**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**




**Washington,
      D.C. 20549**




**FORM
      10-K**




(MARK
      ONE)




**[X]
      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF
      1934**




**For
      the fiscal year ended December 31, 2007**




**OR**




**[   ]
      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT
      OF 1934 FOR THE TRANSITION PERIOD FROM ___________ TO _____________**




**Commission
      file number 0-25699**











**PLX
      Technology, Inc.**




(Exact
      name of Registrant as Specified in its Charter)




**Delaware**
              **94-3008334**(State
                  or Other Jurisdiction of Incorporation or
                  Organization)
              (I.R.S.
                  Employer Identification Number)


**870
      W. Maude Avenue**


**Sunnyvale,
      California  94085**


**(408)
      774-9060**




(Address,
      including zip code, and telephone number, including area code, of registrant's
      principal executive offices)




Securities
      registered pursuant to Section 12(b) of the Act:




**Title
                    of Each
                    Class:**
                **Name
                    of Each Exchange on which
                    Registered**Common
                    Stock, par value $0.001 per
                    share
                The
                    NASDAQ Stock Market
                    LLC




Securities
      registered pursuant to Section 12(g) of the Act: None




Indicate
      by check mark if the registrant is a well-known seasoned issuer, as defined
      in
      Rule 405 of the Securities Act. Yes [ ] No [X].




Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or Section 15(d) of the Act. Yes [ ] No [X]




Indicate
      by check mark
      whether the registrant (1) has filed all reports required to be filed by Section
      13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
      months (or for such shorter period that the registrant was required to file
      such
      reports), and (2) has been subject to such filing requirements for the past
      90
      days. Yes [X] No [  ]




Indicate
      by check mark if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K is not contained herein, and will not be contained, to the best
      of Registrant's knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-K, or any amendment to
      this Form 10-K.  [X]




Indicate
      by check mark whether the Registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a small reporting company. See
      definition of "large accelerated filer", "accelerated filer" and "small
      reporting company" in Rule 12b-2 of the Exchange Act (Check One):


Large
      accelerated filer [ ] Accelerated
      filer [X] Non-accelerated
      filer [ ] Small Reporting
      Company [ ]




Indicate
      by check mark whether the Registrant is a shell company (as defined in Rule
      12b-2 of the Act ).
      Yes [
      ] No [X]




The aggregate market value of the voting stock held by non-affiliates of the
      registrant, based upon the closing sale price of the registrant's common stock
      on June
      29,
      2007 ,
      as
      reported on The NASDAQ Global Market, was $183,317,162. Shares
      of
      common stock held by each executive officer and director and by each person
      who
      to the registrant's knowledge owns 5% or more of the outstanding voting stock
      have been excluded in that such persons may be deemed to be affiliates. This
      determination of affiliate status is not necessarily a conclusive determination
      for other purposes.




The
      number of shares of common stock outstanding at February
      29, 2008  was
      28,839,745.




DOCUMENTS
      INCORPORATED BY REFERENCE




PART
      III
      OF THIS REPORT ON FORM 10-K INCORPORATES INFORMATION BY REFERENCE FROM THE
      REGISTRANT'S PROXY STATEMENT FOR ITS 2008 ANNUAL MEETING OF STOCKHOLDERS -
      ITEMS
      10, 11, 12, 13 AND 14.





**PLX
        Technology, Inc.**
   **INDEX
        TO**
 **ANNUAL
        REPORT ON FORM 10-K**
 **FOR
        YEAR ENDED DECEMBER 31, 2007**
 **Part
                    I.**
                
                **Page**Item 1.
                Business
                2Item 1A.
                Risk
                    Factors
                14Item 1B.
                Unresolved
                    Staff Comments
                21Item 2.
                Properties
                21Item 3.
                Legal
                    Proceedings
                21Item 4.
                Submission
                    of Matters to a Vote of Security
                    Holders
                21**Part
                    II.**Item 5.
                Market
                    for Registrant's Common Equity and Related
                    Stockholder Matters and Issuer Purchases of Equity
                    Securities
                22Item 6.
                Selected
                    Financial Data
                24Item 7.
                Management's
                    Discussion and Analysis of Financial Condition
                    and Results of Operations
                24Item 7A.
                Quantitative
                    and Qualitative Disclosures About Market
                    Risk
                33Item 8.
                Financial
                    Statements and Supplementary
                    Data
                33Item 9.
                Changes
                    in and Disagreements with Accountants on
                    Accounting and Financial Disclosures
                33Item 9A.
                Controls
                    and Procedures
                34Item 9B.
                Other
                    Information
                34**Part
                    III.**Item 10.
                Directors,
                    Executive Officers and Corporate
                    Governance
                35Item 11.
                Executive
                    Compensation
                35Item 12.
                Security
                    Ownership of Certain Beneficial Owners and
                    Management and Related Stockholder Matters
                35Item 13.
                Certain
                    Relationships and Related Transactions, and
                    Director Independence
                35Item 14.
                Principal
                    Accountant Fees and
                    Services
                35**Part
                    IV.**Item 15.
                Exhibits
                    and Financial Statement
                    Schedules
                36**Signatures**
                
