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                                                            Exhibit 10.32

                                 SUBFEATURE NOTE


$10,000,000.00                                              San Jose, California
                                                                    May 29, 1997

         FOR VALUE RECEIVED, the undersigned SMART MODULAR TECHNOLOGIES (EUROPE)
LIMITED ("Smart(Europe)") promises to pay to the order of WELLS FARGO BANK,
NATIONAL ASSOCIATION ("Bank") at its office at Santa Clara Valley RCBO, 121 Park
Center Drive, San Jose, California, or at such other place as the holder hereof
may designate, in lawful money of the United States of America and in
immediately available funds, the principal sum of Ten Million Dollars
($10,000,000.00), or so much thereof as may be advanced and be outstanding, with
interest thereon, to be computed on each advance from the date of its
disbursement as set forth herein.

DEFINITIONS:

         As used herein, the following terms shall have the meanings set forth
after each, and any other term defined in this Note shall have the meaning set
forth at the place defined:

         (a) "Business Day" means any day except a Saturday, Sunday or any other
day on which commercial banks in California are authorized or required by law to
close.

         (b) "Fixed Rate Term" means a period commencing on a Business Day and
continuing for one (1), two (2) or three (3) months, as designated by
Smart(Europe), during which all or a portion of the outstanding principal
balance of this Note bears interest determined in relation to LIBOR; provided
however, that no Fixed Rate Term may be selected for a principal amount less
than One Million Dollars ($1,000,000.00); and provided further, that no Fixed
Rate Term shall extend beyond the scheduled maturity date hereof. If any Fixed
Rate Term would end on a day which is not a Business Day, then such Fixed Rate
Term shall be extended to the next succeeding Business Day.

         (c) "LIBOR" means, for each Fixed Rate Term, the rate per annum
(rounded upward, if necessary, to the nearest whole 1/16 of 1%) and determined
pursuant to the following formula:

         LIBOR =           Base LIBOR
                ------------------------------------
                  100% - LIBOR Reserve Percentage

         (i) "Base LIBOR" means the average of the rates per annum (rounded
upward, if necessary, to the nearest 1/16 of 1%) at which U.S. dollar deposits
are offered to Agent in the London interbank Eurocurrency market on the second
Business Day prior to the commencement of a Fixed Rate Term at or about 11:00
A.M. (London time), for delivery on the first day of such Fixed Rate



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Term, for a term comparable to the number of days in such Fixed Rate Term and in
an amount approximately equal to the principal amount to which such Fixed Rate
Term shall apply.

         (ii) "LIBOR Reserve Percentage" means the reserve percentage prescribed
by the Board of Governors of the Federal Reserve System (or any successor) for
"Eurocurrency Liabilities" (as defined in Regulation D of the Federal Reserve
Board, as amended), adjusted by Bank for expected changes in such reserve
percentage during the applicable Fixed Rate Term.

         (d) "Prime Rate" means at any time the rate of interest most recently
announced within Bank at its principal office as its Prime Rate, with the
understanding that the Prime Rate is one of Bank's base rates and serves as the
basis upon which effective rates of interest are calculated for those loans
making reference thereto, and is evidenced by the recording thereof after its
announcement in such internal publication or publications as Bank may designate.

INTEREST:

         (a) Interest. The outstanding principal balance of this Note shall bear
interest (computed on the basis of a 360-day year, actual days elapsed) either
(i) at a fluctuating rate per annum at the Prime Rate in effect from time to
time, or (ii) at a fixed rate per annum determined by Bank to be one and
one-fourth percent (1.25%) above LIBOR in effect on the first day of the
applicable Fixed Rate Term. When interest is determined in relation to the Prime
Rate, each change in the rate of interest hereunder shall become effective on
the date each Prime Rate change is announced within Bank. With respect to each
LIBOR selection hereunder, Bank is hereby authorized to note the date, principal
amount, interest rate and Fixed Rate Term applicable thereto and any payments
made thereon on Bank's books and records (either manually or by electronic
entry) and/or on any schedule attached to this Note, which notations shall be
prima facie evidence of the accuracy of the information noted.

