UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q
                                   (Mark One)

              ( X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                       For the quarter ended June 30, 2002

                                       OR

              ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
           Or the transition period from ___________ to ______________



                           Commission File No. 0-10394


                              DATA I/O CORPORATION
             (Exact name of registrant as specified in its charter)





                Washington                           91-0864123

        (State or other jurisdiction of          (I.R.S. Employer
        incorporation or organization)           Identification No.)



               10525 Willows Road N.E., Redmond, Washington, 98052
               (Address of principal executive offices, Zip Code)


                                 (425) 881-6444
              (Registrant's telephone number, including area code)



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


7,664,408 shares of no par value or the Registrant's Common Stock were issued
and outstanding as of July 30, 2002.

<PAGE>

                              DATA I/O CORPORATION

                                    FORM 10-Q
                       For the Quarter Ended June 30, 2002

                                      INDEX


Part I - Financial Information                                           Page

     Item 1.    Financial Statements (unaudited)                           3

     Item 2.    Management's Discussion and Analysis of
                Financial Condition and Results of Operations              9

     Item 3.    Quantitative and Qualitative Disclosures
                about Market Risk                                         13


Part II - Other Information

     Item 1.    Legal Proceedings                                         13

     Item 2.    Changes in Securities and Use of Proceeds                 13

     Item 3.    Defaults Upon Senior Securities                           13

     Item 4.    Submission of Matters to a Vote of Security Holders       13

     Item 5.    Other Information                                         13

     Item 6.    Exhibits and Reports on Form 8-K                          14



Signatures                                                                18

Exhibit 99.1    Certification by Chief Executive Officer                  19

Exhibit 99.2    Certification by Chief Financial Officer                  20




<PAGE>

PART I - FINANCIAL INFORMATION

Item 1.           Financial Statements

                              DATA I/O CORPORATION

                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
                                                                                    June 30,                Dec. 31,
                                                                                      2002                    2001
-----------------------------------------------------------------------------------------------------------------------
(in thousands, except share data)                                                  (unaudited)
<S>                                                                                <C>                     <C>

ASSETS
CURRENT ASSETS:
     Cash and cash equivalents                                                         $3,270                 $2,656
     Marketable securities                                                              1,851                  3,236
     Trade accounts receivable, less allowance for
        doubtful accounts of $308 and $350                                              4,644                  5,666

     Inventories                                                                        5,601                  6,388
     Other current assets                                                                 631                    485
                                                                                   -----------            -------------
         TOTAL CURRENT ASSETS                                                          15,997                 18,431

Property and equipment - net                                                            1,476                  1,741

Other assets                                                                              127                    168
                                                                                   -----------            -------------
         TOTAL ASSETS                                                                 $17,600                $20,340
                                                                                   ===========            =============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
     Accounts payable                                                                  $1,712                 $1,599
     Accrued compensation                                                                 790                    848
     Deferred revenue                                                                   1,686                  1,686
     Other accrued liabilities                                                          1,545                  1,871
     Accrued costs of business restructuring                                               34                     88
     Income taxes payable                                                                 446                    329
                                                                                   -----------            -------------
         TOTAL CURRENT LIABILITIES                                                      6,213                  6,421

Deferred gain on sale of property                                                       1,600                  1,765
                                                                                   -----------            -------------
         TOTAL LIABILITIES                                                              7,813                  8,186

COMMITMENTS                                                                                 -                      -

STOCKHOLDERS' EQUITY:
     Preferred stock -
        Authorized, 5,000,000 shares, including
           200,000 shares of Series A Junior Participating
        Issued and outstanding, none                                                        -                      -
     Common stock, at stated value -
        Authorized, 30,000,000 shares
        Issued and outstanding, 7,664,408
           and 7,613,754 shares                                                        18,576                 18,500
     Accumulated deficit                                                               (8,792)                (6,173)
     Accumulated other comprehensive loss                                                   3                   (173)
                                                                                   -----------            -------------
        TOTAL STOCKHOLDERS' EQUITY                                                      9,787                 12,154
                                                                                   -----------            -------------

        TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                    $17,600                $20,340
                                                                                   ===========            =============


See accompanying notes to consolidated financial statements.
</TABLE>


<PAGE>



                              DATA I/O CORPORATION

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)
<TABLE>
<CAPTION>

                                                                             Quarters Ended               Six Months Ended
------------------------------------------------------------------------ ------------------------ -- ---------------------------
                                                                         June 30,      June 30,       June 30,       June 30,
                                                                           2002          2001           2002           2001
------------------------------------------------------------------------ ---------- -- ---------- -- ----------- -- ------------
(in thousands, except per share data)
<S>                                                                     <C>            <C>           <C>            <C>
Net sales                                                                  $4,796        $6,487       $10,186        $14,370
Cost of goods sold                                                          2,792         3,677         5,679          8,825
                                                                         ----------    ----------    -----------    ------------
Gross margin                                                                2,004         2,810         4,507          5,545

Operating expenses:
     Research and development                                               1,398         1,765         2,706          3,703
     Selling, general and administrative                                    1,972         2,450         4,267          5,446
     Net provision for business restructuring                                   -           460             -            460
                                                                         ----------    ----------    -----------    ------------
         Total operating expenses                                           3,370         4,675         6,973          9,609
                                                                         ----------    ----------    -----------    ------------

         Operating loss                                                    (1,366)       (1,865)       (2,466)        (4,064)

Non-operating income (expense):
     Interest income                                                           23            51            49            117
     Interest expense                                                          (5)           (3)           (8)           (10)
     Foreign currency exchange                                                 (3)          (83)          (58)           (90)
                                                                         ----------    ----------    -----------    ------------
         Total non-operating income (expense)                                  15           (35)          (17)            17