                61
 1
 **PART
        I**
  **ITEM
        1: BUSINESS**
  **Overview**
  PLX
        Technology, Inc. ("PLX" or the "Company"), a Delaware corporation established
        in
        May 1986, develops and supplies semiconductor devices that accelerate and
        manage
        the transfer of data in microprocessor-based systems including networking
        and
        telecommunications, enterprise storage, servers, personal computers (PCs),
        PC
        peripherals, consumer electronics, imaging and industrial products. We offer
        a
        complete solution consisting of three related types of products: semiconductor
        devices, software development kits and hardware design kits. Our semiconductor
        devices manage fast and reliable transfer of data in microprocessor based
        systems. Our software development kits and hardware design kits promote sales
        of
        our semiconductor devices by lowering customers' development costs and by
        accelerating their ability to bring new products to market.
  In
        the
        last decade, demand for communications, storage, servers, imaging, PCs, consumer
        electronics and other products that transmit, store and process information
        rapidly has increased due to:
  ·
              growth
                  of the Internet,
 ·
              deployment
                  of high-speed networking, and
 ·
              proliferation
                  of data-intensive multimedia
                  applications.
  Suppliers
        of these products seek to reduce product development time and to use their
        scarce engineering resources more efficiently. Until the mid 90’s, these
        suppliers typically developed their own system components and the connections
        between the components. Now, however, they are increasingly building their
        equipment based on industry standard connection methods and purchasing
        components supplied by other companies that comply with these standards.
        By
        doing so, they reduce the time and resources required for product development.
        Consequently, there is a growing demand for standards-based components that
        connect systems together, such as our semiconductor devices. The majority
        of
        products we ship today are based on three interconnect standards that are
        widely
        used in our markets:  Peripheral Component Interconnect (PCI),
        Universal Serial Bus (USB) and PCI Express. PLX is an active member of many
        of
        the trade associations that define current and future interconnect standards
        including PCITM, CompactPCI®, PCI-X®, PCI ExpressTM, USB and
        HyperTransportTM.
  Our
        objective is to expand our advantages in data transfer technology
        by:
  ·
              focusing
                  on high-growth markets;
 ·
              delivering
                  comprehensive solutions, including semiconductor devices, software
                  development kits and hardware design
                  kits;
 ·
              extending
                  our technology advantages by incorporating new functions and
                  technologies,
 ·
              driving
                  industry standards; and
 ·
              strengthening
                  and expanding our industry
                  relationships.
  Our
        headquarters are located at 870 W. Maude Avenue, Sunnyvale,
        California 94085. The telephone number is (408) 774-9060. Additional
        information about PLX is available on our website at http://www.plxtech.com.
        Information contained in the website is not part of this report.
  Our
        Annual Report on Form 10-K, quarterly reports on Form 10-Q, current
        reports on Form 8-K and all amendments to those reports and the Proxy
        Statement for our Annual Meeting of Stockholders are made available, free
        of
        charge, on our website, http://www.plxtech.com, as soon as reasonably
        practicable after the reports have been filed with or furnished to the
        Securities and Exchange Commission.  2
 **Industry
        Background**
  Microprocessor-based
        systems are found in many common products and offer varying levels of
        performance depending on each product's requirements. These products range
        from
        low performance devices such as electronic toys and kitchen appliances to
        complex, high-performance electronic equipment such as network routers and
        switches. High-performance microprocessor-based systems offer increased data
        processing capabilities and typically utilize one or more 32-bit or 64-bit
        microprocessors, fast memories and peripherals and sophisticated operating
        systems and software applications.
  The
        growth of the communications infrastructure has increased the demand for
        high
        performance microprocessor-based systems. This demand has been fueled by
        the
        growth of the Internet; the deployment of high-speed networking systems to
        transmit, store, and process data; and the proliferation of data types in
        the
        network, including voice traffic and multimedia.
  Markets
        for electronic equipment that rely on high-performance microprocessor-based
        systems include the following:
  ·
              *Networking
                  and Telecommunications*. Networking and telecommunications
                  applications include digital telephony, multimedia gateways, wireless
                  base
                  stations, remote access concentrators, routers, switches and cable
                  modem
                  equipment. This market segment has grown rapidly due to the rise
                  of the
                  Internet and the proliferation of high bandwidth communication
                  technologies such as Gigabit and 10 Gigabit Ethernet, Asynchronous
                  Transfer Mode, or ATM, cable modems, Digital Subscriber Line, or
                  xDSL,
                  Voice-over-IP, or VoIP and wireless communications
                  protocols.
  ·
              *Enterprise**Storage*. Enterprise storage applications include disk storage systems
                  in both Network Attached Storage (NAS) and Storage Area Networks
                  (SAN) and
                  storage host bus adapters. The growing use of multimedia applications
                  and
                  storage networks is driving demand for increased data storage
                  capacity.
  ·
              *Servers*.
                  Data transfer rates through servers have increased because of their
                  higher
                  processing power and the greater data-handling workload caused
                  by broad
                  internet usage and the need to process high data-content material
                  such as
                  video files and complex
                  applications.
  ·
              *Imaging*.
                  Imaging applications include printers, copiers, medical instrumentation
                  and video and graphics equipment. The popularity of digital photography
                  and video, the demand for better image quality and higher performance,
                  increasing demand for video surveillance security equipment, as
                  well as
                  connection of these applications to high-speed networks, have increased
                  their data processing requirements.
  ·
              *Industrial*.
                  Industrial applications include a wide range of process control
                  computers
                  and factory automation equipment. These products have high data
                  transfer
                  rate requirements, are used to monitor and control complex processes
                  in
                  real-time and are being increasingly attached to
                  networks.
  ·
              *PC
                  Peripherals and Consumer Electronics*. PC peripheral applications
                  include graphics adapters, TV tuners and communication
                  peripherals.  Examples of consumer electronics applications
                  include portable media players, digital camcorders, set top boxes,
                  printers and TV tuners for PCs.  These products are increasingly
                  using high speed connection standards for data
                  transfers.
  Manufacturers
        of products that rely on high-performance microprocessor-based systems seek
        to
        maximize the performance and minimize the cost of their increasingly complex
        products. In addition, these manufacturers must develop and bring new products
        to market quickly to keep pace with technological advancements.
  ***The
        I/O Subsystem***
  A
        typical
        computer system can be described in terms of four primary functions: the
        host
        microprocessor, the memory, the peripherals and the input/output, or I/O,
        subsystem. The host microprocessor is the primary control center for the
        system.
        The memory acts as a storage area for instructions to be executed and data
        to be
        processed. The peripherals enable connections between the system and other
        external devices such as network components, printers and storage systems.
        The
        I/O subsystem is the interconnect circuitry and software that connects these
        three other functions and allows for the transfer of instructions and data
        among
        these functions. The I/O subsystem may also connect the system to the outside
        world.  The I/O subsystem includes the system bus or switch fabric,
        which is a physical connection between these different functions.
 3
 To
        enable
        increased performance and functionality from computer systems, semiconductor
        suppliers have historically focused on improving the operation of peripherals,
        microprocessors and memories. The interconnect silicon in the I/O subsystem
        must
        also improve to keep pace with these improvements by transferring more
        information efficiently and at faster speeds.
  In
        parallel with the increased performance demands of customers and their data
        traffic, the reliability of these systems is under constant pressure to improve.
        This is especially true as the networking and telecommunications disciplines
        merge through use of the Internet to carry all types of traffic. Highly
        available systems are required to meet the expectations of
        customers.
  As
        data
        transfer and reliability requirements for the I/O subsystem have increased,
        so
        has the complexity of its interface logic and related software. Until the
        mid
        90’s, most microprocessor-based systems used simple I/O subsystems that
        contained limited logic and rudimentary software, if any. Complex I/O subsystem
        components such as switches, elaborate control logic and advanced software
        were
        costly, and therefore their use was confined to very high-end equipment such
        as
        mainframe computers. Furthermore, the lack of widely accepted I/O standards
        impeded the use of complex I/O subsystems in other than high-end applications.
        However, advances in semiconductor technology combined with the widespread
        adoption of standards in microprocessor-based systems have enabled the
        development of highly integrated semiconductor devices that can better manage
        I/O subsystem performance at lower cost.
  ***Penetration
        of I/O Standards in Systems***
  Until
        the
        mid 90’s, microprocessor-based systems manufacturers relied on a wide variety of
        proprietary solutions and a fragmented set of industry standard I/O
        architectures. For example, many networking, imaging, storage and industrial
        applications employed proprietary architectures to meet their specific
        performance and cost requirements. A mix of standard buses such as VMEbus,
        Multibus and ISA was used in some industrial, telecommunications and military
        applications. Software was even more fragmented with many proprietary and
        application specific software architectures in use. While developers could
        take
        advantage of many standard microprocessor, memory and peripheral components
        supplied by external vendors, the lack of acceptable I/O standards forced
        many
        to develop custom I/O subsystems internally, placing a heavy demand on
        development resources.
  The
        deployment of the PCI standard was one of the catalysts for the widespread
        adoption of I/O standards in microprocessor-based systems. In the early 1990s,
        PC and server manufacturers developed PCI, a new standard hardware architecture
        to connect the major components of their systems at high speed. It offered
        up to
        a one hundred times improvement in I/O data transfer rates over the previous
        architectures. By the mid-1990s, PCI became the most widely used bus
        architecture in the PC market. Consequently, many suppliers of peripheral
        semiconductor components used in PCs adopted PCI as the standard system
        interface. In addition to penetrating the PC and server market, PCI gained
        popularity as a standard I/O architecture for many other high-performance
        microprocessor-based systems because it allows the use of low cost and
        state-of-the-art peripheral semiconductor components developed for the PC
        market
        and provides a foundation for system interoperability. PCI also offered
        equivalent or superior performance to the in-house developed standards of
        many
        electronic equipment suppliers. Furthermore, the use of PCI enabled faster
        time
        to market, lower development cost and the ability to quickly integrate new
        I/O
        components.
  By
        the
        late 90’s, PCI became established as a major “in-the-box” interconnect for
        connecting components within a system.
  Also
        in
        the late 90’s USB emerged as a major “box-to-box” interconnect for connecting
        PCs to PC peripherals and consumer electronics devices.  Prior to USB,
        a diverse collection of proprietary and industry standard connections, such
        as
        serial port, parallel port and SCSI (Small Computer Serial Interface) were
        used
        to connect PCs to peripherals such as printers and external storage devices
        and
        to consumer electronic devices such as cell phones, digital cameras and portable
        media players.  USB provides a single standard connection that allows
        PCs to connect to peripherals and consumer electronics devices made by different
        manufacturers.
 4
 In
        2001
        and 2002, the PCI Express standard was developed as a higher-performance
        upgrade
        to the widely-deployed PCI standard.  Many builders of
        microprocessor-based systems need the improved performance of PCI Express
        to
        ensure that the I/O subsystem data transfer capacity keeps pace with the
        increasing performance of the surrounding processors and peripheral
        devices.  In addition to higher data throughput, PCI Express enables
        more devices to be connected and improves system management.  Although
        PCI Express, which is a switched-serial architecture, is different in terms
        of
        hardware than PCI, a parallel bus architecture, it is software compatible
        with
        PCI.  This software compatibility attribute makes the task of
        upgrading PCI systems to take advantage of PCI Express’s performance advantages
        relatively simple and inexpensive.  Although initially it was used
        only in the computing market, PCI Express is now the leading I/O standard
        for
        new designs in many other markets including storage systems, communications
        equipment, embedded systems and PC Peripherals.
  This
        rapid acceptance is expected to continue as a solid cost competitive ecosystem
        has developed encouraging the use of PCI Express in more and more
        applications.
  ***Need
        for Standard I/O Interconnect Products and Comprehensive I/O
        Solutions***
  Even
        with
        standard I/O specifications, design teams must still create the circuitry
        and
        related software that implement these specifications. Designers must also
        update
        their I/O subsystems to include frequent improvements in these
        specifications.
  Instead
        of developing all the hardware and software technology internally, system
        developers seek to focus their scarce engineering resources on the proprietary
        features of their products. By using standard semiconductor devices in the
        I/O
        subsystem instead of custom-designed devices they are able to implement the
        basic framework of the system more easily and thereby reduce the I/O subsystem
        design effort resulting in faster time-to-market and lower development cost.
        Standard products allow the design teams to concentrate their efforts on
        differentiating hardware and software features. In addition to standard
        interconnect semiconductor devices, system designers can benefit from several
        other design elements, such as data control software, hardware design kits
        and
        third-party development tools to complete their development work in a timely
        manner. These additional elements simplify development and improve time to
        market. They provide design teams with proven hardware and software design
        examples and the tools to adapt these examples to their needs.
  Due
        to
        the availability and adoption of I/O standards by developers of
        microprocessor-based systems, servers and PCs, there is a large and growing
        demand for I/O subsystem components based on these standards.
  **The
        PLX Solution**
  PLX
        develops and supplies interconnect semiconductor devices and supporting hardware
        and software platforms that accelerate and manage the transfer of data in
        high-performance microprocessor-based systems.
  Our
        solution consists of three related products:
  ·
              interconnect
                  semiconductor devices,
 ·
              software
                  development kits which assist in developing systems that incorporate
                  our
                  semiconductor devices and
 ·
              hardware
                  design kits that allow development of a system using our semiconductor
                  devices and software development
                  kits.
  Development
        tools provided by third parties support these three related products. Our
        products are designed for use in a variety of applications including networking
        and telecommunications, enterprise storage, servers, embedded control, PC
        peripheral and consumer electronics. Our chips are highly integrated,
        cost-effective semiconductor devices that optimize the flow of data and simplify
        the development of high-performance I/O subsystems. Our software development
        kits and hardware design kits promote sales of our semiconductor devices
        by
        lowering customers' development costs and allowing them to bring new products
        to
        market more quickly.
 5
 PLX
        products shipping today provide I/O connectivity solutions mainly for the
        PCI
        Express, PCI, PCI-X, and USB standards. As new I/O standards evolve, we expect
        to support them where appropriate.  More than 1,000 electronic
        equipment manufacturers use PLX semiconductor devices in a wide variety of
        applications.
  Historically,
        PLX supplied bridges, controllers, and accelerators to the PCI, PCI-X and
        USB
        markets.  Today, PLX’s main focus is supplying the needs of the fast
        growing demand for PCI Express Switches.  PCI Express is a serial
        point to point technology that requires switches to route the traffic similar
        to
        Ethernet.  PCI and PCI-X did not require these
        devices.  This has opened up an exciting new market for suppliers like
        PLX.
  **Strategy**
  Our
        objective is to continue to expand our market position as a developer and
        supplier of I/O connectivity solutions for high-performance systems. Key
        elements of our strategy include the following:
  *Focus
        on High-Growth Markets.*We focus on the high-growth communications,
        storage, server, embedded control, PC peripheral and consumer markets. Within
        these markets, there are many highly differentiated applications with different
        design criteria such as product function, performance, cost, power consumption,
        software, size limitations and design support. The requirements of many of
        these
        differentiated applications are addressed by our products, and we target
        those
        applications where we believe we can attain a leadership position.
  *Deliver
        Comprehensive Solutions.*Our products provide system developers with a
        comprehensive, proven development environment to simplify I/O subsystem design,
        enhance performance, reduce development costs and accelerate time-to-market.
        This solution consists of semiconductor devices, software development kits
        and
        hardware design kits. These design elements are supported by development
        tools
        provided by third parties.
  *Extend
        I/O Subsystem Technology.*We offer our customers highly integrated
        semiconductor devices and related software that incorporate many of the latest
        advances in I/O interconnect technology. Our semiconductor devices and software
        are designed to enable quick adoption of new I/O technologies and enhancements
        to existing I/O standards. We seek to integrate additional I/O-related functions
        into our semiconductor devices to provide our customers with additional value.
        We employ a team of engineers with expertise in system architectures, product
        definition and semiconductor and software design to maintain our I/O subsystem
        technology advantages.
  *Drive
        I/O Subsystem Standards.*We believe that our understanding of I/O
        technology trends and market requirements allows us to bring to market more
        quickly new products that support the latest I/O technologies. Through our
        participation in key industry groups responsible for standards such as the
        PCI
        Special Interest Group, the PCI Industrial Computer Manufacturer's Group
        (PICMG), PCI-X Manufacturers' Group, and the USB Implementers Forum (USB-IF),
        we
        have taken an active role in defining new I/O standards.
  *Strengthen
        and Expand Industry Relationships.*We work with industry leaders in
        developing hardware and software development tools and marketing programs
        that
        promote the use of each company's products. Partners include AMD, Broadcom,
        Intel, Jungo, Microsoft, Freescale, Cavium, One Stop Systems, Pigeon Point,
        RamBus, Virage, Magma, Synopsys, NEC, Bayside, AMCC, ARM and National
        Instruments. As a result of these relationships, we enable microprocessor-based
        systems designers to choose the best products for their particular applications
        while still employing our product as the core of their I/O subsystem
        design.
  **Customers**
  We
        supply
        our products to end customers for a wide variety of communications, storage,
        server, embedded control, PC peripheral and consumer appliance applications.
        We
        sell our products directly to our end customers as well as to our
        distributors.  The typical product life cycle of a high performance
        microprocessor-based system is one to two years or more of product development
        and initial marketing activity followed by one to five years or more of volume
        production, assuming the product is successful in the market. The system
        design
        team typically selects the sole-source hardware and software components early
        in
        the design cycle. Generally, the system will incorporate these same components
        throughout its product life because changes require an expensive re-engineering
        effort. Therefore, when our products are designed into a system, they are
        likely
        to be used in that system throughout its one to five year or more production
        life.
 6
 Our
        products are standard semiconductor devices that may be incorporated into
        equipment used in several of our target markets. More than 1,000 electronic
        equipment manufacturers incorporate our semiconductor devices in their
        products.
  **Products**
  Our
        products consist of interconnect semiconductor devices, software development
        kits and hardware design kits. Development tools provided by third parties
        support these three design elements. The sales of our interconnect semiconductor
        devices account for substantially all of our revenues. We generate less than
        1%
        of our revenues from sales of our software development and hardware design
        kits.  Our software development kits and hardware design kits promote
        sales of our semiconductor devices by lowering customers' development costs
        allowing them to bring new products to market more quickly.
  *PCI
        Express Bridges.*The PCI Express bus standard has become the
        interconnect standard for the latest servers, notebooks, desktops, graphics,
        storage, communications and embedded systems. With its 2.5 to 5.0 Gigabit
        per
        second line rate/lane, it offers significantly higher performance than legacy
        standards.  PCI Express Bridges enable conventional PCI products
        (32-bit/33 MHz, 32-bit/66 MHz and even 64-bit/133 MHz PCI-X) to be upgraded
        for
        use in new PCI Express systems.  This allows users to quickly bring a
        new product to market.  Applications using these bridge devices
        include servers, storage host bus adapters, graphics, TV tuners and security
        systems.   The reverse bridging feature also allows users to
        bridge backwards allowing the latest PCI Express based powerful CPUs/Graphics
        processors to still service and support the legacy PCI and PCI-X
        market.
  *PCI
        Express Switches.*Since PCI Express is a point to point serial
        interconnect, it requires a switch to connect a single port from a processor
        or
        chipset to many end-points.  Example of applications include fanout in
        servers, dual graphics in gaming and workstation systems, control planes
        in
        networking and backplanes in embedded and industrial equipment. PLX switches
        allow aggregation of multi-channel Gigabit Ethernet, Fibre Channel, graphics
        and
        SAS cards to the host. PLX switch products are offered in various configurations
        as requirements vary from one application to the next. PCI Express switches
        have
        become a basic building block in systems being designed today using this
        standard.  PLX started with the Gen 1 family of PCI Express at 2.5
        Gigabit per second and now has products on the market supporting the new
        Gen 2
        specification where the data rate has doubled to 5.0 Gigabit per
        second.
  *I/O
        Accelerators*. Our I/O accelerators are semiconductor devices that
        accelerate movement of data across a PCI bus and between one or more devices
        or
        subsystems that need to communicate across the PCI bus. These products
        incorporate the Data Pipe Architecture technology, a set of circuits and
        features that enable an efficient flow of data within systems with minimal
        supervision from the system processor. Our I/O accelerators address a range
        of
        applications and provide flexible interfaces that allow them to connect to
        a
        wide variety of semiconductor devices, including chipsets from major chipset
        vendors; FPGAs and processors such as Freescale's PowerPC, Intel's i960 and
        Strong ARM, Hitachi's SH and Motorola's 68K series. Customers also use these
        semiconductor devices in connection with digital signal processors, or DSPs,
        from Texas Instruments and others. The I/O accelerators can be connected
        with a
        wide range of peripheral devices, including LAN, WAN, disk control and
        graphics.
  *PCI-to-PCI
        Bridges**.*  PCI-to-PCI bridges are chips that increase the
        number of peripheral devices that can be included in a microprocessor-based
        system. PCI-to-PCI bridges have become common in a wide variety of systems,
        including servers, storage, communications and embedded-control applications
        such as imaging, industrial control and test equipment. PLX’s bridge product
        line spans the entire PCI range, from 32-bit 33MHz through 64-bit 66MHz,
        and
        includes 133MHz PCI-X devices.
  *USB
        Interface Chips**.*USB interface chips are used by
        computer peripherals to connect to a PC through an external cabled connection.
         The USB standard allows for connections to be made at different
        speeds.  Hi-Speed USB (also known as USB 2.0) provides 40x the bandwidth of
        Full-Speed USB and can be found on most PCs sold after 2003.  However, many
        PC peripherals today, such as mice, printers and digital cameras, still utilize
        Full-Speed transfer rates.  PLX’s products are all USB 2.0 Hi-Speed and are
        backward compatible with USB Full-Speed.  Hi-Speed connections can be
        found today on devices like multi-function printers, DVD camcorders, portable
        media players, portable navigation systems, digital cameras, PDAs and hard
        disks.
 7
 *Software
        Development Kits*. Our software development kits, or SDKs, are designed to
        simplify and accelerate the development of systems that incorporate our
        semiconductor devices. Support is provided for several industry-leading
        operating systems, including VxWorks from Wind River, Linux, Microsoft Windows
        and Vista as well as generic applications and other operating systems. The
        SDKs
        include an application programming interface, or API, that enables developers
        to
        execute complex transactions with simple commands. This common interface
        allows
        customers to preserve their software investment even as their designs evolve
        in
        complexity and as new I/O architectures are deployed.
  *Hardware
        Design Kits*. We offer hardware design kits that support the development of
        systems incorporating PLX semiconductor devices. We call our hardware design
        kits "rapid development kits", or RDKs. Designers use the RDKs to evaluate
        our
        semiconductor devices and to simplify and accelerate product development.
        Each
        hardware design kit includes a development circuit board that designers can
        use
        to evaluate the PLX products and also design their own system. These hardware
        design kits also include technical drawings, documentation and other design
        assistance tools.
  To
        offer
        additional design support, we work with third party companies that provide
        development tools for our customers. Although we receive no revenue directly
        from these development tools, they promote sales of our semiconductor devices
        because these tools often make it easier to develop systems incorporating
        our
        products. Examples include software development tools from Jungo, Microsoft,
        Pigeon Point and Wind River and software modeling tools from Synopsys and
        Magma.
 8
 Our
        principal product offerings and functions include the
        following:
 **Category**
                **Product**
                **Description****Semiconductor
                    Devices**PCI
                    Express Bridges
                PEX
                    8111
                o
                    Support the standard PCI Express serial interconnect
                    protocolPEX
                    8112
                o
                    Facilitate the connection of the newest PCI Express
                    processorsPEX
                    8114
                o
                    Enable conventional PCI products to be upgraded for use in the
                    newest PCI
                    Express standardPEX
                    8311PCI
                    Express Switches
                PEX
                    8505
                o
                    Facilitate the connection of the newest PCI Express
                    processorsPEX
                    8508
                o
                    Provide essential system fanout required by the point-to-point
                    PCIPEX
                    8509
                o
                    Provide PCI Express signal routingPEX
                    8512PEX
                    8516PEX
                    8517PEX
                    8518PEX
                    8524PEX
                    8525PEX
                    8532PEX
                    8533PEX
                    8534PEX
                    8535PEX
                    8547PEX
                    8548PEX
                    8612PEX
                    8616PEX
                    8624PEX
                    8632PEX
                    864832-bit/33
                    MHz Target I/O Accelerators
                PCI
                    9030
                o
                    Enable connection of 8-, 16-  and 32-bit peripherals and
                    personalPCI
                    9050
                computer
                    adapters to PCIPCI
                    905232-bit/33
                    MHz Master I/O Accelerators
                PCI
                    9054
                o
                    Provide the flexibility to connect with a wide range of
                    processors,PCI
                    9060SD
                peripherals
                    and memoryPCI
                    9060ESPCI
                    9060PCI
                    908032
                    and 64-bit/66 MHz I/O Accelerators
                PCI
                    9056
                o
                    Provide the flexibility to connect with a wide range ofPCI
                    9656
                peripherals
                    and memoryPCI
                    and PCI-X Bridge Chips
                PCI
                    6140
                o
                    Increase the number of PCI peripheral devices that can be included
                    inPCI
                    6150
                a
                    microprocessor-based systemPCI
                    6152PCI
                    6154PCI
                    6156PCI
                    6254PCI
                    6350PCI
                    6466PCI
                    6520PCI
                    6540USB
                    Bridge Chips
                NET
                    1080
                o
                    Connect CPUs and DSPs to a high-speed USB device portNET
                    2252NET
                    2260NET
                    2270NET
                    2272NET
                    2280NET
                    2282NET
                    2888NET
                    2890**Software
                    Development Kits**PCI
                    Software
                SDK
                o
                    Provide tools for accelerating design of data transport
                    softwareo
                    Include development and debugging utilities, sample firmware
                    and
                    drivers**Hardware
                    Design Kits**Rapid
                    Development Kits
                Kits
                    supporting a
                o
                    Include development circuit boards, SDK Software, documentation
                    andrange
                    of products
                schematics
                    to assist system development 9
 **Technology**
  We
        believe that supplying high-performance connectivity solutions for I/O
        subsystems requires expertise in four areas:
  ·
              semiconductor
                  design; ·
                software
                    technology;
 ·
                system
                    design; and
 ·
              industry
                  standards.
  *Semiconductor
        Design.*Our engineers have substantial expertise in semiconductor design
        and have developed a comprehensive library of complex functional blocks for
        use
        in semiconductor devices for I/O connectivity. As a result of this expertise,
        we
        offer both innovative architectures and high levels of functionality. We
        continue to integrate more functionality in our semiconductor devices to
        reduce
        cost, improve performance, reduce size and simplify the customer's design
        effort.
  *Software
        Technology.*We devote engineering resources to the development of software
        technology used to assist the system developer in debugging hardware and
        creating data control software. The quality and availability of these tools
        are
        key differentiating factors between PLX and competing alternatives. We continue
        to enhance and expand our software development kits, which contain a set
        of
        programming interfaces that simplify the development of software. Our software
        expertise provides us with valuable insights into our customers' software
        development issues, which aids the definition and development of future
        semiconductor devices. Software revenue from sales of our software development
        kits amounted to less than 1% of our net revenues for 2007.
  *System
        Design.*We employ a team of system level design engineers that develop
        hardware design kits. These kits are high-performance adapters and embedded
        systems that customers can use to assist development of their products. Each
        of
        these hardware design kits is a system or adapter similar in complexity to
        those
        built by our customers. The system design experience provides us valuable
        insights which we can use to improve future semiconductor device and software
        products.
  *Industry
        Standards.*Through our participation in the key industry groups responsible
        for interconnect standards, we take an active role in defining new I/O
        standards.
  **Competition**
  Competition
        in the semiconductor industry is intense. If our target markets continue
        to
        grow, the number of competitors may increase significantly. In addition,
        new
        semiconductor technologies may lead to new products that can perform similar
        functions as our products.
  Competition
        in the various markets we serve comes from companies of various sizes, many
        of
        which are significantly larger and have greater financial and other resources.
        Thus they can better withstand adverse economic or market conditions. Our
        principal products compete with standard products from companies such as
        Cypress
        Semiconductor, Genesys Logic, IDT, Intel, NEC, Oxford Semiconductor, Pericom
        Semiconductor, NXP Semiconductor, Renesas,  Texas Instruments and
        Tundra Semiconductor.
  In
        addition, two alternative devices can perform some or all of the functions
        of
        our devices. The first is the Application Specific Integrated Circuit, or
        ASIC.
        With the ASIC approach, a customer creates a custom semiconductor device
        for a
        particular application. Because the customer buys the ASIC directly from
        the
        semiconductor foundry, this approach may lead to lower unit production costs.
        However, this approach entails a large initial time and resource investment
        in
        developing the custom device. The second alternative device is the Field
        Programmable Gate Array, or FPGA. The FPGA is a semiconductor device whose
        logic
        function can be programmed by the system manufacturer. This requires less
        design
        effort and time than the ASIC approach. However, because of the additional
        circuitry required to enable the device to be programmed, this approach
        typically entails higher unit production costs which can be prohibitive compared
        to ASICs or standard semiconductor devices. Nevertheless, FPGA prices have
        decreased steadily and in many cases are competitive with prices for standard
        semiconductor devices. Accordingly, we also experience competition from leading
        ASIC suppliers, including IBM, LSI Logic, NEC, and Toshiba as well as from
        FPGA
        suppliers, including Actel, Altera, Atmel, Lattice, Quicklogic and Xilinx.
        Many
        of these competitors are large companies that have significantly greater
        financial, technical, marketing and other resources than PLX.
 10
 We
        believe that the principal factors of competition in our business include
        functionality, product performance, price, product innovation, availability
        of
        development tools, customer service and reliability. We believe that we compete
        favorably with respect to each of these factors. We differentiate our products
        from those of our competitors by incorporating innovative features that allow
        our customers to build systems based on industry standards that are more
        efficient and higher in performance. Furthermore, in general, our software
        and
        hardware development tools are more comprehensive than competing solutions.
        However, we cannot assure you that we will be able to compete successfully
        in
        the future against existing or new competitors, and increased competition
        may
        adversely affect our business.
  **Sales,
        Marketing and Technical Support**
  Our
        sales
        and marketing strategy is to achieve design wins at leading systems-companies
        in
        high-growth market segments. We market and sell our products in the United
        States through a combination of direct regional sales managers, a network
        of
        independent manufacturers' representatives and distributors. We maintain
        United
        States sales liaison offices in California, Connecticut, Illinois,
        Massachusetts and Texas.
  Outside
        the United States, we have engaged a team of manufacturers' representatives,
        stocking representatives and distributors to sell and market our products.
        Our
        international network includes representatives in Australia, Austria, Belgium,
        Brazil, Canada, Denmark, Finland, France, Germany, Hong Kong, India, Ireland,
        Israel, Italy, Japan, Korea, Norway, People's Republic of China, Singapore,
        South Africa, Spain, Sweden, Switzerland, Taiwan, The Netherlands and the
        United
        Kingdom. We maintain a sales liaison office in the United Kingdom and France
        to
        service customers in Europe and the Middle East. We also maintain sales liaison
        offices in Korea, Taiwan, and China to service customers in Korea, Southeast
        Asia and The People's Republic of China.  Finally, we maintain a sales
        liaison office in Japan to service customers in Japan.
  As
        of
        December 31, 2007, we employed 55 individuals in sales and marketing. Sales
        in North America represented 29%, 30% and 32%, of net revenues for 2007,
        2006
        and 2005, respectively. All worldwide sales to date have been denominated
        in
        U.S. dollars. We have one operating segment, the sale of semiconductor devices.
        Additional segment reporting information is included in Note 11 of Notes
        to the
        Consolidated Financial Statements in this form 10-K.
  Net
        revenues through distributors accounted for approximately 77%, 70% and 57%
        of
        our net revenues for 2007, 2006 and 2005, respectively. Included in 2006
        distributor revenues is the amount of $2.8 million, or 3.4% of total net
        revenues, resulting from the change in the accounting for revenues to
        distributors. See “Item 7, Management’s Discussion and Analysis of Financial
        Condition and Results of Operations - Critical Accounting Policies - Revenue
        Recognition” in this Form 10-K for details on the change in accounting for
        distributor revenues.  Revenues related to sales through distributors
        are expected to continue to account for a large portion of our total revenues.
        See "Item 1A, Risk Factors - Certain Factors That May Affect Future Operating
        Results - A Large Portion of Our Revenues Is Derived from Sales to Third-Party
        Distributors Who May Terminate Their Relationships with Us at Any Time" in
        this
        Form 10-K.
  In
        2007,
        sales to Excelpoint Systems, Metatech and Answer Technology, distributors,
        accounted for 18%, 17% and 10%, respectively, of our net revenues. In 2006,
        sales to Metatech and Answer Technology accounted for 31% and 10%, respectively,
        of our net revenues. In 2005, sales to Metatech accounted for 23% of our
        net
        revenues.  No other distributor or direct customer accounted for more
        than 10% of net revenues in any period presented.
  Technical
        support to customers provided under warranty is provided through field and
        factory applications engineers, technical marketing personnel and, if necessary,
        product design engineers. Local field support is provided in person, email,
        internet or by telephone. We also use our website to provide product
        documentation and technical support information. We believe that providing
        customers with comprehensive product support is critical to remaining
        competitive in the markets we serve. In addition, our close contact with
        customer design engineers provides valuable input into existing product
        enhancements and next generation product specifications.
 11
 **Research
        and Development**
  Our
        future success will depend to a large extent on our ability to rapidly develop
        and introduce new products and enhancements to our existing products that
        meet
        emerging industry standards and satisfy changing customer requirements. We
        have
        made and expect to continue to make substantial investments in research and
        development and to participate in the development of new and existing industry
        standards.
  The
        majority of our engineers are involved in semiconductor device development,
        with
        the remaining engineers working on software and reference design hardware.
        Before development of a new product commences, our marketing managers work
        closely with research and development engineers and customers to develop
        a
        comprehensive requirements specification. In addition, our marketing managers
        and engineers review the applicable industry standards and incorporate desired
        changes into the new product specification. After the product is designed
        and
        commercially available, our engineers continue to work with various customers
        on
        specific design issues to understand emerging requirements that may be
        incorporated into future product generations or product upgrades.
  Our
        research and development expenditures totaled $24.4 million, $20.2 million
        and $18.5 million in 2007, 2006 and 2005, respectively. Research and
        development expenses consist primarily of salaries, share-based compensation
        and
        related costs of employees engaged in research, design and development
        activities. In addition, expenses for outside engineering consultants and
        non-recurring engineering at our independent foundries are included in research
        and development expenses. As of December 31, 2007, there were 71 employees
        engaged in research and development. We perform our research and development
        activities at our headquarters in Sunnyvale, California. We periodically
        seek to
        hire additional skilled development engineers who are currently in short
        supply.
        Our business could be adversely affected if we encounter delays in hiring
        additional engineers. See "Item 1A, Risk Factors - Certain Factors That May
        Affect Future Operating Results - We Could Lose Key Personnel Due to Competitive
        Market Conditions and Attrition" in this Form 10-K.
  Our
        future performance depends on a number of factors, including our ability
        to
        identify emerging technology trends in our target markets, define and develop
        competitive new products in a timely manner, enhance existing products to
        differentiate them from those of competitors and bring products to market
        at
        competitive prices. The technical innovations and product development required
        for us to remain competitive are inherently complex and require long development
        cycles. We typically must incur substantial research and development costs
        before the technical feasibility and commercial viability of a product can
        be
        ascertained. We must also continue to make significant investments in research
        and development in order to continually enhance the performance and
        functionality of our products to keep pace with competitive products and
        customer demands for improved performance. Revenues from future products
        or
        product enhancements may not be sufficient to recover the development costs
        associated with these products or enhancements. The failure to successfully
        develop new products on a timely basis could have a material adverse effect
        on
        our business.
  **Manufacturing**
  We
        have
        adopted a "fabless" semiconductor manufacturing model and outsource all of
        our
        semiconductor manufacturing, assembly and testing. This approach allows us
        to
        focus our resources on the design, development and marketing of products
        and
        significantly reduces our capital requirements. We subcontract substantially
        all
        of our semiconductor manufacturing to Fujistu, NEC and Seiko-Epson Semiconductor
        in Japan, and Taiwan Semiconductor Manufacturing Corporation, AMD and UMC
        in
        Taiwan. None of our products are currently manufactured by more than one
        supplier, and all of our products are expected to be single-source manufactured
        for the foreseeable future. We must place orders two to four months in advance
        of expected delivery of finished goods. We maintain inventory levels based
        on
        current lead times from foundries plus safety stock to account for unanticipated
        interruption in supply and fluctuations in demand. Our inventory comprises
        a
        large portion of our working capital. As a result, we have limited ability
        to
        react to fluctuations in demand for our products which could cause us to
        have an
        excess or a shortage of inventory of a particular product and reduced product
        revenues.
  In
        the
        event of a loss of, or a decision by us to change a key supplier or foundry,
        qualifying a new supplier or foundry and commencing volume production would
        likely involve delay and expenses, resulting in lost revenues, reduced operating
        margins and possible detriment to customer relationships. Since we place
        our
        orders on a purchase order basis and do not have a long-term volume purchase
        agreement with any of our existing suppliers, any of these suppliers may
        allocate capacity to the production of other products while reducing deliveries
        to us on short notice. While we believe we currently have good relationships
        with our foundries and adequate capacity to support our current sales levels,
        there can be no assurance that adequate foundry capacity will be available
        in
        the future on acceptable terms, if at all. See "Item 1A, Risk Factors - Certain
        Factors That May Affect Future Operating Results - Our Independent Manufacturers
        May Not Be Able To Meet Our Manufacturing Requirements" in this Form
        10-K.
 12
 Our
        semiconductor devices are currently fabricated using a range of semiconductor
        manufacturing processes. We must continuously develop our devices using more
        advanced processes to remain competitive on a cost and performance basis.
        Migrating to new technologies is a challenging task requiring new design
        skills,
        methods and tools. We believe that the transition of our products to smaller
        geometries will be important for us to remain competitive. Our business could
        be
        materially adversely affected if any transition to new processes is delayed
        or
        inefficiently implemented. See " Item 1A, Risk Factors - Certain Factors
        That
        May Affect Future Operating Results - Defects in Our Products Could Increase
        Our
        Costs and Delay Our Product Shipments" in this Form 10-K.
  **Intellectual
        Property**
  Our
        future success and competitive position depend upon our ability to obtain
        and
        maintain the proprietary technology used in our principal products. Most
        of our
        current products include implementations of the PCI, PCI Express and USB
        industry standards, which are available to other companies. We currently
        have no
        patents on any of our I/O accelerator products and rely instead on trade
        secret
        protection. We hold 6 patents on switch technology that will expire at various
        dates beginning in 2019 through 2025. In addition, we have a patent on I/O
        buffer technology that expired in September 2007 and a patent on clock and
        timing control technology that will expire in May 2014. In the future, we
        plan
        to seek patent protection when we believe it is necessary.
  Our
        existing or future patents may be invalidated, circumvented, challenged or
        licensed to others. The rights granted may not provide competitive advantages
        to
        us. In addition, our future patent applications may not be issued with the
        scope
        of the claims sought by us, if at all. Furthermore, others may develop
        technologies that are similar or superior to our technology, duplicate our
        technology or design around the patents owned or licensed by us. In addition,
        effective patent, trademark, copyright and trade secret protection may be
        unavailable or limited in foreign countries where we may need this protection.
        We cannot be sure that steps taken by us to protect our technology will prevent
        misappropriation of our technology.
  The
        semiconductor industry is characterized by vigorous protection and pursuit
        of
        intellectual property rights or positions. This often results in significant,
        often protracted and expensive litigation. There is no intellectual property
        litigation currently pending against us. However, we may from time to time
        receive notifications of claims that we may be infringing patents or other
        intellectual property rights owned by other third parties. If it is necessary
        or
        desirable, we may seek licenses under these third party patents or intellectual
        property rights. However, we cannot be sure that licenses will be offered
        or
        that the terms of any offered licenses will be acceptable to us.
  The
        failure to obtain a license from a third party for technology used by us
        could
        cause us to incur substantial liabilities and to suspend the manufacture
        or
        shipment of products or our use of processes requiring the technology.
        Litigation could result in significant expenses to us, adversely affect sales
        of
        the challenged product or technology and divert the efforts of our technical
        and
        management personnel, whether or not the litigation is determined in our
        favor.
        In the event of an adverse result in any litigation, we could be required
        to pay
        substantial damages, cease the manufacture, use, sale or importation of
        infringing products, expend significant resources to develop or acquire
        non-infringing technology, and discontinue the use of processes requiring
        the
        infringing technology or obtain licenses to the infringing technology. In
        addition, we may not be successful in developing or acquiring the necessary
        licenses under reasonable terms. This could require expenditures by us of
        substantial time and other resources. Any of these developments would have
        a
        material adverse effect on our business. See "Item 1A, Risk Factors - Certain
        Factors That May Affect Future Operating Results - Our Limited Ability to
        Protect Our Intellectual Property and Proprietary Rights Could Adversely
        Affect
        Our Competitive Position" in this Form 10-K.
 13
 ****Employees****
  As
          of
          December 31, 2007, we employed a total of 157 full-time employees,
          including 71 engaged in research and development, 55 engaged in sales and
          marketing, 2 engaged in manufacturing operations and 29 engaged in general
          administration activities. We also from time to time employ part-time employees
          and hire contractors. Our employees are not represented by any collective
          bargaining agreement, and we have never experienced a work stoppage. We
          believe
          that our employee relations are good.
  **Backlog**
  PLX's
        backlog at any particular date is not necessarily indicative of actual sales
        for
        any succeeding period. This results from expected changes in product delivery
        schedules and cancellation of product orders. In addition, PLX's sales will
        often reflect orders shipped in the same quarter that they are
        received.
  **ITEM
        1A: RISK FACTORS**
  **FACTORS
        THAT MAY AFFECT FUTURE OPERATING RESULTS**
  If
        a
        company’s operating results are below the expectation of public market analysts
        or investors, then the market price of its common stock could
        decline.  Many factors that can affect a company’s quarterly and
        annual results are difficult to control or predict.  Factors which can
        affect the operating results of a semiconductor company such as PLX are
        described below.
  Risks
        and
        uncertainties that could cause actual results to differ materially from those
        described herein include the following:
  **Our
        Operating Results May Fluctuate Significantly Due To Factors Which Are Not
        Within Our Control**
  Our
        quarterly operating results have fluctuated significantly in the past and
        are
        expected to fluctuate significantly in the future based on a number of factors,
        many of which are not under our control.  Our operating expenses,
        which include product development costs and selling, general and administrative
        expenses, are relatively fixed in the short-term.  If our revenues are
        lower than we expect because we sell fewer semiconductor devices, delay the
        release of new products or the announcement of new features, or for other
        reasons, we may not be able to quickly reduce our spending in
        response.
  Other
        circumstances that can affect our operating results include:
  ·
              the
                  timing of significant orders, order cancellations and
                  reschedulings;
 ·
              the
                  loss of one or more significant
                  customers;
 ·
              introduction
                  of products and technologies by our
                  competitors;
 ·
              the
                  availability of production capacity at the fabrication facilities
                  that
                  manufacture our products;
 ·
              our
                  significant customers could lose market share that may affect our
                  business;
 ·
              integration
                  of our product functionality into our customers’
                  products;
 ·
              our
                  ability to develop, introduce and market new products and technologies
                  on
                  a timely basis;
 ·
              unexpected
                  issues that may arise with devices in
                  production;
 ·
              shifts
                  in our product mix toward lower margin
                  products;
 ·
              changes
                  in our pricing policies or those of our competitors or suppliers,
                  including decreases in unit average selling prices of our
                  products;
 ·
              the
                  availability and cost of materials to our
                  suppliers;
 ·
              general
                  economic conditions; and
 ·
              political
                  climate.
  These
        factors are difficult to forecast, and these or other factors could adversely
        affect our business.  Any shortfall in our revenues would have a
        direct impact on our business.  In addition, fluctuations in our
        quarterly results could adversely affect the market price of our common stock
        in
        a manner unrelated to our long-term operating performance.
 14
 **The
        Cyclical Nature Of The Semiconductor Industry May Lead To Significant Variances
        In The Demand For Our Products**
  In
        the
        past, the semiconductor industry has been characterized by significant downturns
        and wide fluctuations in supply and demand.  Also, the industry has
        experienced significant fluctuations in anticipation of changes in general
        economic conditions.  This cyclicality has led to significant
        variances in product demand and production capacity.  It has also
        accelerated erosion of average selling prices per unit.  We may
        experience periodic fluctuations in our future financial results because
        of
        industry-wide conditions.
  **Because
        A Substantial Portion Of Our Net Revenues Are Generated By A Small Number
        Of
        Large Customers, If Any Of These Customers Delays Or Reduces Its Orders,
        Our Net
        Revenues And Earnings Will Be Harmed**
  Historically,
        a relatively small number of customers have accounted for a significant portion
        of our net revenues in any particular period. In 2007, sales to Excelpoint
        Systems, Metatech and Answer Technology accounted for 18%, 17% and 10%,
        respectively, of net revenues.  In 2006, sales to Metatech and Answer
        Technology accounted for 31% and 10% of our net revenues. In 2005, sales to
        Metatech accounted for 23% of our net revenues. No other distributor or direct
        customer accounted for more than 10% of net revenues in any period
        presented.
  During
        2007 we terminated our largest distributor and transitioned in a replacement
        distributor. If our new distributor is not able to sustain the same volume
        support it could have a material adverse effect on our business, as we may
        not
        be successful in servicing our customers directly or through manufacturers’
representatives.
  We
        have
        no long-term volume purchase commitments from any of our significant customers.
        We cannot be certain that our current customers will continue to place orders
        with us, that orders by existing customers will continue at the levels of
        previous periods or that we will be able to obtain orders from new customers.
        In
        addition, some of our customers supply products to end-market purchasers
        and any
        of these end-market purchasers could choose to reduce or eliminate orders
        for
        our customers' products. This would in turn lower our customers' orders for
        our
        products.
  We
        anticipate that sales of our products to a relatively small number of customers
        will continue to account for a significant portion of our net
        revenues.  Due to these factors, the following have in the past and
        may in the future reduce our net revenues or earnings:
  ·
              the
                  reduction, delay or cancellation of orders from one or more of
                  our
                  significant customers;
 ·
              the
                  selection of competing products or in-house design by one or more
                  of our
                  current customers;
 ·
              the
                  loss of one or more of our current customers;
                  or
 ·
              a
                  failure of one or more of our current customers to pay our
                  invoices.
  **Intense
        Competition In The Markets In Which We Operate May Reduce The Demand For
        Or
        Prices Of Our Products**
 Competition
          in the semiconductor industry is intense.  If our main target market,
          the microprocessor-based systems market, continues to grow, the number
          of
          competitors may increase significantly. In addition, new semiconductor
          technology may lead to new products that can perform similar functions
          as our
          products.  Some of our competitors and other semiconductor companies
          may develop and introduce products that integrate into a single semiconductor
          device the functions performed by our semiconductor devices.  This
          would eliminate the need for our products in some applications.
  In
          addition, competition in our markets comes from companies of various sizes,
          many
          of which are significantly larger and have greater financial and other
          resources
          than we do and thus can better withstand adverse economic or market
          conditions.  Therefore, we cannot assure you that we will be able to
          compete successfully in the future against existing or new competitors,
          and
          increased competition may adversely affect our business.  See
“Business -- Competition,” and “ -- Products” in Part I of Item I of this Form
          10-K.
 15
 **Our
        Independent Manufacturers May Not Be Able To Meet Our Manufacturing
        Requirements**
  We
        do not
        manufacture any of our semiconductor devices.  Therefore, we are
        referred to in the semiconductor industry as a “fabless” producer of
        semiconductors.  Consequently, we depend upon third party
        manufacturers to produce semiconductors that meet our
        specifications.  We currently have third party manufacturers located
        in Japan, Korea, Taiwan, Singapore and Malaysia that can produce semiconductors
        which meet our needs.  However, as the semiconductor industry
        continues to progress towards smaller manufacturing and design geometries,
        the
        complexities of producing semiconductors will increase.  Decreasing
        geometries may introduce new problems and delays that may affect product
        development and deliveries.  Due to the nature of the semiconductor
        industry and our status as a “fabless” semiconductor company, we could encounter
        fabrication-related problems that may affect the availability of our
        semiconductor devices, delay our shipments or may increase our
        costs.
  None
        of
        our semiconductor devices are currently manufactured by more than one
        supplier.  We place our orders on a purchase order basis and do not
        have a long term purchase agreement with any of our existing
        suppliers.  In the event that the supplier of a semiconductor device
        was unable or unwilling to continue to manufacture our products in the required
        volume, we would have to identify and qualify a substitute
        supplier.  Introducing new products or transferring existing products
        to a new third party manufacturer or process may result in unforeseen device
        specification and operating problems.  These problems may affect
        product shipments and may be costly to correct.  Silicon fabrication
        capacity may also change, or the costs per silicon wafer may
        increase.  Manufacturing-related problems may have a material adverse
        effect on our business.
  **Customers
        Are Requiring That We Offer Our Products In Lead-Free
        Packages**
  Governmental
        regulations in certain countries and customers' intention to produce products
        that are less harmful to the environment has resulted in a requirement from
        many
        of our customers to purchase integrated circuits that do not contain
        lead.  We have responded by offering our products in lead-free
        versions.  While the lead-free versions of our products are expected
        to be more friendly to the environment, the ultimate impact is
        uncertain.  The transition to lead-free products may produce sudden
        changes in demand depending on the packaging method used, which may result
        in
        excess inventory of products packaged using traditional methods. This may
        have
        an adverse affect on our results of operations.  In addition, the
        quality, cost and manufacturing yields of the lead-free products may be less
        favorable compared to the products packaged using more traditional materials
        which may result in higher costs to us.
  **Lower
        Demand For Our Customers’ Products Will Result In Lower Demand For Our
        Products**
 Demand
              for our products depends in large part on the development and expansion
              of the
              high-performance microprocessor-based systems markets including networking
              and
              telecommunications, enterprise storage, imaging and industrial
              applications.  The size and rate of growth of these
              microprocessor-based systems markets may in the future fluctuate significantly
              based on numerous factors. These factors include the adoption of alternative
              technologies, capital spending levels and general economic
              conditions.  Demand for products that incorporate high-performance
              embedded systems may not grow which could materially adversely affect
              our
              business.
 **Our
        Lengthy Sales Cycle Can Result In Uncertainty And Delays With Regard To Our
        Expected Revenues**
  Our
        customers
        typically perform numerous tests and extensively evaluate our products before
        incorporating them into their systems.  The time required for test,
        evaluation and design of our products into a customer’s equipment can range from
        six to twelve months or more.  It can take an additional six to twelve
        months or more before a customer commences volume shipments of equipment
        that
        incorporates our products.  Because of this lengthy sales cycle, we
        may experience a delay between the time when we increase expenses for research
        and development and sales and marketing efforts and the time when we generate
        higher revenues, if any, from these expenditures.
  In
        addition, the delays inherent in our lengthy sales cycle raise additional
        risks
        of customer decisions to cancel or change product plans.  When we
        achieve a design win, there can be no assurance that the customer will
        ultimately ship products incorporating our products.  Our business
        could be materially adversely affected if a significant customer curtails,
        reduces or delays orders during our sales cycle or chooses not to release
        products incorporating our products.
 16
 **Failure
        To Have Our Products Designed Into The Products Of Electronic Equipment
        Manufacturers Will Result In Reduced Sales**
  Our
        future success depends on electronic equipment manufacturers that design
        our
        semiconductor devices into their systems.  We must anticipate market
        trends and the price, performance and functionality requirements of current
        and
        potential future electronic equipment manufacturers and must successfully
        develop and manufacture products that meet these requirements. In addition,
        we
        must meet the timing requirements of these electronic equipment manufacturers
        and must make products available to them in sufficient
        quantities.  These electronic equipment manufacturers could develop
        products that provide the same or similar functionality as one or more of
        our
        products and render these products obsolete in their applications.
  We
        do not
        have purchase agreements with our customers that contain minimum purchase
        requirements.  Instead, electronic equipment manufacturers purchase
        our products pursuant to short-term purchase orders that may be canceled
        without
        charge.  We believe that in order to obtain broad penetration in the
        markets for our products, we must maintain and cultivate relationships, directly
        or through our distributors, with electronic equipment manufacturers that
        are
        leaders in the microprocessor-based systems markets.  Accordingly, we
        will incur significant expenditures in order to build relationships with
        electronic equipment manufacturers prior to volume sales of new
        products.  If we fail to develop relationships with additional
        electronic equipment manufacturers to have our products designed into new
        microprocessor-based systems or to develop sufficient new products to replace
        products that have become obsolete, our business would be materially adversely
        affected.
  **Defects
        In Our Products Could Increase Our Costs And Delay Our Product
        Shipments**
  Our
        products are complex.  While we test our products, these products may
        still have errors, defects or bugs that we find only after commercial production
        has begun.  We have experienced errors, defects and bugs in the past
        in connection with new products.
  Our
        customers may not purchase our products if the products have reliability,
        quality or compatibility problems.  This delay in acceptance could
        make it more difficult to retain our existing customers and to attract new
        customers.  Moreover, product errors, defects or bugs could result in
        additional development costs, diversion of technical and other resources
        from
        our other development efforts, claims by our customers or others against
        us, or
        the loss of credibility with our current and prospective
        customers.  In the past, the additional time required to correct
        defects has caused delays in product shipments and resulted in lower
        revenues.  We may have to spend significant amounts of capital and
        resources to address and fix problems in new products.
  We
        must
        continuously develop our products using new process technology with smaller
        geometries to remain competitive on a cost and performance
        basis.  Migrating to new technologies is a challenging task requiring
        new design skills, methods and tools and is difficult to achieve.
  **Failure
        Of Our Products To Gain Market Acceptance Would Adversely Affect Our Financial
        Condition**
  We
          believe that our growth prospects depend upon our ability to gain customer
          acceptance of our products and technology. Market acceptance of products
          depends
          upon numerous factors, including compatibility with other products, adoption
          of
          relevant interconnect standards, perceived advantages over competing products
          and the level of customer service available to support such
          products.  There can be no assurance that growth in sales of new
          products will continue or that we will be successful in obtaining broad
          market
          acceptance of our products and technology.
 17
 We
        expect
        to spend a significant amount of time and resources to develop new products
        and
        refine existing products.  In light of the long product development
        cycles inherent in our industry, these expenditures will be made well in
        advance
        of the prospect of deriving revenues from the sale of any new
        products.  Our ability to commercially introduce and successfully
        market any new products is subject to a wide variety of challenges during
        this
        development cycle, including start-up bugs, design defects and other matters
        that could delay introduction of these products to the
        marketplace.  In addition, since our customers are not obligated by
        long-term contracts to purchase our products, our anticipated product orders
        may
        not materialize, or orders that do materialize may be cancelled.  As a
        result, if we do not achieve market acceptance of new products, we may not
        be
        able to realize sufficient sales of our products in order to recoup research
        and
        development expenditures. The failure of any of our new products to achieve
        market acceptance would harm our business, financial condition, results of
        operation and cash flows.
  **A
        Large Portion Of Our Revenues Is Derived From Sales To Third-Party Distributors
        Who May Terminate Their Relationships With Us At Any Time**
  We
        depend
        on distributors to sell a significant portion of our products. Net revenues
        through distributors accounted for approximately 77%, 70% and 57% of our
        net
        revenues in 2007, 2006 and 2005, respectively.  Some of our
        distributors also market and sell competing products. Distributors may terminate
        their relationships with us at any time.  Our future performance will
        depend in part on our ability to attract additional distributors that will
        be
        able to market and support our products effectively, especially in markets
        in
        which we have not previously distributed our products.  We may lose
        one or more of our current distributors or may not be able to recruit additional
        or replacement distributors.  The loss of one or more of our major
        distributors could have a material adverse effect on our business, as we
        may not
        be successful in servicing our customers directly or through manufacturers’
representatives.
  During
        2007 we terminated our largest distributor and transitioned in a replacement
        distributor. If our new distributor is not able to sustain the same volume
        support it could have a material adverse effect on our business, as we may
        not
        be successful in servicing our customers directly or through manufacturers’
representatives.
  **The
        Demand For Our Products Depends Upon Our Ability To Support Evolving Industry
        Standards**
  A
        majority of our revenues are derived from sales of products, which rely on
        the
        PCI Express, PCI, PCI-X and USB standards.  If markets move away from
        these standards and begin using new standards, we may not be able to
        successfully design and manufacture new products that use these new
        standards.  There is also the risk that new products we develop in
        response to new standards may not be accepted in the market.  In
        addition, these standards are continuously evolving, and we may not be able
        to
        modify our products to address new specifications.  Any of these
        events would have a material adverse effect on our business.
  **We
        Must Make Significant Research And Development Expenditures Prior To Generating
        Revenues From Products**
  To
        establish market acceptance of a new semiconductor device, we must dedicate
        significant resources to research and development, production and sales and
        marketing.  We incur substantial costs in developing, manufacturing
        and selling a new product, which often significantly precede meaningful revenues
        from the sale of this product.  Consequently, new products can require
        significant time and investment to achieve profitability.  Investors
        should note that our efforts to introduce new semiconductor devices or other
        products or services may not be successful or profitable.  In
        addition, products or technologies developed by others may render our products
        or technologies obsolete or noncompetitive.
  We
        record
        as expenses the costs related to the development of new semiconductor devices
        and other products as these expenses are incurred. As a result, our
        profitability from quarter to quarter and from year to year may be adversely
        affected by the number and timing of our new product launches in any period
        and
        the level of acceptance gained by these products.
 18
 **We
        Could Lose Key Personnel Due To Competitive Market Conditions And
        Attrition**
  Our
        success depends to a significant extent upon our senior management and key
        technical and sales personnel.  The loss of one or more of these
        employees could have a material adverse effect on our business.  We do
        not have employment contracts with any of our executive officers.
  Our
        success also depends on our ability to attract and retain qualified technical,
        sales and marketing, customer support, financial and accounting, and managerial
        personnel.  Competition for such personnel in the semiconductor
        industry is intense, and we may not be able to retain our key personnel or
        to
        attract, assimilate or retain other highly qualified personnel in the
        future.  In addition, we may lose key personnel due to attrition,
        including health, family and other reasons.  We have experienced, and
        may continue to experience, difficulty in hiring and retaining candidates
        with
        appropriate qualifications. If we do not succeed in hiring and retaining
        candidates with appropriate qualifications, our business could be materially
        adversely affected.
  **The
        Successful Marketing And Sales Of Our Products Depend Upon Our Third Party
        Relationships, Which Are Not Supported By Written
        Agreements**
  When
        marketing and selling our semiconductor devices, we believe we enjoy a
        competitive advantage based on the availability of development tools offered
        by
        third parties.  These development tools are used principally for the
        design of other parts of the microprocessor-based system but also work with
        our
        products.  We will lose this advantage if these third party tool
        vendors cease to provide these tools for existing products or do not offer
        them
        for our future products.  This event could have a material adverse
        effect on our business.  We have no written agreements with these
        third parties, and these parties could choose to stop providing these tools
        at
        any time.
  **Our
        Limited Ability To Protect Our Intellectual Property And Proprietary Rights
        Could Adversely Affect Our Competitive Position**
  Our
          future success and competitive position depend upon our ability to obtain
          and
          maintain proprietary technology used in our principal
          products.  Currently, we have limited protection of our intellectual
          property in the form of patents and rely instead on trade secret
          protection.  Our existing or future patents may be invalidated,
          circumvented, challenged or licensed to others.  The rights granted
          there under may not provide competitive advantages to us.  In
          addition, our future patent applications may not be issued with the scope
          of the
          claims sought by us, if at all.  Furthermore, others may develop
          technologies that are similar or superior to our technology, duplicate
          our
          technology or design around the patents owned or licensed by us.  In
          addition, effective patent, trademark, copyright and trade secret protection
          may
          be unavailable or limited in foreign countries where we may need
          protection.  We cannot be sure that steps taken by us to protect our
          technology will prevent misappropriation of the technology.
  We
        may
        from time to time receive notifications of claims that we may be infringing
        patents or other intellectual property rights owned by third
        parties.  While there is currently no intellectual property litigation
        pending against us, litigation could result in significant expenses to us
        and
        adversely affect sales of the challenged product or technology.  This
        litigation could also divert the efforts of our technical and management
        personnel, whether or not the litigation is determined in our
        favor.  In addition, we may not be able to develop or acquire
        non-infringing technology or procure licenses to the infringing technology
        under
        reasonable terms.  This could require expenditures by us of
        substantial time and other resources.  Any of these developments would
        have a material adverse effect on our business.
  **Our
                  Potential Future Acquisitions May Not Be Successful Because Of
                  Our Limited
                  Experience With Acquisitions In The
                  Past**
  As
        part
        of our business strategy, we expect to review acquisition prospects that
        would
        complement our existing product offerings, improve market coverage or enhance
        our technological capabilities.  Future acquisitions could result in
        any or all of the following:
  ·
              potentially
                  dilutive issuances of equity
                  securities;
 19
 ·
              large
                  acquisition-related write-offs;
 ·
              the
                  incurrence of debt and contingent liabilities or amortization expenses
                  related to other intangible assets;
 ·
              difficulties
                  in the assimilation of operations, personnel, technologies, products
                  and
                  the information systems of the acquired
                  companies;
 ·
              diversion
                  of management’s attention from other business
                  concerns;
 ·
              risks
                  of entering geographic and business markets in which we have no
                  or limited
                  prior experience; and
 ·
              potential
                  loss of key employees of acquired
                  organizations.
  We
        have
        had limited experience with acquisitions in the past and may not be able
        to
        successfully integrate any businesses, products, technologies or personnel
        that
        may be acquired in the future. Our failure to do so could have a material
        adverse effect on our business.
  **Because
        We Sell Our Products To Customers Outside Of North America And Because Our
        Products Are Incorporated With Products Of Others That Are Sold Outside Of
        North
        America We Face Foreign Business, Political And Economic
        Risks**
  Sales
          outside of North America accounted for 71%, 70% and 68% of our net revenues
          in
          2007, 2006 and 2005, respectively.  Sales outside of North America may
          fluctuate in future periods and are expected to account for a large portion
          of
          our revenues. In addition, equipment manufacturers who incorporate our
          products
          into their products sell their products outside of North America, thereby
          exposing us indirectly to foreign risks. Further, most of our semiconductor
          products are manufactured outside of North America. Accordingly, we are
          subject
          to international risks, including:
  ·
              difficulties
                  in managing distributors;
 ·
              difficulties
                  in staffing and managing foreign subsidiary and branch
                  operations;
 ·
              political
                  and economic instability;
 ·
              foreign
                  currency exchange fluctuations;
 ·
              difficulties
                  in accounts receivable collections;
 ·
              potentially
                  adverse tax consequences;
 ·
              timing
                  and availability of export
                  licenses;
 ·
              changes
                  in regulatory requirements, tariffs and other
                  barriers;
 ·
              difficulties
                  in obtaining governmental approvals for telecommunications and
                  other
                  products; and
 ·
              the
                  burden of complying with complex foreign laws and
                  treaties.
  Because
        sales of our products have been denominated to date exclusively in United
        States
        dollars, increases in the value of the United States dollar will increase
        the
        price of our products so that they become relatively more expensive to customers
        in the local currency of a particular country, which could lead to a reduction
        in sales and profitability in that country.
  **A
        Downturn In The Global Economy May Adversely Affect Our Revenues, Results
        Of
        Operations And Financial Condition**
  Demand
        for semiconductor components is increasingly dependent upon the rate of growth
        in the global economy.  If the rate of global economic growth slows,
        or contracts, customer demand for products could be adversely affected, which
        in
        turn could adversely affect revenues, results of operations and financial
        condition.  Many factors could adversely affect regional or global
        economic growth.  Some of the factors that could slow global economic
        growth include:
  ·
              rising
                  interest rates in the United
                  States,
 ·
              a
                  slowdown in the rate of growth of the Chinese
                  economy,
 ·
              a
                  significant act of terrorism which disrupts global trade or consumer
                  confidence,
 ·
              geopolitical
                  tensions including war and civil
                  unrest,
 ·
              reduced
                  levels of economic activity or
 ·
              disruption
                  of international transportation.
 20
 **Our
        Principal Stockholders Have Significant Voting Power And May Take Actions
        That
        May Not Be In The Best Interests Of Our Other Stockholders**
  Our
        executive officers, directors and other principal stockholders, in the
        aggregate, beneficially own a substantial amount of our outstanding common
        stock.  Although these stockholders do not have majority control, they
        currently have, and likely will continue to have, significant influence with
        respect to the election of our directors and approval or disapproval of our
        significant corporate actions.  This influence over our affairs might
        be adverse to the interests of other stockholders.  In addition, the
        voting power of these stockholders could have the effect of delaying or
        preventing a change in control of PLX.
  **The
        Anti-Takeover Provisions In Our Certificate of Incorporation Could Adversely
        Affect The Rights Of The Holders Of Our Common Stock**
  Anti-takeover
        provisions of Delaware law and our Certificate of Incorporation may make
        a
        change in control of PLX more difficult, even if a change in control would
        be
        beneficial to the stockholders.  These provisions may allow the Board
        of Directors to prevent changes in the management and control of
        PLX.
  As
        part
        of our anti-takeover devices, our Board of Directors has the ability to
        determine the terms of preferred stock and issue preferred stock without
        the
        approval of the holders of the common stock.  Our Certificate of
        Incorporation allows the issuance of up to 5,000,000 shares of preferred
        stock.  There are no shares of preferred stock
        outstanding.  However, because the rights and preferences of any
        series of preferred stock may be set by the Board of Directors in its sole
        discretion without approval of the holders of the common stock, the rights
        and
        preferences of this preferred stock may be superior to those of the common
        stock.  Accordingly, the rights of the holders of common stock may be
        adversely affected.  Consistent with Delaware law, our Board of
        Directors may adopt additional anti-takeover measures in the
        future.
  **ITEM
        1B: UNRESOLVED STAFF COMMENTS**
  None.
  **ITEM
        2: PROPERTIES**
  We
        own
        one facility in Sunnyvale, California, which has approximately 55,000 square
        feet. This facility comprises our headquarters and includes our research
        and
        development, sales and marketing and administration departments. 
Internationally, we lease sales offices in Japan, Taiwan, Korea and China.
        These
        leases comprise approximately 4,600 square feet and have terms expiring on
        or
        prior to July 2009. We believe that our current facilities will be adequate
        through 2008.
  **ITEM
        3: LEGAL PROCEEDINGS**
  None.
  **ITEM
        4: SUBMISSION OF MATTERS TO A VOTE OF
        SECURITY********HOLDERS**
  No
        matters were submitted to a vote of security holders during the three months
        ended December 31, 2007.
 21
 **PART
        II**
  **ITEM
        5: MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
        MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES**
  Our
        common stock is traded on The NASDAQ Global Market and has been quoted on
        The NASDAQ Global Market under the symbol "PLXT" since its initial public
        offering on April 5, 1999. The following table sets forth, for the periods
        indicated, the range of quarterly high and low sales price for our common
        stock
        as reported on The NASDAQ Global Market:
  **2007**
                  