         (b) Selection of Interest Rate Options. At any time any portion of this
Note bears interest determined in relation to LIBOR, it may be continued by
Smart(Europe) at the end of the Fixed Rate Term applicable thereto so that all
or a portion thereof bears interest determined in relation to the Prime Rate or
to LIBOR for a new Fixed Rate Term designated by Smart(Europe). At any time any
portion of this Note bears interest determined in relation to the Prime Rate,
Smart(Europe) may convert all or a portion thereof so that it bears interest
determined in relation to LIBOR for a Fixed Rate Term designated by
Smart(Europe). At such time as Smart(Europe) requests an advance hereunder or
wishes to select a LIBOR option for all or a portion of the outstanding
principal balance hereof, and at the end of each Fixed Rate Term, Smart(Europe)
shall give Bank notice 



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specifying: (i) the interest rate option selected by Smart(Europe); (ii) the
principal amount subject thereto; and (iii) for each LIBOR selection, the length
of the applicable Fixed Rate Term. Any such notice may be given by telephone so
long as, with respect to each LIBOR selection, (A) Bank receives written
confirmation from Smart(Europe) not later than three (3) Business Days after
such telephone notice is given, and (B) such notice is given to Bank prior to
10:00 a.m., California time, on the first day of the Fixed Rate Term. For each
LIBOR option requested hereunder, Bank will quote the applicable fixed rate to
Smart(Europe) at approximately 10:00 a.m., California time, on the first day of
the Fixed Rate Term. If Smart(Europe) does not immediately accept the rate
quoted by Bank, any subsequent acceptance by Smart(Europe) shall be subject to a
redetermination by Bank of the applicable fixed rate; provided however, that if
Smart(Europe) fails to accept any such rate by 11:00 a.m., California time, on
the Business Day such quotation is given, then the quoted rate shall expire and
Bank shall have no obligation to permit a LIBOR option to be selected on such
day. If no specific designation of interest is made at the time any advance is
requested hereunder or at the end of any Fixed Rate Term, Smart(Europe) shall be
deemed to have made a Prime Rate interest selection for such advance or the
principal amount to which such Fixed Rate Term applied.

         (c)      Additional LIBOR Provisions.

         (i) If Bank at any time shall determine that for any reason adequate
and reasonable means do not exist for ascertaining LIBOR, then Bank shall
promptly give notice thereof to Smart(Europe). If such notice is given and until
such notice has been withdrawn by Bank, then (A) no new LIBOR option may be
selected by Smart(Europe), and (B) any portion of the outstanding principal
balance hereof which bears interest determined in relation to LIBOR, subsequent
to the end of the Fixed Rate Term applicable thereto, shall bear interest
determined in relation to the Prime Rate.

         (ii) If any change after the date hereof in law, treaty, rule,
regulation or determination of a court or governmental authority or any change
therein or in the interpretation or application thereof (each, a "Change in
Law") shall make it unlawful for Bank (A) to make LIBOR options available
hereunder, or (B) to maintain interest rates based on LIBOR, then in the former
event, any obligation of Bank to make available such unlawful LIBOR options
shall immediately be cancelled, and in the latter event, any such unlawful
LIBOR-based interest rates then outstanding shall be converted, at Bank's
option, so that interest on the portion of the outstanding principal balance
subject thereto is determined in relation to the Prime Rate; provided however,
that if any such Change in Law shall permit any LIBOR-based interest rates to
remain in effect until the expiration of the Fixed Rate Term applicable thereto,
then such 



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permitted LIBOR-based interest rates shall continue in effect until the
expiration of such Fixed Rate Term. Upon the occurrence of any of the foregoing
events, Smart(Europe) shall pay to Bank immediately upon demand such amounts as
may be necessary to compensate Bank for any fines, fees, charges, penalties or
other costs incurred or payable by Bank as a result thereof and which are
attributable to any LIBOR options made available to Smart(Europe) hereunder, and
any reasonable allocation made by Bank among its operations and demonstrated to
Borrower shall be conclusive and binding upon Smart(Europe).

