UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                   WASHINGTON, D.C.  20549
                          FORM 10-Q

__X__     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
          OF THE SECURITIES EXCHANGE ACT OF 1934
          For the quarterly period ended June 30, 1999

                             OR

_____     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
          OF THE EXCHANGE ACT OF 1934
          For the transition period from __________ to
          ____________

               Commission file number 0-21321

                         CYMER, INC.
   (Exact name of registrant as specified in its charter)

          Nevada                                               33-0175463
(State or other jurisdiction of incorporation                (I.R.S. Employer
       or organization)                                     Identification No.)

16750 Via Del Campo Court, San Diego, CA                          92127
(Address of principal executive offices)                       (Zip Code)

Registrant's telephone number, including area code           (858) 385-7300

Former name, former address and former fiscal year, if
changed since last report.
  N/A

Indicate by check mark whether the registrant (1) has  filed
all  reports required to be filed by Section 13 or 15(d)  of
the Securities Exchange Act of 1934 during the preceding  12
months  (or for such shorter period that the registrant  was
required to file such reports), and (2) has been subject  to
such filing requirements for the past 90 days.

Yes   X   No

The number of shares of Common Stock, with $0.001 par value,
outstanding on July 22, 1999 was 27,986,892.

<PAGE>

                         CYMER, INC.

                          FORM 10-Q

             For the Quarter Ended June 30, 1999

                            INDEX

                                                                     Page

PART I.  FINANCIAL INFORMATION

ITEM 1.  Consolidated Financial Statements

         Consolidated Balance Sheets as of                             3
         December 31, 1998 and June 30, 1999

         Consolidated Statements of Operations for                     4
         the three and six months ended
         June 30, 1998 and 1999

         Consolidated Statements of Cash Flows for                     5
         the three and six months ended June 30,
         1998 and 1999

         Notes to Consolidated Financial Statements                    7

ITEM 2.  Management's Discussion and Analysis of Financial            10
          Condition and Results of Operations

ITEM 3.  Quantitative and Qualitative Disclosures About               27
           Market Risk

PART II. OTHER INFORMATION

ITEM 4.  Submission of Matters to a Vote of Security Holders          28

ITEM 5.  Other Information                                            28

ITEM 6.  Exhibits and Reports on Form 8-K                             28

SIGNATURE PAGE                                                        29

<PAGE>

               PART I.  FINANCIAL INFORMATION

CYMER, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except share data)
<TABLE>
<CAPTION>
                                                   December 31,       June 30,
                                                      1998              1999
ASSETS
<S>                                                 <C>               <C>
CURRENT ASSETS:
   Cash and cash equivalents                         $53,130           $75,562
   Short-term investments                             85,558            71,008
   Accounts receivable - net                          50,909            54,809
   Foreign exchange contracts receivable              22,145            16,279
   Inventories                                        50,786            52,901
   Deferred income taxes                              12,824            12,812
   Prepaid expenses and other                          3,706             4,057
      Total current assets                           279,058           287,428

PROPERTY - net                                        51,937            52,975
LONG-TERM INVESTMENTS                                 23,480            18,251
DEFERRED TAXES - NON-CURRENT                           2,533             3,041
OTHER ASSETS                                           7,310             6,929
TOTAL ASSETS                                        $364,318          $368,624

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Accounts payable                                    $8,581          $13,301
   Accrued and other liabilities                       33,204           38,852
   Foreign exchange contracts payable                  24,873           16,296
   Income taxes payable                                 2,146            2,399
   Revolving loan                                      11,609           15,495
      Total current liabilities                        80,413           86,343

LONG-TERM LIABILITIES:
Convertible subordinated notes                        172,500          172,500
Other liabilities                                       3,424            3,026
MINORITY INTEREST                                       1,450            1,723
COMMITMENTS AND CONTINGENCIES (Note 6)

STOCKHOLDERS' EQUITY:
   Preferred Stock - authorized 5,000,000
    shares; $.001 par value, no shares
    issued or outstanding
   Common stock - authorized 50,000,000
    shares; $.001 par value, issued and
    outstanding 27,174,000 and 27,951,000 shares           27               28
   Paid-in capital                                    111,842          114,869
   Treasury stock at cost (2,000,000
     common shares)                                   (24,871)         (24,871)
   Accumulated other comprehensive loss                (1,627)          (2,367)
   Retained earnings                                   21,160           17,373
      Total stockholders' equity                      106,531          105,032

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY           $364,318         $368,624
</TABLE>
See notes to consolidated financial statements.
<PAGE>

CYMER, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except per share data)
<TABLE>
<CAPTION>

                                  For the three months       For the six months
                                     ended June 30,           ended June 30,
                                   1998          1999         1998        1999

<S>                              <C>           <C>          <C>         <C>
REVENUES:
   Product sales                 $52,946       $43,378      $102,574    $83,202
   Other                              76            31           127        299
      Total revenues              53,022        43,409       102,701     83,501

COSTS AND EXPENSES:
   Cost of product sales          34,154        28,395        64,784     56,511
   Research and development        8,292         7,863        16,109     15,315
   Sales and marketing             3,980         3,465         7,880      6,996
   General and administrative      2,605         3,172         5,083      5,966
     Total costs and expenses     49,031        42,895        93,856     84,788

OPERATING INCOME (LOSS)            3,991           514         8,845     (1,287)

OTHER INCOME (EXPENSE):
   Foreign currency exchange
    gain (loss) - net               (520)          161          (752)       (74)
   Interest and other income       1,847         1,653         3,855      3,417
   Interest and other expense     (2,802)       (2,807)       (5,583)    (5,570)

     Total other income
      (expense) - net             (1,475)         (993)       (2,480)    (2,227)

INCOME (LOSS) BEFORE PROVISION
   FOR INCOME TAXES AND MINORITY
    INTEREST                       2,516          (479)        6,365     (3,514)

PROVISION FOR INCOME TAXES          (724)         (758)       (1,882)       -
MINORITY INTEREST                   (103)         (252)          (91)      (273)

NET INCOME (LOSS)                 $1,689       ($1,489)       $4,392    ($3,787)

