EMPLOYMENT AGREEMENT

       THIS EMPLOYMENT AGREEMENT, entered into as of this 8th day of July, 
1998, is made by and between VLSI TECHNOLOGY, INC., a Delaware corporation 
(hereinafter the "Company"), and ALFRED J. STEIN (hereinafter "Executive").

       Certain capitalized terms used in this Agreement are defined in 
Article 8.

                                 RECITALS

       WHEREAS, Executive is currently employed as the Chief Executive 
Officer of the Company; and 

       WHEREAS, the Company and Executive have entered into that certain 
Agreement (the "Services Agreement") dated October 31, 1995, and that 
certain Executive Change in Control Severance Benefits Agreement (the 
"Change in Control Agreement") dated as of the 26th day of April, 1996, and 
that certain Executive Salary Continuation Agreement (the "Salary 
Agreement") effective December 20, 1996, and that certain Amendment to 
Change in Control Agreement and Salary Continuation Agreement (the 
"Amendment") dated as of the 10th day of June, 1998 (all such agreements 
being collectively referred to hereafter as the "Prior Agreements"); and

       WHEREAS, the Company and Executive wish to set forth in this Agreement 
the terms and conditions of the Prior Agreements, with the intent that this 
Agreement shall thereupon supersede the terms and conditions of the Prior 
Agreements, and to make such additional changes and clarifications to the 
Prior Agreements as mutually agreed to by both the Company and Executive.

       NOW, THEREFORE, the Company and Executive, in consideration of the 
mutual promises set forth herein, agree as follows:

                                 ARTICLE 1

                           EFFECT OF AGREEMENT

       1.1   Effect of Agreement.  This Agreement shall be effective as of 
July 8, 1998 (the "Effective Date") and shall remain in effect so long as 
Executive is employed by the Company; provided, however, that the rights 
and obligations of the parties hereto contained in Articles 6 and 7 of this 
Agreement, and as otherwise explicitly provided in this Agreement, shall 
survive any termination of this Agreement until such time as such duty or 
obligation is satisfied in full.  This Agreement shall supersede the Prior 
Agreements as of the Effective Date.

       1.2   Consideration.  The duties and obligations of the Company to 
Executive under this Agreement shall be in consideration of Executive's 
continued employment with the Company.

                                 ARTICLE 2

                            EMPLOYMENT DUTIES

       2.1   Title/Responsibilities.  Executive hereby accepts the terms of 
this Agreement and agrees to continue to serve as the Chief Executive 
Officer of the Company and Chairman of the Company's Board of Directors 
(the "Board").  Executive shall report directly to the Board.  Executive 
shall have all powers and duties commensurate with such position, including 
but not limited to hiring personnel necessary to carry out the 
responsibilities for such position.

       2.2   Full-Time Attention.  Executive shall devote his best efforts 
and his full business time and attention to the performance of the services 
customarily incident to such office and to such other services as the Board 
may reasonably request, provided that Executive may also serve on the board 
of directors of one or more other companies with the prior consent of the 
Compensation Committee of the Board, which shall not be unreasonably 
withheld.

       2.3   Other Activities.  Except upon the prior consent of the 
Compensation Committee of the Board, Executive shall not during the period 
of this Agreement engage, directly or indirectly, in any other business 
activity (whether or not pursued for pecuniary advantage) that is or may be 
competitive with, or that might place him in a competing position to that 
of the Company or any other corporation or entity that directly or 
indirectly controls, is controlled by, or is under common control with the 
Company (an "Affiliated Company"), provided that Executive may own less 
than five percent (5%) of the outstanding securities of any such publicly 
traded competing corporation.  Nothing in this Agreement is intended to 
prevent Executive from accepting employment with another employer, or 
providing other services to another business, after Executive's departure 
from the Company.

       2.4   Directorship.  Executive will be nominated for re-election to 
the Company's Board and to continue serving as Chairman of the Board 
throughout the time that this Agreement is in effect.  While he remains an 
employee of the Company, Executive agrees to serve as a member of the Board 
at no additional compensation.

                                 ARTICLE 3

                               COMPENSATION

      3.1   Annual Base Pay.  The Annual Base Pay of Executive is currently 
seven hundred thousand dollars ($700,000).  For as long as this Agreement 
is effective, the Board shall review Executive's annual base pay at least 
annually and may, in its discretion, increase but not decrease Executive's 
Annual Base Pay.

      3.2   Annual Incentive Bonus.  For each of the Company's fiscal 
years, commencing with the Company's 1998 fiscal year and for each fiscal 
year thereafter as long as this Agreement is in effect, the Board shall 
establish a set of performance targets for Executive, which if fully 
achieved shall result in a cash payment to Executive equal to eighty 
percent (80%) of Executive's Annual Base Pay for that fiscal year (the 
"Target Bonus").  If Executive's performance shall exceed the selected 
performance targets, the Board may award a cash incentive bonus payment in 
excess of eighty percent (80%) of Executive's Annual Base Pay for that 
fiscal year.  If Executive's performance does not fully achieve the set of 
performance targets, the Board may nonetheless award a cash incentive bonus 
of less than eighty percent (80%) of Executive's Annual Base Pay.  Any 
bonus payment to which Executive becomes entitled  hereunder shall be paid 
to Executive by March 1 after the end of the applicable fiscal year. 

