**Exhibit 10.35**

**Silicon Image, Inc.**

**Bonus Plan for Fiscal Year 2004**

**1.****             ****Purpose**

The purpose of this BonusPlan (this “**Plan**”) is to providefinancial incentives for certain executive1 and non-executive2 employees (“**Executives**” and “**Non-Executives**”,respectively) of Silicon Image, Inc. (the “**Company**”)to meet and exceed the Company’s annual financial goals.

**2.****             ****Eligibility**

Executives andNon-Executives of the Company selected by the Committee (the “**Participants**” and each a “**Participant**”) shall be eligible to participatein this Plan.  Participation in thisPlan is on a fiscal year basis and in the sole discretion of the CompensationCommittee of the Company’s Board of Directors (the “**Committee**”).

**3.****             ****Administration**

**a.            **This Plan shall be administered by the Committee whichmay delegate specific administrative tasks to others as appropriate foradministration of this Plan.

**b.            **Subject to the provisions of this Plan, the Committeeshall have exclusive authority to designate Participants, the amount of eachParticipant’s award under this Plan (the “**Award**”),the date when any performance goals are measured, and the date when Awards (ifany) will be paid.

**c.            **The Committee shall have all discretion and authoritynecessary or appropriate to administer this Plan, including, but not limitedto, the power to interpret this Plan, to prescribe, amend and rescind rules andregulations relating to it, and to make all other determinations necessary oradvisable in the administration of this Plan, and such determination shall befinal and binding upon all persons having an interest in this Plan.

**d.**             Amajority of the Committee shall constitute a quorum, and the acts of a majorityof the members present at a meeting at which a quorum is present or any actiontaken without a meeting by a writing executed by all of the members of theCommittee shall constitute the act of the Committee.

**e.**             Allexpenses and liabilities incurred by the Committee in the administration ofthis Plan shall be borne by the Company. The Committee may employ attorneys, consultants, accountants, or otherpersons.  The Committee and the Companyand its officers and directors shall be entitled to rely upon the advice,opinion, or valuations of any such persons. No member of the Committee shall be personally liable for any action,determination, or interpretation taken or made with respect to this Plan,unless such action, determination, or interpretation constitutes criminalmisconduct or willful negligence or demonstrates bad faith, and all members ofthe Committee shall be fully protected by the Company in respect of any suchaction, determination or interpretation.

**4.****             ****Bonus Pool Establishment**

Subject to the terms andconditions of this Plan, the Company will establish a cash bonus pool if actualearnings per share (calculated on a pro forma3 basis) for the fiscal year endedDecember 31, 2004 

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1 “**Executive**” means anemployee of the Company at the level of Vice President or above employed by theCompany or any affiliated Company as determined by the Committee.

2 “**Non-Executive**” means anemployee of the Company, other than an Executive, employed by the Company orany affiliated Company as determined by the Committee.

3 Excludes stock compensation expense, amortization of intangible assets,patent defense costs, acquisition integration costs, restructuring costs, andgains on escrow settlement, as well as any other items required to be excludedunder applicable laws, rules and regulations.

 

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(“**Actual EPS**”) exceeds the baseline earningsper share for the fiscal year established by the Committee (“**Bonus EPS**”).  If Actual EPS does not exceed Bonus EPS, then no cash bonus poolwill be established.  The amount of thecash bonus pool will be based on the amount by which Actual EPS exceeds BonusEPS, with the level of such pool equal to an increasing percentage (starting at10% and capped at 50%) of each $0.01 of incremental Actual EPS above BonusEPS.  The maximum amount of the cashbonus pool shall be $3,200,000.  Theforegoing is illustrated by the following table.

