<PAGE>
Confidential treatment requested pursuant to a confidential treatment request
filed with the Securities and Exchange Commission.

                   CONFIDENTIAL TREATMENT REQUESTED
            [*]  Denotes information for which confidential
          treatment has been requested. Confidential portions
        omitted have been filed separately with the Commission.



                     Amendment to Option Agreement



    This Amendment, made to Option Agreement between C-Cube
Microsystems, and Taiwan Semiconductor Manufacturing Co., Ltd., dated
May 18, 1996 (the "Option Agreement"), is effective as of May 30, 1997
(the "Effective Date") by and between C-Cube Microsystems, a company
organized under the laws of California, USA, with its registered
address at 1778 McCarthy Boulevard, Milpitas, CA 95035, USA
("Customer"), and Taiwan Semiconductor Manufacturing Co., Ltd., a
company organized under the laws of the R.O.C, with its registered
address at No.121, Park Ave. 3, Science-Based Industrial Park,
Hsinchu, Taiwan, R.O.C ("TSMC").

    In consideration of mutual covenants and conditions, both
parties agree to amend the Option Agreement as follows:


I.   Defined terms used herein but not defined herein shall have the
     meaning set forth in the Option Agreement.

II.  Amend Sections 1(a), 1(b), 1 (f), 5(b), 11 and 15 as follows:

     1(a) "Base Capacity" used in this Agreement shall mean the base
     amount of annual Wafer capacity, which is set forth in Exhibit B.

     1(b)"Customer Committed Capacity" used in this Agreement shall
     mean the total of [*] of the Base Capacity and [*] of the Option
     Capacity that Customer agrees to purchase from TSMC pursuant to
     this Agreement, and is set forth in Exhibit B.

     1(f) "Wafer" used in this Agreement shall mean 6" physical wafer
     without reference to technology and geometry. The conversion rate
     from 6" wafer to 8" wafer shall be [*].
   
     5(b) Within seven (7) days upon execution hereof, TSMC shall
     return to Customer the promissory note in the amount of [*] to
     Customer.

     11.  This Agreement, including Exhibits B-E and the Amendment,
        constitutes the entire agreement between the parties with
        respect to the subject matter hereof, and supersedes and
        replaces all prior or contemporaneous understanding,
        agreements, dealings and negotiations, oral or written,
        regarding the subject matter hereof. In the event any provision
        of this Agreement conflicts with the Amendment, this Amendment
        shall govern with respect to the subject matter therein. No
        modification, alteration or amendment of this Agreement shall
        be effective unless made in writing and signed by both parties.
        No waiver of any breach or failure by either party to enforce
        any provision of this Agreement shall be deemed a wavier of any
        other or subsequent breach, or a waiver of future enforcement
        of that or any other provision.

     15.  Both parties shall keep in strict confidence the existence
        and contents of this Agreement and the Amendment, and take best
        precaution possible to prevent any unauthorized disclosure or
        use thereof. Both parties agree that no disclosure of this
        Agreement, the Amendment or any matters relating hereto may be
        made without the disclosing party first providing the proposed
        disclosure to the other party two weeks in advance for consent
        and reasonable changes. In the event disclosure is required by
        laws or governmental regulations, the disclosing parry shall
        provide the other party two weeks prior written notice and give
        the other party the opportunity to protest, participate in
        preparing disclosure or make reasonable changes thereto.

III. Add to the End of Section 6(a)

     [*]

     Add to the End of Section 7(e)

     "In no event shall either party be liable for indirect,
     consequential, or special damage arising from this Agreement or
     its performance."

IV.  Delete Original Exhibit A, Replace Original Exhibits B and D with
     New Exhibits B and D.




   C-Cube Microsystems                          Taiwan Semiconductor
                                               Manufacturing Co., Ltd.,


BY: /s/ Alexandre A. Balkanski              BY: /s/ Morris Chang
   ----------------------------                ------------------
   Alexandre A. Balkanski                      Morris Chang
   President                                   Chairman




<PAGE>
Confidential treatment requested pursuant to a confidential treatment request
filed with the Securities and Exchange Commission.

                               EXHIBIT B
                       C-CUBE MICROSYSTEMS/TSMC
                          COMMITTED CAPACITY

[*]




<PAGE>
Confidential treatment requested pursuant to a confidential treatment request
filed with the Securities and Exchange Commission.

                               EXHIBIT D
                              OPTION FEE
                                   
[*]