Document:

<PAGE>

                                                                  EXHIBIT 10.16

                                 CONFIDENTIAL

                            WAFER SUPPLY AGREEMENT

     This Wafer Supply Agreement (the "Agreement"), is dated and effective as of
April 22, 1999 (the "Effective Date"), by and between Mitsubishi Electronics
America, a Delaware corporation, having its principal place of business at 1050
East Arques Avenue, Sunnyvale, CA 94086-4601 ("MELA"), and Centillium
Communications, Inc., a California corporation with offices at 47211 Lakeview
Blvd, Fremont, California, 94538("Centillium").

                                   RECITALS

     WHEREAS, Centillium Communications, Inc. Corporation desires to purchase
from MELA and MELA desires to supply to Centillium Communications, Inc.
Corporation silicon wafers on the terms and conditions of this Agreement.

     NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the parties agree as follows:

                                    PART I
                                  DEFINITIONS

     1.1  "Fabrication Cycle Time" means the period of time required to
           ----------------------
manufacture the Products, commencing upon wafer start and ending on the day when
MELA first delivers the ordered quantity of Products. The Fabrication Cycle Time
for Prototype Production and Volume Production shall be as set forth in Exhibit
B. Fabrication Cycle Time does not include local national holidays and other
factory holidays and shutdowns.

     1.2  "Lead Time" means the period of time, in calendar days, from the
           ---------
placement of a particular order of a Product until the date of first delivery of
the ordered quantity of the Product.

     1.3  "Process" means the wafer manufacturing process (es) used by MELCO as
           -------
identified in Exhibit A and any other manufacturing processes included within
the scope of this Agreement in accordance with Section 3.2.

     1.4  "Products" means semiconductor chips containing any memory, I/Os,
           --------
logic or analog elements manufactured hereunder. The Parties may, from time to
time, agree to add other product(s) or design cores to the definition and scope
of products.

     1.5  "Prototype Production" has the meaning given in Section 3.8(a).
           --------------------

     1.6  "Volume Production" has that meaning given in Section 3.8(b).
           -----------------

     1.7  "Wafers" means processed silicon wafers containing finished die for
           ------
the Products manufactured by MELCO and sold to Centillium Communications, Inc..

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                                 CONFIDENTIAL

     1.8  "MELCO" means MELA's ultimate parent company, Mitsubishi Electric
Corporation.

     1.9  "Affiliate" means any corporation or business entity which is owned or
controlled by, owns or controls, or is under common ownership or control with, a
party. For purposes of this definition, "control" of a corporation or business
entity shall mean the right to exercise, directly or indirectly, more than
fifty, percent (50%) of the voting rights attributable to the shares of the
corporation or business entity or the power to direct or cause the direction of
the management or policies of the corporation or business entity.

                                                                    Page 2 of 30
<PAGE>

                                  CONFIDENTIAL

                                    PART II
                         INTELLECTUAL PROPERTY RIGHTS

     2.1  Technical Information. All intellectual property and related rights in
          ---------------------
and to technical information of either party including an affiliate or either
party, which is provided to the other party in the course of the development of
the Product(s) shall continue to belong to such providing party. This
information shall be considered confidential and covered by a separate Non
Disclosure Agreement.

     2.2  Patents. All intellectual property and related rights in and to all
          -------
inventions made by Centillium Communications, Inc. and patents resulting
therefrom shall belong to Centillium Communications, Inc.. All intellectual
property and related rights in and to all inventions made by MELA and its
affiliates efforts and patents resulting therefrom shall belong to MELA and its
affiliates. All intellectual property and related rights in and to all
inventions jointly made by Centillium Communications, Inc. and MELA in the
course of the development efforts and patents resulting therefrom shall be
jointly owned by both companies. The parties shall confer with each other before
filing any patent claiming a joint invention. Each party shall promptly disclose
any such potentially patentable and jointly owned inventions to the other party;
and the parties will jointly establish whether such disclosed inventions are
sole or joint inventorship. Patents on sole inventions shall be filed at the
discretion and expense of the respective party. For jointly owned inventions,
the parties will jointly establish whether it would be advantageous to file, and
if so, how and where any jointly owned patent applications will be filed. The
reasonable expense of such jointly owned applications and patents shall be borne
equally by the parties. If one party declines to participate or fails to assume
any expense obligations in a timely manner, it shall relinquish to the other
party its right, title and interest in and to such jointly developed application
and patent. Any licensing of jointly owned inventions shall be at the discretion
of either joint owner, without the need for the consent of the joint owner, and
without any necessity of accounting for, sharing royalties with, or making any
other payment to the other joint owner. However, all such licensing of jointly
owned inventions shall be non-exclusive. MELA and Centillium will each have the
rights to utilize the intellectual property rights jointly developed hereunder,
if any, without further charge or cost to the other party. All intellectual
property rights granted to either party under this agreement shall extend to
such party's corporate parent, affiliates, and subsidiaries.

     2.3  Product Rights; Maskworks. Notwithstanding Section 2.2, all worldwide
          -------------------------
title to and interest in mask works developed under this Agreement pursuant to
Centillium designs shall be owned by Centillium Communications, Inc. Masks will
be shipped to Centillium Communications, Inc. after discontinuance of
production. However once the masks are returned to Centillium, they will not be
re-used by MELCO for the re-start of Production. In case Centillium would want
MELA to re-start Production MELCO will make new masks at additional NRE. This
Agreement shall not be construed as granting or conferring any intellectual
property rights of MELA or Centillium Communications, Inc. specified in Part II
of this Agreement or with respect to the Products except as explicitly specified
herein.

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                                  CONFIDENTIAL

     2.4  Process. Subject to Sections 2.1, 2.2 and 2.3 above, MELA shall own
          -------
all intellectual property and related rights in and to the jointly developed
Process.

                                                                    Page 4 of 30
<PAGE>

                                 CONFIDENTIAL

                                   PART III
                                 WAFER SUPPLY

     3.1  Wafer Manufacturing. On the terms and conditions of this Agreement,
          -------------------
MELA will: (i)have MELCO manufacture processed Wafers; and (ii) sell processed
Wafers to Centillium Communications, Inc.. Centillium Communications, Inc. will
take ownership of the silicon after all processing has been completed and
electrical test results meet specification, see exhibit C. MELA will manufacture
all Wafers at its "Saijo" manufacturing facility. If MELCO or MELA desires to
change the location at which it manufacturers wafers, MELA shall first obtain
Centillium Communications, Inc. written consent such consent is not to be
unreasonably withheld.

     3.2  Processes. MELA shall have MELCO manufacture the Wafers using the
          ---------
Process set forth in Exhibit A. If MELCO moves to a new or different Process,
MELCO will provide 120 days notice before the actual change and receive
authorization, which shall not be unreasonably withheld, from Centillium
Communications, Inc. within 30 days after MELA's notification of Centillium
Communications, Inc. MELCO will provide Centillium Communications, Inc. with all
information regarding such new processes (other than proprietary information
belonging to third parties) in order that Centillium Communications, Inc. can
ensure that MELCO can continue to manufacture wafers pursuant to this Agreement.

MELA will treat Centillium Communications, Inc. as a Key Account and as such
will continue to provide early access to newly developed processes during the
period this agreement is in force.

     3.3  Qualification and Quality Control.

          (a) Qualification. Centillium Communications, Inc. and MELA will
              -------------
cooperate fully to qualify jointly each Product for which Wafers will be
manufactured hereunder ("Qualification"). Accordingly, the parties will
cooperate to implement a Qualification procedure pursuant to which the parties
will agree on parameters to monitor product quality and reliability. After
qualification, Centillium Communications, Inc. will notify MELA when Volume
Production will commence. Processes will be capable of meeting *3200 PPM early
mortality (without Burn-in) and *200FITS with the data normalized to 85C
junction temperature and containing 2 million gates of 50% logic and 50% SRAM.
These are target PPM and FITS are not a commitment by MELA. HTOL data will be
provided to Centillium Communications on a quarterly basis detailing; Number of
Lots, Number of devices, Number of passes/fails (time when failed), HTOL
criteria (temperature, time, conditions).

          (b) Changes. After Qualification of any Product, MELA shall not make
              -------
any major and/or critical Process change which will impact the performance,
reliability or construction of the Products, without Centillium Communications,
Inc.'s prior written consent, which consent shall not be unreasonably withheld.
MELA shall notify Centillium Communications, Inc. in writing in advance of major
Process changes, including but not limited to any changes which may:

               (i) degrade Product quality or reliability;

* Less than
                                                                    Page 5 of 30
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                                 CONFIDENTIAL

               (ii)  result in failure of the Product to meet Centillium
Technology's specifications;

               (iii) substantially slow lead times

               (iv)  change Process control variables, ranges or method;

               (v)   result in Product mask revisions or changes to Wafer sort
programs;

          (c) Problem Notification. MELA will notify Centillium Communications,
              --------------------
Inc. promptly (within 72 hours) upon discovering major Process problems in its
manufacturing lines that may affect the delivery capability of Wafers or Wafer
yields.

          (d) Yield Improvement Help. MELA will notify Centillium
              ----------------------
Communications, Inc. of yield trends on a quarterly basis and what action is
being performed to resolve the issues.

     3.4 Forecasts.

          (a) Twelve-month Rolling Forecasts. Each week Centillium
              ------------------------------
Communications, Inc. will provide MELA a rolling forecast ("Forecast") of the
number of Wafers, which Centillium Communications, Inc. intends to purchase
weekly during the next twelve (12) months. The Forecast will be based on "Wafers
out," i.e., on deliveries expected to be made by MELA each week. Upon execution
of the Agreement, the parties will agree upon an initial twelve month Forecast.
MELA shall supply at least the number of wafers agreed to by the parties in the
initial Forecast and each subsequent weekly Forecast.