       3.3   Life Insurance.  

             3.3.1  Split-Dollar Life Insurance Policy.  Pursuant to 
resolutions of the Board adopted at its May 3, 1993 meeting, the Company 
purchased a one million dollar ($1,000,000) split-dollar life insurance 
policy with Executive as the insured.  The Company agrees that it will 
continue to make any premium payments over a sixteen (16)-year period from 
the time of such policy's issuance based on the current dividend schedule 
with a guaranteed minimum benefit of one million dollars ($1,000,000); 
provided, however, that in the event of a Change in Control of the Company, 
the Company shall make a single premium payment equal to the present value 
of the remaining payments described above using a six percent (6%) discount 
rate, simple interest.  Furthermore, the Company agrees that it will pay 
Executive an additional amount to offset fully any tax liability incurred 
by Executive during his lifetime with respect to such life insurance 
policy, including but not limited to any tax liability previously 
recognized by Executive in taxable years prior to 1998, such that the 
after-tax cost to Executive of maintaining this policy shall be zero 
dollars ($0).  This obligation shall remain in effect even if this 
Agreement has terminated.

             3.3.2  MetLife Life Insurance Policy.

                    (a) The Company agrees to make ten (10) annual payments 
to Executive or such person or persons as Executive may designate, on or 
before October 31 of each year, beginning on October 31, 1995, in an amount 
equal to the annual premium necessary to endow a single life policy 
(Corporate Universal Life) on the life of Executive issued by the 
Specialized Benefit Resources division of Metropolitan Life Insurance 
Company (the "MetLife Policy") and based on the following policy 
assumptions: level death benefit of five million dollars ($5,000,000); 
premiums payable for ten (10) years; policy crediting rate assumption equal 
to seven percent (7%); mortality rates and loads current as of October 31, 
1995; nonsmoker unisex rates; and, standard risk based on full 
underwriting.  The amount of the annual premium necessary to endow the 
policy described above will be adjusted upward or downward annually in view 
of the actual policy crediting rate in effect for the year. 

                    (b) In the event that fewer than all payments set forth 
in Article 3.3.2(a) have been made to Executive and (i) Executive becomes 
disabled as defined in Article 8 hereof, (ii) the Company undergoes a 
Change in Control (as defined in Article 8 hereof) or (iii) the Company 
notifies Executive that it no longer desires that Executive perform the 
services described under Article 2 hereof, the Company shall make a single 
lump-sum payment to Executive equal to the sum of the present values of all 
payments provided in Article 3.3.2(a) which have not been paid to Executive 
at the time of such Disability, Change in Control or notification.

                    (c) The lump sum payment payable under Article 3.3.2(b) 
hereof shall be calculated based on the assumptions set forth in Article 
3.3.2(a) with a discount rate equal to the lesser of the prime rate on the 
date of termination and 5.5%.

                    (d) In addition, the Company also agrees to make any 
additional premium payments with respect to the MetLife Policy so that such 
policy is endowed at age ninety-five (95) and the policy's cash value at 
that time is equal to or greater than five million dollars ($5,000,000), 
but in no event shall the Company pay fewer than ten (10) annual premium 
payments after June 10, 1998, each in the amount of one hundred eighty-
three thousand one hundred sixty-four dollars ($183,164).  The premium 
payment period may be changed by the Company, with the written concurrence 
of Executive, to the extent necessary to maintain compliance of such policy 
with Sections 7702 and 7702A of the Code.  Furthermore, as described in 
further detail in Article 3.3.2(e), the Company agrees that it will pay 
Executive an additional amount to offset fully any tax liability incurred 
by Executive during his lifetime with respect to such premium payments, 
such that the after-tax cost to Executive of maintaining this policy shall 
be zero dollars ($0).  If an event described in Article 3.3.2(b) occurs, 
any additional payment shall be made at the same time as the payment called 
for in Article 3.3.2(b) but any such additional payment shall not discharge 
the Company from satisfying its obligation set forth in this paragraph.  
The Company's obligations under this paragraph shall survive termination of 
this Agreement.

                    (e) All payments payable under this Article 3.3.2 shall 
be grossed up, and made free and clear of and without deduction, for any 
and all present or future income taxes, payroll taxes, excise taxes, 
deductions, charges or withholdings, and all liabilities with respect 
thereto, (all such taxes, deductions, charges, withholdings and liabilities 
being hereinafter referred to as "Taxes").  If the Company shall be 
required by law to deduct any Taxes from or in respect of a payment, (i) 
the payment shall be increased as may be necessary so that after making all 
required deductions (including deductions applicable to additional sums 
payable under this Article 3.3.2(e)) the payment shall be made in an amount 
equal to the amount payable had no such deductions been made, (ii) the 
Company shall make such deductions and (iii) the Company shall pay the full 
amount deducted to the relevant taxation authority or other authority in 
accordance with applicable law.  For purposes of computing increases in 
payments payable under this Article 3.3.2(e), the Company shall, in all 
cases, assume that Executive is taxable at the highest marginal tax rate 
applicable to an individual.

                    (f) In the event that Executive is taxable at a 
marginal tax rate less than the rate assumed in Article 3.3.2(e) hereof, 
Executive shall reimburse the Company for the excess of such increase paid 
to Executive over the increase computed on the basis of Executive's actual 
marginal tax rate.

                                 ARTICLE 4

                   EXPENSE ALLOWANCES AND FRINGE BENEFITS

       4.1   Benefits.  While this Agreement is in effect, the Company 
shall provide Executive with the same or greater benefits which it provides 
to any of its other senior executives, including but not limited to 
medical, pension, vacation, bonus, stock, profit-sharing and savings plans 
and similar benefits as such plans and benefits may be adopted by the 
Company from time to time.