         (iii) If any Change in Law or compliance by Bank with any request or
directive (whether or not having the force of law) from any central bank or
other governmental authority shall:

         (A)      subject Bank to any tax, duty or other charge with respect to
                  any LIBOR options, or change the basis of taxation of payments
                  to Bank of principal, interest, fees or any other amount
                  payable hereunder (except for changes in the rate of tax on
                  the overall net income of Bank); or

         (B)      impose, modify or hold applicable any reserve, special
                  deposit, compulsory loan or similar requirement against assets
                  held by, deposits or other liabilities in or for the account
                  of, advances or loans by, or any other acquisition of funds by
                  any office of Bank; or

         (C)      impose on Bank any other condition;

and the result of any of the foregoing is to increase the cost to Bank of
making, renewing or maintaining any LIBOR options hereunder and/or to reduce any
amount receivable by Bank in connection therewith, then in any such case,
Smart(Europe) shall pay to Bank immediately upon demand such amounts as may be
necessary to compensate Bank for any additional costs incurred by Bank and/or
reductions in amounts received by Bank which are attributable to such LIBOR
options. In determining which costs incurred by Bank and/or reductions in
amounts received by Bank are attributable to any LIBOR options made available to
Smart(Europe) hereunder, any reasonable allocation made by Bank and demonstrated
to Smart(Europe) among its operations shall be conclusive and binding upon
Smart(Europe).

         (d) Payment of Interest. Interest accrued on this Note shall be payable
on the first day of each month, commencing July 1, 1997.

         (e) Default Interest. From and after the maturity date of this Note, or
such earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, the outstanding principal balance of this Note shall
bear interest until paid in full at an increased rate per annum (computed on



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the basis of a 360-day year, actual days elapsed) equal to four percent (4%)
above the rate of interest from time to time applicable to this Note.

         (f) Payments. All payments to be made and all proceeds received by Bank
under this Note shall be in immediately available funds in United States dollars
without any setoff or counterclaim and free and clear of, and without deduction
for, any and all present and future taxes, duties, withholdings, fees, levies,
imposts or any other charges of any nature whatsoever. Without reducing any
amount which Bank is to receive under this Note, Smart(Europe), for and on
behalf of Bank, agrees to pay or cause to be paid directly to the appropriate
governmental authorities, or to reimburse Bank for the cost of, any and all
present and future taxes, withholdings, duties, fees, levies, imposts and other
charges of any nature whatsoever, including, but not limited to, United States
of America interest equalization taxes, if any, levied or imposed by any
governmental authority on or with regard to any aspect of the transaction
contemplated in or by this Note, except such taxes as may be measured by or
imposed upon Bank's net income by, or franchise taxes imposed upon Bank by, the
United States of America or the State of California. Any stamp tax required for
this transaction, whether at execution or subsequently, shall be paid by
Smart(Europe).

         (g) Withholding. If Smart(Europe) is prohibited by any law of any
jurisdiction from making payments under this Note unless a tax, withholding,
duty, fee or other charge (hereinafter collectively called "Withholding Taxes")
is deducted or withheld therefrom, or from reimbursing Bank for any tax, duty,
fee, levy or impost or other charge as provided above, Smart(Europe) shall pay
to Bank or any other holder of this Note as of the date of payment of any
Withholding Taxes, such additional amounts as may be necessary in order that the
net amount received by Bank or any other holder of this Note after such
deduction or withholding shall equal the amount which would have been received
if such deduction or withholding was not required. Smart(Europe) shall confirm
that all such Withholding Taxes imposed on this transaction or on any payments
made or received by Bank under this Note shall have been paid to the appropriate
taxing authorities by delivering to Bank within thirty (30) days after payment
of any such Withholding Taxes, valid and properly completed official tax
receipts or notarized copies of such receipts together with any other evidence
requested by Bank to document such payment.

BORROWING AND REPAYMENT:

         (a) Borrowing and Repayment. Smart(Europe) may from time to time during
the term of this Note borrow, partially or wholly repay its outstanding
borrowings, and reborrow, subject to all of the limitations, terms and
conditions of this Note and of any 



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document executed in connection with or governing this Note; provided however,
that the total outstanding borrowings under this Note shall not at any time
exceed the principal amount stated above. The unpaid principal balance of this
obligation at any time shall be the total amounts advanced hereunder by the
holder hereof less the amount of principal payments made hereon by or for any
Smart(Europe), which balance may be endorsed hereon from time to time by the
holder. The outstanding principal balance of this Note shall be due and payable
in full on May 1, 1998.

