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                                                                   EXHIBIT 10.18

                       NETLOGIC/VIRAGE LOGIC MEMORANDUM OF
                        UNDERSTANDING FOR CAM COMPILERS

PURPOSE

        To establish a proposed relationship between NetLogic Microsystems, Inc.
(NetLogic) and Virage Logic Corporation (Virage) to develop and market memory
Compilers that utilize NetLogic CAM technology in order to speed proliferation
of the NetLogic CAM technology and Virage memory compiler technology. It is the
intent of the parties to use this Memorandum of Understanding (MOU) to agree on
a basic framework for the proposed relationship.

        It is further the intent of the parties that revenue generated based on
the Compilers will come from customers of Virage or NetLogic. The parties do not
intend to receive revenue from each other except for specific circumstances
indicated below.

        Following the signature of this MOU, both NetLogic and Virage agree to
use their best efforts to conclude a Formal Contract within 60 days of the
signature of this MOU. Until such time as the Formal Contract is signed, none of
the terms of this MOU are binding on either party.

TERM

        This MOU is effective when signed by both parties (Effective Date) and
expires when the parties enter into the Formal Contract or one year after the
Effective Date.

DEFINITIONS

        A. "Embedded CAM Technology" shall mean (i) all NetLogic architecture,
circuitry, design, database information, and layout information including
documents, data, inventions (whether patentable or patented), and other
intellectual property rights related to CAMs in existence prior to, or developed
by NetLogic during, the term of this Agreement, and incorporated into the
Embedded Product, and (ii) corresponding Embedded Product-related technical
information, documents, data, inventions (whether patentable or patented), and
other intellectual property rights in existence as of the Effective Date or
developed by NetLogic during the term of this Agreement, which are necessary for
the utilization in integrated circuits of the technology described in (i).

        B. "Subsidiary(ies)" of a party shall mean a corporation or other entity
of which such party directly or indirectly owns or controls more than fifty
percent (50%) of the voting stock. Corporations or other entities shall be
considered Subsidiaries only as long as such ownership or control exists. For
the purposes of this MOU, subsidiaries shall always exclude any of the
competitors of either party identified in Attachment A.


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        C. "Third Party" shall mean any party other than NetLogic, Virage,
NetLogic Subsidiaries, and Virage Subsidiaries.

        D. "Compiler" shall mean a software tool used by Virage, NetLogic or
customers to develop a Virtual Component or an Embedded Product for the customer
and consists of: (i) object code versions of a set of executable software
program(s), (ii) libraries containing design elements of memory cell arrays and
control logic, and (iii) all related documentation.

        E. "Virtual Component" shall mean a component based on or incorporating
NetLogic's Embedded CAM Technology and generated for a customer using the
jointly developed Compiler, and for use by NetLogic's and/or Virage's customers
who have established a license agreement with NetLogic to use NetLogic's
Embedded CAM Technology.

        F. "Instance" shall mean an output file of a specific "Virtual
Component" generated from the CAM Compiler and provided by Virage to a Third
Party Licensee according to the Third Party Licensee's specific requirement on a
per-design basis.

        G. "Embedded Product" shall mean the semiconductor product that
incorporates the Virtual Component, and modifications thereof as agreed to by
NetLogic and a Third Party Licensee. The Embedded Product shall include the end
product of a Third Party Licensee including System Integrated Circuits (ICs),
including but not limited to a microprocessor, microcontroller, DSP product, or
system-on-a-chip (SOC) products, and Application Specific Integrated Circuits
(ASICs). The Embedded Product shall exclude all products designed as stand-alone
CAM products, including those designed to JEDEC-standard pin-out for stand-alone
CAM products. The Embedded Product shall also exclude all products that compete
with NetLogic products and Virage products existing or under development during
the term of this MOU and the Formal Contract.

        H. "Third Party Licensee" shall mean a Third Party that has a written
license agreement with NetLogic to use the Virtual Component in an Embedded
Product provided by the Third Party.

        I. "Licensed Foundry" shall mean a foundry that has established a
license with NetLogic to manufacture the Virtual Component in a particular
process for an Embedded Product provided by a Third Party.

        J. "CAM Compiler" shall mean a Compiler as defined in D. above that
incorporates the NetLogic Embedded CAM Technology as defined in A. above as the
base memory technology to generate Instances for use in Embedded Products.

PRODUCT

        NetLogic and Virage shall develop a binary and/or ternary CAM Compiler
based on NetLogic's CAM technology for a Licensed Foundry and process.

        If a customer for the CAM Compiler has already been identified, the
high-level functional


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description of the CAM Compiler (the "Specification') shall be mutually
developed by NetLogic, Virage and the customer. If a customer for the CAM
Compiler has not already been identified, then the Specification of the CAM
Compiler shall be mutually developed and mutually agreed to by NetLogic and
Virage before the start of the project. The schedule for the CAM Compiler
Specification shall be developed jointly by NetLogic and Virage.

