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                                                                   Exhibit 10.14

                                         July 9, 1998


Steven Melman
7099 Royal Ridge Drive
San Jose, CA 95120

Dear Steven:

        Congratulations! Here is the amended offer letter with the new terms as
        agreed to by you and John Kibarian.

1.      You will participate in the same bonus plan as other PDF professionals.
        (paragraph 5)

2.      There will be no anti-dilution commitment or guarantee.

3.      MODIFICATION TO PDF'S STANDARD STOCK OPTION PLAN. You will be subject to
        the standard PDF stock option agreements. There will be two amendments
        to this plan to account for termination without cause when there is no
        change of control of the company, and change of control of the company.
        For the purposes of your employment, "change of control" is defined as
        an event where by a party or group of parties, different from those
        maintaining control today, attains a majority voting right in the
        company. During your first year of employment, if you are terminated w/o
        cause, and there is no change of control of the company, you do not vest
        any stock options. If you are terminated w/o cause any time after your
        1st anniversary and there is no change of control, you receive 6 months
        additional vesting. If there is change of control of PDF, your vesting
        is accelerated by 24 months regardless of whether your employment is
        terminated. (Subject to the approval of the board of directors at their
        next meeting.)

4.      SEVERENCE PAY AND BENEFITS

        You will receive six months severance including benefits paid out over
        the normal payroll cycle with the exception of stock options, which are
        covered under the 3rd clause of this letter if you are terminated
        without cause at any time.

        On behalf of PDF Solutions, Inc., a California corporation (the
"Company"), I am pleased to offer you the position of VP of Finance and
Administration, Chief Financial Officer of the Company under the terms listed
below. You will report initially to John Kibarian and have such responsibilities
as determined by that person.

1.      Duties. You agree to the best of your ability and experience that you
        will at all times loyally and conscientiously perform all of the duties
        and obligations required of and from you pursuant to the express and
        implicit terms hereof, and to the reasonable satisfaction of the
        Company. You will comply with all policies of the Company as in effect
        from time to time. During the term of your employment, you further agree
        that you will devote all of your business time and attention to the
        business of the Company, the Company will be entitled to all of the
        benefits and profits arising from or incident to all such work services
        and advice, you will not render commercial or professional services of
        any nature to any person or organization, whether or not for
        compensation, without the prior written consent of the Company, and you
        will not directly or indirectly engage or participate in any business
        that is competitive in any manner with the business of the Company.
        Nothing in this letter agreement will prevent you from accepting
        speaking or presentation engagements in exchange for honoraria or from
        serving on boards of

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        charitable organizations, or from owning no more than one percent (1%)
        of the outstanding equity securities of a corporation whose stock is
        listed on a national stock exchange.

2.      Start Date. Subject to fulfillment of any conditions imposed by this
        letter agreement, you will commence this new position with the Company
        as follows:

        A       Two weeks notice to be given to ASC week ending 7/11/98.

        B.      PDF employment and "Start Date" to begin 7/16/98, attending BOD
                meeting at 3:00 PM., except during the discussion about your
                offer.

        C.      The period between 7/16/98 and 7/24/98 will be taken as non-paid
                time off. Paid time and office time will begin on 7/27/98.

3.      Proof of Right to Work. For purposes of federal immigration law, you
        will be required to provide to the Company documentary evidence of your
        identity and eligibility for employment in the United States. Such
        documentation must be provided to us within three (3) business days of
        your date of hire, or our employment relationship with you may be
        terminated.

4.      Base Salary. You will be paid a base salary of $150,000 per year
        commencing on your Start Date. Your salary will be payable monthly in
        accordance with the Company's standard payroll policies (subject to
        normal required withholding). You will be entitled to ten (10) days paid
        vacation per year, pro-rated for the remainder of the calendar year from
        your Start Date. The Company also currently recognizes ten (10) days for
        paid holidays per calendar year, however, the holidays or number of days
        may be subject to change.

