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                                                                     Exhibit 4.2




                           Dated 28th September 2000





          DIALOG SEMICONDUCTOR GMBH HEREINAFTER DESCRIBED AS "DIALOG"

                                      and

                    ESM LIMITED HEREWITH DESCRIBED AS "ESM"





                                SUPPLY AGREEMENT


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                                    CONTENTS


1   DEFINITIONS AND INTERPRETATION

2   TECHNICAL SUPPORT AND ASSOCIATED SERVICES

3   PRICING OF PRODUCTION WAFERS

4   ORDERING AND FORECASTING

5   GUARANTEE OF SUPPLY/ALLOCATION

6   WARRANTY

7   CONFIDENTIALITY

8   NON-PUBLICITY

9   PAYMENT TERMS

10  ENGINEERING LOTS REQUIREMENTS

11  QUALITY ASSURANCE/AUDITING

12  CHANGE NOTICES & ECN PROCEDURES

13  CONFORMITY WITH ORDER AND DELIVERY

14  DELAYS

15  CANCELLATIONS

16  CONTINUITY OF SUPPLY

17  OWNERSHIP OF TOOLING AND IPR

18  FORCE MAJEURE

19  PERIOD OF AGREEMENT

20  TERMINATION OF AGREEMENT

21  DUTIES ON TERMINATION

22  AMENDMENTS

23  ASSIGNMENT

24  APPLICABLE LAW

25  DISPUTES

26  NOTICES

27  THE ENTIRE AGREEMENT


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APPENDICES


1  Part I - WAFERS
   Part II - PRODUCTION WAFER PRICING
   Part III - HOT LOT PRICING

2  SPECIFICATIONS

3  WIP PRICE CALCULATION

4  LOANED EQUIPMENT AGREEMENT

5  CONSIGNED EQUIPMENT
   5.(i) CONSIGNED TEST EQUIPMENT
   5.(ii) CONSIGNED PRODUCTION EQUIPMENT


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<PAGE>   4
1    DEFINITIONS AND INTERPRETATION

a)   In this Agreement the following words and expressions shall have the
     meanings set out below unless the context otherwise requires:

     "Agreement"         this agreement and the appendices hereto;

     "Designs"           all masks and designs, belonging to Dialog and relating
                         to the manufacture of Wafers and provided by Dialog to
                         ESM to enable ESM to set up the Process and to
                         manufacture the Wafers;

     "Die"               individual integrated circuits on each Wafer;

     "Forecast Period"   shall mean each calendar month during the term of this
                         Agreement;

     "Lot"               save where otherwise specified herein, a batch of
                         Wafers produced from   *    (it being recognised that
                           *   may not result in    *       * due to losses
                         incurred in the Process);

     "Fab"               means any single wafer manufacturing clean room
                         operated by ESM from time to time at Newport;

     *                   *

     "Orders"            orders for the supply of Wafers placed by Dialog from
                         time to time in accordance with the provisions of
                         clause 4 and which are accepted by ESM;

     "Prices"            the prices specified in Appendix I parts II, III as
                         adjusted from time to time during the term of this
                         Agreement in accordance with clause 3;

     "Process"           the process for the manufacture of Wafers and including
                         (but not limited to) the design configuration and
                         operation of any equipment used in connection
                         therewith;

     "Qualification"     the testing of the Process and Qualification Lots to
                         the relevant Specification and upon passing such tests
                         ("successful Qualification") the relevant Process and
                         Wafers shall be referred to as "Qualified";

     "Qualification
     Date"               means in relation to any Process (or any Die of a
                         particular Design manufactured on that Process) the
                         date on which Dialog confirms in writing to ESM (in
                         accordance with the provisions of clause 2) that
                         Qualification has been successfully completed and that
                         the Process and/or Design is Qualified;



                                                                               4
<PAGE>   5
     "Qualification
     Lot"                such Lot or Lots as shall be manufactured by ESM solely
                         for the purposes of Qualification and whose prices and
                         quantities shall be set out in Appendix 1 or, as the
                         case may be, the Statement of Work as referred to in
                         clause 2;

     "NRE Charge"        the sums payable by Dialog in respect of non-recurring
                         expenses to ESM in respect of the setting up and/or
                         development of any Process or additional Design and as
                         agreed between the parties in advance of ESM commencing
                         set up of the relevant Process or additional Design and
                         as set out in the Statement of Work as referred to in
                         clause 2;

     "Specification"     in relation to those Wafers set out in Appendix 1 part
                         I, the specifications set out or referred to in
                         Appendix 2. In relation to any other Wafers which the
                         parties agree to add to Appendix 1 from time to time,
                         the specification agreed by the parties in writing at
                         that time, in each case as amended from time to time by
                         the parties in writing in accordance with the
                         provisions of clause 13;

     "Start"             means a single raw silicon wafer introduced to the
                         Commencement of the Process;

     "Target Yield"      means the target yield determined between the parties
                         on a design by design basis per test program version;

      *                  *

     "um"                means micron;

     "Wafer"             integrated circuits in the form of silicon wafers
                         manufactured by ESM pursuant to this Agreement and as
                         referred to in Appendix 1 together with such other
                         silicon wafers as the parties may agree and add to
                         Appendix 1 from time to time;

b)   words in the singular shall include the plural and vice versa; references
     to a gender shall include all genders; references to persons shall include
     natural persons, partnerships, companies and unincorporated associations;
     and references to a "party" or the "parties" shall mean a party or the
     parties to this Agreement;

c)   headings are for convenience only and shall not affect the construction or
     interpretation of this Agreement; and references to clauses are to clauses
     of this Agreement.




