SECOND AMENDMENT TO CREDIT AGREEMENT AND WAIVER

Exhibit 10.3b

SECOND AMENDMENT TO CREDIT AGREEMENT AND WAIVER

THIS SECOND AMENDMENT TO CREDIT AGREEMENT AND WAIVER (as the same may be amended, restated, supplemented, extended or otherwise modified from time to time, this “ Agreement ”) is entered into as of June      , 2005, by and among MAGNACHIP SEMICONDUCTOR S.A., a société anonyme , organized and existing under the laws of the Grand Duchy of Luxembourg, having its registered office at 10, rue de Vianden, L-2680 Luxembourg, Grand Duchy of Luxembourg, registered with the Luxembourg Register of commerce and companies under the number B 97,483, MAGNACHIP SEMICONDUCTOR FINANCE COMPANY, a Delaware corporation (collectively, “ Borrowers ”), MAGNACHIP SEMICONDUCTOR LLC, a Delaware limited liability company (“ Holdings ”), the Subsidiary Guarantors listed on the signature pages hereto (each of Borrowers, Holdings and Subsidiary Guarantors are sometimes referred to herein as a “ Loan Party ” and, collectively, as the “ Loan Parties ”), the Lenders and UBS AG, STAMFORD BRANCH, as administrative agent (in such capacity, “ Administrative Agent ”) for the Lenders and as collateral agent (in such capacity, “ Collateral Agent ” and together with the Administrative Agent, the “ Agents ” and each an “ Agent ”) for the Secured Parties and the Issuing Bank.

RECITALS

A. The Borrowers, Holdings, Subsidiary Guarantors, UBS Securities LLC, as lead arranger, as documentation agent and as syndication agent, UBS Loan Finance LLC, as swingline lender, Korea Exchange Bank, as issuing bank and Agents are parties to that certain Credit Agreement dated as of December 23, 2004 (as amended hereby, and as the same has been and hereafter may be amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”). MagnaChip Semiconductor, Ltd., a limited liability company organized under the laws of the Republic of Korea, and U.S. Bank National Association, a national association duly organized and existing under the federal laws of the United States of America, as Collateral Trustee (“ Collateral Trustee ”), have entered into the Accounts Receivable Assignment Agreement dated as of December 23, 2004 (as amended, the “ A/R Agreement ”). Unless otherwise specified herein, all capitalized terms used in this Agreement shall have the meanings ascribed to them in the Credit Agreement.

B. The Borrowers have informed the Agents that certain Defaults described in Exhibit A attached hereto (the “ Specified Defaults ”) have occurred and have been or are expected to be cured by the Borrowers.

C. The Borrowers have requested that the Agents and the Required Lenders make certain acknowledgements and grant certain waivers described below, waive the Specified Defaults, and amend Sections 6.10(a) and 6.24 of the Credit Agreement, and that the Required Lenders waive, the Required Lenders instruct the Collateral Trustee to waive and that the Collateral Trustee waives, certain obligations under the A/R Agreement described below, all upon the terms and subject to the conditions as herein set forth.

NOW, THEREFORE, in consideration of the foregoing, the covenants and conditions contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

SECTION 1. Acknowledgements . The Agents and Lenders hereby acknowledge and agree that:

(a) The form and scope of each of the financial statements, Financial Officer’s certificate and Compliance Certificate delivered by the Borrowers satisfy (as to form and scope) the financial reporting obligations of the Borrowers under Section 5.01(b) and 5.01(c) of the Credit Agreement with respect to the Holdings’ fiscal quarter ended April 3, 2005, and the delivery of substantially similar financial statements and certificates with respect to subsequent fiscal quarters shall satisfy (as to form and scope) the financial reporting obligations set forth in such Sections with respect to such subsequent fiscal quarters.

(b) Based on Holdings’ representation that the information provided to date is accurate and complete, the following obligations set forth in Schedule I of Schedule 5.13 of the Credit Agreement have been satisfied:

(i) Provide a complete, accurate and updated in all material respects list in English of all Improperly Registered IP as of the date thereof that is used or useful in any Company’s business or that can be licensed for meaningful revenue; and

(ii) Provide a complete, accurate and updated in all material respects list in English of all Intellectual Property included in or called for by the Collateral that is registered in countries or jurisdictions outside of Korea, including, but not limited to, in Germany, Great Britain, Japan, Taiwan and the United States (including any Improperly Registered IP and Co-owned Patents therein) as of the date thereof.