                                                                         ----------    ----------    -----------    ------------
        Loss from operations before income taxes                           (1,351)       (1,900)       (2,483)        (4,047)

Income tax expense                                                             18            20            41             22
                                                                         ----------    ----------    -----------    ------------

Net loss                                                                  ($1,369)      ($1,920)      ($2,524)       ($4,069)
                                                                         ==========    ==========    ===========    ============

Basic and diluted loss per share:
     Total basic and diluted loss per share                                ($0.18)       ($0.25)       ($0.33)        ($0.54)
                                                                         ==========    ==========    ===========    ============

Weighted average and potential shares outstanding                           7,664         7,560         7,664          7,560
                                                                         ==========    ==========    ===========    ============

See accompanying notes to consolidated financial statements.
</TABLE>

<PAGE>


                              DATA I/O CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------------------------------------
                                                                                                  June 30,          June 30,
For the six months ended                                                                            2002              2001
--------------------------------------------------------------------------------------------------------------------------------
(in thousands)
<S>                                                                                              <C>                <C>
OPERATING ACTIVITIES:
        Loss from operations                                                                       ($2,524)         ($4,069)
        Adjustments to reconcile loss from operations to net cash
          provided by (used in) operating activities:
         Depreciation and amortization                                                                 508            1,192
         Net loss on dispositions                                                                      227               73
         Amortization of deferred gain on sale                                                        (165)            (164)
         Net change in:
          Deferred revenue                                                                               -             (331)
          Trade accounts receivable                                                                  1,011            2,736
          Inventories                                                                                  792            1,986
          Recoverable income taxes                                                                       -               18
          Other current assets                                                                        (141)             178
          Accrued costs of business restructuring                                                      (54)              63
          Accounts payable and accrued liabilities                                                    (147)          (1,428)
                                                                                                 -----------      --------------
        Net cash provided by (used in) operating activities                                           (493)             254

INVESTING ACTIVITIES:
        Purchases of property and equipment                                                           (430)            (825)
        Net from purchase and sale of marketable securities                                          1,386              263
                                                                                                 -----------      --------------
         Net cash provided by (used in) investing activities                                           956             (562)

FINANCING ACTIVITIES:
        Sale of common stock                                                                            76              117
                                                                                                 -----------      --------------
         Net cash provided by financing activities                                                      76              117

                                                                                                 -----------      --------------
Increase/(decrease) in cash and cash equivalents                                                       539             (191)

Effects of exchange rate changes on cash                                                                75              (50)
Cash and cash equivalents at beginning of year                                                       2,656            3,133
                                                                                                 -----------      --------------
Cash and cash equivalents at end of quarter                                                         $3,270           $2,892
                                                                                                 ===========      ==============


See accompanying notes to consolidated financial statements.

</TABLE>


<PAGE>


                              DATA I/O CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


NOTE 1 - FINANCIAL STATEMENT PREPARATION

The  financial  statements  as of June 30,  2002 and June 30,  2001,  have  been
prepared by the Company  pursuant to the rules and regulations of the Securities
and Exchange  Commission  ("SEC").  These  statements  are unaudited but, in the
opinion of management,  include all adjustments  (consisting of normal recurring
adjustments  and  accruals)  necessary  to present  fairly the  results  for the
periods presented.  The balance sheet at December 31, 2001 has been derived from
the audited financial  statements at that date. Certain information and footnote
disclosures  normally  included in financial  statements  prepared in accordance
with accounting  principles  generally  accepted in the United States of America
have been  condensed  or  omitted  pursuant  to such SEC rules and  regulations.
Operating  results for the six months  ended June 30,  2002 are not  necessarily
indicative of the results that may be expected for the year ending  December 31,
2002. These financial  statements  should be read in conjunction with the annual
audited  financial  statements  and  the  accompanying  notes  included  in  the
Company's Form 10-K for the year ended December 31, 2001.

NOTE 2 - INVENTORIES

Inventories consisted of the following components (in thousands):

                                            June 30,                  Dec. 31,
                                              2002                      2001
                                        --------------          ----------------
                  Raw material              $2,675                    $3,588
                  Work-in-process            1,452                     1,354
                  Finished goods             1,474                     1,446
                                        --------------          ----------------
                                            $5,601                    $6,388
                                        ==============          ================

The Company  increased  its reserve for excess and  obsolete  inventory  by $662
during the second quarter. This increase in the reserve reflects the lower usage
of  materials  due to lower  sales,  work-in-process  inventory  of units nearly
completed,  and anticipated obsolete inventory generated from the development of
product enhancements and replacements.

NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following components (in thousands):

                                          June 30,                  Dec. 31,
                                           2001                       2001
                                     ----------------          ----------------
Leasehold improvements                   $   238                   $   229
Equipment                                 12,056                    12,188
                                     ----------------          ----------------
                                          12,294                    12,417
Less accumulated depreciation             10,818                    10,676
                                     ----------------          ----------------
Property and equipment - net             $ 1,476                   $ 1,741
                                     ================          ================

<PAGE>


NOTE 4 - BUSINESS RESTRUCTURING PROGRESS

In the second quarter of 2001, the Company  recorded a  restructuring  charge of
$460,000  associated with actions taken to reduce the Company's  breakeven point
and realign the Company with growth activities.  This operational  repositioning
was mandated by the impact  which the  economic  slowdown and decline in capital
spending  across a high  number of  customer  groups had on  general  demand for
programming equipment.

