SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-K

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(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, 2003

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.



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

870 Maude Avenue
Sunnyvale, California     94085

(408) 774-9060

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

Securities registered pursuant to Section 12(g) of the Act:
               Common stock, $0.001 par value per share

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 an accelerated filer (as defined in
Rule 121(b)2 of the Securities Exchange Act of 1934). 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 30, 2003, as reported on
The Nasdaq National Market, was approximately $66,027,820. 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 24, 2004 was 23,907,012.



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 2004 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, 2003



|Part I.    |                                                                                       | Page
|---------- | ------------------------------------------------------------------------------------- | ----
|Item 1.    | Business                                                                              | 3   
|Item 2.    | Properties                                                                            | 17  
|Item 3.    | Legal Proceedings                                                                     | 17  
|Item 4.    | Submission of Matters to a Vote of Security Holders                                   | 17  
|Part II.   |                                                                                       |     
|Item 5.    | Market for Registrant's Common Stock and Related Security Holder Matters              | 18  
|Item 6.    | Selected Financial Data                                                               | 18  
|Item 7.    | Management's Discussion and Analysis of Financial Condition and Results of Operations | 18  
|Item 7A.   | Quantitative and Qualitative Disclosures About Market Risk                            | 34  
|Item 8.    | Financial Statements and Supplementary Data                                           | 34  
|Item 9.    | Changes in and Disagreements with Accountants on Accounting and Financial Disclosures | 34  
|Item 9A.   | Controls and Procedures                                                               | 34  
|Part III.  |                                                                                       |     
|Item 10.   | Directors and Executive Officers of the Registrant                                    | 34  
|Item 11.   | Executive Compensation                                                                | 34  
|Item 12.   | Security Ownership of Certain Beneficial Owners and Management                        | 34  
|Item 13.   | Certain Relationships and Related Transactions                                        | 35  
|Item 14.   | Principal Accounting Fees and Services                                                | 35  
|Part IV.   |                                                                                       |     
|Item 15.   | Exhibits, Financial Statement Schedules and Reports on Form 8-K                       | 35  
|Signatures |                                                                                       | 59  

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS

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 (a) the
growing demand for standards-based components such as our semiconductor devices
that connect systems together, (b) our objective to expand our advantages
in data transfer technology, under the heading "Item 1, Business -
Overview"; our expectation that we will support new I/O standards where
appropriate, under the heading "Item 1, Business - The PLX Solution"; the
statements regarding (a) our objective to continue to expand our market
position as a developer and supplier of I/O connectivity solutions for high
performance systems, (b) our plan to target those applications where we
believe we can attain a leadership position, (c) that we seek to integrate
additional I/O-related functions into our semiconductor devices, (d) 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, under the heading "Item 1, Business - Strategy"; that we
continue to integrate more functionality in our semiconductor devices and
continue to enhance and expand our software development kits under the heading
"Item 1, Business - Technology"; the statements regarding (a) our
belief with respect to the principal factors of competition in the business,
(b) our belief that we compete favorably with respect to each of those
factors, under the heading "Item 1, Business - Competition"; the
statements regarding (a) our expectation that revenues related to sales
through distributors will continue to account for a significant portion of total
revenues, (b) our belief that providing customers with comprehensive
product support is critical to remaining competitive in the markets we serve,
(c) our belief that our close contact with customer design engineers
provides valuable input into existing product enhancements and next generation
product specifications, under the heading "Item 1, Business - Sales,
Marketing and Technical Support"; (a) our expectation that we will continue
to make substantial investments in research and development and to participate
in the development of industry standards, (b) our expectation that we will
periodically seek to hire additional development engineers, under the heading
"Item 1, Business - Research and Development"; our belief that the
transition of our products to smaller geometries will be important for us to
remain competitive under the heading "Item 1, Business - Manufacturing";
our plan to seek patent protection when necessary, under the heading
"Item 1, Business - Intellectual Property"; our belief that our current
facility will be adequate through 2004 under the heading "Item 2,
Properties"; the statement regarding our intention to retain earnings for use in
our business and not to pay any cash dividend in the foreseeable future under
the heading "Item 5, Market for Registrant's Common Equity and Related
Stockholder Matters"; our belief that our long-term success will depend on our
ability to introduce new products under the heading "Item 7, Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Overview''; the statement regarding our expectation to record amortization of
deferred compensation related to the stock grants of approximately $32,000,
$6,000, $4,000, and $2,000 for 2004, 2005, 2006, and 2007, respectively, under
the heading "Item 7, Management's Discussion and Analysis of Financial
Condition and Results of Operations - Results of Operations''; 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 under the heading "Item 7, Management's Discussion and
Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources."

All forward-looking statements included in this document are
subject to additional risks and uncertainties further discussed under
"Item 7: Management's Discussion and Analysis of Financial Condition and
Results of Operations - Certain 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. These cautionary statements should
be considered in the context of the factors listed under the heading
"Item 7, Management's Discussion and Analysis of Financial Condition and
Results of Operations - Certain 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.

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 networking and telecommunications, enterprise storage, servers, personal
computers, imaging and industrial equipment. We offer a complete solution
consisting of three related types of products: semiconductor devices, software
development kits and hardware design kits. Our semiconductor devices simplify
the development of data transfer circuits in high-performance embedded systems
and computers and are compatible with microprocessors such as Motorola's
PowerPC, Intel's i960 and StrongArm, Broadcom's MIPS, PMC-Sierra's MIPS, and
DSPs from companies such as Texas Instruments. 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
networking, telecommunications, storage, imaging and other equipment that
transmits, stores and processes information rapidly has increased due to:

- growth of the Internet,
- deployment of high-speed networking, and
- proliferation of multimedia.

 Suppliers of this equipment 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 Peripheral Component
Interconnect, or PCI, an interconnect standard that is widely used in our
markets. 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, Advanced Switching, PCITM and PCI-X®
Bridges 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 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.

Industry Background

Embedded 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
embedded 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 or control code.

The growth of the
communications infrastructure has increased the demand for high performance
embedded systems and communication-related server and personal computer
(PC) adapter cards. 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 embedded systems include the following:

- Networking and Telecommunications

- Enterprise Storage

- Imaging

- Industrial

Manufacturers of products that
rely on high-performance embedded 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 includes the system bus or switch fabric, which is
a physical connection between these different functions.

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 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 requirements
for the I/O subsystem have increased, so has the complexity of its interface
logic and related software. Until a few years ago, most embedded systems used
simple I/O subsystems that contained limited logic and rudimentary software, if
any. Complex I/O subsystem components such as processors, 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 embedded 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 Embedded Systems

Until the mid 90's, embedded
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. Embedded system software was even
more fragmented with many proprietary and application specific software
architectures in use. While embedded 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 embedded 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 is now established as a standard I/O architecture for many high-
performance embedded 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 embedded system interoperability. PCI also offers
equivalent or superior performance to the in-house developed standards of many
embedded equipment suppliers. Furthermore, the use of PCI enables faster time to
market, lower development cost and the ability to quickly integrate new I/O
components.

New standards are emerging to
meet increasing system performance needs. PCI-X, a standard now widely used in
servers, is an evolutionary improvement to PCI. PCI-Express is a next-generation
PCI standard now in the early commercialization phase. Other standards, such as
HyperTransport, InfiniBand, Rapid I/O and Ethernet, are also used in varying
degrees to interconnect system components.

Although the PCI and newer
interconnect standards have resolved many development issues relating to I/O
hardware architectures, software remains a challenge. The lack of standards for
I/O control software and the wide use of proprietary operating systems place a
significant demand on development resources. Consequently, embedded developers
are increasingly adopting standard operating systems with well-defined I/O
structures as opposed to developing their own software internally. Examples
include VxWorks, Linux, pSOS, Windows CE, and Windows NT.

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 implements 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, systems 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 embedded system, server and PC developers, there is
now a large 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
embedded systems and servers and PC adapter cards.

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, imaging and industrial. 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.

PLX products shipping today
provide I/O connectivity solutions mainly for the PCI standard. As new I/O
standards evolve, we expect to support them where appropriate. We are in the
process of developing chips that implement the PCI Express standard. More than
1,000 electronic equipment manufacturers use PLX semiconductor devices in a wide
variety of applications.

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 and
embedded control 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 embedded systems 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 increasing functionality at
the same or lower costs. We employ a team of engineers with expertise in system
architectures, product definition, semiconductor and software design and
engineering to maintain our I/O subsystem technology advantages.

Drive I/O Subsystem
Standards for Embedded Applications.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, HyperTransport Consortium, and the Arapahoe
Working Group (PCI-Express), 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 and promoting industry standards. Partners include AMD,
Broadcom, Bustronics, Intel, Jungo, Kaparel, Microsoft, Motorola, Pigeon Point,
PMC Sierra, RamBus, Texas Instruments and Wind River. As a result of these
relationships, we enable embedded 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
customers for a wide variety of high-performance communications infrastructure
applications including networking, telecommunications, and enterprise storage.
We also have sales in other markets such as the imaging, industrial, personal
computer, server, and consumer markets. The typical product life cycle of a high
performance embedded system is one to two years or more of product development
and initial marketing activity followed by two to five years or more of volume
production, assuming the product is successful in the market. The embedded
system design team typically selects the sole-source hardware and software
components early in the design cycle. Generally, the embedded 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 an embedded system, they are likely to be used in that system
throughout its two to five year or more production life.

Our products are standard
semiconductor devices that may be incorporated into equipment used in several of
our target markets. More than 1000 electronic equipment manufacturers
incorporate our semiconductor devices in their products.

The following table lists
representative customers that purchased directly or through distributors more
than $100,000 of our products in 2003.

`Networking/Telecommunications Enterprise Storage                            
Accton Technology             Fujitsu
Alcatel                       Hewlett-Packard
Allied Telesyn                IBM
Artesyn Technologies
Avaya
Beijing Enti Corporation      Imaging/Industrial/Medical                    
Beijing Sapac Hi-Tech Inc     ABB
Brain Boxes                   Aristocrat
Brooktrout Technologies       Comtrol Corporation
Cisco Systems                 Dr Johannes Heidenhain GMBH
Digi International            Electronics for Imaging, Inc
Eicon Technology              ESD
Hewlett-Packard               Euresys
Hitachi                       Fuji Xerox
Huawei                        General Electric
Intel                         Geovision
Lucent Technologies           Hangzhou Hikvision Digital Technology Co., LTD
Marconi                       Hewlett-Packard
Motorola                      Kofax Image Products
NEC                           Kuowell Electronics Corporation
Nortel Networks               Matrox
On-Line Development           Matsushita
Performance Technology        Measurement Computing
Polycom                       Moxa Technologies
Pyxis Corporation             Optibase
Quatech                       Provideo Multimedia Co., LTD
Radisys                       Rayon Technologies
Sagem                         SBS Technologies
Sea Level Systems             Siemens
Solectron                     Taito
Terayon
Toshiba
UT Starcom`

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 these semiconductor devices account for a majority
of our revenues. We generate less than 1% of our revenues from sales of our
software and hardware design kits. The other layers of our solution promote
sales of our semiconductor devices by lowering customers' development costs
allowing them to bring new products to market more quickly.

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 processors such as Motorola'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 PCs, 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.  PLX acquired
this product line through the May 2003 acquisition of HiNT Corporation.

HyperTransport Interconnect
Bridges.The HyperTransport bridge allows a processor, typically a MIPS
processor, to generate and control two PCI-X buses. The bridge chip converts the
8 or 16 bit 800MHz HyperTransport processor interface to two 64 bit 133MHz PCI-X
buses. The bridge provides a means for the processor to communicate efficiently
with multiple I/O devices such as Ethernet controllers. This product is a result
of an agreement we entered into in May 2002 with Advanced Micro Devices.

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, and Microsoft Windows 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 programming interface allows
customers to migrate their designs, with the same software interface, from our
existing 32 bit I/O accelerators to our 64 bit I/O accelerators. 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.

Our principal product offerings
and functions include the following:

`Category                              Product              Description                                                              
------------------------------------------------------------------------------------------------------------------------------------
                                                    Semiconductor Devices
------------------------------------------------------------------------------------------------------------------------------------
32-bit/33 MHz Target I/O Accelerators PCI 9030             o Enables connection of 8-, 16- and 32-bit peripherals and personal
                                      PCI 9052             computer adapters to PCI
                                      PCI 9050
------------------------------------------------------------------------------------------------------------------------------------
32-bit/33 MHz Master I/O Accelerators PCI 9054             o Provides the flexibility to connect with a wide range of processors,
                                      PCI 9080             peripherals and memory
                                      PCI 9060SD
                                      PCI 9060ES
                                      PCI 9060
------------------------------------------------------------------------------------------------------------------------------------
32 and 64-bit/66 MHz I/O Accelerators PCI 9056             o Provides the flexibility to connect with a wide range of
                                      PCI 9656             microprocessors, peripherals and memory
------------------------------------------------------------------------------------------------------------------------------------
HyperTransport Bridge Chips           HT 7520              o Connects microprocessor HyperTransport interface to two PCI-X buses
------------------------------------------------------------------------------------------------------------------------------------
PCI and PCI-X Bridge Chips            PCI 6140             o Increases the number of PCI peripheral devices that can be included
                                      PCI 6150             in a microprocessor-based system
                                      PCI 6152
                                      PCI 6154
                                      PCI 6156
                                      PCI 6254
                                      PCI 6350
                                      PCI 6520
                                      PCI 6540
------------------------------------------------------------------------------------------------------------------------------------
                                                    Software Development Kits
------------------------------------------------------------------------------------------------------------------------------------
PCI Software                          SDK                  o Provides tools for accelerating design of data transport software
                                                           o Includes 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 and
                                      range of products    schematics to assist system development

------------------------------------------------------------------------------------------------------------------------------------`

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. For
example, our proprietary Data Pipe Architecture technology allows the system
developer a high degree of control over the PCI bus in order to address specific
design needs. In high-performance systems, the Data Pipe Architecture technology
enables data throughput that is faster than typical approaches. 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.