EARNINGS (LOSS) PER SHARE:
Basic:
   Earnings (loss) per share       $0.06        ($0.05)        $0.15     ($0.14)
   Weighted average common
    shares outstanding            28,768        27,795        28,747     27,592
Diluted:
   Earnings (loss) per share       $0.06        ($0.05)        $0.14     ($0.14)
   Weighted average common and
    potential common shares
    outstanding                   30,291        27,795        30,366     27,592
</TABLE>

See notes to consolidated financial statements.
<PAGE>

CYMER, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
                                                   For the six months ended
                                                           June 30,
                                                      1998          1999

<S>                                                 <C>           <C>
OPERATING ACTIVITIES:
   Net income (loss)                                 $4,392       ($3,787)
   Adjustments to reconcile net income
    (loss) to net cash provided by (used for)
    operating activities:
     Depreciation and amortization                    7,148         8,515
     Minority interest                                   91           273
     Deferred income taxes                                           (514)
     Gain on disposal of property                                     (45)
     Change in assets and liabilities:
       Accounts receivable                            1,968        (5,813)
       Foreign exchange contracts receivable         10,296         4,536
       Inventories                                  (12,078)       (2,491)
       Prepaid expenses and other assets                (53)         (990)
       Accounts payable                              (6,568)        4,765
       Accrued and other liabilities                    273         6,692
       Foreign exchange contracts payable            (8,711)       (7,124)
       Income taxes payable                          (2,200)          275

         Net cash provided by (used for)
          operating activities                       (5,442)        4,292

INVESTING ACTIVITIES:
   Acquisition of property                          (10,550)       (9,888)
   Purchases of investments                         (45,558)      (62,354)
   Proceeds from sold or matured investments         74,480        81,785

      Net cash provided by investing activities      18,372         9,543

FINANCING ACTIVITIES:
   Net borrowings (payments) under revolving
    loan and security agreements                     10,013         4,726
   Proceeds from issuance of common stock             1,126         3,018
   Purchase of treasury stock                        (5,276)
   Payments on capital lease obligations               (299)         (284)

     Net cash provided by financing activities        5,564         7,460

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
  CASH EQUIVALENTS                                    4,234         1,137

NET INCREASE IN CASH AND CASH EQUIVALENTS            22,728        22,432
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD     51,903        53,130

CASH AND CASH EQUIVALENTS AT END OF PERIOD          $74,631       $75,562

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
   Interest paid                                     $3,305        $3,337
   Income taxes paid                                 $2,140        $1,101
</TABLE>
     See notes to consolidated financial statements.
<PAGE>

                         CYMER, INC.

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          Three and Six Months Ended June 30, 1999
                         (Unaudited)

1.   BASIS OF PRESENTATION

     The accompanying consolidated financial information has
been prepared by Cymer, Inc.,  its wholly-owned and majority-
owned  subsidiaries, (collectively, "Cymer"), without audit,
in  accordance  with  the  instructions  to  Form  10-Q  and
therefore  does  not include all information  and  footnotes
necessary  for  a  fair presentation of financial  position,
results  of  operations and cash flows  in  accordance  with
generally accepted accounting principles.

       Principles   of  Consolidation  -  The   consolidated
financial  statements include the accounts of  Cymer,  Inc.,
its  wholly-owned  subsidiaries, Cymer  Japan,  Inc.  (Cymer
Japan), Cymer Singapore Pte Ltd. (Cymer Singapore) and Cymer
B.V. in the Netherlands (Cymer B.V.), and its majority-owned
subsidiaries,  Cymer  Korea, Inc. (Cymer  Korea)  and  Cymer
Southeast Asia, Inc. (Cymer SEA).  Cymer, Inc. owns  70%  of
Cymer  Korea  and 75% of Cymer SEA.  Cymer sells  its  laser
systems  in  Japan  primarily through  Cymer  Japan.   Cymer
Korea,  Cymer SEA, Cymer Singapore and Cymer B.V. are  field
service  offices  for  customers  in  those  regions.    All
significant  intercompany balances have been  eliminated  in
consolidation.

      Accounting  Estimates - The preparation  of  financial
statements  in conformity with generally accepted accounting
principles   requires  management  to  make  estimates   and
assumptions that affect the reported amounts of  assets  and
liabilities   and  disclosure  of  contingent   assets   and
liabilities at the date of the financial statements and  the
reported  amounts  of  revenues  and  expenses  during   the
reporting  period.   Actual results may  differ  from  those
estimates.

      Unaudited  Interim Financial Data - In the opinion  of
management, the unaudited consolidated financial  statements
for  the  interim periods presented reflect all adjustments,
consisting of only normal recurring accruals, necessary  for
a fair presentation of the financial position and results of
operations  as  of  and for such periods  indicated.   These
consolidated  financial statements and notes thereto  should
be  read  in  conjunction  with the  consolidated  financial
statements  and  notes thereto included  in  Cymer's  Annual
Report  on  Form  10-K  (including  items  incorporated   by
reference therein) for the year ended December 31, 1998  and
the  Quarterly  Report on Form 10-Q for the  fiscal  quarter
ended  March  31,  1999.  Results for  the  interim  periods
presented  herein are not necessarily indicative of  results
which  may be reported for any other interim period  or  for
the entire fiscal year.