                                                                               5

<PAGE>   6

2   TECHNICAL SUPPORT AND ASSOCIATED SERVICES

a)  In relation to those Wafers and Die referred to in Appendix I part I at the
    date of this Agreement, the parties agree and acknowledge that Processes for
    manufacture of such Wafers are Qualified in accordance with written criteria
    agreed between Newport Wafer-Fab Limited and Dialog (which criteria are
    also agreed between the parties hereto):

b)  In relation to any additional Wafers or Processes which the parties agree to
    include in Appendix I from time to time:

    i)   Dialog shall, within an agreed timescale, provide to ESM the Designs
         free of charge in such form and detail as ESM shall reasonably require.
         Further, the parties shall agree the contents of a statement of work
         ("Statement of Work") detailing the process for development, set up and
         Qualification of the relevant Process together with details of the NRE
         Charge payable to ESM in relation to the same;

    ii)  the parties shall co-operate and perform their respective
         responsibilities in the Statement of Work in relation to the relevant
         Process;

    iii) Dialog shall pay to ESM the NRE Charges in accordance with the
         timescales set out in the Statement of Work and subject to occurrence
         of the relevant milestone stages specified therein;

    iv)  in the event that Dialog requires, prior to the relevant Process being
         Qualified, any works to be carried out in relation to the Wafers or
         Process in addition to the Statement of Work or shall require any
         Qualification Lots in excess of those set out in the Statement of
         Work, ESM shall be entitled to charge Dialog additional fees and
         expenses, such fees and expenses to be agreed prior to commencement
         of any work;

    v)   Dialog shall promptly carry out Qualification testing within a
         reasonable period of time of receipt of the relevant Qualification
         Lot(s) and keep ESM promptly and fully informed as to the results of
         such Qualification. In the event that such testing demonstrates that
         the Qualification Lots comply with the Specification, Dialog shall
         promptly notify ESM of successful Qualification. Dialog shall not
         unreasonably withhold Qualified status. Dialog shall keep true and
         detailed records of any Qualification tests and shall permit ESM, its
         agents and representatives at all reasonable times to inspect and
         (subject to consent of Dialog not to be unreasonably withheld) take
         copies of or extracts from any such records in the possession, custody
         or control of Dialog. ESM shall (save for reimbursement of any NRE
         charges which have been paid to ESM in respect of the Qualification in
         question where failure to Qualify was due to ESM's failure to fulfil
         its obligations under the Statement of Work) not be liable to Dialog
         for failure to achieve Qualified Status and in the event that any
         Process or Wafer has not Qualified within 3 months of the date
         envisaged in the relevant Statement of Work, either party may elect to
         discontinue further work in relation to achieving Qualified Status of
         the relevant Process or Wafer.


                                                                               6
<PAGE>   7
     vi)  Each party shall provide the other with technical support and
          assistance as the other may reasonably require to identify and correct
          any Qualification failure which becomes apparent during the
          Qualification tests. Further Dialog shall upon reasonable notice and
          at such times as the parties shall reasonably agree, be entitled to
          have an employee on site at ESM's premises in Newport during normal
          working hours who shall be entitled to observe the Processes in
          operation in the performance of this Agreement and to liaise with
          stiff of ESM in order to ensure maintained quality standards. Dialog
          shall replace such employee at ESM's request where ESM reasonably
          determines that there has been a breakdown in working relationship.

     vii) unless otherwise agreed in writing, no: Wafers shall be produced or
          supplied to Dialog prior to Qualification Date of the relevant Process
          and Design for use other than in connection with Qualification
          testing.

3    PRICING OF PRODUCTION WAFERS

a)   In relation to Wafers of the type specified in Appendix I part I, the
     pricing is according to Appendix I parts II to III. In relation to Wafers
     added to Appendix I by agreement between the parties, the prices shall be
     as agreed between the parties at that time and Wafers shall not be added to
     Appendix I until the relevant price is agreed. The prices quoted from time
     to time in Appendix I are in U.S. currency and net of any and all taxes and
     duties, including but not limited to, custom duties, sales tax, value added
     tax, use tax, and excise tax. Dialog shall pay all applicable taxes (which
     may include one or more of the above taxes) in addition to the prices
     quoted in Appendix I. During  *  and  *  of each subsequent year, the
     parties shall re-negotiate in good faith the prices for the Wafers for the
     succeeding year commencing  *  and if no agreement can be reached with
     respect to the Wafer prices by  *  the prices applicable to the succeeding
     year shall be the existing price then in effect.


b)   *



c)   In relation to the  *   and  *   designs, the parties are presently
     collaborating regarding introduction of improvements to the  *  and  *
     designs respectively, which are of a smaller Die size and therefore
     increase the number of gross Die per Wafer. It is intended that the parties
     will share the benefit of any gross die count achieved directly through
     such improvements.


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<PAGE>   8
    The following wafers price increases relative to Wafer prices would apply.
    Current process design rules (as defined in appendix 2) No Change

    *



d)  *



e)  *



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<PAGE>   9


4   ORDERING AND FORECASTING

a)  At least five days prior to the 1st day of each Forecast Period Dialog will
    provide a rolling forecast ("the Forecast") of its delivery requirements for
    Wafers for the 12 months commencing on the first day of the said Forecast
    Period. Dialog will use all reasonable endeavours to ensure that its Wafer
    requirements are spread evenly throughout the year, though this cannot be
    guaranteed. The forecasting principle will be as follows:

    *


b)  At the same time as issuing its first Forecast, Dialog shall place orders
    with ESM for the Wafers detailed in months 1 to 4 of such Forecast. Upon
    issuing each subsequent Forecast, Dialog shall place orders with ESM for
    the Wafers detailed in month 4 of such Forecast.

c)  Orders placed by Dialog as referred to above shall be accepted by ESM
    within 3 working days of receipt (and shall then be binding) in so far as:

    i)   they are within the scope of the most recent forecast for the fourth
         calendar month of such forecast; and

    ii)  the total Guaranteed Capacity for Wafers to be delivered in any
         particular Forecast Period has not been exceeded.


d)  Any orders placed by Dialog above the amounts specified in c)(i) and (ii)
    shall be subject to acceptance by ESM, which it may in its direction
    withhold. ESM shall communicate its acceptance or rejection of such orders
    within 5 working days of receipt. Orders accepted by ESM in accordance with
    this clause 4(d) shall be binding on the parties.