                  **High**
                  
                  
                  **Low**First
                      Quarter
                  
                  $
                  13.40
                  
                  
                  $
                  9.16Second
                      Quarter
                  
                  
                  11.95
                  
                  
                  
                  9.60Third
                      Quarter
                  
                  
                  13.72
                  
                  
                  
                  9.86Fourth
                      Quarter
                  
                  
                  11.30
                  
                  
                  
                  8.83**2006**
                  
                  **High**
                  
                  
                  **Low**First
                      Quarter
                  
                  $
                  13.90
                  
                  
                  $
                  8.13Second
                      Quarter
                  
                  
                  15.14
                  
                  
                  
                  10.76Third
                      Quarter
                  
                  
                  12.84
                  
                  
                  
                  8.11Fourth
                      Quarter
                  
                  
                  15.16
                  
                  
                  
                  9.96
 As
          of
          February 29, 2008, there were approximately 118 holders of record of
          our common stock and as of that date, the last reported sales price of
          our
          common stock was $6.46.
 We
        have
        never paid cash dividends on our common stock. We currently intend to retain
        earnings, if any, for use in our business and do not anticipate paying any
        cash
        dividends in the foreseeable future. Any future declaration and payment of
        dividends will be subject to the discretion of our Board of Directors, will
        be
        subject to applicable law and will depend upon our results of operations,
        earnings, financial condition, contractual limitations, cash requirements,
        future prospects and other factors deemed relevant by our Board of
        Directors.
  **Securities
        Authorized For Issuance Under Equity Compensation Plans**
  This
        information is incorporated herein by reference to the Company's Proxy Statement
        for the 2007 Annual Meeting of Stockholders under the heading "Equity
        Compensation Plan Information."
 22
 **Performance
        Graph**
  
 The
        graph
        and other information furnished under the above caption "Performance Graph"
        in
        this Part II, Item 5 of this Form 10-K shall not be deemed to be "soliciting
        material" or to be "filed" with the SEC or subject to Regulation 14A or 14C,
        or
        to the liabilities of the Exchange Act, as amended.
 23
 **ITEM
        6: SELECTED FINANCIAL DATA**
  The
        following selected consolidated financial data should be read in conjunction
        with the consolidated financial statements and related notes thereto and
        "Management's Discussion and Analysis of Financial Condition and Results
        of
        Operations" appearing elsewhere in this Annual Report on
        Form 10-K.
  **Years
                      Ended December 31,****2007**
                  
                  
                  **2006
                      (1)**
                  
                  
                  **2005**
                  
                  
                  **2004
                      (2)**
                  
                  
                  **2003
                      (3)**in
                      thousands, except per share dataConsolidated
                      Statement of Operations Data:Net
                      Revenues
                  
                  $
                  81,734
                  
                  
                  $
                  81,425
                  
                  
                  $
                  54,615
                  
                  
                  $
                  54,449
                  
                  
                  $
                  38,038Gross
                      Margin
                  
                  
                  49,525
                  
                  
                  
                  47,630
                  
                  
                  
                  35,002
                  
                  
                  