| **Actual EPS**      |   | **Incremental    Pool Percentage** |   | **Incremental    Pool Dollars** |    | **Cumulative    Pool Dollars** |   |
|---------------------|--------|------------------------------------|--------|---------------------------------|---------|--------------------------------|--------|
| Bonus EPS +  $0.000 |   | N/A                                |   | $                               | 0       |                           | $      | 0 |   |
| Bonus EPS +  $0.010 |   | N/A                                |   | $                               | 0       |                           | $      | 0 |   |
| Bonus EPS +  $0.021 |   | 10                                 | %      | $                               | 80,000  |                           | $      | 80,000 |   |
| Bonus EPS +  $0.033 |   | 20                                 | %      | $                               | 160,000 |                           | $      | 240,000 |   |
| Bonus EPS +  $0.046 |   | 30                                 | %      | $                               | 240,000 |                           | $      | 480,000 |   |
| Bonus EPS +  $0.060 |   | 40                                 | %      | $                               | 320,000 |                           | $      | 800,000 |   |
| Bonus EPS +  $0.075 |   | 50                                 | %      | $                               | 400,000 |                           | $      | 1,200,000 |   |
| Bonus EPS +  $0.090 |   | 50                                 | %      | $                               | 400,000 |                           | $      | 1,600,000 |   |
| Bonus EPS +  $0.105 |   | 50                                 | %      | $                               | 400,000 |                           | $      | 2,000,000 |   |
| Bonus EPS +  $0.120 |   | 50                                 | %      | $                               | 400,000 |                           | $      | 2,400,000 |   |
| Bonus EPS +  $0.135 |   | 50                                 | %      | $                               | 400,000 |                           | $      | 2,800,000 |   |
| Bonus EPS +  $0.150 |   | 50                                 | %      | $                               | 400,000 |                           | $      | 3,200,000 |   |
| Bonus EPS +  $0.160 |   | 0                                  | %      | $                               | 0       |                           | $      | 3,200,000 |   |
| Bonus EPS +  $0.170 |   | 0                                  | %      | $                               | 0       |                           | $      | 3,200,000 |   |

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Table values assume, for purposes of this example,80,000,000 common shares outstanding. Figures will adjust according to changes in Bonus EPS and common sharesoutstanding.

**5.****             ****Bonus Pool Allocation**

Any cash bonus poolestablished pursuant to this Plan will be allocated between the ExecutiveParticipants and Non-Executive Participants. The respective percentages of the cash bonus pool allocated between theExecutive Participants and Non-Executive Participants will be based on theamount by which Actual EPS exceeds Bonus EPS, with the percentage allocated toExecutive Participants increasing with each $0.01 of incremental Actual EPSabove Bonus EPS.  The percentage split betweenthe Executive Participants and Non-Executive Participants will start at 0/100and become fixed at 30/70 at the maximum bonus pool level.  The amounts of Awards, if any, allocable toindividual Executive Participants will be determined by the Committee in itssole discretion.  The maximum Awardallocable to individual Executive Participants, expressed as a percentage ofbase salary, shall be 50% for the Chief Executive Officer, 40% for thePresident, 35% for the Division President of Storage Group, Chief FinancialOfficer and Chief Technical Officer, and 30% for the Executive Vice Presidentsand Vice Presidents.  The amounts ofAwards, if any, allocable to individual Non-Executive Participants will bedetermined by Company management and submitted to the Committee forapproval.  The maximum Award allocableto individual Non-Executive Participants, expressed as a percentage of basesalary, shall be 20% for directors, 10% for managers and 5.5% for individualcontributors.  For any individual whooccupies more than one office or position, the maximum percentage correspondingto the most senior office or position shall be the applicable maximumpercentage.  The Committee will set themaximum 