       4.2   Business Expense Reimbursement.  While this Agreement is in 
effect, Executive shall be entitled to receive proper reimbursement for all 
reasonable out-of-pocket expenses incurred by him (in accordance with the 
policies and procedures established by the Company for its senior executive 
officers) in performing services hereunder.  Executive agrees to furnish 
the Company reasonably adequate records and other documentary evidence of 
such expenses for which Executive seeks reimbursement.  Such expenses shall 
be accounted for under the policies and procedures established by the 
Company.

                                 ARTICLE 5

                         OTHER RIGHTS AND BENEFITS

       5.1   Nonexclusivity.  Nothing in this Agreement shall prevent or 
limit Executive's continuing or future participation in any benefit, bonus, 
incentive or other plans, programs, policies or practices provided by the 
Company and for which Executive may otherwise qualify, nor shall anything 
herein limit or otherwise affect such rights as Executive may have under 
any stock option or other agreements with the Company.  Except as otherwise 
expressly provided herein, amounts which are vested benefits or which 
Executive is otherwise entitled to receive under any plan, policy, practice 
or program of the Company at or subsequent to the date of a Covered 
Termination, a Change in Control or a Change in Control Termination shall 
be payable in accordance with such plan, policy, practice or program.

                                 ARTICLE 6

                        TERMINATION OF EMPLOYMENT

       6.1   Covered Termination. 

             6.1.1  Entitlement to Salary Continuation Payments.  If 
Executive's employment terminates due to a Covered Termination, Executive 
shall receive salary continuation benefits.  The amount of the salary 
continuation payment shall be equal to three hundred percent (300%)  of the 
sum of Annual Base Pay and Annual Bonus, to be paid in one lump sum within 
sixty (60) days of the termination, or if greater, at Executive's election, 
sixty percent (60%) of Executive's highest Annual Base Pay from the Company 
or its successor, payable within sixty (60) days of Executive's Covered 
Termination and on each anniversary date of such termination thereafter for 
the duration of Executive's life.  If Executive has previously become 
entitled to receive payment under Article 6.2.2 of this Agreement on 
account of the occurrence of a Change in Control, Executive shall not be 
entitled to any additional payments under this Article 6.1.1.

             6.1.2  Welfare Benefits.  Following a Covered Termination, 
Executive and his spouse will each be eligible (a) to continue their 
Welfare Benefits coverage under any Welfare Benefit plan or program 
maintained by the Company on the same terms and conditions (including cost 
to Executive) as in effect immediately prior to the Covered Termination for 
the lives of each of Executive and his spouse, or the survivor of them, 
and/or (b) to purchase such additional or substitute Welfare Benefits 
coverage as Executive or his spouse may determine in his or her sole 
discretion, including reimbursement of expenses for health care expenses 
not otherwise paid by insurance, Medicare, or otherwise; provided, however, 
that the cost to the Company shall not exceed, by payment of premium or 
otherwise, twenty-five thousand dollars ($25,000.00) per year, as adjusted 
for cost of living increases.

             With respect to any Welfare Benefits provided through an 
insurance policy, the Company's obligation to provide such Welfare Benefits 
following a Covered Termination shall be limited by the terms of such a 
policy; provided that (i) the Company shall make reasonable efforts to 
amend such policy to provide the continued coverage, and (ii) if a policy 
providing health benefits is not amended to provide the continued benefits, 
the Company shall pay for the cost of comparable replacement coverage.  The 
cost of any such insurance shall be included and subject to the twenty-five 
thousand dollars ($25,000.00) per year limit set forth above.

             This Article 6.1.2 is not intended to affect, nor does it 
affect, the rights of Executive, or Executive's covered dependents, under 
any applicable law with respect to health insurance continuation coverage.

             6.1.3  Stock Options.  All stock options granted to Executive 
by the Company which are outstanding on the Effective Date and all stock 
options granted to Executive in the future, are hereby amended or shall 
provide as follows: (i) to fully vest upon a Covered Termination, and (ii) 
to permit Executive to exercise the vested options for at least twelve (12) 
months following a Covered Termination, unless an extension of an option's 
term would cause the Company to incur a change to earnings for financial 
accounting purposes, in which case the amendment to such option extending 
the term shall not be made until the first time that such amendment would 
not cause the Company to incur a charge to earnings, at which time such 
amendment shall automatically occur.

             6.1.4  Bonus.  If a Covered Termination occurs, Executive 
shall receive a bonus for the fiscal year in which the Covered Termination 
occurs.  The amount of the bonus shall be equal to the amount Executive 
would have been paid if the Covered Termination had not occurred prior to 
the end of such fiscal year multiplied by a fraction in which (i) the 
numerator is the number of days from and including the first day of the 
fiscal year until and including the date of the Covered Termination, and 
(ii) the denominator is three hundred sixty-five (365).  Such bonus shall 
be paid on the date Executive would have received the bonus if the Covered 
Termination had not occurred during such fiscal year.