5   GUARANTEE OF SUPPLY/ALLOCATION

a)  Subject to the remainder of clause 5 ESM agrees to provide Dialog with a
    guaranteed capacity ("GUARANTEED CAPACITY") as follows:

    *



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<PAGE>   10


    *

    The above capacity reservations are also conditional upon Dialog having
    complied with its obligations under Appendices 4 and 5 and upon ESM having
    successfully configured and installed the equipment as referred to in
    Appendices 4 and 5 within the timescale necessary to meet the
    aforementioned Guaranteed Capacity and such equipment operating (in
    conjunction with other ESM plant) in accordance with its specifications. In
    the event that the foregoing is not achieved due to unavailability of
    equipment or installation and consultancy services in relation to such
    consigned equipment, or failure or delay of the same to operate to
    specification within such timescales as aforesaid the parties shall meet
    and discuss in good faith how to remedy the situation and to agree what
    Guaranteed Capacity levels shall apply.

Further, ESM shall from the time Fab3 is fully equipped and operational and
subject to agreement on price and specification for the relevant wafers provide
a Guaranteed Capacity of * production capacity of Fab3 from time to time.

b)  ESM agrees to use its reasonable endeavours to accelerate its increase in
    production capacity and efficiency in an effort to make available capacity
    of * per month prior to Apr 2001.

c)  Without prejudice to clause 5(d) and 5(e), ESM shall in any Forecast Period
    be entitled to utilise the short fall between the Guaranteed Capacity for
    that period and the volume of Wafers ordered by Dialog during that period
    as ESM shall see fit including for the purpose of supplying Wafers to its
    other customers.

d)  In relation to each of Fab 1 and Fab 3 in the event that in relation to any
    three consecutive Forecast Periods Dialog forecasts (in its latest forecast
    prior to commencement of the first of such Forecast Periods) that its
    aggregate required amounts for those periods for Wafers produced in the
    relevant Fab are less than the aggregate Guaranteed Capacity (as may have
    been previously adjusted in accordance with this clause 5) for the relevant
    Fab and periods then the Guaranteed Capacity for the relevant Fab per
    Forecast Period shall for the remainder of this Agreement (but subject to
    any further amendments pursuant to this clause 5(b) and/or 5(e)) be amended
    to equal the average amount of volumes and wafer type set out in Dialogs
    latest forecast for Wafers produced in the relevant Fab for each of those
    periods plus * of such average where such total amount is less than the
    Guaranteed Capacity for the relevant Fab (as may have been previously
    adjusted in accordance with this clause 5).



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<PAGE>   11


e)  In relation to each of Fab 1 and Fab 3 in the event that in relation to any
    three consecutive Forecast Periods Dialog does not place Orders for the
    relevant Fab (which are binding under clauses 4(c) and/or 4(d) in
    aggregate equal to or in excess of * of the aggregate Guaranteed Capacity
    for the relevant Fab (as may have previously been adjusted in accordance
    with this clause 5) of those periods then without prejudice to any rights
    or remedies ESM may have, the Guaranteed Capacity for the relevant Fab per
    Forecast Period shall for the remainder of this Agreement (but subject to
    the remainder of this clause and to any further amendment pursuant to
    clause 5(d) and/or this clause 5(e)), unless the parties agree otherwise,
    reduce to equal the average plus * of the volumes and Wafer type for Wafers
    produced in the relevant Fab which were the subject of binding Orders
    placed by Dialog for delivery during the said three Forecast Periods where
    such total amount is less than the Guaranteed Capacity for the relevant Fab
    (as may have been previously adjusted in accordance with this clause 5).

    *

f)  In the event that Guaranteed Capacity is reduced under clauses 5(d) or 5(e)
    ESM agrees that, on Dialog's request, it will discuss such reduction with
    Dialog and may, following such discussion agree to reinstate (in whole or
    part) the relevant Guaranteed Capacity

6   WARRANTY

a)  ESM warrants all Wafers will comply with the relevant Specification for *
    from date of delivery (or such other longer period as may be agreed).
    Dialog will use all reasonable endeavours to report any failure to comply
    with Specification as soon as practicable and in any event within * of
    receipt of the relevant Wafers. Further where Dialog probe they will report
    the yield results to ESM within * of probing. If any Wafers do not during
    the said * period conform to the Specification or are not at the time of
    delivery, of new (ie manufactured within the previous 3 months) manufacture
    (hereinafter called a "Defect") then Dialog shall (without prejudice to any
    other right it may have under this Agreement) be entitled to exercise one
    of the following rights:-

    i)   Require ESM to use its best efforts as necessary to replace the Wafers
         free of additional cost to Dialog and at ESM's risk; or

    ii)  where the parties agree (agreement not to be unreasonably withheld)
         that Dialog cannot utilise or sell the Wafer in question or ESM no
         longer manufactures the Wafer in question, reject the Wafers in
         question in whole or in part and require ESM to credit Dialog with
         sums paid in respect of the same.

b)  The warranty in 6(a) is given by ESM subject to the following conditions:



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<PAGE>   12

     i)  ESM shall be under no liability in respect of any defect in the Wafers
         arising from any drawing, design or specification (which shall include
         without limitation the Designs and the Specifications) provided by
         Dialog or as a result of Dialog's designs failing to comply with the
         design rules issued by ESM from time to time outlining relevant design
         parameters for its plant. Dialog undertaken to promptly notify ESM of
         any such failure to comply with the said design rules, in force at the
         time of each database release to mask manufacture.

    ii)  ESM shall be under no liability in respect of any defect arising from
         fair wear and tear, wilful damage. Dialog's negligence, abnormal
         working conditions, improper or faulty handling and use, modification,
         misuse or alteration or repair of the Wafers by Dialog or its Agents or
         contractors.

c)  Except as expressly set out in this clause 6 ESM does not give any warranty
    to Dialog or its customers with respect to the Wafers. All other warranties,
    terms or conditions, whether express or implied by statute or common law or
    trade usage or otherwise, including but not limited to any warranties terms
    or conditions as to the merchantability or satisfactory quality of, or the
    fitness for a particular purpose of, any of the Wafers are hereby excluded.

d)  ESM's liability under or in connection with this Agreement, whether in
    contract or in tort or otherwise howsoever in respect of:

    i)   death or personal injury caused by its own negligence or that of its
         employees, agents or sub-contractors shall not be limited;

    ii)  damage to property caused by negligence of ESM or that of its
         employees, agents or subcontractors, shall not exceed, in any calendar
         year, an aggregate of pound sterling 2 million;

    iii) any other loss or damage shall not in relation to any Order, exceed
         the price paid by Dialog in respect of such Order.

7   CONFIDENTIALITY

a)  Save for information described in clause 7(c)(i) to (iii) Dialog and ESM
    shall keep strictly confidential and not without the other party's prior
    consent in writing disclose to any third party, any document or information
    whether of commercial or technical nature furnished by the other party
    pursuant to this Agreement. The receiving party shall use the same only for
    the purpose of this Agreement.

b)  "information" shall mean all documents, ideas, know-how and other
    information supplied by one party to the other (whether disclosed orally, in
    documentary or other material form, by demonstration or otherwise), which:

    i)   in the case of any document is marked as being "Confidential", or
         "Proprietary", or by any other appropriate legend; and

    ii)  in the case of information orally disclosed, is identified by the
         disclosing party at the time of disclosure as being disclosed in
         confidence and is confirmed in writing by the disclosing party after
         oral disclosure; and

    iii) relates to one party's business or processes and is obtained by
         employees of the other whilst present, on the first party's site.

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<PAGE>   13
     "the disclosing party" shall mean the party furnishing information, and

     "the recipient" shall mean the party receiving it, in the particular case.

c)   All information furnished by the disclosing party shall be treated by the
     recipient as confidential, shall not be disclosed to others, except
     employees of the receiving party having a need-to-know, or used other than
     for purposes for which it was submitted without the disclosing party's
     prior written consent, except for any of the information which the
     recipient can show;

     i)   is already known to the recipient at the date it was disclosed to it
          by the disclosing party and is or becomes free of restriction on the
          disclosure or use in question; or

     ii)  is or becomes generally known or freely available to the public
          (except by reason of any breach by the recipient of its obligations
          hereunder); or

     iii) is disclosed to the recipient, free of restriction on the disclosure
          or use in question, by a third party who was entitled to make such
          unrestricted disclosure; or

     iv)  is independently developed by the recipient.

d)   The recipient will take such precautions and make such arrangements as are
     reasonably necessary to protect the information received by it (and in any
     event no less than those the recipient would take and make to protect its
     own confidential information).

e)   Upon expiration or termination of this Agreement, each party shall return
     to the other, if requested in writing, all written or descriptive matter,
     including, but not limited to drawings, blueprints, descriptions, or other
     papers or documents which contain any such valuable proprietary information
     of the other Party and shall retain no copies of same. The obligations of
     confidentiality shall survive termination of this agreement.

f)   No licence to either party under patents, trademarks or copyrights is
     granted or implied by the disclosure of confidential information under this
     Agreement. However, ESM is hereby licensed to use the Designs for the
     purpose of manufacture and supply of Wafers to Dialog under the terms
     hereof.

8    NON-PUBLICITY

a)   Neither party shall publish or otherwise disclose the terms of this
     Agreement (save in so far as may be required by law or may be necessary for
     the due performance of the Agreement) without the prior approval in writing
     of the other party. The foregoing shall not apply to the extent that such
     disclosure is required by the City Code on Takeovers and Mergers, London
     Stock Exchange Limited or any other stock exchange regulatory authority to
     which either party is or may become bound to comply, subject to the
     parties having previously consulted where practicable as to the timing,
     content and manner of such disclosure.


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<PAGE>   14


9   PAYMENT TERMS

a)  Payments shall be made by Dialog to ESM within  *  days of the date of the
    invoice. A copy of the invoice will be faxed to Dialog on date of issue.

b)  At ESM's option, to be exercised by not less than  *  days notice, payment
    shall, during such period as ESM shall elect, be made within  *  days of
    date of invoice or delivery of the relevant Wafers whichever is the later
    subject to Dialog receiving a  *  discount on the relevant invoices.


10  ENGINEERING LOTS REQUIREMENT

a)  ESM will provide Dialog with engineering runs as required subject to a
    limit, at any one time,

    *

    Any further requests for engineering or multi-project Wafer runs will be
    subject to agreement of the parties, such agreement not to be unreasonably
    withheld having taken into account the production commitments of ESM to
    Dialog and its other customers.

