SecProbe.io

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<TYPE>LETTER
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February 28, 2006

via U.S. mail and facsimile to 011 (853) 323265

C.P. Li
Chief Financial Officer
Deswell Industries, Inc.
17B, Edificio Comercial Rodrigues
599 Avenida da Praia Grande
Macao

	RE:	Deswell Industries, Inc.
		Form 20-F for the fiscal year ended March 31, 2005
		Filed July 8, 2005

		File No. 0-26448

Dear Mr. Li:

      We have reviewed your response letter dated February 20,
2006
and have the following additional comments.  If you disagree, we
will
consider your explanation as to why our comment is inapplicable.
In
some of our comments, we may ask you to provide us with
supplemental
information so we may better understand your disclosure.  After
reviewing this information, we may or may not raise additional
comments.

Form 20-F for the fiscal year ended March 31, 2005

Financial Statements

8. Income Taxes, page 66

1.  We note your response to prior comment 5 in our letter dated
January 30, 2006 and have the following comments:
* For each subsidiary subject to a tax holiday or other
concession,
as detailed on page 66, please tell us and disclose, in future
filings, when each of your tax holidays and other concessions
expire.
Please also tell us and disclose the applicable tax rate after the
expiration of the tax holiday or other concession.
* We note your conclusion that you have no deferred tax assets or
liabilities as a result of operations in tax-free jurisdictions
and
various tax holidays and concessions.  Please tell us the amount
and
nature of each type of temporary taxable or deductible difference
associated with your subsidiaries subject to tax holidays and
concessions.  Please also tell us, in detail, your basis for what
appears to be a determination that all temporary differences
associated with these subsidiaries will reverse prior to the end
of
the tax holiday.  For example, we note that you depreciate your
fixed
assets for book purposes between three and 50 years.  However,
your
disclosures on page 66 indicate that you only receive a 100%
exemption from taxes for two years, followed by a 50% exemption
for
three years.  Thus, it would appear that certain temporary
differences will reverse after the expiration of your tax
holidays,
thereby requiring recognition of a deferred tax asset or
liability.

2.  	We note your response to prior comment 6 in our letter dated
January 30, 2006.  We assume that the entities referred to in your
response that are not subject to any tax jurisdictions are the
same
as those disclosed under "Others" on page 67 of your Form 20-F.
In
future filings, given the increasing impact of the income earned
by
entities in tax free jurisdictions, expand your disclosures to
discuss the nature of the aforementioned entities and
jurisdictions,
and the amounts associated with each for each period presented.

*    *    *    *

      As appropriate, please respond to these comments within 10
business days or tell us when you will provide us with a response.
Please furnish a letter that keys your responses to our comments
and
provides any requested supplemental information.  Detailed
response
letters greatly facilitate our review.  Please file your response
letter on EDGAR.  Please understand that we may have additional
comments after reviewing your  responses to our comments.

      You may contact Jenn Do at (202) 551-3743, or me at (202)
551-
3255 if you have questions regarding these comments.

								Sincerely,

								Nili Shah
								Branch Chief

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Mr. C.P. Li
Deswell Industries, Inc.
February 28, 2006
Page 2

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-7010

         DIVISION OF
CORPORATION FINANCE

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