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
such as PCI-X, HyperTransport, and PCI-Express.

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 Alliance
Semiconductor, Applied Micro Circuits, Cypress Semiconductor, Exar, Intel, NEC,
Oxford Semiconductor, Pericom Semiconductor, Texas Instruments and Tundra
Semiconductor.

In addition, two alternative
devices can perform some or all of the functions of our semiconductor 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 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.

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 embedded 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 and a network of
independent manufacturers' representatives. We maintain United States direct
sales offices in California, Connecticut, Massachusetts, North Carolina, 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, Belgium, Canada, Denmark, France,
Germany, Hong Kong, Ireland, Israel, Italy, Japan, Korea, Norway, People's
Republic of China, Singapore, South Africa, Spain, Sweden, Taiwan, The
Netherlands, and the United Kingdom. We maintain a direct sales office in the
United Kingdom to service customers in Europe and the Middle East and in Japan
and Hong Kong to service Japan, Southeast Asia, and The People's Republic of
China.

As of December 31, 2003,
we employed 30 individuals in sales and marketing. Sales in North America
represented 37%, 42%, and 56%, of net revenues for 2003, 2002, and 2001,
respectively. All sales to date have been denominated in U.S. dollars.

Net revenues through
distributors accounted for approximately 56%, 54%, and 54% of our net revenues
for 2003, 2002, and 2001, respectively. Revenues related to sales through
distributors are expected to continue to account for a majority of our total
revenues. See "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 2003, sales to Metatech and
A2M, both distributors, accounted for 11% and 10%, respectively, of our net
revenues. In 2002, sales to A2M accounted for 13% of our revenues.  In 2001,
sales to Prediwave, a direct customer, and A2M and Unique, both distributors,
accounted for 18%, 14% and 11% of our revenues, respectively.  No other
distributor or direct customer accounted for more than 10% of net revenues in
any period presented. Cisco and IBM have historically and continue to be
significant customers. The majority of our sales to Cisco and IBM are sold
through A2M and Metatech, both distributors, and Celestica, a contract
manufacturer.

Technical support to customers
is provided through field and factory applications engineers, technical
marketing personnel and, if necessary, product design engineers. Local field
support is provided in person or by telephone. We also use our World Wide Web
site 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.

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.

Our research and development
has focused on three main areas: semiconductor devices, hardware design kits and
software development kits. 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 $15.0 million in 2003, $14.3 million in 2002, and
$18.8 million in 2001. Research and development expenses consist primarily
of salaries and related costs of employees engaged in research, design, and
development activities. In addition, expenses for outside engineering
consultants, non-recurring engineering at our independent foundries, and
deferred compensation are included in research and development expenses. As of
December 31, 2003, there were 58 employees engaged in research and
development. We perform our research and development activities at our
headquarters in Sunnyvale, California and in Salt Lake City, Utah. 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 "Certain Factors That May
Affect Future Operating Results - We Could Lose Key Personnel Due to Competitive
Market Conditions and Attrition."

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. See "Certain Factors That May Affect
Future Operating Results - Rapid Technological Change Could Make Our Products
Obsolete."

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 AMD, Samsung in Korea, Seiko-Epson Semiconductor
in Japan, and Taiwan Semiconductor Manufacturing Corporation 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
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 "Certain Factors That May Affect Future Operating Results
- Our Independent Manufacturers May Not Be Able To Meet Our Manufacturing
Requirements."

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
"Certain Factors That May Affect Future Operating Results - Defects in Our
Products Could Increase Our Costs and Delay Our Product Shipments."

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 industry standard, which is
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 two
patents on switch technology that expire in December 2016. In addition, we have
two patents on I/O buffer and clock technology that expire in September 2007 and
September 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 and 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 "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."

Employees

As of December 31, 2003,
we employed a total of 114 full-time employees, including 58 engaged in research
and development, 30 engaged in sales and marketing, 4 engaged in manufacturing
operations and 22 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.

Executive Officers and Directors

Our executive officers and
directors, their ages and their positions as of December 31, 2003, are as
follows:

`Name                                 Age  Position                                                
--------------------------------------------------------------------------------------------------
Michael J. Salameh..................  49  President and Director
Rafael Torres.......................  35  Vice President, Finance, Chief Financial Officer and Secretary
Lawrence Chisvin....................  49  Vice President, Marketing
Michael A. Hopwood..................  41  Vice President, Worldwide Sales
Hector A. Berardi...................  39  Vice President, Operations
Jack Regula.........................  55  Vice President, Chief Technology Officer
C. Mark Lipford.....................  51  Vice President, Engineering
Alex Wong...........................  41  Vice President, Business Development
D. James Guzy.......................  67  Chairman of the Board of Directors
Timothy Draper......................  45  Director
John H. Hart........................  58  Director
Robert H. Smith.....................  66  Director`

Michael J. Salamehco-
founded PLX and has served as our President and as a member of the Board of
Directors since PLX's inception in May 1986. From 1980 through 1986,
Mr. Salameh was employed in various marketing management positions with
Hewlett-Packard Company. Mr. Salameh received a B.S. in Engineering and
Applied Science from Yale University and an M.B.A. from Harvard Business School.

Rafael Torreshas served
as our Vice President, Finance, Chief Financial Officer and Secretary since
November 2000. From May 1999 to November 2000, Mr. Torres served as our
Corporate Controller. From September 1998 to May 1999, Mr. Torres was
employed by OnCommand Corporation, an on demand video company, as Accounting
Manager. From June 1997 to September 1998, Mr. Torres was employed by
Silicon Valley Group, a semiconductor equipment company, as Manager of Financial
Reporting and Analysis. From September 1994 to June 1997, Mr. Torres was
employed with PriceWaterhouse LLP, a public accounting firm, as senior auditor.
Mr. Torres received a B.S. in Accounting from Santa Clara University. Mr.
Torres is a Certified Public Accountant.

Lawrence Chisvinhas
served as our Vice President, Marketing since May 2000. From September 1998
through May 2000, Mr. Chisvin was employed by Neomagic, a semiconductor
company, as Director of Marketing. From May 1996 through September 1998,
Mr. Chisvin was employed by LSI Logic, a semiconductor company, as Director
of Marketing. Prior to LSI Logic, Mr. Chisvin was employed in a variety of
marketing and engineering positions at S3, Philips, Western Digital, and Digital
Equipment Corporation. Mr. Chisvin received a B.S. in Electrical
Engineering from Northeastern University and an M.S. in Electrical Engineering
from Worcester Polytechnic Institute.

Michael A. Hopwoodhas
served as our Vice President, Worldwide Sales since 1995. From 1995 to October
2003, Mr. Hopwood also served as our Vice President of Business Development.
From 1989 to 1995, Mr. Hopwood held a variety of other sales management
positions with our Company. From 1984 until 1989, Mr. Hopwood held various
sales positions at Intel Corporation, a semiconductor manufacturer.
Mr. Hopwood received a B.S. in Physics Engineering from Pacific Lutheran
University.

Hector A. Berardihas
served as our Vice President, Operations since August 2002. From April 1999 to
July 2002, Mr. Berardi served as the Vice President of Operations at Ubicom
Inc., a developer of wireless network processors and software platforms. From
June 1998 to April 1999, Mr. Berardi was a design and program manager for
the advanced RISC core development group at ST Microelectronics, a semiconductor
company. From July 1987 to May 1998, Mr. Berardi worked at National
Semiconductor Corporation, a semiconductor company, where his last position was
senior product engineering manager for microcontroller technologies.
Mr. Berardi received an M.B.A. and a B.S. in Electrical Engineering from
Santa Clara University.

Jack Regulahas served
as our Vice President, Chief Technology Officer since October 2001. From May
2000 to October 2001, Mr. Regula served as our Chief Scientist.
Mr. Regula founded Sebring Systems, a semiconductor company, in 1996 and
was Sebring's Chairman and Chief Technology Officer from 1996 until its
acquisition by PLX in May 2000. Prior to Sebring Systems, Mr. Regula was
employed in a variety of engineering management positions at Sunscoop
Corporation, Force Computers, and Ironics, Inc. Mr. Regula received a B.S.
in Electrical Engineering and an M.S. in Electrical Engineering, both from
Rensselaer Polytechnic Institute.

C. Mark Lipfordhas
served as our Vice President, Engineering since February 2002. From February
2001 to September 2001, Mr. Lipford served as the Vice President of
Engineering at IKOS Systems, Inc., a provider of hardware assisted design
verification products. From April 1989 to February 2001, Mr. Lipford worked at
Hewlett-Packard Company, where his last position was R&D Lab Manager of
Hewlett-Packard's VeriFone division. Mr. Lipford received a B.S. in
Electrical Engineering at Virginia Polytechnic Institute.

Alex Wong has served as our Vice President, Business
Development since October 2003. From May 2003 to October 2003, Mr. Wong held the
position of Vice President with our Company.  From September 1991 to May 2003,
Mr. Wong served as President at HiNT Corporation, a fabless semiconductor
company providing PCI-to-PCI bridge products, until its acquisition by PLX in
May 2003. Prior to HiNT Corporation, Mr. Wong was the lead chipset
developer for Silicon Integrated Systems, a semiconductor company.  Mr. Wong
received a B.S. in Computer Engineering from the University of Manitoba in
Canada.

D. James Guzyhas served
as our Chairman of the Board since 1986. Since 1969, Mr. Guzy has been
Chairman of Arbor Company, a limited partnership engaged in the electronics and
computer industry. Mr. Guzy is also a director of Cirrus Logic, Inc., Intel
Corporation, Micro Component Technology, Inc., Novellus Systems, Inc.,
LogicVision, Tessera Technologies, Inc., Davis Selected Group of Mutual Funds and Alliance Capital
Management Technology Fund, and a member of the board of directors of several
private technology companies. Mr. Guzy received a B.S. from the University
of Minnesota and an M.S. from Stanford University.

Timothy Draperhas been
a director of PLX since 1986. Mr. Draper has been a Managing Director of
Draper Fisher Jurvetson, an investment company, since 1992. Mr. Draper
managed Draper Associates LP from 1986 to 1992. Mr. Draper received a B.S.
in Electrical Engineering from Stanford University and an M.B.A. from Harvard
Business School.

John H. Harthas been a
director of PLX since April 1999. Mr. Hart is currently a 3Com fellow and
serves on the board of directors of two other companies. In September of 2000,
he retired as Senior Vice President and Chief Technical Officer of 3Com
Corporation, a position he had held since August 1996. From the time
Mr. Hart joined 3Com in September 1990 until July 1996, he was Vice
President and Chief Technical Officer. Prior to joining 3Com, Mr. Hart worked
for Vitalink Communications Corporation for seven years, where his most recent
position was Vice President of Network Products. Mr. Hart received a B.S.
in Mathematics from the University of Georgia.

Robert H. Smithjoined
the Board of Directors in November 2002. From May 1995 to August 2002,
Mr. Smith worked at Novellus Systems Inc., a semiconductor equipment
manufacturer, where his last position was Executive Vice President of
Administration in the Office of the CEO and board member. From June 1994 to
September 1994, Mr. Smith held the position of chairman of the board of
directors for Micro Component Technology, Inc., a semiconductor test-equipment
manufacturer. From 1986 through 1990, Mr. Smith served as the president of
Maxwell Graphics, Inc., a printing company. From 1982 through 1986,
Mr. Smith held chief financial officer positions with Maxwell
Communications of North America Corp. and R. R. Donnelley and Sons, printing
companies. He previously held executive positions with Honeywell, Inc., Memorex
Corp. and Control Data Corp. Mr. Smith is currently a member of the board
of directors for Cirrus Logic, Inc and Virage Logic Corporation, both
semiconductor companies, and Epicor Software Corporation, a software company.

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 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. In addition, we have leases for an
engineering design center in Utah and sales offices in Florida and Texas as well
as facilities in Fremont and Sunnyvale, California. Internationally, we lease
sales offices in Hong Kong and Japan. These leases comprise approximately 34,000
square feet and have terms expiring on or prior to April 2006. We believe that
our current facilities will be adequate through 2004.

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, 2003.

PART II

ITEM 5: MARKET FOR REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock is traded on
The Nasdaq Stock Market and has been quoted on The Nasdaq National 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 closing price for our common stock as reported on The Nasdaq
National Market:

`2002                                                          High Bid    Low Bid 
-----------------------------------------------------------   ---------  ---------
First Quarter.............................................. $    17.00  $   11.20
Second Quarter.............................................      11.99       3.62
Third Quarter..............................................       3.68       1.10
Fourth Quarter.............................................       6.10       1.29


2003                                                          High Bid    Low Bid 
-----------------------------------------------------------   ---------  ---------
First Quarter.............................................. $     4.73  $    2.38
Second Quarter.............................................       4.00       2.23
Third Quarter..............................................       8.05       4.40
Fourth Quarter.............................................      10.35       6.52`

As of February 24, 2004,
there were approximately 184 holders of record of our common stock. As of
February 24, 2004, the last reported sales price of our common stock was
$9.01.

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 dividend 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 2004
Annual Meeting of Stockholders under the heading "Equity Compensation Plan
Information."



