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CORRESP
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    Unassociated Document

    April 9,
2009

    VIA
EDGAR

    Angela J.
Crane

    Accounting
Branch Chief

    Division
of Corporation Finance

    Securities
and Exchange Commission

    450 Fifth
Street, N.W.

    Washington,
DC  20549

                RE:

                Kulicke
      and Soffa Industries, Inc. (the “Company”)

                Form
      10-K for period ended September 27, 2008 and
  filed

              December
      11, 2008

                Form
      10-Q for period ended December 27, 2008 and filed February 4,
      2009

              File No.
  0-00121

    Dear Ms.
Crane:

    The Company has reviewed the comments
made by the Staff of the Securities and Exchange Commission (the “Commission” or
“SEC”) in its letter to the Company dated March 17, 2009 with respect to the
Staff’s review of the Company’s Form 10-K for the fiscal year ended September
27, 2008 (the “10-K”) and Form 10-Q for the fiscal quarter ended December 27,
2008 (the “10-Q”).  This letter contains the Company’s responses to
the Staff’s comments.

    For your convenience, we have repeated
below in bold type the Staff’s comments and have set forth the response of the
Company immediately below the applicable comment.

    We acknowledge that:

              ·

              The
      Company is responsible for the adequacy of the disclosure in the
      filing;

              ·

              Staff
      comments or changes to disclosure in response to Staff comments do not
      foreclose the Commission from taking any action with respect to the
      filing; and

              ·

              The
      Company may not assert Staff comments as a defense in any proceeding
      initiated by the Commission or any person under federal securities laws of
      the United States.

    ***

    Comment

    Form 10-K as of September
27, 2008

    Schedule II
-  Valuation and Qualifying Accounts, page 89

              1.

                We
      note you reclassified fully depreciated demonstration and evaluation
      equipment from inventory to property, plant and equipment in the amount of
      $3.3 million during fiscal year 2008.  Please tell us more about
      this reclassification.  Also, clarify why demonstration units
      included in inventory were depreciated instead of valued using estimated
      net realizable value, in accordance with ARB 43.  Support that
      your current accounting complies with
  GAAP.

      Periodically,
we send demonstration and evaluation equipment to customers for a trial period
while they consider whether they will purchase this equipment.  We
also showcase demonstration and evaluation equipment in our
facilities.  Typically, demonstration and evaluation equipment is
classified as inventory for so long as we reasonably believe it will ultimately
be purchased by a customer.  Our policy is to apply ARB 43, Chapter 4,
Statement 6, to value inventory at the lower of cost or market.  With
regard to demonstration and evaluation equipment categorized as inventory that
remains on our books longer than six months, our policy is to reduce its value
systematically over the next 12 months to reflect the decline in its net
realizable value.  Based on our experience, we believe this approach
provides a reasonable estimate of the decline in the net realizable value of
these machines.  At December 27, 2008, we only had $5.3 million
(gross) of demonstration and evaluation equipment included in our
inventory.

    We also
monitor the usage of our demonstration and evaluation equipment on a quarterly
basis to determine whether such demonstration or evaluation equipment is
properly classified on our balance sheet and recorded at appropriate values on
our financial statements.  If we determine that a machine will be used
in an engineering process instead of being sold, it is reclassified to fixed
assets to better reflect the nature of the asset. As part of our policy of
monitoring our demonstration and evaluation equipment, we reclassified $3.3
million of demonstration and evaluation equipment, which had a net book value of
$0, from inventory to property, plant and equipment during fiscal
2008.  This demonstration and evaluation equipment was comprised of
Die Bonder machines that we acquired as part of our acquisition of Alphasem in
fiscal 2007.  In fiscal 2008, we determined that the probability of
selling these machines was low, and that the reclassification from inventory to
property, plant and equipment was appropriate.  The reclassification
had no net impact on our statement of operations or our balance
sheet.

    Comment

    Form 10-Q for the quarterly
period ended December 27, 2008

    Note 2. Discontinued
Operations, page 22

              2.

