<PAGE>

                                                                    Exhibit 10.7

CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION.


(graphic)                 CAESAR INTERNATIONAL, INC.
          2333 Zanker Road, San Jose, CA 5131   Tel. # (408) 474-0808
                             FAX # (408) 474-0800

     August 20, 1998

     Mr. Yee Lok Wong
     InteGraphics, Inc.
     4001 Burton Drive
     Santa Clara, CA 95054

                     Subject:  Quotation No. IGS-0898-001


Dear Mr. Wong,

     Caesar Technology, Inc. (CTI) is proud to present the following quotation
for assembly of your plastic devices.

     1.0 Pricing
     -----------

          Quad Flat Pack
          --------------

               CTI Supplied Material
               ---------------------

                    Leadframe:            Copper 7025, spot Ag, stamped
                    Die Attach Epoxy:     Ablestick 84-1 LMIS
                    Bonding Wire:         Gold 1.3 Mils
                    Molding Compound:     Sumitomo 6300HG
                    Lead Finish:          Solder Plate 85/15
                    Shipping tray:        125 deg bakeable JEDEC standard
                    Heatspreader:         Anodized A1

          Lead   Pkg              Body        L/F         Price
                                                          per unit

          208    PQFP w/HS        28 x 28     Stamped      ***
          208    PQFP w/o HS      28 x 28     Stamped      ***

     Note: Price includes Assembly, Heatspreader, Bake & Dry Pack, Tray, AQ
     leadscan.


***CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

                                       1
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                           Quotation No.IGS-0898-001

     2.0 Fast Tract Program
     ----------------------

     Caesar Technology Inc. offers both Fast Track Program (FTP) and Super Fast
     Track Program (SFTP) for all packages we assemble.  Conditions are as
     follows:

          1.   Fast Track Program will be assembled 5 days in house at an 100%
               premium including all miscellaneous charges.
          2.   Super Fast Track Program will be assembled 3 days in house at an
               200% premium including all miscellaneous charges.
          3.   Assumes CTI standard process flow.
          4.   Assumes all material is in house and reserved for said assembly
               and test prior to shipment of die.
          5.   Assumes all documentation is in house and ready to go upon
               receipt of die shipment.
          6.   Capacity must be reserved through U.S. office prior to shipment
               die.

     3.0 Cycle Time
     --------------

     CTI standard in house cycle time is 8 work days. Standard cycle time is
     based on the assumption all material and documentation are in house.

     4.0 Precious Metal Adder:
     ------------------------

          Prices are quoted at an average price of $400 per troy ounce for gold
          and $10.00 per troy ounce for silver.  Prices are based on the
          Englehard fabricated product price on the day of shipment from the
          factory.  CTI reserves the right to renegotiate the assembly pricing
          should the precious metal prices move appreciably from the base
          prices.

     5.0 Terms and Conditions
     ------------------------

          1.   Minimum lot charge is $ *** USD.
          2.   Engineering lot charge is $ *** USD or total assembly cost, which
               ever is greater.
          3.   FOB is Caesar Technology Inc. Chutung, Hsinchu, Taiwan.  CTI will
               not be responsible for product damages/missing...etc. once it
               leaves CTI's door.
          4.   Customer will provide sorted linked wafers with inked die for
               set-up purposes.
          5.   Customer should provide CTI with three months rolling forecast
               for CTI to set up all necessary material stock.

*** CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES
    AND EXCHANGE COMMISSION.

                                       2
<PAGE>

                           Quotation No.IGS-0898-001


          6.   In any case, should Customer terminate the production, Customer
               must zero the lead frame stock balance and pay the lead frame
               cost in cash immediately. This applies to non-standard
               materials specific to Customer device only.
          7.   Payment terms are net 30 days upon shipment from Chutung,
               Hsinchu, Taiwan.  A monthly late charge of 2% will be applied to
               all invoices over 30 days outstanding.  If collections and/or
               legal actions will become necessary for unpaid shipments to
               Customers, Customer will have to pay for all charges incurred
               relating to the collections and/or legal activities.
          8.   The assembly price include stamped lead frames or etched
               leadframes whichever is applicable, 125 deg C JEDEC tray or
               Shipping Tubes, AQL sample lead scan and dry packing.
               Additional charges will be applied for different materials used
               or services rendered.
          9.   Assembly prices do not include freight, forwarding fees or
               duties.  A separate invoice will be issued for these charges.
          10.  CTI liability shall be value added through assembly only and this
               quotation supersedes all other warranties.
          11.  All Claims must be made 30 days after product ships from Chutung,
               Hsinchu, Taiwan.
          12.  This quote is based on CTI standard process and shall be
               effective upon receipt of purchase order referencing this
               quotation number.
          13.  The price break applicable for the current month is determined by
               the actual die loading of the previous month.
          14.  This quote is effective for 60 days.  The price will apply for
               shipouts made starting July 1, 1998 from Caesar Technology, Inc.

          On behalf of Caesar Technology Inc., I would like to thank you for the
     opportunity to quote on your assembly requirements.  Please feel free to
     call me or our U.S. office should you have any questions regarding this
     quotation.

     Sincerely,

     /s/ Stephen Lee

     Stephen Lee
     President
     Caesar International, Inc.
     Tel # (408) 474-0808
     Fax # (408) 474-0800

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