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,
                                                               -----------------------------------------------------
                                                                2003(1)     2002       2001      2000(2)     1999
                                                               ---------  ---------  ---------  ---------  ---------
                                                                       (in thousands, except per share data)
Consolidated Statement of Operations Data:                                                                          
Net revenues................................................. $  38,038  $  34,810  $  44,128  $  65,351  $  40,699
Gross margin.................................................    27,171     23,958     28,521     45,983     27,831
Operating income (loss)......................................    (2,797)    (3,264)    (9,147)    (3,108)     9,994
Net income (loss)............................................    (2,259)    (2,320)    (6,537)    (7,042)     7,231
Basic earnings (loss) per share.............................. $   (0.10) $   (0.10) $   (0.28) $   (0.31) $    0.43
Shares used to compute basic earnings (loss) per share.......    22,755     22,785     23,258     22,560     17,007
Diluted earnings (loss) per share............................ $   (0.10) $   (0.10) $   (0.28) $   (0.31) $    0.33
Shares used to compute diluted earnings (loss) per share.....    22,755     22,785     23,258     22,560     21,849 

                                                                                     December 31,
                                                               -----------------------------------------------------
                                                                 2003       2002       2001       2000       1999
                                                               ---------  ---------  ---------  ---------  ---------
                                                                                    (in thousands)
Consolidated Balance Sheet Data:                                                                                    
Cash and cash equivalents.................................... $  10,955  $   5,482  $   9,631  $  16,621  $   8,636
Working capital..............................................    23,846     23,601     21,859     21,762     32,827
Total assets.................................................    81,803     71,975     75,229    113,479     52,055
Long-term debt...............................................        --         --         --     28,500         --
Total stockholders' equity................................... $  76,021  $  67,964  $  70,553  $  73,198  $  46,402`



ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

This Report on Form 10-K
contains forward-looking statements within the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, including statements regarding
our expectations, hopes, intentions, beliefs or strategies regarding the future.
Actual results could differ materially from those projected in any forward-looking
statements for the reasons noted under the sub-heading "Factors That May
Affect Future Operating Results" and in other sections of this Report on
Form 10-K. All forward-looking statements included in this Form 10-K
are based on information available to us on the date of this Report on
Form 10-K, and we assume no obligation to update the forward-looking
statements, or to update the reasons why actual results could differ from those
projected in the forward-looking statements. See "Factors That May Affect Future
Operating Results" below, as well as such other risks and uncertainties as are
detailed in our Securities and Exchange Commission reports and filings for a
discussion of the factors that could cause actual results to differ materially
from the forward-looking statements.

The following discussion should
be read in conjunction with our Consolidated Financial Statements and related
notes thereto included elsewhere in this report.

Overview

PLX was founded in 1986, and
since 1994 we have 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.  We generate less than 1% of our revenues from
sales of our software and development tools.

In May 2003, we acquired HiNT Corp. which markets and sells
PCI Bridges and PCI-X products into a variety of applications including
networking and telecommunications, personal computer, peripheral, imaging,
industrial and other embedded applications.  Beginning with the quarter ended
June 30, 2003, our operating results include results of HiNT Corp. and its
products.

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.  We generally recognize revenue at the time of title passage.
Recognition of sales to distributors, including international distributors, is
deferred until the product is resold by the distributors to end users.  See
"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."

Our gross margins have fluctuated in the past and are
expected to fluctuate in the future due to changes in product and customer mix,
write-downs 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 twelve 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 "Certain Factors That May Affect
Future Operating Results -- Our Lengthy Sales Cycle Can Result in Uncertainty
and Delays with Regard to Our Expected Revenues."

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,
                                                                        -------------------------------
                                                                          2003       2002       2001
                                                                        ---------  ---------  ---------
Net revenues..........................................................     100.0 %    100.0 %    100.0 %
Cost of revenues......................................................      28.6       31.2       35.4
                                                                        ---------  ---------  ---------
Gross margin..........................................................      71.4       68.8       64.6
                                                                        ---------  ---------  ---------
Operating expenses:
    Research and development..........................................      39.6       41.0       42.6
    Selling, general and administrative...............................      34.5       35.7       33.3
    In-process research and development...............................       2.3         --         --
    Amortization of goodwill and purchased intangible assets..........       2.4        1.5        9.4
                                                                        ---------  ---------  ---------
Total operating expenses..............................................      78.8       78.2       85.3
                                                                        ---------  ---------  ---------
Operating loss........................................................      (7.4)      (9.4)     (20.7)
Interest income and other, net........................................       1.5        2.9        1.7
                                                                        ---------  ---------  ---------
Loss before provision (benefit) for income taxes......................      (5.9)      (6.5)     (19.0)
Provision (benefit) for income taxes..................................        --        0.2       (4.2)
                                                                        ---------  ---------  ---------
Net loss..............................................................      (5.9)%     (6.7)%    (14.8)%
                                                                        =========  =========  =========`

Comparison of Years Ended December 31, 2003, 2002,
and 2001

Net Revenues.Net
revenues consist of product revenues generated principally by sales of our
semiconductor devices. Net revenues for the year ended December 31, 2003 were
$38.0 million, an increase of $3.2 million or 9% from $34.8 million
for the year ended December 31, 2002. The increase was primarily due to revenues
generated from the PCI bridge product acquired as part of the HiNT Corp.
acquisition.  For the year ended December 31, 2003, approximately 21% of net
revenue was derived from sales to two distributors.  No other distributor
represented greater than 10% of net revenues.

Net revenues for the year ended December 31, 2002 decreased
by $9.3 million or 21% to $34.8 million from $44.1 million for the year ended
December 31, 2001.  The decrease was primarily due to reduced demand from a
significant customer, Prediwave, as well as lower overall unit shipments in
2002.  Prediwave used our product in their set top boxes.  We completed our last
shipment to Prediwave in the first quarter of 2002.  In 2002 and 2001, Prediwave
accounted for $1 million and $8 million, respectively, of our net revenues.
Excluding sales to Prediwave, revenues decreased to $33.8 million for 2002 from
$36.1 million for 2001.  For the year ended December 31, 2002, 13% of net
revenues was derived from sales to one distributor. No other distributor
represented greater than 10% of net revenues.

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 testing costs, and (3) costs
associated with the procurement, storage and shipment of products.

Gross margin for the year ended
December 31, 2003 increased by 13%, or $3.2 million, to $27.2 million
for 2003 from $24.0 million for 2002. The increase in absolute dollars was
primarily due to the shipments of PCI bridge products acquired as part of the
HiNT Corp. acquisition as well as the sale of previously written-down inventory.
The increase in gross margin to 71.4% for 2003 from 68.8% for 2002 was primarily
related to the effect of the sale of previously written-down inventory of $0.7
million in 2003.  Excluding the effect of selling previously written-down
inventory, gross margin was 69.6% for 2003, compared with 68.8% for 2002. The
increase in our gross margin percentage was primarily due to shifts in our
product and customer mix.

Gross margin for the year ended
December 31, 2002 decreased by 16%, or $4.6 million, to $24.0 million
for 2002 from $28.5 million for 2001. The decrease in absolute dollars was
primarily due to reduced demand from a significant customer, Prediwave, in 2002.
The increase in gross margin to 68.8% for 2002 from 64.6% for 2001 was primarily
related to the effect of inventory write-downs of $1.2 million net of
immaterial recoveries recorded in 2001. Excluding the effect of net inventory
write-downs in 2001, gross margin was 68.8% for 2002, compared with 67.4% for
2001. The increase in our gross margin percentage was primarily due to shifts in
our product and customer mix.

Research and Development
Expenses. Research and development (R&D) expenses consist primarily of
salaries and related costs of employees engaged in research, design, and
development activities. In addition, expenses for outside engineering
consultants, non-recurring engineering at our independent foundries, and
deferred compensation are included in R&D expenses.

R&D as a percent of net revenues decreased to 39.6% for
the year ended December 31, 2003 as compared to 41.0% for the same period in
2002.  The percentage decrease is due primarily to an increase in revenues.  In
absolute dollars, R&D expenses increased to $15.0 million for the year ended
December 31, 2003, from $14.3 million for the same period in 2002.  Excluding
deferred compensation of $1.0 million and $2.1 million for the year ended
December 31, 2003 and 2002, respectively, R&D increased by $1.8 million to
$14.0 million for 2003 from $12.2 million for 2002.   The increase in R&D
was primarily due to an increase of approximately $0.4 million in compensation
and benefit expenses as a result of higher headcount, an increase of
approximately $0.5 million in consulting expenses, and an increase of
approximately $0.5 million in engineering tools expense associated with the
development of new products and enhancement of existing products.

R&D as a percent of net revenues decreased to 41.0% for
2002, as compared to 42.6% for 2001.  In absolute dollars, R&D expenses
decreased to $14.3 million for 2002 from $18.8 million for 2001. The decrease in
R&D expenses in absolute dollars and as a percentage of revenues was
primarily due to lower headcount and deferred compensation expense.

We believe continued spending on research and development to
develop new products is critical to our success and, consequently, expect to
increase research and development expenses in future periods.

Selling, General and
Administrative Expenses. Selling, general and administrative (SG&A)
expenses consist primarily of employee related expenses, professional fees,
trade show and other promotional expenses, as well as sales commissions to
manufacturers' representatives.

SG&A as a percent of net revenues decreased to 34.5% for
the year ended December 31, 2003, as compared to 35.7% for the year ended
December 31, 2002.  The decrease is due primarily to an increase in revenues.
In absolute dollars, SG&A expenses increased by $0.7 million or 5% to $13.1
million for the year ended December 31, 2003 from $12.4 million for the same
period in 2002.  The increase was primarily due to an increase of approximately
$0.1 million in higher compensation and benefit expenses as a result of higher
headcount, an increase of approximately $0.1 million in professional services,
an increase of approximately $0.1 million in marketing expenses, and an increase
in office lease expense of approximately $0.2 million resulting from the
assumption of the HiNT Corp. office lease and the loss of a sub-tenant.

SG&A as a percent of net revenues decreased to 35.7% for
the year ended December 31, 2002, as compared to 33.3% for the year ended
December 31, 2001.  In absolute dollars, SG&A expenses decreased by $2.3
million or 15% to $12.4 million for the year ended December 31, 2002 from $14.7
million for the same period in 2001.  The decreases were primarily due to
reduced compensation and benefit expenses of approximately $0.6 million as a
result of lower headcount, a decrease of approximately $0.4 million in sales
commissions to manufacturer's representatives as a result of lower revenues, a
decrease of approximately $0.4 million in professional services, and a decrease
of approximately $0.4 million in advertising and training expenses.

We expect selling, general and administrative expenses in
absolute dollars to likely increase in future periods.

In-Process Research and Development. The amounts
expensed to in-process research and development for the year ended December 31,
2003 related to the acquisition of HiNT Corp





Net Cash Flows

- Discount Rate.

- Percentage of Completion

Amortization of Goodwill and
Purchased Intangible Assets. Amortization of goodwill and purchased
intangible assets increased by $0.4 million or 75% to $0.9 million for
the year ended December 31, 2003 from $0.5 million for the same period in
2002. In 2003, the increase is due to additional
amortization expense from developed/core technology and customer base acquired
as a result of the HiNT Corp. acquisition in May 2003 (see Note 8 to the
Consolidated Financial Statements).

Amortization of goodwill and purchased
intangible assets decreased by $3.6 million or 87% to $0.5 million for the
year ended December 31, 2002 from $4.2 million for the same period in 2001.
In 2002, the decrease was due to the impact of SFAS No. 142, whereby we
discontinued the amortization of goodwill and indefinite lived intangibles
beginning January 1, 2002.

Deferred Compensation. We recorded deferred
compensation of $0.1 million related to unvested stock options assumed in
connection with the acquisition of HiNT Corp in May 2003.  In addition, we
recorded deferred compensation of $3.5 million in connection with the grant of
stock options below fair market value to our employees in September 2000.
Lastly, we recorded deferred compensation of $12.3 million related to stock
options granted below fair market value to employees in relation to the
acquisition of Sebring Systems in May 2000.  The amount of deferred compensation
is presented as a reduction of stockholders' equity and is amortized ratably
over the vesting period of the applicable stock grants.

Amortization of deferred compensation recorded in 2003, 2002,
and 2001, was $1.0 million, $2.1 million, and $2.9 million,
respectively. The $1.1 million decrease in deferred compensation from 2002 to
2003 is primarily the result of certain stock options becoming fully vested.
Substantially all of these amounts are included in research and development
expenses.

We expect to record deferred compensation expenses of
approximately $32,000, $6,000, $4,000, and $2,000 for 2004, 2005, 2006, and
2007, respectively.

Interest Income.
Interest income reflects interest earned on average cash, cash equivalents and
short-term and long-term investment balances. Interest income decreased to
$0.4 million for 2003 from $0.5 million for 2002. Interest income
decreased to $0.5 million in 2002 from $1.5 million for 2001. The
year-over-year decreases were primarily due to lower interest rates.

Interest Expense.
Interest expense reflects interest charges relating to our November 2000 loan of
$28.5 million from Wells Capital Management in connection with our purchase
of the Sunnyvale, California facility. There was no interest expense recorded in
2003 and 2002 as this loan was repaid in full in August 2001. In 2001, interest
expense totaled $1.3 million.

Other Income (Expense).
Other income (expense) decreased to $0.1 million for 2003 from $0.5
million for 2002. The decrease from 2002 to 2003 was primarily due to the ending
of a tenant's lease in our facilities, partially offset by a non-refundable
lease deposit. The lease for the tenant had expired in January 2003 and the tenant
had chosen not to renew the lease.

