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                                                                   Exhibit 10.25
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                       SIXTH LOAN MODIFICATION AGREEMENT

     This SIXTH LOAN MODIFICATION AGREEMENT is entered into as of July 16, 1998,
by and between SILICON VALLEY BANK, a California-chartered bank with its
principal place of business at 3003 Tasman Drive, Santa Clara, CA 95054 and with
a loan production office located at Wellesley Office Park, 40 William Street,
Suite 350, Wellesley, MA 02181, doing business under the name Silicon Valley
East ("Bank"), and TRANSWITCH CORPORATION, a Delaware corporation with its
principal place of business at 3 Enterprise Drive, Shelton, Connecticut 06484
("Borrower").

                                   RECITALS

     Borrower has borrowed money from Bank pursuant to certain Existing Loan
Documents, as defined below.  In consideration of certain financial
accommodations from Bank, and Borrower's continuing obligations under the
Existing Loan Documents, Borrower and Bank agree as follows:

                                   AGREEMENT

     1.    DESCRIPTION OF EXISTING LOAN DOCUMENTS.  Reference is hereby made to
           --------------------------------------                              
that certain Commitment Letter dated as of July 1, 1993 between Bank and
Borrower, as amended by letter amendments dated as of September 1, 1994 and
March 21, 1995, as further amended by Loan Modification Agreements dated April
8, 1994, April 19, 1995, January 5, 1996, December 31, 1996 and July 11, 1997
between Borrower and Bank, and as such Commitment Letter may be further amended
from time to time (the "Commitment Letter"), providing for certain financing
from Bank to Borrower, such financing to be evidenced by promissory notes as
referenced herein.  Hereinafter, all indebtedness owing by Borrower to Bank
pursuant to the Commitment Letter and any promissory notes shall be referred to
as the "Indebtedness." Repayment of the Indebtedness is secured pursuant to a
Security Agreement dated as of July 1, 1993 between Borrower and Bank, as
amended (the "Security Agreement").  Hereinafter, the Commitment Letter,
Security Agreement, and any promissory notes, together with all other documents
securing payment of the Indebtedness, shall be referred to as the "Existing Loan
Documents." Unless otherwise defined herein, capitalized terms used in this
Agreement shall have the same respective meanings as set forth in the Commitment
Letter.

     2.    DESCRIPTION OF CHANGES IN TERMS.
           ------------------------------- 
 
     2.1   Modifications to Commitment Letter.
           ---------------------------------- 

     2.1.1 The first sentence of the first unnumbered paragraph of the
Commitment Letter, as heretofore amended, is hereby replaced in its entirety as
follows:

           Silicon Valley Bank (the "Bank") is pleased to inform you that it has
           approved for TranSwitch Corporation (the "Borrower"), subject to the
           terms set forth in this letter and the attached schedules
           (collectively 
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            referred to as the "Commitment Letter"), the following credit
            facilities: (i) a working capital line of credit of $8,000,000 (the
            "Working Capital Commitment"); and (ii) an equipment line of credit
            of $2,000,000 (the "Equipment Commitment" and, together with the
            Working Capital Commitment, the "Commitments").

     2.1.2  Subparagraphs (a) and (b) of numbered paragraph 1 of the Commitment
Letter, as heretofore amended, are hereby replaced in their entirety as follows:

            (a) a promissory note payable to the order of the Bank by the
            Borrower in the principal amount of $8,000,000 with respect to the
            Working Capital Commitment (as the same may be amended, modified or
            supplemented from time to time, the "Working Capital Note"),

            (b) a promissory note payable to the order of the Bank by the
            Borrower in the principal amount of $2,000,000 with respect to the
            Equipment Commitment (as the same may be amended, modified or
            supplemented from time to time, the "Equipment Note" and together
            with the Working Capital Note, the "Notes");

     2.1.3  Subsections (d) and (e) of numbered paragraph 1 of the Commitment
Letter, as heretofore amended, are hereby replaced in their entirety as follows:

            (d) a Negative Pledge Agreement by the Borrower in favor of the Bank
            (as the same may be amended, modified or supplemented from time to
            time, the "Negative Pledge Agreement");

            (e)  INTENTIONALLY OMITTED;

     2.1.4  Numbered paragraph 2 of the Commitment Letter, as heretofore
amended, is hereby replaced in its entirety as follows:

            2.  The Working Capital Commitment will commence July 16, 1998 and
            will expire on July 15, 1999 (the "Working Capital Expiry Date").
            The Equipment Commitment will commence July 16, 1998 and will expire
            on July 15, 1999 (the "Equipment Expiry Date").

     2.1.5  The first two sentences of numbered paragraph 3 of the Commitment
Letter, as heretofore amended, are hereby replaced in their entirety as follows:

            Advances under the Working Capital Commitment shall bear interest at
            a fluctuating rate of interest equal to the Bank's Prime Rate (as
            defined below) per annum, and advances under the Equipment Line of
            Credit Commitment shall bear interest at a fluctuating rate of
            interest equal to the Bank's Prime Rate per annum. Borrower shall
            make payments of interest in respect of advances under the Working
            Capital Commitment monthly

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            on the fifteenth (15th ) day of each month and on the Working
            Capital Expiry Date. Borrower shall make payments of interest in
            respect of advances under the Equipment Commitment monthly on the
            fifteenth (15th) day of each month and on the Equipment Expiry Date.

     2.1.6  Paragraph 7C of the Commitment Letter, as heretofore amended, is
hereby replaced in its entirety as follows:

            Proceeds of all advances under the Equipment Commitment shall be
            used by the Borrower solely to finance the purchase by the Borrower
            of Eligible Equipment purchased within 30 days of Borrowees request
            for an advance under the Equipment Commitment. The principal amount
            of any advance made by the Equipment Commitment shall not exceed
            100% of the invoice price of any item of Eligible Equipment less
            taxes, shipping, installation and similar or related costs. The
            Borrower shall provide the Bank with copies of all invoices for
            items of Eligible Equipment not later than the date of its request
            for such an advance and shall promptly provide such other
            information as the Bank shall reasonably request in support of
            Borrower's request.

     2.1.7  Numbered paragraph 8 of the Commitment Letter, as heretofore
amended, is hereby amended so that Borrower may use all of the Working Capital
Commitment for Letters of Credit.

     2.1.8  Numbered paragraph 4 of Schedule II to the Commitment Letter, as
heretofore amended, is hereby replaced in its entirety as follows:

            4.  Financial Statements, Etc.  Borrower will furnish to Bank:

            (a) as soon as available, but in any event within forty five (45)
            days after the end of each fiscal quarter, commencing with the
            quarter ending June 30, 1998, consolidated financial statements of
            Borrower on Form 10-Q;

            (b) as soon as available, but in any event within one hundred twenty
            (120) days after the end of Borrowees fiscal year, audited
            consolidated financial statements of Borrower on Form 10-K;

            (c) within five (5) days of filing, copies of all statements,
            reports and notices sent or made available generally by Borrower to
            its security holders or to any holders of Subordinated Debt and all
            reports on Form 10-K, 10-Q and 8-K (to the extent not previously
            provided to Bank) filed with the Securities and Exchange Commission;

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            (d) promptly upon receipt of notice thereof, a report of any legal
            actions pending or threatened against Borrower or any Subsidiary
            that could result in a Material Adverse Effect;

            (f) such budgets, sales projections, operating plans or other
            financial information as Bank may reasonably request from time to
            time.

            (g) prior to any Advances under the Working Capital Commitment, and
            within thirty (30) days after the last day of each month in which
            any Advances under the Working Capital Commitment are outstanding, a
            Borrowing Base Certificate signed by the Chief Financial Officer or
            the President of Borrower in a form acceptable to Bank and
            appropriately completed, together with aged listings of accounts
            receivable.