2.   EARNINGS PER SHARE

     Earnings  Per  Share - In February 1997, the  Financial
Accounting  Standards  Board ("FASB")  issued  Statement  of
Financial  Accounting Standards ("SFAS") No.  128,  Earnings
Per Share ("EPS"), effective for financial statements issued
after  December  15,  1997.   SFAS  No.  128  requires  dual
presentation  of "Basic" and "Diluted" EPS by entities  with
complex  capital structures, replacing "Primary" and  "Fully
Diluted"  EPS  under  Accounting  Principals  Board  ("APB")
Opinion No. 15.  Basic EPS excludes dilution and is computed
by  dividing  net  income  or loss attributable   to  common
stockholders  by  the  weighted-average  of  common   shares
outstanding  for  the  period.   Diluted  EPS  reflects  the
potential dilution that could occur if securities  or  other
contracts  to  issue  common  stock  (convertible  preferred
stock,  warrants to purchase common stock and  common

<PAGE>

stock options using the treasury stock method) were exercised or
converted into common stock.  Potential common shares in the
diluted EPS computation are excluded in net loss periods  as
their  effect  would be antidilutive.  EPS for  all  periods
have  been computed in accordance with SFAS No. 128.   Cymer
adopted  the new method of reporting EPS for the year  ended
December 31, 1997.  Reconciliation of the basic and  diluted
EPS is as follows:

<TABLE>
<CAPTION>

                                     Three months ended      Six months ended
                                          June 30,                June 30,
                                      1998       1999         1998      1999
                                     (In thousands, except per share amounts)

<S>                                 <C>        <C>           <C>      <C>
Net income (loss)                   $1,689     ($1,489)      $4,392   ($3,787)

Basic earnings (loss) per share      $0.06      ($0.05)       $0.15    ($0.14)
Basic weighted average common
 shares outstanding                 28,768      27,795       28,747    27,592

Effect of dilutive securities:
   Warrants                            119                      118
   Options                           1,404                    1,501
Diluted weighted average common
  and potential common shares
  outstanding                       30,291      27,795       30,366    27,592
Diluted earnings (loss) per share    $0.06      ($0.05)       $0.14    ($0.14)
</TABLE>

3.   BALANCE SHEET DETAILS

<TABLE>
<CAPTION>
                                              December 31,          June 30,
                                                1998                 1999
                                                      (in thousands)
<S>                                             <C>                 <C>
INVENTORIES:
   Raw Materials                                $29,324             $13,221
   Work-in-progress                              12,946              17,493
   Finished goods                                 8,516              22,187
Total                                           $50,786             $52,901

ACCRUED AND OTHER LIABILITIES:
   Warranty and installation reserves           $19,000             $20,600
   Payroll and payroll related                    3,622               3,303
   Interest                                       7,651               9,471
   Other                                          2,931               5,478
Total                                           $33,204             $38,852
</TABLE>

4.   REPORTING COMPREHENSIVE INCOME

  Effective  January 1, 1998, Cymer adopted  SFAS  No.  130,
Reporting  Comprehensive  Income.   SFAS  No.  130  requires
reporting  and  displaying  comprehensive  income  and   its
components,  which,  for  Cymer,  include  foreign  currency
translation  adjustments and unrealized  holding  gains  and
losses  on  available-for-sale securities that are currently
being  presented  by  Cymer  as  a

<PAGE>

separate component of stockholders' equity.  The adoption of
SFAS No. 130 had no impact on Cymer's results of operations
or financial position.   In accordance with SFAS No. 130, the
accumulated balance of other comprehensive income (loss) is
disclosed as a separate component of stockholders' equity.  Prior
year financial statements have been reclassified to  conform  to
the requirements of SFAS No. 130.

      The  following  table summarizes the  change  in  each
component  of accumulated other comprehensive income  (loss)
for the periods ended December 31, 1998 and June 30, 1999:
<TABLE>
<CAPTION>
                                          Total unrealized
                                         gains (losses) on        Accumulated
                           Translation   available-for-sale          other
                           adjustment,      investments,         comprehensive
                           net of tax       net of tax            income(loss)

<S>               <S>         <C>                <C>                 <C>
January 1,1998    Balance     ($2,303)            $49                ($2,254)
                  Period net
                   change         441             186                    627
December 31,1998  Balance      (1,862)            235                 (1,627)
                  Period net
                   change        (535)           (205)                  (740)
June 30, 1999     Balance     ($2,397)            $30                ($2,367)
</TABLE>

5.   CLASS ACTION LAWSUITS

  Cymer  has  been named as a defendant in several  putative
shareholder  class  action  lawsuits  which  were  filed  in
September  and October, 1998 in the U.S. District Court  for
the  Southern  District  of  California.  Certain  executive
officers   and  directors  of  Cymer  are  also   named   as
defendants.  The plaintiffs purport to represent a class  of
all persons who purchased Cymer's Common Stock between April
24,  1997 and September 26, 1997 (the "Class Period").   The
complaints allege claims under the federal securities  laws.
The  plaintiffs  allege that Cymer and the other  defendants
made   various  material  misrepresentations  and  omissions
during the Class Period.  The complaints do not specify  the
amount   of  damages  sought.   The  complaints  have   been
consolidated into a single action and a class representative
has  been  appointed  by the court.  A consolidated  amended
complaint  is  due  to  be  filed  in  early  August,  1999.
Discovery has not yet commenced.  Cymer believes that it has
good defenses to the claims alleged in the lawsuits and will
defend  itself vigorously against these actions. The defense
of  these  actions  may  cause some  disruption  in  Cymer's
operations  and  may  from time to time distract  management
from  day-to-day operations. The ultimate outcome  of  these
actions  cannot  be presently determined.   Accordingly,  no
provision  for  any liability or loss that may  result  from
adjudication  or  settlement thereof has been  made  in  the
accompanying consolidated financial statements.

6.   CONTINGENCIES

       Cymer's  Japanese  manufacturing  partner  has   been
notified  that its manufacture of Cymer's laser  systems  in
Japan may infringe certain Japanese patents held by Komatsu,
Ltd.,  one  of  Cymer's competitors.  Cymer  has  agreed  to
indemnify its Japanese manufacturing partner against  patent
infringement claims under certain circumstances.  Cymer  has
engaged  in  discussions with Komatsu to attempt to  resolve
these  patent  issues.  In the course of those  discussions,
Komatsu  has  identified  additional  patents  that  Komatsu
asserts  may  be  infringed  by  Cymer  and  Seiko.    Cymer
believes,  based  upon the advice of counsel,  that  Cymer's
products  do  not infringe any valid claim of  the  asserted
patents.