Provision for Income
Taxes. Income tax expense for the period ended December 31, 2003 was
$29,000 on a pretax loss of $2.2 million, compared to an income tax expense
of $60,000 on pretax loss of $2.3 million and income tax benefit of
$1.9 million on pretax loss of $8.4 million for the periods ended
December 31, 2002 and 2001, respectively.  Our 2003 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 non-deductible
charges for the amortization of deferred compensation and the write
off of in-process research and development.  Our 2002 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 non-deductible
charges for the amortization of deferred compensation and the recording of a
valuation allowance for the deferred tax asset partially offset by the benefit
of research and development tax credits. Our 2001 income tax benefit differs
from the expected benefit derived by applying the applicable U.S. federal
statutory rate to the loss from operations primarily due to non-deductible
charges for the amortization of goodwill and deferred compensation partially
offset by tax benefits related to prior years.

Liquidity and Capital Resources

Cash and cash equivalents and
short and long-term investments were $23.1 million at December 31, 2003, an
increase of $1.4 million from $21.7 million at December 31, 2002.
The increase was primarily due to the following: (1) a net loss of
$2.3 million adjusted for non-cash expenses of $5.2 million,
(2) a decrease in income tax receivable of $3.6 million, and (3) cash
received from the exercise of stock options of $0.3 million.  This was partially
offset by  (1) increases in accounts receivable of $1.8 million, (2) a
decrease in other accrued expenses of $1.0 million, (3) net cash paid in
connection with the HiNT acquisition of $0.7 million, (4) capital expenditures
of $1.4 million, and (5) cash paid for stock repurchases totaling $0.9 million.

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.  As of December 31, 2003, approximately 774,000 shares had
been repurchased at approximately $1,867,000.

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 inventory levels
we maintain, 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, 2003,
we had the following significant contractual obligations and commercial
commitments (in thousands):

`Payments due in
                                     ------------------------------------------  ---------
                                                                                 2007 and
                                       Total      2004       2005       2006     thereafter
                                     ---------  ---------  ---------  ---------  ---------
Operating leases - facilities...... $     995  $     841  $     135  $      19  $      --
Software licenses..................     2,536       1268       1268         --         --
Inventory purchase commitments.....     1,721      1,721         --         --         --
                                     ---------  ---------  ---------  ---------  ---------
Total cash obligations............. $   5,252  $   3,830  $   1,403  $      19  $      --
                                     =========  =========  =========  =========  =========`

See Note 12 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 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.

Inventory Write-downs.We evaluate the need for potential write-downs of inventory by considering a
combination of factors. Based on the life of the product, sales history,
obsolescence, and sales forecast, we may record write-downs to our inventory
ranging from 0% to 100%. Any adverse changes to our future product demand may
result in increased write-downs, 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.

Allowance for Doubtful
Accounts.We evaluate the collectibility of our accounts receivable based on
length of time the receivables are past due. We record reserves for bad debts
against amounts due to reduce the net recognized receivable to the amount we
reasonably believe will be collected. We have certain customers with
individually large amounts due at any given balance sheet date. Any
unanticipated change in one of those customer's 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.

Goodwill.We
perform goodwill impairment tests on an annual basis and between annual tests if
indicators of potential impairment exist. Although at December 31, 2003, no
impairment of goodwill has been recognized, it is reasonably possible that
assumptions upon which the recoverability of goodwill were based could differ in
the future.  In that event, impairment charges could be required.

Taxes.We account for income taxes using the 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, 2003, we carried a valuation allowance for
the entire deferred tax asset as a result of uncertainties regarding the
realization of the asset balance (see Note 11 to the Consolidated Financial
Statements). 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 increase income in the period such determination is
made.

Recent Accounting Pronouncements



In November 2002, the FASB issued FASB Interpretation No. 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others" (FIN 45). FIN 45 requires that
upon issuance of a guarantee, a guarantor must recognize a liability for the
fair value of an obligation assumed under a guarantee. The recognition
provisions of FIN 45 were effective for any guarantees issued or modified after
December 31, 2002.  Adoption of FIN 45 did not have a material impact on our
financial position, results of operations or cash flows. FIN 45 also requires
additional disclosures by a guarantor in its interim and annual financial
statements about the obligations associated with guarantees issued. As disclosed
in this Form 10-K, the Company's products are warranted to be free from defect
for a period of one year, however, to date, we have experienced an immaterial
amount of defective product returns.  In addition, we generally indemnify, under
predetermined conditions, our customers for infringement of third party
intellectual property rights by our products or services. We have not recorded a
liability associated with these guarantees, as we have little or no history of
costs associated with such indemnification requirements.

In January 2003, the FASB issued FASB Interpretation
No. 46 (FIN 46), "Consolidation of Variable Interest Entities, an
Interpretation of ARB No. 51", which requires companies to consolidate
certain types of variable interest entities.  A variable interest entity is an
entity that has inadequate invested equity at risk to meet expected future
losses, or whose holders of the equity investments lack any of the following
three characteristics:  (i) the ability to make decisions about the entity's
activities; (ii) the obligation to absorb the entity's losses if they occur;
(iii) the right to receive the entity's future returns if they occur.  FIN 46
was applicable immediately for variable interest entities created after January
31, 2003.  For variable interest entities created before February 1, 2003, the
provisions of the interpretation are effective for financial statements issued
for the first period ending after December 15, 2003, or March 15, 2004,
depending on the nature of the variable interest entity.   FIN 46 is not
expected to have a material impact on our financial position, results of
operations or cash flows.

CERTAIN FACTORS THAT MAY AFFECT FUTURE OPERATING
RESULTS

The statements contained in this Report on Form 10-K
that are not purely historical are forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, including, without limitation, statements
regarding the Company's expectations, objectives, anticipations, plans, hopes,
beliefs, intentions or strategies regarding the future. Forward-looking
statements include, without limitation, the statements regarding (a) the
growing demand for standards-based components such as the Company's
semiconductor devices that connect systems together, (b) the Company's
objective to expand its advantages in data transfer technology, under the
heading "Item 1, Business - Overview"; the Company's expectation that it
will support new I/O standards where appropriate, under the heading
"Item 1, Business - The PLX Solution"; the statements regarding
(a) the Company's objective to continue to expand its market position as a
developer and supplier of I/O connectivity solutions for high performance
systems, (b) the Company's plan to target those applications where the Company
believes it can attain a leadership position, (c) that the Company seeks to
integrate additional I/O-related functions into its semiconductor devices,
(d) the Company's belief that its understanding of I/O technology trends
and market requirements allows it to bring to market more quickly new products
that support the latest I/O technology, under the heading "Item 1, Business
- Strategy"; that the Company continues to integrate more functionality in its
semiconductor devices and continues to enhance and expand its software
development kits under the heading "Item 1, Business - Technology"; the
statements regarding (a) the Company's belief with respect to the principal
factors of competition in the business, (b) the Company's belief that it
competes favorably with respect to each of those factors, under the heading
"Item 1, Business - Competition"; the statements regarding (a) the
Company's expectation that revenues related to sales through distributors will
continue to account for a significant portion of total revenues, (b) the
Company's belief that providing customers with comprehensive product support is
critical to remaining competitive in the markets it serves, (c) the
Company's belief that its close contact with customer design engineers provides
valuable input into existing product enhancements and next generation product
specifications, under the heading "Item 1, Business - Sales, Marketing and
Technical Support"; (a) the Company's expectation that it will continue to
make substantial investments in research and development and to participate in
the development of industry standards, (b) the Company's expectation that
it will periodically seek to hire additional development engineers, under the
heading "Item 1, Business - Research and Development"; the Company's belief
that the transition of its products to smaller geometries will be important for
the Company to remain competitive under the heading "Item 1, Business -
Manufacturing"; the Company's plan to seek patent protection when necessary,
under the heading "Item 1, Business - Intellectual Property"; the Company's
belief that its current facility will be adequate through 2004 under the heading
"Item 2, Properties"; the statement regarding the Company's intention to
retain earnings for use in its business and not to pay any cash dividend in the
foreseeable future under the heading "Item 5, Market for Registrant's
Common Equity and Related Stockholder Matters"; the Company's belief that its
long-term success will depend on its ability to introduce new products under the
heading "Item 7, Management's Discussion and Analysis of Financial
Condition and Results of Operations - Overview''; the statement regarding the
Company's expectation to record amortization of deferred compensation related to
the stock grants of approximately $32,000, $6,000, $4,000, and $2,000 for 2004,
2005, 2006, and 2007, respectively, under the heading "Item 7, Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Results of Operations''; the Company's belief that its existing resources,
together with cash expected to be generated from its operations, will be
sufficient to meet its capital requirements for at least the next twelve months
under the heading "Item 7, Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources."

All forward-looking statements included in this document are
based on information available to the Company on the date hereof, and the
Company assumes no obligation to update any such forward-looking statements. It
is important to note that the Company's actual results could differ materially
from those included in such forward-looking statements. These cautionary
statements should be considered in the context of the factors listed below, as
well as those disclosed from time to time in the Company's Reports on Forms 10-Q
and 8-K.

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 a significant customer(s),
- our significant customers could lose market share that may affect our
business,
- our ability to develop, introduce and market new products and technologies
on a timely basis,
- introduction of products and technologies by our competitors,
- 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 of production capacity at the fabrication facilities that
manufacture 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.

We May Fail To Adequately Integrate Acquired Businesses

In May 2003, we acquired HiNT Corporation, a fabless
semiconductor supplier of PCI and PCI-X chips, in a transaction accounted for as
a purchase transaction.    We are continuing to integrate HiNT Corp. and its
product into our business.  This integration is subject to risks commonly
encountered in making such acquisitions, including, among others, loss of key
personnel of the acquired company, loss of key customers and business
relationships of the acquired company, the difficulty associated with
assimilating and integrating the personnel, operations and technologies of the
acquired company, the potential disruption of our ongoing business, and the
maintenance of uniform standards, controls, procedures, employees and clients.
There can be no assurance that we will be successful in overcoming these risks
or any other problems encountered in connections with our acquisition of
HiNT.

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,
- large one-time 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 A Substantial Portion Of Our Net Sales Is
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 2003, sales to Metatech and A2M, both
distributors, accounted for 11% and 10%, respectively, of our revenues. In 2002,
sales to A2M accounted for 13% of our revenues.  In 2001, sales to Prediwave, a
direct customer and A2M and Unique, both distributors, accounted for 18%, 14%
and 11% of our net revenues, respectively.  No other distributor or direct
customer accounted for more than 10% of net revenues in any period presented.
Cisco and IBM have historically and continue to be significant customers. The
majority of our sales to Cisco and IBM are sold through A2M and Metatech, both
distributors, and Celestica, a contract manufacturer.

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 sales.  Due to these factors, the following have in the past and may in
the future reduce our net sales 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.

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.

Rapid Technological Change Could Make Our Products
Obsolete

We operate in an industry that is subject to evolving
industry standards, rapid technological changes, rapid changes in customer
demands and the rapid introduction of new, higher performance products with
shorter product life cycles.  As a result, we expect to continue to make
significant investments in research and development.  However, we may not have
adequate funds from operations or otherwise to devote to research and
development, forcing us to reduce our research and development efforts.  Also,
we must manage product transitions successfully, since announcements or
introductions of new products by us or our competitors could adversely affect
sales of our existing products because these existing products can become
obsolete or unmarketable for specific purposes.  There can be no assurance that
we will be able to develop and introduce new products or enhancements to our
existing products on a timely basis or in a manner which satisfies customer
needs or achieves widespread market acceptance.  Any significant delay in
releasing new products could adversely affect our reputation, give a competitor
a first-to-market advantage or allow a competitor to achieve greater market
share.  The failure to adjust to rapid technological change could harm our
business, financial condition, results of operations and cash flows.

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 existing manufacturing processes and products, perceived advantages over
competing products and the level of customer service available to support such
products.  Moreover, manufacturers often rely on a limited number of equipment
vendors to meet their manufacturing equipment needs.  As a result, market
acceptance of our products may be adversely affected to the extent potential
customers utilize a competitor's manufacturing equipment.  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.

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.

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.

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 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 this product 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.

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 embedded 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.  Also, as we start to sell our processor
products, we will compete with established embedded microprocessor companies and
others.  Many of these indirect competitors and microprocessor companies have
significantly greater financial, technical, marketing and other resources than
PLX.  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.

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 embedded 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 embedded systems or to develop sufficient
new products to replace products that have become obsolete, our business would
be materially adversely affected.

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 embedded systems markets
including networking and telecommunications, enterprise storage, imaging and
industrial applications.  The size and rate of growth of these embedded 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.

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.

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.

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.  In 2003, net revenues through distributors accounted for
approximately 56% of our net revenues.  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.

The Demand For Our Products Depends Upon Our Ability To
Support Evolving Industry Standards

Substantially all of our revenues are derived from sales
of products, which rely on the PCI standard.  If the embedded systems markets
move away from this standard 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, the PCI standard
is continuously evolving, and we may not be able to modify our products to
address new PCI specifications.  Any of these events would have a material
adverse effect on our business.

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 embedded 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 thereunder 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.

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 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 63%, 58%,
and 44% of our revenues in 2003, 2002, and 2001, respectively.  Sales outside of
North America may fluctuate in future periods and may continue 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.

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 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK

We have an investment portfolio
of fixed income securities, including those classified as cash equivalents,
short and long-term investments of approximately $21.1 million at
December 31, 2003. These securities are subject to interest rate
fluctuations and will decrease in market value if interest rates increase.

The primary objective of the
Company's investment activities is to preserve principal while at the same time
maximizing yields without significantly increasing risk. The Company invests
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 $0.1 million decrease (less than 1%) in the fair value of the
Company's available-for-sale securities.

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

There has been no change of
accountants nor any disagreements with accountants on any matter of accounting
principles or practices or financial statement disclosure required to be
reported under this Item.



ITEM 9A:  CONTROLS AND PROCEDURES

(a)  Evaluation of
disclosure controls and procedures.