                  35,710
                  
                  
                  
                  27,171Operating
                      Income (Loss)
                  
                  
                  (643
                  )
                  
                  
                  1,715
                  
                  
                  
                  (2,306
                  )
                  
                  
                  (831
                  )
                  
                  
                  (2,797
                  )Net
                      Income (Loss)
                  
                  
                  1,174
                  
                  
                  
                  3,006
                  
                  
                  
                  (1,748
                  )
                  
                  
                  (642
                  )
                  
                  
                  (2,259
                  )Basic
                      Net Income (Loss) Per Share
                  
                  $
                  0.04
                  
                  
                  $
                  0.11
                  
                  
                  $
                  (0.06
                  )
                  
                  $
                  (0.03
                  )
                  
                  $
                  (0.10
                  )Shares
                      Used to Compute Basic Per Share Amounts
                  
                  
                  28,724
                  
                  
                  
                  28,177
                  
                  
                  
                  27,198
                  
                  
                  
                  25,422
                  
                  
                  
                  22,755Diluted
                      Net Income (Loss) Per Share
                  
                  $
                  0.04
                  
                  
                  $
                  0.10
                  
                  
                  $
                  (0.06
                  )
                  
                  $
                  (0.03
                  )
                  
                  $
                  (0.10
                  )Shares
                      Used to Compute Diluted Per Share Amounts
                  
                  
                  29,156
                  
                  
                  
                  28,925
                  
                  
                  
                  27,198
                  
                  
                  
                  25,422
                  
                  
                  
                  22,755**Years
                      Ended December 31,****2007**
                  
                  
                  **2006**
                  
                  
                  **2005**
                  
                  
                  **2004**
                  
                  
                  **2003**in
                      thousands, except per share dataConsolidated
                      Balance Sheet Data:Cash
                      and Cash Equivalents
                  
                  $
                  19,175
                  
                  
                  $
                  32,804
                  
                  
                  $
                  21,028
                  
                  
                  $
                  9,556
                  
                  
                  $
                  10,955Working
                      Capital
                  
                  
                  50,153
                  
                  
                  
                  49,031
                  
                  
                  
                  36,994
                  
                  
                  
                  23,108
                  
                  
                  
                  23,846Total
                      Assets
                  
                  
                  135,800
                  
                  
                  
                  127,948
                  
                  
                  
                  117,911
                  
                  
                  
                  110,473
                  
                  
                  
                  81,803Total
                      Stockholders' Equity
                  
                  $
                  127,892
                  
                  
                  $
                  120,926
                  
                  
                  $
                  107,489
                  
                  
                  $
                  102,159
                  
                  
                  $
                  76,021
 (1)
              Results
                  of operations for 2006 include an increase in revenues and cost
                  of
                  revenues of $2.8 million and $0.9 million, respectively, as a result
                  from
                  a change in accounting for revenues to
                  distributors.
 (2)
              Results
                  of operations for 2004 include a $1.1 million charge for in-process
                  research and development as it relates to the acquisition of NetChip
                  Technology, Inc. in May 2004.
 (3)
              Results
                  of operations for 2003 include a $0.9 million charge for in-process
                  research and development as it relates to the acquisition of HiNT
                  Corporation in May 2003.
  **ITEM
        7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION****AND
        RESULTS OF OPERATIONS**
  This
        Annual Report on Form 10-K and certain information incorporated herein by
        reference contain forward-looking statements within the "safe harbor" provisions
        of the Private Securities Litigation Reform Act of 1995. All statements
        contained in this Report on Form 10-K that are not purely historical are
        forward-looking statements, including, without limitation, statements regarding
        our expectations, objectives, anticipations, plans, hopes, beliefs, intentions
        or strategies regarding the future. Forward-looking statements are not
        guarantees of future performance and are subject to risks and uncertainties
        that
        could cause actual results to differ materially from the results contemplated
        by
        the forward-looking statements.
  Forward-looking
        statements include, without limitation, the statements regarding the
        following:
  ·
              the
                  growing demand for standards-based components such as our semiconductor
                  devices that connect systems
                  together;
 ·
              our
                  objective to expand our advantages in data transfer
                  technology;
 ·
              our
                  expectation that we will support new I/O standards where
                  appropriate;
 ·
              the
                  statements regarding our objective to continue to expand our market
                  position as a developer and supplier of I/O connectivity solutions
                  for
                  high performance systems;
 ·
              our
                  plan to target those applications where we believe we can attain
                  a
                  leadership position;
 ·
              our
                  plan to seek to integrate additional I/O-related functions into
                  our
                  semiconductor devices;
 ·
              our
                  belief that our understanding of I/O technology trends and market
                  requirements allows us to bring to market more quickly new products
                  that
                  support the latest I/O technology;
 24
 ·
              that
                  we continue to integrate more functionality in our semiconductor
                  devices
                  and continue to enhance and expand our software development
                  kits;
 ·
              our
                  belief with respect to the principal factors of competition in
                  the
                  business;
 ·
              our
                  belief that we compete favorably with respect to each of those
                  factors;
 ·
              our
                  expectation that revenues related to sales through distributors
                  will
                  continue to account for a large portion of total
                  revenues;
 ·
              our
                  belief that providing customers with comprehensive product support
                  is
                  critical to remaining competitive in the markets we
                  serve;
 ·
              our
                  belief that our close contact with customer design engineers provides
                  valuable input into existing product enhancements and next generation
                  product specifications;
 ·
              our
                  expectation that we will periodically seek to hire additional development
                  engineers;
 ·
              our
                  expectation that we will continue to make significant investments
                  in
                  research and development in order to continually enhance the performance
                  and functionality of our products to keep pace with competitive
                  products
                  and customer demands for improved
                  performance;
 ·
              our
                  belief that we must continuously develop our devices using more
                  advanced
                  processes to remain competitive on a cost and performance
                  basis;
 ·
              our
                  belief that the transition of our products to smaller geometries
                  will be
                  important for us to remain
                  competitive;
 ·
              our
                  plan to seek patent protection when
                  necessary;
 ·
              our
                  belief that our current facility will be adequate through
                  2008;
 ·
              our
                  intention to retain earnings for use in our business and not to
                  pay any
                  cash dividend in the foreseeable
                  future;
 ·
              our
                  belief that our long-term success will depend on our ability to
                  introduce
                  new products;
 ·
              our
                  belief that we may be required to carry higher levels of inventory
                  because
                  of the difficulty in predicting future levels of sales and
                  profitability;
 ·
              our
                  expectation that selling, general and administrative expenses in
                  absolute
                  dollars will increase in future
                  periods;
 ·
              our
                  expectation that we will modestly increase capital expenditures
                  in 2008;
                  and
 ·
              our
                  belief that our existing resources, together with cash expected
                  to be
                  generated from our operations, will be sufficient to meet our capital
                  requirements for at least the next twelve
                  months.
  All
        forward-looking statements included in this document are subject to additional
        risks and uncertainties further discussed under "Item 1A: Risk Factors -
        Factors That May Affect Future Operating Results" and are based on information
        available to us on the date hereof. We assume no obligation to update any
        such
        forward-looking statements. It is important to note that our actual results
        could differ materially from those included in such forward-looking statements.
        The factors that could cause our actual results to differ from those included
        in
        such forward-looking statements are set forth under the heading "Item 1A:
        Risk Factors - Factors That May Affect Future Operating Results," as well
        as
        those disclosed from time to time in our reports on Forms 10-Q and 8-K and
        our
        Annual Reports to Stockholders.
  The
        following discussion should be read in conjunction with our Consolidated
        Financial Statements and related notes thereto included elsewhere in this
        report.  25
 **Overview**
  PLX
        was
        founded in 1986, and between 1994 and 2002 we focused on development of I/O
        interface semiconductors and related software and development tools that
        are
        used in systems incorporating the PCI standard.  In 1994 and 1995, a
        significant portion of our revenues were derived from the sale of semiconductor
        devices that perform similar functions as our current products, except they
        were
        based on a variety of industry standards.  Our revenues since 1996
        have been derived predominantly from the sale of semiconductor devices based
        on
        the PCI standard to a large number of customers in a variety of applications
        including networking and telecommunications, enterprise storage, imaging,
        industrial and other embedded applications as well as in related adapter
        cards.  In 2002, we shifted the majority of our development efforts to
        PCI Express.  In September 2004, we began shipping products based on
        the PCI Express standard for next-generation systems.  In September
        2007, we announced the addition of the Gen 2 switches to our PCI Express
        product
        family.
  We
        utilize a “fabless” semiconductor business model whereby we purchase wafers and
        packaged and tested semiconductor devices from independent manufacturing
        foundries.  This approach allows us to focus on defining, developing,
        and marketing our products and eliminates the need for us to invest large
        amounts of capital in manufacturing facilities and work-in-process
        inventory.
  We
        rely
        on a combination of direct sales personnel and distributors and manufacturers’
representatives throughout the world to sell a significant portion of our
        products.  We pay manufacturers’ representatives a commission on sales
        while we sell products to distributors at a discount from the selling
        price.
  Our
        gross
        margins have fluctuated in the past and are expected to fluctuate in the
        future
        due to changes in product and customer mix, provisions and recoveries of
        excess
        or obsolete inventory, the position of our products in their respective life
        cycles, and specific product manufacturing costs.
  The
        time
        period between initial customer evaluation and design completion can range
        from
        six to twenty-four months or more. Furthermore, there is typically an additional
        six to twelve month or greater period after design completion before a customer
        requests volume production of our products.  Due to the variability
        and length of these design cycles and variable demand from customers, we
        may
        experience significant fluctuations in new orders from month to month. In
        addition, we typically make inventory purchases prior to receiving customer
        orders.  Consequently, if anticipated sales and shipments in any
        quarter do not occur when expected, expenses and inventory levels could be
        disproportionately high, and our results for that quarter and potentially
        future
        quarters would be materially and adversely affected.
  Our
        long-term success will depend on our ability to introduce new
        products.  While new products typically generate little or no revenues
        during the first twelve months following their introduction, our revenues
        in
        subsequent periods depend upon these new products. Due to the lengthy sales
        cycle and additional time before our customers request volume production,
        significant revenues from our new products typically occur twelve to twenty-four
        months after product introduction.  As a result, revenues from newly
        introduced products have, in the past, produced a small percentage of our
        total
        revenues in the year the product was introduced.  See “Item 1A, Risk
        Factors - Certain Factors That May Affect Future Operating Results -- Our
        Lengthy Sales Cycle Can Result in Uncertainty and Delays with Regard to Our
        Expected Revenues” in this Form 10-K.  26
 **Results
        of Operations**
  The
        following table summarizes historical results of operations as a percentage
        of
        net revenues for the periods shown.
  **Years
                      Ended December 31,****2007**
                  
                  
                  **2006**
                  
                  
                  **2005**Net
                      revenues
                  
                  
                  100.0
                  %
                  
                  
                  100.0
                  %
                  
                  
                  100.0
                  %Cost
                      of revenues
                  
                  
                  39.4
                  %
                  
                  
                  41.5
                  %
                  
                  
                  35.9
                  %Gross
                      margin
                  
                  
                  60.6
                  %
                  
                  
                  58.5
                  %
                  
                  
                  64.1
                  %Operating
                      expenses:Research
                      and development
                  
                  
                  29.8
                  %
                  
                  
                  24.8
                  %
                  
                  
                  33.8
                  %Selling,
                      general and administrative
                  
                  
                  30.0
                  %
                  
                  
                  29.3
                  %
                  
                  
                  30.4
                  %Amortization
                      and write-down of purchased intangible assets
                  
                  
                  1.6
                  %
                  
                  
                  2.3
                  %
                  
                  
                  4.1
                  %Total
                      operating expenses
                  
                  
                  61.4
                  %
                  
                  
                  56.4
                  %
                  
                  
                  68.3
                  %Operating
                      income (loss)
                  
                  
                  (0.8
                  )%
                  
                  
                  2.1
                  %
                  
                  
                  (4.2
                  )%Interest
                      income and other, net
                  
                  
                  2.9
                  %
                  
                  
                  2.2
                  %
                  
                  
                  1.5
                  %Income
                      (loss) before provision for income taxes
                  
                  
                  2.1
                  %
                  
                  
                  4.3
                  %
                  
                  
                  (2.7
                  )%Provision
                      for income taxes
                  
                  
                  0.7
                  %
                  
                  
                  0.6
                  %
                  
                  
                  0.6
                  %Net
                      income (loss)
                  
                  
                  1.4
                  %
                  
                  
                  3.7
                  %
                  
                  
                  (3.3
                  )%
 **Comparison
        of Years Ended****December 31, 2007, 2006 and
        2005**
  *Net
        Revenues.*Net revenues consist of product revenues generated principally by
        sales of our semiconductor devices. Net revenues for the year ended December
        31,
        2007 were $81.7 million, an increase of $0.3 million or 0.4% from
        $81.4 million for the same period in 2006. The 2006 results include an
        additional $2.8 million in net revenues recognized in the first quarter of
        2006
        as a result of the change in the accounting for revenues to distributors
        (see
“Item 7, Management’s Discussion and Analysis of Financial Condition and Results
        of Operations - Critical Accounting Policies - Revenue Recognition” in this Form
        10-K). The increase in 2007 net revenues was due primarily to increased sales
        of
        our PCI Express products as a result of an increase of customers in volume
        production, partially offset by decreased sales of our legacy products due
        to
        demand fluctuations.
  The
        following table shows the revenue by product type as a percentage of net
        revenues:
  **Years
                    Ended December 31,****2007**
                
                
                **2006**
                
                
                **2005**Revenues:Legacy
                    Products
                
                
                65.2
                %
                
                
                77.8
                %
                
                
                93.2
                %PCI
                    Express
                
                
                34.8
                %
                
                
                22.2
                %
                
                
                6.8
                %
 For
        the
        year ended December 31, 2007, sales to Excelpoint Systems, Metatech and Answer
        Technology accounted for approximately 18%, 17% and 10%, respectively, of
        net
        revenues.  In the third quarter of 2007, we terminated Metatech and
        transitioned in Excelpoint Systems. As of February 29, 2008 we have not
        experienced a financial  impact from this transition. However, due to
        the lack of history with Excelpoint, we can not guarantee it will not impact
        our
        future revenues.  In 2006, sales to Metatech and Answer Technology
        accounted for approximately 31% and 10%, respectively, of net
        revenues.  In 2005, sales to Metatech accounted for approximately 23%
        of net revenues. No other distributor or direct customer represented greater
        than 10% of net revenues. We continue to generate significant revenues from
        Asia. For the twelve months ended December 31, 2007, 2006 and 2005,
        approximately 59.7%, 57.6% and 52.5%, respectively, of net revenues were
        generated from Asia.****
  Net
        revenues for the year ended December 31, 2006 were $81.4 million, an increase
        of
        $26.8 million or 49.1% from $54.6 million for the same period in 2005. The
        increase was due primarily to increased unit shipments of our PCI Express
        products as a result of the general market adoption of the PCI Express standard
        and higher sales of our legacy products.
 27
 Customer
        demand for semiconductors can change quickly and unexpectedly.  Our revenue
        levels have been highly dependent on the amount of new orders that are received
        for product to be delivered to the customer within the same quarter, also
        called
“turns fill” orders. Because of the long cycle time to build our products, our
        lack of visibility into demand when turns fill is high makes it difficult
        to
        predict what product to build to match future demand.  The high turns fill
        requirement together with the uncertainty of product mix and pricing, make
        it
        difficult to predict future levels of sales and profitability and may require
        us
        to carry higher levels of inventory.
  *Gross
        Margin.*Gross margin represents net revenues less the cost of revenues.
        Cost of revenues primarily includes the cost of (1) purchasing semiconductor
        devices from our independent foundries, (2) packaging, assembly and test
        services from our independent foundries and assembly and test contractors
        and
        (3) our operating costs associated with the procurement, storage and shipment
        of
        products.
  Gross
        margin for the year ended December 31, 2007 increased by 4.0%, or $1.9 million,
        to $49.5 million from $47.6 million for the same period in 2006. As a percentage
        of sales, gross margin increased to 60.6% for 2007 from 58.5% for 2006. The
        increase in absolute dollars was primarily due to increased product shipments
        while the increase as a percentage was primarily due to improved production
        yields of our PCI Express products.
  Gross
        margin for the year ended December 31, 2006 increased by 36.1%, or
        $12.6 million, to $47.6 million from $35.0 million for 2005. As a
        percentage of sales, gross margin decreased to 58.5% for 2006 from 64.1%
        for
        2005. The decrease as a percentage of sales was primarily attributable to
        higher
        sales of PCI Express and USB products, which have lower margins relative
        to the
        PCI I/O devices, and lower yields on certain first generation PCI Express
        products. In addition, we recorded a provision for excess and obsolete inventory
        of approximately $0.5 million, or 0.7 percentage points, in the fourth quarter
        ended December 31, 2006 primarily due to certain customers migrating from
        PCI
        I/O leaded to lead-free devices more quickly than anticipated, resulting
        in
        excess leaded inventory.  This migration was brought upon by our
        customers’ efforts to comply with government guidelines that require their
        products to be lead-free, green, and compliant with the Restrictions on the
        use
        of certain Hazardous Substances (RoHS) Directive.
  Future
        gross margin is highly dependent on the product and customer mix of net
        revenues.  Accordingly, we are not able to predict future gross profit
        levels or gross margins with certainty.
  *Research
        and Development Expenses*. Research and development (R&D) expenses
        consist primarily of tape-out costs at our independent foundries, salaries
        and
        related costs, share-based compensation and expenses for outside engineering
        consultants included in R&D expenses.
  R&D
        as a percentage of net revenues increased to 29.8% for the year ended December
        31, 2007 as compared to 24.8% for the same period in 2006.  In
        absolute dollars, R&D expenses increased by $4.2 million, or 20.7%, to $24.4
        million for the year ended December 31, 2007, from $20.2 million for the
        same
        period in 2006. The increase in R&D in absolute dollars and as a percentage
        of revenue was primarily due to increases in R&D spending on engineering
        tools of $2.0 million and tape-out related costs of $1.3 million associated
        with
        new product designs and compensation and benefit expenses of $0.6 million
        resulting from higher headcount.
  R&D
        as a percentage of net revenues decreased to 24.8% for the year ended December
        31, 2006 as compared to 33.8% for the same period in 2005.  In
        absolute dollars, R&D expenses increased by $1.7 million, or 9.3%, to $20.2
        million for the year ended December 31, 2006, from $18.5 million for the
        same
        period in 2005. The percentage decrease was primarily due to an increase
        in
        revenues, partially offset by the expensing of share-based compensation expense
        pursuant to SFAS 123R. The increase in R&D in absolute dollars was due
        primarily to share-based compensation of $2.0 million as well as higher
        compensation and benefit expenses of $0.9 million, partially offset by a
        decrease in external engineering expenses of $1.1 million.
  We
        believe continued spending on research and development to develop new products
        is critical to our success and, consequently, expect to modestly increase
        research and development expenses in future periods.
 28
 *Selling,
        General and Administrative Expenses*. Selling, general and administrative
        (SG&A) expenses consist primarily of salaries and related costs, share-based
        compensation and sales commissions to manufacturers’ representatives, as well as
        professional fees, trade show and other promotional expenses.
  SG&A
        as a percentage of net revenues increased to 30.0% for the year ended December
        31, 2007, as compared to 29.3% for the same period in 2006.  In
        absolute dollars, SG&A expenses increased by $0.7 million or 2.8% to $24.5
        million for the year ended December 31, 2007 from $23.8 million for the same
        period in 2006. The increase in SG&A in absolute dollars and as a percentage
        of revenue was primarily due to increased compensation and benefit expenses
        resulting from annual salary increases and higher headcount.
  SG&A
        as a percentage of net revenues decreased to 29.3% for the year ended December
        31, 2006, as compared to 30.4% for the same period in 2005.  In
        absolute dollars, SG&A expenses increased by $7.3 million or 43.9% to $23.8
        million for the year ended December 31, 2006 from $16.6 million for the same
        period in 2005. The percentage decrease was primarily due to an increase
        in
        revenues, partially offset by the expensing of share-based compensation pursuant
        to SFAS 123R. The increase in SG&A in absolute dollars was due primarily to
        share-based compensation of $2.8 million as well as increases in compensation
        and benefit expenses of $2.2 million, commission expense of $1.3 million
        resulting from higher revenues, professional fees of $0.3 million, travel
        expense of $0.3 million and marketing expenses of $0.2 million.
  We
        expect
        SG&A expenses in absolute dollars to increase in future
        periods.
  *Amortization
        and Write-down of Purchased Intangible Assets*. Amortization and write-down
        of purchased intangible assets decreased by $0.6 million or 31.7% to
        $1.3 million for the year ended December 31, 2007 from $1.9 million
        for the same period in 2006. The decrease was due to customer base acquired
        as a
        result of the NetChip Technology, Inc. acquisition in May 2004 becoming fully
        amortized in 2007.
  Amortization
        and write-down of purchased intangible assets decreased by $0.4 million or
        17.2% to $1.9 million for the year ended December 31, 2006 from
        $2.3 million for the same period in 2005. The decrease is due to customer
        base acquired as a result of the HiNT Corporation acquisition in May 2003
        being
        fully amortized in 2006 and a $0.2 million write-down in 2005 of an acquired
        tradename.
  *Interest
        Income*. Interest income reflects interest earned on average cash, cash
        equivalents and short-term and long-term investment balances. Interest income
        increased to $2.4 million in 2007 from $1.8 million for
        2006.  This increase was due to higher investment balances as well as
        higher interest rates. Interest income increased to $1.8 million in 2006
        from $0.8 million for 2005.  This increase was due to higher cash
        and investment balances as well as higher interest rates.
  *Provision
        for Income Taxes*. Income tax expense for the period ended December 31, 2007
        was $0.6 million on a pretax profit of $1.8 million, compared to income tax
        expense of $0.5 million on a pretax profit of $3.5 million and income tax
        expense of $0.3 million on a pretax loss of $1.5 million for the periods
        ended
        December 31, 2006 and 2005, respectively. Our 2007 income tax expenses differs
        from the expense derived by applying the applicable U.S. federal statutory
        rate
        to the income from operations primarily due to the recording of a valuation
        allowance for the deferred tax asset partially offset by (1) a $0.1 million
        tax
        benefit from the release of tax reserves following the expiration of certain
        state statute of limitations and (2) the benefit of research and development
        tax
        credits. Our 2006 income tax expense differs from the expected expense derived
        by applying the applicable U.S. federal statutory rate to the income from
        operations primarily due to the recording of a valuation allowance for the
        deferred tax asset partially offset by (1) a $0.6 million tax benefit from
        the
        release of tax reserves following the expiration of certain federal statute
        of
        limitations and (2) the benefit of research and development tax
        credits.  Our 2005 income tax expense differs from the expected
        benefit derived by applying the applicable U.S. federal statutory rate to
        the
        loss from operations primarily due to the recording of a valuation allowance
        for
        the deferred tax asset partially offset by the benefit of research and
        development tax credits.
 29
 **Liquidity
        and Capital Resources**
  In
        summary, our cash flows were (in thousands):
  **Years
                    Ended December 31,****2007**
                
                
                **2006**
                
                
                **2005**Net
                    cash provided by operating activities
                
                $
                5,777
                
                
                $
                2,883
                
                
                $
                3,866Net
                    cash provided by (used in) investing activities
                
                
                (20,665
                )
                
                
                3,537
                
                
                
                5,958Net
                    cash provided by financing activities
                
                
                1,301
                
                
                
                5,389
                
                
                
                1,667Effect
                    of exchange rate fluctuations on cash and cash equivalents
                
                
                (42
                )
                
                
                (33
                )
                