The four  components of the Company's  second quarter  repositioning  included a
reduction in the Company's  global  workforce of approximately 40 persons or 20%
of the  workforce;  discontinuance  or  reallocation  of numerous  projects  and
activities  not  essential to the Company's  long-term  goals;  streamlining  of
activities to decrease  discretionary  marketing,  distribution  and promotional
expenses;  and  consolidation  of numerous  functions across the organization to
create a team which was more  productive  and able to  respond  faster to global
customer needs.

During  its third  quarter of 2001,  the  Company  announced  that it would take
further  strategic  actions to reduce its breakeven  point,  which  included the
following actions: closure of a facility in Germany and moving its operations to
other  locations  within the  Company;  combining  the  Company's  four  product
families  into two business  groups;  consolidating  service  groups  across the
organization  to create a team more  responsive to global  customer  needs;  and
targeting  certain other expense  reductions for the third quarter,  including a
closure of the Company's  Redmond facility for one week. A restructuring  charge
of $499,000 was recorded in the third quarter.

In the fourth quarter of 2001, the Company reduced its staff by 29 persons.  The
actions were taken to reduce the Company's  breakeven  point and bring it closer
to forecasted  revenues,  and to maintain the cash position of the Company.  The
Company incurred restructuring costs of $252,000 during the fourth quarter.

At June 30,  2002 all  restructuring  expenses  associated  with the  activities
detailed above had been paid except for approximately $34,000. Subsequent to the
end of the quarter,  the Company announced its intention to reduce its workforce
by  approximately  25% to further reduce its breakeven  point.  A  restructuring
charge of  approximately  $500,000 is expected to be taken in the third  quarter
relating to these actions.

An analysis of the restructuring is as follows (in thousands):
<TABLE>
<CAPTION>

                                                          Reserve                        2002          Reserve
                                                         Balance at        2002       Payments/       Balance at
 Description                                           Dec. 31, 2001     Adjust.     Write-offs      June 30, 2002
 --------------                                       ----------------- -----------  ------------- ------------------
<S>                                                   <C>               <C>         <C>              <C>
 Downsizing U.S. Operations:
    Employee severance                                    $  4             $ 10         $ 10            $  4
    Redmond facility consolidation                          45                -           28              17
    Consulting and legal expenses                           20              (10)           6               4
    Downsizing Foreign Operations                           19                -           10               9
                                                      ----------------- -----------  ------------- ------------------
 Total                                                    $ 88             $  -         $ 54            $ 34
                                                      ================= ===========  ============= ==================
</TABLE>

NOTE 5 - EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per
share (in thousands except per share data):
<TABLE>
<CAPTION>

                                                                         Second Quarter                 First Six Months
                                                                  -----------------------------    ---------------------------
                                                                     2002             2001            2002            2001
                                                                  -----------     -------------    -----------     -----------
<S>                                                                 <C>              <C>             <C>             <C>
Numerator for basic and diluted loss per share:
       Net loss                                                     ($1,369)          ($1,920)       ($2,524)        ($4,069)
                                                                  -----------     -------------    -----------     -----------

Denominator:
        Denominator for basic earnings per share -
          weighted-average shares                                    7,664            7,560           7,657           7,560
        Employee stock options (1)                                     -                -               -               -
                                                                  -----------     -------------    -----------     -----------
        Denominator for diluted earnings per share -
          adjusted weighted-average shares and
          assumed conversions of stock options                       7,664            7,560           7,657           7,560
                                                                  -----------     -------------    -----------     -----------
Basic and diluted loss per share
        Total basic and diluted loss per share                      ($0.18)          ($0.25)         ($0.33)         ($0.54)
                                                                  ===========     =============    ===========     ===========

(1) At June  30,  2002  and 2001  there  were  1,327,919  and  1,174,594  shares
    respectively,  of potentially  issueable  common stock.  Because of the  net
    loss for the three  months  and six months  ended  June 30,  2002 and  2001,
    potentially  issueable  common stock was not included in the calculation  of
    diluted loss per share as their inclusion would be anti-dilutive.
</TABLE>


NOTE 6 - ACCOUNTING FOR INCOME TAXES

The Company's  effective tax rate for the first six months of 2002 differed from
the statutory 34% tax rate  primarily due to operating  losses for which  no tax
benefit was recorded. The tax valuation  allowance  increased  by  approximately
$490,000 during the quarter ended June 30, 2002. As of June 30, 2002 the Company
has tax valuation allowances of $9,955,000.

NOTE 7 - COMPREHENSIVE INCOME

During the second  quarter  and the first sixth  months of 2002 and 2001,  total
comprehensive income (loss) was comprised of the following (in thousands):
<TABLE>
<CAPTION>

                                                       For the Second Quarter                For the Six Months
                                                   -------------------------------    ----------------------------------
                                                       2002             2001              2002               2001
                                                   -------------    --------------    -------------    -----------------
                                                      <S>              <C>               <C>                <C>

    Net loss                                           ($1,369)          ($1,920)         ($2,524)         ($4,069)
    Foreign currency translation gain (loss)                95               (76)              79              (78)
                                                   -------------    --------------    -------------    -----------------
    Total comprehensive loss                           ($1,274)          ($1,996)         ($2,445)         ($4,147)
                                                   =============    ==============    =============    =================
</TABLE>

NOTE 8 - CHANGE IN FISCAL YEAR

Prior to 2001, the Company reported on a fifty-two,  fifty-three week basis. The
last  reporting  period using this fiscal period was the year ended December 28,
2000. The Company's  Board of Directors  approved a resolution on March 12, 2001
to change the Company's reporting period to a calendar year and calendar quarter
basis  effective for the current  fiscal year. The first quarter of 2001 covered
the period  December 29, 2000 to March 31, 2001. The second quarter  covered the
period April 1, 2001 to June 30, 2001.