As of the end of the period covered by this report, we
carried out an evaluation, under the supervision and with the participation of
our President and Chief Financial Officer, of the effectiveness of the design
and operation of our disclosure controls and procedures.  Based on this
evaluation, our President and Chief Financial Officer concluded that our
disclosure controls and procedures are effective in timely alerting them to
material information required to be included in this report on Form 10-K.

(b)  Changes in internal controls.

There has been no significant change in our internal
control over financial reporting that occurred during our most recent fiscal
quarter that has materially affected or is reasonably likely to materially
affect our internal control over financial reporting.

PART III

ITEM 10: DIRECTORS AND EXECUTIVE
OFFICERS OF THE REGISTRANT

The information required by
this Item is incorporated herein by reference to the Company's Proxy Statement
for the 2004 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 2004 Annual Meeting of Stockholders.

ITEM 12: SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by
this Item is incorporated herein by reference to the Company's Proxy Statement
for the 2004 Annual Meeting of Stockholders.

ITEM 13: CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS

The information required by
this Item is incorporated herein by reference to the Company's Proxy Statement
for the 2004 Annual Meeting of Stockholders.

ITEM 14: PRINCIPAL ACCOUNTANT FEES
AND SERVICES

The information required under this Item is incorporated
by reference to our definitive proxy statement pursuant to Regulation 14A
to be filed with the Commission no later than 120 days after the close of
our fiscal year ended December 31, 2003.

PART IV

ITEM 15: EXHIBITS, FINANCIAL
STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

1. 1.      Consolidated Financial Statements
2. Reports on Form 8-K

The Company hereby files, as exhibits to this Form 10-K,
those exhibits listed on the Exhibit Index referenced in Item 15 (a)
(3) above.



PLX TECHNOLOGY, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                                  | Page
|----------------------------------------------------------------------------------------------------------------- | ----
|Report of Ernst & Young LLP, Independent
Auditors                                                                 | 37  
|Consolidated Balance Sheets as of December 31, 2003 and
2002                                                      | 38  
|Consolidated Statements of Operations for each of the three
years in the period ended December 31,
2003           | 39  
|Consolidated Statements of Stockholders' Equity for each of the
three years in the period ended December 31,
2003 | 40  
|Consolidated Statements of Cash Flows for each of the three
years in the period ended December 31,
2003           | 41  
|Notes to Consolidated Financial
Statements                                                                        | 42  

---

Report of Ernst & Young LLP,
Independent Auditors

The Board of Directors and Stockholders
PLX Technology, Inc.

We have audited the
accompanying consolidated balance sheets of PLX Technology, Inc. as of
December 31, 2003 and 2002, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended December 31, 2003. Our audits also included the financial
statement schedule listed in the Index at Item 15(a). These consolidated
financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements and schedule based on our audits.

We conducted our audits in
accordance with auditing standards generally accepted in the United States.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.  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 consolidated financial position of PLX Technology, Inc.
as of December 31, 2003 and 2002, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2003, in conformity with accounting principles generally
accepted in the United States. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.

As discussed in Note 4 to the
consolidated financial statements, effective January 1, 2002, the Company
adopted Statement of Financial Accounting Standards No. 142, "Goodwill and
Other Intangible Assets".

/s/ Ernst & Young LLP

San Jose, California
January 19, 2004



---



PLX TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

``



`December 31,
                                                                              ----------------------
                                                                                 2003        2002
                                                                              ----------  ----------
                                   ASSETS
Current assets:
  Cash and cash equivalents................................................. $   10,955  $    5,482
  Short-term investments....................................................     10,052      13,131
  Accounts receivable, less allowance for doubtful accounts of $161
    in 2003 and $127 in 2002................................................      4,998       2,568
  Inventories...............................................................      1,893       1,003
  Income tax receivable.....................................................         --       3,635
  Other current assets......................................................      1,730       1,793
                                                                              ----------  ----------
Total current assets........................................................     29,628      27,612
Goodwill....................................................................     15,998       8,054
Other intangible assets, net of accumulated amortization of $2,447
    in 2003 and $1,518 in 2002..............................................      2,730         970
Property and equipment, net.................................................     31,068      31,962
Long-term investments.......................................................      2,049       3,067
Other assets................................................................        330         310
                                                                              ----------  ----------
    Total assets............................................................ $   81,803  $   71,975
                                                                              ==========  ==========

                    LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable.......................................................... $    1,768  $    1,582
  Accrued compensation and benefits.........................................      1,427         932
  Deferred revenues.........................................................        991         613
  Accrued commissions.......................................................        368         201
  Other accrued expenses....................................................      1,228         683
                                                                              ----------  ----------
Total current liabilities...................................................      5,782       4,011
                                                                              ----------  ----------
Commitments
Stockholders' equity:
  Preferred stock, $.001 par value:
    Authorized -- 5,000,000 shares: none issued and outstanding.............         --          --
  Common stock, $.001 par value: authorized -- 30,000,000 shares:
      issued and outstanding -- 23,848,168 in 2003 and 21,124,192 in 2002...         24          21
  Additional paid-in capital................................................     84,508      74,953
  Deferred compensation.....................................................        (44)       (900)
  Notes receivable for employee stock purchases.............................        (70)        (67)
  Accumulated other comprehensive income (loss).............................        (49)         46
  Accumulated deficit.......................................................     (8,348)     (6,089)
                                                                              ----------  ----------
Total stockholders' equity..................................................     76,021      67,964
                                                                              ----------  ----------
Total liabilities and stockholders' equity.................................. $   81,803  $   71,975
                                                                              ==========  ==========`

See accompanying notes to consolidated financial
statements.

---







PLX TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS 
(in thousands, except per share data)



`Years Ended December 31,
                                                                        -------------------------------
                                                                          2003       2002       2001
                                                                        ---------  ---------  ---------     
Net revenues.......................................................... $  38,038  $  34,810  $  44,128
Cost of revenues......................................................    10,867     10,852     15,607
                                                                        ---------  ---------  ---------
Gross margin..........................................................    27,171     23,958     28,521
                                                                        ---------  ---------  ---------
Operating expenses:
    Research and development..........................................    15,048     14,256     18,783
    Selling, general and administrative...............................    13,114     12,433     14,709
    In-process research and development...............................       875         --         --
    Amortization of goodwill and purchased intangible assets..........       931        533      4,176
                                                                        ---------  ---------  ---------
Total operating expenses..............................................    29,968     27,222     37,668
                                                                        ---------  ---------  ---------
Operating loss........................................................    (2,797)    (3,264)    (9,147)
Interest income.......................................................       437        527      1,536
Interest expense......................................................        --         --      1,270
Other income..........................................................       130        477        478
                                                                        ---------  ---------  ---------
Loss before provision (benefit) for income taxes......................    (2,230)    (2,260)    (8,403)
Provision (benefit) for income taxes..................................        29         60     (1,866)
                                                                        ---------  ---------  ---------
Net loss.............................................................. $  (2,259) $  (2,320) $  (6,537)
                                                                        =========  =========  =========

Basic and diluted net loss per share.................................. $   (0.10) $   (0.10) $   (0.28)
                                                                        =========  =========  =========

Shares used to compute basic and diluted per share amounts............    22,755     22,785     23,258
                                                                        =========  =========  =========`

See accompanying notes to consolidated financial
statements.

---



PLX TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands, except share amounts)





`Notes      Accumulated
                                                                                                 Receivable      Other      Retained
                                                   Common Stock        Additional    Deferred   for Employee  Comprehensive Earnings       Total
                                               ----------------------    Paid-in     Compen-       Stock        Income     (Accumulated Stockholders'
                                                  Shares      Amount     Capital      sation     Purchases      (Loss)      Deficit)       Equity
                                               ------------  --------  -----------  ----------  ------------  -----------  -----------  ------------
Balance at December 31, 2000..................  23,168,895  $     23  $    79,715  $   (9,312) $        (50) $        54  $     2,768  $     73,198
Issuance of stock pursuant
   to exercise of stock options...............     192,400        --          883          --            --           --           --           883
Stockholder notes receivable interest.........          --        --           --          --           (13)          --           --           (13)
Tax benefit from employee stock option plans..          --        --          281          --            --           --           --           281
Repurchase of common stock....................     (15,301)       --          (91)         --            --           --           --           (91)
Reversal of deferred compensation on options
  associated with employee terminations.......          --        --       (2,477)      2,477            --           --           --            --
Deferred compensation on stock
  options issued to consultants...............          --        --           17                        --           --           --            17
Amortization of deferred compensation.........          --        --           --       2,906            --           --           --         2,906
Comprehensive loss:
    Change in unrealized loss on investments..          --        --           --          --            --          (52)          --           (52)
    Translation adjustments...................          --        --           --          --            --          (39)          --           (39)
Net loss......................................          --        --           --          --            --           --       (6,537)       (6,537)
                                                                                                                                        ------------
Total comprehensive loss......................                                                                                               (6,628)
                                               ------------  --------  -----------  ----------  ------------  -----------  -----------  ------------
Balance at December 31, 2001..................  23,345,994        23       78,328      (3,929)          (63)         (37)      (3,769)       70,553
Issuance of stock pursuant
  to exercise of stock options................     199,850        --        1,287          --            --           --           --         1,287
Stockholder notes receivable interest.........          --        --           --          --            (4)          --           --            (4)
Tax benefit from employee stock option plans..          --        --          944          --            --           --           --           944
Repurchase of common stock....................  (2,421,652)       (2)      (4,698)         --            --           --           --        (4,700)
Reversal of deferred compensation on options
  associated with employee terminations.......          --        --         (908)        908            --           --           --            --
Amortization of deferred compensation.........          --        --           --       2,121            --           --           --         2,121
Comprehensive loss:
    Change in unrealized loss on investments..          --        --           --          --            --           95           --            95
    Translation adjustments...................          --        --           --          --            --          (12)          --           (12)
Net loss......................................          --        --           --          --            --           --       (2,320)       (2,320)
                                                                                                                                        ------------
Total comprehensive loss......................                                                                                               (2,237)
                                               ------------  --------  -----------  ----------  ------------  -----------  -----------  ------------
Balance at December 31, 2002..................  21,124,192        21       74,953        (900)          (67)          46       (6,089)       67,964
Issuance of common stock and options related
   to the acquisition of HiNT Corporation.....   2,996,589         3       10,160          --            --           --           --        10,163
Deferred compensation on options issued
   related to acquisition of HiNT Corporation.          --        --           --        (110)           --           --           --          (110)
Issuance of stock pursuant
  to exercise of stock options................      69,687        --          317          --            --           --           --           317
Stockholder notes receivable interest.........          --        --           --          --            (3)          --           --            (3)
Repurchase of common stock....................    (342,300)       --         (922)         --            --           --           --          (922)
Amortization of deferred compensation.........          --        --           --         966            --           --           --           966
Comprehensive loss:
    Change in unrealized loss on investments..          --        --           --          --            --          (91)          --           (91)
    Translation adjustments...................          --        --           --          --            --           (4)          --            (4)
Net loss......................................          --        --           --          --            --           --       (2,259)       (2,259)
                                                                                                                                        ------------
Total comprehensive loss......................                                                                                               (2,354)
                                               ------------  --------  -----------  ----------  ------------  -----------  -----------  ------------
Balance at December 31, 2003..................  23,848,168  $     24  $    84,508  $      (44) $        (70) $       (49) $    (8,348) $     76,021
                                               ============  ========  ===========  ==========  ============  ===========  ===========  ============`

See accompanying notes to consolidated financial
statements.

---

PLX TECHNOLOGY, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)

`Years Ended December 31,
                                                                          -------------------------------
                                                                            2003       2002       2001
                                                                          ---------  ---------  ---------
Cash flows from operating activities:                                                                    
    Net loss............................................................ $  (2,259) $  (2,320) $  (6,537)
    Adjustments required to reconcile net loss to cash
       flows provided by (used in) operating activities:
        Depreciation....................................................     2,335      2,401      2,369
        Amortization of deferred compensation...........................       966      2,121      2,906
        Compensation expense recognized.................................        --         --         17
        Amortization of goodwill and other intangible assets............       929        533      4,177
        In-process research and development.............................       875         --         --
        Tax benefit from employee stock option plans....................        --        944        281
        Other non-cash items............................................       104        172        (13)
        Changes in operating assets and liabilities:
            Accounts receivable.........................................    (1,840)     1,505        699
            Inventories.................................................      (423)     3,583        (65)
            Deferred tax assets.........................................        --      3,194        905
            Income tax receivable.......................................     3,635     (2,912)      (185)
            Other current assets........................................       225     (1,288)       787
            Other assets................................................       (20)       (15)      (153)
            Accounts payable............................................      (413)      (271)    (3,209)
            Accrued compensation and benefits...........................       380        124       (683)
            Deferred revenues...........................................       378        332     (1,149)
            Income tax payable..........................................       313         --       (552)
            Deferred tax liability......................................        --       (830)      (270)
            Accrued commissions.........................................       167       (109)       (35)
            Other accrued expenses......................................    (1,027)        68       (926)
                                                                          ---------  ---------  ---------
Net cash provided by (used in) operating activities.....................     4,325      7,232     (1,636)
                                                                          ---------  ---------  ---------
Cash flows used in investing activities:                                                                 
    Cash used in acquisition of HiNT, net of cash acquired..............      (704)        --         --
    Purchases of investments............................................    (6,094)   (14,200)   (23,312)
    Sales and maturities of investments.................................    10,000      7,020     46,632
    Purchase of property and equipment..................................    (1,441)      (784)    (4,952)
    Proceeds from sales of property and equipment.......................        --          2         --
                                                                          ---------  ---------  ---------
Net cash provided by (used in) investing activities                          1,761     (7,962)    18,368
                                                                          ---------  ---------  ---------
Cash flows provided by financing activities:                                                             
    Proceeds from sales of common stock.................................       317      1,287        883
    Decrease in restricted cash and investments.........................        --         --      4,025
    Repurchases of common stock.........................................      (922)    (4,700)       (91)
    Repayment of note payable...........................................        --         --    (28,500)
                                                                          ---------  ---------  ---------
Net cash used in financing activities...................................      (605)    (3,413)   (23,683)
                                                                          ---------  ---------  ---------

Effect of exchange rate fluctuations on cash and cash equivalents.......        (8)        (6)       (39)
                                                                          ---------  ---------  ---------
Increase (decrease) in cash and cash equivalents........................     5,473     (4,149)    (6,990)
Cash and cash equivalents at beginning of year..........................     5,482      9,631     16,621
                                                                          ---------  ---------  ---------
Cash and cash equivalents at end of year................................ $  10,955  $   5,482  $   9,631
                                                                          =========  =========  =========
                                                                                                         
Supplemental disclosure of cash flow information:                                                        
    Cash received for income taxes...................................... $   4,028  $     650  $   1,876
    Cash paid for income taxes.......................................... $      49  $       8  $      99
    Cash paid for interest.............................................. $      --  $      --  $   1,363`

See accompanying notes to consolidated financial statements.

