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                             LICENSE AGREEMENT


     THIS AGREEMENT is entered into and effective as of February 26, 1997 
("Effective Date"), by and between Taiwan Semiconductor Manufacturing Co., 
Ltd. ("TSMC"), a company duly incorporated under the laws of the Republic of 
China, having its principal place of business at No. 121, Park Avenue 3, 
Science Based Industrial Park, Hsinchu, Taiwan, ROC, and Silicon Storage 
Technology, Inc. ("SST"), a company duly incorporated under the laws of 
California, having its principal place of business at 1171 Sonora Court, 
Sunnyvale, California 94086.

WHEREAS, SST has designed and developed SST Technology (as defined 
hereinafter),

WHEREAS, SST is the owner of SST Intellectual Property Rights (as defined 
hereinafter),

WHEREAS, TSMC desires to obtain from SST a non-exclusive, personal, 
non-transferable, world-wide license to use, make, have made, sell, and 
distribute the products containing SST Technology and to sublicense TSMC's 
customers for the right to design such products; SST agrees to grant to TSMC 
such non-exclusive, world-wide license to TSMC in accordance with the terms 
and conditions set forth in this Agreement,

WHEREAS, SST's grant of right to TSMC to sublicense to TSMC's customers shall 
be limited to offering of the Embedded Flash (as defined hereinafter) 
manufactured by and for TSMC, and such right prohibit transfer of technology, 
or any part of SST Intellectual Property Rights to any third party.

NOW THEREFORE, the parties hereto agree as follows:

I. DEFINITIONS

1.1  "SST Intellectual Property Rights" shall mean all patents, mask work 
     rights, copyright and trade secrets subsisting in or covering the SST 
     Technology for single bit per cell flash memory, which are owned by SST or
     to which SST has the right to license as granted herein, now or hereafter
     during the term of this Agreement. SST Intellectual Property Rights
     include, but not limited to, patents covering flash cell and memory
     circuits and memory array architecture, process, design rule and physical
     layout therefore, masks work right in the layout of the flash cells and
     memory circuits, copyright in the netlist, and confidential information in
     cell design layout, design rule and process flow, and cell and memory array
     architecture.



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1.2  "Embedded Flash" shall mean a product, other than a standalone 
     memory device, having a single bit per cell flash memory, manufactured 
     by or have-made for TSMC, in which portion of SST Intellectual Property 
     Right is used.


1.3  "Wafer Price" shall mean the price of the wafer charged by TSMC, 
     net of insurance fees, duties and taxes, masks charges, transportation 
     and handling charges. This price shall include back-lapping.


1.4  "SST Technology" shall mean [  *  ]


II. SCOPE OF LICENSE

2.1  SST hereby grants to TSMC a world-wide, non-exclusive, personal 
     non-transferable license for the right to sublicense others to use the 
     SST Intellectual Property Rights to design Embedded Flash, and for TSMC 
     to make and have made such designed Embedded Flash, and to sell or 
     distribute such made Embedded Flash to TSMC customers

2.2  TSMC agrees to enter into a non-disclosure agreement with each 
     sublicensee, to maintain in confidence the SST Intellectual Property 
     Rights. The right to enforce the non-disclosure agreement is assigned to 
     SST.

2.3  SST shall deliver the material set for in Exhibit A to TSMC. SST 
     shall render assistance and training necessary for TSMC in 
     implementation and use of the material as set forth in Exhibit A and 
     shall provide relevant services and documents. Any customization, 
     modifications, availability schedule and other factors which have not 
     been jointly defined and specified in Exhibit A, shall be discussed in 
     good faith and planned with mutual agreement.

2.4  The "have-made" right granted herein shall be limited to wafer 
     manufacturing at TSMC affiliates of which TSMC owns or control at least 
     25% of interests. In the event the "have made" right is to be used, TSMC 
     shall inform SST of such intention in advance.


III. CONSIDERATION AND MUTUAL SUPPORT

3.1  In consideration of the License granted herein, TSMC shall pay to 
     SST:


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Royalties:  [  *  ]











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     [ * ]

3.2  In consideration of the license granted in Section II, subject to the 
     royalties payments of Sub-Section 3.1, the relationship established with 
     TSMC in accordance with the spirit of this Agreement, although unique at 
     present, is viewed as most favorable. SST agrees to assure and uphold 
     TSMC as the most favorable licensee in respect of SST's grant of a 
     license having the same total consideration. SST shall keep TSMC 
     informed of any license or agreement which grants more favorable 
     condition than that of the license and adjust status of TSMC in 
     compliance of this Section. TSMC has the right to appoint an 
     internationally renown accounting firm to audit the license and license 
     agreements SST grants to third parties no more than once a year. Such 
     accounting firm can only report to TSMC if SST has treated TSMC as the 
     most favorable licensee.

