after termination,
the Optionee does not exercise his or her Option within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.

    (c)  Disability of Optionee.  In the event Optionee's status as a Director
terminates as a result of Disability, the Optionee may exercise his or her
Option, but only within twelve (12) months following the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it on the date of such termination (but in no event later than the expiration of
its ten (10) year term). To the extent that the Optionee was not vested as to
his or her entire Option on the date of termination, the Shares covered by the
unvested portion of the Option shall revert to the Plan. If, after termination,
the Optionee does not exercise his or her Option within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.

    (d)  Death of Optionee.  In the event of an Optionee's death, the Optionee's
estate or a person who acquired the right to exercise the Option by bequest or
inheritance may exercise the Option, but only within twelve (12) months
following the date of death, and only to the extent that the Optionee was
entitled to exercise it on the date of death (but in no event later than the
expiration of its ten (10) year term). To the extent that the Optionee was not
vested as to his or her entire Option on the date of death, the Shares covered
by the unvested portion of the Option shall revert to the Plan. To the extent
that the Optionee's estate or a person who acquired the right to exercise such
Option does not exercise such Option (to the extent otherwise so entitled)
within the time specified herein, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.

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    9.  Non-Transferability of Options.  The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.

    10.  Adjustments Upon Changes in Capitalization, Dissolution, Change of
Control or Asset Sale.  

    (a)  Changes in Capitalization.  Subject to any required action by the
stockholders of the Company, the number of Shares covered by each outstanding
Option, the number of Shares which have been authorized for issuance under the
Plan but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the price per Share covered by each such outstanding Option, and the number of
Shares issuable pursuant to the automatic grant provisions of Section 4 hereof
shall be proportionately adjusted for any increase or decrease in the number of
issued Shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued Shares effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of Shares
subject to an Option.

    (b)  Dissolution or Liquidation.  In the event of the proposed dissolution
or liquidation of the Company, to the extent that an Option has not been
previously exercised, it shall terminate immediately prior to the consummation
of such proposed action.

    (c)  Change of Control or Asset Sale.  In the event of a Change of Control
or the sale of substantially all of the assets of the Company, outstanding
Options may be assumed or equivalent options may be substituted by the successor
corporation or a Parent or Subsidiary thereof (the "Successor Corporation"). If
an Option is assumed or substituted for, the Option or equivalent option shall
continue to be exercisable as provided in Section 4 hereof for so long as the
Optionee serves as a Director or a director of the Successor Corporation.
Following such assumption or substitution, if the Optionee's status as a
Director or director of the Successor Corporation, as applicable, is terminated,
the Option(s) shall become fully exercisable, including as to Shares for which
it would not otherwise be exercisable if the following conditions are met:
(i) the Optionee has offered in writing and is willing to continue to serve as a
Director or a director of the Successor Corporation for the duration of the
vesting period described in Section 4 hereof; (ii) the Optionee involved is not
then in default of any material obligations to the Company (as to which the
Company has provided written notice of default and which default the Optionee
has failed to cure within a reasonable time after such notice); and (iii) the
Company (or the Successor Corporation), or the stockholders or directors
thereof, do not offer the Optionee a reasonable opportunity to continue in such
capacity following the Change of Control or sale of assets so as to fully vest
in all Options granted to such Optionee. Thereafter, the Option(s) shall remain
exercisable in accordance with Sections 8(b) through (d) above.

    If the Successor Corporation does not assume an outstanding Option or
substitute for it an equivalent option, the Option shall become fully vested and
exercisable, including as to Shares for which it would not otherwise be
exercisable. In such event the Board shall notify the Optionee that the Option
shall be fully exercisable for a period of thirty (30) days from the date of
such notice, and upon the expiration of such period the Option shall terminate.

    For the purposes of this Section 10(c), an Option shall be considered
assumed if, following the Change of Control or sale of assets, the Option
confers the right to purchase or receive, for each Share of Optioned Stock
subject to the Option immediately prior to the Change of Control or sale of
assets, the consideration (whether stock, cash, or other securities or property)
received in connection with the

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Change of Control or sale of assets, by holders of Common Stock for each Share
held on the effective date of the transaction (and if holders were offered a
choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares). If such consideration received in
connection with the Change of Control or sale of assets is not solely common
stock of the successor corporation or its Parent, the Board may, with the
consent of the Successor Corporation, provide for the consideration to be
received upon the exercise of the Option, for each Share of Optioned Stock
subject to the Option, to be solely common stock of the Successor Corporation or
its Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the connection with the Change of Control or sale of
assets.

    11.  Amendment and Termination of the Plan.  

    (a)  Amendment and Termination.  The Board may at any time amend, alter,
suspend, or discontinue the Plan, but no amendment, alteration, suspension, or
discontinuation shall be made which would impair the rights of any Optionee
under any grant theretofore made, without his or her consent. In addition, to
the extent necessary and desirable to comply with any applicable law, regulation
or stock exchange rule, the Company shall obtain stockholder approval of any
Plan amendment in such a manner and to such a degree as required.

    (b)  Effect of Amendment or Termination.  Any such amendment or termination
of the Plan shall not affect Options already granted and such Options shall
remain in full force and effect as if this Plan had not been amended or
terminated.

    12.  Time of Granting Options.  The date of grant of an Option shall, for
all purposes, be the date determined in accordance with Section 4 hereof.

    13.  Conditions Upon Issuance of Shares.  Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.

    As a condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares, if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned relevant provisions of law.

    Inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company's counsel to be necessary
to the lawful issuance and sale of any Shares hereunder, shall relieve the
Company of any liability in respect of the failure to issue or sell such Shares
as to which such requisite authority shall not have been obtained.

    14.  Reservation of Shares.  The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

    15.  Option Agreement.  Options shall be evidenced by written option
agreements in such form as the Board shall approve.

    16.  Stockholder Approval.  The Plan shall be subject to approval by the
stockholders of the Company within twelve (12) months after the date the Plan is
adopted. Such stockholder approval shall be obtained in the degree and manner
required under applicable state and federal law and any stock exchange rules.

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Exhibit 10.5