**EXHIBIT
      10.17**






**PLX
      TECHNOLOGY, INC.**




**2008
      VARIABLE COMPENSATION PLAN**




(Effective
      as of January 1, 2008)






1.  Introduction.  The
      Company hereby adopts the Plan, effective as of January 1, 2008.  The
      purpose of the Plan is to encourage performance and achieve retention of a
      select group of executive employees of PLX Technology, Inc.  This
      document constitutes the written instrument under which the Plan is
      maintained.




2.  Definitions.




“Cause”
      means (i) conviction of a felony or a crime of moral turpitude; (ii) misconduct
      that results in harm to the Company; (iii) material failure to perform assigned
      duties; or (iv) willful disregard of lawful instructions from the chief
      executive officer of the Company or the Board of Directors relating to the
      business of the Company or any of its affiliates.




“Code”
      means the Internal Revenue Code of 1986, as amended, and the regulations issued
      with respect thereof.




“Committee”
      means the Compensation Committee of the Company’s Board of
      Directors.




“Company”
      means PLX Technology, Inc., a Delaware corporation.




“Disability”
      means that a Participant (i)  is unable to engage in any substantial
      gainful activity by reason of any medically determinable physical or mental
      impairment which can be expected to result in death or can be expected to last
      for a continuous period of not less than 12 months, or (ii)  is, by
      reason of any medically determinable physical or mental impairment which can
      be
      expected to result in death or can be expected to last for a continuous period
      of not less than 12 months, receiving income replacement benefits for a period
      of not less than 3 months under an accident and health plan covering employees
      of the Participant’s employer.




“Eligible
      Employee” means each employee who is eligible for the Plan as designated by the
      Committee as set forth in approved minutes.




“Operating
      Income” means the Company’s operating income for 2008, excluding (1) share based
      compensation, (2) acquisition-related costs and (3) any adjustments as
      deemed necessary by the Committee for 2008.




“Normal
      Retirement Age” means age sixty (60).




“Participant”
      means each Eligible Employee who is designated from time to time by the
      Committee in writing.




“Plan”
      means the PLX Technology, Inc. 2008 Variable Compensation Plan, as set forth
      in
      this document and as hereafter amended.




“Retirement”
      means the termination of employment after Normal Retirement Age.




3.  Variable
      Compensation Award.




(a)
      Variable Compensation Award and Calculation of Payable Amount. Each Participant
      will receive an award, entitling the Participant to earn variable compensation,
      the payment of which will be based upon (i) the achievement of performance
      criteria based on Operating Income, PCI Express revenues determined in
      accordance with US GAAP, or a combination of both and (ii) continued employment
      by the Participant through the vesting dates set forth in Section 4 hereof
      (the
“Variable Compensation Award”).  The Committee shall designate in
      writing the amount payable under the Variable Compensation Award and, if
      applicable, the percentage of the amount payable under the Variable Compensation
      Award that is allocable to each of the criteria.  Notwithstanding the
      foregoing, the maximum amount payable under a Variable Compensation Award
      granted to any Participant shall not exceed two times the Participant's target
      Variable Compensation Award for 2008, unless the Committee, in its sole
      discretion, decides to permit a greater amount with respect to such Participant
      based on the performance and condition of the Company’s business. Also, at any
      time prior to January 1, 2009, the Committee or the CEO, in his, her, or its
      sole discretion, may reduce the amount payable under any Participant’s Variable
      Compensation Award.  The amount of the Variable Compensation Award
      that may become payable to the extent it becomes vested in accordance with
      the
      schedule set forth in Section 4 hereof shall be calculated as soon as reasonably
      practicable following January 1, 2009 based on the extent to which the
      performance criteria set forth in this Section 3(a) have been achieved (the
      “Award Payment Amount”).




(b)
      Interest on Award Payment Amount. Interest at the Fed Funds Rate as of the
      date
      the Award Payment Amount is calculated by the Committee shall accrue on the
      Participant’s unvested and unpaid Award Payment Amount.  Subject to
      the forfeiture provisions in Section 4(c), interest shall be paid in accordance
      with the vesting schedule established by the Committee at the time the Award
      Payment Amount is calculated.




4.  Payment
      of Variable Compensation Award.




(a)  Vesting,
      Timing and Form of Payment. Subject to Sections 4(b), 4(c), 4(d) and 7, each
      Participant’s Award Payment Amount shall vest and be paid as
      follows:




(i)  Sixty
      percent (60%) of the Participant’s Award Payment Amount shall vest and be paid
      to the Participant on the last business day in January 2009; and




(ii)  Twenty
      percent (20%) of the Participant’s Award Payment Amount (i.e. fifty percent
      (50%) of the Award Payment Amount then remaining) shall vest and be paid to
      the
      Participant on the last business day in January, 2010; and




(iii)  Twenty
      percent (20%) of the Participant’s Award Payment Amount (i.e. one-hundred
      percent (100%) of the Award Payment Amount then remaining) shall vest and be
      paid to the Participant on the last business day in January, 2011.




(b)  Distribution
      in the Event of Retirement, Termination as a result of Disability or without
      Cause. If a Participant terminates employment because of Retirement or
      Disability, or the Company terminates a Participant’s employment without Cause,
      the Participant shall be entitled to payment of all of his or her Award Payment
      Amount according to the schedule in Section 4(a), provided that if
      termination under these conditions occurs prior to January 1, 2009, the amount
      of the Variable Compensation Award payable will be the Award Payment Amount
      calculated pursuant to Section 3(a), multiplied by the number of days employee
      was employed in 2008 by the Company and then divided by 365 days, and all
      remaining amounts payable under Variable Compensation Award for 2008 shall
      be
      forfeited.