       6.2   Termination Due to Change in Control.

             6.2.1  Entitlement To Severance Benefits.  Upon the occurrence 
of a Change in Control while Executive is employed by the Company, the 
Company shall provide Executive the compensation and benefits described in 
Articles 6.2.2, 6.2.3 and 6.2.6 below.  If Executive's employment 
terminates due to an Involuntary Termination without Cause or a Voluntary 
Termination for Good Reason within twenty-four (24) months following a 
Change in Control, the termination of employment will be a Change in 
Control Termination and the Company shall pay Executive the compensation 
and benefits described in Articles 6.2.4 and 6.2.5.  If Executive's 
employment terminates, but not due to an Involuntary Termination without 
Cause or a Voluntary Termination for Good Reason within twenty-four (24) 
months following a Change in Control, then the termination of employment 
will not be a Change in Control Termination.

             6.2.2  Lump Sum Severance Payment.  Within thirty (30) days 
following a Change in Control, Executive shall receive a lump sum payment 
equal to three hundred percent (300%) of the sum of Annual Base Pay and 
Annual Bonus, subject to any applicable withholding of federal, state or 
local taxes.

             6.2.3  Stock Options.  All stock options granted to Executive 
by the Company which are outstanding on the Effective Date and all stock 
options granted to Executive in the future, are hereby amended or shall 
provide as follows: (i) to provide for full vesting of stock options upon a 
Change in Control, (ii) to permit Executive to exercise any vested options 
following his termination of service to the Company as an employee or 
consultant for up to three (3) months (or such longer period as may be 
currently provided in Executive's stock option agreement without giving 
effect to this Article 6.2.3) and (iii) to permit Executive to exercise the 
options for at least the twelve (12) months following a Change in Control 
Termination, unless an extension of an option's term would cause the 
Company to incur a charge to earnings for financial accounting purposes, in 
which case no amendment to such option extending the term shall be made 
until the first time that such amendment would not cause the Company to 
incur a charge to earnings, at which time such amendment shall 
automatically occur.

             6.2.4  Welfare Benefits.  Following a Change in Control 
Termination, Executive and his spouse shall be eligible for the same 
Welfare Benefits as following a Covered Termination (as such Welfare 
Benefits are described in Article 6.1.2 above).  In addition, for the three 
(3) year period following a Change in Control Termination, the Company 
shall reimburse Executive for any income tax liability due as a result of 
the provision of Welfare Benefits under this Article 6.2 (and as a result 
of any payments due under this paragraph) in order to put Executive in the 
same after-tax position as if no taxable Welfare Benefits had been 
provided.

             6.2.5  Office Space; Secretarial Support.  For three (3) years 
following a Change in Control Termination, Executive shall be provided an 
office and secretarial support comparable to those provided to Executive 
prior to the Change of Control; provided, however, that the Company's 
obligation to provide office space and secretarial support under this 
Article 6.2.5 shall terminate upon Executive's obtaining full-time 
employment or full-time consulting work.

             6.2.6  Stock Purchase Promissory Note.  In the event of the 
occurrence of a Change in Control, Executive shall be entitled to exercise 
any or all of his outstanding stock options to acquire shares of the 
Company's common stock using a full recourse promissory note.  Any such 
note shall be due and payable after five (5) years, subject to earlier 
prepayment voluntarily by Executive.  Any such note shall bear the minimum 
rate of interest required to avoid imputed income to Executive under all 
applicable provisions of the Code.

             6.2.7  Excise Tax Gross-up.  In the event it shall be 
determined that any payment by the Company to or for the benefit of 
Executive, whether paid or payable under this Agreement or otherwise, but 
determined without regard to any additional payments required under this 
Article 6.2.7 (a "Payment"), would be subject to the excise tax imposed by 
Section 4999 of the Code, or any comparable federal, state, or local excise 
tax (such excise tax, together with any interest and penalties, are 
hereinafter collectively referred to as the "Excise Tax"), then Executive 
shall be entitled to receive an additional payment (a "Gross-Up Payment") 
in such an amount that after the payment of all taxes (including without 
limitation, any interest and penalties on such taxes and the excise tax) on 
the Payment and on the Gross-Up Payment, Executive shall retain an amount 
equal to the Payment minus all applicable income and employment taxes on 
the Payment.  The intent of the parties is that the Company shall be solely 
responsible for, and shall pay, any Excise Tax on the Payment and Gross-Up 
Payment and any income, employment and other taxes (including, without 
limitation, penalties and interest) imposed on any Gross-Up Payment, as 
well as any loss of tax deduction caused by the Gross-Up Payment or 
applicable provisions of the Code.  All determinations required to be made 
under this Article 6.2.7, including without limitation, whether and when a 
Gross-Up Payment is required and the amount of such Gross-Up Payment and 
the assumptions to be utilized in arriving at such determinations, shall be 
made by a nationally recognized accounting firm that is the Company's 
outside auditor at the time of such determinations, which firm must be 
reasonably acceptable to Executive (the "Accounting Firm").  All fees and 
expenses of the Accounting Firm shall be borne solely by the Company.

       6.3   Termination for Cause.  The Company may terminate Executive's 
employment for Cause (as defined below) without liability at any time with 
or without advance notice to Executive.  The Company shall pay Executive 
all Accrued Compensation, but no other compensation or reimbursement of any 
kind, including without limitation, severance compensation, shall be paid 
to Executive.  The Company's obligations under this Article 6.3 shall 
terminate upon complete payment of Accrued Compensation. 

       6.4   Mitigation.  Except as otherwise specifically provided herein, 
Executive shall not be required to mitigate damages or the amount of any 
payment provided under this Agreement by seeking other employment or 
otherwise, nor shall the amount of any payment provided for under this 
Agreement be reduced by any compensation earned by Executive as a result of 
employment by another employer or by retirement benefits after the date of 
a Covered Termination or a Change in Control Termination.