                
                (19
                )
 We
        invest
        excess cash predominantly in debt instruments that are highly liquid, of
        high-quality investment grade and predominantly have maturities of less than
        one
        year with the intent to make such funds readily available for operating
        purposes. As of December 31, 2007 cash, cash equivalents, short and
        long-term marketable securities were $46.6 million, an increase of $4.3 million
        from $42.3 million at December 31, 2006, and an increase of $7.3 million
        from
        $35.0 million at December 31, 2005.
  Cash
        provided by operating activities primarily consists of net income (loss)
        adjusted for certain non-cash items including depreciation, amortization,
        share-based compensation expense, provision for excess and obsolete inventories,
        changes in pre-acquisition deferred tax balances, other non-cash items and
        the
        effect of changes in working capital and other activities. Cash provided
        by
        operating activities in 2007 of $5.8 million consisted primarily of net income
        of $1.2 million adjusted for non-cash items of $8.7 million and an increase
        in
        accounts payable of $1.5 million due to timing of vendor payments, partially
        offset by increases in other assets of $3.2 million due to an increase in
        software and IP licenses and $2.0 million in accounts receivable due to timing
        of customer payments and higher sales in the fourth quarter of 2007 compared
        to  the fourth quarter of 2006. Cash provided by operating activities
        in 2006 of $2.9 million consisted primarily of net income of
        $3.0 million adjusted for non-cash items of $8.4 million and offset by
        the increases in inventory of $4.8 million and $2.3 million in accounts
        receivable and a decrease in accounts payable of $1.5 million. Cash provided
        by
        operating activities in 2005 of $3.9 million consisted primarily of a net
        loss of $1.7 million adjusted for non-cash items of $5.9 million and
        increases in accounts receivable of $1.1 million and accounts payable of
        $0.9
        million.
  Cash
        used
        in investing activities in 2007 of $20.7 million was primarily due to purchases
        of marketable securities (net of sales and maturities of investments) of
        $17.6
        million and capital expenditures of $3.1 million primarily to provide
        infrastructure for new product designs. Capital expenditures have generally
        comprised of purchases of engineering equipment, computer hardware, software,
        server equipment and furniture and fixtures. Cash provided by investing
        activities in 2006 of $3.5 million was primarily due to cash provided by
        proceeds from sales and maturities (net of purchases) of investments in
        marketable securities of $4.7 million, partially offset by capital
        expenditures of $1.2 million. Cash provided by investing activities in 2005
        of $6.0 million was primarily due to proceeds from sales and maturities
        (net of purchases) of investments in marketable securities of $6.7 million,
        partially offset by capital expenditures of $0.7 million.
  Cash
        provided by financing activities in 2007 of $1.3 million and the cash provided
        by financing activities in 2006 of $5.4 million were due to proceeds from
        the exercise of stock options. Cash provided by financing activities in 2005
        of
        $1.7 million was due to proceeds from the exercise of stock options and
        warrants.
  The
        negative effect of exchange rates on cash and cash equivalents during 2007,
        2006
        and 2005 was due to the weakening of the U.S. dollar against other foreign
        currencies.
  In
        September 2002, our Board of Directors authorized the repurchase of up
        to 2,000,000 shares of common stock.  At the discretion of the
        management, we can repurchase the shares from time to time in the open market
        or
        in privately negotiated transactions.  Approximately 774,000 shares had
        been repurchased for approximately $1.9 million in cash in 2003. We did not
        repurchase any shares through December 31, 2007. As of March 5, 2008, we
        repurchased 80,000 shares for approximately $516,000 and anticipate additional
        shares will be repurchased throughout 2008.
 30
 We
        believe that our existing resources, together with cash generated from our
        operations will be sufficient to meet our capital requirements for at least
        the
        next twelve months. Our future capital requirements will depend on many factors,
        including the level of investment we make in new technologies and improvements
        to existing technologies and the levels of monthly expenses required to launch
        new products. From time to time, we may also evaluate potential acquisitions
        and
        equity investments complementary to our technologies and market strategies.
        To
        the extent that existing resources and future earnings are insufficient to
        fund
        our future activities, we may need to raise additional funds through public
        or
        private financings. Additional funds may not be available or, if available,
        we
        may not be able to obtain them on terms favorable to us and our
        stockholders.
  As
        of
        December 31, 2007, we had the following significant contractual obligations
        and commercial commitments (in thousands):
  **Payments
                    due in**Total
                
                
                Less
                    than 1 Year
                
                
                1-3
                    YearsOperating
                    leases - facilities and equipment
                
                $
                149
                
                
                $
                112
                
                
                $
                37Software
                    licenses
                
                
                2,553
                
                
                
                2,553
                
                
                
                -Inventory
                    purchase commitments
                
                
                3,306
                
                
                
                3,306
                
                
                
                -Total
                    cash obligations
                
                $
                6,008
                
                
                $
                5,971
                
                
                $
                37
 See
        Note
        10 to our Consolidated Financial Statements for additional information on
        our
        contractual obligations and commercial commitments.
  **Critical
        Accounting Policies**
  The
        preparation of financial statements in conformity with accounting principles
        generally accepted in the United States requires management to make estimates
        and assumptions that affect the reported amounts of assets and liabilities,
        revenues and expenses and related disclosures of contingent assets and
        liabilities in the consolidated financial statements and accompanying notes.
        The
        U.S. Securities and Exchange Commission (“SEC”) has defined a company's critical
        accounting policies as the ones that are most important to the portrayal
        of the
        company's financial condition and results of operations, and which require
        the
        company to make its most difficult and subjective judgments, often as a result
        of the need to make estimates of matters that are inherently uncertain. Based
        on
        this definition, we have identified the critical accounting policies and
        judgments addressed below. We also have other key accounting policies which
        involve the use of estimates, judgments and assumptions that are significant
        to
        understanding our results. For additional information see Note 1 (Organization
        and Summary of Significant Accounting Policies) of the Notes to our Consolidated
        Financial Statements. Although we believe that our estimates, assumptions
        and
        judgments are reasonable, they are based upon information presently available.
        Actual results may differ significantly from these estimates under different
        assumptions, judgments or conditions.
  *Revenue
        Recognition**.*We**recognize revenue when persuasive
        evidence of an arrangement exists, delivery has occurred, the fee is fixed
        or
        determinable and collection is reasonably assured.
  Revenue
        from product sales to direct customers is recognized upon shipment and transfer
        of risk of loss if we believe collection is reasonably assured and all other
        revenue recognition criteria are met. We assess the probability of collection
        based on a number of factors, including past transaction history and the
        customer’s creditworthiness.  At the end of each reporting period, the
        sufficiency of allowances for doubtful accounts is assessed based on the
        age of
        the receivable and the individual customer’s creditworthiness.
  In
        the
        first quarter ended March 31, 2006, we completed an evaluation of our revenue
        recognition methodology and concluded that it was more appropriate to recognize
        revenues on sales to distributors at the time of shipment to a distributor
        (also
        referred to as the sell-in basis of recognizing revenue). Prior to the first
        quarter of 2006, we recognized revenue on sales to distributors when the
        distributor resold the product to its end customer (also referred to as the
        sell-through basis of recognizing revenue). Statement of Financial Accounting
        Standards (“SFAS”) No. 48, “Revenue Recognition When Rights of Return Exists”,
        sets forth conditions that must be met to recognize revenue at the time of
        shipment. Among those conditions is that a company that provides a right
        of
        return or pricing concession to a buyer be able to reasonably estimate the
        amount of future returns or pricing concessions. In the past, we had concluded
        that we did not meet this condition and therefore used the sell-through basis
        of
        revenue recognition. In the first quarter of 2006, we concluded that we are
        able
        to reasonably estimate returns and pricing concessions, and therefore had
        implemented the sell-in method of accounting for sales to distributors. We
        recognized an additional $2.8 million in revenues during the first quarter
        of
        2006 due to this change resulting in an increase to diluted earnings per
        share
        of $0.06.
 31
 We
        offer
        pricing protection to a single distributor whereby we support the distributor’s
        resale product margin on certain products held in the distributor’s inventory.
        In general, we analyze current requests for credit in process, also known
        as
        ship and debits, inventory at the distributor and credit expectations to
        determine the ending sales reserve required for this program. We have
        arrangements with a small number of customers offering a rebate program on
        various products. We record rebates under the guidelines of Emerging Issues
        Task
        Force (“EITF”) 01-9, “Accounting for Consideration Given to a Customer
        (Including a Reseller of the Vendor’s Product)”. In addition, we offer stock
        rotation rights to several distributors such that they can return up to a
        total
        of 5% of products purchased every six months in exchange for other PLX products
        of equal value. In general, we analyze current stock rotation requests and
        past
        experience to determine the ending sales reserve required for this
        program.
  *Inventory
        Valuation.*We evaluate the need for potential inventory provisions by
        considering a combination of factors. Based on the life of the product, sales
        history, obsolescence, and sales forecast, we may record a provision for
        inventory ranging from 0% to 100%. Any adverse changes to our future
        product demand may result in increased provisions, resulting in decreased
        gross
        margin. In addition, future sales on any of our previously written down
        inventory may result in increased gross margin in the period of sale. In
        the
        fourth quarter ended December 31, 2006, we recorded a net inventory write-down
        of approximately $0.5 million primarily due to customers migrating from PCI
        I/O
        leaded to lead-free devices quicker than anticipated, resulting in excess
        leaded
        inventory.  This migration was brought upon by our customers’ efforts
        to comply with government guidelines that require their products to be
        lead-free, green, and compliant with the Restrictions on the use of certain
        Hazardous Substances (RoHS) Directive.
  *Allowance
        for Doubtful Accounts.*We evaluate the collectibility of our accounts
        receivable based on length of time the receivables are past due. Generally,
        our
        customers have thirty days to remit payment of invoices. We record reserves
        for
        bad debts against amounts due to reduce the net recognized receivable to
        the
        amount we reasonably believe will be collected.   Once we have
        exhausted collection efforts, we will reduce the related accounts receivable
        against the allowance established for that receivable.  We have
        certain customers with individually large amounts due at any given balance
        sheet
        date. Any unanticipated change in one of those customers’ creditworthiness or
        other matters affecting the collectibility of amounts due from such customers
        could have a material affect on our results of operations in the period in
        which
        such changes or events occur.  Historically, our write-offs have been
        insignificant.
  *Goodwill*.
        Our methodology for allocating the purchase price related to purchase
        acquisitions is determined through established valuation
        techniques.  Goodwill is measured as the excess of the cost of the
        acquisition over the amounts assigned to identifiable assets acquired less
        assumed liabilities.  We have one operating segment and business reporting
        unit, the sales of semiconductor devices, and we perform goodwill impairment
        tests annually and between annual tests in certain circumstances. To date,
        no
        such impairment has been recorded.  In response to changes in industry
        and market conditions, we may strategically realign our resources and consider
        restructuring, disposing of, or otherwise exiting businesses, which could
        result
        in an impairment of goodwill.
  *Taxes.*We account for income taxes using the asset and liability method.
 Deferred taxes are determined based on the differences between the
        financial statement and tax bases of assets and liabilities, using enacted
        tax
        rates in effect for the year in which the differences are expected to reverse.
         Valuation allowances are established when necessary to reduce deferred tax
        assets to the amounts expected to be realized. As of December 31, 2007, we
        carried a valuation allowance for the entire deferred tax asset of $13.8
        million
        as a result of uncertainties regarding the realization of the asset balance
        (see
        Note 9 to the Consolidated Financial Statements).The net deferred tax
        assets are reduced by a valuation allowance if, based upon weighted available
        evidence, it is more likely than not that some or all of the deferred tax
        assets
        will not be realized.  We must make significant judgments to determine
        our provision for income taxes, our deferred tax assets and liabilities and
        any
        valuation allowance to be recorded against our net deferred tax
        asset.  As of December 2007, a valuation allowance continues to be
        recorded for the net deferred tax asset based on management’s assessment that
        realization of deferred tax assets is uncertain due to the history of losses,
        the variability of operating results and the inability to conclude that it
        is
        more likely than not that sufficient taxable income would be generated in
        future
        periods to realize those deferred tax assets. Future taxable income and/or
        tax
        planning strategies may eliminate all or a portion of the need for the valuation
        allowance. In the event we determine we are able to realize our deferred
        tax
        asset, an adjustment to the valuation allowance may significantly increase
        income in the period such determination is made.
 32
 **Recent
        Accounting Pronouncements**
  In
        September 2006, FASB issued SFAS No. 157, “Fair Value
        Measurements”. SFAS 157 defines fair value, establishes a framework for
        measuring fair value in generally accepted accounting principles (“GAAP”) and
        expands disclosures about fair value measurements. The FASB has issued a
        proposed interpretation that would defer the implementation of
        SFAS No. 157 for non-financial assets and liabilities until fiscal
        years beginning after November 15, 2008. The remaining provisions of SFAS
        157 are effective for fiscal years beginning after November 15, 2007 and
        interim periods within those fiscal years. We do not believe that the adoption
        of SFAS 157 will have a material impact on our financial position and results
        of
        operations.
 
 In
        February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
        Financial Assets and Financial Liabilities – including an amendment of FASB
        Statement No. 115”. SFAS 159 permits entities to choose to measure many
        financial instruments and certain other items that are not currently required
        to
        be measured at fair value, with unrealized gains and losses related to these
        financial instruments reported in earnings at each subsequent reporting date.
        SFAS 159 is effective for fiscal years beginning after November 15, 2007.
        We do
        not believe that the adoption of SFAS 159 will have a material impact on
        our
        financial position and results of operations.
 
 In
        December 2007, the FASB issued SFAS No. 141(R), “Business Combinations – Revised
        2007”, which replaces FASB Statement No. 141, “Business Combinations”. SFAS
        141(R) establishes principles and requirements intending to improve the
        relevance, representational faithfulness and comparability of information
        that a
        reporting entity provides in its financial reports about a business combination
        and its effects. SFAS 141(R) is effective for fiscal years beginning after
        December 15, 2008. We do not believe that the adoption of SFAS 141(R) will
        have
        a material impact on our financial position and results of
        operations.
 
 In
        December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
        Consolidated Financial Statements – an amendment of ARB No. 51”. SFAS 160
        establishes accounting and reporting standards to improve the relevance,
        comparability and transparency of financial information that a reporting
        entity
        provides in its consolidated financial statements. SFAS 160 is effective
        for
        fiscal years beginning after December 15, 2008. We do not believe that the
        adoption of SFAS 160 will have a material impact on our financial position
        and
        results of operations.
  **ITEM
        7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
        RISK**
  We
        have
        an investment portfolio of fixed income securities, including those classified
        as cash equivalents short-term investments and long-term investments of
        approximately $43.8 million at December 31, 2007. These
        securities are subject to interest rate fluctuations and will decrease in
        market
        value if interest rates increase.
  The
        primary objective of our investment activities is to preserve principal while
        at
        the same time maximizing yields without significantly increasing risk. We
        invest
        primarily in high quality, short-term and long-term debt instruments. A
        hypothetical 100 basis point increase in interest rates would result in less
        than a $0.3 million decrease (less than 1%) in the fair value of the
        Company's available-for-sale securities.  At December 31, 2007, we had
        an unrealized gain on our investments of approximately $62,000 and an unrealized
        gain of $6,000 at December 31, 2006.
  **ITEM
        8: FINANCIAL STATEMENTS AND SUPPLEMENTARY
        DATA**
  The
        information required by this Item is contained in the financial statements
        and
        schedule set forth in Item 15 (a) of this Form 10-K.
  **ITEM
        9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING****AND
        FINANCIAL DISCLOSURE**
  None.
 33
 **ITEM
        9A:** **CONTROLS AND
        PROCEDURES**
  **Controls
        and Procedures**
  **(a)**
              **Evaluation
                  of disclosure controls and
                  procedures.**
  Based
        on
        their evaluation as of December 31, 2007, our Chief Executive Officer and
        Chief Financial Officer, have concluded that our disclosure controls and
        procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
        Securities Exchange Act of 1934, as amended (the “Exchange Act”)) were effective
        to ensure that the information required to be disclosed by us in this Annual
        Report on Form 10-K was recorded, processed, summarized and reported within
        the time periods specified in the SEC's rules and instructions for
        Form 10-K and that such disclosure controls and procedures were also
        effective to ensure that information required to be disclosed in the reports
        we
        file or submit under the Exchange Act is accumulated and communicated to
        our
        management, including our Chief Executive Officer and Chief Financial Officer,
        as appropriate to allow timely decisions regarding required
        disclosure.
  **(b) Changes
        in internal controls.**
  There
        has
        been no change in our internal control over financial reporting that
        occurred during our most recent fiscal year that has materially affected
        or is
        reasonably likely to materially affect our internal control over financial
        reporting.
  **Management's
        Report on Internal Control over Financial Reporting**
  Our
        management is responsible for establishing and maintaining adequate internal
        control over financial reporting (as defined in Rule 13a-15(f) under the
        Securities Exchange Act of 1934, as amended). Our management assessed the
        effectiveness of our internal control over financial reporting as of
        December 31, 2007. In making this assessment, our management used the
        criteria set forth by the Committee of Sponsoring Organizations of the Treadway
        Commission ("COSO") in Internal Control-Integrated Framework. Our management
        has
        concluded that, as of December 31, 2007, our internal control over
        financial reporting is effective based on these criteria.
  **ITEM
        9B:  OTHER INFORMATION**
  On
        March
        5, 2008, the Compensation Committee (the “Committee”) of the Board of Directors
        of PLX Technology, Inc. (the “Company”), approved the 2008 Variable Compensation
        Plan (the “Plan”) effective as of January 1, 2008 to encourage performance and
        achieve retention of a select group of executive employees of the
        Company.  The Plan is intended to comply with the requirements of
        Section 409A of the Internal Revenue Code (the “Code”), recently enacted under
        the American Jobs Creation Act of 2004.  Section 409A imposes a number
        of requirements on non-qualified deferred compensation plans, primarily relating
        to the timing of elections and distributions.  The following is a
        summary of the terms and conditions of the Plan that are material to the
        Company.  The Plan provides for a variable compensation amount for the
        2008 performance to be awarded to eligible employees.  Portions of
        such bonus amount shall be paid to employees on the last business day of
        January
        of each of 2009, 2010 and 2011.
  Through
        December 31, 2008, the Committee, in its sole and unlimited discretion, may
        amend or terminate the Plan.  After January 1, 2009, the Committee may
        amend or terminate the Plan, provided that 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, except as permitted under Code Section
        409A.
  The
        foregoing description of the Plan is qualified in its entirety by reference
        to
        the Plan, a copy of which is filed herewith as Exhibit 10.17 and is incorporated
        herein by reference.
 34
 **PART
        III**
  **ITEM
        10: DIRECTORS****,****EXECUTIVE****OFFICERS AND CORPORATE
        GOVERNANCE**
  The
        information required by this Item is incorporated herein by reference to
        the
        Company's Proxy Statement for the 2008 Annual Meeting of
        Stockholders.
  **ITEM
        11: EXECUTIVE COMPENSATION**
  The
        information required by this Item is incorporated herein by reference to
        the
        Company's Proxy Statement for the 2008 Annual Meeting of
        Stockholders.
  **ITEM
        12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
        AND MANAGEMENT****AND RELATED STOCKHOLDER
        MATTERS**
  The
        information required by this Item is incorporated herein by reference to
        the
        Company's Proxy Statement for the 2008 Annual Meeting of
        Stockholders.
  **ITEM
        13: CERTAIN RELATIONSHIPS AND RELATED
        TRANSACTIONS**, **AND DIRECTOR
        INDEPENDENCE**
  The
        information required by this Item is incorporated herein by reference to
        the
        Company's Proxy Statement for the 2008 Annual Meeting of
        Stockholders.
  **ITEM
        14: PRINCIPAL ACCOUNTANT FEES AND
        SERVICES**
  The
        information required by this Item is incorporated herein by reference to
        the
        Company's Proxy Statement for the 2008 Annual Meeting of Stockholders.  35
 **PART
        IV**
  **ITEM
        15: EXHIBITS AND FINANCIAL STATEMENT
        SCHEDULES**
  (a) 1.   Consolidated Financial Statements
  For
        the following
        financial information included herein, see Index on page 37:
  Report
        of Independent Registered Public Accounting Firm
  Report
        of Independent Registered Public Accounting Firm on Internal Control Over
        Financial Reporting
  Consolidated
                  Balance Sheets as of December 31, 2007 and
                  2006.
  Consolidated
                  Statements of Operations for each of the three years in the period
                  ended
                  December 31, 2007.
  Consolidated
                  Statements of Stockholders' Equity and Comprehensive Income (Loss)
                  for
                  each of the three years in the period ended December 31,
                  2007.
  Consolidated
                  Statements of Cash Flows for each of the three years in the period
                  ended
                  December 31, 2007.
  Notes
        to Consolidated
        Financial Statements.
 
 2.   Consolidated Financial Statements
 
 The
        financial statement schedules of the Company are included in Part IV of this
        report: As of and for each of the three years in the period ended
        December 31, 2007-II Valuation and Qualifying Accounts. All other schedules
        have been omitted because they are not applicable.
  3.   Exhibit
        Index
  See
        Exhibit Index immediately following the signature page for a list of
        exhibits filed or incorporated by reference as a part of this
        report.
  (b) Exhibits
  The
          Company here
          by files, as exhibits to this Form 10-K, those exhibits listed on the Exhibit
          Index referenced in Item 15 (a) (3) above.  36
 **PLX
        TECHNOLOGY, INC.**
 **INDEX
        TO CONSOLIDATED FINANCIAL STATEMENTS**
  **Page**Report
                    of BDO Seidman, LLP, Independent Registered
                    Public Accounting Firm
                38Report
                    of BDO Seidman, LLP, Independent
                    Registered Public Accounting Firm on Internal Control Over Financial
                    Reporting
                39Consolidated
                    Balance Sheets as of December 31, 2007 and
                    2006
                40Consolidated
                    Statements of Operations for each of the three
                    years in the period ended December 31, 2007
                41Consolidated
                    Statements of Stockholders' Equity and
                    Comprehensive Income (Loss) for each of the three years in the
                    period
                    ended December 31, 2007
                42Consolidated
                    Statements of Cash Flows for each of the
                    three years in the period ended December 31, 2007
                43Notes
                    to the Consolidated Financial
                    Statements
                44
 37
 **Report
        of Independent Registered Public Accounting Firm**
  The
        Board
        of Directors and Stockholders
 PLX
        Technology, Inc.
 Sunnyvale,
        California
   We
        have
        audited the accompanying consolidated balance sheets of PLX Technology, Inc.
        as
        of December 31, 2007 and 2006, and the related consolidated statements of
        operations, stockholders’ equity, and cash flows for each of the three years in
        the period ended December 31, 2007.  In connection with our audits of
        the financial statements, we have also audited Schedule II – Valuation and
        Qualifying Accounts as of and for each of the years ended December 31, 2007,
        2006 and 2005.  These financial statements and schedule are the
        responsibility of the Company’s management.  Our responsibility is to
        express an opinion on these financial statements and schedule based on our
        audits.
  We
        conducted our audits in accordance with the standards of the Public Company
        Accounting Oversight Board (United States).  Those standards require
        that we plan and perform the audit to obtain reasonable assurance about whether
        the financial statements and schedule are free of material
        misstatement.  An audit includes examining, on a test basis, evidence
        supporting the amounts and disclosures in the financial statements and schedule,
        assessing the accounting principles used and significant estimates made by
        management, as well as evaluating the overall presentation of the financial
        statements and schedule.  We believe that our audits provide a
        reasonable basis for our opinion.
  In
        our
        opinion, the consolidated financial statements referred to above present
        fairly,
        in all material respects, the financial position of PLX Technology, Inc.
        at
        December 31, 2007 and 2006, and the results of its operations and its cash
        flows
        for each of the three years in the period ended December 31,
        2007**,** in conformity with accounting principles generally
        accepted in the United States of America.  Also, in our opinion,
        Schedule II – Valuation and Qualifying Accounts, when considered in relation to
        the basic consolidated financial statements taken as a whole, presents fairly,
        in all material respects, the information set forth therein.
  As
        discussed in Note 9 to the consolidated financial statements, effective January
        1, 2007, the Company adopted the provisions of Financial Accounting Standards
        Board Interpretation No. 48, *Accounting for Uncertainty in Income Taxes – an
        Interpretation of FASB Statement No. 109.* As discussed in Note 2 to the
        consolidated financial statements, effective January 1, 2006, the Company
        adopted the provisions of Statement of Financial Accounting Standards No.
        123
        (Revised 2004), *Share-Based Payment*.
  We
        also
        have audited, in accordance with the standards of the Public Company Accounting
        Oversight Board (United States), PLX Technology, Inc.’s internal control over
        financial reporting as of December 31, 2007, based on criteria established
        in
*Internal Control – Integrated Framework*issued by the Committee of
        Sponsoring Organizations of the Treadway Commission (COSO) and our report
        dated March 5, 2008, expressed an unqualified opinion thereon.
   /s/
        BDO
        Seidman, LLP
 San
        Francisco, California
 March
        5, 2008
 38
 **Report
        of Independent Registered Public Accounting
        Firm, on Internal Control Over Financial Reporting**
  The
        Board
        of Directors and Stockholders
 PLX
        Technology, Inc.
 Sunnyvale,
        California
   We
        have
        audited PLX Technology, Inc.’s internal control over financial reporting as of
        December 31, 2007, based on criteria established in *Internal
        Control-Integrated Framework* issued by the Committee of Sponsoring
        Organizations of the Treadway Commission (the COSO criteria).  PLX
        Technology, Inc.’s management is responsible for maintaining effective internal
        control over financial reporting and for its assessment of the effectiveness
        of
        internal control over financial reporting, included in the accompanying Item
        9A,
        Management’s Report on Internal Control Over Financial Reporting. Our
        responsibility is to express an opinion on the company's internal control
        over
        financial reporting based on our audit.
  We
        conducted our audit in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audit to obtain reasonable assurance about whether effective
        internal control over financial reporting was maintained in all material
        respects. Our audit included obtaining an understanding of internal control
        over
        financial reporting, assessing
        the risk that
        a material weakness exists, and testing and evaluating the design and
        operating effectiveness of internal control based on the assessed risk. Our
        audit also included performing such other procedures as we considered necessary
        in the circumstances.  We believe that our audit provides a reasonable
        basis for our opinion.
  A
        company's internal control over financial reporting is a process designed
        to
        provide reasonable assurance regarding the reliability of financial reporting
        and the preparation of financial statements for external purposes in accordance
        with generally accepted accounting principles. A company's internal control
        over
        financial  reporting  includes those policies and procedures
        that (1) pertain to the maintenance of records that, in reasonable detail,
        accurately and fairly reflect the transactions and dispositions of the assets
        of
        the company; (2) provide reasonable  assurance that transactions are
        recorded as necessary to permit preparation of financial statements in
        accordance with generally accepted accounting  principles, and that
        receipts and expenditures of the company are being made only in accordance
        with
        authorizations of management and directors of the company; and (3) provide
        reasonable assurance regarding prevention or timely detection of unauthorized
        acquisition, use, or disposition of the company's assets that could have
        a
        material effect on the financial statements.
  Because
        of its inherent limitations, internal control over financial reporting may
        not
        prevent or detect misstatements.  Also, projections of any evaluation
        of effectiveness to future periods are subject to the risk that controls
        may
        become inadequate because of changes in conditions, or that the degree of
        compliance with the policies or procedures may deteriorate.
  In
        our
        opinion, PLX Technology, Inc. maintained, in all material respects, effective
        internal control over financial reporting as of December 31, 2007, based
        on the
        COSO criteria.
  We
        also
        have audited, in accordance with the standards of the Public Company Accounting
        Oversight Board (United States), the consolidated balance sheets of PLX
        Technology, Inc. as of December 31, 2007 and 2006, and the related consolidated
        statements of operations, stockholders' equity, and cash flows for each of
        the
        three years in the period ended December 31, 2007, and our report
        dated March 5, 2008, expressed an unqualified opinion thereon.
   /s/
        BDO
        Seidman, LLP
 San
        Francisco, California
 March
        5, 2008
 39
 **PLX
        TECHNOLOGY, INC.**
 **CONSOLIDATED
        BALANCE SHEETS**
 **(in
        thousands, except share and per share data)**
  **December
                    31,****2007**
                
