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                                                                   EXHIBIT 10.21

August 29, 2002

Cornelis D. Hartgring
1795 Woodhaven Place
Mountain View, CA 94041

Dear Cees:

         On behalf of PDF Solutions, Inc., ("PDF" or the "Company"), I am very
pleased to extend to you this offer of employment. Your position will be that of
Vice President of Sales reporting to David Joseph. This offer of employment with
PDF is conditioned upon your acceptance, in writing, of the terms and conditions
as enumerated below.

1.       Salary. Commencing on your Start Date, you shall be paid a base salary
         of $175,000.00 per annum, paid to you semi-monthly at a rate of
         $7,291.67 per payroll period. Your salary shall be paid in accordance
         with the Company's standard payroll policies (subject to applicable
         withholding taxes as required by law).

2.       Variable Compensation. You will be eligible for revenue-based variable
         compensation effective January 1, 2003. For fiscal year 2003 your
         target variable compensation will be $200,000, paid semi-annually,
         based upon the following conditions:

         a)  $100,000 of target variable compensation is contingent upon
             achievement of revenue in excess of PDF 2002 actual revenue. One
             hundred percent (100%) of target will be paid for achievement of
             the PDF fiscal 2003 revenue plan (the "Plan"), as presented and
             approved by the Board of Directors of PDF Solutions, Inc. in the
             beginning of the fiscal year. Actual payout will be prorated
             equally for achievement between the 2002 actual revenue and 100% of
             the 2003 Plan. For example, if actual 2002 revenue is $50 million
             and the 2003 Plan is $65 million then, each percentage point (or
             prorata for a fraction of a percentage point) above $50 million is
             equal to $6,666.66 in variable compensation ($100,000/15).

         b)  $100,000 of target variable compensation is contingent upon
             achievement of revenue in excess of 100% of Plan. Payout will be
             prorated equally over the first 10% in excess of 100% of Plan.

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         c)  Variable compensation will be paid semi-annually as follows: For
             the first half of the fiscal year, a revenue goal ("1HFY03 Plan")
             and associated bonus target ("1HFY03 Bonus Target") will be set
             consistent with paragraphs a) and b) above. The projected earned
             bonus for the first half of fiscal year 2003 will be calculated
             based on achievement of the 1HFY03 Plan and the 1HFY03 Bonus
             Target. Sixty percent (60%) of the projected earned bonus will be
             paid mid-year, following the close of second quarter books. The
             second half payment will be equal to the earned annual bonus less
             the first half payment and will be paid following the close of the
             annual books.

         Your variable compensation plan for fiscal years beginning January 1,
         2004 will be mutually agreed upon at an appropriate time. This variable
         compensation plan and any future plans are in lieu of any other Company
         sponsored cash incentive plan that may be offered to employees on a
         company-wide basis from time-to-time.

3.       Sign-on Bonus. You will receive a one-time sign-on bonus of $25,000
         (subject to applicable withholding taxes as required by law) on January
         1, 2003 subject to your continued employment with PDF Solutions, Inc.
         In the event that you voluntarily terminate your employment with the
         Company before the one (1) year anniversary of receipt of the bonus,
         you agree to repay the Company 100% of the sign-on bonus. Upon such
         termination, should you not take appropriate action to fully repay the
         sign-on bonus, you hereby authorize the company to withhold amounts
         equal to such bonus from any cash compensation owed by the company to
         you, including, but not limited to, base salary, accrued vacation, or
         earned bonuses.

4.       Stock Options. Upon commencement of your employment, and subject to the
         approval of the Company's Board of Directors, you will be granted an
         option to purchase 200,000 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 grant. Such option shall vest
         over a four year period commencing on your Start Date, according to the
         following vesting schedule: 1/4 of the Total Option Shares shall be
         exercisable on the twelve (12) month anniversary of your Start Date and
         1/48th of the Total Option Shares shall be exercisable on a monthly
         basis thereafter. Vesting of the options shall be contingent upon your
         continued employment with the Company. The options will be incentive
         stock options (ISO) to the maximum extent permitted by the tax code and
         will be subject to the terms of the Company's 2001 Stock Plan and
         execution of an applicable Stock Option Agreement to be entered into
         between you and the Company.

         You will be subject to the standard PDF stock option agreement. There
         will be one amendment to this plan in the event there is a change of
         control of the company during your first two years of employment. For
         the purposes of your employment, "change of control" is defined as an
         event whereby a party or group

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         of parties, different from those maintaining control today, attains a
         55% voting right in the company. If there is a change of control of PDF
         during your first two years of employment, your vesting is accelerated
         by 12 months regardless of whether your employment is terminated.
         (Subject to approval of the Board of Directors at their next meeting.)

5.       Start Date. Subject to fulfillment of any conditions imposed by this
         letter agreement, you will commence your new position with the Company
         on a date to be determined and agreed upon with the Company but no
         later than two weeks after you accept this offer. The date you actually
         start working at the Company is referred to as your "Start Date".

6.       General Duties. During the term of your employment, you agree that at
         all times and to the best of your ability you will loyally and
         conscientiously perform all of the duties and obligations required of
         you in your job and by the Company. You further agree that 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 that you will not directly or
         indirectly engage in or participate in any business that is competitive
         in any manner with the business of the Company. You also agree to
         comply with any and all policies of the Company as in effect from time
         to time.

7.       Proof of Right to Work. In compliance with federal immigration laws,
         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 within three (3) business days of your
         date of hire. Your failure to meet this condition could result in
         termination of your employment with the Company.

8.       Benefits. Effective on your Start Date, the Company will make available
         to you the regular health insurance program and other benefits as
         established by the Company for its employees from time to time. A
         summary of those benefits, including Paid Time Off and Sabbatical is
         attached.

9.       Confidential Information and Invention Assignment Agreement. Your
         acceptance of this offer and commencement of employment with the
         Company is contingent upon your execution of the Company's Confidential
         Information and Invention Assignment Agreement (the "Confidentiality
         Agreement"), a copy of which is enclosed for your review. An executed
         copy of the Confidentiality Agreement must be delivered to the PDF
         Human Resources Department on or before your Start Date. The
         Confidentiality Agreement relates to confidential information received
         in regards to the Company's business, technology, and intellectual
         property, as well as information about the Company's customers. The
         Confidentiality Agreement also addresses the Company's ownership of
         intellectual property generated during your employment at the Company.
         You

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         are required, to the best of your ability, to hold such information as
         confidential even after an event terminating your employment with the
         Company.

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 this offer, please
sign and date this letter in the space provided below and return it Becky
Baybrook, Vice President Human Resources, along with a signed and dated copy of
the Confidentiality Agreement.

THIS OFFER EXPIRES ON SEPTEMBER 6, 2002.

                                         Very truly yours,

                                         PDF SOLUTIONS, INC.

                                         By /s/ David Joseph
                                            ----------------
                                            David Joseph
                                            Executive Vice President,
                                            Sales, Marketing and Business
                                            Development

                          ACKNOWLEDGMENTS & ACCEPTANCE

I accept this employment offer with the understanding that it is not a contract
for a fixed term or specified period of time. I understand that my employment is
voluntary, ("At Will"), and can be terminated either by me or by the company at
any time, with or without notice and with or without cause. The provisions
stated above supersede all prior representations or agreements, whether written
or oral. This offer letter may not be modified or amended except by a written
agreement, signed by the company and me.

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

Signed: /s/ Cornelis D. Hartgring
        -------------------------

Print Name: Cornelis D. Hartgring

Date: 9/2/02

Anticipated Start Date: 9/3/02

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