          (b) Forecast Acknowledgment. All Forecasts shall be mutually agreed
              -----------------------
upon by the parties, and MELA will treat Centillium Communications, Inc. as a
Key Account.

          (c) Required Orders. Upon mutual agreement by the parties regarding
              ---------------
the initial Forecast, Centillium shall issue a "blanket" purchase order for
those units identified in the initial Forecast and each subsequent weekly
Forecast issued in accordance with this Agreement. The parties shall agree on
the Forecast by the end of every week of the Centillium Communications, Inc.
calendar month. Authorization for payment against the forecast will be given
upon the determination of the yield, within 15 days of the shipment date
pursuant to Section 4.2.

     For example, Centillium Communications, Inc. will issue a blanket P.O.
covering at least a 12 month forecast. Centillium Communications, Inc. must
submit a rolling 12 month forecast with weekly requirements, and if the forecast
is provided at the end of the week between April 26-30, 1999, and if the silicon
is shipped to Centillium Communications, Inc. from MELA on July 1 the payment
authorization will be given within 15 days i.e. on or before July 16.

     NOTE: The forecast is for production orders only. The ramp-up-plan, pre-
qualification for the first product shall be mutually agreed between Centillium
Communications, Inc. and MELA.

          (d) Limited Quantity Adjustments.

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                                 CONFIDENTIAL

     (i) For low volume production (*500 wafers/month) MELA agrees to use
commercially reasonable efforts to meet the Centillium Communications, Inc.
weekly forecast requirements.

     (ii) Centillium Communications, Inc. may for high volume production (**500
wafers/month) increase or decrease Forecast quantities during the fourth and
fifth calendar month following the date of the Forecast by no more than twenty
percent (20%) and beyond the fifth calendar month following the date of the
Forecast by no more than thirty percent (30%). For months one through three
following the date of the Forecast, MELA shall use commercially reasonable
efforts to meet any upside requests made by Centillium, however, if Centillium
wants to decrease Forecast quantities Centillium may decrease up to 10% of the
first three months subject to payment of the cancellation charges in Section
3.8(c). However, during months one through three Centillium may, at no charge,
push back delivery, by no more than sixty (60) days, of up to ten percent (10%)
of the Forecast demand in any month.

     For example

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
Apr        May       Jun       Jul       Aug       Sep       Oct       Nov       Dec       Jan       Feb       Mar
----------------------------------------------------------------------------------------------------------------------
<S>        <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
500        1000      750       2000      3000      2000      1000      500       1000      300       3000      4000
----------------------------------------------------------------------------------------------------------------------
</TABLE>

     If Centillium Communications, Inc. submits the above forecast in March.
Then the Forecast for

          i.   April, May, June (1-3 month) Mela shall try to meet any upside
               made by Centillium; however, if Centillium decreases forecast
               quantities, this quantity may be decreased by 10%.

          II.  Jul, Aug (4-5 month) may increase or decrease by 20% per month

          III. Sep (**5 month) and beyond may increase or decrease by 30% per
month

     3.5 Demand. Centillium Communications, Inc. shall not be under any
         ------
obligation to purchase wafers hereunder except as otherwise provided by Sections
3.4 or 3.8.

     3.6 Purchase Order Process. All purchases under this Agreement will be
         ----------------------
initiated by a blanket purchase order and the forecast process as stated in
section 3.4. Forecast shall state unit quantities, unit descriptions, requested
delivery, dates and shipping instructions. This Agreement any prices agreed upon
by the parties pursuant to this Agreement, unit quantities, unit descriptions,
requested delivery dates and shipping instructions, shall constitute the
complete agreement between the parties with respect to the purchase and sale of
the Products and shall supercede all prior oral or written agreements,
representations and other communications between the parties relating to the
subject matter of this Agreement. This Agreement shall also supercede any
standard terms and conditions or pre-printed terms and conditions found on any
Purchase Order issued under this Agreement.

     3.7 Order (Forecast) Acknowledgment. MELA agrees to accept Centillium's
         -------------------------------
blanket purchase order to the extent it conforms to the mutually agreed upon
Forecasts, as outlined in Section 3.4, above.

*  Less than
** Greater than

                                                                    Page 7 of 30
<PAGE>

                                 CONFIDENTIAL

     3.8 Prototype and Volume Production Lots. Centillium Communications, Inc.
         ------------------------------------
shall order Products in either Prototype Production lots or Volume Production
lots as follows:

          (a) Prototype Lots. Centillium Communications, Inc. may order Wafers
              --------------
in prototype lots ("Prototype Production") whenever Centillium Communications,
Inc.: (i) seeks a Qualification in accordance with Section 3.3(a); (ii) seeks to
make any engineering changes, including without limitation changes to improve
Product functionality and Wafer yield; or (iii) elects, at Centillium
Communications, Inc. risk, to purchase Wafers in volume prior to Qualification.
A Prototype Production lot shall contain the number of Wafers specified in
Exhibit B. Centillium Communications, Inc. may order multiple Prototype
Production lots of the same Wafer. Centillium Communications, Inc. may require
MELA to hold Prototype Production at "gate" or "contact" intermediate stages of
production. Centillium Communications, Inc. should not hold lots longer than
ninety (90) days in such an intermediate stage. During Prototype and Production,
MELA will provide e-test data as specified in Exhibit G. Centillium
Communications, Inc. may request process splits (i.e., examine Wafers at a
particular step in fabrication) in order for Centillium Communications, Inc. to
evaluate variations within the specifications for each process.

          (b) Volume Production Lots. Upon Qualification of any particular
              ----------------------
Product, Centillium Communications, Inc. may order that Product only in volume
production lot ("Volume Production"). A Volume Production lot shall contain the
number of Wafers specified in Exhibit B. Centillium has the right to request
finished wafers are held at MELA for 60 days, prior to shipment. In the case of
pre-qualification ramp up Centillium may request lots of a different lot size
are processed.

          (c) Cancellation. Centillium Communications, Inc. may cancel product
          ----------------
purchase order(s) or any portions thereof for any reason by notifying MELA in
writing prior to the scheduled delivery date on the purchaser order(s), provided
that Centillium Communications, Inc. pays the fees specified in this Section
3.8(c). Cancellation shall be effective upon MELA's receipt of the written
cancellation notice from Centillium Communications, Inc., or upon the date
specified in such cancellation notice if later than the date of receipt. MELA
shall cease all work on such cancelled purchase order quantities in accordance
with the cancellation notice; provided that Centillium Communications, Inc.
shall pay a cancellation charge calculated in the manner provided below
("Cancellation Charge"). MELA will invoice Cancellation Charges, if any,
immediately upon cancellation and Centillium Communications, Inc. will pay the
Cancellation Charge within thirty (30) days after receipt of invoice. The
foregoing rights shall be MELA's sole remedies for any cancellation of a
purchase order or failure to order quantities specified in a Forecast. The
Cancellation Charge shall be calculated as a percentage of the Wafer price, as
specified in Exhibit D otherwise payable based upon the number of weeks between
the date Centillium Communications, Inc. submits the cancellation notice and the
delivery date of the wafers as set forth in the then most current Report (as
defined in Section 3.9(b). Such rate is as follows

     Prior to delivery date                   Monies due

             * 2 weeks                            100%

             * 3 weeks                             80%

             * 5 weeks                             60%

* Less than

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                                 CONFIDENTIAL

            * 7 weeks                      40%

            *= 9 weeks                     20%

           ** 9 weeks            No cancellation charge

Forecast will be given on a weekly basis, broken down into weekly quantities.

At Centillium Communications, Inc. request MELA shall deliver all work-in-
process to Centillium Communications, Inc. or destroy all such work-in-process
and provide written certification of destruction to Centillium Communications,
Inc.. Notwithstanding the foregoing, there shall not be any cancellation change
if Centillium Communications, Inc. cancels an order before wafers are physically
started.

          (d) Delivery Commitments. MELA will deliver wafers to the carrier for
          ------------------------
shipment, within one (1) day. MELA will use reasonable efforts to distribute the
manufacture of wafers evenly throughout each month (i.e., start and complete
Wafers linearly). Upon Centillium Communications, Inc. request, before
Centillium Communications, Inc. product qualification, MELA will hold Products
during their manufacture in accordance with terms to be agreed upon by the
parties. If wafers are requested to be held by Centillium Communications, Inc.
during manufacture, the foregoing delivery commitments will be extended by the
number of days that the Wafers are held.

     (e) Work-in-Process Reporting. MELA will provide Centillium Communications,
     -----------------------------
Inc. with work-in-process reports ("Reports") on a periodic basis, for at least
10 process steps. Reports shall be sent to Centillium Communications, Inc. via
email. The Reports shall include all of the information in Exhibit H. The format
of the report will be comma delaminated (excel") and frequency of the reports
shall be at least bi-monthly up to 500 wafers and weekly thereafter. This report
will be used by Centillium for information purpose only and not as an official
confirmation of delivery by MELA. If the wafer demand per design becomes very
small, the frequency of this report will be re negotiated

     (f) Shipping. All Wafers shall be delivered to Centillium Communications,
     ------------
Inc. or its designated airport, pre-alerts are required to be sent from MELA to
Centillium Communications freight forwarder at least 24 hrs in advance and shall
be suitably packed for shipment in MELA's standard containers, marked for
shipment as specified in Centillium Communications, Inc. purchase order, and
delivered to a carrier or forwarding agent chosen by Centillium Communications,
Inc. However, should Centillium Communications, Inc. fail to designate a
carrier, forwarding agent or type of conveyance, MELA shall make such
designation in conformance with its standard shipping practices. Shipment will
be "ex works (EXW) fabrication location" according to the Incoterms 1990.