NOTE 9 - FOREIGN CURRENCY TRANSLATION AND DERIVATIVES

Assets and  liabilities of foreign  subsidiaries  are translated at the exchange
rate on the  balance  sheet  date.  Revenues,  costs  and  expenses  of  foreign
subsidiaries are translated at average rates of exchange  prevailing  during the
year.  Translation  adjustments  resulting  from this  process  are  charged  or
credited to stockholders'  equity,  net of taxes.  Realized and unrealized gains
and losses resulting from the effects of changes in exchange rates on assets and
liabilities  denominated  in foreign  currencies  are included in  non-operating
expense as foreign currency transaction gains and losses.

In June 1998, the Company  adopted SFAS No. 133,  Accounting for Derivatives and
Hedging  Activities.   This  statement  establishes   accounting  and  reporting
standards for derivative  instruments and requires recognition of derivatives as
assets or liabilities in the statement of financial  position and measurement of
those  instruments  at fair value.  The adoption of this standard by the Company
did not materially impact its consolidated financial statements.

The Company utilizes forward foreign exchange  contracts to reduce the impact of
foreign currency exchange rate risks where natural hedging  strategies cannot be
effectively employed. All hedging instruments held by the Company are fair value
hedges.  Generally,  these  contracts  have  maturities  less  than one year and
require the Company to exchange foreign currencies for U.S. dollars at maturity.
The change in fair value of the open hedge  contracts  as of June 30, 2002 is an
unrealized  loss of $154,000 and is included in accounts  payable on the balance
sheet.

The Company does not hold or issue derivative financial  instruments for trading
purposes.  The purpose of the Company's hedging activities is to reduce the risk
that the valuation of the underlying  assets,  liabilities and firm  commitments
will  be  adversely  affected  by  changes  in  exchange  rates.  The  Company's
derivative  activities do not create foreign currency exchange rate risk because
fluctuations  in the value of the  instruments  used for  hedging  purposes  are
offset by fluctuations in the value of the underlying exposures being hedged.


Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

General

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes  forward-looking  statements  within
the meaning of the Private  Securities  Litigation  Reform Act of 1995. This Act
provides a "safe harbor" for  forward-looking  statements to encourage companies
to provide  prospective  information  about  themselves as long as they identify
these statements as forward looking and provide meaningful cautionary statements
identifying important factors that could cause actual results to differ from the
projected results.  All statements other than statements of historical fact made
in this  Quarterly  Report  on Form  10-Q are  forward-looking.  In  particular,
statements herein regarding industry prospects;  future results of operations or
financial position; changes in gross margin percentages; integration of acquired
products and operations;  market acceptance of the Company's newly introduced or
upgraded  products;  development,  introduction  and  shipment of new  products;
expected  spending  levels;  and  any  other  guidance  on  future  periods  are
forward-looking  statements.  Forward-looking  statements  reflect  management's
current expectations and are inherently uncertain.  The Company's actual results
may  differ   significantly  from  management's   expectations.   The  following
discussions and  discussions  under the caption  "Business - Cautionary  Factors
That May Affect Future Results" in Item 1 in the Company's Annual report on Form
10-K for the year ended  December 31, 2001,  describe  some, but not all, of the
factors that could cause these differences.

Results of Operations
<TABLE>
<CAPTION>

Net Sales
 -------------------------------------------------------------------------------------------------------------------------------
 (in thousands)


                                                        Second Quarter                            First Six Months
                                           -----------------------------------------  ------------------------------------------

 Net sales by product line                      2002         % Change       2001           2002        % Change         2001
 -----------------------------------------------------------------------------------  ------------------------------------------
<S>                                            <C>           <C>           <C>            <C>          <C>           <C>
 Non-automated programming systems              $2,762       (23.9%)        $3,630         $5,490       (34.0%)       $8,320

 Automated programming systems                   2,034       (28.8%)         2,857          4,696       (22.4%)        6,050

                                           -----------------------------------------  ------------------------------------------

 Total Sales                                    $4,796       (26.1%)        $6,487        $10,186       (29.1%)      $14,370
                                           =========================================  ==========================================


                                                        Second Quarter                            First Six Months
                                           -----------------------------------------  ------------------------------------------

 Net sales by location                           2002        % Change        2001          2002        % Change         2001
 -----------------------------------------------------------------------------------  ------------------------------------------

 United States                                 $2,118         (10.2%)      $2,358         $3,907         (26.0%)      $5,278

    % of total                                  44.2%                       36.3%          38.4%                       36.7%

 International                                 $2,678         (35.1%)      $4,129         $6,279         (30.9%)      $9,092

    % of total                                  55.8%                       63.7%          61.6%                       63.3%

 -------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Revenues for the second  quarter of 2002  decreased $1.7 million or 26% compared
to the  second  quarter  of  2001.  Sales  were  lower  for both  automated  and
non-automated programming systems. The decline in revenues is due to a reduction
in orders for  programming  equipment  that the  Company  believes is due to the
continued  general  economic  sluggishness of the  electronics  industry and the
capital  equipment  market in  particular.  The  Company  believes  its  largest
customer  group,  the  wireless  handset  manufacturers,  as  well  as  contract
manufacturers  and other sectors of the electronics  industry  continue to defer
capital equipment purchases.

