AMENDMENT NUMBER TWO TO WAFER SUPPLY AGREEMENT

Exhibit 10.47

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

AMENDMENT NUMBER TWO

TO

WAFER SUPPLY AGREEMENT

This Amendment Number Two (the “Amendment”), effective as of September 13, 2010 (the “Amendment Effective Date”), amends the Wafer Supply Agreement effective April 1, 2005, as amended by Amendment Number One effective December 19, 2008, (as amended, the “Agreement”) by and between:

and

RECITALS

WHEREAS, pursuant to the terms of the Agreement, Power Integrations grants to Seiko Epson licenses of certain of Power Integrations’ intellectual property for the sole purpose of Power Integrations acquiring from Seiko Epson the fabrication and supply of wafers of certain power IC products; and

WHEREAS, Power Integrations and Seiko Epson desire to amend the terms of the Agreement; and

WHEREAS, in accordance with Section 18.10 of the Agreement, the Agreement may be amended only by an instrument in writing duly executed by authorized representative of Seiko Epson and Power Integrations.

NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby amend the Agreement as follows:

1

AGREEMENT

13.1 This Agreement shall continue in full force and effect from the Effective Date until December 31, 2020, unless earlier terminated as provided herein (“Term”). After [*] Seiko Epson may terminate the Agreement without cause at its convenience upon providing [*] prior written notice thereof to PI. If this Agreement has not been earlier terminated, the parties agree to negotiate in good faith, beginning one year prior to the end of the Term, for this Agreement’s continuation for another [*] year period, on mutually agreeable terms and conditions.

IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their duly authorized representatives, effective as of the Amendment Effective Date.

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

2

Exhibit A

FOUNDRY CAPACITY and PI ANNUAL FORECAST

1. FOUNDRY CAPACITY

The following FOUNDRY CAPACITY will be effective from [*] for the [*] calendar year.

[*] WAFERS/month for DS and/or DM WAFERS

The following FOUNDRY CAPACITY will be effective from [*] for the [*] calendar year and [*] during the Term of the Agreement.

[*] WAFERS/month for DS and/or DM WAFERS

The FOUNDRY CAPACITY shall be allocated equally on a monthly basis over a given calendar year.

2. PI’s projected PI ANNUAL FORECAST of WAFER orders (non-binding)

For DS WAFERS

For DM WAFERS

3. The MAXIMUM FOUNDRY CAPACITY ALLOCATION shall be [*] WAFERS per month or [*] WAFERS per year.

4. The REVIEW PERIOD is the [*] day period prior to the commencement of the next calendar year.

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

Exhibit B

WAFER PRICES FOR VOLUME PRODUCTION OF SIX (6) INCH WAFERS BY MONTHLY ORDER VOLUME

For DS WAFERS in both PILOT PRODUCTION and VOLUME PRODUCTION:

For DM WAFERS in both PILOT PRODUCTION and VOLUME PRODUCTION:

Pricing will be reviewed and mutually agreed to in writing on an annual basis.

For WAFERS in ENGINEERING PRODUCTION, the price for each entry of the above table will be multiplied by [*].

The above prices are the WAFER’S BASE_PRICE and are based on an exchange rate of [*]¥/$. The fluctuation in foreign exchange rate, as supplied by the Wall Street Journal, will be shared equally by each party as follows

F/X_BASE = [*]¥/$

Initial F/X_RATE = [*]¥/$

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

A new F/X_RATE is only established at the time of placing a PO for WAFERS if the [*] is equal to or greater than [*]¥ from the F/X-BASE. The new F/X RATE will be set to the [*] and will remain in effect for at least the [*] it was established.

The actual PURCHASE_PRICE for WAFERS, by WAFER TYPE, used at the time of order will be calculated by the following formula:

PURCHASE_PRICE =

[*]

Examples: For DS WAFERS with a BASE_PRICE of [*]

PURCHASE_PRICE = BASE_PRICE

PURCHASE_PRICE = [*] = [*]

PURCHASE_PRICE = [*].

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.