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A novel design for reducing polarization sensitivity in silicon-on-insulator-based arrayed-waveguide grating (AWG) (de)multiplexer is presented. Each arrayed waveguide has two sections separated by a polarization beam splitter (PBS). These two sections have different core widths and length differences. With these PBSs, one polarization is reflected and the other one goes through. The through polarization enters the second section and is then reflected by a reflector at the end of the second section of the arrayed waveguide. The theoretical simulation shows that one can diminish greatly the polarization sensitivity of both the central channel wavelength and the channel spacing by optimizing the core width and length difference of the second section. The design procedure and formulas are given and an appropriate diffraction order is chosen to obtain a good fabrication tolerance. As an example, an ultrasmall (82.2 times 85.1 mum2) AWG (de)multiplexer with eight channels and a channel spacing of 4 nm is designed to have minimized polarization sensitivity and Bragg-grating PBSs and photonic crystal reflectors are used.