SecProbe.io

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

       DIVISION OF
CORPORATION FINANCE

Mail Stop 6010

September 11, 2007

VIA U.S. MAIL and FACSIMILE

Mr. Joel S. Hatlen
Chief Financial Officer
6464 185th Ave NE, Suite 101
Redmond, Washington, 98052

 RE: Data I/O Corporation
  Form 10-K for the fiscal year ended December 31, 2006
  Filed April, 2, 2007
  Form 10-Q for the quarterl y period ended June 30, 2007
  File No. 000-10394

Dear Mr. Hatlen:

We have reviewed your filing and have the following comments.  Where
indicated, we think you should re vise your document in response to these comments.  If
you disagree, we will consider your explanation as to why our comment is inapplicable or
a revision is unnecessary.  Please be as deta iled as necessary in your explanation.  In
some of our comments, we may ask you to provi de us with information so we may better
understand your disclosure.  After reviewing th is information, we may raise additional
comments.

 Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure  requirements and to  enhance the overall
disclosure in your filing.  We look forward to  working with you in these respects.  We
welcome any questions you may have about our comments or any other aspect of our
review.  Feel free to call us at the telephone numbers listed at the end of this letter.

Mr. Joel S. Hatlen
Data I/O Corporation September 11, 2007
Page 2

Form 10-K for the fiscal year ended December 31, 2006

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of
Operations, page 17

Aggregate Contractual Obligations and Commitments, page 24

1. Please revise future filings to include cap ital lease obligations in the contractual
obligations table as of December 31, 2006 or tell us why you are not required to
do so.  Refer to Item 303 of Regulation S-K.

Consolidated Statements of Cash Flows, page 29

2. We see that during each year presented equipment was transferred to cost of
goods sold.  Please tell us the nature of the equipment and the circumstances that
resulted in the transfer to cost of goods  sold.  Please also explain your accounting
for the transfer.

Note 1.  Summary of Significant Accounting Policy, page 31

Revenue Recognition, page 33

3. We see that your revenue recognition policie s were changed in the third quarter of
2005 such that you began recognizing revenue for certain products at the time of
shipment.  You disclose that you change d the accounting after determining that
the equipment had reached a point of matu rity and stability such that product
acceptance could be assured by testing at the factory prior to shipment and that the installation could be considered a se parate element.   Please tell us the
evidence that you considered in determin ing that product acceptance could be
assured by testing at the f actory.  Tell us how you demonstrated that performance
of the equipment, once installed and operate d at the customer's facility, would not
be different from that tested prior to shipment. We reference SAB Topic
13(A)(3)(b).

4. As a related matter, we see that you c onsider the product and installation as
separate units of accounting under EITF 00-21.  In your response and in future filings, please clarify how objective and reliable sta ndalone (not including
installation) fair value of the product is derived consider ing that products such as
the ProLine RR are unique in the marketplace.

5. We reference your disclosure that reserves  for sales returns are established based
on historical return data and estimates for new items.  In your response and in
future filings, please disclose the terms of  your sales return policy.  Please address

Mr. Joel S. Hatlen
Data I/O Corporation
September 11, 2007
Page 3
how your accounting complies with SFAS 48, including how you can make a reasonable estimate of the amount of futu re returns for new items.  In addition,
please tell us and disclose any changes in estimates that resulted in a decrease to
sales return allowances from 2004 to 2006 while sales were increasing during the
same period.

New Accounting Pronouncements, page 35

6. We see that you adopted SAB 108 during 2006 and recorded the correction of an
error related to the accrual of audit fees  as a cumulative effect adjustment at
January 1, 2006.  In future filings, please disclose when and how the error being corrected arose.  Refer to Question 3 of SAB 108.

Note 12.  Share-Based Compensation, page 40

7. We see that volatility used in calculating the fair value of share-based awards significantly decreased from 1.03 in 2004 to .65 in 2006.  Please tell us and revise
future filings to disclose the change in es timates that resulted in this variation.
Additionally, we see that volatility is based on historical volatility of the
company’s stock and includes considerati on of implied volatility for comparable
entities within your industr y.  Please tell us how your  calculation of volatility
complies with SAB Topic 14D(1).

Form 10-Q for the quarterly period ended June 30, 2007

Condensed Consolidated Financial Statements

Note 5 – Business Restructuring, page 7

8. Please revise future filings to include a reconciliation of the beginning and ending business restructuring liability balances  showing separately the changes during
the period attributable to costs incurred and charged to expense, costs paid or
otherwise settled, and any adju stments to the liability with an explanation of the
reason(s) therefore, as require d by paragraph 20 of SFAS 146.

As appropriate, please respond to these co mments within 10 business days or tell
us when you will provide us with a response.  Please furnish a cover letter with your
response that keys your responses to our  comments and provides any requested
information.  Detailed cover le tters greatly facilitate our re view.  Please understand that
we may have additional comments after re viewing your responses to our comments.

  We urge all persons who are responsi ble for the accuracy and adequacy of the
disclosure in the filing to be certain that the filing includes all in formation required under

Mr. Joel S. Hatlen
Data I/O Corporation
September 11, 2007
Page 4
the Securities Exchange Act of 1934 and th at they have provided all information
investors require for an informed decision.  Since the company and its management are in
possession of all facts relating to a company’ s disclosure, they are responsible for the
accuracy and adequacy of the disclosures they have made.

 In connection with responding to our comments, please provide, in writing, a statement from the company acknowledging that:

‚ the company is responsible for the adequacy  and accuracy 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 comme nts as a defense in any proceeding
initiated by the Commission or any person under the federal secu rities laws of the
United States.

In addition, please be advise d that the Division of Enfo rcement has access to all
information you provide to the staff of the Divi sion of Corporation Fi nance in our review
of your filing or in response to our comments on your filing.

 You may contact Jong Hwang at (202) 551- 3327 or Kristin Lochhead at (202)
551-3664 if you have questions.  In this regar d, please do not hesitate to contact me at
(202) 551-3676 with any other questions.

Sincerely,

Brian Cascio
Accounting Branch Chief