Exhibit 10.17

Product Sourcing Agreement

by
and between

NeoMagic International Corporation,a Cayman Island company, with offices c/o Caledonian Bank & Trust Ltd., Ground Floor,
Caledonian House, Mary Street, P.O. Box 1043, Georgetown, Grand Cayman, B.W.I.
(hereinafter "NMI")

and

Infineon Technologies AG,St. Martin-Street 53, 81669 Munich (hereinafter "Infineon")

on
financial contributions to Infineon's investment of enlarged capacity

Preamble

Infineon has developed and markets embedded DRAM Products. NMI is interested in the long-term procurement of supply with approximately 50.000
processed wafers from August 2001 through February 2004. Infineon is willing to make investments, to adapt its process to the specific requirements of NMI and to reserve capacity for
NMI. Parties intend to share the risks connected with such investment efforts and for this purpose NMI intends to contribute to the funding of Infineon's investment by way of an irrevocable Standby
Letter of Credit with the Bank of America in the name of Infineon in the amount of US $15.000.000 on which Infineon may draw on February, 27, 2004 if NMI has ordered less than 50.000 wafers.

Article 1Definitions

1.1 "Processed
Wafers" shall mean the customer-specific processed silicon wafers to be jointly developed and qualified by the parties, manufactured by Infineon and sold
to NMI under the separate wafer supply agreement. Processed Wafers will be manufactured by Infineon after parties have jointly developed and qualified the Product(s).

1.2. "Wafer
Supply Agreement" shall mean the agreement entered into by the parties on March, 15, 1999 and the General Amendment to the Wafer Supply Agreement to be
concluded between the Parties regulating the development and the volume purchase of Processed Wafers.

Article 2Infineon's Obligation

Article 3NMI's Obligation

1

---



If,
for any reason, Infineon may not draw on the outstanding sum of the irrevocable Standby Letter of Credit and thus does not receive payment from the Bank of America hereunder, even though the sum
of US $15.000.000 has not by mutual consent been reduced to zero, then NMI shall himself be obliged to pay on his own account the corresponding sum which Infineon would have been entitled to receive
from the Bank of America under the irrevocable Standby Letter of Credit. In the event NeoMagic were to pay Infineon directly the outstanding sum, Infineon agrees to legally rescind all requirements
and rights associated with the above mentioned Letter of Credit.

Article 4Additional Obligations

C9DD1 (0,2μ)

for the calendar year 2001: US $ 3250 per each Processed Waferfor the calendar year 2002: US $ 3200 per each Processed Waferfor the calendar year 2003: US $ 3100 per each Processed WaferC10DD0 (0.17μ)

for the calendar year 2002: US $3400/waferfor the calendar year 2003: US $3300/wafer


2

---

Article 5Confidentiality



Article 6Limitation of Liability



Article 7Miscellaneous

3

---

In
witness hereof, the parties hereto have caused this Agreement to be executed by their duly authorised representatives on the dates specified below.

|NMI International Corporation |  | Infineon Technologies AG
|----------------------------- |  | ------------------------
|By:                           |  |                         
|                              |  |                         
|Name:                         |  |                         
|                              |  |                         
|Title:                        |  |                         
|                              |  |                         
|Date:                         |  |                         
|                              |  |                         
|                              |  |                         
|                              |  |                         
|                              |  |                         
|                              |  |                         
|                              |  |                         
|                              |  |                         
|                              |  |                         
|                              |  |                         

4

---

General Amendment of the Wafer Supply Agreement

Between

NeoMagic International Corporation, a Cayman Island company, with offices c/o Caledonian Bank & Trust Ltd., Ground Floor, Caledonian House, Mary Street, P.O. Box 1043, Georgetown,
Grand Cayman, B.W.I (hereinafter "NMI" or "Buyer")

and

Infineon Technologies Aktiengesellschaft ("Infineon" or "Seller"), Federal Republic of Germany (former Siemens Aktiengesellschaft Semiconductor Group)

("General Amendment for future Products")

NMI and Infineon have concluded the Wafer Supply Agreement dated March 15, 1999. ("Original Agreement")

The
Parties wish to amend the Original Agreement as follows, to provide for the design, development, fabrication, qualification and supply for future Products. Capitalized terms used
in this Amendment and not otherwise defined shall have the same meanings herein as specified therefor in the Original Agreement.

0.  Definition



1.  Delivery-Commitments



2.  NRE-payments



1

---

3.  New Products/Shrinks





4.  Payment



5.  Cancellation



6.  Prototype Lots



2

---



7.0 Term and Termination



IN WITNESS WHEREOF, the Parties have executed this Amendment effective as of the last signature date below.

AGREED TO:

|NeoMagic International Corporation |  | Infineon Technologies AG
|---------------------------------- |  | ------------------------
|By:                                |  |                         
|                                   |  |                         
|Name:                              |  | Prakash Agarwal         
|Title:                             |  | President and CEO       
|Date:                              |  |                         
|NeoMagic International Corporation |  | Infineon Technologies AG
|By:                                |  |                         
|                                   |  |                         
|Name:                              |  | Stephen Lanza           
|Title:                             |  | Vice President and CFO  
|Date:                              |  |                         
|                                   |  |                         
|                                   |  |                         
|                                   |  |                         
|                                   |  |                         
|                                   |  |                         

3

---

QuickLinks