     3.9 Test and Inspection.

*  Less than

** Greater than
                                                                    Page 9 of 30
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                                  CONFIDENTIAL

          (a) By MELA. MELA will supply to Centillium Communications, Inc., with
              -------
each Wafer shipment, process control monitor ("PCM") test results and visual
quality inspection results as agreed by the parties.

          (b) Reports. MELA will supply Centillium Communications, Inc. with
              -------
reliability and statistical quality data on the MELA standard processes, which
is made for the same product line, at regular intervals to be agreed upon but no
less than once a quarter. The format and the contents of these report(s) are to
be mutually agreed upon. Upon reasonable notice, MELA will allow Centillium
Communications, Inc. on-site inspection at reasonable intervals to ensure that
MELA follows the reliability and testing procedures set forth in this Agreement.

          (c) By Centillium Communications, Inc. Wafers manufactured using the
              ---------------------------------
Process set forth in Exhibit A shall be subject to incoming inspection,
electrical testing and reliability testing by Centillium Communications, Inc. in
accordance with the acceptance criteria set forth in Exhibit C hereto. Wafers
manufactured under other Processes (jointly defined by the parties in accordance
with Section 3.2) shall be subject to incoming inspection, electrical testing
and reliability testing by Centillium Communications, Inc. in accordance with
updated acceptance criteria which the parties agree to negotiate in good faith
promptly at or prior to the implementation of any such other Process. Wafers
meeting applicable initial acceptance criteria or updated acceptance criteria
will be deemed accepted by Centillium Communications, Inc., if wafers do not
meet this criteria Centillium Communications will notify MELA within 72 hrs.
Centillium Communications will provide a monthly test report to MELA

          (d) Test Failure. If any Wafer or lot of Wafers fails incoming
              ------------
inspection or test, and if test failure is caused by any defect in the Process
used by MELA, or any other design core provided by MELA, Centillium
Communications, Inc. may reject such lot or Wafer in writing as soon as possible
but at least within forty-five (45) days after delivery and return such lot or
Wafer to MELA, at MELA's expense, for a full refund. Centillium Communications,
Inc. will explain the reasons for wishing to reject a lot and MELA will be
entitled to examine any lot that Centillium Communications, Inc. wishes to
reject. The parties will seek in good faith to resolve any disagreement as to
whether a lot is conforming. After mutual agreement for return shipment,
Centillium Communications, Inc. shall use reasonable commercial efforts to use
MELA original packing, but in any event shall use commercially reasonable
packaging, and supply all identifying shipping documents in order to avoid any
deterioration of the goods.

          (e) Low Line Yield on Volume Production. If the output per lot (i.e.,
              -----------------------------------
good die/wafer yield, which meets the inspection and test criteria, is less than
yield defined in Exhibit E and if Centillium Communications, Inc. so requests,
MELA will explain the reasons for the low line yield. Lots or Wafers with sort
yields below a yield defined in Exhibit E may not be shipped unless Centillium
Communications, Inc. prior approval is obtained.

          (f) Yield Based Adjustments. Wafer prices shall be adjusted if the
              -----------------------
average Yield (as defined below) per Wafer Lot (as defined below) is outside the
allowance range ("Allowance Range," as further defined below). The Allowance
Range and standard yields are defined in exhibit D which will be mutually agreed
upon by the parties but in any event an Allowance Range will be

                                                                   Page 10 of 30
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                                  CONFIDENTIAL

defined and shall not be less than 20% of the standard yield defined in Exhibit
D. A price adjustment shall be determined according To an adjusted Wafer value
that is equal to the actual price adjusted by the percentage change from the
averse tot yield, subject to the Allowance Range. For example

          (i)   If the average Yield rate is 70% in the case of a Product with
an average lot yield of 80%, there shall be no value adjustment

          (ii)  If the average Yield rate is 50% for that Product and the
current price is $1,000, the adjusted value shall be ((average lot yield-
(allowable yield deviation)) - yield rate)% * 1000= ((80-(20))-50)%*1000= $
100.00 to Centillium.

          (iii) If the yield is 95% in the above example, then (95-
(80+10))%*1000 = $ 50.00 to MELA.

          (iv)  The Established Standard Yield will be reviewed in every
quarterly strategic business review and mutually agreed upon to apply for the
following quarter and placed in Exhibit D.

          (v)   Centillium Communications, Inc. shall have the option of
obtaining a credit or prompt refund of the amount of any adjustments. For the
purposes of this Section 3.8(f), the following definitions apply:

     "Wafer Lot" see Exhibit C.

     "Yield" shall mean electrically good dice divided by the number of full die
locations on the Wafer (i.e., excluding locations which are not complete due to
the curved edge of the Wafer so long as MELA uses best efforts to optimize the
use and coverage of silicon on a Wafer)

     NOTE: This section will take effect after 200 wafers of qualified product

                                                                   Page 11 of 30
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                                  CONFIDENTIAL

                                    PART IV
                                  COMPENSATION

     4.1 Purchase Price. The price of the Wafers shall be determined from time
         --------------
to time by agreement. The price shall be adjusted according to Section 3.9(f).
The fixed price for any quarter will be reviewed during the last month of the
previous quarter and mutually agreed to by the parties in good faith. For
example, the Q2 (May - July) price will be finalized by March. If an agreement
cannot be made, the current price will continue to be valid for the products
already ordered.

     4.2 Payment. MELA will invoice Centillium Communications, Inc. or its
         -------
designees acceptable to MELA (the "payer"), for example Mitsubishi International
Corn oration (MIC), as specified in the relevant Purchase Order. Nothing in this
section shall be construed to release or discharge Centillium of its payment
obligation to MELA, and as such Centillium guarantees payment of all sums by
designees which MELA has agreed to invoice. Except as otherwise agreed in
writing by the parties, the payer shall authorize payment to MELA the net
purchase price, after yield adjustment, in US dollars within (15) days of
shipment from MELA. Once payment is authorized actual payment will occur within
(30) days of shipment. Past due invoices of MELA to the payer shall bear
interest at the rate of 1.5% per month, however, this payment can be delayed
without charge if a quality or other process issue causes a delay but not in
excess of the maximum lawful rate, until paid in full. If the due date of the
invoice of MELA is not a business day, the payer shall pay MELA on the next
business day following such due date. MELA may submit invoices for Wafers not
earlier than the date of Wafer shipment to Centillium Communications, Inc.
Payment shall be in United States dollars unless otherwise agreed. For masks
tooled by MELA hereunder, MELA may submit mask-tooling invoices with the
prototype lot.

     4.3 Taxes. Purchase prices shall be inclusive of all taxes and customs
         -----
duties, and MELA shall pay and be liable for all taxes and duties imposed by any
Taxing jurisdiction in "Country of Origin" or at the location of fabrication.

                                                                   Page 12 of 30
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                                  CONFIDENTIAL

                                     PART V
                       WARRANTY AND DISCLAIMER; LIABILITY

     5.1 LIMITED WARRANTY. Products sold by MELA are warranted to conform to
         ----------------
specifications therefor at the time of delivery to Centillium and to remain free
from defects in workmanship and material for a period of twelve(12) months from
the date of shipment by MELA. Any products which fail to meet either such
warranty shall, at MELA's option, either be repaired or replaced by MELA at no
charge to Centillium or MELA shall issue a credit therefor in the amount paid by
Centillium on the said invoice. MELA's warranty obligation shall be limited
solely to such repair, replacement or credit. Such obligation shall be
conditioned upon receipt by MELA of notice of any alleged non-conformance to
specifications within thirty (30) days after delivery to Centillium and of any
alleged defect in material or workmanship within thirty (30) days after
discovery. Products which MELA consents or directs in writing to be returned
shall be returned to MELA, freight prepaid, F.O.B. MELA's facility in Sunnyvale,
California or other destination directed by MELA. Without limitation, MELA shall
be responsible for any costs associated with the removal of the Products from
items into which such Products have been integrated by Centillium (or other
third parties), MELA's warranty shall only apply if the products have not been
altered or repaired other than with authorization from MELA and according to its
approved procedures, the products have not been subjects to misuse, abuse,
improper installation, misapplication, maintenance, neglect or accident, the
products have not been damaged by excessive physical or electrical stress and
the products have not had their serial numbers, or other markings, if any,
altered, defaced or removed. All Products or parts determined to be defective
shall become the property of MELA upon replacement, and MELA reserves the right
to utilize refurbished parts to repair or replace the warranted products.
Warranty repairs or warranty replacements shall be subject to this warranty for
the longer of (a) ninety (90) days following shipment of the repaired/replaced
products, or (b) the remainder of the original warranty for the defective
product which has been repaired or replaced.

THE FOREGOING WARRANTY IS EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES, EXPRESS
OR IMPLIED, INCLUDEING BUT NOT LIMITED TO ANYIMPLIED WARRANTY OK
MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE, COURSE OF DEALING OR USAGE
OF TRADE. MELA SHALL HAVE NO RESPONSIBILITY FOR ANY PARTICULAR APPLICATION MADE
OF ANY PRODUCT.

