Item 8.01 Other Events.

On June 21, 2012, Pixelworks, Inc. (the "Company") entered into an agreement with a customer to defray a portion of the research and development expenses expected to be incurred by the Company in connection with its development of an integrated circuit product. Under the agreement, the Company will receive $3.5 million from the customer within 60 days of the date of the agreement, and may receive up to an additional $3.5 million upon completion of certain development milestones. The Company currently believes that such amounts will be treated as a reduction to research and development expenses related to the product for accounting purposes.

Development work on the product is currently expected to be performed through 2013. The actual timing and amount of the Company's expenses and payments by the customer cannot be determined at this time, and there is no assurance that all amounts will be received by the Company. In any event, the Company expects its research and development expenses will exceed the amounts received from the customer. Upon the completion of the development, the Company expects to sell units of the product to the customer. However, there is no commitment or agreement from the customer for such sales at this time or assurance that the development will be successful.

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