SecProbe.io

June 7, 2013

Via E -mail
Chih -Hsiang (Thompson) Lin
President and Chief Executive Officer
Applied Optoelectronics, Inc.
13115 Jess Pirtle Blvd.
Sugar Land, TX 77478

Re: Applied Optoelectronics, Inc.
 Amendment No. 1 to
Draft Registration Statement on Form S -1
Submitted May 22, 2013
  CIK No. 0001158114

Dear Dr. Lin :

We have reviewed your amended draft registration statement  and have the following
comments.  In some of our comments, we may ask you to provide us with information so we
may better understand your disclosure.

Please respond to this letter by providing the requested information and either submitting
an amended draft registration statement or publicly fili ng your registration statement on
EDGAR.  If you do not believe our comments apply to your facts and circumstances or do not
believe an amendment is appropriate, please tell us why in your response.

 After reviewing the information you provide in respon se to these  comments  and your
amended draft registration statement or filed registration statement,  we may have  additional
comments .

Prospectus Summary, page 1

1. Refer to your response to prior comment 1.
 Please clarify in your disclosure against whom you  are comparing yourself in the
statement you make in the first full sentence on page 2, and provide us support for the
comparison.
 Please revise the last sentence of the first bullet point on page 83 and the penultimate
sentence of the penultimate bullet p oint on page 84 to clarify against whom you are
comparing yourself.  If competitors also can provide the advantages, please ensure
that your disclosure here and in the last paragraph on page 1 does not imply
otherwise.

Chih -Hsiang (Thompson) Lin
Applied Optoelectronics, Inc.
June 7, 2013
Page 2

2. Please expand  your response to prior comment 2 to demonstrate clearly how the material
you provided supports the $2.2 billion market opportuni ty disclosed  on page 1  of your
prospectus .  Your response should (1) indicate clearly how your products address th e
entire market mentioned in your supporting material and (2) explain all relevant technical
terms and acronyms in the supporting  material.

3. We note your response to prior comment 3.  However, your document should not
selectively highlight companies based on their s ize or reputation in a manner that
disproportionately represents their contributions to your business.  Please relocate this
disclosure to a more appropriate section of your document where you can provide
sufficient context to explain the criteria that you  selected  to determine which  companies
to identify.  Please ensure that the criteria you select results in disclosure that accurately
represents your business, that your relocated disclosure clearly conveys the significance
of the named companies to your current o perations, that you clearly indicate which
companies satisfy which criteria , and that you have identified all of the companies that
satisfy the criteria that you have selected.

4. Please expand your response to prior comment 6 to tell us why you believe the detail that
you retained is appropriate for your prospectus summary.  For example, it is unclear why
your summary includes  statistics regarding shipments of 10 gigabit ethe rnet ports and
detail regarding  the cable television market.  If this information is relevant to an
investment decision, would it not be more appropriate for disclosure later in your
document so that it does not overwhelm required disclosure in the summary about the
aspects of your offering that are most significant?  Likewise, it is unclear why it is
appropriate for your prospectus summary to highlight a $2.2 billion “revenue
opportunity” estimate before the sections of your prospectus that explain the results th at
you have achieved and the related risks.  Instead, your summary should focus investors
on those aspects of your offering that are the most significant using concrete, everyday
terms, avoiding unnecessary technical terminology, acronyms, and jargon like
“solutions,” and leaving unnecessary detail for subsequent sections of your document
where it can be understood with in appropriate context.

Our Strengths, page 4

5. Please tell us why you believe it is appropriate to highlight in your document the
information  in the last sentence of the second bullet point in this section given your
response to prior comment 20.

Summary Consolidated Financial Data, page 9

6. We refer to your response to prior comment 8.  Based on the balance sheet presented on
page F -3, the amo unt labeled “Total stockholders’ equity (deficit)” appears to be the

Chih -Hsiang (Thompson) Lin
Applied Optoelectronics, Inc.
June 7, 2013
Page 3

 “Accumulated deficit.”   Please either appropriately label the amount presented on page
12 or revise to present the amount for total stockholders’ equity, if that was your
intention.

Risk Factors, page 13

7. If there is a material risk that customers may elect a technology for their fiber optic
networks that differs from the technology you offer, please add a separate risk factor that
directly highlights the risk and the other technologie s available.