LIMITATION OF LIABILITY. UNDER NO CIRCUMSTANCE SHALL MELA OR ANY OF ITS
-------------------------
AFFILIATES BE LIABLE TO CENTILLIUM OR ANY OTHER PERSON OR ENTITY FOR ANY
SPECIAL, PUNITIVE, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER BASED
UPON LOST GOODWILL, LOST PROFITS, WORK STOPAGE, PRODUCT FAILURE, IMPAIRMENT OF
OTHER GOODS OR OTHERWISE AND WHETHER ARISING OUT OF BREACH OF WARRANTY, BREACH
OF CONTRACT, NEGLIGENCE, TORT OR OTHERWISE.

                                                                   Page 13 of 30
<PAGE>

                                  CONFIDENTIAL

                                    PART VI
                        INTELLECTUAL PROPERTY INDEMNITY

     6.1 Indemnification by Centillium Communications. Inc.. Centillium
         --------------------------------------------------
Communications, Inc. agrees to defend MELA and its Affiliates against any third-
party actions or claims arising out of the manufacture, use, sale, offer for
sale, or importation of Products and brought against MELA and its Affiliates to
the extent based upon a claim that Centillium's specifications; technology; or
information made available to MELA, or the product thereof infringes any
worldwide patent, trademark or copyright, trade secret or similar intellectual
property right of any third party, and Centillium Communications, Inc. agrees to
purchase any work-in-process for Products and to pay any settlement mounts or
damages awarded against MELA and its Affiliates (including reasonable attorneys
fees and court costs) to the extent based upon such a claim; provided that MELA
and its Affiliates provides Centillium Communications, Inc. (i) prompt notice
thereof, (ii) reasonable assistance in connection with the defense thereof (at
Centillium Communications, Inc.'s expense excluding MELA and its Affiliates
employee expense), and (iii) full control of the defense and settlement thereof.
Centillium Communications, Inc. shall not settle any such claim in a manner that
has a material adverse effect on MELA and its Affiliates without MELA and its
Affiliates prior written consent. Centillium Communications, Inc. agrees to keep
MELA and its Affiliates apprised of the progress of any action or claims covered
by this Section 6.1. Notwithstanding the foregoing, Centillium Communications,
Inc.'s obligation to indemnify MELA and its Affiliates under this Section 6.1
shall not apply to any actions or claims described in Section 6.2 below.

     6.2 Indemnification by MELA.
         -----------------------

          (a) MELA agrees to defend Centillium Communications, Inc. and/or its
Associated Companies against any third-party actions or claims arising out of
the manufacture, use, sale, offer for sale, or importation of Products and
brought against Centillium Communications, Inc. and/or its Associated Companies
to the extent based upon a claim that the use of any Process used by MELA or any
technology or information provided by MELA under this Agreement infringes or
misappropriates (directly or indirectly, such as, without limitation, through
the sale or importation of a wafer manufactured by any such Process) any
worldwide patent, copyright, trade secret or other intellectual property right
of any third party, and agrees to pay any settlement amounts or damages awarded
against Centillium Communications, Inc. and/or its Associated Companies
(including reasonable attorneys fees and court costs) to the extent based upon
such a claim; provided that Centillium Communications, Inc. and/or its
Associated Companies provides MELA (i) reasonably prompt notice thereof, (ii)
reasonable assistance in connection with the defense thereof (at MELA's expense
excluding Centillium Communications, Inc. and/or Associated Company employee
expense), and (iii) allows MELA full control of the defense and settlement
thereof. MELA shall not settle any such claim in a manner that has a material
adverse effect on Centillium Communications, Inc. without Centillium
Communications, Inc.'s prior written consent. MELA agrees to keep Centillium
apprised of the progress of any action covered by this Section 6.2.

                                                                   Page 14 of 30
<PAGE>

                                  CONFIDENTIAL

          (b) MELA shall at all times have the right to: (i) obtain appropriate
licenses to, or (ii) modify, the Process provided that the resulting Product
complies with the specifications set forth in Exhibit F and subject to
Centillium Communications, Inc.'s right to approve such changes in advance, such
pre-approval not to be unreasonably withheld.

          (c) Exclusions. MELA shall not be obligated to indemnify and hold
              ----------
harmless Centillium Communications, Inc. where the infringement is caused by:
(i) the use of Products by Centillium Communications, Inc. in combination with
other circuits components, components, devices or products if both the
infringement would not have occurred but for such combination and could have
been avoided by a different commercially viable combination and such combination
is not reasonably necessary to use the Product for its intended purpose; (ii)
use of the Products by Centillium Communications, Inc. and/or its Associated
Companies in applications or environments for which Products were not designed;
or (iii) modifications to the Products by Centillium Communications, Inc. and/or
is Associated Companies if such infringement would have been avoided absent such
modifications, unless such modifications were authorized by MELA.

     6.3 Entire Liability. THE FOREGOING STATES EACH PARTY'S ENTIRE LIABILITY
         ----------------
AND OBLIGATION (EXPRESS, STATUTORY, IMPLIED OR OTHERWISE) UNDER THIS AGREEMENT
WITH RESPECT TO INFRINGEMENT OF THIRD PARTY INTELLECTUAL PROPERTY. IN NO EVENT
SHALL MELA'S LIABILITY PURSUANT TO SECTION 6.2 ARISING OUT OF ANY INFRINGEMENT
CLAIM EXCEED THE AMOUNT PAID OR PAYABLE BY CENTILLIUM COMMUNICATIONS, INC.
HEREUNDER FOR THE PRODUCTS THAT ARE THE SUBJECT OF SUCH CLAIM.

                                                                   Page 15 of 30
<PAGE>

                                 CONFIDENTIAL

                                   PART VII

                              GENERAL PROVISIONS

     7.1 Confidentiality. (5 years)

          (a) Confidential Information. "Confidential Information" means any
              ------------------------
technical data, trade secret, know-how, or other information disclosed by any
party (including the Associated Companies) hereunder, either directly or
indirectly, in writing, orally, by drawing or by inspections, and which shall be
marked by the disclosing party as "Confidential" or "Proprietary". If such
information is disclosed orally, through demonstration or by inspection, in
order to be deemed Confidential Information, it must be specifically designated
as being of a confidential nature at the time of disclosure and confirmed in
writing to be received by the receiving party within ten (10) days of such
disclosure.

          (b) Exclusions. Notwithstanding the foregoing, Confidential
Information shall not include information which:

     is known to the receiving party at the time of disclosure or becomes known
to the receiving party without breach of this Agreement;

     is or becomes publicly known through no wrongful act of the receiving party
or any affiliate of the receiving party;

     is rightfully received from a third party (excluding the Associated
Companies) without restriction on disclosure;

     is independently developed by the receiving party or any of its affiliates
by persons who had no access to the information;

     is furnished to any third party by the disclosing party without restriction
on its disclosure; or

     is approved for release upon a prior written consent of the disclosing
party.

          (c) Compelled Disclosure. Notwithstanding the foregoing, a receiving
              --------------------
party may disclose Confidential Information if such Confidential Information is
disclosed pursuant to judicial order, requirement of a governmental agency or by
operation of law; provided, however, that the receiving party shall provide
prior notice to the disclosing party and thereafter use reasonable commercial
efforts to assist the disclosing party in preventing or controlling such
compelled disclosure.

          (d) Nondisclosure. The receiving party agrees that it will not
              -------------
disclose any Confidential Information to any third party unless that third party
agrees to be bound to the confidentiality obligations stated in this part VII
and will not use Confidential Information of the disclosing party for any
purpose other than for the performance of obligations hereunder during the term
of this Agreement. The receiving party further agrees that Confidential
Information shall remain the sole property of the disclosing party and that it
will take all reasonable precautions to

                                                                   Page 16 of 30
<PAGE>

                                 CONFIDENTIAL

prevent any unauthorized disclosure of Confidential information by its employees
and independent contractors. No license shall be granted by the disclosing party
to the receiving party with respect to Confidential Information disclosed
hereunder unless otherwise expressly provided herein. Each party will disclose
the other's Confidential Information only to those of its employees and
personnel of Affiliates that have a need to know and who are informed that such
information is confidential.

          (e) Return of Confidential Information. After expiration or
              ----------------------------------
termination of this Agreement upon the request of the disclosing party the
receiving party will promptly return all Confidential Information furnished
hereunder and all copies thereof, and the receiving party will certify that al
such confidential information has been returned or destroyed.

          (f) Publicity. The parties agree that all publicity and public
              ---------
announcements concerning the formation and existence of this Agreement shall be
jointly planned and coordinated by and among the parties. Neither party shall
disclose any of the provisions of this Agreement, the existence of this
Agreement, nor that the parties are doing business with one another to any third
party without the prior written consent of the other party. Centillium
Communications, Inc. will be responsible for all communications with Centillium
Communications, Inc.'s customers concerning the subject matter hereof, and MELA
agrees to forward to Centillium Communications, Inc. any communications it
receives from Centillium Communications, Inc.'s customers. Notwithstanding the
foregoing, any party may disclose information concerning this Agreement as
required by the rules, orders, regulations, subpoenas or directives of a court,
government or governmental agency, after giving prior notice to the other
parties and either party may disclose this Agreement to its attorneys,
accountants or like consultants that have a need to know or to potential
investors or potential acquiring companies.

          (g) Remedy for Breach of Confidentiality. If a party breaches any of
              ------------------------------------
its obligations with respect to confidentiality and unauthorized use of
Confidential Information hereunder, the non-breaching party shall be entitled to
equitable relief to protect its interest therein, including but not limited to
injunctive relief, as well as money damages.

