Exhibit 10.41

December 22, 2004   (Photon Dymanics Logo) [f05512f0551201.jpg]

Dr. Malcolm Thompson
c/o Photon Dynamics, Inc.
5970 Optical Court
San Jose, CA 95138

Dear Malcolm:

As you are aware, Photon Dynamics, Inc. (the “Company”) and you are party to a
consulting agreement dated March 18, 2004 (the “Agreement”) pursuant to which
you provide Consulting Services (as defined in the Agreement) to the Company in
the position of Executive Chairman of the Company’s board of directors. The
Company is pleased to offer to extend the Consulting Period (as defined in
Section 1 of the Agreement) from December 31, 2004 to March 31, 2005.

If you are in agreement to the extension of the Consulting Period to March 31,
2005, please sign and return to me the original of this Agreement and retain a
copy for your files. Other than the extension of the Consulting Period, all
provisions of the Agreement remain unchanged by this letter.

We look forward to continuing to work with you pursuant to the Agreement.

            Sincerely,

Photon Dynamics, Inc.
      By:   /s/ Richard Okumoto         Richard Okumoto        Chief Financial
Officer        Accepted and Agreed:
      /s/ Malcolm Thompson       Malcolm Thompson