                
                **2006****ASSETS**Current
                    Assets:Cash
                    and cash equivalents
                
                $
                19,175
                
                
                $
                32,804Short-term
                    investments
                
                
                17,142
                
                
                
                5,853Accounts
                    receivable, less allowances of $516 and $312
                
                
                10,534
                
                
                
                8,491Inventories
                
                
                7,422
                
                
                
                8,295Other
                    current assets
                
                
                3,788
                
                
                
                600Total
                    current assets
                
                
                58,061
                
                
                
                56,043Goodwill
                
                
                34,541
                
                
                
                34,976Other
                    purchased intangible assets, net of accumulated amortization
                    of $9,223 and
                    $7,944
                
                
                1,577
                
                
                
                2,856Property
                    and equipment, net
                
                
                29,798
                
                
                
                28,744Long-term
                    investments
                
                
                10,246
                
                
                
                3,666Other
                    assets
                
                
                1,577
                
                
                
                1,663Total
                    assets
                
                $
                135,800
                
                
                $
                127,948**LIABILITIES
                    AND STOCKHOLDERS' EQUITY**Current
                    Liabilities:Accounts
                    payable
                
                $
                4,447
                
                
                $
                2,995Accrued
                    compensation and benefits
                
                
                2,237
                
                
                
                2,417Accrued
                    commissions
                
                
                652
                
                
                
                1,100Other
                    accrued expenses
                
                
                572
                
                
                
                500Total
                    current liabilities
                
                
                7,908
                
                
                
                7,012Commitments
                    and contingencies (Note 10)Stockholders'
                    equity:Preferred
                    stock, $0.001 par value per share:Authorized
                    -- 5,000,000  shares: none issued and
                    outstanding
                
                
                -
                
                
                
                -Common
                    stock, $0.001 par value per share:Authorized
                    -- 50,000,000 shares: issued and outstanding -- 28,837,745 and
                    28,626,328
                
                
                29
                
                
                
                29Additional
                    paid-in capital
                
                
                134,503
                
                
                
                128,735Accumulated
                    other comprehensive loss
                
                
                (82
                )
                
                
                (96
                )Accumulated
                    deficit
                
                
                (6,558
                )
                
                
                (7,732
                )Total
                    stockholders' equity
                
                
                127,892
                
                
                
                120,936Total
                    liabilities and stockholders' equity
                
                $
                135,800
                
                
                $
                127,948
  See
        accompanying notes to consolidated financial statements.
 40
 **PLX
        TECHNOLOGY, INC.**
 **CONSOLIDATED
        STATEMENTS OF OPERATIONS**
 **(in
        thousands, except per share data)**
  **Years
                    Ended December 31,****2007**
                
                
                **2006**
                
                
                **2005**Net
                    revenues
                
                $
                81,734
                
                
                $
                81,425
                
                
                $
                54,615Cost
                    of revenues
                
                
                32,209
                
                
                
                33,795
                
                
                
                19,613Gross
                    margin
                
                
                49,525
                
                
                
                47,630
                
                
                
                35,002Operating
                    expensesResearch
                    and development
                
                
                24,373
                
                
                
                20,194
                
                
                
                18,469Selling,
                    general and administrative
                
                
                24,516
                
                
                
                23,848
                
                
                
                16,577Amortization
                    and write-down of purchased intangible assets
                
                
                1,279
                
                
                
                1,873
                
                
                
                2,262Total
                    operating expenses
                
                
                50,168
                
                
                
                45,915
                
                
                
                37,308Operating
                    income (loss)
                
                
                (643
                )
                
                
                1,715
                
                
                
                (2,306
                )Interest
                    income
                
                
                2,385
                
                
                
                1,763
                
                
                
                812Other
                    income, net
                
                
                9
                
                
                
                40
                
                
                
                11Income
                    (loss) before provision for income taxes
                
                
                1,751
                
                
                
                3,518
                
                
                
                (1,483
                )Provision
                    for income taxes
                
                
                577
                
                
                
                512
                
                
                
                265Net
                    income (loss)
                
                $
                1,174
                
                
                $
                3,006
                
                
                $
                (1,748
                )Basic
                    net income (loss) per share
                
                $
                0.04
                
                
                $
                0.11
                
                
                $
                (0.06
                )Shares
                    used to compute basic per share amounts
                
                
                28,724
                
                
                
                28,177
                
                
                
                27,198Diluted
                    net income (loss) per share
                
                $
                0.04
                
                
                $
                0.10
                
                
                $
                (0.06
                )Shares
                    used to compute diluted per share amounts
                
                
                29,156
                
                
                
                28,925
                
                
                
                27,198
  See
        accompanying notes to consolidated financial statements.
 41
 **PLX
        TECHNOLOGY, INC.**
 **CONSOLIDATED
        STATEMENTS OF STOCKHOLDERS'
        EQUITY**
 **&
        COMPREHENSIVE INCOME (LOSS)**
 **(in
        thousands, except share amounts)**
  AccumulatedOtherAdditional
                
                
                Comprehensive
                
                
                
                
                
                TotalCommon
                    Stock
                
                
                Paid-in
                
                
                Income
                
                
                Accumulated
                
                
                Stockholders'Shares
                
                
                Amount
                
                
                Capital
                
                
                (Loss)
                
                
                Deficit
                
                
                EquityBalance
                    at December 31, 2004
                
                
                26,706,763
                
                
                $
                27
                
                
                $
                111,333
                
                
                $
                (211
                )
                
                $
                (8,990
                )
                
                $
                102,159Proceeds
                    from the exercise of warrants assumedin
                    the acquisition of HiNT Corporation
                
                
                3,057
                
                
                
                -
                
                
                
                26
                
                
                
                -
                
                
                
                -
                
                
                
                26Issuance
                    of common stock related to theacquisition
                    of NetChip Technology, Inc
                
                
                554,306
                
                
                
                1
                
                
                
                5,119
                
                
                
                -
                
                
                
                -
                
                
                
                5,120Issuance
                    of stock pursuantto
                    exercise of stock options
                
                
                402,742
                
                
                
                -
                
                
                
                1,641
                
                
                
                -
                
                
                
                -
                
                
                
                1,641Amortization
                    of deferred stock compensation
                
                
                -
                
                
                
                -
                
                
                
                168
                
                
                
                -
                
                
                
                -
                
                
                
                168Tax
                    benefit related to exercise of stock options
                
                
                -
                
                
                
                -
                
                
                
                26
                
                
                
                -
                
                
                
                -
                
                
                
                26Comprehensive
                    loss:Change
                    in unrealized loss on investments
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                115
                
                
                
                -
                
                
                
                115Translation
                    adjustments
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (18
                )
                
                
                -
                
                
                
                (18
                )Net
                    loss
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (1,748
                )
                
                
                (1,748
                )Total
                    comprehensive loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (1,651
                )Balance
                    at December 31, 2005
                
                
                27,666,868
                
                
                
                28
                
                
                
                118,313
                
                
                
                (114
                )
                
                
                (10,738
                )
                
                
                107,489Share-based
                    compensation expense
                
                
                -
                
                
                
                -
                
                
                
                4,903
                
                
                
                -
                
                
                
                -
                
                
                
                4,903Issuance
                    of stock pursuantto
                    exercise of stock options
                
                
                959,460
                
                
                
                1
                
                
                
                5,388
                
                
                
                -
                
                
                
                -
                
                
                
                5,389Tax
                    benefit related to exercise of stock options
                
                
                -
                
                
                
                -
                
                
                
                131
                
                
                
                -
                
                
                
                -
                
                
                
                131Comprehensive
                    income:Change
                    in unrealized loss on investments
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                48
                
                
                
                -
                
                
                
                48Translation
                    adjustments
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (30
                )
                
                
                -
                
                
                
                (30
                )Net
                    income
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                3,006
                
                
                
                3,006Total
                    comprehensive income
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                3,024Balance
                    at December 31, 2006
                
                
                28,626,328
                
                
                
                29
                
                
                
                128,735
                
                
                
                (96
                )
                
                
                (7,732
                )
                
                
                120,936Share-based
                    compensation expense
                
                
                -
                
                
                
                -
                
                
                
                4,441
                
                
                
                -
                
                
                
                -
                
                
                
                4,441Issuance
                    of stock pursuantto
                    exercise of stock options
                
                
                211,417
                
                
                
                -
                
                
                
                1,301
                
                
                
                -
                
                
                
                -
                
                
                
                1,301Tax
                    benefit related to exercise of stock options
                
                
                -
                
                
                
                -
                
                
                
                26
                
                
                
                -
                
                
                
                -
                
                
                
                26Comprehensive
                    income:Change
                    in unrealized loss on investments
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                56
                
                
                
                -
                
                
                
                56Translation
                    adjustments
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (42
                )
                
                
                -
                
                
                
                (42
                )Net
                    income
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                1,174
                
                
                
                1,174Total
                    comprehensive income
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                1,188Balance
                    at December 31, 2007
                
                
                28,837,745
                
                
                $
                29
                
                
                $
                134,503
                
                
                $
                (82
                )
                
                $
                (6,558
                )
                
                $
                127,892
 See
        accompanying notes to consolidated financial statements.  42
 **PLX
        TECHNOLOGY, INC.**
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 **(in
        thousands)**
  **Years
                    Ended December 31,****2007**
                
                
                **2006**
                
                
                **2005****Cash
                    flows from operating activities**Net
                    income (loss)
                
                $
                1,174
                
                
                $
                3,006
                
                
                $
                (1,748
                )Adjustments
                    to reconcile net income (loss) to net cash flows provided by
                    operating
                    activities:Depreciation
                    and amortization
                
                
                2,029
                
                
                
                1,979
                
                
                
                2,065Share-based
                    compensation expense
                
                
                4,441
                
                
                
                4,903
                
                
                
                -Amortization
                    of deferred stock compensation
                
                
                -
                
                
                
                -
                
                
                
                168Amortization
                    and write-down of purchased intangible assets
                
                
                1,279
                
                
                
                1,873
                
                
                
                2,262Deferred
                    margins
                
                
                -
                
                
                
                (1,963
                )
                
                
                653Provision
                    for inventories
                
                
                763
                
                
                
                809
                
                
                
                379Changes
                    in pre-acquisition deferred tax balances
                
                
                435
                
                
                
                842
                
                
                
                207Other
                    non-cash items
                
                
                (217
                )
                
                
                (84
                )
                
                
                215Changes
                    in operating assets and liabilities:Accounts
                    receivable
                
                
                (2,031
                )
                
                
                (2,251
                )
                
                
                (1,123
                )Inventories
                
                
                110
                
                
                
                (4,776
                )
                
                
                (548
                )Other
                    current assets
                
                
                (3,188
                )
                
                
                1,242
                
                
                
                216Other
                    assets
                
                
                86
                
                
                
                (1,250
                )
                
                
                (333
                )Accounts
                    payable
                
                
                1,452
                
                
                
                (1,535
                )
                
                
                903Accrued
                    compensation and benefits
                
                
                (180
                )
                
                
                663
                
                
                
                (59
                )Accrued
                    commissions
                
                
                (448
                )
                
                
                802
                
                
                
                (2
                )Other
                    accrued expenses
                
                
                72
                
                
                
                (1,377
                )
                
                
                611Net
                    cash provided by operating activities
                
                
                5,777
                
                
                
                2,883
                
                
                
                3,866**Cash
                    flows provided by (used in) investing activities:**Purchase
                    of investments
                
                
                (34,677
                )
                
                
                (13,703
                )
                
                
                (6,027
                )Sales
                    and maturities of investments
                
                
                17,100
                
                
                
                18,428
                
                
                
                12,725Purchase
                    of property and equipment
                
                
                (3,088
                )
                
                
                (1,188
                )
                
                
                (740
                )Net
                    cash provided by (used in) investing activities
                
                
                (20,665
                )
                
                
                3,537
                
                
                
                5,958**Cash
                    flows provided by financing activities:**Proceeds
                    from exercise of common stock options
                
                
                1,301
                
                
                
                5,389
                
                
                
                1,641Proceeds
                    from exercise of warrants
                
                
                -
                
                
                
                -
                
                
                
                26Net
                    cash provided by financing activities
                
                
                1,301
                
                
                
                5,389
                
                
                
                1,667Effect
                    of exchange rate fluctuations on cash and cash equivalents
                
                
                (42
                )
                
                
                (33
                )
                
                
                (19
                )Increase
                    (decrease) in cash and cash equivalents
                
                
                (13,629
                )
                
                
                11,776
                
                
                
                11,472Cash
                    and cash equivalents at beginning of year
                
                
                32,804
                
                
                
                21,028
                
                
                
                9,556Cash
                    and cash equivalents at end of year
                
                $
                19,175
                
                
                $
                32,804
                
                
                $
                21,028**Supplemental
                    disclosure of cash flow information:**Cash
                    from income tax refunds
                
                $
                41
                
                
                $
                9
                
                
                $
                79Cash
                    paid for income taxes
                
                $
                165
                
                
                $
                135
                
                
                $
                14**Non-cash
                    investing and financing activities**Common
                    stock issued for the acquisition of NetChip Technology,
                    Inc
                
                $
                -
                
                
                $
                -
                
                
                $
                5,120
  See
        accompanying notes to consolidated financial statements.
 43
 **PLX
        TECHNOLOGY, INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
  **1.  Organization
                  and Summary of Significant Accounting
                  Policies**
  ***Description
        of Business***
  PLX
        Technology, Inc. ("PLX" or the "Company"), a Delaware corporation established
        in
        May 1986, develops and supplies semiconductor devices that accelerate and
        manage
        the transfer of data in microprocessor-based systems including networking
        and
        telecommunications, enterprise storage, servers, personal computers (PCs),
        PC
        peripherals, consumer electronics, imaging and industrial products. The Company
        offers a complete solution consisting of three related types of products:
        semiconductor devices, software development kits and hardware design kits.
        The
        Company’s semiconductor devices simplify the development of data transfer
        circuits in micro-processor based systems. The Company’s software development
        kits and hardware design kits promote sales of its semiconductor devices
        by
        lowering customers' development costs and by accelerating their ability to
        bring
        new products to market. The Company utilizes a “fabless” semiconductor
        business model whereby it purchases wafers and packaged and tested semiconductor
        devices from independent manufacturing foundries.  Semiconductor
        devices account for substantially all of the Company's net
        revenues.
  ***Basis
        of Presentation***
  The
        consolidated financial statements include the accounts of the Company and
        its
        wholly-owned subsidiaries in China, Japan, Korea, Taiwan and the United Kingdom.
        All intercompany transactions and balances have been eliminated.
  ***Cash
        and Cash Equivalents***
  The
        Company considers all highly liquid investments purchased with an original
        maturity of three months or less to be cash equivalents.
  ***Investments***
  The
        Company accounts for its investments in accordance with SFAS No. 115,
        "Accounting for Certain Investments in Debt and Equity Securities". At December
        31, 2007, the Company’s securities consisted of debt
        securities.  Under SFAS 115, management determines the appropriate
        classification of debt securities at the time of purchase and reevaluates
        such
        designation as of each balance sheet date. At December 31, 2007 and 2006,
        all debt securities were designated as available-for-sale. Available-for-sale
        securities are carried at fair value with unrealized gains and losses reported
        in a separate component of stockholders' equity. The fair value of securities
        is
        based on quoted market prices. The amortized cost of debt securities in this
        category is adjusted for the amortization of premiums and the accretion of
        discounts to maturity. Such amortization, as well as any interest earned
        on the
        securities, is included in interest income. Realized gains and losses and
        declines in value judged to be other-than-temporary on available-for-sale
        securities are included in interest income. The cost of securities sold is
        based
        on the specific identification method.
  ***Accounts
        Receivable and Allowance for Doubtful Accounts***
  Accounts
        receivable are recorded at the invoiced amount and do not bear
        interest.  The allowance for doubtful accounts is the Company’s best
        estimate of the amount of probable credit losses in its existing accounts
        receivable.  The Company determines the allowance based on historical
        write-off experience and customer economic data.  The Company reviews
        its allowance for doubtful accounts monthly.  Past due balances over
        90 days are reviewed individually for collectibility.  Account
        balances are charged off against the allowance when the Company believes
        that it
        is probable the receivable will not be recovered.  44
 ***Inventories***
  Inventories
        are valued at the lower of cost (first-in, first-out method) or
        market.  Inventories were as follows (in thousands):
 December
                    31,2007
                
                
                2006Work-in-process
                
                $
                2,000
                
                
                $
                1,226Finished
                    goods
                
                
                5,422
                
                
                
                7,069Total
                
                $
                7,422
                
                
                $
                8,295
 The
        Company evaluates the need for potential provision for inventory by considering
        a combination of factors. Based on the life of the product, sales history,
        obsolescence and sales forecast, the Company may record provisions for inventory
        of up to 100%.
  ***Goodwill
        and Other Intangible Assets***
  Goodwill
        represents the excess of cost over the value of net assets of businesses
        acquired pursuant to SFAS No. 141, "Business Combinations" and is carried
        at cost unless write-downs for impairment are required. The Company evaluates
        the carrying value of goodwill on an annual basis during the fourth quarter
        and
        whenever events and changes in circumstances indicate that the carrying amount
        may not be recoverable. Such indicators would include a significant reduction
        in
        the Company's market capitalization, a decrease in operating results or a
        deterioration in the Company's financial position. To date, no such impairment
        has been recorded. The Company operates under a single reporting unit and
        accordingly, all of its goodwill is associated with the entire
        company.
  The
        purchased intangible assets including customer base and developed/core
        technology are being amortized over the assets’ useful lives, which ranges from
        three to six years, utilizing the straight-line method which approximates
        the
        estimated future cash flows from the intangible. Also, see Note 6 to the
        Consolidated Financial Statements. The Company evaluates other intangible
        assets
        for impairment whenever events and circumstances indicate that such assets
        might
        be impaired.
  Changes
        in the carrying amount of goodwill for the years ended December 31, 2007
        and
        2006 are as follows (in thousands):
  Balance
                    as of December 31, 2005
                
                $
                35,818Changes
                    in pre-acquisition deferred tax balances
                
                
                (842
                )Balance
                    as of December 31, 2006
                
                
                34,976Changes
                    in pre-acquisition deferred tax balances
                
                
                (435
                )Balance
                    as of December 31, 2007
                
                $
                34,541
 ***Long-lived
        Asset Impairment***
  Long-lived
        assets, principally property and equipment and identifiable intangibles,
        held
        and used by the Company are reviewed for impairment whenever events or
        circumstances indicate that the carrying amount of assets may not be recoverable
        in accordance with SFAS No. 144 “Accounting for the Impairment or Disposal of
        Long-Lived Assets”.  The Company evaluates recoverability of assets to
        be held and used by comparing the carrying amount of an asset to estimated
        future net undiscounted cash flows generated by the asset.  If such
        assets are considered to be impaired, the impairment recognized is measured
        as
        the amount by which the carrying amount of the assets exceeds the fair value
        of
        the assets.  Also see Note 6 to the Consolidated Financial
        Statements.  45
 ***Property
        and Equipment***
  Property
        and equipment are stated at cost, less accumulated depreciation. Depreciation
        is
        computed using the straight-line method over the estimated useful lives of
        39 years for buildings and three to five years for equipment, furniture and
        purchased software. Leasehold improvements are amortized using the straight-line
        method over the shorter of the useful lives of the assets or the terms of
        the
        leases.
  Property
        and equipment are as follows (in thousands):
  **December
                    31,****2007**
                
                
                **2006**Land
                
                $
                8,550
                
                
                $
                8,550Building
                
                
                19,333
                
                
                
                19,333Equipment
                    and furniture
                
                
                13,995
                
                
                
                11,447Purchased
                    software
                
                
                4,128
                
                
                
                4,09046,006
                
                
                
                43,420Accumulated
                    depreciation and amortization
                
                
                (16,208
                )
                
                
                (14,676
                )Net
                    property and equipment
                
                $
                29,798
                
                
                $
                28,744
 Depreciation
        and amortization expense pertaining to property and equipment was approximately
        $2.0 million, $2.0 million and $2.1 million for the years ended December
        31,
        2007, 2006 and 2005, respectively.
  ***Foreign
        Currency Translation***
  The
        functional currency of each of the Company’s international subsidiaries in
        China, Japan, Korea, Taiwan and the United Kingdom is the local currency
        of the
        resident countries.  Assets and liabilities of the Company’s foreign
        subsidiaries are translated into the Company’s reporting currency at month-end
        exchange rates.  Revenues and expenses of the Company’s foreign
        subsidiaries are translated into the Company’s reporting currency at
        weighted-average exchange rates.
  ***Income
        Taxes***
  Income
        taxes are accounted for using the asset and liability method in accordance
        with
        SFAS No. 109, “Accounting for Income Taxes”.  Under this method,
        deferred tax liabilities and assets are recognized for the expected future
        tax
        consequences of differences between the carrying amounts and the tax bases
        of
        assets and liabilities.  A valuation allowance is provided when it is
        more likely than not that all or some portion of deferred tax assets will
        not be
        realized.
  ***Revenue
        Recognition***
  The
        Company**recognizes revenue when persuasive evidence of an
        arrangement exists, delivery has occurred, the fee is fixed or determinable,
        and
        collection is reasonably assured.
  Revenue
        from product sales to direct customers and distributors is recognized upon
        shipment and transfer of risk of loss, if the Company believes collection
        is
        reasonably assured and all other revenue recognition criteria are met. The
        Company assesses the probability of collection based on a number of factors,
        including past transaction history and the customer’s creditworthiness.  At
        the end of each reporting period, the sufficiency of allowances is assessed
        based on the age of the receivable and the individual customer’s
        creditworthiness.
  In
        the
        first quarter ended March 31, 2006, the Company completed an evaluation of
        its
        revenue recognition methodology and concluded that it was more appropriate
        to
        recognize revenues on sales to distributors at the time of shipment to a
        distributor (also referred to as the sell-in basis of recognizing revenue).
        Prior to the first quarter of 2006, the Company recognized revenue on sales
        to
        distributors when the distributor resold the product to its end customer
        (also
        referred to as the sell-through basis of recognizing revenue). SFAS No. 48,
        “Revenue Recognition When Rights of Return Exists”, sets forth conditions that
        must be met to recognize revenue at the time of shipment. Among those conditions
        is that a company that provides a right of return or pricing concession to
        a
        buyer be able to reasonably estimate the amount of future returns or pricing
        concessions. In the past, the Company had concluded that it did not meet
        this
        condition and therefore used the sell-through basis of revenue recognition.
        In
        the first quarter of 2006, the Company concluded that it is able to reasonably
        estimate returns and pricing concessions, and therefore had implemented the
        sell-in method of accounting for sales to distributors. The Company recognized
        an additional $2.8 million in revenues during the first quarter of 2006 due
        to
        this change resulting in an increase to diluted earnings per share of
        $0.06.
 46
 The
        Company offers pricing protection to a single distributor whereby the Company
        supports the distributor’s resale product margin on certain products held in the
        distributor’s inventory. In general, the Company analyzes current requests for
        credit in process, also known as ship and debits, inventory at the distributor
        and credit expectations to determine the ending sales reserve required for
        this
        program.  Reserves are reduced directly from revenue and recorded as a
        reduction to accounts receivable. We have arrangements with a small number
        of
        customers offering a rebate program on various products. The Company records
        rebates under the guidelines of EITF 01-9, “Accounting for Consideration Given
        to a Customer (Including a Reseller of the Vendor’s Product)”. In addition, the
        Company offers stock rotation rights to several distributors such that they
        can
        return up to a total of 5% of products purchased every six months in exchange
        for other PLX products of equal value. In general, the Company analyzes current
        stock rotation requests and past experience to determine the ending sales
        reserve required for this program.
  ***Product
        Warranty***
  The
        Company generally sells products with a limited warranty of product quality
        for
        a period of one year and a limited indemnification of customers against
        intellectual property infringement claims related to the Company’s
        products.  The Company accrues for known warranty and indemnification
        issues if a loss is probable and can be reasonably estimated, and accrues
        for
        estimated incurred but unidentified issues based on historical
        activity.
  ***Software
        Development Costs***
  In
        accordance with SFAS No. 86, "Accounting for the Costs of Computer Software
        to Be Sold, Leased or Otherwise Marketed," the Company is required to capitalize
        eligible computer software costs upon achievement of technological feasibility
        subject to net realizable value considerations. The Company has defined
        technological feasibility as completion of a working model. The period between
        the achievement of technological feasibility and release of the Company's
        software products has been of short duration. Through December 31, 2007
        such costs were insignificant. Accordingly, the Company has charged all
        such costs to research and development expenses in the accompanying consolidated
        statements of operations.
  ***Use
        of Estimates***
  The
        preparation of financial statements in conformity with accounting principles
        generally accepted in the United States requires management to make estimates
        and assumptions that affect various accounts, including but not limited to
        goodwill, income taxes, inventories, revenue recognition, allowance for doubtful
        accounts, share-based compensation and warranty reserves as reported in the
        financial statements and accompanying notes.  Actual results could
        differ from those estimates and such differences may be material to the
        consolidated financial statements.
  ***Comprehensive
        Loss***
  The
        components of accumulated other comprehensive loss, reflected in the
        Consolidated Statements of Stockholders' Equity and Comprehensive Income
        (Loss),
        consisted of the following:
  **Years
                      Ended December 31,****2007**
                  
                  
                  **2006**
                  
                  
                  **2005**Unrealized
                      gain (loss) on investments, net
                  
                  $
                  62
                  
                  
                  $
                  6
                  
                  
                  $
                  (42
                  )Cumulative
                      translation adjustments
                  
                  
                  (144
                  )
                  
                  
                  (102
                  )
                  
                  
                  (72
                  )Accumulated
                      other comprehensive loss
                  
                  $
                  (82
                  )
                  
                  $
                  (96
                  )
                  
                  $
                  (114
                  )
 47
 ***Recent
        Accounting Pronouncements***
  In
        September 2006, FASB issued SFAS No. 157, “Fair Value
        Measurements”. SFAS 157 defines fair value, establishes a framework for
        measuring fair value in generally accepted accounting principles (“GAAP”) and
        expands disclosures about fair value measurements. The FASB has issued a
        proposed interpretation that would defer the implementation of
        SFAS No. 157 for non-financial assets and liabilities until fiscal
        years beginning after November 15, 2008. The remaining provisions of SFAS
        157 are effective for fiscal years beginning after November 15, 2007 and
        interim periods within those fiscal years. The Company does not believe that
        the
        adoption of SFAS 157 will have a material impact on its financial position
        and
        results of operations.
 