                  We
      note on September 29, 2008 that you completed the sale of your wire
      business for gross proceeds of $155.0 million.  We also note
      that in conjunction with the sale, you entered into a joint development
      and engineering services agreement (“the Agreement”) with the
      purchaser.  The agreement, among other things, indicates that
      you will continue to provide process engineering and research and
      development activities for the business for five years and additional
      transitional services for at least one year to the
      purchaser.  We also note that you collected cash on behalf of
      the purchaser totaling $5.8 million as of December 27, 2008.  In
      light of the provisions of the agreement and your continuing involvement
      in the operations, please tell us why you believe your presentation as
      discontinued operations is appropriate.  Note that any
      significant continuing involvement in the operations of the component
      after the disposal transaction would preclude discontinued operations
      reporting.  Refer to the guidance in paragraph 42 of SFAS 144
      and EITF 03-13 in your
response.

      As part
of our agreement to sell our Wire business to W.C. Heraeus GmbH (the
“Purchaser”) we entered into three agreements, a joint development and
engineering services agreement, a transition services agreement and a sales
representative agreement, with the Purchaser.  These were the only
agreements entered into between the Purchaser and the Company relating to
post-closing involvement by us in the divested business.  We evaluated
these agreements, individually and in the aggregate, under the guidelines of
SFAS No. 144, paragraph 42 and EITF 03-13 in order to determine whether
classification of the Wire business as discontinued operations was
appropriate.

    Under
EITF 03-13, an entity is directed to consider the following steps to determine
whether a disposed business can appropriately be classified as a discontinued
operation:

              1.

              Are
      continuing cash flows expected to be generated by the ongoing
      entity?

              2.

              Do
      the continuing cash flows result from a migration or continuation of
      activities (i.e., direct cash
flows)?

              3.

              Are
      the continuing cash flows
significant?

              4.

              Is
      there continuing significant involvement in the disposed
      business?

    If the
cash flows result from a migration or continuation of activities and are
considered significant, the disposed business cannot be classified as a
discontinued operation.  A brief summary of each agreement and the
results of our evaluations are provided below.

    Transition Services
Agreement

    Under
this agreement, the Company agreed to provide data processing and communications
services, financial accounting and administrative support, human resources and
personnel services, order processing and invoicing services and logistics and
operation services for periods commencing on October 3, 2008 and ranging from
three months to nine months depending on the service.

    In
analyzing the services outlined above, we determined that the Company will
generate continuing cash flows under the agreement, and that these cash flows
result from a continuation of activities.  However, we also determined
that the cash flows associated with these activities are not significant for the
following reasons:

              1.

              The
      services were being provided essentially at cost, and the gross cash
      inflows and cash outflows under this agreement were each expected to total
      less than $700,000, which represents less than 0.25% of the estimated cash
      inflows and outflows for the nine month period ended June
      2009.  The net cash flows from this agreement were expected to
      be minimal.  As of April 6, 2009, the actual cash gross cash
      inflows and cash outflows were both approximately
  $350,000.

              2.

              The
      length of time that the services were to be provided was relatively short
      and ranged from approximately three months to nine months depending on the
      type of service.  No services were to be provided in excess of
      one year.  All services under this agreement have been
      terminated.

              3.

              The
      Company does not have active involvement in the divested business or an
      interest in the success or failure of the divested
      business.  The Company does not have the ability to influence
      the operating or financial policies of the divested
      business.  Also, the Company does not retain any risk and will
      not obtain benefits from the ongoing operations of the divested
      business.

    Although
we determined that the Company would have continuing involvement with the Wire
business for the reasons stated above, we also concluded that the Company’s
involvement is not significant under this agreement.

    Sales Representative
Agreement

    Similar
to the transition services agreement for administrative functions, the Company
entered into a transition services agreement for sales representatives under
which we agreed to use commercially reasonable efforts to develop the market for
certain products of the Wire business and solicit orders for these products in
certain countries for a six month period, which may be extended for an
additional six month period.  In exchange for the services rendered by
the Company, the Purchaser agreed to pay a sales commission to the Company equal
to 7.12% (estimated as the Company’s cost of maintaining the sales force to
provide these services) of certain revenue generated by the Company under the
agreement.