For the six-month  period ending June 30, 2002 sales are down by $4.2 million or
29.1% from the same  period the prior  year.  Sales to Europe and Asia have been
very slow the first six  months,  but  increased  sales in  mainland  China have
offset a portion of the sales decline.

While the sales  amounts  were lower than the prior year,  the  Company's  sales
funnel continues to grow beyond levels not seen for several quarters.

Gross Margin
<TABLE>
<CAPTION>

                                                     Second Quarter                         First Six Months
                                           ---------------------------------------------------------------------------

 (in thousands)                                  2002                2001               2002               2001
----------------------------------------------------------------------------------------------------------------------
<S>                                             <C>                 <C>               <C>                <C>
Gross Margin                                    $2,004              $2,810             $4,507             $5,545

Percentage of net sales                          41.8%               43.3%              44.2%              38.6%
----------------------------------------------------------------------------------------------------------------------
</TABLE>

Gross  margins  decreased in dollars and as a percentage of sales for the second
quarter of 2002  compared  with the same period of 2001,  primarily due to lower
sales volumes and  additional  inventory  related  reserves  charged  during the
quarter.  Partially offsetting the decrease are reduced costs resulting from the
Company's restructuring actions taken during the last year.

Research and Development
<TABLE>
<CAPTION>

                                                     Second Quarter                         First Six Months
                                           ---------------------------------------------------------------------------

 (in thousands)                                  2002                2001                2002              2001
 ---------------------------------------------------------------------------------------------------------------------
<S>                                            <C>                 <C>                 <C>               <C>
 Research and development                       $1,398              $1,765              $2,706            $3,703

 Percentage of net sales                         29.1%               27.2%               26.6%             25.8%
 ---------------------------------------------------------------------------------------------------------------------
</TABLE>

The decrease in research and  development  (R&D)  spending for the first half of
2002 as compared to the first half of 2001  reflects  lower  headcount and lower
development spending. Spending on R&D projects has been reduced to control costs
in view of the lower sales volumes.

Selling, General and Administrative
<TABLE>
<CAPTION>
                                                     Second Quarter                         First Six Months
                                           ---------------------------------------------------------------------------

 (in thousands)                                  2002                2001                2002              2001
 ---------------------------------------------------------------------------------------------------------------------
<S>                                            <C>                 <C>                 <C>               <C>
 Selling, general & administrative              $1,972              $2,450              $4,267            $5,446

 Percentage of net sales                         41.1%               37.8%               41.9%             37.9%
 ---------------------------------------------------------------------------------------------------------------------
</TABLE>

Selling,  General and  Administrative  (SG&A) expenses decreased $0.5 million in
the second  quarter of 2002 versus 2001 and $1.2  million for the first 6 months
of 2002 versus last year,  including the  provision for business  restructuring.
Tight internal spending controls, coupled with the benefits of the restructuring
activities  undertaken  during 2001 has led to a  significant  reduction in SG&A
spending.  An $80,000  reduction in the Bad Debt Reserve was taken in the second
quarter due to the lower  accounts  receivable  balance as a result of the lower
sales volumes. This further reduced the SG&A spending for the quarter.

SG&A spending as a percentage of sales is higher in 2002 versus 2001 as a result
of the lower sales volume in 2002.

Interest
<TABLE>
<CAPTION>
                                                     Second Quarter                         First Six Months
                                           ---------------------------------------------------------------------------

 (in thousands)                                  2002                2001                2001              2001
 ---------------------------------------------------------------------------------------------------------------------
<S>                                             <C>                 <C>                 <C>               <C>
 Interest income                                  $23                 $51                 $49              $117

 Interest expense                                 ($5)                ($3)                ($8)             ($10)
 ---------------------------------------------------------------------------------------------------------------------
</TABLE>

Income Taxes
<TABLE>
<CAPTION>
                                                     Second Quarter                         First Six Months
                                           ---------------------------------------------------------------------------

 (in thousands)                                  2002                2001                2002              2001
 ---------------------------------------------------------------------------------------------------------------------
<S>                                             <C>                 <C>                 <C>               <C>
 Income tax expense from  operations              $18                 $20                 $41               $22
 ---------------------------------------------------------------------------------------------------------------------

The income tax provision relates to foreign taxes.
</TABLE>

<PAGE>


Financial Condition
<TABLE>
<CAPTION>
Liquidity and Capital Resources
                                                                    June 30,                                  Dec. 31,
(in thousands)                                                        2002                Change                2001
<S>                                                               <C>                    <C>                 <C>
------------------------------------------------------------- --------------------- -------------------- -------------------
Working capital                                                      $9,784             ($2,226)             $12,010
------------------------------------------------------------- --------------------- -------------------- -------------------
</TABLE>

Working capital  decreased  during the first six months of 2002 primarily due to
funding of the losses for the period.  Cash,  cash  equivalents  and  marketable
securities  decreased  approximately  $0.8 million during the period,  inventory
decreased $0.8 million,  and accounts  receivable  decreased $1.0 million. As of
June 30, 2002 and 2001, the Company had no debt outstanding.

The  Company  estimates  that  capital  expenditures  for  property,  plant  and
equipment  during the  remainder of 2002 will be between  $300,000 and $700,000.
The Company's  future  capital  requirements  will depend on a number of factors
including;  costs associated with R&D, successful launch of new products and the
potential use of funds for strategic purposes. Capital expenditures are expected
to be funded from  existing  and  internally  generated  funds or may be leased.
Management believes that the Company has sufficient working capital available to
fund its operations and capital requirements for at least 12 months. The Company
established  a foreign  line of credit for 50,000  Euros in February  2002.  The
sub-tenant  who was leasing the bottom floor of the building in Redmond  vacated
the premises during the second quarter at the end of the sub-tenant's lease. The
Company has the spaced listed with a broker and is actively marketing the space.