We may be involved in intellectual property disputes, page 26

8. Please disclose the substance of your response to prior 12.

If we fail to maintain effective internal control, page 27

9. We note your response to prior comment 13; however, the last paragraph of this section
says that your internal controls can provide “no assurance…” while your response
indicates that your controls provide reasonable assurance.  Please clarify your disclosu re.

We are subject to governmental export and import controls, page 29

10. We note your deletions in response to prior comment 38.  Please provide disclosure in an
appropriate section of your document to explain the nature of the import and export
controls  that materially affect your business and the portion of your business affected.

Special Note Regarding Forwa rd Looking Statements and Industry Data, page 38

11. We are unable to agree with your response to prior comment 15.  When you file your
registration statement via Edgar, please include the consent of the third -party that
provided the disclosed market data you commissioned for use in connection with the
regis tration statement.

Use of Proceeds, page 39

12. Please address that part of prior comment 16 that asked you to disclose the portion of the
proceeds to be used for each of the purposes mentioned in what is now the first sentence
of the second paragraph of t his section.  Your disclosure should address the approximate
amount that you currently intend to use for each purpose as required by Regulation S -K
Item 504; you may reserve the right to change the use of proceeds as provided in
Instruction 7 to Item 504.   Also, if you do not have a specific plan for a significant
portion of the proceeds, please say so clearly and discuss the principal reasons for the
offering.

Chih -Hsiang (Thompson) Lin
Applied Optoelectronics, Inc.
June 7, 2013
Page 4

13. Please ensure that your disclosure throughout your document is current.  For example, we
note your reference to maturity dates in May 2013 on page 39 and April 2013 on page 68
and your disclosure as of December 31, 2012 in the last paragraph on page 65.   In
addition, your disclosure  on page II -3 does not appear to be updated for the exercise of
warran ts in March 2013  mentioned in the last sentence on page F -31.

Capitalization, page 40

14. Disclosure on page F -32 to the notes to financial statements suggests that several of the
warrants exercise on a  cashless basis upon the closing of the offering.  Tell us why
warrants that will exercise on a cashless basis at the offering date are not considered in
shares outstanding on a pro forma and pro forma, as adjusted basis.  Also, address this
matter with re spect to the dilution disclosure on pages 43 and 44.

Dilution, page 43

15. Please revise the first paragraph to also disclose actual net tangible book value at March
31, 2013.  Also, show us how the balance sheet amounts for intangible assets and land
use ri ghts, which also appears to be an intangible asset, are considered in your
determination of actual and pro forma net tangible book value.  Show us how actual net
tangible book value per share of $3.73 was determined.

Factors Affecting Our Performance, pag e 48

16. Please expand your response to prior comment 20  to tell us why you believe that
investors have sufficient information to evaluate the factor described in the second
paragraph of this section if you do not disclose the number of new design wins in each
period or otherwise quantify how design wins are affecting your results in the period s
presented.  It is unclear why the issues you identify in your response could not be
addressed by appropriate explanation accompanying your disclosure of the number of
design win s.

Revenue, page 49

17. Refer to your response to prior comment 21.  If the last sentence on page 49 compares
your results to companies that have a different, narrower or broader product line  or
market focus , please provide sufficient disclosure about the differences and the
companies against wh om you are comparing yourself so investors can evaluate your
disclosure about your relative price decline.

Chih -Hsiang (Thompson) Lin
Applied Optoelectronics, Inc.
June 7, 2013
Page 5

 Gross Margin, page 55

18. Please expand your disclosure of the unfavorable product mix to discuss what types of
products were selling more and what  types were selling less and the reasons for the
changes.  After you revise your disclosure in responses to this comment, we will continue
to evaluate you response to prior comment 36 regarding Regulation S -K Item
101(c)(1)(i); we note the “product categor ies” identified on your web site.

Other Income, page 56

19. Please describe the nature of the government subsidy.

Revenue Recognition, page 72

20. You state that products returned under warranty claims are repaired and returned to
customer with no impact on revenue.  You then contradict this statement later by stating
that revenue is net of warranty expenses. Please clarify how you are presenting warranty
costs.