        NetLogic and Virage agree to use their best efforts to engineer the CAM
Compiler such that Virtual Components generated therefrom include BIST,
redundancy and/or fuse programming to increase yield and density. Virage shall
provide the plans for all DFT planned including but not limited to BIST and
diagnostics. Virage and NetLogic agree to work together to determine the amount
and type of DFT to be included in the CAM Compiler. NetLogic and Virage agree to
determine, before start of the project, whether to optimize the CAM Compiler to
one or mom of the following particular parameters: low power, speed, area or
density.

        The date for the start of development of the first CAM Compiler is to be
determined and shall be after the parties obtain a first customer for the first
CAM Compiler. Additional CAM Compilers for additional foundries and/or processes
may be developed under the terms of the Formal Contract as required to meet
customer demand.

        CUSTOMERS

        Potential customers of NetLogic and Virage can be characterized as (1)
Customer Owned Tooling (COT) customers, and (2) semiconductor Integrated Device
Manufacturers (IDMs). A customer requires a CAM Instance for a specific Embedded
Product or a CAM Compiler for generating multiple Instances for corresponding
Embedded Products.

        COT CUSTOMERS

        The COT customer is the fabless IC or Systems Company that directly
contracts with a Licensed Foundry to have the Embedded Product fabricated. It is
anticipated that the COT customer will purchase the Instance for a specific
Virtual Component, or the CAM Compiler to generate Virtual Components, for its
Embedded Products that will be manufactured at a specific Licensed Foundry.
Although a relationship with Licensed Foundries will be important in order to
initially develop CAM Compilers for their processes and to market the results to
their customers, the parties shall not sell the CAM Compilers to the Licensed
foundries themselves.

        IDM CUSTOMERS

        The IDM customer is a vertically integrated semiconductor or systems
company that owns or operates their own wafer fabrication facility. It is
anticipated that the IDM customer will purchase the CAM Compiler to generate
Virtual Components for its Embedded Products that will be manufactured at its
own facility.

        BUSINESS


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        NetLogic shall grant Virage a royalty-free, non-transferable,
non-exclusive license, for the duration of the MOU and Formal Contract, to use
NetLogic's Embedded CAM Technology only in connection with development and sale
of the CAM Compilers or Instances generated pursuant to the Formal Contract.

        If any customer wishes to add their own proprietary technology to
NetLogic's Embedded CAM Technology, Virage may build products subject to
approval from NetLogic and agreement on suitable licensing fees to NetLogic from
the customer or Virage. Ownership of the resultant product shall be determined
on a case-by-case basis between NetLogic, Virage and the customer.

        If any customer decides not to use NetLogic's Embedded CAM Technology,
Virage is free to build custom CAM components and compilers utilizing other CAM
technologies for the customer's internal and other use provided that the custom
CAM components and compilers are not offered for general commercial sale by
Virage, and do not use, and are not based on, any proprietary or confidential
NetLogic information (including know-how) disclosed to, or learned by, Virage
prior to, during, or subsequent to this agreement. Virage agrees to notify
NetLogic of their intent to enter into such an agreement. Virage also agrees to
provide NetLogic with a high level product description of the custom CAM
component. Under these circumstances, Virage and NetLogic agree to discuss the
product description and compiler to determine the best means for protecting each
parity's intellectual property and business interests.

        Similarly, if a customer decides that they would like to use NetLogic's
Embedded CAM Technology, but would like to use its own or other compiler
technology to develop a Compiler or Instance, then NetLogic is free to provide
NetLogic's Embedded CAM Technology to the customer for the development of the
compiler for the customer's internal and other use provided that the resultant
compiler is not offered for general commercial sale by NetLogic, and does not
use, and is not based on, any proprietary or confidential Virage information
(including know-how) disclosed to, or learned by, NetLogic prior to, during, or
subsequent to this agreement. NetLogic agrees to notify Virage of their intent
to enter into such an agreement. NetLogic also agrees to provide Virage with a
high level product description of the custom Compiler or Instance. Under these
circumstances, Virage and NetLogic agree to discuss the product description and
compiler to determine the best means for protecting each party's intellectual
property and business interests.

        The parties agree to determine, on a case-by-case basis, the
compensation and payment terms of such compensation to be provided to Virage by
NetLogic for NetLogic's own use of the developed CAM Compiler incorporating
Virage's Compiler Technology and NetLogic Embedded CAM Technology to develop a
NetLogic's stand-alone integrated circuit device.