(c)  Forfeiture.
      If the Company terminates a Participant’s employment for Cause or if the
      Participant’s employment is terminated for any reason other than as a result of
      Retirement or Disability, he or she shall forfeit all or any portion of his
      or
      her entire Award Payment Amount for 2008 (as set forth in Section 3(a)) which
      is
      not yet vested and payable under the schedule set forth in Section 4(a) as
      of the date of termination.




(d)  Timing
      of Distribution to a Beneficiary. If a Participant dies while still employed
      by
      the Company or after termination due to Retirement, Disability, or termination
      by the Company without Cause but before receiving a distribution of all of
      his
      or her Award Payment Amount according the schedule in Section 4(a), then the
      vesting of the Participant’s Award Payment Amount shall be fully accelerated
      such that one-hundred percent (100%) of the Award Payment Amount, as calculated
      pursuant to Section 4(b) hereof (with the amount prorated to the date of death
      in the event death occurs prior to January 1, 2009), will be distributed to
      his
      or her beneficiary as a lump sum distribution on the January 31 following the
      Participant’s death.




(e)  Beneficiary
      Designation. Each Participant must designate a beneficiary to receive a
      distribution of his or her Variable Compensation Award if the Participant dies
      before such amount is fully distributed to him or her. To be effective, a
      beneficiary designation must be signed, dated and delivered to the Committee.
      In
      the absence of a valid or effective beneficiary designation, the Participant’s
      surviving spouse will be his or her beneficiary or, if there is no surviving
      spouse, the Participant’s estate will be his or her beneficiary. If a married
      Participant designates anyone other than his or her spouse as his or her
      beneficiary, such designation will be void unless it is signed and dated by
      the
      Participant’s spouse.




5.  Withholding.
      The Company will withhold from any Plan distribution all required federal,
      state, local and other taxes and any other payroll deductions that may be
      required.




6.  Administration.
      The Plan is administered and interpreted by the Company. The Company has
      delegated to the Committee certain responsibilities under the Plan. The
      Committee has the full and exclusive discretion to interpret and administer
      the
      Plan. All actions, interpretations and decisions of the Committee are conclusive
      and binding on all persons, and will be given the maximum possible deference
      allowed by law.  Subject to the provisions of the Plan, the Committee
      shall have full authority to select, in its sole discretion the Participant
      to
      whom Variable Compensation Awards will be granted.




7.  Amendment
      or Termination. Through December 31, 2008, the Committee, in its sole and
      unlimited discretion, may amend or terminate the Plan at any time, without
      prior
      notice to any Participant. After January 1, 2009, the Committee may amend or
      terminate the Plan provided that any such amendment does not reduce or increase
      any benefit to which a Participant has accrued and is otherwise entitled to
      under the terms of the Plan, nor accelerate the timing of any payment under
      the
      Plan. Notwithstanding the foregoing to the contrary, the Company reserves the
      right to the extent it deems necessary or advisable, in its sole discretion,
      to
      unilaterally alter or modify the Plan and any Variable Compensation Awards
      made
      thereunder to ensure that the Plan and Variable Compensation Awards provided
      to
      Participants who are U.S. taxpayers are made in such a manner that either
      qualify for exemption from or comply with Code Section 409A; provided, however,
      that the Company makes no representations that the Plan or any Variable
      Compensation Awards made thereunder will be exempt from or comply with Code
      Section 409A and makes no undertaking to preclude Code Section 409A from
      applying to the Plan or any Variable Compensation Awards made thereunder. The
      Plan shall automatically terminate on the date when no Participant (or
      beneficiary) has any right to or expectation of payment of further benefits
      under the Plan.




8.  Source
      of Payments. All payments under the Plan will be paid in cash from the general
      funds of the Company. No separate fund will be established under the Plan,
      and
      the Plan will have no assets. Any right of any person to receive any payment
      under the Plan is no greater than the right of any other general unsecured
      creditor of the Company. This Plan shall be binding upon the Company’s
      successors and assigns.




9.  Inalienability.
      A Participant’s rights to benefits under the Plan are not subject in any manner
      to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
      attachment, or garnishment by creditors of the Participant or the Participant’s
      beneficiary.




10.  Applicable
      Law. The provisions of the Plan will be construed, administered and enforced
      in
      accordance with the laws of the State of California without reference to its
      principles of conflicts-of-laws.




11.  Severability.
      If any provision of the Plan is held invalid or unenforceable, its invalidity
      or
      unenforceability will not affect any other provision of the Plan, and the Plan
      will be construed and enforced as if such provision had not been
      included.




12.  No
      Right of Continued Employment. THIS PLAN DOES NOT GIVE ANY ELIGIBLE EMPLOYEE
      OR
      PARTICIPANT THE RIGHT TO BE RETAINED AS AN EMPLOYEE. SUBJECT TO THE TERMS OF
      ANY
      WRITTEN EMPLOYMENT AGREEMENT TO THE CONTRARY, THE COMPANY SHALL HAVE THE RIGHT
      TO TERMINATE OR CHANGE THE TERMS OF EMPLOYMENT OF AN ELIGIBLE EMPLOYEE OR A
      PARTICIPANT AT ANY TIME AND FOR ANY REASON WHATSOEVER, WITH OR WITHOUT
      CAUSE.




13.  Bindings
      on Successor.  The liabilities and obligations of the Company under
      this Plan will be binding upon any successor corporation or entity which
      succeeds to all or substantially all of the assets and business of the Company
      by merger or other transaction.




IN
      WITNESS WHEREOF, PLX Technology, Inc., by its duly authorized officer, has
      executed the Plan on the date indicated below.




**PLX
      TECHNOLOGY,
      INC.**






/s/     Michael
      J. Salameh


Name:
      Michael J. Salameh


Title:
      Chief Executive Officer