Stock -Based Compensation, page 73

21. We may have further comments regarding your response to prior  comment 25  after you
file the consents .

22. We refer to your response to prior comment 29.  Please further clarify the factors you
considered in esta blishing the fair value of your common shares for purposes of
measuring stock -based compensation during 2012.  In that regard:
 Please make the disclosure more specific to the individual grant dates.  For instance,
it is not clear how your expectation about  revenues for the first quarter of 2013 is
relevant to the option grants in February and May of 2012.
 Please disclose the dates and per share prices realized in the sales of the series F and
series G shares.  Clarify how you considered differences in the rights of the different
instruments and also clarify the extent to which there was third -party particip ation in
these offerings.
 Clarify how the growth and development of your business was considered in your
determinations.  We note for instance, growing revenues and reduced losses in 2012
and that your business generated positive operating income in two quarters of that
year.
 Clarify why you continued to use a valuation from March of 2009.  Explain why you
believe that valuation continued to be valid, including how you evaluated actual
performance of your business against that projected at the time of the  2009 valuation.

Chih -Hsiang (Thompson) Lin
Applied Optoelectronics, Inc.
June 7, 2013
Page 6

 23. With respect to the grant in January 2013, in light of the pending offering, please tell us
and revise to explain why a marketability discount of 30% is appropriate.  Also tell us
and revise to explain how you arrived at the cost of c apital assumption.  Please note that
we may have further comment if there is a significant difference between the proposed
offering price and fair value assigned to your shares for stock compensation purposes for
grants in periods just prior to the offerin g.

Industry Background, page 79

24. Please disclose the substance of the first sentence of your response to prior comment 31.

Optical hybrid -integration technology, page 86

25. Please expand your response to prior comment 32 to tell us whether wavelength d rift with
temperature changes is an issue with WDM -PON.

Our Products, page 87

26. Please expand your response to prior comment 34 to tell us whether any product that you
do not include in the pictures on pages 88 -90 generate more revenue than any of the
products that you do include.  If so, please quantify the differences for us and tel l us why
you believe omission of the products is appropriate.

Direction Compensation, page 100

27. Please expand your response to prior comment 40 to clarify the nature of the consulting
agreements with your board members mentioned on page F -35.  Your respo nse should
clarify the nature of the affiliation between the directors  and the  entities , the nature of the
services, and what person actually performed the services.  It remains unclear why
disclos ure is not required per Regulation S -K Item 402(r).

Certain Relationships and Related Party Transactions, page 117

28. Please expand your response to prior comments 40 and 45 to tell us the authority on
which you rely to provide your disclosure based on sto ck ownership “on an as -converted
basis.”  Also tell us about all transactions that you would have disclosed under this
section if you did not present the information based “on an as -converted basis.”

Stock Option Awards, page 120

29. We note your response to prior comment 44; however, that comment sought disclosure of
the risk created by  provisions like section 2.4 of Exhibit 10.8 which, by defining a
Change in Control as any event required to be reported under Item 1 of Form 8 -K, app ear

Chih -Hsiang (Thompson) Lin
Applied Optoelectronics, Inc.
June 7, 2013
Page 7

 to accelerate options whenever you enter into any material agreement.  Please revise or
advise.

Principal and Selling Stockholders, page 121

30. Please clarify your disclosure in this section regarding Dr. Lin’s 1.3% ownership to also
explain the intended 6% grant ment ioned on page 120.

Warrants, page 125

31. Please tell us why you have not included disclosure in this section of the $0.60 warrants
mentioned in the first paragraph of subsection (c) on page II -3.

Financial Statements, page F -1

Note B.  Summary of Significant Accounting Policies, page F -8

Fair Value, page F -9

32. Please expand to also disclose the fair value of your borrowings and the underlying
methods and assumptions you applied to arrive at your determinations at each balance
sheet date, including March 31, 20 13.  Refer to FASB ASC 825 -10-50.

Note D.  Inventories, page F -17

33. Please disclose the composition of inventories at March 31, 2013.  Refer to FASB ASC
270-10-S99-1.

Note G.  Fair Value of Financial Instruments, page F -19

34. Please expand to provide fair v alue disclosure as of March 31, 2013.  Refer to FASB
ASC 270 -10-50 and FASB ASC 820 -10-50.  In that regard, it appears that the interest
rate swap, which would appear to be a derivative, should also be included in your fair
value disclosures.

Note O.  S egment Information and Geographic Information, page F -33

35. We refer to your response to prior comment 73.  Please expand to present product line
disclosure for each annual period presented in your financial statements.  Refer to FASB
ASC 280 -10-50-40.

Chih -Hsiang (Thompson) Lin
Applied Optoelectronics, Inc.
June 7, 2013
Page 8

 Signatures

36. Because you have not yet filed your registration statement, your Signatures page to your
first filing should not refer to the document as an amendment.

Exhibit 3.2

37. We note your