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                                                                     EXHIBIT 4.3

                                 AMENDMENT NO. 2
                                       TO
                        PREFERRED SHARES RIGHTS AGREEMENT

        THIS AMENDMENT NO. 2 TO PREFERRED SHARES RIGHTS AGREEMENT dated as of
September 14, 1998 (this "AMENDMENT") is made between CATALYST SEMICONDUCTOR,
INC., a Delaware corporation (the "COMPANY"), and BANKBOSTON, N.A., a national
banking association, formerly known as a The First National Bank of Boston, as
rights agent (the "RIGHTS AGENT").

                                    RECITALS

        A. The Company and the Rights Agent are parties to a Preferred Shares
Rights Agreement dated as of December 3, 1996 as amended by Amendment No. 1
thereto dated as May 22, 1998 (the "RIGHTS AGREEMENT").

        B. Elex N.V. ("ELEX") previously purchased 1,500,000 shares of Common
Stock from the Company. Elex and the Company are entering into a Common Stock
Purchase Agreement (the "PURCHASE AGREEMENT") pursuant to which the Company will
issue and Elex will purchase up to 8,000,000 shares of Common Stock of the
Company (the "INVESTMENT"). The Board of Directors of the Company has authorized
and approved the Purchase Agreement and the transactions contemplated thereby.

        C. Pursuant to Section 27 of the Rights Agreement, the Board of
Directors of the Company has determined that an amendment to the Rights
Agreement as set forth herein is necessary and desirable to reflect the
foregoing and the Company and the Rights Agent desire to evidence such amendment
in writing.

        NOW, THEREFOR, the parties hereto agree as follows:

        1. Amendment of Section 1(a). Section 1(a) of the Rights Agreement is
amended to replace the last sentence thereof with the following sentence:

        "Notwithstanding anything in this Rights Agreement to the contrary,
        neither Elex N.V. ("ELEX") nor its Affiliates or Associates shall be
        deemed to be an Acquiring Person solely by virtue of the announcement,
        occurrence or continuance of (i) the execution of the Common Stock
        Purchase Agreement dated as of May 26, 1998 between Elex and the Company
        (the "PURCHASE AGREEMENT"), (ii) the execution of the Common Stock
        Purchase Agreement dated as of September 14, 1998 between Elex and the
        Company (the "SECOND PURCHASE AGREEMENT"), (iii) the issuance to Elex of
        1,500,000 shares of Common Stock of the Company in accordance with the
        terms of the Purchase Agreement and up to 8,000,000 shares of Common
        Stock of the Company in accordance with the terms of the Second



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        Purchase Agreement (collectively, the "PERMITTED SHARES"), (iv) the
        consummation of any and all other transactions contemplated by the
        Purchase Agreement and the Second Purchase Agreement, or (v) Elex (or
        its Affiliates or Associates) holding or being deemed a Beneficial Owner
        of the Permitted Shares; provided, however, that if Elex or its
        Affiliates and Associates, at any time after consummation of the
        transactions contemplated by the Purchase Agreement and the issuance of
        the Permitted Shares, collectively shall be or become deemed to be the
        Beneficial Owner of shares of Common Stock of the Company other than the
        Permitted Shares, then Elex's (and its Affiliates' and Associates')
        exemptions from being deemed an Acquiring Person contained in this
        sentence shall not be applicable.

        2. Effectiveness. This Amendment shall be deemed effective as of
September 14, 1998 as if executed on such date. Except as amended hereby, the
Rights Agreement shall remain in full force and effect and shall be otherwise
unaffected hereby.

        3. Miscellaneous. This Amendment shall be deemed to be a contract made
under the laws of the State of California and for all purposes shall be governed
by and construed in accordance with the laws of such state applicable to
contracts to be made and performed entirely within such state. This Amendment
may be executed in any number of counterparts, each of such counterparts shall
for all purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument. If any provision, covenant
or restriction of this Amendment is held by a court of competent jurisdiction or
other authority to be invalid, illegal or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Amendment shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.


                         [REMAINDER OF PAGE LEFT BLANK]



                                      -2-
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        IN WITNESS WHEREOF the undersigned have executed this Amendment No. 2 to
the Rights Agreement as of the date first above written.


                                        CATALYST SEMICONDUCTOR, INC.


                                        By: /s/ Radu M. Vanco
                                           -------------------------------------
                                           Radu M. Vanco
                                           President & Chief Executive Officer

ATTEST:

/s/ T. E. Gay III
-------------------------------------
    Thomas E. Gay III
    Vice President Finance &
    Chief Financial Officer


                                        BANKBOSTON N.A.
                                        (AKA) EquiServe Trust Company, N.A.


                                        By: /s/ Michael J. Connor
                                           -------------------------------------
                                           Name:  Michael J. Connor
                                           Title: Managing Director,
                                                  Client Administration


ATTEST:

        /s/ Dawn Engelhardt
-------------------------------------
Name:  Dawn Engelhardt
Title:  Account Manager


                      [SIGNATURE PAGE TO AMENDMENT NO. 2 TO
                       PREFERRED SHARES RIGHTS AGREEMENT]