EXHIBIT 10.40   10131 Bubb Road 
Cupertino  CA  95014 (408) 873-3111 
FAX: (408) 873-0446     August 19, 1999  To:  Mike Kelley  Dear Mike:  Silicon Image, Inc. (the Company) is pleased
to confirm our offer.  You will
initially report to the Executive VP of Marketing and Business Development,
Steve Tirado in the position of Senior Director, Product Marketing. The
terms of our offer and the benefits currently provided by the company are as
follows:  1.Your starting salary will be $150,000and will be subject
to annual review.  In addition, you will
be eligible to participate in regular health insurance, vacation and other
employee benefit plans established by the Company for its employees from time
to time.  2.As an employee of the Company  you will have access to certain Company
confidential information and you may, during the course of your employment,
develop certain information or inventions which will be the property of the
Company.  To protect the interest of the
Company, you will need to sign the Companys standard Employee Inventions and
Confidentiality Agreement as a condition of your employment.  A copy of the form of this agreement has
been attached as Appendix A for your review.  We wish to impress upon you that we do not wish you to bring any
confidential or proprietary material of any former employer or to violate any
other obligations you may have to your former employer.  3.Management will recommend that the Board of Director
approve a grant to you of stock options for 100,000 sharesof
the Companys Common Stock.  The
exercise price of the options would be the fair market value as determined by
the Board at the time of the grant. The
vesting schedule for all options will be at a rate of 25% for the first 12
months, and thereafter, at 2.083% after each full succeeding month. However,
the grant of such options by the Company is subject to the Boards approval and
this promise to recommend such approval is not a promise of compensation, and
is not intended to create any obligation on the part of the Company.  Further details on the Companys Option Plan
and any specific grant to you will be provided upon approval of such grant by
the Board.  4.This offer of employment is made to you in confidence,
and its terms must not be disclosed by you to anyone outside your immediate
family.  If you do disclose any of its
terms to such a family member, you must caution him or her that such
information is confidential and must not be disclosed to anyone.  5.While we look forward to a long and profitable relationship,
should you decide to accept our offer, you will be an at-will employee of the
Company, which means the employment relationship can be terminated by either of
us for any reason at any time.  Any
statements or representations to the contrary (and, indeed, any statements
contradicting any provision in this letter) should be regarded  
   by you as ineffective.  Further, your participation in any stock option or benefit
program is not to be regarded as assuring you of continuing employment for any particular
period of time.  6.Please note that because of employer regulations
adopted in the Immigration Reform and Control Act of 1986, within three
business days of starting your new position you will need to present
documentation demonstrating that you have authorization to work in the United
States.  If you have questions about
this requirement, which applies to U.S. citizens and non-U.S. citizens alike,
you may contact our Human Resource department.  7.This offer will remain valid until Thursday, August
19, 1999.  If you decide to
accept our offer please sign the enclosed copy of this letter in the space
indicated and return it to the Human Resource department.  Your signature will acknowledge that you
have read and understood and agreed to the terms and conditions of this offer
and the attached documents.  Should you
have anything else that you wish to discuss, please do not hesitate to call.  We look forward to the opportunity to welcome you to
Silicon Image, Inc.   Sincerely,      Steve Tirado                                                                                 Jenny
S. Jun Executive Vice President                                                             Human
Resource Administrator Marketing and Business Development   Attachments: EI & CA   Acknowledged, Accepted and Agreed       Mike Kelley
  
  Date
  
  Start Date   This letter is simply for your information and is not
to be construed as a contract of employment.