         (b) Advances. Advances hereunder, to the total amount of the principal
sum stated above, shall be made by the holder at the oral or written request of
(i) Ajah Shah or Lata Krishnan or David Mullin or Jack Pacheco, any one acting
alone, who are authorized to request advances and direct the disposition of any
advances until written notice of the revocation of such authority is received by
the holder at the office designated above, or (ii) any person, with respect to
advances deposited to the credit of any account of any Smart(Europe) with the
holder, which advances, when so deposited, shall be conclusively presumed to
have been made to or for the benefit of each Smart(Europe) regardless of the
fact that persons other than those authorized to request advances may have
authority to draw against such account. The holder shall have no obligation to
determine whether any person requesting an advance is or has been authorized by
any Smart(Europe).

         (c) Application of Payments. Each payment made on this Note shall be
credited first, to any interest then due and second, to the outstanding
principal balance hereof. All payments credited to principal shall be applied
first, to the outstanding principal balance of this Note which bears interest
determined in relation to the Prime Rate, if any, and second, to the outstanding
principal balance of this Note which bears interest determined in relation to
LIBOR, with such payments applied to the oldest Fixed Rate Term first.

PREPAYMENT:

         (a) Prime Rate. Smart(Europe) may prepay principal on any portion of
this Note which bears interest determined in relation to the Prime Rate at any
time, in any amount and without penalty.

         (b) LIBOR. Smart(Europe) may prepay principal on any portion of this
Note which bears interest determined in relation to LIBOR at any time and in the
minimum amount of Ten Thousand Dollars ($10,000.00); provided however, that if
the outstanding principal balance of such portion of this Note is less than said
amount, the minimum prepayment amount shall be the entire outstanding principal
balance thereof. In consideration of Bank providing this prepayment option to
Smart(Europe), or if any such portion of this Note shall become due and payable
at any time 



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prior to the last day of the Fixed Rate Term applicable thereto by acceleration
or otherwise, Smart(Europe) shall pay to Bank immediately upon demand a fee
which is the sum of the discounted monthly differences for each month from the
month of prepayment through the month in which such Fixed Rate Term matures,
calculated as follows for each such month:

         (i)      Determine the amount of interest which would have accrued each
                  month on the amount prepaid at the interest rate applicable to
                  such amount had it remained outstanding until the last day of
                  the Fixed Rate Term applicable thereto.

         (ii)     Subtract from the amount determined in (i) above the amount of
                  interest which would have accrued for the same month on the
                  amount prepaid for the remaining term of such Fixed Rate Term
                  at LIBOR in effect on the date of prepayment for new loans
                  made for such term and in a principal amount equal to the
                  amount prepaid.

         (iii)    If the result obtained in (ii) for any month is greater than
                  zero, discount that difference by LIBOR used in (ii) above.

Smart(Europe) acknowledges that prepayment of such amount may result in Bank
incurring additional costs, expenses and/or liabilities, and that it is
difficult to ascertain the full extent of such costs, expenses and/or
liabilities. Each Smart(Europe), therefore, agrees to pay the above-described
prepayment fee and agrees that said amount represents a reasonable estimate of
the prepayment costs, expenses and/or liabilities of Bank. If Smart(Europe)
fails to pay any prepayment fee when due, the amount of such prepayment fee
shall thereafter bear interest until paid at a rate per annum two percent (2.0%)
above the Prime Rate in effect from time to time (computed on the basis of a
360-day year, actual days elapsed). Each change in the rate of interest on any
such past due prepayment fee shall become effective on the date each Prime Rate
change is announced within Bank.

EVENTS OF DEFAULT:

         This Note is made pursuant to and is subject to the terms and
conditions of that certain Credit Agreement between Smart(Europe) and Bank dated
as of May 29, 1997, as amended from time to time (the "Credit Agreement"). Any
default in the payment or performance of any obligation under this Note, or any
defined event of default under the Credit Agreement, shall constitute an "Event
of Default" under this Note.