 In
        February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
        Financial Assets and Financial Liabilities – including an amendment of FASB
        Statement No. 115”. SFAS 159 permits entities to choose to measure many
        financial instruments and certain other items that are not currently required
        to
        be measured at fair value, with unrealized gains and losses related to these
        financial instruments reported in earnings at each subsequent reporting date.
        SFAS 159 is effective for fiscal years beginning after November 15, 2007.
        The
        Company does not believe that the adoption of SFAS 159 will have a material
        impact on its financial position and results of operations.
 
 In
        December 2007, the FASB issued SFAS No. 141(R), “Business Combinations – Revised
        2007”, which replaces FASB Statement No. 141, “Business Combinations”. SFAS
        141(R) establishes principles and requirements intending to improve the
        relevance, representational faithfulness and comparability of information
        that a
        reporting entity provides in its financial reports about a business combination
        and its effects. SFAS 141(R) is effective for fiscal years beginning after
        December 15, 2008. The Company does not believe that the adoption of SFAS
        141(R)
        will have a material impact on its financial position and results of
        operations.
 
 In
        December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
        Consolidated Financial Statements – an amendment of ARB No. 51”. SFAS 160
        establishes accounting and reporting standards to improve the relevance,
        comparability and transparency of financial information that a reporting
        entity
        provides in its consolidated financial statements. SFAS 160 is effective
        for
        fiscal years beginning after December 15, 2008. The Company does not believe
        that the adoption of SFAS 160 will have a material impact on its financial
        position and results of operations.
  **2****.****Share-Based
                  Compensation**
  ***Stock
        Option Plans***
  In
        January 1998, the Company’s stockholders approved the 1998 Stock Incentive Plan
        (“1998 Plan”).  Under the 1998 Plan, options generally vest over four
        years and have a maximum term of 10 years.  The Board of Directors
        establishes the exercise price as the closing price quoted on NASDAQ on the
        date
        of grant.  In addition to stock options, the 1998 Plan allows for the
        grant of restricted stock, stock appreciation rights, performance shares,
        performance units, dividends and dividend equivalents.  This plan
        expired in January 2008.
  In
        January 1999, the Company’s stockholders approved the 1999 Stock Incentive Plan
        (“1999 Plan”).  The 1999 Plan has substantially the same terms as the
        1998 Plan.
  ***Share-Based
        Compensation Expense***
  On
        January 1, 2006, the Company adopted SFAS No. 123 (revised 2004),
“Share-Based Payment” using the modified-prospective transition method, which
        requires the measurement and recognition of compensation expense for all
        share-based payment awards made to the Company’s employees and directors
        including stock options. Share-based compensation expense for stock options
        granted subsequent to January 1, 2006 was based on the grant-date fair
        value estimated in accordance with the provisions of SFAS 123(R). For awards
        granted prior to, but not vested, as of January 1, 2006, share-based
        compensation expense was based on the grant-date fair value, previously
        estimated, using the Black-Scholes valuation model, in accordance with the
        original provisions of SFAS 123. The Company recognizes the share-based
        compensation expense on a straight-line basis over the requisite service
        period
        of the award, which generally equals the vesting period of each
        grant.
 48
 The
        fair
        value of share-based awards to employees is calculated using the Black-Scholes
        option pricing model, even though this model was developed to estimate the
        fair
        value of freely tradable, fully transferable options without vesting
        restrictions, which differ significantly from the Company’s stock options. The
        Black-Scholes model requires subjective assumptions, including future stock
        price volatility and expected time to exercise, which greatly affect the
        calculated values.
  ***Valuation
        and Expense Information Under SFAS 123R***
  The
        weighted-average fair value of share-based compensation to employees is based
        on
        the multiple option valuation approach. Forfeitures are estimated and it
        is
        assumed no dividends will be declared. The estimated fair value of share-based
        compensation awards to employees is amortized using the straight-line method
        over the vesting period of the options. The weighted-average fair value
        calculations are based on the following average assumptions:
  **Years
                    Ended December 31,****2007**
                
                
                **2006**Volatility
                
                
                0.59
                
                
                
                0.67Expected
                    life of options (in years)
                
                
                4.35
                
                
                
                4.39Dividend
                    yield
                
                
                0.00
                %
                
                
                0.00
                %Risk-free
                    interest rate
                
                
                4.31
                %
                
                
                4.72
                %
 *Risk-Free
        Interest Rate*. The risk-free interest rate is based on the U.S. Treasury
        yield curve in effect at the time of grant for the expected term of the
        option.
  *Expected
        Term**.* The Company’s expected term represents the weighted-average
        period that the Company’s stock options are expected to be outstanding. The
        expected term is based on the observed and expected time to post-vesting
        exercise of options by employees. The Company uses historical exercise patterns
        of previously granted options in relation to stock price movements to derive
        an
        employee behavioral pattern used to forecast expected exercise
        patterns.
  *Expected
        Volatility**.* The Company calculates its expected volatility
        assumption required in the Black-Scholes model by blending the historical
        volatility with the market-based implied volatility.  The Company uses
        a 50/50 blend of historical volatility and market-based volatility.
  These
        factors could change in the future, which would affect the share-based
        compensation expense in future periods.
  As
        share-based compensation expense recognized in the Consolidated Statements
        of
        Operations for the fiscal years 2007 and 2006 is based on awards ultimately
        expected to vest, it has been reduced for estimated forfeitures. SFAS 123(R)
        requires forfeitures to be estimated at the time of grant and revised, if
        necessary, in subsequent periods if actual forfeitures differ from those
        estimates. Our estimated forfeiture rate of 27% and 30% for the years ended
        December 31, 2007 and 2006, respectively, was based on historical
        experience.
  The
        following table shows total share-based compensation expense recorded for
        the
        years ended December 31, 2007 and 2006 (in thousands):
  **Years
                    Ended December 31,****2007**
                
                
                **2006**Cost
                    of revenues
                
                $
                54
                
                
                $
                51Research
                    and development
                
                
                1,712
                
                
                
                2,004Selling,
                    general and administrative
                
                
                2,675
                
                
                
                2,848Total
                    share-based compensation expense
                
                $
                4,441
                
                
                $
                4,903
 49
 A
        summary
        of option activity under the Company’s stock equity plans during the three years
        ended December 31, 2007, 2006 and 2005 are as follows:
  **Weighted
                    Average****Remaining**
                
                
                **Aggregate****Options
                    Available**
                
                
                **Number
                    of**
                
                
                **Weighted
                    Average**
                
                
                **Contractual
                    Term**
                
                
                **Intrinsic****Options**
                
                **for
                    Grant**
                
                
                **Shares**
                
                
                **Exercise
                    Price**
                
                
                **(in
                    years)**
                
                
                **Value**Outstanding
                    at December 31, 2004
                
                
                1,564,131
                
                
                
                4,366,035
                
                
                $
                10.66Granted
                
                
                (979,300
                )
                
                
                979,300
                
                
                
                8.96Exercised
                
                
                -
                
                
                
                (402,742
                )
                
                
                4.08Cancelled
                
                
                448,074
                
                
                
                (459,542
                )
                
                
                13.75Outstanding
                    at December 31, 2005
                
                
                1,032,905
                
                
                
                4,483,051
                
                
                
                10.57
                
                
                
                5.95
                
                
                $
                5,747,342Authorized
                
                
                800,000
                
                
                
                -
                
                
                
                -Granted
                
                
                (880,250
                )
                
                
                880,250
                
                
                
                12.29Exercised
                
                
                -
                
                
                
                (959,460
                )
                
                
                5.62Cancelled
                
                
                687,355
                
                
                
                (690,364
                )
                
                
                14.77Outstanding
                    at December 31, 2006
                
                
                1,640,010
                
                
                
                3,713,477
                
                
                
                11.47
                
                
                
                5.39
                
                
                $
                11,718,444Granted
                
                
                (790,650
                )
                
                
                790,650
                
                
                
                10.30Exercised
                
                
                -
                
                
                
                (211,417
                )
                
                
                6.16Cancelled
                
                
                293,237
                
                
                
                (293,237
                )
                
                
                13.44Outstanding
                    at December 31, 2007
                
                
                1,142,597
                
                
                
                3,999,473
                
                
                
                11.38
                
                
                
                4.79
                
                
                $
                2,663,803Exercisable
                    at December 31, 2007
                
                
                
                
                
                
                2,570,695
                
                
                $
                11.84
                
                
                
                4.28
                
                
                $
                2,486,571
 The
        Black-Scholes weighted average fair values of options granted during the
        years
        ended December 31, 2007, 2006 and 2005 were $5.34, $6.98 and $7.14,
        respectively.
  The following table summarizes ranges of outstanding and exercisable options
        as
        of December 31, 2007:
  **Options
                      Outstanding**
                  
                  
                  **Options
                      Exercisable****Weighted
                      Average****Remaining**
                  
                  
                  **Weighted**
                  
                  
                  
                  
                  
                  **Weighted****Range
                      of**
                  
                  
                  
                  
                  
                  **Contractual
                      Term**
                  
                  
                  **Average**
                  
                  
                  
                  
                  
                  **Average****Exercise
                      Price**
                  
                  
                  **Number**
                  
                  
                  **(in
                      years)**
                  
                  
                  **Exercise
                      Price**
                  
                  
                  **Number**
                  
                  
                  **Exercise
                      Price**$0.88-$8.68
                  
                  
                  
                  812,538
                  
                  
                  
                  4.41
                  
                  
                  $
                  6.28
                  
                  
                  
                  709,569
                  
                  
                  $
                  6.04$8.70-$9.45
                  
                  
                  
                  813,636
                  
                  
                  
                  4.34
                  
                  
                  
                  9.07
                  
                  
                  
                  680,703
                  
                  
                  
                  9.07$9.55-$10.21
                  
                  
                  
                  914,700
                  
                  
                  
                  6.02
                  
                  
                  
                  10.05
                  
                  
                  
                  181,893
                  
                  
                  
                  9.86$10.29-$15.58
                  
                  
                  
                  826,416
                  
                  
                  
                  5.58
                  
                  
                  
                  12.65
                  
                  
                  
                  367,222
                  
                  
                  
                  13.18$15.70-$25.94
                  
                  
                  
                  632,183
                  
                  
                  
                  3.01
                  
                  
                  
                  21.15
                  
                  
                  
                  631,308
                  
                  
                  
                  21.16Total
                  
                  
                  
                  3,999,473
                  
                  
                  
                  4.79
                  
                  
                  $
                  11.38
                  
                  
                  
                  2,570,695
                  
                  
                  $
                  11.84
 The
        total
        intrinsic value of options exercised during the year ended December 31, 2007
        was
        approximately $1.1 million. The fair value of options vested during the year
        ended December 31, 2007 was approximately $6.8 million. As of December 31,
        2007,
        total unrecognized compensation costs related to nonvested stock options
        net of
        estimated forfeitures was $2.6 million which is expected to be recognized
        as
        expense over a weighted average period of approximately 1.17 years.
  ***Pro
        Forma Information Under SFAS 123 for Periods Prior to Fiscal
        2006***
  Prior
        to
        fiscal 2006, the weighted-average fair value of share-based compensation
        to
        employees was based on the multiple option valuation approach. Forfeitures
        were
        recognized as they occurred and it was assumed no dividends would be declared.
        The estimated fair value of share-based compensation awards to employees
        was
        amortized ratably over the vesting period of the options. The weighted-average
        fair value calculations were based on the following weighted-average
        assumptions:
 50
 **Year
                    Ended December 31, 2005**Volatility
                
                
                0.93Expected
                    life of options (in years)
                
                
                4.68Risk-free
                    interest rate
                
                
                4.00
                %
 Pro
        forma
        results are as follows (in thousands except per share amounts):
  **Year
                    Ended December 31, 2005**Net
                    loss as reported
                
                $
                (1,748
                )Add:
                    Share-based compensation included in reported net loss
                
                
                168Deduct:
                    Share-based compensation cost under SFAS 123
                
                
                (5,291
                )Pro
                    forma net loss
                
                $
                (6,871
                )Pro
                    forma basic and diluted net loss per common share:Pro
                    forma shares used in the calculation of pro formanet
                    loss per common share - basic and diluted
                
                
                27,198Pro
                    forma shares used in the calculation of pro formanet
                    income per common share - diluted
                
                
                27,198Pro
                    forma net loss per common share - basic and diluted
                
                $
                (0.25
                )Reported
                    net loss per common share - basic and diluted
                
                $
                (0.06
                )
 **3****.** **Net****Income
        (****Loss****)****Per
        Share**
  The
        Company uses the treasury stock method to calculate the weighted-average
        shares
        used in the diluted earnings per share in accordance with SFAS No. 128,
“Earnings Per Share”.  The following table sets forth the computation
        of basic and diluted net income (loss) per share (in thousands, except per
        share
        data):
  **Years
                    Ended December 31,****2007**
                
                
                **2006**
                
                
                **2005**Net
                    income (loss)
                
                $
                1,174
                
                
                $
                3,006
                
                
                $
                (1,748
                )Weighted
                    average shares of common stock outstanding
                
                
                28,724
                
                
                
                28,177
                
                
                
                27,198Net
                    income (loss) per share - basic
                
                $
                0.04
                
                
                $
                0.11
                
                
                $
                (0.06
                )Shares
                    used in computing basic net income (loss) per share
                
                
                28,724
                
                
                
                28,177
                
                
                
                27,198Dilutive
                    effect of stock options
                
                
                432
                
                
                
                748
                
                
                
                -Shares
                    used in computing diluted net income (loss) per share
                
                
                29,156
                
                
                
                28,925
                
                
                
                27,198Net
                    income (loss) per share - diluted
                
                $
                0.04
                
                
                $
                0.10
                
                
                $
                (0.06
                )
 
 Weighted
        average employee stock options to purchase approximately 2.3 and 1.5 million
        shares for the years ended December 31, 2007 and 2006, respectively, were
        outstanding, but were not included in the computation of diluted earnings
        per
        share because the exercise price of the stock options, including unamortized
        share-based compensation, was greater than the average share price of the
        common
        shares and, therefore, the effect would have been anti-dilutive.
  As
        the
        Company incurred a loss for the year ended December 31, 2005, the effect of
        dilutive securities, totaling 4.5 million, have been excluded from the
        computation of diluted loss per share, as their impact would be
        anti-dilutive.  Dilutive securities are comprised of options to
        purchase common stock.
 51
 **4.  Cash,
        Cash Equivalents, Short-Term Investments and Long-Term
        Investments**
  The
        Company invests its excess cash in high quality, short-term and long-term
        debt
        instruments. The following is a summary of the Company's investments by major
        security type at December 31, 2007 and December 31, 2006 (in
        thousands):
 **Amortized**
                
                
                **Unrealized**
                
                
                **Estimated****Cost**
                
                
                **Gains
                    (Losses), net**
                
                
                **Fair
                    Value****2007**Classified
                    as Current Assets:Cash
                
                $
                2,733
                
                
                $
                -
                
                
                $
                2,733Cash
                    equivalents:Money
                    market mutual funds
                
                
                73
                
                
                
                -
                
                
                
                73Commercial
                    paper
                
                
                16,371
                
                
                
                (2
                )
                
                
                16,369Total
                    cash equivalents
                
                
                16,444
                
                
                
                (2
                )
                
                
                16,442Total
                    cash and cash equivalents
                
                
                19,177
                
                
                
                (2
                )
                
                
                19,175Short
                    term investments:Commercial
                    paper
                
                
                5,082
                
                
                
                1
                
                
                
                5,083Medium
                    term notes
                
                
                2,539
                
                
                
                (6
                )
                
                
                2,533Corporate
                    bonds
                
                
                1,082
                
                
                
                (1
                )
                
                
                1,081Government
                    Agencies
                
                
                8,426
                
                
                
                19
                
                
                
                8,445Total
                    short-term investments
                
                
                17,129
                
                
                
                13
                
                
                
                17,142Classified
                    as Non-Current Assets:Long
                    term investments:Corporate
                    bonds
                
                
                8,486
                
                
                
                40
                
                
                
                8,526Government
                    Agencies
                
                
                1,709
                
                
                
                11
                
                
                
                1,720Total
                    long-term investments
                
                
                10,195
                
                
                
                51
                
                
                
                10,246Total
                    cash, cash equivalents, short-term and long-term
                    investments
                
                $
                46,501
                
                
                $
                62
                
                
                $
                46,563**2006**Classified
                    as Current Assets:Cash
                
                $
                3,025
                
                
                $
                -
                
                
                $
                3,025Cash
                    equivalents:Money
                    market mutual funds
                
                
                16
                
                
                
                -
                
                
                
                16Commercial
                    paper
                
                
                26,361
                
                
                
                3
                
                
                
                26,364Government
                    Agencies
                
                
                3,400
                
                
                
                (1
                )
                
                
                3,399Total
                    cash equivalents
                
                
                29,777
                
                
                
                2
                
                
                
                29,779Total
                    cash and cash equivalents
                
                
                32,802
                
                
                
                2
                
                
                
                32,804Short
                    term investments:Muni
                    Auction Rate Receipt
                
                
                1,700
                
                
                
                -
                
                
                
                1,700Commercial
                    paper
                
                
                3,156
                
                
                
                1
                
                
                
                3,157Corporate
                    bonds
                
                
                994
                
                
                
                2
                
                
                
                996Total
                    short-term investments
                
                
                5,850
                
                
                
                3
                
                
                
                5,853Classified
                    as Non-Current Assets:Long
                    term investments:Corporate
                    bonds
                
                
                2,684
                
                
                
                -
                
                
                
                2,684Government
                    Agencies
                
                
                981
                
                
                
                1
                
                
                
                982Total
                    long-term investments
                
                
                3,665
                
                
                
                1
                
                
                
                3,666Total
                    cash, cash equivalents, short-term and long-term
                    investments
                
                $
                42,317
                
                
                $
                6
                
                
                $
                42,323
 52
 At
        December 31, 2007, the contractual maturity of short term investments
        (including cash equivalents) was less than one year and the contractual maturity
        of long term investments was one to two years. The Company determined
        the $62,000 unrealized gain as of December 31, 2007 was due to increases in
        the fair values of the investments above their cost basis.  There were no
        impairments as of December 31, 2007.
  **5****.  Concentrations
        of Credit, Customer and Supplier Risk**
  Financial
        instruments that potentially subject the Company to concentrations of credit
        risk consist primarily of cash equivalents, short-term investments, long-term
        investments and trade receivables. The Company generally invests its excess
        cash
        in money market funds, commercial paper of corporations with high credit
        ratings, municipal bonds and treasury bills. The Company’s cash, cash
        equivalents, short and long-term investments were approximately $46.6 million
        as
        of December 31, 2007 which exceeded the amount insured by the Federal Deposit
        Insurance Corporation (“FDIC”).  The Company has not experienced any
        significant losses on its cash equivalents or short and long-term
        investments.
  The
        Company performs ongoing credit evaluations of its customers and generally
        requires no collateral. The Company's single largest receivable balance as
        of
        December 31, 2007 and 2006 was approximately 31% of net accounts receivable,
        generated by Excelpoint Systems and Metatech, respectively.
  The
        Company analyzes the need for reserves for potential credit losses and records
        reserves when necessary. Through fiscal 2007, a relatively small number of
        direct customers and distributors accounted for a significant percentage
        of the
        Company's revenues.  For the year ended December 31, 2007, sales to
        Excelpoint Systems, Metatech and Answer Technology accounted for approximately
        18%, 17% and 10%, respectively, of net revenues In 2006, sales to Metatech
        and
        Answer Technology accounted for approximately 31% and 10%, respectively of
        net
        revenues. In 2005, sales to Metatech accounted for approximately 23% of net
        revenues. No other distributor or direct customer represented greater than
        10%
        of net revenues.
  Currently,
        the Company relies on single source suppliers for the significant majority
        of
        its product inventory. As a result, should the Company's current suppliers
        not
        produce and deliver inventory for the Company to sell on a timely basis,
        operating results may be adversely impacted.
  **6****.  Other
        Intangible Assets**
  Information
        regarding the Company's other identified intangible assets subject to
        amortization is as follows (in thousands):
  **2007****Estimated**
                
                **Gross
                    Carrying**
                
                
                **Accumulated**
                
                
                **Net****Useful
                    Life**
                
                **Amounts**
                
                
                **Amortization**
                
                
                **Value**Patents
                4
                    years
                
                $
                2,132
                
                
                $
                (2,132
                )
                
                $
                -Developed
                    Core Technology
                6
                    years
                
                
                5,422
                
                
                
                (3,845
                )
                
                
                1,577Customer
                    Base
                3
                    years
                
                
                3,246
                
                
                
                (3,246
                )
                
                
                -Total
                
                
                $
                10,800
                
                
                $
                (9,223
                )
                
                $
                1,577**2006****Estimated**
                
                **Gross
                    Carrying**
                
                
                **Accumulated**
                
                
                **Net****Useful
                    Life**
                
                **Amounts**
                
                
                **Amortization**
                
                
                **Value**Patents
                4
                    years
                
                $
                2,132
                
                
                $
                (2,132
                )
                
                $
                -Developed
                    Core Technology
                6
                    years
                
                
                5,422
                
                
                
                (2,880
                )
                
                
                2,542Customer
                    Base
                3
                    years
                
                
                3,246
                
                
                
                (2,932
                )
                
                
                314Total
                
                
                $
                10,800
                
                
                $
                (7,944
                )
                
                $
                2,856
 Identified
        intangible asset amortization expense was approximately $1.3 million, $1.9
        million and $2.3 million, for the years ended December 31, 2007, 2006 and
        2005
        respectively.
 53
 Estimated
        amortization expense for fiscal years ending December 31 is as follows (in
        thousands):
 2008
                