       6.5   Indemnification.  For a period no less than six (6) years 
following the date of a Covered Termination or a Change in Control 
Termination, Executive shall be indemnified by the Company (or any 
successor entity) for any act, or omission, taken while Executive was 
employed by the Company (or any successor entity), and the Company shall 
maintain insurance coverage which is either at least equivalent to such 
indemnification coverage provided for Executive prior to such termination, 
or if such equivalent coverage is not available at a commercially 
reasonable price, then at least equivalent to the indemnification coverage 
provided to the then current executive officers of the Company (or in the 
event of the occurrence of a Change in Control of the Company, the 
executive officers of the controlling entity of which the Company is then a 
part).

                                 ARTICLE 7

                 LIMITATIONS AND CONDITIONS ON BENEFITS

       7.1   Withholding of Taxes.  The Company shall withhold appropriate 
federal, state and local income and employment taxes from any payments 
hereunder.

       7.2   Employee Agreement and Release Prior to Receipt of Benefits.  
Upon the occurrence of a Covered Termination or a Change in Control 
Termination and prior to the receipt of any benefits under this Agreement 
on account of the occurrence of a Covered Termination or a Change in 
Control Termination, Executive shall, as of the date of a Covered 
Termination or a Change in Control Termination, as applicable, execute an 
employee agreement and release in the form attached hereto as Exhibit A.  
Such employee agreement and release shall specifically relate to all of 
Executive's rights and claims in existence at the time of such execution 
and shall confirm Executive's obligations under the Company's standard form 
of proprietary information agreement.  It is understood that Executive has 
twenty-one (21) days to consider whether to execute such employee agreement 
and release and Executive may revoke such employee agreement and release 
within seven (7) business days after execution of such employee agreement 
and release.  In the event Executive does not execute such employee 
agreement and release within the twenty-one (21) day period, or if 
Executive revokes such employee agreement and release within the seven (7) 
business day period, no benefits shall be payable to Executive on account 
of the occurrence of a Covered Termination or a Change in Control 
Termination under this Agreement.

                                 ARTICLE 8

                                DEFINITIONS

For purposes of the Agreement, the following terms shall have the meanings 
set forth below:

       8.1   "Accrued Compensation" means any accrued Annual Base Pay, any 
bonus compensation to the extent actually awarded by the Board but not yet 
paid, any vested deferred compensation (other than pension plan or profit-
sharing plan benefits which will be paid in accordance with the applicable 
plan), any benefits under any plans of the Company in which Executive is a 
participant to the full extent of Executive's rights under such plans, any 
accrued vacation pay and any appropriate business expenses incurred by 
Executive in connection with his duties hereunder, all to the date of 
termination.

       8.2   "Agreement" means this Employment Agreement.

       8.3   "Annual Base Pay" means the annual base pay of Executive as 
determined in accordance with Article 3.1 of this Agreement.  

For the purposes of a payment made pursuant to Article 6.1 of this 
Agreement relating to a Covered Termination, Annual Base Pay means 
Executive's Annual Base Pay at the rate in effect during the last regularly 
scheduled payroll period immediately preceding the Covered Termination.  
For the purposes of a payment made pursuant to Article 6.2 of this 
Agreement relating to a Change in Control, Annual Base Pay means 
Executive's annual base pay in effect during the last regularly scheduled 
payroll period immediately preceding the Change in Control.  

       8.4   "Annual Bonus" means the annual incentive bonus of Executive 
as determined in accordance with Article 3.2 of this Agreement.  

For purposes of a payment made pursuant to Article 6.1 or Article 6.2 of 
this Agreement relating to a Covered Termination or a Change in Control, 
Annual Bonus means the greater of (i) Executive's Target Bonus (which for 
the Company's fiscal year ending December 31, 1998 is eighty percent (80%) 
of Executive's Annual Base Pay) of the year in which the Covered 
Termination or the Change in Control occurs or (ii) Executive's most recent 
actual annual cash incentive bonus for the fiscal year of the Company 
preceding the year in which the Covered Termination or the Change in 
Control occurs.

       8.5   "Cause"  the occurrence of any of the following (and only the 
following):  (i) conviction of any felony involving fraud or act of 
dishonesty against the Company, (ii) conduct by Executive which, based upon 
good faith and reasonable factual investigation and determination of the 
Board of Directors of the Company, demonstrates gross unfitness to serve, 
or (iii) intentional, material violation by Executive of any statutory or 
fiduciary duty of Executive to the Company, provided that in the event that 
any of the foregoing events is capable of being cured, the Company shall 
provide written notice to Executive describing the nature of such event and 
Executive shall thereafter have thirty (30) days to cure such event.