<PAGE>

 Item 2.  Management's Discussion and Analysis of Financial
                          Condition
                  and Results of Operations


      AN  ASTERISK ("*") DENOTES A FORWARD-LOOKING STATEMENT
REFLECTING  CURRENT  EXPECTATIONS  THAT  INVOLVE  RISKS  AND
UNCERTAINTIES.   ACTUAL RESULTS MAY DIFFER  MATERIALLY  FROM
THOSE  DISCUSSED  IN  SUCH FORWARD-LOOKING  STATEMENTS,  AND
STOCKHOLDERS  OF CYMER, INC. (TOGETHER WITH ITS WHOLLY-OWNED
AND   MAJORITY-OWNED  SUBSIDIARIES,  COLLECTIVELY,  "CYMER")
SHOULD CAREFULLY REVIEW THE CAUTIONARY STATEMENTS SET  FORTH
IN THIS FORM 10Q, INCLUDING "RISK FACTORS" BEGINNING ON PAGE
17  HEREOF.   CYMER  MAY FROM TIME TO TIME  MAKE  ADDITIONAL
WRITTEN   AND  ORAL  FORWARD-LOOKING  STATEMENTS,  INCLUDING
STATEMENTS  CONTAINED IN CYMER'S FILINGS WITH THE SECURITIES
AND  EXCHANGE COMMISSION AND IN ITS REPORTS TO STOCKHOLDERS.
CYMER  DOES  NOT  UNDERTAKE  TO UPDATE  ANY  FORWARD-LOOKING
STATEMENT THAT MAY BE MADE FROM TIME TO TIME BY OR ON BEHALF
OF CYMER.

RESULTS OF OPERATIONS

  The  following table sets forth certain items  in  Cymer's
statements  of operations as a percentage of total  revenues
for the periods indicated:
<TABLE>
<CAPTION>

                               Three months ended       Six months ended
                                      June 30,               June 30,
                                 1998      1999           1998     1999
<S>                            <C>        <C>            <C>      <C>
Revenues:
   Product sales                99.8%      99.9%          99.9%    99.6%
   Other                          .2         .1             .1       .4
     Total revenues            100.0%     100.0%         100.0%   100.0%

Cost and expenses:
   Cost of product sales        64.4       65.4           63.1     67.7
   Research and development     15.6       18.1           15.7     18.3
   Sales and marketing           7.5        8.0            7.7      8.4
   General and administrative    4.9        7.3            4.9      7.1
     Total costs and expenses   92.4       98.8           91.4    101.5

Operating income (loss)          7.6        1.2            8.6     (1.5)
Other income (expense) - net    (2.8)      (2.3)          (2.4)    (2.7)

Income (loss) before provision
for income taxes and
minority interest                4.8       (1.1)           6.2     (4.2)

Provision for income taxes      (1.4)      (1.7)          (1.8)      -
Minority interest                (.2)       (.6)           (.1)     (.3)

Net income (loss)                3.2%      (3.4%)          4.3%    (4.5%)

Gross margin on product sales   35.6%      34.6%          36.8%    32.1%
</TABLE>
<PAGE>

THREE MONTHS ENDED JUNE 30, 1998 AND 1999

     Revenues.    Cymer's total revenues consist of  product
sales,  which  include sales of laser systems, spare  parts,
service  and  training, and other revenues, which  primarily
include   revenues   from   funded  development   activities
performed  for  SEMATECH.  Revenue  from  product  sales  is
generally  recognized  at  the  time  of  shipment,   unless
customer  agreements contain inspection or other conditions,
in  which  case  revenue  is recognized  at  the  time  such
conditions are satisfied.  Funded development contracts  are
accounted  for on the percentage-of-completion method  based
on  the  relationship of costs incurred to  total  estimated
costs, after giving effect to estimates of costs to complete
the development project.

     Product sales decreased 18% from $52.9 million for  the
three  months ended June 30, 1998 to $43.4 million  for  the
three months ended June 30, 1999, primarily due to decreased
sales  of  DUV photolithography laser systems.  The decrease
in laser system sales was partially offset by an increase in
the  average  selling  price from  period  to  period.   The
average  selling  price of a lithography  laser  system  was
$425,000 for the three month period ended June 30,  1998  as
compared  to $469,000 for the three month period ended  June
30, 1999.  Due to the increase in Cymer's installed base  of
lasers,  Cymer's  revenues  from  spares,  system  upgrades,
replacement parts and services has increased and is a larger
component  of  product  sales.  Funded development  revenues
decreased from $76,000 for the three months ended  June  30,
1998 to $31,000 in the three months ended June 30, 1999.

      Cymer's sales are generated primarily by shipments  to
customers in Japan, the Netherlands, and the United  States.
Approximately  89%, 88% and 85% of Cymer's  sales  in  1997,
1998  and  the first six months of 1999, respectively,  were
derived  from  customers outside the United  States.   Cymer
maintains a wholly-owned Japanese subsidiary which sells  to
Cymer's   Japanese   customers.   Revenues   from   Japanese
customers, generated primarily by this subsidiary, accounted
for  65%,  48%  and 32% of revenues for 1997, 1998  and  the
first six months of 1999, respectively.   The activities  of
Cymer's Japanese subsidiary are limited to sales and service
of  products  purchased by the subsidiary  from  the  parent
corporation.   All  costs of development and  production  of
Cymer's products, including costs of shipment to Japan,  are
recorded  as costs of the parent company.  Cymer anticipates
that  international sales will continue  to  account  for  a
significant portion of its net sales.*

     Cost  of Product Sales.  Cost of product sales includes
direct material and labor, warranty expenses, license  fees,
manufacturing  and  service overhead, and  foreign  exchange
gains  and  losses  on foreign currency  exchange  contracts
associated  with  purchases  of  Cymer's  products  by   the
Japanese subsidiary for resale under firm third-party  sales
commitments.

     Cost  of  product sales declined 17% from $34.2 million
for  the  three months ended June 30, 1998 to $28.4  million
for the three months ended June 30, 1999 due to the decrease
in  sales volume.  The gross margin on these sales decreased
from 35.5% for the three months ended June 30, 1998 to 34.5%
for the same three month period in 1999.  This reduction was
primarily  due  to  lower product sales on  higher  relative
fixed  manufacturing facility costs as well as the continued
development of worldwide field support infrastructure.

     Net  gains  or  losses from foreign  currency  exchange
contracts  are  included in cost of  product  sales  in  the
consolidated  statements of operations as the related  sales
are   recognized.   Cymer  recognized  net  gains  on   such
contracts  of  $861,000 and $122,000 for  the  three  months
ended June 30, 1998 and 1999, respectively.

