<PAGE>

                                                                   EXHIBIT 10.18

                                 LOAN AGREEMENT

                                     between

                           ALLEGRO MICROSYSTEMS, INC.

                                       and

                            SANKEN ELECTRIC CO., LTD.

                            Dated as of July 13, 2005

<PAGE>

                                 LOAN AGREEMENT

                            Dated as of July 13, 2005

     Allegro MicroSystems, Inc., a U.S. corporation ("AMI"), and Sanken Electric
Co., Ltd., a Japanese corporation ("JSK"), hereby agrees as follows:

1.   The Loan. Subject to the terms and conditions of this Agreement, JSK hereby
     lends to AMI, and AMI hereby borrows from JSK, US $8,000,000 on July 13,
     2005 (the "Loan").

2.   Repayment of Loan. The Loan shall be repaid in half yearly installments
     according to the attached repayment schedule. JSK shall accept an early
     paying off the Loan by AMI anytime with no penalty.

3.   Interest. Interest shall accrue on the unpaid principal balance as follows:
     The interest rate for the Loan is equal to the announced 3-month Tokyo
     Inter Bank Offered Rate (TIBOR) in Japan + 0.5% spread that is in effect on
     July 13, 2005. The rate shall be changed to new 3-month TIBOR + 0.5% spread
     every three months.

4.   Payment of Interest. An accrued interest shall be paid on January 13 and
     July 13 every year, from January 13, 2006 to July 13, 2011.

5.   Manner of Payment. Payments of principal and interest shall be made in an
     U.S. Dollar in immediately available funds. Payments shall be remitted to
     JSK's account #68910 at The Resona Bank, Ltd., Ikebukuro Branch.

<PAGE>

6.   Unsecured Loan. Any assets of AMI or other collateral do not secure this
     Loan.

7.   No Separate Note. This Loan is not evidenced by a separate promissory note.
     This Agreement itself shall constitute evidence of indebtedness.

8.   Acceleration. In the event that AMI should fail to make timely payments of
     principal or interest pursuant to this agreement, and such default is not
     cured within ten days, then, as JSK's option, JSK may declare the entire
     outstanding principal balance of the Loan to be immediately due and
     payable.

9.   Governing Law. This Agreement shall be construed in accordance with the
     laws of the Commonwealth of Massachusetts.

SANKEN ELECTRIC CO., LTD.               Allegro MicroSystems, Inc.


By: /s/ Akira Ota                       By: /s/ Mark A. Feragne
    ---------------------------------       ------------------------------------
    Akira Ota                               Mark A. Feragne

Title : Corporate Officer, Financial    Title: Chief Financial Officer
        Management Division Corporate
        Administration Headquarters

<PAGE>

                               REPAYMENT SCHEDULE

<TABLE>
<CAPTION>
      Date         Payment Amount   Remaining Balance
----------------   --------------   -----------------
<S>                <C>              <C>
January 13, 2007      $800,000         $7,200,000
July 13, 2007         $800,000         $6,400,000
January 13, 2008      $800,000         $5,600,000
July 13, 2008         $800,000         $4,800,000
January 13, 2009      $800,000         $4,000,000
July 13, 2009         $800,000         $3,200,000
January 13, 2010      $800,000         $2,400,000
July 13, 2010         $800,000         $1,600,000
January 13, 2011      $800,000         $  800,000
July 13, 2011         $800,000         $        0
</TABLE>

<PAGE>

                                   MEMORANDUM

                                       for

                       LOAN AGREEMENT dated July 13, 2005

                            Dated as of June 30, 2006

     With regard to the Loan Agreement entered into between Allegro
MicroSystems, Inc. a U.S. corporation ("AMI"), and Sanken Electric Co., Ltd., a
Japanese corporation ("JSK") on July 13, 2005, the parties hereby agree as
follows:

<PAGE>

1.   AMI and JSK have agreed to change the interest rate on this loan for the
     remaining period. Consequently, Section 3 shall be changed from "The
     interest rate for the Loan is equal to the announced 3-month Tokyo Inter
     Bank Offered Rate (TIBOR) in Japan + 0.5% spread that is in effect on July
     13, 2005. The rate shall be changed to new 3-month TIBOR + 0.5% spread
     every three months." to "The interest rate for the Loan is equal to the
     announced 3-month BBA LIBOR (London Inter Bank Offered Rate) + 0.45%
     spread.

     The interest rate shall be changed to new rate every three months. The
     interest rate for each period shall be determined by the following rule:

     Interest Rate from April 1 to June 30: 3-month BBA LIBOR on the last bank
     trading day in March + 0.45%.

     Interest Rate from July 1 to September 30: 3-month BBA LIBOR on the last
     bank trading day in June + 0.45%.

     Interest Rate from October 1 to December 31: 3-month BBA LIBOR on the last
     bank trading day in September + 0.45%.

     Interest Rate from January 1 to March 31: 3-month BBA LIBOR on the last
     bank trading day in December + 0.45%."

2.   This Memorandum shall come into effect on July 1, 2006.

SANKEN ELECTRIC CO., LTD.               Allegro MicroSystems, Inc.


By: /s/ Akira Ota                       By: /s/ Mark A. Feragne
    ---------------------------------       ------------------------------------
    Akira Ota                               Mark A. Feragne

Title : Corporate Officer, Planning     Title: Chief Financial Officer
        and Finance Division,
        Administration Headquarters