     7.2 Term and Termination. This Agreement shall remain in force for five (5)
         --------------------
years from the time the first product is released to production by Centillium
Communications, inc. unless it is terminated earlier as provided in this
Agreement. At the end of five (5) years, this Agreement will be extended for
another one (1) year under the same terms and conditions provided herein unless
either party gives notice of termination twelve (12) months prior to the
expiration date. Notwithstanding the foregoing, all existing orders and the
provisions of Part V, VI, and Section 7.6 of Part VII (Export Controls) shall
survive any termination or expiration of this Agreement. The obligations of
confidentiality under Article 7.1 of Part VII shall last during the specific
period set forth in Article 7.1 of Part VII.

          (a) Subject to Section 7.2(b), either party may terminate this
Agreement with immediate effect, at its sole discretion, upon giving written
notice to the other party, in case:

     the other party, defaults in the performance of any material obligation
hereunder, and if any such default is not corrected within ninety (90) days
after the defaulting party receives written notice of such default from the non-
defaulting party,

                                                                   Page 17 of 30
<PAGE>

                                 CONFIDENTIAL

     the business of the other party as a commercial enterprise ceases, or

     The other party files a petition in bankruptcy, or is adjudicated bankrupt,
or makes a general assignment for the benefit of creditors, or becomes
insolvent, or is otherwise unable to meet its business obligations for a period
of three (3) consecutive months.

          (b) In the event that MELA terminates this Agreement pursuant to
Section 7.2(a) above, MELA agrees to upon request negotiate in good faith with
Centillium customers for the continued supply of Wafers. Centillium
Communications, Inc. agrees to provide MELA with a list of such customers
reasonably prior to the occurrence of the events specified in Section 7.2(a)
above.

     7.3 Force Majeure. The parties shall not be liable to one another for
         -------------
failure to perform any part of this Agreement except for any payment obligation
when such failure is due to fire, flood, strikes, labor troubles or other
industrial disturbances, inevitable accidents, war (declared or undeclared),
embargoes, blockades, legal restrictions, governmental regulations or orders,
riots, insurrections, year 2000 computer problems or any cause beyond the
control of such party. However, the party so prevented from performance shall
use commercially reasonable efforts to resume performance, and the parties shall
proceed under this Agreement when the causes of such nonperformance have ceased
or have been eliminated.

     7.4 Assignment. The parties shall not assign or transfer this Agreement, in
         ----------
whole or in part, or any right or obligation hereunder to any third party
without the prior written consent of the other party, provided that either party
shall have the right to assign this Agreement to an entity that acquires all or
substantially all of its assets, without the consent of the other party.

     7.5 Governing Law; Disputes.
         ------------------------

          (a) Except as hereinafter provided, all disputes or controversies
arising out of or in any manner relating to this Agreement which the parties do
not resolve in good faith within ten days after either party notifies the other
of its desire to arbitrate such disputes or controversies shall be settled by
arbitration by a single arbitrator in accordance with the then standard
prevailing commercial rules, as modified or supplemented by this article, of the
American Arbitration Association("AAA"). The arbitration shall be held in Santa
Clara County, California. The arbitration award shall be in writing and shall
specify the factual and legal bases of such award. The arbitration award shall
be final and binding, and a judgment consistent therewith may be entered by any
court of competent jurisdiction. The parties agree that the arbitration award
shall be treated confidentially, and the parties shall not, except as otherwise
required by law or court or, disclose the arbitration award to any third party,
excluding personnel I their affiliated companies and their attorneys and
accountants with a need to know, provided that such recipients agree to be bound
by the same restrictions as are contained in this Agreement. The arbitrator
shall not have the power to render an award of punitive damages. To the extent
of any conflict, this article shall supersede and control AAA rules.

                                                                   Page 18 of 30
<PAGE>

                                 CONFIDENTIAL

          (b) Nothing in this article shall be construed to preclude or in any
way prohibit either party from: (1) seeking any provisional remedy, such as an
injunction or a temporary, restraining order; or (2) instituting or prosecuting
to judgment any lawsuit in any court of competent jurisdiction to collect any
money due.

          (c) Except as provided in this subsection, neither party shall have
the right to take depositions or obtain discovery of documents or other
information. After the appointment of the arbitrator, the parties shall agree on
(1) a reasonable number of and schedule for depositions which the parties may
take and (2) a reasonable scope and schedule for the production of documents or
other information which is relevant to the subject matter of the arbitration. If
the parties cannot reach agreement on the number of depositions, the scope, of
production of documents or other information and the schedule therefor, the
arbitrator shall make such determination(s). All discovery shall be completed no
later than thirty (30) days prior to the arbitration hearing. The arbitrator
shall have the power to enforce any discovery agreed upon by the parties or
other wise required to be taken sanctions and penalties as can be or may be
imposed in like circumstance in a civil actions by a California Superior Court,
except the power to order the arrest or imprisonment of a person.

          (d) No later than thirty (30) days prior to the arbitration hearing,
each party shall produce to the other party and the arbitrator lists of the
witnesses, documents and other information which such party intends to use at
the arbitration hearing.

     7.6 Export Controls. MELA and Centillium Communications, Inc. acknowledge
         ---------------
that they are each subject to regulation by agencies of the U.S. and "Country of
Origin" Governments, including the U.S. Department of Commerce, which prohibit
export or diversion of certain products and technology to certain countries. Any
and all obligations of the parties to provide technical information, technical
assistance, any media in which any of the foregoing is contained, training and
related technical data (collectively, "Data") shall be subject in all respect to
such United States and "California" laws and regulation as shall from time to
time govern the license and delivery of technology and products abroad by
persons subject to the jurisdiction of the United States, including the Export
Administration Act of 1979, as amended, any successor legislation, and the
Export Administration Regulations issued by the Department of Commerce,
International Trade Administration, Bureau of Export Administration.

     Without in any way limiting the provisions of this Agreement, the parties
agree that unless prior written authorization is obtained from the Bureau of
Export Administration or unless the Export Administration Regulations explicitly
permit the reexport without such written authorization, neither party will
export, reexport, or transship, directly or indirectly, the Products or any
technical data disclosed or provided to MELA, or the direct product of such
technical data, to country groups Q, S, W, Y, or Z (as defined in the Export
Administration Regulations and which currently consist of Albania, Bulgaria,
Cambodia, Cuba, the Czech Republic, Estonia, Laos, Latvia, Libya, Lithuania,
Mongolian People's Republic, North Korea, Poland, Romania, the geographic area
of the former Union of Soviet Socialist Republics, the Slovak Republic and
Vietnam, or to the People's Republic of China (excluding Taiwan), Haiti, Iran,
Iraq, Syria, Yugoslavia (Serbia and Montenegro), or to any

                                                                   Page 19 of 30
<PAGE>

                                 CONFIDENTIAL

other country, as to which the U.S. Governments have placed an embargo against
the shipment of products, which is in effect during the term of this Agreement.

     7.7  Notice. Any notice required or permitted to be given under this
          ------
Agreement shall be delivered (i) by hand, (ii) by registered or certified mail,
postage prepaid, return receipt requested, to the address of the other party
first set forth above, or to such other address as a party may designated by
written notice in accordance with this Section 7.7 by overnight courier, or
(iii) by electronic transmission with conforming letter mailed under the
conditions described in (ii). Notice so given shall be deemed effective when
received, or if not received by reason of fault of addressee, when delivered.

If to MELA, to:

MELA
Product Manager
Mitsubishi Electronics America
1050 East Arques Ave
Sunnyvale, CA 94086-4601

If to Centillium Communications, Inc., to:

Vice President of Operations and Manufacturing
Centillium Communications, Inc.
46531 Fremont Blvd
California, 94538

     7.8  Relationship of Parties. The relationship between Centillium
          -----------------------
Communications, Inc. and MELA under this Agreement is that of independent
contractors and neither shall be, nor represent itself to be, the joint
venturer, franchiser, franchisee, partner, broker, employee, servant agent, or
representative of the other for any purpose whatsoever. No party is granted any
right or authority to assume or create any obligation or responsibility, express
or implied, on behalf of, or in the name of, another party or to bind another in
any matter or thing whatsoever.

     7.9  Waiver. Should any of the parties fail to exercise or enforce any
          ------
provision of this Agreement or to waive any rights in respect thereto, such
waiver or failure shall not be construed as constituting a continuing waiver or
a waiver of any other right.

     7.10 Severability. In the event that any provision or provisions of this
          ------------
Agreement shall be held to be unenforceable, the parties shall renegotiate those
provisions in good faith to be valid, enforceable substitute provisions which
provisions shall reflect as closely as possible the intent of the original
provisions of this Agreement. If the parties fail to negotiate a substitute
provision, this Agreement will continue in full force and effect without said.

     7.11 Entire Agreement. This Agreement, including the Exhibits referred to
          ----------------
herein, contains the entire understanding of the parties, and supersedes any
prior agreement between or among the parties with respect to its subject matter.
In case of any conflicts between this Agreement

                                                                   Page 20 of 30
<PAGE>

                                 CONFIDENTIAL

and any purchase orders, acceptances, correspondence, memorandum, listing sheets
and other documents forming part of any order for Products, this Agreement shall
govern. This Agreement shall not be amended or modified except by written
instrument signed by the duty authorized representatives of the parties hereto.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their duly authorized representatives or officers, effective as of the
Effective Date.

Mitsubishi Electronics America, Inc.          Centillium Communications, Inc.