Restructuring

In the second quarter of 2001, the Company  recorded a  restructuring  charge of
$460,000  associated with actions taken to reduce the Company's  breakeven point
and realign the Company with growth activities.  This operational  repositioning
was mandated by the impact  which the  economic  slowdown and decline in capital
spending  across a high  number of  customer  groups had on  general  demand for
programming equipment.

The  Company's  second  quarter   repositioning   included  the  following  four
components:  a reduction in the Company's  global  workforce of approximately 40
persons or 20% of the  workforce;  discontinuance  or  reallocation  of numerous
projects  and  activities  not  essential  to  the  Company's  long-term  goals;
streamlining of activities to decrease discretionary marketing, distribution and
promotional  expenses;  and  consolidation  of  numerous  functions  across  the
organization  to create a team  which was more  productive  and able to  respond
faster to global customer needs.

On July 12, 2001, during its third quarter,  the Company announced that it would
take further strategic actions to reduce its breakeven point, which included the
following actions: closure of a facility in Germany and moving its operations to
other  locations  within the  Company;  combining  the  Company's  four  product
families  into two business  groups;  consolidating  service  groups  across the
organization  to create a team more  responsive to global  customer  needs;  and
targeting  certain other expense  reductions for the third quarter,  including a
closure of the company's  Redmond facility for one week. A restructuring  charge
of $499,000 was recorded in the third quarter.

In the fourth quarter of 2001, the Company reduced its staff by 29 persons.  The
actions  taken were meant to reduce the Company's  breakeven  point and bring it
closer to forecasted revenues, and to maintain the cash position of the Company.
The Company incurred restructuring costs of $252,000 during the fourth quarter.

At June 30, 2002,  all  restructuring  expenses  associated  with the activities
detailed  above were paid except for  approximately  $34,000 which was primarily
associated  with  facility   consolidation,   and  consulting  and  legal  fees.
Subsequent  to the end of the quarter,  the Company  announced  its intention to
reduce its workforce by approximately 25% to further reduce its breakeven point.
A restructuring charge of approximately  $500,000 is expected to be taken in the
third quarter relating to these actions.


<PAGE>


General

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

The Company has  experienced  no material  changes in market  risk.  The Company
currently uses only foreign currency hedge derivative instruments, which are not
material as of June 30, 2002.  However,  the Company is exposed to interest rate
risks.  The  Company  generally  invests  in  high-grade  commercial  paper with
original  maturity dates of twelve months or less and conservative  money market
funds  to  minimize  its  exposure  to  interest  rate  risk  on its  marketable
securities,  which are classified as  available-for-sale as of June 30, 2002 and
December 31, 2001.

PART II - OTHER INFORMATION


Item 1.           Legal Proceedings

                  None


Item 2.           Changes in Securities and Use of Proceeds

                  None


Item 3.           Defaults Upon Senior Securities

                  None

Item 4.           Submission of Matters to a Vote of Security Holders

          At the Annual Meeting of Shareholders held on May 15, 2002, there were
          present in person or by proxy the holders of 7,418,240 (96.79%) shares
          of Common  Stock of the  Corporation  thereby  constituting  a quorum.
          Following  are the  matters  ratified  and  the  voting  results:

          (a) Election of a Board of Directors  consisting  of the following six
              (6)directors:

                  Name                         Votes For        Votes Withheld

                  Glen F. Ceiley               6,780,865             637,375
                  Daniel A. DiLeo              6,847,914             570,326
                  Paul A. Gary                 6,850,515             567,725
                  Frederick R. Hume            6,848,014             570,226
                  Edward D. Lazowska           6,850,315             567,925
                  Steven M. Quist              6,847,914             570,326


          (b) Approval  to  amend  the  Data  I/O  Corporation  Stock  Incentive
              Compensation Plan as described in the Proxy Statement for the 2002
              Annual Meeting. The amendment passed by the following vote counts:
              5,909,761 votes for; 1,470,394 against; 38,085 abstain.

          (c) The proposal to ratify the selection of Grant  Thornton LLP as the
              company's  independent  auditors  passed with  the following  vote
              results: 7,376,490 for; 28,955 against; and 12,795 abstain.


Item 5.     Other Information

The Company  received a letter dated August 6, 2002 from NASDAQ  indicating that
the  Company's  common  stock  has  closed  below  the  minimum  $1.00 per share
requirement for continued  inclusion under  Marketplace Rule 4450(a)(5) and that
the Company will be provided 90 Calendar  days,  or until  November 4, 2002,  to
regain compliance.

On August 1, 2002,  the Company  announced its intention to reduce its workforce
by  approximately  25% to further reduce its breakeven point. As a part of these
actions, Irene Bjorklund will no longer be an officer of the Company.

Item 6.     Exhibits and Reports on Form 8-K

(a)      Exhibits

The  following  list is a subset  of the list of  exhibits  described  below and
contains all compensatory plans, contracts or arrangements in which any director
or  executive  officer  of the  Company is a  participant,  unless the method of
allocation of benefits  thereunder is the same for management and non-management
participants:

(1)  Amended and Restated 1982 Employee Stock Purchase Plan.  See Exhibit 10.7.

(2)  Retirement Plan and Trust Agreement.  See Exhibit 10.2, 10.3, 10.4, 10.11,
     10.14, 10.15, and 10.16.