5.      Bonus. You will be eligible to participate in the 1998 bonus plan, in
        which select employees will receive up to $20,000. The exact amount is
        based upon PDF's achievement of revenue targets as well as the
        employee's individual performance as decided upon by PDF management.
        There are, of course, no guarantees of what, if any, bonus will be paid
        in 1998 or any subsequent year.


6.      Stock Options. In connection with the commencement of your employment,
        the Company will recommend that the Board of Directors grant you an
        option to purchase 300,000 shares (the "Total Option Shares") of the
        Company's Common Stock with an exercise price equal to the fair market
        value of the Common Stock on the date of the grant by the Board. Such
        option will vest over a four year period starting on your Start Date
        (the date you actually start working) according to the following vesting
        schedule: 1/4 of the Total Option Shares will be exercisable on the
        twelve (12) month anniversary of your Start Date and 1/48th of the Total
        Option Shares will be exercisable on a monthly basis thereafter. Vesting
        of the options will, of course, depend on your continued employment with
        the Company. The options will be incentive stock options to the maximum
        extent permitted by the tax code and will be subject to execution of and
        the terms of the Company's Stock Option Plan and the Stock Option
        Agreement to be entered into between you and the Company. The option
        grant is subject to and will not be effective until approved by the
        Board.

7.      Benefits. Effective on your Start Date, the Company will make available
        to you the standard medical and dental insurance and other benefits
        provided to employees of the Company generally.

8.      At-Will Employment. By signing below, you acknowledge that your
        employment at the Company is for an unspecified duration, and neither
        this letter nor your acceptance thereof constitutes a contract of
        employment. You acknowledge that your employment will be on an "at-will"
        basis, which means that the employment relationship may be terminated by
        you or the Company at any time for any reason or no reason, without
        further obligation or liability.

9.      Confidentiality Information and Invention Assignment Agreement. Your
        acceptance of this offer and commencement of employment with the Company
        is contingent upon the execution, and delivery to an officer of the
        Company, of the Company's Confidential Information and Invention
        Assignment Agreement, a copy of which is enclosed for your review and
        execution (the

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        "Confidentiality Agreement"), prior to or on the Start Date. The
        Confidentiality Agreement relates to confidential information you gain
        about PDF's business, technology, and intellectual property as well as
        information for our customers and the Company's ownership of
        intellectual property generated while you are employed at PDF. You are
        required to protect this information to the best of your ability even
        after your possible termination of employment.

10.     Confidentiality of Terms. You agree to follow the Company's strict
        policy that employees must not disclose, either directly or indirectly,
        any information, including any of the terms of this agreement, regarding
        salary, bonuses, or stock purchase or option allocations to any person,
        including other employees of the Company; provided, however, that you
        may discuss such terms with members of your immediate family and any
        legal, tax or accounting specialists who provide you with individual
        legal, tax or accounting advice.


        We are all delighted to be able to extend you this offer and look
forward to working with you. To indicate your acceptance of the Company's offer,
please sign and date this letter in the space provided below and return it to
me, along with a signed and dated copy of the Confidentiality Agreement. This
letter, together with the Confidentiality Agreement, set forth the terms of your
employment with the Company and supersedes any prior representations or any
agreements, whether written or oral. This letter may not be modified or amended
except by a written agreement, signed by the Company and by you.



THIS OFFER EXPIRES TWO DAYS FROM THE DATE OF THIS LETTER WRITTEN ABOVE.


                                         Very truly yours,

                                         PDF SOLUTIONS, INC.


                                         By /s/ DR. THOMAS F. COBOURN
                                            ------------------------------------
                                            Dr. Thomas F. Cobourn
                                            Vice President, PDF/SOLUTIONS, INC

THE FOREGOING TERMS AND CONDITIONS
ARE HEREBY AGREED TO AND ACCEPTED:


Signed: /s/ P. STEVEN MELMAN
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Print Name: P. Steven Melman
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Date: July 10, 1998
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