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We've not seen very much focus on design in interviews (very few companies talk about this when telling us why they like/dislike candidates). We do see a lot of focus on interest in what the company does. I think that pitching design skills as a passion for making the company's product better is the best way to go.

But "an understanding of Photoshop and Illustrator" is to "a basic understanding of UX design" as "an understanding of vi or emacs" is to "a basic understanding of distributed application architecture"

The only reason I mentioned Photoshop and Illustater is because they're easy things to put on a resume. "Knowledge of design principles" is a little more amorphous.

Sadly, very few companies care about UX when interviewing.

Well, actually, most companies I have interviewed with care about core CS fundamentals and nothing else.