Exhibit 10.23

Agere
Systems Inc.

2004-2005
Medium-Term Incentive Plan

Purpose

To  provide the
Executive leadership team with an incentive to focus on increasing  share during a period
of significant industry discontinuity and business  restructuring.

| | · | Critical
to meeting the expectations of our investors
| | - | -----------------------------------------------------

| | · | Key
element of  performance-based compensation
| | - | ----------------------------------------------

| | · | Minimizes
use of options and further dilution
| | - | ---------------------------------------------

Description

The
plan is a market share-based incentive plan targeting performance versus peer
competitors over a two-year period.

Participants

The
Chief Executive Officer and selected other officers who report directly to the
Chief Executive Officer.

Plan
Administrator

The
plan will be administered by the Compensation Committee of Ageres Board of
Directors.

Performance
Period

October 1, 2003
 September 30, 2005

Grant Date

October 1, 2003

Payment Date

On or
about January 10, 2006. Payments will be made in cash.

Incentive
Opportunity

|               | 
|-------------- | 
|CEO            | 
|Direct Reports | 

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Agere Systems
Inc 2004-2005 Medium-Term Incentive Plan

The
actual payment will be determined by multiplying the amount shown above by the
Achievement Level for the share attained by the company at the end of the
performance period.

Section
162(m) Provisions

So
that awards under the program may be deductible for US federal income tax
purposes, grants will be made in the form of awards under the 2001 Long Term
Incentive Plan. Each participant will be granted a $9 million award, which can
be reduced by the Committee in its sole discretion. It is expected that the
Committee would reduce the awards before payment to the appropriate amounts
shown below. No award may be paid unless the Committee shall have certified in
writing that Ageres Net Income (as defined in Ageres 2001 Long Term
Incentive Plan) for fiscal 2005 was at least equal to its Net Income in fiscal
2003.

Performance
Structure

|Achievement Level | Share Target | Growth Rate
|----------------- | ------------ | -----------
|                  | 200          | %          
|                  | 175          |            
|                  | 150          |            
|                  | 125          |            
|Target            | 100          |            
|                  | 50           |            
|                  | 25           |            
|                  | 0            |            

Share
Computation

|· |  | The total market will be the sum of reported revenues from AMCC, Broadcom,
Conexant, Globespan, Infineon (wireless and wireline segments only), Intersil
(pre-divestiture WLAN segment only), LSI Logic (semiconductor segment only),
Marvell, Mindspeed, Motorola (semiconductor segment only), PMC-Sierra, Skyworks
Solutions, STMicroelectronics, Texas Instruments (semiconductor segment only),
Vitesse and Agere Systems.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|· |  | For any company whose fiscal quarters are not calendar quarters, the share
calculation for any quarter will use the most recently completed fiscal quarter
for that company. For example, for the March quarter, Marvells reported
sales results for its quarter ending around the end of January will be used.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|· |  | The beginning share will be the average of Ageres share for the two
quarters immediately prior to the performance period (the third and fourth
quarters of fiscal 2003).
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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Agere Systems
Inc 2004-2005 Medium-Term Incentive Plan

|· |  | Ageres share percentage will be calculated quarterly, using the following
formula:
|- |  | -----------------------------------------------------------------------------------

Agere Share =
100 x Agere Revenue/Total Market Revenue

|· |  | The ending share used to determine award levels will be the average of
Ageres share for the two quarters immediately prior to the end of the
performance period (the third and fourth quarters of fiscal 2005).
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Adjustments

|· |  | Discontinued Agere businesses. Ageres revenues will be adjusted in
all periods to remove revenue from discontinued businesses.
|- |  | -------------------------------------------------------------------------------------------------------------------------------

|· |  | Changes in Agere and competitor product portfolios. The Committee may
make such adjustments to plan targets or revenue computations as it deems
appropriate in the event of changes in the product portfolio of Agere or any of
the other companies whose revenues are used to determine the total market (e.g.,
product divestitures, acquisitions, mergers, etc.).
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|· |  | Agere Profitability. Except following a Change in Control as defined in
Ageres 2001 Long Term Incentive Plan, the Committee may reduce the plan
target percentages payable for achieving a particular share target if Agere does
not meet the profitability goals set forth in its approved plans for fiscal
years 2004 and 2005. Any such reduction shall be applied ratably to all
participants.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Miscellaneous

|· |  | Performance monitoring. The Committee will review Ageres
performance under the plan on a quarterly basis.
|- |  | ----------------------------------------------------------------------------------------------------------

|· |  | Change in Control. In an event of a Change in Control as defined in
Ageres 2001 Long Term Incentive Plan, if, within 2 years of the Change in
Control, either:
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

|o |  | A participants employment is terminated by the company other than for
Cause, or
|- |  | ----------------------------------------------------------------------------------

|o |  | A participant terminates his or her employment within
three months of an event constituting Good Reason,
|- |  | ----------------------------------------------------------------------------------------------------------

| |  | then
that participant will be entitled to an at target payment to be made
in a lump sum within 30 days of the termination of employment. Cause
and Good Reason have the meanings given those terms in the
companys Officer Severance Policy.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|· |  | Involuntary Separation. In the event that a participants employment
is terminated by the company other than for Cause and the
participant is not entitled to a payment under Change in Control,
then the participant will be entitled to a pro
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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Agere Systems
Inc 2004-2005 Medium-Term Incentive Plan

| |  | rated payment
for the period  beginning on the Grant Date and ending on the participants last day
of  active employment, without reference to any continuation of employment under the
Officer Severance Policy. The payment will be made in a lump sum at the same  time as all
other participants. If a participants employment is terminated  by the company for
Cause, the participant shall not be entitled to  any payment under this plan.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|· |  | Voluntary Separation. In the event that, before the end of the
performance period, a participant voluntarily terminates their employment with
the company, other than under circumstances entitling the participant to a
payment under Change in Control, the participant will not be
entitled to any payment under the plan. Payment of awards under the plan does
not require continued employment beyond the end of the performance period.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|· |  | Termination. The Committee may terminate the plan at any time. If the
Committee terminates the plan, all participants will be entitled to an
at-target payment to be made in a lump sum within 30 days of the
termination.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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