    For the purposes of this clause 10:

    i)   an engineering run shall be deemed to be any single Lot which has any
         Wafers held in or removed from the Process line part processed or has
         splits in processing within a single Lot. The price payable in respect
         of each engineering lot shall be as specified in Appendix I and shall
         be subject to the annual price negotiation referred to in clause 2.
         For the avoidance of doubt, engineering lots shall not be charged per
         wafer but per Lot.

    ii)  *

    iii) *


11  QUALITY ASSURANCE/AUDITING

a)  ESM shall ensure that their quality assurance/inspection authority is
    supported by adequate staff proficient in this role.

b)  Dialog requires ESM to actively work to maintain of ISO 9002 and QS9000,
    ESM agrees to support this.

c)  Dialog shall have the right to make quality inspections/audits at the ESM
    manufacturing location(s) at agreed intervals in time. This right shall be
    extended to Dialog's customers by agreement with ESM, and subject to ESM
    receiving required confidentiality undertakings from such customers.


                                                                              14



<PAGE>   15
d)  ESM will provide, upon Dialog's written request during the term of this
    Agreement, ESM's available reliability and quality data regarding Wafers
    produced for Dialog for the purpose of maintaining consistent quality and
    reliability standards for such Wafers.

e)  During the term of this Agreement, ESM shall maintain fab and test lot
    traceability for Wafers manufactured on behalf of Dialog. The parties shall
    meet annually and agree (agreement not to be unreasonably withheld) which
    traceability records retained by ESM may be destroyed.

f)  ESM will promptly after discovery advise Dialog of defects and/or
    non-conformity in Wafers already delivered to and/or in lots currently in
    manufacture for Dialog. During the term of this Agreement, ESM will provide
    Dialog with written quarterly quality assurance reports regarding Wafers (if
    any) manufactured on behalf of Dialog in those months.

g)  Wafer acceptance with be subject to process control monitor acceptance
    criteria to be mutually agreed upon on a process-by-process basis. Minimum
    yield and low yield lot criteria will be negotiated on a product-by-product
    basis. All accept-reject criteria shall be the agreed upon Wafer Acceptance
    and Visual Inspection Specifications and all critical dimension and process
    tolerances shall be solely as agreed upon in writing.

h)  Subject to Dialog's obligations with respect to volumes committed under the
    ordering and forecasting procedures involved, upon receipt of Dialog's
    written Stop Request, ESM will immediately stop shipment of Wafers which are
    subject to a suspected failure to meet the criteria specified in the
    Specification. If ESM is responsible for a proven failure so as to breach
    the warranties in clause 6, and ESM is not able to correct the matter within
    forty-five (45) days of receipt of such Stop Request, then subject to the
    provisions of clause 6(b) to (d) Dialog may exercise its rights under
    clause 6(a).

i)  If Dialog requests, under (h) above ESM to stop delivery of any Wafers which
    Dialog is obligated to purchase, and the Wafers are determined in good faith
    by ESM to have been processed in accordance with the applicable
    Specification, in addition to and without either party waiving any other
    remedies, Dialog shall pay for completed goods at the purchase order price
    and payment for work in progress shall be the Wafer Price as amended in
    accordance with Appendix 3 to make an appropriate but not pro rata
    calculation based on the relative mask step at which the Wafer(s) were at
    the time of cancellation.

j)  Upon written request from Dialog and subject to satisfactory arrangements
    for payment to ESM for the reasonable costs involved, ESM will perform
    failure analysis of Wafers returned to ESM pursuant to ESM's standard return
    material authorisation procedures. If such analysis shows the existence of
    material defects in breach of applicable ESM warranties, ESM will not be
    entitled to payment for the cost of the failure analysis concerning such
    defects for the specific Wafers which were subject to them.

12 CHANGE NOTICES & ECN PROCEDURES

a)  After a Process is Qualified, all changes, which result in changes to
    electrical or mechanical specifications of the relevant Wafers, in the
    relevant manufacturing Process and materials used by ESM to fabricate goods
    provided to Dialog must first be approved by both parties under ESM's ECN
    procedures. Without limiting the foregoing, during the term of this
    Agreement



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<PAGE>   16
    i)   ESM shall give Dialog advance written notice of any proposed change(s)
         ("Proposed Change Notice") in materials and/or to its existing
         manufacturing process, which, to the best of ESM's knowledge, affect
         the form, fit, performance, maintainability, operation, function,
         reliability, interface, interconnectability, compatibility, design
         rules, models, or size of the chips for Wafers then Qualified and
         subject to open purchase Orders from Dialog or which would require
         verification on silicon.

    ii)  Such Proposed Change Notice shall describe the nature of the proposed
         changes(s), including reasons for the change(s), the anticipated
         schedule for implementation of the change(s), and other relevant
         technical and logistic considerations, including without limitation
         quality and reliability data to the extent available.

    iii) Dialog shall approve or disapprove any such proposed change promptly,
         but in no event may any such change be disapproved later than five (5)
         business days after receipt of the Proposed Change Notice.

    iv)  If Dialog disapproves such proposed change within the five business day
         period allowed, ESM shall continue to manufacture and deliver to Dialog
         unchanged Wafers in accordance with this Agreement for a minimum of six
         (6) months from the date ESM issues the Proposed Change Notice.

    v)   Upon the expiration of three months after the following Proposed Change
         Notice, ESM, in its discretion and by then giving a minimum of three
         months prior written notice to the Dialog, may stop manufacture and
         delivery of all Wafers involved without liability and thereafter such
         Wafers shall be deemed removed from Appendix I.

    vi)  ESM shall not, without agreement of Dialog, use in engineering
         experiments or withdraw from the production line for use in engineering
         experiments Wafers which are in the process of production pursuant to
         binding purchase Orders placed by Dialog.

b)  After successful Qualification Dialog reserves the right to prepare changes
    to the design of Wafers to be produced for it by ESM, provided however that
    each such change must be timely documented by Dialog through written change
    notices and agreed by ESM. Notwithstanding anything to the contrary, after
    Process Qualification runs for a particular design have been made and
    approved by ESM and Dialog, any Dialog-requested changes to design, process
    or materials for such Wafers shall be subject to ESM's consent (which will
    not be unreasonably withheld) and payment by Dialog of applicable reasonable
    costs and price increases, if any, related to such change.

c)  No additional quality assurance requirements or measurements (whether cv
    plots, metal step coverage analysis, SEM analysis, or other) will be
    required except upon ESM's written agreement as to the step or measurement
    to be performed, and Dialog's commitment to pay ESM's stated costs.