     Research  and  Development.  Research  and  development
expenses  include costs of internally-funded and externally-
funded  projects  as  well  as continuing  research  support
expenses  which  primarily  include  employee  and  material
costs,  depreciation  of  equipment  and  other

<PAGE>

engineering related  costs.  Research and development expenses
decreased 5% from $8.3 million in the three months ended June 30,
1998 to  $7.9  million for the three months ended June 30,  1999,
due   primarily  to  timing  of  various  research  programs
initiation,    development   and   milestone    completions.
Development expenses during 1998 consisted of the completion
of  major  milestones on Cymer's ELS-5010 laser system,  and
development efforts on Cymer's next generation Orion or ELS-
6000  laser  system.  The  expenses  associated  with  these
programs declined in 1999 as milestones were met and as  new
programs  were at their initial stages.  As a percentage  of
total  revenues, such expenses increased from 15.6% to 18.1%
in the respective periods due to lower revenues.

     Sales  and  Marketing.   Sales and  marketing  expenses
include  the  expenses of the sales, marketing and  customer
support  staffs  and  other marketing expenses.   Sales  and
marketing expenses decreased 13% from $4.0 million  for  the
three  months  ended June 30, 1998 to $3.5 million  for  the
three  months ended June 30, 1999 due primarily  to  initial
start  up  costs associated with developing Cymer's  foreign
field  service  locations in Europe,  Singapore,  Korea  and
Taiwan,  which  were incurred in 1998.  As a  percentage  of
total revenues, such expenses increased from 7.5% to 8.0% in
the respective periods due to lower sales volumes.

     General and Administrative.  General and administrative
expenses  consist primarily of management and administrative
personnel  costs,  professional services and  administrative
operating   costs.   General  and  administrative   expenses
increased  23% from $2.6 million for the three months  ended
June  30,  1998 to $3.2 million for the three  months  ended
June  30,  1999, due to continuing business process  quality
development   efforts   and  other  required   general   and
administrative support activities.  As a percentage of total
revenues,  such expenses increased from 4.9%  to  7.3%  from
period to period.

     Other   Income  (Expense)  -  net.   Net  other  income
(expense) consists primarily of interest income and  expense
and  foreign  currency exchange gains and losses  associated
with   fluctuations in the value of the Japanese yen against
the  United States dollar. Net other expense decreased  from
$1.5  million for the three months ended June  30,  1998  to
$1.0  million  for  the three months ended  June  30,  1999,
primarily  due to a foreign exchange loss in 1998  versus  a
gain for the same period in 1999.  Foreign currency exchange
losses  totaled  $520,000,  interest  income  totaled   $1.8
million  and interest expense totaled $2.8 million  for  the
three  months ended June 30, 1998, compared to  an  exchange
gain  of $161,000, interest income of $1.7 million and  $2.8
million in interest expense for the three months ended  June
30, 1999.

     Cymer's   results   of  operations   are   subject   to
fluctuations  in the value of the Japanese yen  against  the
United  States  dollar.  Sales  by  Cymer  to  its  Japanese
subsidiary  are  denominated in dollars, and  sales  by  the
subsidiary  to  customers in Japan are denominated  in  yen.
Cymer's  Japanese  subsidiary manages its exposure  to  such
fluctuations  by  entering  into foreign  currency  exchange
contracts  to hedge its purchase commitments to Cymer.   The
gains  or  losses  from these contracts are  recorded  as  a
component  of  cost  of product sales, while  the  remaining
foreign  currency  exposure  is  recorded  as  other  income
(expense)  in  the  consolidated statements  of  operations.
Gains and losses resulting from foreign currency translation
are  accumulated  as  a separate component  of  consolidated
stockholders' equity.

     Income  Tax Provision.  The provision for income  taxes
for  the  three  months  ended June  30,  1998  of  $724,000
reflects an annual effective tax rate of 30% as Cymer had no
additional  loss  or  valuation  allowance  carryovers  from
previous  periods to be applied in 1998.  The tax  provision
of  $758,000  for the three months ended June  30,  1999  is
reflective  of a change in Cymer's effective tax  rate  from
25%  for the three month period ended March 31, 1999, to  an
annual effective rate of 0% at June 30, 1999.  This decrease
in  the  annual  rate  is primarily the result  of  improved
visibility regarding certain expected tax benefits for 1999.
Specifically,  the lower rate

<PAGE>

reflects an  increase  in  the expected  tax  benefit  from
foreign sales and a more favorable expected mix of 1999 taxable
earnings between the U.S. and foreign jurisdictions.

<PAGE>

SIX MONTHS ENDED JUNE 30, 1998 AND 1999

     Revenues.    Product sales decreased  19%  from  $102.6
million  for  the six months ended June 30,  1998  to  $83.2
million  for  the six months ended June 30, 1999,  primarily
due   to  decreased  sales  of  DUV  photolithography  laser
systems.   The decrease in laser system sales was  partially
offset  by  an  increase in the average selling  price  from
period   to  period.   The  average  selling  price   of   a
lithography  laser  system for the six month  periods  ended
June   30,   1998  and  1999  were  $408,000  and  $472,000,
respectively.    Due  to the increase in  Cymer's  installed
base   of  lasers,  Cymer's  revenues  from  spares,  system
upgrades,  replacement parts and services has increased  and
is  a larger component of product sales.  Funded development
revenues  increased from $127,000 for the six  months  ended
June  30, 1998 to $299,000 in the six months ended June  30,
1999,  primarily  due  to  the  addition  of  various  laser
research  projects sponsored by customers  and  SEMATECH  in
1999 compared to the completion of various projects in 1998.

      Cost of Product Sales.  Cost of product sales declined
13%  from  $64.8 million for the six months ended  June  30,
1998 to $56.5 million for the six months ended June 30, 1999
due  to  the decrease in sales volume.  The gross margin  on
these  sales  decreased from 36.8% for the six months  ended
June  30,  1998  to 32.1% for the same six month  period  in
1999.   This  reduction was primarily due to  lower  product
sales  on higher relative fixed manufacturing facility costs
as  well  as  the  continued development of worldwide  field
support infrastructure.