       8.6   "Change in Control" means the consummation of any of the 
following transactions:

             (a) the stockholders of the Company approve a merger or 
consolidation of the Company with any other corporation, other than a 
merger or consolidation which would result in the voting securities of the 
Company outstanding immediately prior thereto continuing to represent 
(either by remaining outstanding or by being converted into voting 
securities of the surviving entity) at least fifty percent (50%) of the 
total voting power represented by the voting securities of the Company or 
such surviving entity outstanding immediately after such merger or 
consolidation, or the stockholders of the Company approve a plan of 
liquidation or dissolution of the Company or an agreement for the sale, 
lease, exchange or other transfer or disposition by the Company of all or 
substantially all (more than fifty percent (50%)) of the Company's assets;

             (b) any person (as such term is used in Sections 13(d) and 
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange 
Act")), is or becomes the beneficial owner (within the meaning of Rule 13d-
3 under the Exchange Act) directly or indirectly of 25% or more of the 
Company's outstanding Common Stock; or

             (c) a change in the composition of the Board within a three 
(3) year period, as a result of which fewer than a majority of the 
directors are Incumbent Directors.  "Incumbent Directors" shall mean 
directors who either:

                 (i)    are directors of the Company as of the date hereof;

                 (ii)   are elected, or nominated for election, to the 
Board with the affirmative votes of at least a majority of the directors of 
the Company who are Incumbent Directors described in (i) above at the time 
of such election or nomination; or

                 (iii)  are elected, or nominated for election, to the 
Board with the affirmative votes of at least a majority of the directors of 
the Company who are Incumbent Directors described in (i) or (ii) above at 
the time of such election or nomination.

Notwithstanding the foregoing, "Incumbent Directors." shall not include an 
individual whose election or nomination is in connection with an actual or 
threatened proxy contest relating to the election of directors to the 
Company.

       8.7   "Change in Control Termination" means an Involuntary 
Termination without Cause or a Voluntary Termination with Good Reason 
within twenty-four (24) months following a Change in Control.  No other 
event shall be deemed a Change in Control Termination for purposes of this 
Agreement.

       8.8   "Code" means the Internal Revenue Code of 1986, as amended.

       8.9   "Company" means VLSI Technology, Inc., a Delaware corporation, 
and any successor thereto.

       8.10  "Covered Termination" means any voluntary termination of 
Executive and any Involuntary Termination (including death or Disability, 
mental or physical) other than for Cause. 

       8.11  "Disability" means a physical or mental condition, illness, or 
injury of Executive such that (a) Executive's personal physician, or (b) a 
physician selected by Executive's personal physician, or (c) if neither of 
such physicians is reasonably acceptable to the Company, a physician 
selected by Executive's personal physician and a physician selected by the 
Company, determines that Executive is no longer capable of providing 
services as described under Article 2 of this Agreement.

       8.12  "Exchange Act" means the Securities Exchange Act of 1934, as 
amended.

       8.13  "Involuntary Termination" means Executive's dismissal or 
discharge by the Company (or, if applicable, by the successor entity).  
For purposes of a Covered Termination pursuant to Article 6.1 of this 
Agreement, Involuntary Termination includes the death or Disability 
(physical or mental) of Executive.  

For purposes of a Change in Control Termination pursuant to Article 6.2 of 
this Agreement, the termination of Executive's employment would not be 
deemed to be an "Involuntary Termination" if such termination occurs as a 
result of the death or Disability of Executive.

       8.14  "Voluntary Termination for Good Reason" means that the 
Executive voluntarily terminates his employment after any of the following 
are undertaken without Executive's express written consent:

             (a) the assignment to Executive of any duties or 
responsibilities which result in any diminution or adverse change of 
Executive's position, status or circumstances of employment as in effect 
immediately prior to a Change in Control of the Company; a change in 
Executive's titles or offices as in effect immediately prior to a Change in 
Control of the Company; any removal of Executive from or any failure to 
reelect Executive to any of such positions, except in connection with the 
termination of his employment for death, Disability, retirement, fraud, 
misappropriation, embezzlement or any other voluntary termination of 
employment by Executive other than Voluntary Termination for Good Reason;

             (b) a reduction by the Company in Executive's Annual Base Pay;

             (c) any failure by the Company to continue in effect any 
benefit plan or arrangement, including incentive plans or plans to receive 
securities of the Company, in which Executive is participating at the time 
of a Change in Control of the Company (hereinafter referred to as "Benefit 
Plans"), or the taking of any action by the Company which would adversely 
affect Executive's participation in or reduce Executive's benefits under 
any Benefit Plans or deprive Executive of any fringe benefit enjoyed by 
Executive at the time of a Change in Control of the Company, provided, 
however, that Executive may not terminate for Good Reason following a 
Change in Control of the Company if the Company offers a range of benefit 
plans and programs which, taken as a whole, are comparable to the Benefit 
Plans as determined in good faith by Executive;

             (d) a relocation of Executive or the Company's principal 
executive offices to a location more than fifteen (15) miles from the 
location at which Executive performed Executive's duties prior to a Change 
in Control of the Company, except for required travel by Executive on the 
Company's business to an extent substantially consistent with Executive's 
business travel obligations at the time of a Change in Control of the 
Company;

             (e) any breach by the Company of any provision of this 
agreement; or

             (f) any failure by the Company to obtain the assumption of 
this agreement by any successor or assign of the Company.

       8.15  "Welfare Benefits" means benefits providing for coverage or 
payment in the event of Executive's death, disability, illness or injury of 
a type provided to Executive immediately before a Covered Termination, 
whether taxable or non-taxable and whether funded through insurance or 
otherwise.

                                 ARTICLE 9

                            GENERAL PROVISIONS

       9.1   Governing Law.  The validity, interpretation, construction and 
performance of this Agreement and the rights of the parties hereunder shall 
be interpreted and enforced under California law without reference to 
principles of conflicts of laws.  The parties expressly agree that inasmuch 
as the Company's headquarters and principal place of business are located 
in California, it is appropriate that California law govern this Agreement.

