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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
     US$24,500,000 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,

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          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



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

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                               EXHIBIT B
                       C-CUBE MICROSYSTEMS/TSMC
                          COMMITTED CAPACITY

[*]

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

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                               EXHIBIT D
                              OPTION FEE

[*]


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

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