        NetLogic agrees to use its best efforts to license the use of its
Virtual Component to Third Parties, including those referred to NetLogic by
Virage, under reasonable terms and conditions that are demonstrably free of any
unfair discrimination. NetLogic reserves the right, however, to determine, in
its sole discretion whether to license the use of NetLogic's


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Embedded CAM Technology to any IDM customer. NetLogic also reserves the right to
not license the use of NetLogic's Embedded CAM Technology to IDM customers if
the IDM customers do not agree to include a grant back clause to NetLogic in the
license agreement for rights to future inventions developed by the IDM customer.

        For COT customers, Virage and NetLogic agree to continue discussions
during the next sixty (60) days, and to formalize in the Formal Contract, a
framework in which COT customers obtain rights to make, use, sell, or offer to
sell NetLogic's Embedded CAM Technology as part of the CAM compiler.

        PRICING AND ALLOCATION OF SALES REVENUE

        The parties agree that the overall pricing to the customer shall be
determined by a fair market value and shall be based on value to the customer. A
Pricing Model shall be established in the Formal Contract and shall be based on
the following five components:

        (1)     a Non-Recurring Engineering (NRE) fee based on the amount of
                time and/or resources expended by the respective parties to
                develop a subject compiler for the respective foundry and/or
                process;

        (2)     a compiler or instance license fee based on the core values of
                the respective intellectual properties, that can be in the form,
                for example, of an initial license fee, royalties based on the
                selling price of the wafers or Embedded Product, or both;

        (3)     a technology license fee paid by the CAM technology licensee
                based on the core value of NetLogic's CAM intellectual property,
                that can either be in the form, for example, of an initial
                license fee, royalties based on the selling price of the wafer
                or Embedded Product, or both;

        (4)     royalties based on a percentage of the Average Selling Price
                (ASP) of the Embedded Product paid by COT foundry as part of a
                library royalty program; and

        (5)     a maintenance fee for the Instance or the Compiler.

        The overall sales revenue collected by the parties shall be allocated
between the parties based on the amount of contributions from each party, fair
sharing and compatibility with each party's license business model. Allocation
of sales revenue between the parties shall reflect the five components discussed
above and shall be further defined in the Formal Contract. The Formal Contract
shall also address the method for collecting sales tax and allocating tax
liability between the parties.

        INSTANCES

        For any potential CAM Instance customer (whether COT or IDM), the
parties anticipate that Virage will take the lead position in determining the
customer's needs and obtaining the order from the customer. In some situations,
however, NetLogic may make the initial customer contact, determine the
customer's needs and obtain the order from the customer.

        The CAM Instance generated for the customer is to be targeted for a
specific process of a Licensed Foundry for a COT customer or a specific process
for an IDM customer. For the


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sale of a CAM Instance, Virage will generate the Instance and provide necessary
customer support to incorporate the Instance (as a Virtual Component) into the
customer's Embedded Product, with the assistance from NetLogic if needed. Under
this assumption, Virage shall receive and retain substantially the entire NRE
fee and/or the instance license from its sale or licensing agreement with the
customer.

        If NetLogic provides support for generation of an Instance, then
NetLogic and Virage agree to split the NRE fee and/or the instance license based
on the amount of time and/or resources expended by the respective parties in
accordance with the method established in the Formal Contract. Before the
parties begin any CAM Compiler development where Net Logic provides support for
the generation of Instances, the parties shall agree upon the resources to be
expended by each.

        Virage shall provide the customer maintenance services if needed and
retain the entire maintenance fee. NetLogic shall independently establish a
technology license relationship with the customer for use of NetLogic's Embedded
CAM Technology in each Instance. NetLogic shall receive and retain all
compensation, including a license fee and a royalty, from its separate licensing
arrangement with the Customer consistent with its established license business
model.

        COMPILERS

        Any potential CAM Compiler customer may be approached by either company
to determine the need of the customer and determine what course of action is to
be taken to meet or exceed the customer's needs. The CAM Compiler can be
developed and characterized for the customer's specific process or a Licensed
Foundry's process specified by the customer.

        NetLogic and Virage agree that Virage will assume the leadership role
and provide substantially all of the support to the customer to develop the CAM
Compiler. Under this assumption, Virage shall receive and retain substantially
the entire NRE fee and/or the compiler license for development of the CAM
Compiler. If NetLogic provides support to develop the CAM Compiler, then
NetLogic and Virage agree to split the NRE fee and/or the compiler license fee
based on the amount of time and/or resources expended by the respective parties
in accordance with the method established in the Formal Contract. Before the
parties begin any CAM Compiler development where Net Logic provides support for
the development of the CAM Compiler, the parties shall agree upon the resources
to be expended by each.


        Virage may also charge the customer a maintenance fee. The parties
anticipate that Virage will provide most of the maintenance services for the
Compiler and shall retain the entire maintenance fee. If, however, NetLogic
provides maintenance services for the Compiler, then Virage and NetLogic shall
split the maintenance fee based on the amount of time and/or resources expended
by the respective parties in accordance with the method established in the
Formal Contact. NetLogic shall independently establish a technology license
relationship with the customer for use of NetLogic's Embedded CAM Technology in
each Compiler. NetLogic shall receive and retain all compensation, including a
license fee.