       9.2   Assignment; Successors; Binding Agreement.

             9.2.1  Executive may not assign, pledge or encumber his 
interest in this Agreement or any part thereof and any attempt to do so 
shall be void.

             9.2.2  The Company will require any successor (whether direct 
or indirect, by purchase, merger, consolidation or otherwise) to all or 
substantially all of the business and/or assets of the Company, by 
operation of law or by agreement in form and substance reasonably 
satisfactory to Executive, to assume and agree to perform this Agreement in 
the same manner and to the same extent that the Company would be required 
to perform it if no such succession had taken place.

             9.2.3  This Agreement shall inure to the benefit of and be 
enforceable by Executive's personal or legal representatives, executors, 
administrators, successors, heirs, distributees, devisees and legatees.  If 
Executive should die while any amount is at such time payable to him 
hereunder, all such amounts, unless otherwise provided herein, shall be 
paid in accordance with the terms of this Agreement to Executive's devisee, 
legatee or other designee or, if there be no such designee, to his estate.

       9.3   Notices. Any notices provided hereunder must be in writing and 
such notices or any other written communication shall be deemed effective 
upon the earlier of personal delivery (including personal delivery by telex 
or facsimile) or the third day after mailing by first class mail, to the 
Company at its primary office location and to Executive at his address as 
listed in the Company's payroll records.  Any payments made by the Company 
to Executive under the terms of this Agreement shall be delivered to 
Executive either in person or at his address as listed in the Company's 
payroll records.

       9.4   Modification; Waiver; Entire Agreement.  No provisions of this 
Agreement may be modified, waived or discharged unless such waiver, 
modification or discharge is agreed to in writing signed by Executive and 
such officer or other representative of the Company as may be specifically 
designated by the Board.  No waiver by either party hereto at any time of 
any breach by the other party of, or compliance with, any condition or 
provision of this Agreement to be performed by such other party shall be 
deemed a waiver of similar or dissimilar provisions or conditions at the 
same or any prior or subsequent time.  No agreements or representations, 
oral or otherwise, express or implied, with respect to the subject matter 
hereof have been made by either party which are not expressly set forth or 
referred to in this Agreement.

       9.5   Validity.  Whenever possible, each provision of this Agreement 
will be interpreted in such manner as to be effective and valid under 
applicable law, but if any provision of this Agreement is held to be 
invalid, illegal or unenforceable in any respect under any applicable law 
or rule in any jurisdiction, such invalidity, illegality or 
unenforceability will not affect any other provision or any other 
jurisdiction, but this Agreement will be reformed, construed and enforced 
in such jurisdiction as if such invalid, illegal or unenforceable 
provisions had never been contained herein.

       9.6   Controlling Document.  In case of conflict between any of the 
terms and conditions of this Agreement and the documents herein referred 
to, or any other documents or agreements affecting the same terms and 
conditions of Executive's employment as are addressed in this Agreement, 
the terms and conditions of this Agreement shall control, and such other 
documents shall be deemed to be amended hereby.

       9.7   Employment Status.  This Agreement does not constitute a 
contract of employment or impose on Executive any obligation to remain as 
an employee, or impose on the Company any obligation (i) to retain 
Executive as an employee, (ii) to change the status of Executive as an at-
will employee, or (iii) to change the Company's policies regarding 
termination of employment.

       9.8   Headings.  The headings of the Articles hereof are inserted 
for convenience only and shall not be deemed to constitute a part hereof 
nor to affect the meaning thereof.

       9.9   Non-Publication.  The parties mutually agree not to disclose 
publicly the terms of this Agreement except to the extent that disclosure 
is mandated by applicable law.

       9.10  Tax and Attorney Fees.  The Company will reimburse Executive, 
Executive's successor-in-interest, or the holder of any life insurance 
policy referred to in this Agreement for all attorney fees and costs 
associated with bringing any action under this Agreement to enforce their 
rights hereunder, regardless of the outcome of such proceeding, provided 
the court finds the claim was brought in good faith.  In addition, the 
Company will reimburse Executive for all fees and costs associated with 
advice, execution or negotiation of this Agreement and Executive's ongoing 
employment relationship with the Company on or before the Effective Date.

       9.11  Construction.  In the event of a conflict between the text of 
the Agreement and any summary, description or other information regarding 
the Agreement, the text of the Agreement shall control.

       9.12  Counterparts.  This Agreement may be executed in one or more 
counterparts any one of which need not contain signatures of more than one 
party, all of which taken together shall constitute one and the same 
Agreement.

Executed by the parties as of the day and year first above written.


                                           VLSI TECHNOLOGY, INC.


                                           By:  /s/ Robert P. Dillworth
                                                ---------------------------
                                           Its:       Director
                                                ---------------------------

                                           EXECUTIVE:

                                                /s/ Alfred J. Stein
                                           --------------------------------
                                           Alfred J. Stein

<PAGE>


                                 EXHIBIT A

                      EMPLOYEE AGREEMENT AND RELEASE

       I understand and agree completely to the terms set forth in the 
foregoing agreement.

       I hereby confirm my obligations under the Company's standard form of 
proprietary information agreement.

       I acknowledge that I have read and understand Section 1542 of the 
California Civil Code which reads as follows: "A general release does not 
extend to claims which the creditor does not know or suspect to exist in 
his favor at the time of executing the release, which if known by him must 
have materially affected his settlement with the debtor." I hereby 
expressly waive and relinquish all rights and benefits under that section 
and any law of any jurisdiction of similar effect with respect to my 
release of any claims I may have against the Company.