---

Basis of Presentation

The consolidated financial
statements include the accounts of the Company and its wholly-owned subsidiary.
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.

The Company accounts for its
investments in accordance with Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity Securities"
(FAS 115). Under FAS 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, 2003 and 2002, 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.

The Company invests its excess
cash in high quality, short-term and long-term debt and equity instruments. The
following is a summary of the Company's investments by major security type at
December 31, 2003 and December 31, 2002 (in thousands):

`Gross
                                                            Amortized     Unrealized
                                                              Cost       Gains (Losses)  Fair Value
                                                          -------------  -------------  -------------
2003                                                                                                 
Operating cash.......................................... $       1,919  $          --  $       1,919
Money market mutual funds...............................         5,990             --          5,990
Municipal auction rate securities.......................         7,050             --          7,050
Municipal auction rate preferred stock..................         1,000             --          1,000
Commerical paper........................................         3,048             (3)         3,045
Sovereign debt securities...............................         1,001              1          1,002
U.S. government & agency securities.....................         3,042              8          3,050
                                                          -------------  -------------  -------------
   Total................................................ $      23,050  $           6  $      23,056
                                                          =============  =============  =============
                                                                                                     
2002                                                                                                 
Operating cash.......................................... $       1,767  $          --  $       1,767
Money market mutual funds...............................         2,715             --          2,715
Municipal bonds.........................................         1,000             --          1,000
Municipal auction rate securities.......................         6,000             --          6,000
Corporate debt securities...............................         6,076             46          6,122
Sovereign debt securities...............................         1,024             22          1,046
U.S. government & agency securities.....................         3,001             29          3,030
                                                          -------------  -------------  -------------
   Total................................................ $      21,583  $          97  $      21,680
                                                          =============  =============  =============`

At December 31, 2003, the amortized cost
and estimated fair values of short-term and long-term investments (including
cash equivalents) by contractual maturity were as follows:

`Amortized
                                                                 Cost     Fair Value
                                                              ----------  -----------
                                                                 (in thousands)                             
Less than one year.......................................... $   19,089  $    19,088
Mature in 1-2 years.........................................      2,042        2,049
                                                              ----------  -----------
   Total.................................................... $   21,131  $    21,137
                                                              ==========  ===========`

Allowance for Doubtful Accounts

The Company evaluates the
collectibility of accounts receivable based on the length of time the
receivables are past due. It records reserves for bad debts against amounts due
to reduce the net recognized receivable to the amount it reasonably believes
will be collected.

Inventories

Inventories are valued at the
lower of cost (first-in, first-out method) or market.  Inventories were as
follows:

`December 31,
                                                              -----------------------
                                                                 2003        2002
                                                              ----------  -----------
                                                                 (in thousands)                             
Work-in-process............................................. $      356  $       338
Finished goods..............................................      1,537          665
                                                              ----------  -----------
   Total.................................................... $    1,893  $     1,003
                                                              ==========  ===========`

Inventory Write-downs

The Company evaluates the need
for potential write-downs of inventory by considering a combination of factors.
Based on the life of the product, sales history, obsolescence and sales
forecast, the Company may record write-downs to inventory ranging from 0% to
100%.

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.

Reviews are regularly performed
to determine whether facts and circumstances exist which indicate that the
carrying amount of assets may not be recoverable. The recoverability of the
carrying amount of property and equipment is assessed based on estimated future
undiscounted cash flows and if an impairment exists a charge to operations is
measured as the excess of the carrying amount over the fair value of the assets.
Based upon this method of assessing recoverability, no asset impairment occurred
in any of the years presented.

Property and equipment are as follows:

`December 31,
                                                              -----------------------
                                                                 2003        2002
                                                              ----------  -----------
                                                                 (in thousands)                             
Land........................................................ $    8,550  $     8,550
Building....................................................     19,333       19,333
Equipment and furniture.....................................     10,275        9,104
Purchased software..........................................      4,826        4,556
                                                              ----------  -----------
                                                                 42,984       41,543
Accumulated depreciation....................................    (11,916)      (9,581)
                                                              ----------  -----------
Net property and equipment.................................. $   31,068  $    31,962
                                                              ==========  ===========`

Goodwill and Other Intangibles

Goodwill represents the excess
of cost over the value of net assets of businesses acquired pursuant to
Statement of Financial Accounting Standards (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 and other
intangibles on an annual basis (November 1st) 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.

Stock-Based Compensation

The Company has employee stock
plans, which are more fully described in Note 6. The Company has elected to
account for its stock option and stock grant plans in accordance with the
intrinsic value method under Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB Opinion No. 25).

The Company has elected to
follow APB Opinion No. 25 and related interpretations in accounting for its
stock options and grants since the alternative fair market value accounting
provided for under Statement of Financial Accounting Standards
(SFAS) No. 123 requires use of valuation models that were not
developed for use in valuing employee stock options and grants. Under APB
Opinion No. 25, if the exercise price of the Company's stock grants and
options equals the deemed fair value of the underlying stock on the date of
grant, no compensation expense is recognized.

If compensation cost for the
Company's stock-based compensation plans had been determined based on the fair
value at the grant dates for awards under those plans consistent with the method
of SFAS No. 123, then the Company's net loss per share would have been
adjusted to the pro forma amounts indicated below:

`Years Ended December 31,
                                                              -----------------------------------
                                                                 2003        2002         2001
                                                              ----------  -----------  ----------           
                                                              (in thousands, except per share data)
Net loss as reported........................................ $   (2,259) $    (2,320) $   (6,537)
Add: Stock-based compensation included in reported net loss.        966        2,121       2,923
Deduct: Stock-based compensation cost under SFAS 123........     (6,348)      (9,721)     (9,193)
                                                              ----------  -----------  ----------
Pro forma net loss.......................................... $   (7,641) $    (9,920) $  (12,807)
                                                              ==========  ===========  ==========
Pro forma basic and diluted net loss per common share:
Pro forma shares used in the calculation of pro forma
   net loss per common share - basic and diluted............     22,755       22,785      23,258
                                                              ==========  ===========  ==========
Pro forma net loss per common share - basic and diluted..... $    (0.33) $     (0.44) $    (0.55)
                                                              ==========  ===========  ==========
Reported net loss per common share - basic and diluted...... $    (0.10) $     (0.10) $    (0.28)
                                                              ==========  ===========  ==========`

See Note 7 for a discussion on the
assumptions used in the option-pricing model and estimated fair value of
employee stock options.

Revenue Recognition

Sales to original equipment
manufacturers are generally recognized at the time of title passage. Recognition
of sales to distributors, including international distributors, is deferred
until the product is resold by the distributors to end users. Net revenues from
the sale of software development kits is insignificant for all years presented.
Our products are warranted to be free from defect for a period of one year. The
Company provides an allowance for estimated returns of defective products. To
date, the Company has experienced an immaterial amount of defective product
returns.

Advertising

The Company accounts for
advertising costs as expenses in the period in which they are incurred.
Advertising expenses for 2003, 2002, and 2001, were $4,000, $19,000, and
$0.2 million, respectively.

Software Development Costs

In accordance with Statement of
Financial Accounting Standards 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. As of
December 31, 2003, 2002, and 2001 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
the amounts reported in the financial statements and accompanying notes. The
accounting estimates that require management's most difficult and subjective
judgments include the evaluation on the collectibility of the Company's accounts
receivable, the assessment of recoverability of property, plant, and equipment
and goodwill; the valuation of inventory; and the recognition and measurement of
income tax assets and liabilities. The actual results experienced by the Company
may differ from management's estimates.

Comprehensive Income (Loss)

At December 31, 2003, the
components of accumulated other comprehensive income (loss), reflected in the
Consolidated Statements of Stockholders' Equity, consisted of the following:

`Years Ended December 31,
                                                              -----------------------------------
                                                                 2003        2002         2001
                                                              ----------  -----------  ----------           
                                                                          (in thousands)
Unrealized gain on investments, net......................... $        6  $        97  $        2
Cumulative translation adjustments..........................        (55)         (51)        (39)
                                                              ----------  -----------  ----------
Accumulated other comprehensive income (loss)............... $      (49) $        46  $      (37)
                                                              ==========  ===========  ==========`

Recent Accounting Pronouncements

In July 2002, the Financial Accounting Standards Board
(FASB) issued SFAS No. 146, "Accounting for Costs Associated with Exit or
Disposal Activities."  This statement nullifies Emerging Issues Task Force
(EITF) Issue No. 94-3, "Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred
in a Restructuring)."  It requires companies to recognize costs associated with
exit or disposal activities when they are incurred rather than at the date of a
commitment to an exit or disposal plan. Statement 146 is to be applied
prospectively to exit or disposal activities initiated after December 31,
2002.  Adoption of this statement did not have a material impact on the
Company's financial position, results of operations or cash flows.

In November 2002, the FASB issued FASB Interpretation No. 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others" (FIN 45). FIN 45 requires that
upon issuance of a guarantee, a guarantor must recognize a liability for the
fair value of an obligation assumed under a guarantee. The recognition
provisions of FIN 45 were effective for any guarantees issued or modified after
December 31, 2002.  Adoption of FIN 45 did not have a material impact on the
Company's financial position, results of operations or cash flows. FIN 45 also
requires additional disclosures by a guarantor in its interim and annual
financial statements about the obligations associated with guarantees issued. As
disclosed in this Form 10-K, the Company's products are warranted to be free
from defect for a period of one year, however, to date, the Company has
experienced an immaterial amount of defective product returns.  In addition, the
Company generally indemnifies, under predetermined conditions, its customers for
infringement of third party intellectual property rights by its products or
services. The Company has not recorded a liability associated with these
guarantees, as the Company has little or no history of costs associated with
such indemnification requirements.

In January 2003, the FASB issued FASB Interpretation
No. 46 (FIN 46), "Consolidation of Variable Interest Entities, an
Interpretation of ARB No. 51", which requires companies to consolidate
certain types of variable interest entities.  A variable interest entity is an
entity that has inadequate invested equity at risk to meet expected future
losses, or whose holders of the equity investments lack any of the following
three characteristics:  (i) the ability to make the Company's decisions about
the entity's activities; (ii) the obligation to absorb the entity's losses if
they occur; (iii) the right to receive the entity's future returns if they
occur.  FIN 46 is applicable immediately for variable interest entities created
after January 31, 2003.  For variable interest entities created before February
1, 2003, the provisions of the interpretation are effective for financial
statements issued for the first period ending after December 15, 2003, or March
15, 2004, depending on the nature of the variable interest entity.   FIN 46 is
not expected to have a material impact on the Company's financial position,
results of operations or cash flows.

2.  Net Loss Per Share

Basic and diluted net loss per
share is computed by dividing the net loss by the weighted average number of
common shares outstanding during the period.

As the Company incurred a loss for each of the years
ended December 31, 2003, 2002 and 2001, the effect of dilutive securities,
totaling 4.2 million, 3.4 million, and 3.1 million, equivalent shares,
respectively, have been excluded from the computation of diluted loss per share,
as their impact would be anti-dilutive.  Dilutive securities are comprised of
stock options and warrants to purchase common stock.

3.  Business Combination

On May 22, 2003, the Company
purchased HiNT Corp., a fabless semiconductor supplier of Peripheral Component
Interconnect (PCI) and PCI-X bridge chips, for an aggregate purchase price,
including assumed liabilities, of $15.6 million. The Company acquired HiNT Corp.
in order to provide electronic-equipment suppliers with a single source for a
wide selection of advanced interconnect chips and design support. The PCI, PCI-X,
and HyperTransportTM standards are the architectural foundation for a
broad range of communications, server, storage and embedded-control systems. The
combined company will provide a wide selection of interconnect chips based on
these standards. The transaction was accounted for using purchase
accounting.

The financial results for the year ended December 31, 2003
reflect the acquisition from the date the transaction was closed.

The purchase price of the HiNT Corp. acquisition is
summarized below (in thousands):

`Cash consideration........................ $   3,608
Fair value of common stock issued.........     9,595
Fair value of options and warrants assumed       457
Assumed liabilities.......................     1,581
Acquisition costs.........................       391
                                            ---------
Total consideration....................... $  15,632
                                            =========`

The Company issued an aggregate of 2,996,589 shares of its
common stock valued at $9.6 million and paid cash of $3.6 million.  The Company
also assumed 267,920 vested and unvested stock options and 3,057 warrants with a
total value of approximately $0.5 million.  The stock options and warrants were
valued using the Black-Scholes valuation model.  Additionally, the Company
incurred $0.4 million in professional fees, including legal, valuation and
accounting fees related to the acquisition, which were included as part of the
purchase price consideration for this transaction.  Assumed liabilities
consisted primarily of accounts payable and other accrued expenses.