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and a royalty, from its separate licensing arrangement with the Customer
consistent with its established license business model.

      INTELLECTUAL PROPERTY AND CONFIDENTIAL INFORMATION

      Neither NetLogic nor Virage may use each other's technology for any
purpose other than that identified in this agreement. In all cases, the
confidentiality of NetLogic and Virage technology must be protected. Both
parties agree to execute a mutual non-disclosure agreement, which shall become
a part of this agreement and the Formal Contract.

      Additionally, Virage and NetLogic agree to cross-license each other's
relevant technology and patents required for the development, sale, and use of
the developed CAM Compiler. Also, NetLogic and Virage agree not to develop
other compilers that compete against the CAM Compiler developed under this
agreement. NetLogic and Virage also agree not to engage or sell products to the
other companies' competitors. Each company is to provide a list of competitors,
and that list is to be attached to this document as Attachment A. Attachment A
may be updated from time-to-time by either party and shall be incorporated into
the Formal Contract.

      NetLogic and Virage anticipate that there will be intellectual property
developed by the parties during the course of development of the CAM Compiler
under this agreement and the subsequent Formal Contract. The parties agree that
the ownership of any intellectual property developed during the course of the
development of the CAM Compiler shall be as follows:

      a)    Any intellectual property developed independently by either party
            which is not based on the other party's intellectual property shall
            be the sole and exclusive property of the developing party and the
            non-developing party shall not acquire any ownership interest in it.
            However, the developing party shall grant the non-developing party a
            non-transferable, non-exclusive, royalty-free license to use the
            intellectual property only in connection with the products developed
            pursuant to this agreement or the subsequent Formal Contract. All
            other license grants shall be at the sole discretion of the
            developing party.

      b)    Any intellectual property developed independently by either party
            which is based on the other party's intellectual property shall be
            the sole and exclusive property of the developing party and the
            non-developing party shall not acquire any ownership interest in
            it. However, the developing party shall grant the non-developing
            party a perpetual non-transferable, non-exclusive, royalty-free
            license to use the intellectual property to develop products or
            services provided by the non-developing party, and to make or sell
            products that incorporate the intellectual property.

      c)    Any intellectual property jointly developed by both parties shall
            be jointly owned by both parties. Neither party shall license,
            assign, or transfer or grant any rights in or to the jointly
            developed intellectual property to any Third Party without the
            prior written consent of the other party. Each party agrees that it
            will not unreasonably withhold such consent. The parties shall
            define in the Formal Contract the method of allocation between the
            parties of any revenue derived from the jointly developed
            intellectual property.


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        NetLogic and Virage agree to cooperate in joint selling activities to
locate an initial source of NRE fees to help fund development of the CAM
Compiler. NetLogic and Virage agree to cooperate on development of a
verification vehicle for the Virtual Component, and a silicon validation report
with the first customer and Licensed Foundry. NetLogic and Virage agree that
Virage shall assume the leadership role in developing the CAM Compiler with the
Licensed Foundry, and that NetLogic shall provide specific product support for
the Virtual Component on an as needed basis. If possible, the first CAM Compiler
will be developed with common design rules to allow foundry reuse. NetLogic and
Virage shall migrate the developed CAM Compiler to additional foundries based on
customer demand.

        MARKETING

        NetLogic and Virage agree to perform joint marketing activities to
promote the relationship established by this Agreement. The activities shall
include, but not be limited to, the following:

        a)      A joint press release that the parties are working together to
                develop a CAM Compiler the includes NetLogic's Embedded CAM
                Technology, the joint press release to be published after
                signature of this MOU and approval of the joint press release by
                both parties,

        b)      Joint sales activities to establish the first customer, that
                will fund the NRE of the first Compiler, and also subsequent
                customers to proliferate the CAM Compiler products,

        c)      A jointly authored white paper discussing the NetLogic's CAM
                technology and the Virage Compiler technology, and the
                advantages of both in one product,

        d)      Quarterly technology reviews to inform each party of subsequent
                technology developments that could lead to the modification of
                the product established under this agreement, or to additional
                products jointly developed by the parties,

        e)      Advertisement of the Compiler in the list of off-the-shelf
                components by both NetLogic and Virage, including published
                datasheets to be used by both companies in the selling of the
                Compiler.

NETLOGIC MICROSYSTEMS, INC.                   VIRAGE LOGIC CORPORATION


/s/ AL KWOK                                   /s/ ADAM KABLANIAN
------------------------------------          ----------------------------------
NAME:  Al Kwok                                NAME:  Adam Kablanian
TITLE: VP of Operations and Business          TITLE:  President & CEO
Development
DATE:                                         DATE:

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