       Except as otherwise set forth in this Agreement, I hereby release, 
acquit and forever discharge the Company, its parents and subsidiaries, and 
their officers, directors, agents, servants, employees, shareholders, 
successors, assigns and affiliates, of and from any and all claims, 
liabilities, demands, causes of action, costs, expenses, attorneys fees, 
damages, indemnities and obligations of every kind and nature, in law, 
equity, or otherwise, known and unknown, suspected and unsuspected, 
disclosed and undisclosed (other than any claim for indemnification I may 
have as a result of any third party action against me based on my 
employment with the Company), arising out of or in any way related to 
agreements, events, acts or conduct at any time prior to and including the 
Effective Date of this Agreement, including but not limited to: all such 
claims and demands directly or indirectly arising out of or in any way 
connected with my employment with the Company or the termination of that 
employment, including but not limited to, claims of intentional and 
negligent infliction of emotional distress, any and all tort claims for 
personal injury, claims or demands related to salary, bonuses, commissions, 
stock, stock options, or any other ownership interests in the Company, 
vacation pay, fringe benefits, expense reimbursements, severance pay, or 
any other form of compensation; claims pursuant to any federal, state or 
local law or cause of action including, but not limited to, the federal 
Civil Rights Act of 1964, as amended; the federal Age Discrimination in 
Employment Act of 1967, as amended ("ADEA"); the federal Americans with 
Disabilities Act of 1990; the California Fair Employment and Housing Act, 
as amended; tort law; contract law; wrongful discharge; discrimination; 
fraud; defamation; emotional distress; and breach of the implied covenant 
of good faith and fair dealing; provided, however, that nothing in this 
paragraph shall be construed in any way to release the Company from its 
obligation to indemnify you pursuant to the Company's Indemnification 
Agreement.

       I acknowledge that I am knowingly and voluntarily waiving and 
releasing any rights I may have under ADEA.  I also acknowledge that the 
consideration given for the waiver and release in the preceding paragraph 
hereof is in addition to anything of value to which I was already entitled. 
I further acknowledge that I have been advised by this writing, as required 
by the ADEA, that: (A) my waiver and release do not apply to any rights or 
claims that may arise after the Effective Date of this Agreement; (B) I 
have the right to consult with an attorney prior to executing this 
Agreement; (c) I have twenty-one (21) days to consider this Agreement 
(although I may choose to voluntarily execute this Agreement earlier); (D) 
I have seven (7) days following the execution of this Agreement by the 
parties to revoke the Agreement; and (E) this Agreement shall not be 
effective until the date upon which the revocation period has expired, 
which shall be the eighth day after this Agreement is executed by me, 
provided that the Company has also executed this Agreement by that date 
("Effective Date").

                                        By:
                                              --------------------------
                                                Alfred J.  Stein

                                        Date:
                                              -------------------------

<PAGE>

                              TABLE OF CONTENTS

ARTICLE 1         Effect of Agreement                                      1
     1.1     Effect of Agreement                                           1
     1.2     Consideration                                                 1

ARTICLE 2         Employment Duties                                        2
     2.1     Title/Responsibilities                                        2
     2.2     Full-Time Attention                                           2
     2.3     Other Activities                                              2
     2.4     Directorship                                                  2

ARTICLE 3         Compensation                                             2
     3.1     Annual Base Pay                                               2
     3.2     Annual Incentive Bonus                                        2
     3.3     Life Insurance                                                3

ARTICLE 4         Expense Allowances And Fringe Benefits.                  4
     4.1     Benefits                                                      4
     4.2     Business Expense Reimbursement                                5

ARTICLE 5         Other Rights and Benefits                                5
     5.1     Nonexclusivity                                                5

ARTICLE 6         Termination of Employment                                5
     6.1     Covered Termination                                           5
     6.2     Termination Due to Change in Control                          6
     6.3     Termination for Cause                                         8
     6.4     Mitigation                                                    8
     6.5     Indemnification                                               8

ARTICLE 7         Limitations and Conditions on Benefits                   8
     7.1     Withholding of Taxes                                          8
     7.2     Employee Agreement and Release Prior to Receipt of Benefits   9

ARTICLE 8         Definitions                                              9
     8.1     "Accrued Compensation"                                        9
     8.2     "Agreement"                                                   9
     8.3     "Annual Base Pay"                                             9
     8.4     "Annual Bonus"                                                9
     8.5     "Cause"                                                      10
     8.6     "Change in Control"                                          10
     8.7     "Change in Control Termination"                              11
     8.8     "Code"                                                       11
     8.9     "Company"                                                    11
     8.10    "Covered Termination"                                        11
     8.11    "Disability"                                                 11
     8.12    "Exchange Act"                                               11
     8.13    "Involuntary Termination"                                    11
     8.14    "Voluntary Termination for Good Reason"                      11
     8.15    "Welfare Benefits"                                           12

ARTICLE 9         General Provisions                                      12
     9.1     Governing Law                                                12
     9.2     Assignment; Successors; Binding Agreement                    12
     9.3     Notices.                                                     13
     9.4     Modification; Waiver; Entire Agreement                       13
     9.5     Validity                                                     13
     9.6     Controlling Document                                         13
     9.7     Employment Status                                            14
     9.8     Headings                                                     14
     9.9     Non-Publication                                              14
     9.10    Tax and Attorney Fees                                        14
     9.11    Construction                                                 14
     9.12    Counterparts                                                 14