    In
analyzing the services outlined above, we determined that the Company would
generate continuing cash flows under the agreement, and that such cash flows
result from a continuation of activities.  However, we also determined
that the cash flows associated with these activities are not significant for the
following reasons:

              1.

              The
      services were being provided essentially at cost, and the gross cash
      inflows and cash outflows under this agreement were each expected to total
      less than $2.0 million, which represents less than 0.5% of the estimated
      cash inflows and outflows for the twelve month period ended September
      2009.  The net cash flows from this agreement were expected to
      be minimal.  As of April 6, 2009, the actual cash gross cash
      inflows and cash outflows were both approximately
  $375,000.

              2.

              The
      length of time that the services were to be provided was relatively short,
      ranging from six months to one year.  No services were to be
      provided in excess of one year.  Substantially all services
      under this agreement have been
terminated.

              3.

              The
      Company does not have active involvement in the divested business or an
      interest in the success or failure of the divested
      business.  The Company does not have the ability to influence
      the operating or financial policies of the divested
      business.  Also, the Company does not retain any risk and will
      not obtain benefits from the ongoing operations of the divested
      business.

    Although
we determined that the Company would have continuing involvement with the Wire
business for the reasons stated above, we also concluded that the Company’s
involvement is not significant under this agreement.

    Joint Development and
Engineering Services Agreement

    Under
this agreement, the Company agreed to provide certain engineering services to
the Purchaser on existing products for one year, subject to annual
renewal.

    In analyzing the services outlined
above, we determined that the Company would generate continuing cash flows under
the agreement, and that such cash flows result from a continuation of
activities.  However, we also determined that the cash flows
associated with these activities are not significant for the following
reasons:

              1.

              The
      services on existing products are being provided essentially at cost, and
      the gross cash inflows and cash outflows under this agreement were both
      expected to total approximately $14,200 per month (which is our estimate
      of the cost of two engineers who would be expected to provide these
      services).  The net cash flows from this agreement were expected
      to be minimal.

              2.

              The
      Company does not have active involvement in the divested business or an
      interest in the success or failure of the divested
      business.  The Company does not have the ability to influence
      the operating or financial policies of the divested
      business.  Also, the Company does not retain any risk and will
      not obtain benefits from the ongoing operations of the divested
      business.

    Although
we determined that the Company would have continuing involvement with the Wire
business for the reasons stated above, we also concluded that the Company’s
involvement is not significant under this agreement.

    In
addition to the services described above relating to the disposed business, the
Company agreed to provide the Purchaser with reasonable access to the Company’s
existing wire bonding equipment and tools for the purpose of Purchaser
establishing that its new bonding wire products function properly with the
Company’s wire bonding equipment and tools.  The Company and the
Purchaser also agreed to consider, during the five-year term of the agreement,
proposals to work jointly on future research and/or development projects for
certain bonding wire technologies.  Currently, there are no such
projects under consideration by the Company.  In analyzing these
services, we determined that these services do not result from a migration or
continuation of activities because these services are new and did not exist
prior to the sale of the Wire business.

    Conclusion

    As result
of the above evaluation, we determined that the Wire business met the
requirements in SFAS No. 144, paragraph 42, to be considered a discontinued
operation.

    Additionally,
the $5.8 million that was held by the Company as of December 31, 2008 was from
former customers and was simply a pass-through of payments for accounts
receivable that had been acquired by the Purchaser as part of the purchase of
the Wire business.  The collection of this cash was not part of any of
the agreements, but was rather the result of customers inadvertently sending
payments to the Company instead of to the Purchaser.  This was a
temporary situation and is not expected to continue in the future.

    Comment

    Note 5. Goodwill and
Intangible Assets, page 14

              3.

                  We
      note your disclosure that “no triggering events have occurred during
      fiscal year 2009” that would have the effect of reducing the fair valu