3.3  In consideration of the license granted herein, TSMC shall provide SST's 
     forecast wafer requirement as agreed to by the parties, in the annual 
     plan.  [  *  ]

3.4  The wafer price used for calculation of the Royalties shall be [  *  ]

3.5  Royalties payment shall be made quarterly within thirty (30) days at net 
     thirty (30) days term after the close of every calendar quarter. The 
     calculation of the Royalties payment shall be based on the actual 
     payment received by TSMC, payment by SST on products containing the 
     Embedded Flash excluded, during the particular calendar quarter. SST has 
     the right to appoint an internationally renown accounting firm to audit 
     the sales record of TSMC and the "have made" facilities of TSMC 
     generated from manufacturing of the Embedded Flash no more than once a 
     year. Such accounting firm can only report to SST if TSMC or its "have

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     made" licenses has made sufficient Royalties payment. The Royalties
     payment shall be subject to withholding tax and custom duty, and TSMC has
     the right to withhold taxes as required by the laws of Republic of China.
     In the event refund of the withholding tax can be claimed, TSMC will
     conduct application for refund with the assistance of SST. [ * ] In the 
     event a TSMC customer is an existing licensee of SST, TSMC agrees to 
     [ * ], in addition to the Royalties payment and report.

3.6  SST shall provide support and consultation, including support in 
     developing test method and tools needed for use by TSMC, and technical 
     support in implementation thereof. SST shall provide TSMC with 
     consultation support in the back end production of Embedded Flash, 
     including but not limited to, characterization, yield/performance 
     improvement, production, testing and application. Technical assistance 
     provided by SST shall be reasonably sufficient to demonstrate and 
     explain practical use and operation of the License granted herewith, and 
     to reasonably permit TSMC to make full use thereof. Such assistance 
     shall be performed by qualified SST technical staff, knowledgeable in 
     SST Technology. TSMC's use of consultation support, training and other 
     technical assistance shall be reasonable. TSMC may generate material and 
     discussion for internal training to carry the know-how in relation to 
     the License forward, such material shall be subject to proprietary 
     treatment of Article (V).
    
IV. MODIFICATION AND IMPROVEMENT

4.1  Title to all intellectual property rights relating to invention(s) 
     or improvement(s) to SST Technology arising from the joint efforts of 
     TSMC or TSMC customers or TSMC "have made" affiliates and SST under this 
     Agreement shall be jointly owned by TSMC and SST, and all expenses 
     incurred in obtaining and maintaining such rights shall be equally 
     shared by both parties hereto. Subject to the limitation on TSMC's 
     sublicense under the Agreement, either party has the right to license 
     such joint work to third parties. In case either party elects not to 
     seek or maintain legal protection for any such invention or improvement 
     in any particular country or territory, the other party shall have the 
     right to seek protection at its sole expenses and for its sole benefit 
     and shall have full control over the prosecution and maintenance 
     thereof, provided that such other party shall grant to the other party a 
     royalty free license to use such invention(s) or improvement(s). Any 
     modification and improvement to the joint work as set forth herein made 
     by sole efforts of a party after the termination or expiration of this 
     Agreement shall be solely owned by such party.


4.2  TSMC and TSMC's customers shall have the right to modify or improve 
     the License. Title to any intellectual property right relating to such 
     modifications or 


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     improvements made by sole efforts of TSMC or TSMC customers shall be 
     solely owned by TSMC. TSMC will notify SST of any modifications and 
     improvements promptly upon use thereof and SST shall have the right to 
     royalty free, personal, unrestricted use of such intellectual property 
     right, improvements and modifications without the right to transfer to 
     third parties the modification or improvement owned by TSMC.

V. PROPRIETARY INFORMATION

5.1  The term "Proprietary Information" shall mean any information controlled 
     by a party hereto identified as proprietary and/or confidential and 
     disclosed to the other party according to this Agreement. Written 
     Proprietary Information shall be clearly marked "CONFIDENTIAL" or 
     "PROPRIETARY". All oral disclosures of Proprietary Information shall be 
     identified as such prior to disclosure and confirmed in writing, or 
     email, by the disclosing party within thirty (30) days of the oral 
     disclosure. In case of disagreement, the receiving party must make a 
     written objection thereto within thirty (30) days after receipt of the 
     information. The Proprietary Information shall not include information 
     that: (1) is now or subsequently in the public domain or otherwise 
     becomes available to the public other than by breach of this Agreement 
     by the receiving party; (2) has been rightfully in the receiving party's 
     possession prior to receipt from the disclosing party; (3) is rightfully 
     received by the receiving party from a third party; and (4) is 
     independently developed by the receiving party without use of any 
     proprietary information or trade secrets of disclosure, and is authorized 
     by the disclosing party to be disclosed or released.

