Exhibit 10.23

Agere Systems Inc.

2004-2005 Medium-Term Incentive Plan

Purpose

To provide the Executive leadership team with an incentive to focus on
increasing share during a period of significant industry discontinuity and
business restructuring.

  ·

 Critical to meeting the expectations of our investors

  ·

 Key element of performance-based compensation

  ·

 Minimizes use of options and further dilution

Description

The plan is a market share-based incentive plan targeting performance versus
peer competitors over a two-year period.

Participants

The Chief Executive Officer and selected other officers who report directly to
the Chief Executive Officer.

Plan Administrator

The plan will be administered by the Compensation Committee of Agere’s Board of
Directors.

Performance Period

October 1, 2003 – September 30, 2005

Grant Date

October 1, 2003

Payment Date

On or about January 10, 2006. Payments will be made in cash.

Incentive Opportunity

CEO   3.0 x Base Salary in effect September 30, 2005   Direct Reports  1.5 x
Base Salary in effect September 30, 2005 

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Agere Systems Inc 2004-2005 Medium-Term Incentive Plan

The actual payment will be determined by multiplying the amount shown above by
the Achievement Level for the share attained by the company at the end of the
performance period.

Section 162(m) Provisions

So that awards under the program may be deductible for US federal income tax
purposes, grants will be made in the form of awards under the 2001 Long Term
Incentive Plan. Each participant will be granted a $9 million award, which can
be reduced by the Committee in its sole discretion. It is expected that the
Committee would reduce the awards before payment to the appropriate amounts
shown below. No award may be paid unless the Committee shall have certified in
writing that Agere’s Net Income (as defined in Agere’s 2001 Long Term Incentive
Plan) for fiscal 2005 was at least equal to its Net Income in fiscal 2003.

Performance Structure

Achievement Level Share Target Growth Rate   200 % 10.8  
]15% Growth
  175   10.4   150   10.1   125   9.7 Target 100   9.4  
]20% Growth
  50   8.9   25   8.3   0   7.8

Share Computation

·  

The total market will be the sum of reported revenues from AMCC, Broadcom,
Conexant, Globespan, Infineon (wireless and wireline segments only), Intersil
(pre-divestiture WLAN segment only), LSI Logic (semiconductor segment only),
Marvell, Mindspeed, Motorola (semiconductor segment only), PMC-Sierra, Skyworks
Solutions, STMicroelectronics, Texas Instruments (semiconductor segment only),
Vitesse and Agere Systems.

·  

For any company whose fiscal quarters are not calendar quarters, the share
calculation for any quarter will use the most recently completed fiscal quarter
for that company. For example, for the March quarter, Marvell’s reported sales
results for its quarter ending around the end of January will be used.

·  

The beginning share will be the average of Agere’s share for the two quarters
immediately prior to the performance period (the third and fourth quarters of
fiscal 2003).

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Agere Systems Inc 2004-2005 Medium-Term Incentive Plan

·  

Agere’s share percentage will be calculated quarterly, using the following
formula:

Agere Share = 100 x Agere Revenue/Total Market Revenue

·  

The ending share used to determine award levels will be the average of Agere’s
share for the two quarters immediately prior to the end of the performance
period (the third and fourth quarters of fiscal 2005).

Adjustments

·  

Discontinued Agere businesses. Agere’s revenues will be adjusted in all periods
to remove revenue from discontinued businesses.

·  

Changes in Agere and competitor product portfolios. The Committee may make such
adjustments to plan targets or revenue computations as it deems appropriate in
the event of changes in the product portfolio of Agere or any of the other
companies whose revenues are used to determine the total market (e.g., product
divestitures, acquisitions, mergers, etc.).

·  

Agere Profitability. Except following a Change in Control as defined in Agere’s
2001 Long Term Incentive Plan, the Committee may reduce the plan target
percentages payable for achieving a particular share target if Agere does not
meet the profitability goals set forth in its approved plans for fiscal years
2004 and 2005. Any such reduction shall be applied ratably to all participants.

Miscellaneous

·  

Performance monitoring. The Committee will review Agere’s performance under the
plan on a quarterly basis.

·  

Change in Control. In an event of a Change in Control as defined in Agere’s 2001
Long Term Incentive Plan, if, within 2 years of the Change in Control, either:

o  

A participant’s employment is terminated by the company other than for “Cause”,
or

o  

A participant terminates his or her employment within three months of an event
constituting “Good Reason”,

   

then that participant will be entitled to an ‘at target’ payment to be made in a
lump sum within 30 days of the termination of employment. “Cause” and “Good
Reason” have the meanings given those terms in the company’s Officer Severance
Policy.

·  

Involuntary Separation. In the event that a participant’s employment is
terminated by the company other than for “Cause” and the participant is not
entitled to a payment under “Change in Control,” then the participant will be
entitled to a pro

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Agere Systems Inc 2004-2005 Medium-Term Incentive Plan

   

rated payment for the period beginning on the Grant Date and ending on the
participant’s last day of active employment, without reference to any
continuation of employment under the Officer Severance Policy. The payment will
be made in a lump sum at the same time as all other participants. If a
participant’s employment is terminated by the company for “Cause,” the
participant shall not be entitled to any payment under this plan.

·  

Voluntary Separation. In the event that, before the end of the performance
period, a participant voluntarily terminates their employment with the company,
other than under circumstances entitling the participant to a payment under
“Change in Control,” the participant will not be entitled to any payment under
the plan. Payment of awards under the plan does not require continued employment
beyond the end of the performance period.

·  

Termination. The Committee may terminate the plan at any time. If the Committee
terminates the plan, all participants will be entitled to an ‘at-target’ payment
to be made in a lump sum within 30 days of the termination.

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