     Net  gains  or  losses from foreign  currency  exchange
contracts  are  included in cost of  product  sales  in  the
consolidated  statements of operations as the related  sales
are   recognized.   Cymer  recognized  net  gains  on   such
contracts of $3.2 million for the six months ended June  30,
1998  and a $829,000 net loss for the six months ended  June
30, 1999.

     Research  and  Development.  Research  and  development
expenses decreased 5% from $16.1 million for the six  months
ended  June  30,  1998 to $15.3 million for the  six  months
ended  June 30, 1999, due primarily to the timing of various
research  programs  initiation,  development  and  milestone
completions.  Development expenses during 1998 consisted  of
the completion of major milestones on Cymer's ELS-5010 laser
system,  and development efforts on Cymer's next  generation
Orion or ELS-6000 laser system. The expenses associated with
these  programs declined in 1999 as milestones were met  and
as  new  programs  were  at  their  initial  stages.   As  a
percentage  of total revenues, such expenses increased  from
15.7%  to  18.3%  in  the respective periods  due  to  lower
revenues.

     Sales  and  Marketing.   Sales and  marketing  expenses
decreased  11%  from $7.9 million for the six  months  ended
June  30, 1998 to $7.0 million for the six months ended June
30,  1999  due  primarily  to the  initial  start  up  costs
associated  with  developing Cymer's foreign  field  service
locations in Europe, Singapore, Korea and Taiwan, which were
incurred  in 1998.  As a percentage of total revenues,  such
expenses  increased  from 7.7% to  8.4%  in  the  respective
periods due to lower sales volumes.

     General     and    Administrative.      General     and
administrative expenses increased 18% from $5.1 million  for
the  six months ended June 30, 1998 to $6.0 million for  the
six  months  ended  June  30, 1999, due  to  the  continuing
business  process  quality  development  efforts  and  other
required general and administrative support activities.   As
a percentage of total revenues, such expenses increased from
4.9% to 7.1% from period to period.

     Other  Income  (Expense)  - net.    Net  other  expense
decreased  from $2.5 million for the six months  ended  June
30,  1998 to $2.2 million for the six months ended June  30,
1999,  primarily  due to larger foreign exchange  losses  in
1998  versus  1999, offset by a decrease in interest  income
associated  with  lower  market  yields  in  1999   on   the
investment of excess cash.  Foreign currency exchange losses
totaled  $752,000, interest income totaled $3.9 million and interest
<PAGE>

expense totaled $5.6 million for  the  six  months ended
June  30,  1998,  compared to  an  exchange  loss  of
$74,000, interest income of $3.4 million and $5.6 million in
interest expense for the six months ended June 30, 1999.

     Income  Tax Provision.  The provision for income  taxes
for  the  six  months ended June 30, 1998  of  $1.8  million
reflects an annual effective tax rate of 30% as Cymer had no
additional  loss  or  valuation  allowance  carryovers  from
previous  periods to be applied in 1998.  There  is  no  tax
provision  estimated for 1999 primarily due to tax  benefits
expected from foreign sales.

LIQUIDITY AND CAPITAL RESOURCES

     Since   inception,  Cymer  has  funded  its  operations
primarily  through  the private sale  of  equity  securities
totaling   approximately  $27.1  million,  borrowings   from
certain   of  its  investors  for  bridge  financing,   bank
borrowings, its September 18, 1996 initial public  offering,
which  resulted  in net proceeds to Cymer  of  approximately
$29.7  million,  the public offering on December  12,  1996,
which  resulted  in  net  proceeds  of  approximately  $50.0
million,  and raising a net $167.3 million in a  convertible
subordinated note offering on August 6, 1997.   As  of  June
30,  1999, Cymer had approximately $75.6 million in cash and
cash  equivalents, $71.0 million in short-term  investments,
$18.3  million in long-term investments, $201.1  million  in
working capital and $15.5 million in bank debt.

     Net    cash   used   for   operating   activities   was
approximately $5.4 million for the six months ended June 30,
1998  and net cash provided by operating activities was $4.3
million for the six months ended June 30, 1999.  The  change
from  cash used for to cash provided by operating activities
for  the  six  months  ended June  30,  1998  and  1999  was
primarily  attributable to a significantly smaller  increase
in  inventory from period to period, an increase in accounts
payable and other accrued liabilities, offset by an increase
in accounts receivable from 1998 to 1999.

     Net   cash   provided  by  investing   activities   was
approximately  $18.4 million for the six months  ended  June
30,  1998  as  compared to $9.5 million for the  six  months
ended  June  30, 1999.  The net cash provided  by  investing
activities  during the first six months  of  1998  and  1999
primarily   reflects  continued  property  acquisitions   to
accommodate  the business development and focus,  offset  by
the  timing of short and long term investments maturing  and
being reinvested during the period.

     Net   cash   provided  by  financing   activities   was
approximately $5.6 million for the six months ended June 30,
1998,  and  $7.5 million for the six months ended  June  30,
1999.   For  the  six  months ended  June  30,  1998,  Cymer
borrowed  $10.0 on its line of credit in Japan,  received  a
net  $1.1  million  through the issuance  of  common  stock,
offset by a treasury stock repurchase of $5.3 million.   The
net cash provided by financing activities for the six months
ended  June  30,  1999  was primarily attributable  to  $4.7
million in bank borrowings in Japan and the receipt of  $3.0
million  upon  the  issuance of  common  stock  due  to  the
exercising of stock options by Cymer employees.

     Cymer requires substantial working capital to fund  its
business,  particularly to finance inventories and  accounts
receivable  and  for capital expenditures.   Cymer's  future
capital  requirements will depend on many factors, including
the  rate of Cymer's manufacturing expansion, the timing and
extent  of  spending to support product development  efforts
and  expansion of sales and marketing and field service  and
support,  the  timing of introductions of new  products  and
enhancements  to  existing products,  and  overall  industry
conditions.  Cymer  believes that it has sufficient  working
capital and available bank credit to sustain operations  and
provide  for  the  future expansion of its  business  during
1999.