(c) The Borrowers are not in breach of their obligation set forth in Schedule I of Schedule 5.13 of the Credit Agreement to register, file and record, and use commercially reasonable efforts to have appropriate third parties register, file and record, in all appropriate offices or agencies, all documents necessary or advisable to evidence or perfect such Liens and security interests including, without limitation, powers of attorney, transmittal forms, local language and/or local law security agreements, and the like for any Intellectual Property that is used or useful in any Company’s business or that can be licensed for meaningful revenue, and there shall be no time limitation to satisfy such obligation. The Borrowers covenant and agree to continue to use their commercially reasonable efforts (and, at the Administrative Agent’s reasonable request, shall provide a reasonably detailed written report to the Administrative Agent with respect to such efforts, together with copies of all filings made) to make such registrations, filings and recordings, and have appropriate third parties make such registrations, filings and recordings, to the extent that the same have not yet been made for any Intellectual Property that is used or useful in any Company’s business or that can be licensed for meaningful revenue.

(d) The form and scope of the earnings releases, earnings release transcripts and lenders’ presentations delivered by the Borrowers satisfy (as to form and scope) the financial reporting obligations of the Borrowers set forth in Sections 5.01(a)(ii) and (iii) and 5.01(b)(ii) and (iii) of the Credit Agreement with respect to Holdings’ fiscal year ended December 31, 2004 and fiscal quarter ended April 3, 2005, and the delivery of documents, releases or presentations containing substantially similar information with respect to subsequent fiscal years and quarters

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shall be deemed to satisfy (as to form and scope) such obligations with respect to such fiscal years and quarters, respectively.

SECTION 2. Waivers .

(a) The Agents and Lenders hereby waive, the Requisite Lenders hereby instruct the Collateral Trustee to waive, and the Collateral Trustee hereby waives, the obligations set forth in the A/R Agreement and Section 5.01(j) of the Credit Agreement, insofar as they relate to any agreements or transactions with Samsung Electronics Co., Ltd. (“ Samsung ”) or any of its Affiliates, or any right, title, claim, interest, benefit or sum arising in respect thereof.

(b) The Agents and Lenders hereby waive the obligations set forth in paragraphs 7 and 9 of Schedule 5.13 of the Credit Agreement.

(c) Under the First Amendment to Credit Agreement and Waiver (the “ First Amendment ”), dated as of May 6, 2005, by and among the Borrowers, the Agents and the other parties thereto, the Agents and Lenders waived the requirement that the ICM Foreign Subs (as defined in the First Amendment) become Subsidiary Guarantors and grant a Lien on their assets and that any Company pledge any securities of, or existing intercompany notes with, the ICM Foreign Subs unless the Disposition (as defined in the First Amendment) is not consummated by June 15, 2005. The Agents and Lenders hereby waive the requirement that the ICM Foreign Subs become Subsidiary Guarantors and grant a Lien on their assets and that any Company pledge any securities of, or existing intercompany notes with, the ICM Foreign Subs; provided , however , that if the Disposition is not consummated by August 31, 2005, each of the ICM Foreign Subs shall have granted a Lien on its assets and the applicable Loan Party holding any securities or intercompany notes of the ICM Foreign Subs shall have pledged such securities or notes, in each case to the extent otherwise required by the Credit Agreement, and each of the ICM Foreign Subs shall be required to become, and shall have become, Subsidiary Guarantors to the extent required by the Credit Agreement. A

(d) The Agents and Lenders hereby waive the Specified Defaults. The foregoing waiver shall (i) not be deemed a waiver of any other Default or Event of Default which has occurred, exists or hereafter may occur under the Credit Agreement or any other Loan Document and (ii) not be deemed to establish a custom or course of dealing among the Administrative Agent, Collateral Agent, Lenders, Borrowers other Loan Parties or any of them.

SECTION 3. Amendments to Credit Agreement .

(a) Sections 6.10(a), (b) and (c) of the Credit Agreement are hereby amended and restated in their entirety to read as follows:

“(a) Maximum Total Leverage Ratio . Permit the Total Leverage Ratio, at the last day of each fiscal quarter during any period set forth in the table below, to exceed the ratio set forth opposite such period in the table below:

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(b) Minimum Interest Coverage Ratio . Permit the Consolidated Interest Coverage Ratio, for any Test Period ending during any period set forth below, to be less than the ratio set forth opposite such period in the table below:

(c) Minimum Interest Coverage Ratio (Excluding CapEx) . Permit the Consolidated Interest Coverage Ratio (Excluding CapEx), for any Test Period ending during any period set forth in the table below, to be less than the ratio set forth opposite such period in the table below:

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(b) Section 6.24 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“ SECTION 6.24 Liens on Deposit Accounts and Available Cash . At any time on or after April 1, 2005, neither Holdings nor any Subsidia