PLX recorded $0.1 million in deferred compensation on 75,351
unvested employee stock options assumed in connection with the acquisition of
HiNT Corp.  Deferred compensation is being amortized over the remaining vesting
period of these assumed options.

Additional consideration of PLX's common stock and cash with
a maximum aggregate value of approximately $2.3 million may be paid out in the
event HiNT product sales meet certain performance milestones approximately one
year following the close of the transaction.  Any additional consideration will
become additional goodwill.

The allocation of the Company's purchase price to the
tangible and identifiable intangible assets acquired and liabilities assumed is
summarized below (in thousands).  The allocation was based on a number of
factors including a valuation and a fair value appraisal.

`Net tangible assets....................... $    4,123
In-process technology.....................        875
Goodwill and other intangible assets:
    Goodwill..............................      7,944
    Developed/Core Technology.............      1,828
    Customer Base.........................        862
                                             ---------
                                               10,634
                                             ---------
Net assets acquired....................... $   15,632
                                             =========`

Net tangible assets acquired were comprised primarily of cash
of $2.9 million, inventory of $0.5 million, and  accounts receivables $0.6
million. The acquired in-process technology was written-off in the second
quarter of 2003. The estimated weighted average useful lives of the intangible
assets for the developed/core technology and customer base acquired in
connection with the acquisition of HiNT Corp. are approximately five and three
years, respectively.  Amortization of developed/core technology and customer
base was $222,000 and $175,000, respectively, for the year ended December 31,
2003.

The $875,000 allocation of the purchase price to the acquired
in-process technology was determined by identifying research projects in areas
for which technological feasibility had not been established and no alternative
future uses existed. PLX acquired technology consisting of PCI Bridge and PCI-X
solutions. The value was determined by estimating the expected cash flows from
the project once commercially viable, discounting the net cash flows to their
present value, and then applying a percentage of completion to the calculated
value as defined below.

Net Cash Flows.  The net cash flows from the identified
project utilized were based on estimates of revenues, cost of sales, research
and development costs, selling, general and administrative costs, and income
taxes from the project.  These estimates were based on assumptions mentioned
below.  The research and development costs excluded costs to bring the acquired
in-process project to technological feasibility.  The estimated revenues were
based on management projections of the acquired in-process project.

Discount Rate.  Discounting the net cash flows back to
their present value was based on the cost of capital for well-managed venture
capital funds which typically have similar risks and returns on investments.
The cost of capital used in discounting the net cash flows from acquired
in-process technology was 25%.

Percentage of Completion.  Percentage of completion
was determined using costs incurred by HiNT Corp. prior to the acquisition date
compared to the remaining research and development costs to be incurred to bring
the project to technological feasibility. As of the acquisition date, the
Company estimated the project was approximately 80% complete.  As of February
2004, the project was substantially complete.  However, generation of future
sales from this product is dependent on rapidly changing customer markets and
significant competitive threats from numerous companies.  Such risks could
adversely impact sales and profitability of the Company in the future.
Additionally, the value of the intangible assets acquired may become impaired.

Unaudited Pro Forma Financial Results

The unaudited pro forma financial information combines
the historical statements of operations of the Company and Hint Corp. for the
year ended December 31, 2003 and 2002 and gives effect to the transaction,
including the amortization of other intangible assets and the recognition of
deferred compensation, as if they occurred at the beginning of each period
presented.  The amount of the aggregate purchase price allocated to purchased
in-process research and development has been excluded from the pro forma
information, as it is a non-recurring item.

The unaudited pro forma information is presented for
illustrative purposes only and is not necessarily indicative of the operating
results that would have occurred if the transaction had been consummated at the
dates indicated, nor is it necessarily indicative of future operating results of
the combined companies and should not be construed as representative of these
amounts for any future periods.  The following table is in thousands, except per share data:

`December 31,
                                                              ---------------------------
                                                                  2003           2002
                                                              ------------   ------------  
Net revenues................................................ $     40,509   $     40,548
Net loss.................................................... $     (2,284)  $     (1,714)

Net loss per share - basic and diluted...................... $      (0.10)  $      (0.07)
                                                              =============  =============
Shares used to compute basic and diluted per share amounts..       23,913         25,782
                                                              =============  =============`

4.  Goodwill

In June 2001, the Financial
Accounting Standards Board (FASB) issued Statement of Financial Accounting
Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets." SFAS
No. 142 is effective for fiscal years beginning after December 15,
2001. The Company has adopted SFAS No. 142 as of January 1, 2002.
Under the new rules, goodwill and intangible assets deemed to have indefinite
lives are no longer amortized, but rather are reviewed for impairment annually,
or more frequently if certain indicators arise. Other intangibles will continue
to be amortized over their useful lives. The Company reclassified acquired
workforce, which is no longer defined as an identifiable intangible asset under
SFAS 141, to goodwill as of January 1, 2002. As of December 31, 2003,
no impairment of goodwill has been recognized.

The impact of SFAS No. 142
is summarized below:

`Years Ended December 31,
                                                              -----------------------------------
                                                                 2003        2002         2001
                                                              ----------  -----------  ----------
                                                                      (in thousands)                        
Net loss, as reported....................................... $   (2,259) $    (2,320) $   (6,537)
Add:
    Goodwill amortization...................................         --           --       3,310
    Workforce amortization..................................         --           --         246
                                                              ----------  -----------  ----------
Net loss, as adjusted....................................... $   (2,259) $    (2,320) $   (2,981)
                                                              ==========  ===========  ==========

Basic and diluted net loss per share, as reported........... $    (0.10) $     (0.10) $    (0.28)
                                                              ==========  ===========  ==========

Basic and diluted net loss per share, as adjusted........... $    (0.10) $     (0.10) $    (0.13)
                                                              ==========  ===========  ==========`

Changes in the carrying amount
of goodwill for the years ended December 31, 2003 and 2002 are as follows (in
thousands):

`Balance as of December 31, 2001............................. $    7,998
Workforce reclassified as goodwill during the period........        594
Realization of unrecorded deferred tax assets acquired
   via the purchase of Sebring Systems, Inc.................       (538)
                                                              ----------
Balance as of December 31, 2002.............................      8,054
Hint acquisition............................................      7,944
                                                              ----------
Balance as of December 31, 2003............................. $   15,998
                                                              ==========`

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 money in money
market funds, commercial paper of corporations with high credit ratings,
municipal bonds, and treasury bills. 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. At December 31, 2003, the Company's largest receivable
balance accounted for approximately 15% of net accounts receivable. Through
fiscal 2003, a relatively small number of direct customers and distributors
accounted for a significant percentage of the Company's revenues. The Company
analyzes the need for reserves for potential credit losses and records reserves
when necessary.

Currently, the Company relies
on single source suppliers of materials 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.  Employee Stock Plans

At December 31, 2003,
5,625,942 shares of the Company's common stock were reserved for future
issuance.

The Company's 1998 Stock
Incentive Plan (the "1998 Plan") was approved by the Board of Directors on
January 15, 1998. The 1998 Plan provides for the grant of both incentive
and nonqualified stock options. The Company's 1999 Stock Incentive Plan was
approved by the Board of Directors on January 25, 1999 and amended on
May 24, 2000, May 22, 2001 and May 22, 2002 (as so amended, the
"1999 Plan"). The 1999 Plan provides for the grant of both incentive and
nonqualified stock options. The maximum term of any stock option granted under
the 1998 and 1999 Plans is ten years, except that with respect to incentive
stock options granted to a person possessing more than 10% of the combined
voting power of the Company (a 10% stockholder), the term of such stock options
shall be for no more than five years. The exercise price of incentive stock
options granted under the 1998 and 1999 Plan must be at least 100% of the fair
market value of the common stock on the grant date except that the exercise
price of incentive stock options granted to a 10% stockholder must be at least
110% of such fair market value on the date of grant. The options generally vest
over a period of four years.

Activity under the 1998 and
1999 Plans is summarized as follows:

`Options Outstanding
                                                    -----------------------------------------
                                         Options                                  Weighted
                                        Available                   Aggregate      Average
                                           for        Number of      Exercise     Exercise
                                          Grant       Options         Price        Price
                                       ------------ -------------  ------------  -----------
Balance at December 31, 2000..........   1,249,232     2,896,327  $ 41,223,159  $     14.23
    Options authorized................     900,000            --
    Options granted...................  (1,114,000)    1,114,000     8,941,348         8.03
    Options exercised.................          --      (192,400)     (883,183)        4.59
    Options canceled..................     638,679      (727,744)  (10,285,923)       14.13
                                       ------------ -------------  ------------
Balance at December 31, 2001..........   1,673,911     3,090,183    38,995,401        12.62
    Options authorized................     900,000            --
    Options granted...................  (1,073,300)    1,073,300    14,386,905        13.40
    Options exercised.................          --      (199,850)   (1,286,976)        6.44
    Options canceled..................     525,396      (560,325)   (7,559,407)       13.49
                                       ------------ -------------  ------------
Balance at December 31, 2002..........   2,026,007     3,403,308    44,535,923        13.09
    Options authorized................          --            --
    Options assumed...................          --       267,920       415,645         1.55
    Options granted...................    (942,500)      942,500     3,303,040         3.50
    Options exercised.................          --       (69,687)     (317,338)        4.55
    Options canceled..................     306,021      (307,627)   (4,152,600)       13.50
                                       ------------ -------------  ------------
Balance at December 31, 2003..........   1,389,528     4,236,414  $ 43,784,670  $     10.34
                                       ============ =============  ============`

Options assumed of 267,920 represent options related to the
May 2003 acquisition of HiNT Corp. Options assumed from HiNT Corporation and
Sebring Systems are no longer available for grant once canceled.

The following table summarizes the information
about options outstanding at December 31, 2003:



`Options Outstanding           Options Exercisable
                     ---------------------------------- ---------------------
                                   Weighted
                                   Average    Weighted              Weighted
                                  Remaining    Average               Average
      Range of         Number     Contractual Exercise    Number    Exercise
   Exercise Price    Outstanding     Life       Price   Exercisable   Price
-------------------- -----------  ----------  --------- ----------  ---------
$1.25 - $3.22.......  1,050,918   7.54 years $    2.61    378,205  $    1.84
$3.28 - $6.65.......    713,184   7.07 years      4.65    420,433       5.19
$6.70 - $9.00.......    916,553   6.66 years      8.18    888,928       8.22
$9.21 - $16.65......    784,284   7.93 years     15.49    330,616      15.22
$17.94 - $25.94.....    754,975   6.30 years     23.32    754,975      23.22
$27.00 - $31.63.....     16,500   6.16 years     28.60     16,500      28.60
                     -----------                        ----------
Total...............  4,236,414   7.12 years $   10.34  2,789,657  $   11.94
                     ===========                        ==========`

As of December 31, 2003, 2002, and 2001, there were
2,500,572, 1,686,558, and 1,580,937 stock options vested at weighted average
exercise prices of $12.04 per share, $12.20 per share, and $9.82 per share,
respectively.

During the year ended
December 31, 2003, the Company recorded aggregate deferred compensation of
$0.1 million, representing the difference between the grant price and the
deemed fair value of the Company's common stock options granted during this
period. The Company recorded no deferred compensation in 2002 and 2001. The
amortization of deferred compensation is charged to operations and is amortized
on a straight-line basis over the vesting period of the options, which is
typically three years. For the years ended December 31, 2003, 2002, and
2001, amortization expense was $1.0 million, $2.1 million, and
$2.9 million, respectively. In addition, for the years ended
December 31, 2003, 2002, and 2001, the Company reversed aggregate deferred
compensation of $0, $0.9 million, and $2.5 million, respectively, on
options associated with employee terminations.

7.  FAS 123 Assumptions

Pro forma information regarding
net income (loss) is required by FAS 123, which also requires that the
information be determined as if the Company had accounted for grants subsequent
to December 31, 1994 under a method specified by FAS 123. Options granted
were estimated using the Black-Scholes valuation model. The following weighted
average assumptions were used for 2003, 2002, and 2001:

`Years Ended December 31,
                                                         -------------------------------
                                                           2003       2002       2001
                                                         ---------  ---------  ---------
Volatility.............................................      1.16       1.00       1.00
Expected life of options (in years)....................      5.15       4.05       4.00
Dividend yield.........................................        -- %       -- %       -- %
Risk-free interest rate................................      3.23 %     4.05 %     4.66 %`

The weighted average grant date
fair value of options granted during 2003, 2002, and 2001 was $2.98, $10.93, and
$6.22, respectively.

8.  Other Intangible Assets

Information regarding the
Company's other identified intangible assets subject to amortization is as
follows (in thousands):

`2003
                                                 -------------------------------------------------
                                                 Gross Carrying     Accumulated          Net
                                                     Amounts       Amortization         Value
                                                 ---------------  ---------------  ---------------   
Patents........................................ $         2,132  $        (1,909) $           223
Developed Core Technology......................           1,828             (222)           1,606
Customer Base..................................             861             (175)             686
                                                 ---------------  ---------------  ---------------
Total.......................................... $         4,821  $        (2,306) $         2,515
                                                 ===============  ===============  ===============

                                                                    2002
                                                 -------------------------------------------------
                                                 Gross Carrying     Accumulated          Net
                                                     Amounts       Amortization         Value
                                                 ---------------  ---------------  ---------------   
Patents........................................ $         2,132  $        (1,377) $           755
                                                 ---------------  ---------------  ---------------
Total.......................................... $         2,132  $        (1,377) $           755
                                                 ===============  ===============  ===============`

The estimated useful lives of
the intangible assets for patents, developed/core technology and customer base
are approximately four, five and three years, respectively.  Estimated
amortization expenses for the fiscal years ending December 31 are as
follows:



|2004
2005
2006
2007 | $0.8 million
$0.7 million
$0.7 million
$0.3 million
|------------------- | ---------------------------------------------------

The carrying amount of
indefinite lived intangibles (Tradename) as of December 31, 2003 and 2002
was approximately $0.2 million.