(3)  Summary of Management Incentive Compensation Plan.  See Exhibit 10.12.

(4)  Amended and Restated 1983 Stock Appreciation Rights Plan. See Exhibit 10.1.

(5)  Amended and Restated 1986 Stock Option Plan.  See Exhibit 10.19.

(6)  Form of Change in Control Agreements.  See Exhibit 10.5.

(7)  1996 Director Fee Plan.  See Exhibit 10.6 and 10.17.

(8)  Letter Agreement with Frederick R. Hume.  See Exhibit 10.21.

(9)  Letter Agreement with Irene Bjorklund.  See Exhibit 10.25.

     3   Articles of Incorporation:

          3.1    The Company's restated Articles of Incorporation filed
                 November 2, 1987 (Incorporated by reference to Exhibit 3.1
                 of the Company's 1987 Annual Report on Form 10-K (File No.
                 0-10394)).

          3.2    The Company's Bylaws as amended and restated as of March 2001
                 (Incorporated by reference to the Company's 2001 Annual Report
                 on Form 10-K (File No. 0-10394)).

          3.3    Certificate of Designation, Preferences and Rights of
                 Series A Junior Participating Preferred Stock
                 (Incorporated by reference to Exhibit 1 of the Company's
                 Registration Statement on Form 8-A filed March 13, 1998
                 (File No. 0-10394)).

      4   Instruments Defining the Rights of Security Holders, Including
          Indentures:

          4.1    Rights Agreement, dated as of April 4, 1998, between Data
                 I/O Corporation and ChaseMellon Shareholder Services,
                 L.L.C. as Rights Agent, which includes: as Exhibit A
                 thereto, the Form of Right Certificate; and, as Exhibit B
                 thereto, the Summary of Rights to Purchase Series A Junior
                 Participating Preferred Stock (Incorporated by reference
                 to the Company's Current Report on Form 8-K filed on
                 March 13, 1998).

          4.2    Rights Agreement, dated as of March 31, 1988, between Data
                 I/O Corporation and First Jersey National Bank, as Rights
                 Agent, as amended by Amendment No. 1 thereto, dated as of
                 May 28, 1992 and Amendment No. 2 thereto, dated as of
                 July 16, 1997 (Incorporated by reference to the Company's
                 Report on Form 8-K filed on March 13, 1998).

          4.3    Amendment No. 1, dated as of February 10, 1999, to Rights
                 Agreement, dated as of April 4, 1998, between Data I/O
                 Corporation and ChaseMellon Shareholder Services, L.L.C. as
                 Rights Agent (Incorporated by reference to Exhibit 4.1 of the
                 Company's Form 8-A/A dated February 10, 1999).

      10  Material Contracts:

          10.1   Amended and Restated 1983 Stock Appreciation Rights Plan dated
                 February 3, 1993 (Incorporated by reference to Exhibit 10.23
                 of the Company's 1992 Annual Report on Form 10-K  (File No.
                 0-10394)).

          10.2   Amended and Restated Retirement Plan and Trust Agreement
                 (Incorporated by reference to Exhibit 10.26 of the Company's
                 1993 Annual Report on Form 10-K (File No. 0-10394)).

          10.3   First Amendment to the Data I/O Tax Deferred Retirement Plan
                 (Incorporated by reference to Exhibit 10.21 of the Company's
                 1994 Annual Report on Form 10-K (File No. 0-10394)).

          10.4   Second Amendment to the Data I/O Tax Deferred Retirement Plan
                 (Incorporated by reference to Exhibit 10.26 of the Company's
                 1995 Annual Report on Form 10-K (File No. 0-10394)).

          10.5   Form of Change in Control Agreements (Incorporated by reference
                 to Exhibit 10.20 of the Company's 1994 Annual Report on
                 Form 10-K (File No. 0-10394)).

          10.6   Data I/O Corporation 1996 Director Fee Plan (Incorporated
                 by reference to Exhibit 10.27 of the Company's 1995 Annual
                 Report on Form 10K (File No. 0-10394)).

          10.7   Data I/O Corporation 1982 Employee Stock Purchase Plan
                 Amended and Restated December 11, 1996 (Incorporated by
                 reference to Exhibit 10.1 to the Company's Registration
                 Statement of Form S-8 (File No. 333-20657, filed
                 January 29, 1997)).

          10.8   Purchase and Sale Agreement dated as of July 9, 1996
                 (Relating to the sale of Data I/O Corporation's headquarters
                 property in Redmond, Washington consisting of approximately 79
                 acres of land and an approximately 96,000 square foot building.
                 (Portions of this exhibit have been omitted pursuant to an
                 application for an order granting confidential treatment. The
                 omitted portions have been separately filed with the
                 Commission) (Incorporated by reference to Exhibit 10.32 of the
                 Company's 1996 Annual Report on Form 10-K (File No. 0-10394)).

          10.9   Letter dated as of December 20, 1996, First Amendment and
                 extension of the Closing Date under that certain Purchase and
                 Sale Agreement dated as of July 9, 1996. (Portions of this
                 exhibit have been omitted pursuant to an application for an
                 order granting confidential treatment. The omitted portions
                 have been separately filed with the Commission)(Incorporated by
                 reference to Exhibit 10.33 of the Company's 1996 Annual Report
                 on Form 10-K (File No. 0-10394)).

          10.10  Letter dated as of February 17, 1997, Second Amendment and
                 extension of the Closing Date under that certain Purchase and
                 Sale Agreement dated as of July 9, 1996. (Portions of this
                 exhibit have been omitted pursuant to an application for an
                 order granting confidential treatment. The omitted portions
                 have been separately filed with the Commission)(Incorporated
                 by reference to Exhibit 10.34 of the Company's 1996 Annual
                 Report on Form 10-K (File No. 0-10394)).