<PAGE>

Recent Accounting Pronouncements

     In June 1998, the FASB issued SFAS No. 133, "Accounting
for  Derivative  Instruments and Hedging Activities."   SFAS
No.  133 establishes accounting and reporting standards  for
derivative instruments and for hedging activities.  The  new
standard will become effective for Cymer for the year ending
December 31, 2000.  Interim reporting for this standard will
be  required.  Cymer has not yet assessed the effect of this
standard on Cymer's current reporting and disclosures.

Impact of Year 2000 Issue

      The Year 2000 issue is primarily the result of
computer systems using a two-digit format rather than  four-
digits to indicate the year.  Such computer systems will  be
unable  to differentiate between the year 1900 and the  year
2000,  causing errors and system failures which may  disrupt
the  operations of such systems.  Cymer has been  addressing
this  issue and has been focusing its efforts through a five
step  approach: (1) identification of the systems which  may
be vulnerable to Year 2000 issues; (2) assessment of the impact
on  the systems identified; (3) remediation of non-compliant
systems  and  components and determination of solutions  for
non-compliant   suppliers;  (4)  testing  of   systems   and
components following remediation; and (5) documentation.

      Cymer  is  100%  complete with the  identification  of
systems which may be vulnerable to the Year 2000 issues, and is
100%  complete  with the assessment of the impact  on  these
systems.   The assessment includes factory systems,  desktop
PC's,  fax machines, printers, and common software  packages
in  use  at  Cymer.   In addition, all suppliers  have  been
contacted for their Year 2000 issues and plans, and all new
software licenses include Year 2000 statements.  Remediation
is 100% complete.   The testing  of systems and components was
100% complete  as  of March 31, 1999.

      Cymer has completed the initial phase of working  with
suppliers and customers to verify their Year 2000 readiness as of
June 30, 1999, including obtaining their then-current Year 2000
related public statements on Year 2000 compliance.   Cymer  is
evaluating any issues raised in this process in terms of any
special  actions  Cymer  should consider  taking  to  reduce
related  risks,  including further follow up with  suppliers
and  customers as the year 2000 approaches.  These and other
issues will be included in Cymer's Year 2000 ongoing action plan.

     Cymer's Year 2000 contingency plan consists of the following:
(1)  offsite  backup of all critical data and software;  (2)
multiple   redundant  suppliers  for   all   critical   data
communication and telecommunications services; (3) readiness
planning  for  support  personnel; (4)  outside  consultants
identified   for   rapid  availability;  and   (5)   ongoing
evaluation and planning for contingencies.

     Cymer's current laser systems are not Year 2000 compliant per
accepted industry standards.  The laser systems currently require
manual  intervention to reset the internal clock to  account
for leap year in the year 2000.  Cymer's customers have been
informed  of the non-compliance and have been provided  with
instructions  for the manual correction of the date  between
January 1 and February 28, 2000.  Not resetting the internal
clock would have no material impact on the operation of  the
laser  system.   Cymer  has  demonstrated  and  tested   the
software  fix  to  bring the lasers  to  fully accepted industry
standards for Year 2000 compliance.  These tests have been
completed  and  Cymer  is currently making the upgrade available
to customers.

     Based on the assessment efforts to date, Cymer does not
believe that the year 2000  will have a  material  adverse
effect  on  Cymer's  consolidated  financial  condition  and
results  of  operations.*  The cost of Year 2000 compliance  is
estimated  at  approximately $250,000 of which

<PAGE>
approximately $150,000  has been incurred.*  However, Cymer's beliefs
and expectations   are   based  on  certain   assumptions   that
ultimately  may prove to be inaccurate.  Aside  from  global
infrastructure Year 2000 requirements, Cymer's worst case scenario
may  include:  supplier and customer purchase, delivery  and
payment delays; server and desktop computer failures; one or
more  critical software systems failures, including embedded
control  systems;  and failure of one or more  internal  and
external   communications  systems   such   as   telephones,
networks,   voice  mail  and  paging  systems.    Additional
potential sources of risk include (a) the inability  of  key
suppliers  and  customers to  be Year 2000 compliant,  (b)  the
disruption of global transportation channels as a result  of
general  system  failures, and (c)  an  overall  failure  of
necessary    infrastructure   such   as   electricity    and
telecommunications.  If any of these were  to  occur,  there
could  be  a material adverse effect on Cymer's consolidated
financial condition and results of operations.

<PAGE>

RISK FACTORS

Likely Fluctuations in Operating Results

     Certain Factors Causing Fluctuations

     Cymer's  operating results have in the past  fluctuated
and  are  likely  in the future to fluctuate  significantly.
These fluctuations depend on a variety of factors which  may
include:

     *   the demand for semiconductors in general and,  in
         particular, for leading edge devices with smaller circuit
         geometries;
     *   the rate at which semiconductor manufacturers take
         delivery of photolithography tools from Cymer's customers;
     *   cyclicality  in  the  market  for  semiconductor
         manufacturing equipment;
     *   the timing and size of orders from Cymer's small base
         of customers;
     *   the ability of Cymer to manufacture, test and deliver
         laser systems in a timely and cost effective manner;
     *   the mix of  laser models, replacement parts and service
         revenues;
     *   the ability of Cymer's competitors to obtain orders
         from Cymer's customers;
     *   the entry of new competitors into the market for DUV
         photolithography illumination sources;
     *   the ability of Cymer to manage its costs as it supplies
         its products in higher volumes; and
     *   Cymer's ability to effectively manage its exposure to
         foreign currency exchange rate fluctuations, principally
         with respect to the Japanese yen (in which sales by Cymer's
         Japanese subsidiary are denominated).

In   addition,   as  customers  become  more  efficient   at
integrating   Cymer's  lasers  into  their  photolithography
tools,  reductions in customer laser inventories may  affect
Cymer's operating results.