                $
                7422009
                
                
                5992010
                
                
                236Total
                
                $
                1,577
 An
        indefinite lived intangible (Tradename) acquired in connection with the Sebring
        acquisition was written off in 2005 as it was deemed to have no value. The
        total
        write-down, included in the amortization and write-down of purchased intangible
        assets on the consolidated statement of operations, was $0.2
        million.
  **7****.  Stock
        Repurchase**
  In
        September 2002, the Company’s Board of Directors approved a repurchase of up to
        2,000,000 shares of common stock.  The Company, at the discretion of
        management, can repurchase the shares from time to time in the open market
        or in
        privately negotiated transactions. Approximately 774,000 shares were repurchased
        for approximately $1.9 million in cash in 2003.  No shares were
        repurchased through December 31, 2007. As of March 5, 2008, the
        Company repurchased 80,000 shares for approximately $516,000 and anticipate
        additional shares will be repurchased throughout 2008.
  **8****.  Retirement
        Savings Plan**
  The
        Company sponsors the PLX Technology, Inc. 401(k) Plan (the
“Plan”).  The Plan allows all full-time employees to contribute up to
        100% of their annual compensation.  However, employee contributions
        are limited to a maximum annual amount as set up by the Internal Revenue
        Service. Beginning in 1996, the Company made a matching contribution calculated
        at 50 cents on each dollar of the first 6% of the participant’s compensation.
        The Company's expenses relating to the plan were approximately $0.5
        million, $0.4 million and $0.3 million for 2007, 2006 and 2005,
        respectively.
  **9.
        Income Taxes**
  The
        provision for income taxes consists of the following (in
        thousands):
  **Years
                    Ended December 31,****2007**
                
                
                **2006**
                
                
                **2005**Federal:Current
                
                $
                187
                
                
                $
                (419
                )
                
                $
                26Deferred
                
                
                414
                
                
                
                712
                
                
                
                188601
                
                
                
                293
                
                
                
                214State:Current
                
                
                (101
                )
                
                
                39
                
                
                
                9Deferred
                
                
                33
                
                
                
                144
                
                
                
                19(68
                )
                
                
                183
                
                
                
                28Foreign:Current
                
                
                44
                
                
                
                36
                
                
                
                2344
                
                
                
                36
                
                
                
                23Total
                
                $
                577
                
                
                $
                512
                
                
                $
                265
 54
 The
        provision for income taxes differs from the amount of income taxes
        determined by applying the U.S. statutory federal income tax rate as follows
        (in
        thousands):
 **Years
                      Ended December 31,****2007**
                  
                  
                  **2006**
                  
                  
                  **2005**Tax
                      expense (benefit) at the U.S. statutory rate
                  
                  $
                  613
                  
                  
                  $
                  1,232
                  
                  
                  $
                  (504
                  )State
                      taxes (net of federal benefit)
                  
                  
                  47
                  
                  
                  
                  183
                  
                  
                  
                  329True
                      ups
                  
                  
                  1,137
                  
                  
                  
                  (891
                  )
                  
                  
                  30Release
                      of income tax reserves
                  
                  
                  (115
                  )
                  
                  
                  (569
                  )
                  
                  
                  -Research
                      and development credit
                  
                  
                  (112
                  )
                  
                  
                  (1,461
                  )
                  
                  
                  (1,291
                  )Change
                      in valuation allowance
                  
                  
                  (1,006
                  )
                  
                  
                  1,945
                  
                  
                  
                  1,740Other
                      individually immaterial items
                  
                  
                  13
                  
                  
                  
                  73
                  
                  
                  
                  (39
                  )$
                  577
                  
                  
                  $
                  512
                  
                  
                  $
                  265
 During
        the year ended December 31, 2007, the Company’s deferred tax asset valuation
        allowance decreased by $2.2 million and for the same periods in 2006 and
        2005,
        the Company’s deferred tax asset valuation allowance increased by $1.9 million
        and $3.5 million, respectively.  The decrease from December 31, 2006
        to December 31, 2007 primarily relates to the decrease in net operating loss
        carry forwards due to utilization. The increase from December 31, 2005 to
        December 31, 2006 relates to increases in federal and state research and
        development credits that have not been realized along with a decrease in
        the
        deferred liability related to acquired intangibles.
  Significant
        components of the Company's deferred tax assets and liabilities are as follows
        (in thousands):
 **Yeards
                    Ended December 31,****2007**
                
                
                **2006**Deferred
                    tax assets:Accrued
                    expenses and reserves
                
                $
                1,558
                
                
                $
                1,255Net
                    operating loss carryforwards
                
                
                3,036
                
                
                
                7,239Research
                    and development credits
                
                
                8,939
                
                
                
                9,344Share-based
                    compensation
                
                
                1,548
                
                
                
                204Other
                
                
                226
                
                
                
                228Gross
                    deferred tax assets:
                
                
                15,307
                
                
                
                18,270Valuation
                    Allowance
                
                
                (13,752
                )
                
                
                (15,987
                )1,555
                
                
                
                2,283Deferred
                    tax liabilities:Acquisition
                    related intangibles
                
                
                (869
                )
                
                
                (1,452
                )Depreciation
                
                
                (686
                )
                
                
                (831
                )(1,555
                )
                
                
                (2,283
                )Total
                    net deferred tax assets
                
                $
                -
                
                
                $
                -
 At
          December 31, 2007, the Company had federal and state net operating loss
          carryforwards of $8.6 million and $0.6 million, respectively. These
          carryforwards will expire at various dates beginning in 2008 through 2025,
          if
          not utilized. In addition, as of December 31, 2007, the Company had federal
          and state tax credit carryforwards of approximately $5.5 million and $7.6
          million, respectively.  The federal research and development credits
          will expire beginning in 2012 and the state credits will carryforward
          indefinitely.  Approximately $3.7 million of the federal and $0.6
          million of the state net operating loss carryforward relate to excess tax
          deductions from stock options which have not yet been realized.  SFAS
          123R prohibits recognition of a deferred income tax asset for excess tax
          benefits due to stock option exercises that have not yet been realized
          through a
          reduction in income tax payable.
 55
 Utilization
        of the net operating loss and credit carryforwards may be subject to a
        substantial annual limitation due to the ownership change limitations provided
        by the Internal Revenue Code of 1986, as amended, and similar state provisions.
        The annual limitation may result in the expiration of net operating loss
        carryforwards before utilization.   Utilization of $4.9 million
        of federal net operating loss is subject to an annual limitation under the
        Internal Revenue Code of 1986, as amended, and similar state
        provisions.  Utilization of $1.1 million of federal research and
        development credits and $0.9 million of state research and development credits
        are subject to an annual limitation under the Internal Revenue Code of 1986,
        as
        amended, and similar state provisions.  The annual limitation may
        result in the expiration of the federal and state research and development
        credits before utilization.
  Due
        to
        operating losses incurred, the Company created a full valuation allowance
        as of
        December 2002 for deferred tax assets.  As of December 2007, a
        valuation allowance continues to be recorded for the net deferred tax asset
        based on management’s assessment that the realization of deferred tax assets is
        uncertain due to the history of losses, the variability of operating results
        and
        the inability to conclude that it is more likely than not that sufficient
        taxable income would be generated in future periods to realize those deferred
        tax assets. The Company will maintain a full valuation allowance until
        sufficient positive evidence exists to support a reversal of the valuation
        allowance. Approximately $3.4 million of the valuation allowance relates
        to
        acquired tax benefits, which will result in an adjustment to goodwill, net
        of
        the related deferred liability on acquired intangibles when such benefits
        are
        realized.  During 2007, $0.4 million was released from the deferred
        tax valuation allowance and credited to goodwill.
  On
        January 1, 2007, the Company adopted the provision of Financial Standards
        Accounting Board Interpretation No. 48, “Accounting for Uncertainty in Income
        Taxes” FIN 48 – an interpretation of FASB No. 109. As a result of the
        implementation of FIN 48, the Company recognized no material adjustment in
        the
        liability for unrecognized income tax benefits.
  A
        reconciliation of the beginning and ending amount of unrecognized tax benefits
        is a follows (in thousands):
  **Year
                  Ended December 31, 2007**Unrecognized
                  tax benefits balance at January 1, 2007
              
              $
              1,916Gross
                  decrease for tax positions for prior year
              
              
              (225
              )Gross
                  increase for tax positions for current year
              
              
              319Reduction
                  for Lapse of California statute of limitations
              
              
              (115
              )Unrecognized
                  tax benefits balance at December 31, 2007
              
              $
              1,895




Future
        changes in the remaining balance of unrecognized tax benefits will have no
        impact on the effective tax rate as it is subject to a full valuation
        allowance.
  The
        Company does not have any material accrued interest or penalties associated
        with
        any unrecognized tax benefits. The Company does not believe it is reasonably
        possible that its unrecognized tax benefits will significantly change within
        the
        next twelve months.
  The
        Company is subject to taxation in the US and various state and foreign
        jurisdictions. The tax years 1997-2007 remain open to examination by the
        federal
        and state tax authorities due to certain acquired net operation loss and
        overall
        credit carryforward positions.
  The
        Company has made no provision for U.S. income taxes on approximately $0.4
        million of cumulative undistributed earnings of certain foreign subsidiaries
        because it is the Company’s intention to permanently reinvest such
        earnings.  If such earnings were distributed, the Company would accrue
        additional taxes of approximately $0.2 million.  Pre-tax income from
        foreign operations was $86,000, $77,000 and $55,000 in 2007, 2006 and 2005,
        respectively.
 56
 **10.  Commitments
        and Contingencies**
  In
        2006,
        the Company entered into two software license agreements and one intellectual
        property license agreement with unrelated parties totaling
        $7.4 million.  As of December 31, 2007, the Company is required
        to make payments in accordance with the agreements of approximately $2.6
        million
        for the year ended December 31, 2008.
  The
        Company uses several contract manufacturers and suppliers to provide
        manufacturing services for its products. As of December 31, 2007, the
        Company has purchase commitments for inventory with these contract manufacturers
        and suppliers of approximately $3.3 million. These inventory purchase
        commitments are placed on a sales order basis with lead times ranging from
        4 to
        16 weeks to meet estimated customer demand requirements.
  The
        Company leases facilities and equipment under non-cancelable operating lease
        agreements. Future minimum payments under facility and equipment leases at
        December 31, 2007 are as follows (in thousands):
 2008
                
                $
                1122009
                
                
                332010
                
                
                4Total
                
                $
                149
 Rental
        expense for all facility leases aggregated approximately $0.1 million for
        the
        year ended December 31, 2007.  Rental expense aggregated approximately
        $0.1 million for the year ended December 31, 2006 and $0.2 million for the
        year ended December 31, 2005.
  ***Warranty
        and Indemnification Provisions***
  Changes
        in sales warranty reserve are as follows (in thousands):
  **Years
                    Ended December 31,****2007**
                
                
                **2006**
                
                
                **2005**Balance,
                    beginning of period
                
                $
                98
                
                
                $
                92
                
                
                $
                60Warranty
                    costs incurred
                
                
                (236
                )
                
                
                (232
                )
                
                
                (148
                )Additions
                    related to current period sales
                
                
                204
                
                
                
                238
                
                
                
                180Balance,
                    end of period
                
                $
                66
                
                
                $
                98
                
                
                $
                92
 Warranty
        costs, which relate to product quality issues, remained consistent and
        insignificant during the periods presented.
  The
        Company enters into standard indemnification agreements with many of its
        customers and certain other business partners in the ordinary course of
        business. These agreements include provisions for indemnifying the customer
        against any claim brought by a third-party to the extent any such claim alleges
        that a PLX product infringes a patent, copyright or trademark, or violates
        any
        other proprietary rights of that third-party. It is not possible to estimate
        the
        maximum potential amount of future payments the Company could be required
        to
        make under these indemnification agreements. To date, the Company has not
        incurred any costs to defend lawsuits or settle claims related to these
        indemnification agreements. No liability for these indemnification agreements
        has been recorded at December 31, 2007 or 2006.
  **11.  Segments
        of an Enterprise and Related Information**
  The
        Company has one operating segment, the sale of semiconductor devices. The
        Chief
        Executive Officer has been identified as the Chief Operating Decision Maker
        (CODM) because he has final authority over resource allocation decisions
        and
        performance assessment. The CODM does not receive discrete financial information
        about individual components of the Company's business.  The majority
        of the Company’s assets are located in the United States.
 57
 Revenues
        by geographic region based on customer location were as follows (in
        thousands):
  **Years
                    Ended December 31,****2007**
                
                
                **2006**
                
                
                **2005**Revenues:United
                    States
                
                $
                21,251
                
                
                $
                20,656
                
                
                $
                15,256Singapore
                
                
                15,047
                
                
                
                12,814
                
                
                
                8,254China
                
                
                12,130
                
                
                
                8,111
                
                
                
                6,949Other
                    Asia Pacific
                
                
                11,604
                
                
                
                11,712
                
                
                
                8,716Taiwan
                
                
                10,002
                
                
                
                14,271
                
                
                
                4,760Europe
                
                
                8,962
                
                
                
                10,074
                
                
                
                8,244The
                    Americas - excluding United States
                
                
                2,738
                
                
                
                3,787
                
                
                
                2,436Total
                
                $
                81,734
                
                
                $
                81,425
                
                
                $
                54,615
 Revenues
        by product type were as follows (in thousands):
  **Years
                      Ended December 31,****2007**
                  
                  
                  **2006**
                  
                  
                  **2005**Revenues:Legacy
                      Products
                  
                  $
                  53,285
                  
                  
                  $
                  63,373
                  
                  
                  $
                  50,878PCI
                      Express
                  
                  
                  28,449
                  
                  
                  
                  18,052
                  
                  
                  
                  3,737Total
                  
                  $
                  81,734
                  
                  
                  $
                  81,425
                  
                  
                  $
                  54,615
 There
        were no direct end customers that accounted for more than 10% of net
        revenues.  Sales to the following distributors accounted for 10% or
        more of net revenues:
  **Years
                    Ended December 31,****2007**
                
                
                **2006**
                
                
                **2005**Excelpoint
                    Systems
                
                
                18
                %
                
                
                -
                
                
                
                -Metatech
                
                
                17
                %
                
                
                31
                %
                
                
                23
                %Answer
                    Technology
                
                
                10
                %
                
                
                10
                %
                
                
                -
 58
 **12.  Quarterly
        Financial Data (unaudited)**
  (In
        thousands, except per share amounts)
  **Three
                    Months Ended****March
                    31,**
                
                
                **June
                    30,**
                
                
                **September
                    30,**
                
                
                **December
                    31,****2007**
                
                
                **2007**
                
                
                **2007**
                
                
                **2007**Net
                    revenues
                
                $
                18,640
                
                
                $
                19,764
                
                
                $
                21,216
                
                
                $
                22,114Gross
                    profit
                
                $
                11,377
                
                
                $
                11,646
                
                
                $
                13,108
                
                
                $
                13,394Net
                    income (loss)
                
                $
                (272
                )
                
                $
                (82
                )
                
                $
                997
                
                
                $
                531Net
                    income (loss) per basic share
                
                $
                (0.01
                )
                
                $
                (0.00
                )
                
                $
                0.03
                
                
                $
                0.02Net
                    income (loss) per diluted share
                
                $
                (0.01
                )
                
                $
                (0.00
                )
                
                $
                0.03
                
                
                $
                0.02**Three
                    Months Ended****March
                    31,**
                
                
                **June
                    30,**
                
                
                **September
                    30,**
                
                
                **December
                    31,****2006**
                
                
                **2006**
                
                
                **2006**
                
                
                **2006**Net
                    revenues
                
                $
                20,005
                
                
                $
                19,411
                
                
                $
                21,046
                
                
                $
                20,963Gross
                    profit
                
                $
                12,508
                
                
                $
                11,186
                
                
                $
                12,210
                
                
                $
                11,726Net
                    income
                
                $
                1,541
                
                
                $
                281
                
                
                $
                1,022
                
                
                $
                162Net
                    income per basic share (1)
                
                $
                0.06
                
                
                $
                0.01
                
                
                $
                0.04
                
                
                $
                0.01Net
                    income per diluted share (1)
                
                $
                0.05
                
                
                $
                0.01
                
                
                $
                0.04
                
                
                $
                0.01
 (1)
              The
                  sum of per share amounts for the quarters does not necessarily
                  equal that
                  for the year due to rounding as the computations were made
                  independently.
 59
 **SCHEDULE
        II-VALUATION AND QUALIFYING ACCOUNTS**
 (IN
        THOUSANDS)
  **Additions**
                
                
                **Deductions****Balance
                    at**
                
                
                **Charged
                    to**
                
                
                **Charged
                    to**
                
                
                **Amount**
                
                
                **Balance
                    at****Beginning
                    of**
                
                
                **Costs
                    and**
                
                
                **Other**
                
                
                **Recovered**
                
                
                **End
                    of****Description**
                
                **Period**
                
                
                **Expenses**
                
                
                **Accounts**
                
                
                **(Written
                    off)**
                
                
                **Period**Year
                    ended December 31, 2007:Allowance
                    for doubtful accounts
                
                $
                94
                
                
                $
                3
                
                
                $
                -
                
                
                $
                (15
                )
                
                $
                82Provision
                    for excess and obsolete inventories
                
                $
                936
                
                
                $
                763
                
                
                $
                -
                
                
                $
                (420
                )
                
                $
                1,279Allowance
                    for returns and price concessions
                
                $
                75
                
                
                $
                -
                
                
                $
                358
                
                
                $
                (284
                )
                
                $
                149Allowance
                    for ship and debits
                
                $
                143
                
                
                $
                -
                
                
                $
                2,101
                
                
                $
                (1,959
                )
                
                $
                285Year
                    ended December 31, 2006:Allowance
                    for doubtful accounts
                
                $
                131
                
                
                $
                (28
                )
                
                $
                -
                
                
                $
                (9
                )
                
                $
                94Provision
                    for excess and obsolete inventories
                
                $
                389
                
                
                $
                809
                
                
                $
                -
                
                
                $
                (262
                )
                
                $
                936Allowance
                    for returns and price concessions
                
                $
                80
                
                
                $
                -
                
                
                $
                79
                
                
                $
                (84
                )
                
                $
                75Allowance
                    for ship and debits
                
                $
                -
                
                
                $
                -
                
                
                $
                1,008
                
                
                $
                (865
                )
                
                $
                143Year
                    ended December 31, 2005:Allowance
                    for doubtful accounts
                
                $
                127
                
                
                $
                14
                
                
                $
                -
                
                
                $
                (10
                )
                
                $
                131Provision
                    for excess and obsolete inventories
                
                $
                534
                
                
                $
                379
                
                
                $
                -
                
                
                $
                (524
                )
                
                $
                389Allowance
                    for returns and price concessions
                
                $
                -
                
                
                $
                -
                
                
                $
                267
                
                
                $
                (187
                )
                
                $
                80 60
 **SIGNATURES**
  Pursuant
        to the requirements of Section 13 or 15(d) of the Securities Exchange Act
        of 1934, the registrant has duly caused this report to be signed on its behalf
        by the undersigned, thereunto duly authorized.
   March
                    06, 2008
                PLX
                    Technology, Inc.
                  by:
                  /s/     Michael
                    J.
                    Salameh
                  Name:
                    Michael J. Salameh
                  Title:
                    Chief Executive Officer
 61
 **POWER
        OF ATTORNEY**
  KNOW
        ALL
        PERSONS BY THESE PRESENTS, that each person whose signature appears below
        constitutes and appoints Michael J. Salameh and Arthur O. Whipple, and each
        of
        them, his attorneys-in-fact, each with the power of substitution, for him
        in any
        and all capacities, to sign any amendments to this Report on Form 10-K and
        to file the same, with exhibits thereto and other documents in connection
        therewith, with the Securities and Exchange Commission, hereby ratifying
        and
        confirming all that each of said attorneys-in- fact, or his substitute or
        substitutes, may do or cause to be done by virtue hereof.
  Pursuant
        to the requirements of the Securities Exchange Act of 1934, this report has
        been
        signed below by the following persons on behalf of the registrant and in
        the
        capacities and on the dates indicated.
  **Name
                    and Signature**
                
                **Title(s)**
                
                **Date**/s/
                    Michael J. Salameh
                
                Chief
                    Executive Officer and Director
                
                March
                    6, 2007Michael
                    J. Salameh
                
                (Principal
                    Executive Officer)Chief
                    Financial Officer, Vice President,/s/
                    Arthur O. Whipple
                
                Finance
                    and Secretary
                
                March
                    6, 2007Arthur
                    O. Whipple
                
                (Principal
                    Finanacial and Accounting Officer)/s/
                    D. James Guzy
                
                Director
                    and Chairman of the Board of
                
                March
                    6, 2007D.
                    James Guzy
                
                Directors/s/
                    Robert H. Smith
                
                Director
                
                March
                    6, 2007Robert
                    H. Smith/s/
                    John H. Hart
                
                Director
                
                March
                    6, 2007John
                    H. Hart/s/
                    Thomas J. Riordan
                
                Director
                
                March
                    6, 2007Thomas
                    Riordan/s/
                    Patrick Verderico
                
                Director
                
                March
                    6, 2007Patrick
                    Verderico
 62
 **EXHIBIT
        INDEX**
  **Exhibit****Number**
                
                **Description**3.1
                    (1)
                
                Amended
                    and Restated Certificate of Incorporation of the
                    Registrant.3.2
                
                Registrant's
                    Amended and Restated Bylaws, filed as Exhibit 3.1 to the Company's
                    Form
                    8-K, filed on November 26,2007 and incorporated herein by
                    reference.3.3
                
                Certificate
                    of Amendment to Amended and Restated Certificate of Incorporation,
                    filed
                    as Exhibit 3.1 to the Company’s quarterly report on Form 10-Q for the
                    quarter ended June 30, 2004 and incorporated herein by
                    reference.4.1
                
                Reference
                    is made to Exhibits 3.1 and 3.3.10.1
                    (1)*
                
                Form
                    of Indemnification Agreement between PLX and each of its Officers
                    and
                    Directors.10.2
                    (1)*
                
                1998
                    Stock Incentive Plan.10.3
                    (1) (2)*
                
                1999
                    Stock Incentive Plan, As Amended.10.4
                    (1)
                
                Lease
                    Agreement dated October 17, 1997 between The Arrillaga Foundation and
                    The Perry Foundation as Landlords and PLX as Tenant, as
                    amended.10.10
                    (4)*
                
                HiNT
                    Corporation 2000 Stock Plan.10.11
                    (3)*
                
                Sebring
                    Systems, Inc. 1997 Stock Option/Stock/Issuance Plan.10.12
                    (5)*
                
                NetChip
                    Technology, Inc. 1996 Flexible Stock Incentive Plan.10.15*
                
                PLX
                    Technology, Inc. 2006 Bonus and Deferred Compensation Plan, filed
                    as
                    Exhibit 10.15 to the Company’s Form 10-K, filed on March 3, 2006, and
                    incorporated herein by reference.10.16*
                
                PLX
                    Technology, Inc. 2007 Variable Compensation Plan, filed as Exhibit
                    10.16
                    to the Company's Form 10-K, filed on February 27, 2007 and incorporated
                    herein by reference.10.17*
                
                PLX
                    Technology, Inc. 2008 Variable
                    Compensation Plan.10.18*
                
                Amended
                    and Restated PLX Technology, Inc. 1999 Stock Incentive Plan,
                    titled as
                    Appendix A to the Company's Proxy Statement on Schedule 14A,
                    dated April
                    18, 2006, and incorporated herein by reference.10.19*
                
                Offer
                    letter, dated December 29, 2006 between PLX Technology, Inc.
                    and Arthur O.
                    Whipple, filed as Exhibit 10-1 to the Company's Form 8-K, filed
                    on January
                    18, 2007, and incorporated herein by reference.14.1
                
                Code
                    of Ethics, filed as Exhibit 14.1 to the Company’s Form 10-K, filed on
                    March 3, 2006, and incorporated herein by reference.21.1
                
                Subsidiaries
                    of the
                    Company.23.1
                
                Consent
                    of Independent Registered Public
                    Accounting Firm.24.1
                
                Power
                    of Attorney (See Signature page).31.1
                
                Certification
                    of Chief Executive Officer
                    Pursuant to Section 302 of the Sarbanes-Oxley Act of
                    2002.31.2
                
                Certification
                    of Chief Financial Officer
                    Pursuant to Section 302 of the Sarbanes-Oxley Act of
                    2002.32.1
                
                Certification
                    of Chief Executive Officer
                    Pursuant to 18 U.S.C.Section 1350, Chapter 63 of Title 18,
                    United States Code, as Adopted Pursuant to Section 906 of the
                    Sarbanes-Oxley Act of 2002.32.2
                
                Certification
                    of Chief Financial Officer
                    Pursuant to 18 U.S.C.Section 1350, Chapter 63 of Title 18,
                    United States Code, as Adopted Pursuant to Section 906 of the
                    Sarbanes-Oxley Act of 2002.(1)
                
                Incorporated
                    by reference to the same numbered exhibit previously filed with
                    the
                    Company's Registration Statement on Form S-1 (Registration
                    No. 333-71795).(2)
                
                Incorporated
                    by reference to Exhibit 10.1 to the Company's quarterly report on
                    Form 10-Q for the quarter ended June 30,
                    2002.(3)
                
                Incorporated
                    by reference to Exhibit 2.1 to Form 8-K as filed on June 2,
                    2000.(4)
                
                Incorporated
                    by reference to Exhibit 10.1 to the Company's quarterly report on
                    Form 10-Q for the quarter ended September 30,
                    2003.(5)
                
                Incorporated
                    by reference to Exhibit 10.2 to the Company’s quarterly report on Form
                    10-Q for the quarter ended June 30, 2004.*
                
                Management
                    contract or compensatory plan or
                    arrangement.
 63