          10.11  Third Amendment to the Data I/O Tax Deferred Retirement Plan
                 (Incorporated by reference to Exhibit 10.35 of the Company's
                 1996 Annual Report on Form 10-K (File No. 0-10394)).

          10.12  Amended and Restated Management Incentive Compensation Plan
                 dated January 1, 1997 (Incorporated by reference to
                 Exhibit 10.25 of the Company's 1997 Annual Report on Form 10-K
                 (File No. 0-10394)).

          10.13  Amended and Restated Performance Bonus Plan dated
                 January 1, 1997 (Incorporated by reference to Exhibit 10.26 of
                 the Company's 1997 Annual Report on Form 10-K
                 (File No. 0-10394)).

          10.14  Fourth Amendment to the Data I/O Tax Deferred Retirement Plan
                 (Incorporated by reference to Exhibit 10.27 of the Company's
                 1997 Annual Report on Form 10-K (File No. 0-10394)).

          10.15  Fifth Amendment to the Data I/O Tax Deferred Retirement Plan
                 (Incorporated by reference to Exhibit 10.28 of the Company's
                 1997 Annual Report on Form 10-K (File No. 0-10394)).

          10.16  Sixth Amendment to the Data I/O Tax Deferred Retirement Plan
                 (Incorporated by reference to Exhibit 10.29 of the Company's
                 1997 Annual Report on Form 10-K (File No. 0-10394)).

          10.17  Amended and Restated Data I/O Corporation 1996 Director Fee
                 Plan (Incorporated by reference to Exhibit 10.32 of the
                 Company's 1997 Annual Report on Form 10-K (File No. 0-10394)).

          10.18  Amended and Restated Data I/O Corporation 1996 Director Fee
                 Plan (Incorporated by reference to Exhibit 10.32 of the
                 Company's 1997 Annual Report on  10-K (File No. 0-10394)).

          10.19  Amended and Restated 1986 Stock Option Plan dated May 12,
                 1998 (Incorporated by reference to Exhibit 10.37 of the
                 Company's 1998 Annual Report on Form 10-K (File No. 0-10394)).

          10.20  Sublease dated December 22, 1999 between Data I/O
                 Corporation and Imandi.com, Inc. (Incorporated by
                 reference to Exhibit 10.34 of the Company's 1999 Annual
                 Report on Form 10-K (File No. 0-10394)).

          10.21  Letter Agreement with Fred R. Hume dated January 29, 1999
                 (Incorporated by reference to Exhibit 10.35 of the
                 Company's 1999 Annual Report on Form 10-K (File 0-10394)).

          10.22  Letter Agreement dated May 28, 1999, among Data I/O
                 Corporation, JTAG Technologies B.V., and JTAG Holding B.V.
                 (Incorporated by reference to Exhibit 10.36 of the Company's
                 1999 Annual Report on Form 10-K (File No. 0-10394)).

          10.23  Amended and Restated 2000 Stock Compensation Incentive
                 Plan dated May 19, 2000 (Incorporated by reference to the
                 Company's 2000 Proxy Statement dated March 27, 2000.).

          10.24  Amended and Restated 1982 Employee Stock Purchase Plan dated
                 May 16,2001 (Incorporated by reference to the Company's 2001
                 Proxy Statement dated March 28, 2001.).

          10.25  Letter Agreement with Irene Bjorklund dated March 13, 2001
                 (Incorporated by reference to Exhibit 10.25 of the Company's
                 2001 Annual Report on Form 10-K (File No. 0-10394).

          16.1   Letter regarding change in certifying accountant (Incorporated
                 by reference to Exhibit 16.1 of the Company's Form 8-K filed
                 on November 21, 2001.).

          99.1   Certification by Chief Executive Officer                 19

          99.2   Certification by Chief Financial Officer                 20

             (b) Reports on Form 8-K

                 None



<PAGE>


                                   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.



                               DATA I/O CORPORATION
                                    (REGISTRANT)
DATED:   August 2, 2002

                               By://S//Joel S. Hatlen
                                     Joel S. Hatlen
                                     Vice President - Finance
                                     Chief Financial Officer
                                     Secretary and Treasurer
                               (Principal Financial and Duly Authorized Officer)




                               By://S//Frederick R. Hume
                                     Frederick R. Hume
                                     President
                                     Chief Executive Officer


<PAGE>


Exhibit  99.1

Certification by Chief Executive Officer
Pursuant to 18 U.S.C. Section 1350
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the quarterly  Report of Data I/O Corporation (the "Company")
on Form 10-Q for the period ended June 30, 2002 as filed with the Securities and
Exchange  Commission on the date hereof (the  "Report"),  I,  Frederick R. Hume,
Chief  Executive  Officer of the Company,  certify,  that  pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of
    the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
    respects, the financial condition and results of operations of the Company.


/s/ Frederick R. Hume
Frederick R. Hume
Chief Executive Officer
August 2, 2002



<PAGE>


Exhibit 99.2

Certification by Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the quarterly  Report of Data I/O Corporation (the "Company")
on Form 10-Q for the period ended June 30, 2002 as filed with the Securities and
Exchange Commission on the date hereof (the "Report"),  I, Joel S. Hatlen, Chief
Financial Officer of the Company,  certify,  that  pursuant  to  18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:

(1) Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.


/s/ Joel S. Hatlen
Joel S. Hatlen
Chief Financial Officer
August 2, 2002