By: /s/ Dwain R. Aidala                        By: /s/ W F Mackenzie
    -----------------------                        -----------------------------

Name: Dwain Aidala                             Name: William F Mackenzie
      ---------------------                          ---------------------------

Title:  Sr. VP & GM. Systems Integration       Title: VP Operations and Mnfg.
        ---------------------------------             --------------------------
Division, Electronics Device Group                    Services
----------------------------------                    --------

                                                                   Page 21 of 30

<PAGE>

                                 CONFIDENTIAL

                                   EXHIBITS
                                   --------

     A - Initial Process(es)

     B - Production Information

     C - Acceptance Criteria

     D - Acceptable Yields

     E - Yield Scrap Criteria

     F - Specifications

     G - E-test parameters

     H - Work in Progress (WIP) reporting format

                                                                   Page 22 of 30
<PAGE>

                                 CONFIDENTIAL

                                   EXHIBIT A
                                   ---------

                             INITIAL PROCESS (ES)

MELCO STANDARD "C-Si-J8" as modified for Centillium Communications, Inc.
(Vtn=0.5/V, Vtp=-0.70/V, Idsn=570A/um, Idsp=260mA/um).

                                                                   Page 23 of 30
<PAGE>

                                 CONFIDENTIAL

                                   EXHIBIT B
                                   ---------

                            PRODUCTION INFORMATION

Fabrication Cycle Times
-----------------------

     Prototype:  32 days Cycle Time from mask generation to Centillium
                 Communications, Inc. provided Centillium Communications, Inc.
                 releases design database to MELCO 3 days before tape out. 25
                 days from Metal 1 to Centillium Communications, Inc.

        Volume:  77 days at Centillium Communications, Inc. dock after P.O.
                 acceptance 30 days from Metal 1 to Centillium Communications,
                 Inc.(pre-qualification)

Wafers Per Lot
--------------

     Prototype:  12

        Volume:  25

                                                                   Page 24 of 30
<PAGE>

                                 CONFIDENTIAL

                                   EXHIBIT C
                                   ---------

     Acceptance Criteria: Wafers

     1.   5 wafers out of a lot

     2.   5 sites per wafer

          3. If 5 out of 5 sites pass electrical test (ET) specification pass on
             product

          4. If 4 out of 5 sites pass electrical test specification choose one
             more wafer.

             5. If this passes electrical tests pass on lot

             6. If this fails 100% test lot - inform Centillium after
                disposition

          7. If 3 or less sites pass electrical specifications, 100% test lot -
                inform Centillium after disposition

     8.   No more than 3 probe marks on any I/O pad which is not on test
          structure

     9.   No visual defects seen under 50x magnification which covers 20% of
          wafer

                                                                   Page 25 of 30
<PAGE>

                                  CONFIDENTIAL

                                   EXHIBIT D
                                   ---------

                               ACCEPTABLE YIELDS

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------

Time                      Ave. Lot Yield            Allowance Range (+/- 20%)
-------------------------------------------------------------------------------
<S>                       <C>                       <C>
CT-L21DC08                 60%                                +/- 20%
-------------------------------------------------------------------------------
CT-L21DC04                 65%                                +/- 20%
-------------------------------------------------------------------------------
CT-L21DC01                 70%                                +/- 20%
-------------------------------------------------------------------------------
CT-L22DT01                 Undetermined (85%)                 +10%/-20%
-------------------------------------------------------------------------------
</TABLE>

Note: Yield based on first 200 wafers

                               WAFER COST (US$)
                               ----------------

*  500 wafers $2450

** 500 wafers Not to exceed $2280

                                MASK COST (US$)
                                ---------------

Masks (NRE), 12 wafers (6 held pre-metals and 6 shipped) and superhot cycle-time

 .  $150,000 per design

*  = less than

** = greater than

                                                                   Page 26 of 30
<PAGE>

                                 CONFIDENTIAL

                                   EXHIBIT E

                                YIELD CRITERIA

Scrap Yield 20% of Standard yield in Exhibit D

                                                                   Page 27 of 30
<PAGE>

                                 CONFIDENTIAL

                                   EXHIBIT F

                                SPECIFICATIONS

SPC monitoring of wafer fabrication site      CSP-OPQR-16

Reliability process monitoring program        CSP-OPQR-17

Packing and Transportation of wafers          CSP-OPSH-1

Visual wafer inspection criteria              CSP-OPQR-18

                                                                   Page 28 of 30
<PAGE>

                                 CONFIDENTIAL

                                   EXHIBIT G

                       E-TEST PROCESS MONITORS (Minimum)

Threshold Voltages (3.3 & 2.5V process) - Vthn/Vthp

Drive Currents (3.3 & 2.5V process)- Idsn/Idsp

Ring Oscillator Frequency

Resistance - Metal, Via, Contacts, silicides

Breakdown voltages

                                                                   Page 29 of 30
<PAGE>

                                 CONFIDENTIAL

                                   EXHIBIT H
                                   ---------

           WORK IN PROCESS (WIP) REPORTING FORMAT (MINIMUM DATA SET)

     MELCO DATA                                        MELA DATA
     ------------                                      ---------

1. MELCO fabrication location                     1.  Requested Ship Date

2. Date and time file sent (PST)                  2.  Forecast Ship date

3. Customer or MELCO Devices Number               3.  Ship confirmation date

4. Process Stage (10 defined locations 5 at metals 5 pre-metals)

5. Lot number

6. Wafer quantity into process stage

------------------------------------------------------------------------
Centillium        Mitsubishi    Quantity   Due date to      Centillium
 Part #             Part #                  Centillium     request Dock
------------------------------------------------------------------------

------------------------------------------------------------------------

------------------------------------------------------------------------

------------------------------------------------------------------
  Lot #        # of Wafers   Wafer start    WIP         Wafer
                             Date           location    Completion
                                                        date
------------------------------------------------------------------

------------------------------------------------------------------

-------- ---------------------------------------------------------

Shaded areas are provided by MELA

                                                                   Page 30 of 30<PAGE>

                                                                   EXHIBIT 10.20

                                   AGREEMENT

This Agreement made and entered into this 19th day of March, 1998, by and
between Centillium Technology Corporation, a corporation duly organized and
existing under the laws of California and having its registered office at 46824
Lakeview Blvd., Fremont, California 94538, USA ("Centillium") and Mitsubishi
Corporation, a corporation duly organized and existing under the laws of Japan
and having its registered head office at 6-3, Marunouchi 2-chome, Chiyoda-ku,
Tokyo, Japan ("MC"):

Whereas Centillium is engaged in developing semiconductors to be used for
digital subscriber line system which enable subscribers enjoy higher speed data
transmission over existing metallic telephone lines ("x-DSL Technology"),

Whereas, MC find Nippon Telegram and Telephone Co., Ltd., a company incorporated
under the laws of Japan having its principal office at 19-2 Nishi-Shinjuku 3-
chome, Shinjuku-ku, Tokyo, Japan ("NTT") is interested in receiving consultation
service of obtaining technical information including (1) simulation data of
several x-DSL Technologies under the circumstances of Japanese unique
environment including public telecommunication system and telecommunication
cable structure and distribution and (2) appropriate transmission interface
specification to be used for such unique environment,

Whereas, MC is interested in providing such technical information with NTT by
executing a contract separately ("NTT/MC Contract", an English translation of
NTT/MC Contract is incorporated herein as Attachment 1), and is interested in
making Centillium engaged in gathering and summarizing such technical
information, which shall be used as the deliverables of the NTT/MC Contract.

Now therefore, Centillium agrees to provide MC with technical services for
obtaining technical information including (1) simulation data of several x-DSL
Technologies under the circumstances of Japanese unique environment including
public telecommunication system and telecommunication cable structure and
distribution and (2) appropriate transmission interface specification to be used
for such unique environment ("Technical Services"), substantially in accordance
with Centillium's proposal ("Proposal"), which is incorporated herein as
Attachment 2, for MC's providing the information resulted from such Technical
Services with NTT, subject to the following terms and conditions.

1.   TERM:

     This Agreement will continue until the final result presentation to NTT,
     defined by item VI. of the Proposal incorporated herein, which is being
     expected to be held by
<PAGE>

     the end of April, 1998.

2.   PAYMENT:

     In consideration of the Proposal incorporated herein, MC agrees to pay
     Centillium the fixed amount of Two Hundred and Two Thousand (202,000) US
     dollars, upon the presentation of invoices as follows: One hundred and One
     Thousand (101,000) US dollars upon execution of the Contract and One
     hundred and One Thousand (101,000) US dollars upon the final result
     presentation to NTT as defined in item VI of the Proposal.

     All payments to Centillium by MC shall be made after MC's receipt of
     payments to be made by NTT by following payment schedule defined in the
     NTT/MC Contract incorporated herein; telegraphic bank transfer within 45
     days after (1) execution of the NTT/MC Contract and (2) NTT's confirmation
     of MC's completion of its obligation defined in item VI. of the Proposal.

3.   CENTILLIUM'S OBLIGATION:

     a. Centillium agrees to render services defined in the Proposal by
        providing Deliverables defined in the item III. of the Proposal with MC
        for its completion of their consultation defined in the NTT/MC Contract
        incorporated herein.

     b. Centillium agrees to submit a copy of written report in around a
        month later after execution of this Agreement to inform MC of
        Centillium's progress of its services as an interim report ("Interim
        Report"), which will be presented to NTT by MC, as defined in item VI.
        of the Proposal incorporated herein.

     c. Centillium agrees to complete submit a copy of written report which
        contain data and information defined in item III. 1.-3. in the Proposal
        ("Final Report"), and simulation software program in floppy disk(s)
        ("Software") to MC for its completing its obligation defined in the
        NTT/MC Contract by the end of April, 1998.

     d. Centillium agrees to make its staff available for the meeting to be held
        at NTT headquarter in Tokyo in around the end of April for verbal
        explanation of the report above and responding any questions to be
        raised by NTT during the meeting.