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percentage applicable toany offices or positions not listed above. The foregoing is illustrated by the following table.
| **Actual EPS**      |   | **Cumulative  Pool Dollars** |      | **Executive  Percentage** |   | **Non-Executive  Percentage** |   | **Executive  Allocation** |   | **Non-Executive  Allocation** |   |
|---------------------|--------|------------------------------|-----------|---------------------------|--------|-------------------------------|--------|---------------------------|--------|-------------------------------|--------|
| Bonus EPS +  $0.000 |   | $                            | 0         |                      | 0.0    | %                             | 0.0    | %                         | $      | 0                             |   | $ | 0 |   |
| Bonus EPS +  $0.010 |   | $                            | 0         |                      | 0.0    | %                             | 0.0    | %                         | $      | 0                             |   | $ | 0 |   |
| Bonus EPS +  $0.021 |   | $                            | 80,000    |                      | 0.0    | %                             | 100.0  | %                         | $      | 0                             |   | $ | 80,000 |   |
| Bonus EPS +  $0.033 |   | $                            | 240,000   |                      | 0.0    | %                             | 100.0  | %                         | $      | 0                             |   | $ | 240,000 |   |
| Bonus EPS +  $0.046 |   | $                            | 480,000   |                      | 0.0    | %                             | 100.0  | %                         | $      | 0                             |   | $ | 480,000 |   |
| Bonus EPS + $0.060  |   | $                            | 800,000   |                      | 0.0    | %                             | 100.0  | %                         | $      | 0                             |   | $ | 800,000 |   |
| Bonus EPS +  $0.075 |   | $                            | 1,200,000 |                      | 5.0    | %                             | 95.0   | %                         | $      | 60,000                        |   | $ | 1,140,000 |   |
| Bonus EPS +  $0.090 |   | $                            | 1,600,000 |                      | 10.0   | %                             | 90.0   | %                         | $      | 160,000                       |   | $ | 1,440,000 |   |
| Bonus EPS +  $0.105 |   | $                            | 2,000,000 |                      | 15.0   | %                             | 85.0   | %                         | $      | 300,000                       |   | $ | 1,700,000 |   |
| Bonus EPS +  $0.120 |   | $                            | 2,400,000 |                      | 20.0   | %                             | 80.0   | %                         | $      | 480,000                       |   | $ | 1,920,000 |   |
| Bonus EPS +  $0.135 |   | $                            | 2,800,000 |                      | 25.0   | %                             | 75.0   | %                         | $      | 700,000                       |   | $ | 2,100,000 |   |
| Bonus EPS +  $0.150 |   | $                            | 3,200,000 |                      | 30.0   | %                             | 70.0   | %                         | $      | 960,000                       |   | $ | 2,240,000 |   |
| Bonus EPS + $0.160  |   | $                            | 3,200,000 |                      | 30.0   | %                             | 70.0   | %                         | $      | 960,000                       |   | $ | 2,240,000 |   |
| Bonus EPS +  $0.170 |   | $                            | 3,200,000 |                      | 30.0   | %                             | 70.0   | %                         | $      | 960,000                       |   | $ | 2,240,000 |   |

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Table values assume, for purposes of this example, 80,000,000 commonshares outstanding.  Figures will adjustaccording to changes in Bonus EPS and common shares outstanding.

**6.****             ****Payment**

Awards under this Planwill distributed as soon as reasonably practicable following (i) publicdisclosure of the Company’s financial results for the fiscal year endedDecember 31, 2004, (ii) calculation of Actual EPS and (iii) any determinationof the amounts of the bonus pool allocable to individual Executive Participantsand Non-Executive Participants. Participants must be employed by the Company as employees at the time ofdistribution in order to be eligible to receive payment of Awards, unlessotherwise determined by the Committee in its sole discretion.  The Committee may impose additionaleligibility requirements on payment of any Awards in its sole discretion.

**7.****             ****General Provisions**

**a.             NoPrior Funding**

No amounts payable underthis Plan shall be funded, set aside or otherwise segregated prior topayment.  The obligation to pay theAwards shall at all times be an unfunded and unsecured obligation of theCompany and the Company shall not be required to incur indebtedness to fund thebonus pool unless otherwise directed to do so by the Committee.  Participants shall have the status ofgeneral creditors.  This Plan is notqualified under Section 401(a) of the Internal Revenue Code of 1986, asamended, and is not subject to any provisions of the Employee Retirement IncomeSecurity Act of 1974.

**b.             NoObligation to Employ**

Eligibility forparticipation in this Plan is not evidence of, nor does it constitute, acontract of employment between the Company and any individual.  Nothing in this Plan will confer or bedeemed to confer on any individual any right to continue in the employ of theCompany or limit in any way the right 

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of the Company to terminatean individual’s employment at any time, with or without cause.  This Plan is not intended to and does notcreate any legal rights for any employee.

**c.             Amendment or Termination of Plan**

This Plan may be amendedor terminated by the Board or the Committee at any time prior to payment ofAwards hereunder.

**d.             Headings**

The headings of thesections hereof are inserted for convenience only and shall not be deemed toconstitute a part hereof nor to affect the meaning thereof.

**e.             Withholdingof Taxes**

To the extent that theCompany is required to withhold federal, state, local or foreign taxes inconnection with any benefit realized by a Participant under this Plan, and theamounts available to the Company for such withholding are insufficient, it willbe a condition to the realization of such benefit that the Participant makearrangements satisfactory to the Company for payment of the balance of suchtaxes required or requested to be withheld.

**f.              Choice of Law**

All questions concerningthe construction, validity and interpretation of this Plan will be governed bythe law of the State of California.  AnyAward will not be effective unless such Award is made in compliance with allapplicable laws, rules and regulations.

 

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