9.  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.  As of December 31, 2003, approximately 774,000 shares had
been repurchased at approximately $1,867,000.

10.  Retirement Savings Plan

The Company has a retirement
savings plan, commonly known as a 401(k) plan, that allows all full-time
employees to contribute up to 100% of their annual compensation.  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 participant
contributions. The Company's contributions to the 401(k) plan were
$0.3 million, $0.2 million, and $0.3 million for 2003, 2002, and
2001, respectively.

11.  Income Taxes

The provision
(benefit) for income taxes consists of the following:

`Years Ended December 31,
                                                         -------------------------------
                                                           2003       2002       2001
                                                         ---------  ---------  ---------
                                                                  (in thousands)        
Federal:
    Current............................................ $      --  $  (2,842) $  (2,382)
    Deferred...........................................        --      2,764        600
                                                         ---------  ---------  ---------
                                                               --        (78)    (1,782)
                                                         ---------  ---------  ---------
State:
    Current............................................         6         --       (119)
    Deferred...........................................        --        138         35
                                                         ---------  ---------  ---------
                                                                6        138        (84)
                                                         ---------  ---------  ---------
Foreign:
    Current............................................        23         --         --
    Deferred...........................................        --         --         --
                                                         ---------  ---------  ---------
                                                               23         --         --
                                                         ---------  ---------  ---------
Total.................................................. $      29  $      60  $  (1,866)
                                                         =========  =========  =========`

The provision (benefit) for income taxes
differs from the amount of income taxes determined by applying the U.S.
statutory federal income tax rate as follows:

`Years Ended December 31,
                                                         -------------------------------
                                                           2003       2002       2001
                                                         ---------  ---------  ---------
                                                                  (in thousands)        
Tax benefit at the U.S. statutory rate................. $    (780) $    (791) $  (2,941)
State taxes (net of federal benefit)...................       (97)       (99)       (55)
Tax exempt interest income.............................        --       (379)       (87)
Non-deductible in-process R&D write off................       345         --         --
Non-deductible amortization of deferred compensation...       380        835      1,017
Non-deductible amortization of goodwill
   and purchased intangible assets.....................        --         --      1,158
Research and development credit........................        --     (1,786)      (600)
Tax benefits from prior years..........................        --         --       (975)
Change in valuation allowance..........................        98      2,242        600
Other individually immaterial items....................        83         38         17
                                                         ---------  ---------  ---------
                                                        $      29  $      60  $  (1,866)
                                                         =========  =========  =========`

During the years ended December 31, 2003, 2002, and 2001, the
Company's deferred tax asset valuation allowance increased by $0.6 million, $4.7
million, and $0.6 million, respectively.  Approximately $0.2 million of the 2003
increase in the valuation allowance and $2.5 million of the 2002 increase in the
valuation allowance resulted from the establishment of deferred tax assets
related to the net operating losses and start-up costs associated with the
Company's acquisition of HiNT Corporation and Sebring Systems, Inc.  These
assets will be reflected as an adjustment to goodwill if and when they are
realized.

The Company increased its benefit in fiscal 2001 by $1.0
million or $0.04 per share due to the recognition of tax benefits from prior
years.  This change in estimated taxes was reflected in the federal tax return
for 2000 filed in September 2001.

Significant components of the Company's deferred tax assets and liabilities
are as follows:

`December 31,
                                                         --------------------
                                                           2003       2002
                                                         ---------  ---------
                                                            (in thousands)              
Deferred tax assets:
    Accrued expenses and reserves...................... $   1,100  $   1,367
    Net operating loss carryforwards...................     3,920      2,653
    Research and development credit carryforwards......     2,286      1,621
    Costs capitalized for tax purposes.................       284        489
    Other..............................................        --         --
                                                         ---------  ---------
Gross deferred tax assets..............................     7,590      6,130
Valuation allowance....................................    (5,967)    (5,321)
                                                         ---------  ---------
                                                            1,623        809
                                                         ---------  ---------
Deferred tax liabilities:
    Acquisition related intangibles....................    (1,323)      (616)
    Other..............................................      (300)      (193)
                                                         ---------  ---------
                                                           (1,623)      (809)
                                                         ---------  ---------
Total net deferred tax assets.......................... $      --  $      --
                                                         =========  =========`

At December 31, 2003, the
Company had federal and state net operating loss carryforwards of
$10.8 million and $2.4 million, respectively. These carryforwards will
expire at various dates beginning in 2005 through 2023, if not utilized. In
addition, as of December 31, 2003, the Company had federal and state tax
credit carryforwards of approximately $1.2 million and $2.3 million,
respectively, which expire at various dates beginning in 2007. Approximately
$169,000 of the net operating loss carryforward represents the stock option
deduction arising from activity under the Company's stock option plan, the
benefit of which will increase additional paid in capital when realized.

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.

A valuation allowance has been
recorded for the entire deferred tax asset as a result of uncertainties
regarding the realization of the asset balance due to the history of losses and
the variability of operating results.

The Company has made no provision for U.S. income taxes on
approximately $150,000 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 $50,000.

Pre-tax income from foreign operations was $56,000 in 2003
and $44,000 in 2002.

12.  Commitments

In November 2003, the Company
entered into a software license agreement with an unrelated party totaling
$3.9 million. The Company paid approximately $1.3 million upon
execution of the agreement and is obligated to pay $1.3 million and
$1.3 million in 2004 and 2005, respectively.

The Company uses several
contract manufacturers and suppliers to provide manufacturing services for its
products. As of December 31, 2003, the Company has purchase commitments for
inventory with these contract manufacturers and suppliers of approximately
$1.7 million. These inventory purchase commitments are placed on a sales
order basis with lead times ranging from 8 to 13 weeks to meet estimated
customer demand requirements.

The Company leases facilities
under non-cancelable operating lease agreements. Future minimum payments under
facility leases at December 31, 2003 are as follows:

`(in thousands)
                                                         ---------                      
2004................................................... $     841
2005...................................................       135
2006...................................................        19
2007 and thereafter....................................        --
                                                         ---------
Total minimum lease payments........................... $     995
                                                         =========`

Rental expense for all leases
aggregated approximately $0.7 million, $0.1 million, and $0.5 million,
net of sublease income of $8,000, $0.4 million, and $0 for the years ended
December 31, 2003, 2002, and 2001, respectively.

13.  Segments of an Enterprise and Related Information

The Company has one operating
segment, the sale of semiconductor devices. The President 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.

Revenues by geographic region
based on customer location were as follows:

`Years Ended December 31,
                                                         -------------------------------
                                                           2003       2002       2001
                                                         ---------  ---------  ---------
                                                                  (in thousands)        
Revenues:
    United States...................................... $  12,155  $  13,312  $  22,978
    Asia - excluding Taiwan and Singapore..............     6,696      5,940      3,164
    Europe - excluding France..........................     5,280      4,955      5,092
    Taiwan.............................................     4,097      1,614      2,744
    Singapore..........................................     3,995      3,195      1,891
    France.............................................     3,845      4,609      6,373
    North America - excluding United States............     1,970      1,185      1,886
                                                         ---------  ---------  ---------
        Total.......................................... $  38,038  $  34,810  $  44,128
                                                         =========  =========  =========`

Sales to the following distributors or direct
customers accounted for 10% or more of net revenues:

`Years Ended December 31,
                                                         -------------------------------
                                                           2003       2002       2001
                                                         ---------  ---------  ---------
Metatech...............................................        11 %        9 %        4 %
A2M....................................................        10 %       13 %       14 %
Prediwave..............................................        -- %        3 %       18 %
Unique Technologies....................................        -- %       --         11 %`

14.  Related Party Transactions

The Company and a customer
are related parties because the chairman of the Company's Board of Directors
also serves on the customer's Board of Directors. For the years ended
December 31, 2003, 2002, and 2001, net revenues from sales to this
customer, which were transacted at arms' length prices, were approximately
$1.0 million, $0.7 million, and $0.8 million, respectively.  The
Company sold products to this customer directly as well as through
distributors.

15.  Quarterly Summaries

(In thousands, except per share amounts, unaudited)

`Three Months Ended
                                       ------------------------------------------
                                       March 31,  June 30,   Sept. 30,   Dec 31,
                                         2003     2003 (1)     2003       2003
                                       ---------  ---------  ---------  ---------
Net revenues......................... $   8,503  $   8,660  $  10,283  $  10,592
Gross profit......................... $   5,988  $   6,142  $   7,437  $   7,604
Net income (loss).................... $    (816) $  (1,897) $     129  $     325
Net income (loss) per basic share.... $   (0.04) $   (0.09) $    0.01  $    0.01
Net income (loss) per diluted share.. $   (0.04) $   (0.09) $    0.01  $    0.01 

                                                  Three Months Ended
                                       ------------------------------------------
                                       March 31,  June 30,   Sept. 30,   Dec 31,
                                         2002       2002       2002       2002
                                       ---------  ---------  ---------  ---------
Net revenues......................... $  10,118  $   7,797  $   8,339  $   8,556
Gross profit......................... $   6,757  $   5,416  $   5,904  $   5,881
Net loss............................. $    (271) $  (1,160) $    (688) $    (201)
Net loss per basic share............. $   (0.01) $   (0.05) $   (0.03) $   (0.01)
Net loss per diluted share........... $   (0.01) $   (0.05) $   (0.03) $   (0.01)`

(1) Net loss includes a $0.9 million charge for in-process research and
development.

SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS (In thousands)

`Additions    Deductions
                                        Balance at   Charged to     Amounts
                                       Beginning of   Costs and    Recovered    Balance at
             Description                  Period      Expenses    (Written off)   Period
-------------------------------------  ------------  -----------  ------------  ----------
Year ended December 31, 2003                                                              
Allowance for doubtful accounts...... $        127  $        39  $         (5) $      161 
Year ended December 31, 2002                                                              
Allowance for doubtful accounts...... $        202  $       103  $       (178) $      127 
Year ended December 31, 2001                                                              
Allowance for doubtful accounts...... $        318  $        49  $       (165) $      202`

---

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.

|February 27, 2004 | PLX Technology, Inc.
by:     /s/     Michael J. Salameh
Name: Michael J. Salameh
Title: President
|----------------- | -------------------------------------------------------------------------------------------------







POWER OF ATTORNEY



KNOW ALL PERSONS BY THESE
PRESENTS, that each person whose signature appears below constitutes and
appoints Michael J. Salameh and Rafael Torres, 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
		Michael J. Salameh | President and Director
(Principal Executive Officer)                                                        | February 27, 2004
|/s/	Rafael Torres
		Rafael Torres           | Vice President, Finance, Chief Financial Officer
and Secretary
(Principal Financial and Accounting Officer) | February 27, 2004
|/s/	D. James Guzy
		D. James Guzy           | Director and Chairman of the Board of
Directors                                                             | February 27, 2004
|/s/	Timothy Draper
		Timothy Draper         | Director                                                                                                    | February 27, 2004
|/s/	Robert H. Smith
		Robert H. Smith       | Director                                                                                                    | February 27, 2004
|/s/	John H. Hart
		John H. Hart             | Director                                                                                                    | February 27, 2004





EXHIBIT INDEX



|Exhibit       |  |                                                                                                                                                                                     
|------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number        |  | Description                                                                                                                                                                         
|2.1 (3)       |  | Agreement and Plan of Reorganization dated May 6, 2003 by and
among PLX Technology, Inc., HT Acquisition Sub, LLC, HiNT Corporation and
Herbert Chang as Shareholders' Agent.       
|3.1 (1)       |  | Amended and Restated Certificate of Incorporation of the
Registrant.                                                                                                                
|3.2 (1)       |  | Registrant's Amended and Restated Bylaws.                                                                                                                                           
|4.1           |  | Reference is made to Exhibit 3.1.                                                                                                                                                   
|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.                                        
|10.7 (4)      |  | Note Secured By Stock Pursuant to Stock Pledge Agreement dated
June 18, 1997, between Jack Regula and Sebring Systems, Inc.                                                         
|10.8 (4)      |  | Stock Pledge Agreement dated June 18, 1997 between Jack
Regula and Sebring Systems, Inc.                                                                                            
|10.9 (4)      |  | Amendment to Stock Pledge Agreement dated May 19, 2000
between Sebring Systems, Inc. and Jack Regula.                                                                               
|10.10 (6)*    |  | HiNT Corp. 2000 Stock Plan.                                                                                                                                                         
|10.11 (5)*    |  | Sebring Systems, Inc. 1997 Stock Otion/Stock/Issuance
Plan.                                                                                                                         
|21.1          |  | Subsidiaries of the Company.                                                                                                                                                        
|23.1          |  | Consent of Ernst & Young LLP, Independent
Auditors.                                                                                                                                 
|31.1          |  | Certification of President 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 President 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
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
May 27, 2003.                                                                                                      
|(4)           |  | Incorporated by reference to the same numbered exhibit
previously filed with the Company's Form 10-K as filed on March 13,
2003.                                                    
|(5)           |  | Incorporated by reference to Exhibit 2.1 to Form 8-K as filed on
June 2, 2000.                                                                                                      
|(6)           |  | Incorporated by reference to Exhibit 10.1 to the Company's
quarterly report on Form 10-Q for the quarter ended September 30,
2003.                                                  
|*             |  | Management contract or compensatory plan or
arrangement.                                                                                                                            

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