5.2  Except that TSMC exercises its license and rights hereunder, both 
     parties agree to maintain Proprietary Information in confidence, not to 
     make use thereof other than for the performance of this Agreement, to 
     release it only to employees or TSMC customers who have a reasonable 
     need to know the same, and not to release or disclose it to any third 
     party, without the prior written consent of the disclosing party.

5.3  All Proprietary Information and any copies thereof shall remain the 
     property of the disclosing party. Upon expiration or termination of this 
     Agreement, the receiving party shall return the original and all copies 
     of tangible Proprietary Information at the request of the disclosing 
     party.

5.4  This Section shall survive the termination or expiration of this 
     Agreement for a period of five (5) years.

5.5  The terms and conditions of the Non-disclosure Agreement dated February 
     1, 1996 between the parties shall remain effective. In the event the 
     terms and conditions conflicts with this Agreement, this Agreement shall 
     prevail.

                                                                       6  

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VI. WARRANTY

6.1  SST warrants and represents that the it has the right and authority 
     to convey and grant the License as set forth herein.

6.2  SST agrees to indemnify, hold harmless and defend TSMC from and 
     against any and all equitable actions, damages, costs and expenses 
     incurred by TSMC in connection with a claim which, if true, would 
     constitute a breach of SST's warranty set forth under Sub-Section 6.1 
     hereof, provided SST has been given prompt notification and reasonable 
     assistance from TSMC, and SST has sole control over legal action.

6.3  Neither party shall be liable to the other for any incidental, 
     indirect or consequential damages arising out of or in connection with 
     this Agreement. In no event shall either party be liable to the other 
     for damages, in the aggregate, greater than [  *  ]. Furthermore, 
     TSMC agrees to hold SST harmless from any cause of action arising 
     out of, as a result of, or in connection with, any dispute between 
     TSMC and its customers, except to the extent such dispute arises 
     from a breach by SST of its contractual obligation to TSMC under this 
     Agreement, including a breach by SST of its warranty under Sub-Section 
     6.1, and provided that SST fulfills its obligation under Sub-Section 6.2.

6.4  TSMC shall have the sole liability and responsibility for the 
     exploitation of the modifications and improvements it or its customer 
     made pursuant to Sub-Section 4.2. TSMC shall defend SST, and indemnify 
     it and hold it harmless from any breach of this obligation.

VII. TERM AND TERMINATION

7.1  This Agreement shall remain in full force and effect for five (5) 
     years. Thereafter, so long as neither party is in breach of this 
     Agreement, this Agreement will continue year to year unless either party 
     notifies the other, in writing, of a request for non-renewal at least 
     one year prior to the expiration of the original or renewed term of the 
     Agreement. Upon termination, all tangible Proprietary Information shall 
     be returned or destroyed according to the instruction of the disclosing 
     party.

7.2  This Agreement may be terminated by either party if the other party 
     (1) breaches any material provision of this Agreement and does not cure 
     or remedy such breach within thirty (30) days after receipt of the 
     notice of breach from the other party; (2) becomes the subject of a 
     voluntary or involuntary petition in bankruptcy or any proceeding 
     relating to insolvency, receivership, liquidation, or composition


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      for the benefit of creditors if such petition or proceeding is not 
      dismissed with prejudice within sixty (60) days after filing. 
      Termination of this Agreement shall be effective 30 days after issuance 
      of a written notice of termination to the other party by the 
      non-defaulting party. In the event SST becomes bankrupt, or a trustee 
      is otherwise appointed for SST, TSMC shall have the right to maintain 
      the rights and licenses provided for in this Agreement, provided it 
      continues to make the royalty payments provided for herein.

7.3   After effective termination of this Agreement by either party in 
      accordance with Section VII hereof, TSMC shall cease and desist all use 
      of the License except for the performance of its obligations to 
      customers which are incurred before termination of this Agreement. The 
      obligation and duties of both parties under this Agreement for 
      existing products at the time of termination shall survive the 
      termination of this Agreement.