13  CONFORMITY WITH ORDER AND DELIVERY

a)  Delivery of orders binding on the parties, under clause 3 will be made
    ex-works Newport UK (or as otherwise agreed in writing) in accordance with
    Incoterms 2000.


                                                                              16
<PAGE>   17
b)  Risk in the Wafers shall pass on delivery notwithstanding that title to the
    Wafers shall not pass to Dialog until ESM has received payment in full for
    the Wafers.

c)  If at any time Dialog fails to make payment in full of any amount payable to
    ESM for the Wafers supplied or Dialog becomes insolvent or a receiver is
    appointed or Dialog is liquidated (except for the purposes of a solvent bona
    fide amalgamation, reconstruction or other reorganisation), then (provided
    the relevant Wafers are still in existence and have not been resold) ESM may
    forthwith enter upon the premises of Dialog for the purpose of repossessing
    the Wafers supplied in which title has not passed to Dialog up to the value
    of the Wafers in respect of which payment has not been made and Dialog
    hereby grants to ESM a license for that purpose.

d)  All products must be properly and securely packed and the package marked
    with Dialog's part number and order number. Dialog will return containers to
    ESM if previously requested, at ESM's expense.

14  DELAYS

a)  Without prejudice to any other rights Dialog may have under this Agreement
    Dialog has the right to cancel an Order wholly or in part without liability,
    where the relevant Wafers are not available for collection in accordance
    with the relevant forecast or other agreed date or on a new date
    subsequently agreed with Dialog. Dialog will not unreasonably withhold such
    agreement.

b)  Time shall not be of the essence in relation to this Agreement or any Order.

15  CANCELLATIONS

a)  Upon termination of this Agreement or upon Dialog ceasing to require
    production of a particular Wafer, Dialog undertakes to pay a fair and
    reasonable price for raw materials purchased by ESM in reliance upon the
    forecast up to that time and which cannot reasonably be deployed to fulfil
    the then current requirements of its other customers, up to a maximum of
    12 weeks requirement of such stock or material in production against orders
    with the raw material supplier, calculated on the average consumption of
    such stock by ESM over the previous 6 months.

16  CONTINUITY OF SUPPLY

a)  ESM undertakes to inform Dialog in writing as soon as possible of any plans
    to suspend or close down manufacturing of Wafers or specific Processes, with
    a view to permitting Dialog to place consolidated orders for future
    requirements.

b)  ESM shall be entitled to close down manufacture of Wafer or Specific
    Processes (whereupon the same shall be removed from Appendix 1) provided
    always that Dialog shall be entitled to place Orders for the relevant Wafers
    in accordance with and subject to the terms of this Agreement within 6
    months of such notice, for delivery within 12 months of the order date.

17  OWNERSHIP OF TOOLING AND IPR

a)  All Designs provided by Dialog and used to manufacture Wafers for Dialog
    shall remain the property of Dialog. Upon receipt of a written request from
    Dialog, ESM shall deliver to Dialog all such designs in its possession or
    control.


                                                                              17







<PAGE>   18

b)  The parties agree that ESM (or its licensor) owns or, as the case may be,
    shall own all rights in and relating to the Processes used from time to
    time. Each party shall retain ownership of their respective intellectual
    property rights (including knowhow) and, without prejudice to the foregoing,
    Dialog does not assign any of its rights to ESM.

c)  ESM is authorised to use Designs produced by Dialog for the purpose of
    supply Wafers under the terms of this Agreement.

18  FORCE MAJEURE

a)  Nether party shall be liable in any circumstances for any failure to perform
    any of its obligations hereunder if such failure is due to any cause beyond
    its reasonable control including, without limitation, war, act of God,
    governmental act, fire or explosion. Non-availability of materials shall be
    consider Force Majeure.

19  PERIOD OF AGREEMENT

a)  This Agreement becomes effective from the date of signing by both parties
    and, unless terminated earlier in accordance with its terms shall remain in
    force until  *  *  and shall continue in force thereafter until either party
    terminates by giving to the other not less than  *  written notice, such
    notice to expire on or after  *  .

20  TERMINATION OF AGREEMENT

a)  Either party (the "first party") may, without prejudice to any other rights
    or remedies it may then have, forthwith terminate this Agreement by written
    notice to the other in the event that the other is in material breach of any
    of the provisions hereof provided that the first party shall not be entitled
    to terminate if (i) the other party remedies such breach within 60 days (or
    such longer period as the parties may agree) of written notice from the fist
    party specifying the breach and (ii) within 30 days of receipt of written
    notice from the first party the other party takes reasonable steps to
    commence remedy of the relevant breach.

b)  Either party may terminate this Agreement forthwith by written notice in the
    event that the other party, is wound up or goes into liquidation (except for
    the purposes of a solvent bona fide amalgamation, reconstruction or other
    reorganisation and in such manner that the company resulting from such
    reorganisation effectively agrees to be bound by or to assume the
    obligations imposed on that other party under this Agreement).