4.   DELIVERABLES AND USE OF RESULTS BY MC:

     a. Centillium agrees that MC can pass the Interim Report, Final Report and
        Software to NTT as all or a part of deliverables defined in the NTT/MC
        Contract.
<PAGE>

     b. Centillium agrees that the copyright of the both Interim Report and
        Final Report shall belong to NTT upon completion of our payment defined
        in Article 2 of this Agreement. Centillium, however, have the same
        rights on idea, know-how and data which are base of the Interim Report
        and Final Report.

     c. Centillium agrees that it shall not have the right to modify the Interim
        Report and Final Report after transfer of the copyright.

     d. The copyright of the software simulation program to be delivered to NTT
        shall belong to Centillium. NTT, however, shall be able to have a
        license to use the software for its own use only.

     e. Centillium shall hold MC harmless from any claim or dispute which may
        arise from or in connection with infringement of any patent, utility
        model, design, trademark or any other industrial property rights or
        copyrights in connection with the Deliverables as defined in the
        Proposal incorporated herein, Centillium shall indemnify, reimburse and
        compensate MC for all losses and damages including costs, expenses and
        charges for defensive actions by MC, if Centillium should incur them as
        a result of such claim or dispute.

     f. Centillium agrees no claim, requests (such as license fee and any
        restriction of use of the name Centillium) and legal actions shall be
        made to MC and NTT about their use and handling of the Deliverables
        defined in the Proposal.

     g. Centillium agrees that execution of this Agreement shall not mean any
        commitment and/or obligation for purchasing any products to be produced
        by Centillium by MC and NTT as well.

5.   EARLY TERMINATION:

     MC shall have the right to terminate this contract upon thirty (30) days'
     prior written notice. In the event of this early termination, Centillium
     agrees to provide MC with all reports, materials, or other deliverable
     items available as of the date of termination. If MC has failed to pay any
     invoice submitted by Centillium within thirty (30) days of receipt,
     Centillium may terminate this Agreement.

6.   SETTLEMENT OF DISPUTE:

     Any controversy or claim arising out of or relating to this Agreement, or
     the breach thereof, shall be settled by arbitration in New York, N.Y.,
     U.S.A. in accordance with the Commercial Arbitration Rules of the American
     Arbitration Association, and judgement upon the award rendered by the
     Arbitrator(s) may be entered in any Court having jurisdiction thereof.
<PAGE>

7.   GENERAL:

     This Agreement, and Proposal incorporated herein, represent the entire
     Agreement of the parties, and may be modified or amended only by mutual
     Agreement in writing. This Agreement shall be governed by and is to be
     construed in accordance with the laws of Japan.

Centillium Technology Corporation

By:     /s/ Faraj Aalaei
        ---------------------------
        Faraj Aalaei

Title:  Vice President

Date:   19 March, 1998

Mitsubishi Corporation

By:     /s/ Mitsuo Miyachi
        ----------------------------
        Mitsuo Miyachi

Title:  Manager,
        Semiconductor Business Unit
        Information Systems and Services Division B

Date:   19 March, 1998
<PAGE>

Attachment 1.

     Contract for Consultation (English translation of Japanese NTT/MC contract)

NTT and MC have agreed following terms and conditions about MC's consultation on
transmission characteristics of xDSL.

(contract)

Article 1. NTT asks MC's consultation about theoretical compatibility of xDSL
technology within an environment of Japanese loop (ISDN) and MC accepts such
request.

(period)

Article 2. The period of this consultation is:
from March 19, 1998
until May 29, 1998

(consultation)

Article 3. The consultation to be made by MC to NTT shall be defined by the
proposal dated 28/Jan/98 which was presented to NTT by MC ("Proposal"). The
delivery terms, quantity and specification shall be followed by the Proposal.

(2) The Deliverables shall be a written report which contain data and
information defined in III.1-3 in the Proposal ("Report"), simulation software
programs as defined in III.4. of the Proposal.

(3) if there are any discrepancy between the Proposal and this Contract, this
Contract should be respected than the Proposal.

(fee)

Article 4. NTT agreed to pay (Yen)28,500,000- as a fee for this consultation
plus 5% of consumption tax to MC.

2. The cost for travel and accommodation for pursuing this consultation shall be
not be paid in addition to above cost.

(transfer of rights)

Article 5. It is not allowed for MC to transfer its rights and obligations to be
raised by this contract to any third party. This article shall, however, not be
applied if MC obtain written
<PAGE>

acceptance from NTT.

(sub-contracting)

Article 6. In case MC sub-contract either all or a part of this consultation to
any third party, MC shall have to obtain NTT's acceptance beforehand.

(2) NTT shall be able to check whether or not above subcontracting shall be
acceptable for NTT.

(definition of completion)

Article 7. NTT shall check the contents of the report whether or not the
contents meet specification defined in the Proposal within 10 days upon their
receipt of it, shall inform MC of the result of their checking.

(2) If it is found that the contents do not meet the specification defined in
the Proposal, MC shall have to re-report the contents to meet the specification
by the timing NTT indicate. The timing of such checking shall be counted from
the date NTT receive the modified version.

(3) The date for completion shall be defined as the timing of passing such
checking as defined in (1) and (2) above.

(modification)

Article 8 If NTT find some discrepancy between the contents of the Report and
requirements (definition of Deliverables) in the Proposal within 30 days after
receipt of the Report, MC shall have to modify the Report to meet such
requirements with free of charge.

(Payment)

Article 9 NTT shall pay a fee within 45 days ("Time for Payment") upon receipt
of invoices issued by MC.

(2) If issuing invoices by MC are delayed for over 15 days from a date of
completion, days after 15 days until NTT's receipt of invoices shall not be
counted within the Time for Payment.

(3) Payment shall be made by telegraphic transfer to the account of the bank MC
indicated.

(partial payment)

Article 10. NTT agree to pay 50% of the fee defined in Article 4 together with
5%
<PAGE>

consumption tax to MC at the execution of this Agreement.

(2) NTT agree that they shall make payment to MC within 45 days after their
receipt of invoice to be issued to MC

(3) This partial payment will be deducted from the fee defined in Article 4 and
will be paid to MC by following Article 9.

(interest for Delay of Payment)

Article 11  If NTT do not make payment by the Time of Payment due to NTT's
mistake, MC shall be able to request NTT to pay interests at 8.25% per year.

(Copyright)

Article 12  The copyright of the Report belongs to NTT upon completion of
Payment. MC or the third party defined in the Article 5 in this Contract,
however, have the same rights on idea, know-how and data which are base of the
Report.

2. MC or the third party defined in the Article 6 in this Contract shall not
have the right to modify the Report.

3. The copy right of the Software simulation program to be delivered to NTT
shall belong to the third party which develop it. NTT, however, shall be able to
have a license to use the software for their own use only.

4. MC shall hold NTT harmless from any claim or dispute which may arise from or
in connection with infringement of any patent, utility model, design, trademark
or any other industrial property rights or copyrights in connection with the
Deliverables. MC shall indemnify, reimburse and compensate NTT for all losses
and damages including costs, expenses and charges for defensive actions by NTT,
if MC should incur them as a result of such claim or dispute.

(Information to be given by NTT)

Article 13  NTT shall provide MC with necessary information which, shall be
fundamentals for MC's pursuing this consultation.

(2) MC shall handle such information in good faith as administrator of such
information.

(3) Such information shall be returned to NTT by MC if such information is no
longer needed or NTT request so to MC.

(Confidentiality)

Article 14  Any operational/business information of NTT known by MC shall not be
disclosed to any other party or used for another purpose than that of this
Contract. This
<PAGE>

clause shall be effective after completion of this Contract.

(Compensation for Damage)

Article 15  If NTT or other party get damage by MC's pursuing of this
Consultation, MC shall compensate up to the amount of this Contract.

(Delay of Performing MC's Obligation)

Article 16  If some delay of delivery of deliverables can be expected by force
majeure, directly or indirectly, MC shall inform NTT of such delay together with
information of expecting completion date and receive advise from NTT.

(2) If MC expect delay of delivery due to its responsibility, MC shall be able
to ask extend such due date to NTT with clarifying reasons in written form, NTT
shall be able to accept such delay with some amount of penalty.

(Termination)

Article 17  NTT shall be able to terminate all or a part of Contract without any
notification in case below;

(a) if MC do not perform all or a part of its obligation without understandable
reasons.
(b) if there is no prospectus for MC's completion of consultation due to MC's
fault,
(c) if MC is bankrupt, or forced to continue its operation,
(d) if MC is ordered to stop its operation by Governmental body,
(e) if MC breach the Contract other than above.

(2) MC shall have obligation for compensating such damage to NTT

(Governing Law)

Article 18  This Contract shall be governed by the laws of Japan.

(others)

Article 19  NTT and MC shall discuss and settle anything which are not defined
in this Contract with good faith each other.
<PAGE>

Attachment 2.
-------------

                              Consulting Proposal

                                      To

                                      NTT

         Prepared by Mitsubishi Corporation and Centillium Technology

                                    1/28/97

                         Proprietary and Confidential
<PAGE>

Mitsubishi Corporation and Centillium Technology Corporation are pleased to
present a Consulting proposal for the analysis of the theoretical performance of
various DSL technologies over Japanese loop plant in presence of other
Interferences.

I.  NTT's Goals of the Proposal
-------------------------------

Through this analysis NTT wishes to identify the capability of the DSL
technologies to accomplish the following transmission solutions:

1.  Symmetrical solution which can provide bit rates of around 500Kb/s with very
    high network coverage.

2.  Asymmetrical solution with up to 6Mb/s downstream and up to 64Kb/s upstream.
    In this case the network coverage is expected to be lower.