7.4   The termination of the license granted under this Agreement, by 
      expiration or otherwise, shall not release TSMC from any of its 
      obligations or liabilities therefore incurred, or rescind or give any 
      rights to rescind, anything done or any payment made or other 
      consideration given therefore to SST under this Agreement, provided 
      that TSMC will have such rights, under such license, after any such 
      termination or expiration, as are necessary for TSMC to (a) supply 
      replacement products for any defective Embedded Flash units sold by 
      TSMC on or prior to the date of such termination or expiration, and (b) 
      supply Embedded Flash products under, and pursuant to the terms of, 
      commitments of TSMC to third parties, for a period of one year 
      thereafter, and (c) to dispose of inventory of Embedded Flash products 
      under TSMC's control as of the date of such supply Embedded Flash 
      products to new product design. TSMC will provide SST a statement of 
      inventory at this point in time, as well as an estimate of time 
      required to dispose of said inventory. TSMC shall cause to be issued an 
      irrevocable letter of credit issued by a commercial bank equal to the 
      amount of royalty based upon the inventory. TSMC will fulfill all 
      royalty obligations for material described in (a), (b) and (c). No 
      failure or delay on the part of SST in exercising its right to 
      terminate for any one or more default shall be construed to prejudice 
      its rights of termination for such or for any other or subsequent 
      default.

VIII. MISCELLANEOUS

8.1   Neither party shall be responsible for any failure to perform under 
      this Agreement if such failure is caused by unforseen circumstances or 
      due to causes beyond its control, including but not limited to acts of 
      God, riot, labor stoppages, acts of civil and military authorities, 
      fire, floods or accidents.

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8.2  This Agreement shall be governed by and construed in accordance with the 
     laws of the state of California. In the event of any dispute arising out 
     of or in connection with this Agreement which cannot be amicably settled 
     by the parties hereto, the parties agree to submit any such dispute to 
     binding arbitration to be conducted in San Francisco, California in 
     accordance with the then prevailing rules for the commercial arbitration 
     of American Arbitration Association and the decision of the arbitration 
     panel shall be final and binding and may be entered as a judgment by a 
     court of competent jurisdiction. All information relating to or 
     disclosed by any party in connection with the arbitration shall be 
     treated by the parties and the arbitration panel as confidential 
     information and no disclosure of such information shall be made by 
     either party or the arbitration panel without the prior written consent 
     of the disclosing party.

8.3  No modification, alteration or amendment of this Agreement shall be 
     effective unless in writing and duly signed by both parties. The terms 
     and conditions of this Agreement constitutes the entire agreement and 
     understanding of the parties with respect to the subject matter hereof, 
     and supersede all previous communication, agreement, understanding, 
     whether oral or written, between the parties regarding the same.
     
8.4  No waiver of any breach or failure by either party to enforce any 
     provision of this Agreement shall be deemed a waiver of any other or 
     subsequent breach or a waiver of future enforcement of that or any other 
     provision.
     
8.5  TSMC and SST shall schedule management review meetings a minimum of twice 
     a year to access the progress of the relationship, deal with any 
     unresolved problems, and develop strategic plans for continued joint 
     effort. Specific areas of discussion are to include:
     1) [  *  ] 2) process changes and improvements; 3) flash and embedded 
     flash technology roadmap planning; 4) other topics as required and 
     proposed by either party toward the continued achievement of the 
     business objectives represented by this Agreement.
     
8.6  Neither party can assign this Agreement without the prior written 
     consent of the other party.
     
8.7  Any notice between the parties shall be made, by fax or mail, to the 
     correspondent as follows:


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To TSMC:

Mr. Sam Chu
121 Park Ave. III
Science-Based Industrial Park                  Tel: 886/3-578-0221 x.2456
Hsinchu, Taiwan, ROC                           Fax: 886/3-578-4450




To SST:

Mr. Sohrab Kianian/Mr. Yaw-Wen Hu
1171 Sonora Court
Sunnyvale, CA 94086                            Tel: 408/735-9110
USA                                            Fax: 408/735-9136


8.8  In the event TSMC finds a design provided by third parties for production
     by TSMC which contains SST Technology without a license from SST nor 
     TSMC, TSMC shall promptly notify SST.













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    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be 
duly executed in duplicate on their behalf by their duly authorized officers 
and representatives on the date given above.

Taiwan Semiconductor                       Silicon Storage Technology, Inc.
Manufacturing Co., Ltd

/s/ Don Brooks                             /s/ Bing Yeh
----------------------------------         ----------------------------------
Signature                                  Signature

Mr. Don Brooks, President                  Mr. Bing Yeh, President
----------------------------------         ----------------------------------
Name & Title                               Name & Title

    2/26/97                                    2/26/97
----------------------------------         ----------------------------------
Date                                       Date















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                                  Exhibit A

1)  The engineering deliverables from SST to TSMC
-------------------------------------------------
    1.1)   The macrocell block according to the configuration defined in 
           paragraph (2)

    1.2)   Documentation and training material as outlined in paragraph (3)

2)  Macrocell blocks
--------------------

    [  *  ]














3)  Documentation and material for training
-------------------------------------------
Following documentation shall be compiled during the training period relevant 
to the macrocell block defined in Paragraph (2), and they shall be delivered 
at conclusion of the training period.

    [  *  ]



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    [  *  ]



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