            (h) within thirty (30) days after the last day of each quarter,
            commencing with the quarter ending June 30, 1998, a Compliance
            Certificate signed by the Chief Financial Officer or the President
            of Borrower in a form acceptable to Bank and appropriately
            completed.

     2.1.9  Numbered paragraphs 21 through 25 of Schedule II to the Commitment
Letter, as heretofore amended, are hereby replaced in their entirety as follows:

            21.  Adjusted Quick Ratio.  The Borrower will not permit its
                 -------------------- 
            Adjusted Quick Ratio to be less than 2.00 to 1 at the end of any
            calendar quarter, commencing with the quarter ending June 30, 1998.

            22.  Minimum Profitability.  INTENTIONALLY OMITTED
                 ---------------------                        

            23.  Leverage.  The Borrower will not permit the ratio of Total 
                 --------                         
             Adjusted Liabilities to Tangible Net Worth at the end of any
             calendar quarter, commencing with the quarter ending June 30, 1998,
             to be more than 1.25 to 1.

            24.  Tangible Net Worth.  The Borrower will not permit Tangible Net
                 ------------------                                            
            Worth at the end of any calendar quarter, commencing with the
            quarter ending June 30, 1998, to be less than $28,000,000.

            25.  Liquidity.  INTENTIONALLY OMITTED
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     2.1.10 The Compliance Certificate referred to in numbered subparagraph
4(c) of Schedule II to the Commitment Letter, as heretofore amended, is hereby
deleted and replaced with the Compliance Certificate attached hereto as Exhibit
A.

     2.1.11 Subsection (i) of the definition of "Eligible Domestic Accounts
Receivable" on Schedule III to the Commitment Letter, as heretofore amended, is
hereby replaced in its entirety as follows:

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             (i) The aggregate accounts receivables from the account debtor do
             not exceed 25% of the total Eligible Accounts Receivable of the
             Borrower; that portion of the account over the 25% level will be
             disqualified.

     2.1.12  The definition. of "Eligible Equipment' in Schedule III of the
Commitment Letter, as heretofore amended, is hereby amended by deleting the date
July 11, 1997 appearing in the last line of subparagraph (b) thereof and
substituting the date July 16, 1998.

     2.1.13  The following definition is hereby added to Schedule III to the
Commitment Letter, as heretofore amended, as follows:

             "Adjusted Quick Ratio" means, at any time, all cash and accounts
             receivable, less reserves for doubtful accounts, of the Borrower
             and its Subsidiaries at such time, on a consolidated basis,
             determined in accordance with GAAP, divided by the aggregate of all
             Current Liabilities (less deferred revenues) plus, to the extent
             not already included, all Indebtedness of Borrower to Bank.

     3.      TERMINATION OF SECURITY AGREEMENT.  The Security Agreement is 
             ---------------------------------
hereby terminated effective with Borrower's compliance with all of the
conditions set forth in Section 5 of this Sixth Loan Modification Agreement, and
all rights to the Collateral shall revert to Borrower, subject to the Negative
Pledge Agreement between Borrower and Bank of even date herewith.

     4.      FACILITY FEE.  Borrower shall pay to Bank a Working Capital 
             ------------
Commitment facility fee of EIGHT THOUSAND AND NO/100THS Dollars ($8,000) and an
Equipment Commitment facility fee of TWO THOUSAND AND NO/100THS Dollars ($2,000)
as well as any out-of-pocket expenses incurred by the Bank through the date
hereof, including reasonable attorneys' fees and expenses, and after the date
hereof, all Bank Expenses, including reasonable attorneys' fees and expenses, as
and when they become due.

