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     Correspondence 02-25-05

February 25, 2005

VIA EDGAR

Securities and Exchange
Commission
Division of Corporation Finance
450 Fifth Street, N.W.
Washington, D.C. 20549
Attn:
Mr. Patrick N. Enunwaonye

     Re:
     hi/fn, inc.

     Form 10-K for the fiscal year ended September 30, 2004

     Form 10-Q for the quarter ended December 31, 2004

     SEC File No. 000-24765

Dear Division of
Corporation Finance:

        The
following comprises the Company’s responses to comments dated February 17, 2005 by
the Division of Corporation Finance (the “Staff”) of the Securities and
Exchange Commission (the “Commission”) with respect to the Company’s
annual report on Form 10-K for the fiscal year ended September 30, 2004 and quarterly
report on Form 10-Q for the quarter ended December 31, 2004. The Staff’s comments
have been reproduced in italics for convenience of reference. The Company’s response
appears in normal typeface following each comment.

        Page
number references in the Company’s responses are to pages of the Form 10-Q.

February 17, 2005
Staff Comments

Form 10-Q

Item 4. Controls and
Procedures – Page 27

         1.
          We note your statement that your disclosure controls and procedures were
          effective “subject to the limitations noted above.” Given the
          exception noted, it remains unclear whether your chief executive officer and
          chief financial officer have concluded that your disclosure controls and
          procedures are effective. Please revise your disclosure to state, in clear and
          unqualified language, the conclusions reached by your chief executive officer
          and your chief financial officer on the effectiveness of your disclosure
          controls and procedures. For example, if true, you can state that your
          disclosure controls and procedures are effective. Or, if true, you can state
          that your disclosure controls and procedures are not effective. You should not,
          however, state the conclusion in your current disclosure, which appears to state
          that your disclosure controls and procedures are effective except to the extent
          they are not effective.

Securities and Exchange Commission

February 25, 2005
Page 2

        The
Company acknowledges the Staff’s comment regarding the Company’s disclosures
under “Item 4. Controls and Procedures” and has reflected the Staff’s comment in the following revised
disclosure:

Evaluation
of disclosure controls and procedures. We maintain disclosure controls and procedures
that are designed to ensure that information required to be disclosed by us in reports
that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded,
processed, summarized and reported within the time periods specified in Securities and
Exchange Commission rules and forms and that such information is accumulated and
communicated to our management, including our Chief Executive Officer and Chief Financial
Officer, as appropriate to allow timely decisions regarding required disclosure.

Based
on their evaluation as of the end of the period covered by this Quarterly Report on Form
10-Q, our Chief Executive Officer and Chief Financial Officer have concluded that our
disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Act of 1934, as amended, are effective to ensure that information that is
required to be disclosed in this Quarterly Report on Form 10-Q is recorded, processed,
summarized and reported within the time periods specified in SEC rules and forms and is
accumulated and communicated to our Chief Executive Officer and Chief Financial Officer,
as appropriate to allow timely decisions regarding required disclosure.

Changes
in internal control over financial reporting. There was no change in our internal
control over financial reporting that was identified in connection with our evaluation of
disclosure controls and procedures that occurred during the period covered by this
Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.

         2.
          We note your disclosure in the first paragraph that “there can be no
          assurance that any design [of a system of disclosure controls and
          procedures] will succeed in achieving its stated goals under all potential
          future conditions (emphasis added).” If you elect to retain this qualifying
          disclosure, please revise to also disclose, if true, that your system of
          internal control over financial reporting is designed so as to provide
          reasonable assurance that the objectives the system will be met. In addition, if
          the first paragraph of your disclosure is retained, please also disclose, if
          true, that the design and operation of your system of internal controls does in
          fact provide reasonable assurance in achieving the objectives of the system. For
          guidance, refer to Part TI.F.4 of Release No. 33-8238.

        The
Company acknowledges the Staff’s comment number 2 above and has incorporated its
response thereto in the revised disclosure provided in response to comment number 1 above.

Securities and Exchange Commission

February 25, 2005
Page 3

         3.
          We note your statement that your disclosure controls and procedures were
          effective “to ensure that material information... is made known to
          management... as appropriate to allow timely decisions regarding required
          disclosure.” Please note that all language that appears following the word
          “effective” must be consistent with the language that appears in the
          definition of “disclosure controls and procedures” set forth in Rule
          13a-15(e) of the Exchange Act. Please revise your disclosure accordingly.

        The
Company acknowledges the Staff’s comment number 3 above and has incorporated its
response thereto in the revised disclosure provided in response to comment number 1 above.

         4.
          Please revise to delete the reference to “other factors that
          significantly affect your internal controls,” and clarify whether there was
          any change in your internal control over financial reporting during the quarter
          that materially affected, or is reasonably likely to materially affect, your
          internal control over financial reporting. Also revise to remove the reference
          to Item 4(a) and c1arify the portion your disclosure to which you are referring
          readers.

        The
Company acknowledges the Staff’s comment number 4 above and has incorporated its
response thereto in the revised disclosure provided in response to comment number 1 above.

        Please
contact either the undersigned at tel: (408) 399-3537, fax: (408) 399-3509, or Eric
Finseth or Nate Gallon of Wilson Sonsini Goodrich & Rosati, P.C. at tel: (650)
320-4838 (for Mr. Finseth) or (650) 565-3591 (for Mr. Gallon) and fax: (650)
493-6811, with any questions.

Sincerely,

HIFN, INC.

/s/ William R. Walker,

William R. Walker,
Chief Financial Officer