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                                                                  EXHIBIT 10.14





                           MEMORANDUM OF UNDERSTANDING

This Memorandum of Understanding is entered into this 29th day of October 2001
between Hisense Electric Co. Ltd of 11 Jianxi Road, Qingdao, China and IRICO
Group Corp of 1 Caihing road, Xianyang, Shaanxi, China and SpatiaLight Inc.
("SpatiaLight") of 9 Commercial Blvd, Suite 200, Novato, California 94949,
United States of America together "the parties"

                                     WHEREAS

     1. Hisense and IRICO are leading Chinese Electronics manufacturers which
        propose to enter into the market for manufacturing LCOS television sets.

     2. Hisense and IRICO recognize that SpatiaLight has commercial and
        technical expertise of value to its business.

     3. Hisense and IRICO have entered into a full Non-disclosure Agreement with
        SpatiaLight and are fully aware of the confidential nature of these
        discussions.

     4. SpatiaLight is a leading LCOS chip design and manufacturing company and
        wishes to strengthen its relationship with Hisense and IRICO to assist
        in the development of the Chinese market.

     5. The parties recently had friendly and constructive meetings and have
        recognized that each could benefit in important ways by working
        together.

     6. To help further discussions and co-operation the parties have agreed
        this memorandum to clarify their intentions.

NOW IT IS AGREED

     The parties agree to co-operate in developing Hisense and IRICO's
manufacture of LCOS television sets.

     1. Business Scope: The purchase by Hisense and IRICO of Display Units
        manufactured by SpatiaLight. A Display Unit is defined as a light engine
        inclusive of lamp and ballast manufactured exclusively for SpatiaLight
        by Fuji fitted with SpatiaLight's chips.

     2. SpatiaLight will supply two prototype Display Units for Hisense and
        IRICO to promote SpatiaLight's technology in China and Hisense and
        IRICO's product development. Hisense and IRICO undertake to return these
        prototypes plus any other materials SpatiaLight provides within an
        agreed time period should Hisense and IRICO not proceed to enter into a
        purchase contract.

     3. SpatiaLight will provide technical assistance to Hisense and IRICO to
        make and test mock LCOS TV using SpatiaLight's chips and optical engines
        to ensure relevant technical criteria are satisfied.

     4. Given that SpatiaLight's products and quality suit the Chinese market
        Hisense and IRICO will either build new or transform existing production
        capacity into a production line.

        Hisense and IRCO's target output will be:

        First Year        12,000 sets

     5. In relation to its planned production ramp-up and following satisfactory
        technical testing of SpatiaLight's Display Units, Hisense and IRICO
        agree to enter into a contract with SpatiaLight for the purchase of its
        Display Units. The actual quantity of orders will be by the parties in
        due time.


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     6. Under the current market condition, the price of each display unit is
        estimated to be USD 1600.00 (excluding import tariff and VAT). The
        actual price will be discussed by the parties in due time.

     7. The method of payment will accord to international practice acceptable
        to SpatiaLight, Hisense and IRICO.

OTHER ISSUES

In relation to the desire of both Hisense and IRICO and SpatiaLight to develop
their commercial relationship beyond the foregoing the following is also agreed.

     8. The parties agree to use this Memorandum of Understanding as a basis to
        advance their future co-operation.

     9. Hisense and IRICO undertake not to disclose trade secrets, technical and
        other assistance provided by SpatiaLight. If Hisense and IRICO want to
        co-operate with SpatiaLight's competitors, they must return the
        prototypes provided by SpatiaLight in advance.

Signed on behalf of Hisense                Signed on behalf of SpatiaLight

Name:    \s\XIAODONG XIA                   Name:    \s\ROBERT OLINS
      ------------------------------             -----------------------------
         Xiaodong Xia                                Robert OLINS

Title:   Vice President                             Title: Chief Executive

Signed on behalf of IRICO

Name:    \s\YINGZHONG WU
         ---------------------------
         Yingzhong Wu


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