Mail Stop 6010
January 27, 2006

Via U.S. Mail and Facsimile (858) 450-9885

Robert G. Gargus
Senior Vice President and Chief Financial Officer
Applied Micro Circuits Corporation
215 Moffett Park Drive
Sunnyvale, California 94089

	Re:	Applied Micro Circuits Corporation
		Form 10-K for the fiscal year ended March 31, 2005
		Filed June 7, 2005
		Forms 8-K filed April 28, July 27, and October 26, 2005
and
		  January 25, 2006
		File No. 000-23193

Dear Mr. Gargus:

      We have reviewed your filings and have the following
comments.
We have limited our review of your filings to those issues we have
addressed in our comments. Where indicated, we think you should
revise your future filings 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 detailed
as
necessary in your explanation.  In some of our comments, we may
ask
you to provide us with information so we may better understand
your
disclosure.  After reviewing this information, we may raise
additional comments.

      Please understand that the purpose of our review 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 comment or on any other
aspects
of our review.  Feel free to call us at the telephone numbers
listed
at the end of this letter.



Form 10-K for the Fiscal Year Ended March 31, 2005

Item 7. Management`s Discussion and Analysis of Financial
Condition
and Results of Operations, page 18


1. We note that your financial statements reflect materially
higher
revenues resulting from your "fiscal 2004 and 2005 acquisitions,
as
well as increases in revenue from [y]our existing communications
product portfolio, offset by decreases in other revenue."  In your
September 30, 2005 Form 10-Q, you explain the increase in revenues
as
"primarily attributable to increases in [y]our communications and
storage revenue."  Please revise MD&A in future filings to include
(a) an analysis explaining the underlying reasons for the
significant
changes noted, (b) a discussion of the extent to which such
increases
are attributable to increases in prices or to increases in the
volume
or amount of goods or services being sold or to the introduction
of
new products or services, and (c) a quantification for each
significant factor noted when you identify the contribution of two
or
more factors as the cause for material changes.

We also note that in Risk Factors on page 36 you discuss your
announcement of the discontinuance of the FiberChannel HBA
products.
You state that these products "accounted for a significant portion
of
[y]our revenue from sales of storage products during fiscal 2004
and
fiscal 2005."  We also note that you expect revenue from these
products to "decline rapidly" and that you have "obligations to
customers that relate to these products" and that "fulfilling
these
obligations and failure to fulfill these obligations could result
in
significant liability, costs, and expenses."  Please revise MD&A
in
future filings to describe any known trends or uncertainties that
have had or that you reasonably expect will have a material
favorable
or unfavorable impact on net sales or revenues or income from
continuing operations.

We also note that you present a table showing the percentage of
sales
by type of product (i.e., communications, storage, embedded
products,
and other).  Please revise MD&A in future filings to explain the
underlying reasons for significant changes in the revenues of each
product group and explain how management uses the information in
the
table to analyze the company`s operations.

Where your financial statements reflect material restructuring or
impairment charges, or a decline in the profitability of a plant
or
other business activity, MD&A should analyze the reasons
underlying
these matters.

Please see Item 303 of Regulation S-K, SAB Topic 13.B, FRC 501,
and
Release 33-8350.


Item 8. Financial Statements and Supplementary Data, page F-1

Note 1.  Summary of Significant Accounting Policies, page F-7


2. We note your disclosure that you operate in only one segment.
From the business section of your Form 10-K, you appear to have
two
distinct markets: communication systems and storage solutions.
Through your acquisition of the Embedded Processor Business from
IBM,
you state that you have diversified into the embedded processor
market.  We also note from page 11 that you have separate vice-
presidents for each of the (a) storage, (b) embedded products, and
(c) communications businesses.  Please tell us briefly about the
content of the financial information reviewed by your CODM in
general
and for each of the businesses identified above.  Please also
explain
how you considered SFAS 131, including paragraphs 10 - 24, in
determining that you have only one reportable segment.  Please
note
that if you applied the aggregation criteria in paragraph 17 of
SFAS
131 that fact should be disclosed in future filings and your
response
should address how you reviewed each of the criteria in that
paragraph, including the requirement for similar economic
characteristics, in determining that the identified segments were
properly aggregated under SFAS 131.


Note 5.  Stockholders` Equity, page F-20


3. We note that you have entered into various structured stock
repurchases in fiscal 2005 and 2006.  For the year ended March 31,
2005, you reflect net cash flows used in financing activities for
these repurchases of $11.2 million.  In your September 30, 2005
Form
10-Q, we note that you reflect net cash flows used in financing
activities for these repurchases of $50 million.  For the same
period
in fiscal 2006 you used cash of $36.5 million.  Please tell us why
you present these cash flows on a net basis and discuss your
consideration of paragraphs 11 - 13 and 75 - 80 of SFAS 95.


4. With respect to your structured stock repurchases, please tell
us
and disclose in future filings all of the significant terms of
these
agreements and how you account for them and tell us why.  Cite the
accounting literature relied upon and explain how you applied that
literature to your facts and circumstances.    Please tell us
whether
or not you entered into any of these agreements with related
parties
and whether you were required to file any of the related
agreements
as exhibits.  Show us how you determined that the repurchase of
2,478,000 shares during fiscal 2005 for $11.2 million resulted in
an
effective purchase price of $3.03 per share as disclosed on page
31.


Forms 8-K filed April 28, July 27, and October 26, 2005 and
January
25, 2006


5. We note that you present your non-GAAP measures in the form of
pro
forma statements of operations.  The format may be confusing to
investors as it reflects several non-GAAP measures.  All of these
measures have not been identified or described to investors.
Furthermore, it is not clear whether management uses all of these
non-GAAP measures or whether they are shown here as a result of
the
presentation format.  Please note that Instruction 2 to Item 2.02
of
Form 8-K requires that when furnishing information under this item
you must provide all the disclosures required by paragraph
(e)(1)(i)
of Item 10 of Regulation S-K and FAQ 8 Regarding the Use of Non-
GAAP
Financial Measures dated June 13, 2003 for each non-GAAP measure
presented.  In addition, you should explain why you believe each
non-
GAAP measure provides useful information to investors.

* To eliminate investor confusion, please remove the non-GAAP
statements of income format from future filings and only disclose
those non-GAAP measures used by management with the appropriate
reconciliations and explanations.
* Otherwise, confirm that you will revise the presentation of non-
GAAP financial information that you furnish in future filings to
provide all of the disclosures required by Item 10(e)(1)(i) of
Regulation S-K and FAQ 8 for each non-GAAP measure presented, and
provide us with a sample of your proposed disclosure.


6. In addition, we note that you refer to your non-GAAP
information
as "pro forma" results.  The pro forma terminology has very
specific
meaning in accounting literature, as indicated by Article 11 of
Regulation S-X.  In future filings, please revise your
presentation
to omit the pro forma terminology when referring to your non-GAAP
information.



      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 cover letter that keys your responses to our
comments and provides any requested information.  Detailed cover
letters greatly facilitate our review.  Please file your cover
letter
on EDGAR.  Please understand that we may have additional comments
after reviewing your responses to our comments.

	We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment 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 filings;
* 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 comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.

      In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.

      You may contact Praveen Kartholy at (202) 551-3778 or me at
(202) 551-3604 if you have questions regarding these comments.  In
this regard, do not hesitate to contact Brian Cascio, Accounting
Branch Chief, at (202) 551-3676.


							           Sincerely,



							           Kate Tillan
					             	           Assistant Chief
Accountant

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Robert G. Gargus
Applied Micro Circuits Corporation
January 27, 2006
Page 5