     5.      CONDITIONS PRECEDENT TO FURTHER ADVANCES.  The obligation of Bank 
             ---------------------------------------- 
to make further advances to Borrower under this line is subject to the condition
precedent that Bank shall have received, in form and substance satisfactory to
Bank, the following:

             (a) this Sixth Loan Modification Agreement (in duplicate), the
Working Capital Note and the Equipment Note, each duly executed by Borrower;

             (b) a certificate of the Secretary of Borrower with respect to
resolutions authorizing the execution and delivery of this Sixth Loan
Modification Agreement and the Loan Documents;

             (c) Negative Pledge Agreement covering all assets of Borrower:

             (d) UCC-1 financing statements evidencing the negative pledge;

                                      -5-
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             (e)  insurance certificate;

             (f) payment of the fees and Bank Expenses then due specified in
Section 4 hereof; and

             (g) such other documents, and completion of such other matters, as
Bank may reasonably deem necessary or appropriate.

     6.      CONSISTENT CHANGES.  The Existing Loan Documents are hereby amended
             ------------------                                                 
wherever necessary to reflect the changes described in this Sixth Loan
Modification Agreement.

     7.      NO DEFENSES OF BORROWER.  Borrower agrees that as of this date, it
             ----------------------- 
has no defenses against any of the obligations to pay any amounts under the
Indebtedness.

     8.      CONTINUING VALIDITY.  Borrower understands and agrees that (i) in
             -------------------                                              
modifying the Existing Loan Documents, Bank is relying upon Borrower's
representations, warranties and agreements, as set forth in the Existing Loan
Documents, (ii) except as expressly modified pursuant to this Sixth Loan
Modification Agreement (including the effects of Section 6 hereof), the Existing
Loan Documents remain unchanged and in full force and effect, (iii) Bank's
agreement to modify the Existing Loan Documents pursuant to this Sixth Loan
Modification Agreement shall in no way obligate Bank to make any future
modifications to the Existing Loan Documents, (iv) it is the intention of Bank
and Borrower to retain as liable parties all makers and endorsers of the
Existing Loan Documents, unless a party is expressly released by Bank in
writing, (v) no maker, endorser or guarantor will be released by virtue of this
Sixth Loan Modification Agreement, and (vi) the terms of this Section 8 apply
not only to this Sixth Loan Modification Agreement but also to all subsequent
loan modification agreements, if any.

     9.      CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.  The laws of the
             ------------------------------------------                  
Commonwealth of Massachusetts shall apply to this Agreement.  BORROWER ACCEPTS
FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, UNCONDITIONALLY, THE NON-
EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN THE COMMONWEALTH OF MASSACHUSETTS IN ANY ACTION, SUIT, OR PROCEEDING OF ANY
KIND AGAINST IT WHICH ARISES OUT OF OR BY REASON OF THIS AGREEMENT; PROVIDED,
HOWEVER, THAT IF FOR ANY REASON BANK CANNOT AVAIL ITSELF OF THE COURTS OF THE
COMMONWEALTH OF MASSACHUSETTS, BORROWER ACCEPTS JURISDICTION OF THE COURTS AND
VENUE IN SANTA CLARA COUNTY, CALIFORNIA.  BORROWER AND BANK EACH HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS
CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.  EACH PARTY RECOGNIZES AND
AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO
ENTER INTO THIS AGREEMENT.  EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS
REVIEWED THIS WAIVER WITH ITS 

                                      -6-
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LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

     10.     EFFECTIVENESS.  This Agreement shall become effective only when it
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shall have been executed by Borrower and Bank (provided, however, in no event
shall this Agreement become effective until signed by an officer of Bank in
California).

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as a sealed instrument as of the date first set forth above.

"Borrower"                          "Bank"

TRANSWITCH CORPORATION              SILICON VALLEY BANK, doing business as
                                    SILICON VALLEY EAST


By:    /s/ Michael F. Stauff        By: 
    ------------------------            --------------------------------
     Michael F. Stauff, SVP             William R. Howell, AVP
     & Treasurer         


                                    SILICON VALLEY BANK


                                    By: 
                                        --------------------------------
                                    Title: 
                                          ------------------------------

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