Mail Stop 6010


      February 10, 2006


Mr. Hans Olsen
Chief Financial Officer
8100 SW Nyberg Road
Tualatin, OR  97062

	Re:	Pixelworks, Inc.
      Form 10-K for the Year Ended December 31, 2004
Forms 10-Q for the Quarter Ended March 31, 2005, June 30, 2005,
and
     September 30, 2005
      File No. 000-30269

Dear Mr. Olsen:

      We have reviewed your filings and your response letter dated
January 17, 2006 and we have the following comments.  Where
indicated, we think you should revise your documents in future
filings in response to these comments.  If you disagree, we will
consider your explanation as to why our comment is inapplicable or
a
revision is unnecessary.  Please be as detailed as necessary in
your
explanation.  In some of our comments, we may ask you to provide
us
with information so we may better understand your disclosure.
After
reviewing this information, we may raise additional comments.

	Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or any other aspect
of
our review.  Feel free to call us at the telephone numbers listed
at
the end of this letter.

Form 10-K for the Year Ended December 31, 2004

Notes to Consolidated Financial Statements, page 48

Note 2.  Summary of Significant Accounting Policies, page 48

- -Revenue Recognition, page 50

1. Please refer to prior comment 3.  We have the following
additional
comments:

* We note that you negotiate prices with your end customers and
that
serves as a basis for your estimates of credits to your
distributor`s
accounts.  We further note that in certain situations, you might
subsequently lower a price to a customer.  Please tell us and
revise
future filings to discuss in greater detail the nature of your
relationship with your distributors.  Since you handle pricing
negotiations with the end customer, it is not clear what function
your distributors serve.

* In addition, you state that you receive orders from your
distributors with prices equal to the prices you negotiated with
the
end customer less the distributor`s margin.  You also state that
you
grant distributors credit if they purchased product for a specific
customer and you subsequently lower the price to the customer such
that the distributor can no longer earn its negotiated margin on
in-
stock inventory.  Describe to us the circumstances that could
arise
that could cause you to reduce the price previously negotiated
with
the customer.

* Provide us with a rollforward schedule of your price protection
reserve for each of the last three years through December 31,
2005.
The rollforward should show, on a gross basis, amounts charged to
income, amounts credited to distributors against this reserve and
adjustments to the reserves.

Form 8-K Dated January 27, 2006

2. We note that you recorded a fourth quarter adjustment of $31.4
million in income tax expense related to recording a valuation
allowance against your deferred tax assets during fiscal 2005.
Please tell us and disclose in future filings the reasons for the
significant income tax expense adjustment during the fourth
quarter
of fiscal 2005.  Within your discussion, please support the timing
of
this adjustment.  Refer to paragraphs 17(e), 20 and 26 of SFAS
109.

      As appropriate, please respond to these comments within 10
business days or tell us when you will provide us with a response.
Please furnish a letter that keys your responses to our comments
and
provides any requested information.  Detailed cover letters
greatly
facilitate our review.  Please understand that we may have
additional
comments after reviewing your responses to our comments.
      	 You may contact Tara Harkins, Staff Accountant, at
(202)
551-3639 or me at (202) 551-3643 if you have questions regarding
these comments.  In this regard, please do not hesitate to contact
Michele Gohlke, Branch Chief, at (202)551-3327.


      							Sincerely,



								Kevin Vaughn
								Senior Staff Accountant



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Mr. Hans Olsen
Pixelworks, Inc.
February 10, 2006
Page 3