21  DUTIES ON TERMINATION

a)  Upon termination of this Agreement (other than termination by Dialog
    pursuant to clause 20(a)), Dialog shall be obligated to accept and pay for
    all the Wafers which are subject to binding Orders as at the date of
    termination. If this Agreement is terminated by Dialog under clause 20(a),
    then Dialog will be entitled either to cancel all Orders for the Wafers not
    notified to Dialog as available for collection at the time of termination,
    or to require ESM to fulfil all binding Orders for the Wafers which are
    outstanding at the date of termination subject to payment by Dialog of the
    relevant price. Further, if ESM terminates this Agreement in accordance with
    clause 19, ESM shall be obliged to fulfil all binding Orders for the Wafers
    which are outstanding at the date of termination, subject to payment by
    Dialog of the relevant price and in relation to such supply the provisions
    of this Agreement shall, notwithstanding termination, continue in full force
    and effect.

                                                                              18
<PAGE>   19


b)  Following the termination of this Agreement due to notice properly served
    by Dialog under clause 20(a) ESM shall promptly co-operate with Dialog and
    provide assistance in the transfer by Dialog to an alternative supplier and
    shall if requested by Dialog continue to supply Wafers in accordance with
    the terms hereof (including lead times) for a period not to exceed 3 months
    and in relation to such supply the provisions of this Agreement shall,
    notwithstanding termination, continue, full force and effect.

c)  For the avoidance of doubt ESM does not grant and shall not be obliged to
    grant to Dialog or any alternative supplier a right to use any intellectual
    property rights or know how owned or used by ESM in the production of
    Wafers (and ESM shall not be obliged to disclose the same) whether for the
    purpose of Wafer manufacture or otherwise.

d)  The expiration or earlier termination of this Agreement will not operate to
    release either hereto from its obligation under or the effect of clauses 6,
    7, 17, 21 to 27, which obligations and provisions will survive such
    expiration or termination, or from any liability which has already accrued
    to the other party as of the date of expiration or termination or which
    may thereafter accrue in respect of any act, omission or default occurring
    prior to expiration or termination.


22  AMENDMENTS

a)  Any amendment to this Agreement has to be made in writing and signed by
    both parties.


23  ASSIGNMENT

a)  Neither of the parties can assign this Agreement in whole or in part to any
    third party without the prior written consent of the other party.


24  APPLICABLE LAW

a)  This Agreement shall be governed by the laws of England and Wales.


25  DISPUTES

a)  Any disputes which arise in respect of matters provided for in this
    Agreement shall be initially submitted to the Chief Executive of ESM and
    Dialog's Managing Director for resolution. If such attempt at resolution is
    not successful within 30 days of such submission the dispute shall subject
    to the jurisdiction of the courts of England and Wales, to which
    jurisdiction both parties hereby expressly submit.


26  NOTICE

a)  All notices, consents, approvals or other communications hereunder shall be
    in writing and shall be delivered personally or by registered or certified
    mail, postage prepaid, or sent by fax, addressed to the relevant party at
    the following address (or other address for a party as shall be specified
    by like notice):

    If to ESM to:

    Cardiff Road
    Duffryn
    Newport
    South Wales
    NP9 1YJ



                                                                              19


<PAGE>   20
     Attention: The Chief Executive

     Fax: +44 1633 816910

     If to Dialog to:

     Neue Strasse 95
     D-73230, Kirchheim/Tech-Nabern
     Germany

     Attention: The Managing Director

     Fax: 0049 7021 941 410

27   THE ENTIRE AGREEMENT

a)   This Agreement supersedes all other agreements between the parties either
     oral or written and represents the entire agreement between the parties.

b)   Save as the parties may agree in writing from time to time (whether in a
     Statement of Work or otherwise), all Wafers sold by ESM are sold subject to
     the terms of this Agreement which shall be the sole terms and conditions of
     any sale by ESM to Dialog. Terms and conditions on Dialog's order for a or
     other similar document shall not be binding on ESM. Terms and conditions on
     ESM's quotations or invoices or other similar document shall not be binding
     on Dialog.

c)   For the avoidance of doubt the Agreement between the parties dated 2nd
     August 1999 relating to supply of Wafers is hereby terminated and each
     party irrevocably waives any rights against the other (save under clause 6,
     7, 8(a) 19(b) and 23(c) thereof in connection with the same).

     ESM LTD.                                DIALOG SEMICONDUCTOR GMBH

     Date: 28th September 2000               Date: 28th September 2000

     Name: Robert C. Wright                  Name: R. Pudelko

     Signature: Robert C. Wright             Signature: R. Pudelko

     Position: CEO                           Position: CEO & President




                                                                              20
<PAGE>   21


APPENDIX 1

PART I - WAFERS

    *

PART II - PRODUCTION WAFER PRICING

    *



PART III - PRICING

    *



                                                                              21

<PAGE>   22


*




                                                                              22


<PAGE>   23


APPENDIX 2  SPECIFICATION

<TABLE>
<CAPTION>
ESM Spec No         Rev       Description
-----------         ---       -----------
<S>                 <C>       <C>
*

</TABLE>

<PAGE>   24


*



<PAGE>   25


*


<PAGE>   26


APPENDIX 3  WIP PRICE CALCULATION


*



<PAGE>   27
Appendix 4

                                                       Dialog Semiconductor GmbH
                                                                Neue Strasse 95,
                                                       73230 Kircheim unterTeck,
                                                                         Nabern,
                                                                         Germany
                                                                      ("Dialog")

TO:
ESM Limited,
Cardiff Road,
Newport,
NP10 8YJ

Dear Sirs

As you know, ESM and Dialog have entered into an agreement for the supply by ESM
of silicon wafers to Dialog (the "Supply Agreement"). Dialog are willing to loan
ESM the hardware and software as detailed in the attached appendix (the "Loan
Equipment") free of charge for the term of the Supply Agreement (the "Loan
Term") on the terms and conditions set out below:

1    THE LOAN EQUIPMENT

     (a)  Dialog shall at its expense install the Loan Equipment by way of loan
          in ESM's Premises.