II. Scope of consultation
-------------------------

The consultation will consist of the following steps:

1.  Define and build mathematical models for the various loop configurations
    identified by NTT.

2.  Define and build mathematical models for Interference sources such as TCM-
    ISDN.

3.  Theoretical performance simulations for ADSL DMT based on the standard
    T1E1.413 recommendations. These performance simulations will be performed as
    stated in item 1 and item 2 of the "Goals" above.

4.  Theoretical performance simulation for Centillium's UDSL(TM) solution as
    proposed to the U.S. market. These performance simulations will be performed
    as stated in item 1 of the "Goals" above.

    UDSL(TM) is the registered trademark of Centillium Technology. UDSL(TM) is
    the Universal DSL solution that has been proposed by Centillium to the
    T1E1.4

                         Proprietary and Confidential
<PAGE>

     Committee and ITU-T for consideration as part of G Lite standard. UDSL(TM)
     is a low power, low cost solution providing symmetric or asymmetric data
     rates of about 786Kbs over existing copper lines.

5.   Theoretical performance simulation for Centillium's TCM-UDSL(TM). These
     performance simulations will be performed as stated in item 1 of the
     "Goals" above.

6.   Theoretical performance simulations for ADSL-CAP. These performance
     simulations will be stated in item 1 and item 2 of the "Goals" above.

7.   Sensitivity Analysis of the Gauge of Copper Wires used to ADSL-DMT and
     UDSL.

9.   Sensitivity Analysis of Bridge Taps to the ADSL DMT and UDSL.

III. Deliverables
------------------

1.   As a result of the above work statement, Centillium shall deliver the
     result of the investigation to NTT for each of the above cases (item 3, 4,
     5, 6, 7, 8 and 9 above) in the following format.

A.)  For performance calculations the following conditions are assumed:
            -      No Bridge Taps are used
            -      Copper insulation type is paper
            -      0.4mm Gauge wire is used
            -      Three TCM-ISDN disturbers cases are assumed; 0, 20, and 49

                         Proprietary and Confidential
<PAGE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
                            Zero ISDN                20 ISDN                 49 ISDN
                            Disturbers              Disturbers              Disturbers
--------------------------------------------------------------------------------------------
<S>                     <C>                     <C>                     <C>
ADSL-DMT, 64Kb          Reach vs Bit Rate       Reach vs Bit Rate       Reach vs Bit Rate
  Upstream
--------------------------------------------------------------------------------------------
  ADSL DMT              Reach vs Bit Rate       Reach vs Bit Rate       Reach vs Bit Rate
--------------------------------------------------------------------------------------------
   UDSL                 Reach vs Bit Rate       Reach vs Bit Rate       Reach vs Bit Rate
--------------------------------------------------------------------------------------------
  ADSL-CAP              Reach vs Bit Rate       Reach vs Bit Rate       Reach vs Bit Rate
--------------------------------------------------------------------------------------------
ADSL-CAP, 64Kb          Reach vs Bit Rate       Reach vs Bit Rate       Reach vs Bit Rate
   Upstream
--------------------------------------------------------------------------------------------
   TCM-UDSL             Reach vs Bit Rate       Reach vs Bit Rate       Reach vs Bit Rate
--------------------------------------------------------------------------------------------
</TABLE>

B.)    For the sensitivity analysis to the copper insulation materials, the
       following conditions will be fixed:
            -      20 ISDN disturbers
            -      Average length (80% coverage ration)
            -      0.4mm Gauge
            -      No Bridge Taps

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
   Copper Insulation Used               ADSL-DMT                         UDSL
------------------------------------------------------------------------------------------
   <S>                             <C>                            <C>
           Paper                   Achievable Bit Rate            Achievable Bit Rate
------------------------------------------------------------------------------------------
      Paper + Plastic              Achievable Bit Rate            Achievable Bit Rate
------------------------------------------------------------------------------------------
</TABLE>

C.)    For the sensitivity analysis to the Copper Gauge, the following
       conditions will be fixed:
            -      20 ISDN disturbers
            -      Average length (80% coverage ration)
            -      Paper Insulation
            -      No Bridge Taps

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
        Copper Gauge                    ADSL-DMT                         UDSL
------------------------------------------------------------------------------------------
        <S>                        <C>                            <C>
           0.4mm                   Achievable Bit Rate            Achievable Bit Rate
------------------------------------------------------------------------------------------
           0.65mm                  Achievable Bit Rate            Achievable Bit Rate
------------------------------------------------------------------------------------------
</TABLE>

D.)    For the sensitivity analysis to the Bridge Taps, the following conditions
       will be

                         Proprietary and Confidential
<PAGE>

       fixed:
            -      20 ISDN disturbers
            -      Average length (80% coverage ration)
            -      Paper Insulation
            -      0.4mm Gauge

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
        Bridge Taps                     ADSL-DMT                         UDSL
------------------------------------------------------------------------------------------
       <S>                         <C>                            <C>
       No Bridge Taps              Achievable Bit Rate            Achievable Bit Rate
------------------------------------------------------------------------------------------
       One Bridge Tap              Achievable Bit Rate            Achievable Bit Rate
------------------------------------------------------------------------------------------
</TABLE>

2. For the case of UDSL(TM), Centillium shall provide NTT with an Interface
   specification for the proposed UDSL(TM) system. This Interface Specification
   shall focus on the system level transmission characteristics. An outline of
   the Interface specification is shown in the attachment.

3. Based on the result of the above analysis, if all of the cases considered
   fail to meet performance results stated in the "NTT's Goals of the Proposal"
   section of this document. Centillium may provide additional ideas and
   recommendations on ways to achieve the desired goals.

4. Centillium shall provide NTT with simulation software program in Object form,
   for NTT's own operation of the simulation for studying sensitivities of
   several other parameters. The simulation software program, however, shall be
   used for NTT internal use only and no third party NTT can use it, and no
   documents, such as manuals and/or instructions shall be available.

IV.    Disclosure of information to third parties
-------------------------------------------------

NTT is free to disclose the result of this work which covers information about
transmission capability, bit rates, distance and performance simulation results.

V.     Staffing
---------------

                         Proprietary and Confidential
<PAGE>

Centillium Technology Corporation has assigned its most senior members to this
project. The technical part of project shall be headed by Dr. Guozhu Long. Dr.
Long will be assisted by Dr. Jing Dong Lin, Mr. Tony O'Toole, Mr. Bob Cai and
Mr. Sanjay Gupta. Each member will be responsible for a portion of this
specification. The following is the assignment of each team member:

Dr. Long: System Design, Director of Signal Processing department
Dr. Lin: Loop and Interference Characterization, Manager of Signal Processing
     department
Tony O'Toole: TC Layer specification, Director of System Engineering
Bob Cai: Layer 2 compatibility, Manager, ATM and Layer 2 solutions
Mr. Sanjay Gupta: Modem Handshaking, training and start up sequence, Staff
     Engineer, Signal Processing Department.

The project shall be directly managed by Faraj Aalaei, V.P. of Planning and Mr.
Shahin Hedayat, V.P. of engineering.

VI. Completion date:
--------------------

The proposed timeline for the project is as follows:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
Task                           Responsible                   Completion Date
------------------------------------------------------------------------------------------
<S>                           <C>                            <C>
Identify loop configurations  NTT                            1/M/98
------------------------------------------------------------------------------------------
Build loop models and         Centillium                     2/M/98
Interference models
------------------------------------------------------------------------------------------
Interim Review                Centillium & NTT               3/M/98
------------------------------------------------------------------------------------------
Final results presentation    Centillium                     4/E/98
to NTT
------------------------------------------------------------------------------------------
</TABLE>

1. It is understood that Centillium's obligation for this consultation work will
   be completed upon its submitting a copy of written report which contain
   information defined in item III. 1. -3. of this proposal, having a meeting
   for explaining the report verbally to NTT, and submitting simulation software
   program defined in item III. 4. of this proposal.
2. Centillium will submit a copy of written report mentioned in above, with A4
   size

                         Proprietary and Confidential
<PAGE>

   like paper in English. Some drawings or chart may be included in the paper.
3. Centillium will make its staff(s) available for the meeting in order to
respond technical questions to be raised by NTT. The meeting will be done by
either or both Japanese or English.
4. Centillium will inform NTT of their progress of work around a month later
   after execution of the contract by preparing a written report.
5. The simulation software program will be passed to NTT through floppy disks.
6. Centillium will complete all tasks by 30/Apr/98.

VII. Cost
---------

The estimate cost of this activity is US$236,000 and is broken down as below:

Hours per engineer: 236 hours
Total Engineering hours for 5 Engineers: 1,180 hours

Cost per Hour: US$200
Total Cost: US$236,000

Centillium is honored and privileged to work with NTT and as such is flexible in
the amount of payment from NTT.

                         Proprietary and Confidential
<PAGE>

          Attachment 1: Outline for UDSL(TM) Interface Specification

                         Proprietary and Confidential
<PAGE>

1. General

This section includes Scope, Definition, Objective, Acronyms and References for
the document.

2.  Reference Architecture and Functions

This section presents
The reference of the end to end system.
A high level summary of functions by the DSL Transmission System.

3.  Transmission Convergence Sub-layer

This section presents the TC sub-layer, including general super frame format and
the format for each rate, Reed Solomon, potential interleaving, etc. The frame
synchronization state machine is also discussed here.

4.  Line Coding

This section discusses the line coding of UDSL(TM) system.

5.  Operation and Maintenance

This section discusses the OAM&P related issues, including the EOC channel and
protocols carried over the EOC channel. The OAM states, Potential AIS, RDI
messages, Loop back tests, and performance measurement, and error reporting are
also defined in this section.

                         Proprietary and Confidential

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