MISCELLANEOUS:

         (a) Remedies. Upon the occurrence of any Event of Default, 



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the holder of this Note, at the holder's option, may declare all sums of
principal and interest outstanding hereunder to be immediately due and payable
without presentment, demand, notice of nonperformance, notice of protest,
protest or notice of dishonor, all of which are expressly waived by
Smart(Europe), and the obligation, if any, of the holder to extend any further
credit hereunder shall immediately cease and terminate. Smart(Europe) shall pay
to the holder immediately upon demand the full amount of all payments, advances,
charges, costs and expenses, including reasonable attorneys' fees (to include
outside counsel fees and all allocated costs of the holder's in-house counsel),
expended or incurred by the holder in connection with the enforcement of the
holder's rights and/or the collection of any amounts which become due to the
holder under this Note, and the prosecution or defense of any action in any way
related to this Note, including without limitation, any action for declaratory
relief, whether incurred at the trial or appellate level, in an arbitration
proceeding or otherwise, and including any of the foregoing incurred in
connection with any bankruptcy proceeding (including without limitation, any
adversary proceeding, contested matter or motion brought by Bank or any other
person) relating to any Smart(Europe) or any other person or entity.

         (b) Jurisdiction and Service of Process, Venue, Immunity. Subject to
the terms of Section 7.11 of the Credit Agreement relative to arbitration, any
suit, action or proceeding against Smart(Europe) with respect to this Guaranty
may be brought in (a) the courts of the State of California, (b) the United
States District Court for the Northern District of California, or (c) the courts
of the country of Smart(Europe)'s incorporation, as Bank may elect in its sole
discretion, and the Smart(Europe) hereby submits to any such suit, action,
proceeding or judgment and waives any other preferential jurisdiction by reason
of domicile. The Smart(Europe) hereby agrees that service of all writs,
processes and summonses in any suit, action or proceeding brought in the State
of California may be made upon Smart Modular Technologies, Inc. and/or its
successors, presently located at 4305 Cushing Parkway, Fremont, California,
94538, U.S.A. (the "Process Agent"). Smart(Europe) hereby irrevocably appoints
the Process Agent its agent and true and lawful attorney-in-fact while any of
the Smart(Europe)'s obligations under this Note remain unsatisfied, in its name,
place and stead only to accept such service of any and all such writs, processes
and summonses, and agrees that the failure of the Process Agent to give any
notice of any such service of process to the Smart(Europe) shall not impair or
affect the validity of such service or of any judgment based thereon.
Smart(Europe) hereby further irrevocably consents to the service of process in
any suit, action or proceeding in the above specified courts by the mailing
thereof by Bank by registered or certified mail, postage prepaid, to
Smart(Europe) at the address specified in the Credit Agreement. Nothing herein
shall in any way be deemed to limit the ability of 



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Bank to serve any writs, processes or summonses in any other manner, as may be
permitted by applicable law. Smart(Europe) irrevocably waives any objection
which it may now or hereafter have to the laying of the venue of any suit,
action or proceeding arising out of or relating to this Note brought in the
courts of the State of California or of the United States District Court for the
Northern District of California, or the courts in the country of Smart(Europe)'s
incorporation, and also irrevocably waives any claim that any such suit, action
or proceeding brought in any of those courts has been bought in an inconvenient
form.

         (c) Judgment Currency. Notwithstanding any judgment rendered in a
currency other than United States Dollars, Smart(Europe) shall not be relieved
of any obligations with respect to any amount owed by it to Bank under this Note
except to the extent of the amount in United States dollars which Bank is able
to acquire with such amount of such currency on the Banking Day (a day when Bank
is open for business in San Francisco, California, U.S.A.) following receipt of
such amount by Bank. If the amount in United States dollars so acquired is less
than the amount initially due to Bank, Smart(Europe) shall indemnify Bank by
paying the difference between such amounts in United States Dollars. The payment
of any additional amount so required of Smart(Europe) under this Section shall
constitute an independent obligation of Smart(Europe), the enforcement of which
obligation may not be impeded by Smart(Europe).

         (d) Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of California.

         IN WITNESS WHEREOF, the undersigned has executed this Note as of the
date first written above.


SMART MODULAR TECHNOLOGIES (EUROPE) LIMITED


By:  /s/  LATA KRISHNAN
  ---------------------------------------
Title: Vice President, Administration


By: /s/  DAVID B. MULLIN
  ---------------------------------------
Title: Vice_President, Finance and
       Chief Financial Officer


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