     (b)  Throughout the Loan Term ESM agrees that:-

          (i)     the Loan Equipment will remain the property of Dialog even if
                  it is fixed to ESM's Premises;

          (ii)    it will not seek to assert title in the Loan Equipment;

          (iii)   Dialog may place and maintain on the Loan Equipment such
                  plates, marks and numbers as it considers appropriate to
                  indicate that he Loan Equipment is Dialog's property;

          (iv)    ESM will permit Dialog or its agents at all reasonable times
                  to inspect the Loan Equipment and for that purpose to enter
                  ESM's Premises or any other premises where the Loan
                  Equipment may be;

          (v)     ESM will maintain the Loan Equipment in good order and
                  condition, fair wear and tear only excepted;

          (vi)    ESM will use the Loan Equipment in accordance with the
                  relevant operating manual;

          (vii)   ESM will insure the Loan Equipment with the interest of Dialog
                  noted on the policy;

          (viii)  ESM will keep the Loan Equipment at ESM's Premises.


<PAGE>   28

    (c)  ESM may use the Loan Equipment for probing Wafers to be delivered to
         any of its customers provided that any such probing of Wafers to be
         delivered to third parties does not prevent ESM from probing Wafers for
         delivery to Dialog in accordance with the terms of the Supply
         Agreement.

2   LOSS OR DAMAGE TO THE LOAN EQUIPMENT

    (a)  If the Loan Equipment is damaged during the Loan Term and such damage
         is covered by an insurance policy and if in the opinion of the insurers
         it is economic that such damage be made good all insurance monies
         payable under the said insurance shall be applied in making good such
         damage.

    (b)  If the Loan Equipment is lost, stolen, destroyed or damaged and such
         loss or damage is covered by insurance and the Loan Equipment is lost
         or damaged to such an extent as to be in the opinion of the insurers
         incapable of economic repair all insurance monies payable to ESM under
         the said insurance shall be paid to Dialog in full and the Loan Period
         shall come to an end.

    (c)  ESM's liability for damage, loss or destruction to the Loan Equipment
         is limited except where ESM is guilty of gross negligence or wilful
         default to the amount payable under any insurance policy as set out in
         clauses 2(a) and (b) above.

3   TERMINATION

    (a)  If the Supply Agreement is terminated for any reason then Dialog may
         immediately terminate the loan of the Loan Equipment and in such event
         may enter ESM's premises to recover the same if ESM fails to promptly
         return the Loan Equipment.

4   LAW

    (a)  This Letter shall be governed by and construed in accordance with
         English law, and the parties hereto hereby irrevocably submit to the
         non-exclusive jurisdiction of the English Courts.

Please confirm your agreement to the terms set out in this letter by signing
and returning the attached copy of this Letter.


Yours faithfully


R. Pudelko
-------------
For and on behalf of Dialog
We agree to the above terms



Robert Wright
-------------
Signed for and on behalf of ESM


<PAGE>   29

APPENDIX 5     CONSIGNMENT AGREEMENT

APPENDIX 5(I)  CONSIGNED TEST EQUIPMENT


*


LOAN EQUIPMENT


*


APPENDIX 5(II) CONSIGNED PRODUCTION EQUIPMENT


*
<PAGE>   30

                                                                      [EMS LOGO]

Dialog Semiconductor GmbH
Neue Strasse 95,
73230 Kircheim unter Teck,
Nabern,
Germany
                                                            Cardiff Road
                                                            Newport
                                                            South Wales NPIO BY
                                                            United Kingdom
                                                            Tel (44-1633) 810121
                                                            Fax (44-1633) 810820


Dear Sirs

Agreement dated 28th September 2000 between Dialog Semiconductor GmbH and ESM
Limited relating to supply of Wafers (the "Agreement")

We refer to the Agreement.

In consideration of the mutual release in 3 below, the Agreement shall be
amended as follows.

1   Appendix 1 of the Agreement shall be replaced by the agreed revised version
    of Appendix 1 attached hereto.

2   Appendix 5 of the Agreement shall be replaced by the agreed revised version
    of Appendix 5 attached hereto.

3   The aforesaid amendments shall be deemed to be effective from the date of
    the Agreement. Each party hereby irrevocably releases the other from its
    obligations and liability under the Appendices 1 and 5 of the Agreement
    which were in place prior to the date of this letter.

4   Save as aforesaid the Agreement remains unamended.


                                       1

[GRAPHIC]                    [GRAPHIC]
                          INVESTOR IN PEOPLE          Registered office as above
                                                      Registered in England
                                                      No: 376927




<PAGE>   31
5   This letter of variation shall be governed by and construed in accordance
    with English law.

Please sign below to indicate your agreement to the above.


                                                     [SIGNATURE]
Signed as deed by ESM Limited                )     ___________________________
acting by a director and its secretary or by   )     Director
two directors                                  )




                                                     [SIGNATURE]

                                                     Secretary or Director


                                                     [SIGNATURE]
Signed as a deed by DIALOG                     )     __________________________
SEMICONDUCTOR GmbH acting by                   )     Director
a director and its secretary or by             )
two directors                                  )
                                                     [SIGNATURE]
                                                     ___________________________
                                                     Vice President Finance
                                                     & Controlling



                                       2
<PAGE>   32

APPENDIX 1

Part I -- WAFERS

*

Part II -- PRODUCTION WAFER PRICING
*




Part III -- PRICING

*

                                       1
<PAGE>   33


*





                                       2

<PAGE>   34

APPENDIX 5     CONSIGNMENT AGREEMENT:

APPENDIX 5(I)  CONSIGNED TEST EQUIPMENT

*



APPENDIX 5(II) PREPAYMENT FOR SECURING CAPACITY

*


                                       3