     Timing of Revenue Recognition

     Cymer has historically derived a substantial portion of
its  quarterly  and  annual revenues  from  the  sale  of  a
relatively  small  number  of systems.   As  a  result,  the
precise  timing of the recognition of revenue from an  order
for  a small number of systems can have a significant impact
on  Cymer's  total  revenues and  operating  results  for  a
particular period.  If customers cancel or reschedule orders
for a small number of systems or if Cymer cannot fill orders
in  time  to  recognize revenue during a particular  period,
this  could  adversely affect Cymer's operating results  for
that   period.  For  example,  unanticipated  manufacturing,
testing,  shipping or product acceptance delays could  cause
such cancellations, rescheduling or inability to fill orders
promptly.

     Fixed Expenses

     Cymer's  expense levels are based, in  large  part,  on
Cymer's  expectations  as  to  future  revenues.  Therefore,
Cymer's expenses are relatively fixed in the short term.  If
revenue   levels   fall  below  expectations,   this   would
disproportionately and adversely affect net  income.   Cymer
cannot forecast the impact of these and other factors on its
revenues and operating results in any future period with any
degree of certainty.

     Semiconductor Manufacturer Demand

     Cymer believes that semiconductor manufacturers are currently
developing capability for production  and  pilot production of 0.25um,
0.18um and below devices.  Cymer  also believes  that

<PAGE>

the efforts to develop such  capability  are driving  present  demand
for  its  laser  systems  for  DUV photolithography  tools.   Once
semiconductor  manufacturers have acquired such capability, their demand
for Cymer's  DUV photolithography tools will depend on whether they  want
to expand  their  capacity to manufacture such  devices.   This will
in  turn  depend on whether their sales forecasts  and manufacturing
process yields justify  such  an  investment. Cymer  currently  expects
that demand  for  its  DUV  laser systems  will depend on such demand and
process  development constraints of the semiconductor manufacturers.

     Industry Conditions

      Recently,  Cymer  has increased some  aspects  of  its
operations   in  response  to  anticipated  improvement   in
industry   conditions.    Should  these   improvements   not
materialize, the planned increases in spending may delay the
return to profitable operations.

      Due  to  the foregoing, as well as other unanticipated
factors,  Cymer's operating results will likely  fall  below
the  expectations of public market analysts or investors  in
some  future  quarter  or quarters.  Such  failure  to  meet
operating  result  expectations would  materially  adversely
affect the price of Cymer's Common Stock.

Dependence on Semiconductor Industry

       Cymer derives substantially all of its revenues  from
photolithography  tool manufacturers. Photolithography  tool
manufacturers  depend  in  turn  on  the  demand  for  their
products  from  semiconductor  manufacturers.  Semiconductor
manufacturers depend on the demand from manufacturers of end-
products   or   systems   that  use   semiconductors.    The
semiconductor   industry   is  highly   cyclical   and   has
historically experienced periodic and significant downturns.
These downturns have often had a severe effect on the demand
for   semiconductor   manufacturing   equipment,   including
photolithography  tools.  Cymer believes that  downturns  in
the  semiconductor manufacturing industry will  periodically
occur,  resulting  in  periodic  decreases  in  demand   for
semiconductor  manufacturing equipment.  In addition,  Cymer
believes  that in a future downturn Cymer's need to continue
investment  in  research and development,  and  to  maintain
extensive  ongoing  customer service and support  capability
will constrain its ability to reduce expenses.  Accordingly,
downturns  in  the  semiconductor  industry  could  have   a
material  adverse  effect  on  Cymer's  business,  financial
condition and results of operations.

Dependence on Small Number of Customers

     A small number of manufacturers of DUV photolithography
tools  constitute Cymer's primary customer base.  Four large
firms, ASM Lithography, Canon, Nikon and SVG Lithography  (a
subsidiary  of  Silicon Valley Group,  Inc.),  dominate  the
photolithography tool business. Collectively, they accounted
for approximately 94%, 94% and 82% of Cymer's total revenues
in  1997,  1998,  and the six months ended  June  30,  1999,
respectively. Individually, sales to ASM Lithography, Canon,
Nikon  and SVG Lithography accounted for approximately  37%,
20%, 31% and 6%, respectively, of total revenues in 1998 and
41%,  19%, 16%, 6%, respectively, of total revenues for  the
six months ended June 30, 1999.  Cymer expects that sales of
its  systems to these customers will continue to account for
substantially all of its revenues in the foreseeable future.
None  of  Cymer's  customers are  obligated  to  purchase  a
minimum  number  of  Cymer's  products.   The  loss  of  any
significant  business from any one of these customers  or  a
significant  reduction  in orders  from  any  one  of  these
customers,  would have a material adverse effect on  Cymer's
business,  financial  condition and results  of  operations.
Reductions  caused  by  changes in a customer's  competitive
position,  a decision to purchase illumination sources  from
other suppliers, or economic conditions in the semiconductor
and photolithography tool industries, could all cause such a
loss of business or reduction  in orders.
<PAGE>

Need to Manage a Changing Business

     Cymer has recently dramatically expanded and contracted
the  scope of its operations and the number of employees  in
most  of its functional areas.  For example, Cymer increased
the number of its employees from 136 at December 31, 1995 to
336  at  December 31, 1996 to 809 at December 31,  1997  and
then decreased that number to 703 at December 31, 1998.   As
of  June  30,  1999,  Cymer  had 727  employees.  Cymer  has
installed  new management information systems and  has  also
substantially  expanded  its  facilities  and  manufacturing
capacity.   For example, since December 31, 1996  Cymer  has
occupied  three additional buildings covering  approximately
187,000  square feet. In a cyclical environment of  dramatic
growth or contraction, Cymer will need:

     *    to continue close management of these areas, and
     *    to improve its management, operational and financial
          systems, including
          *   accounting and other internal management systems,
          *   quality control,
          *   delivery and
          *   field service and customer support capabilities.

Cymer  must  also  effectively manage its inventory  levels,
including   assessing  and  managing  excess  and   obsolete
inventories associated with the changing environment and new
product  introductions. Cymer will need to  attract,  train,
retain  and  manage  key  technical personnel  in  order  to
support Cymer's growth and/or contraction.  Cymer will  also
need  to  manage  effectively its international  operations,
including:

     *    the operations of its subsidiaries in Japan, Korea,
          Taiwan, Singapore and the    Netherlands,
     *    its field service and support presence in Asia and
          Europe and
     *    its relationship with Seiko as a manufacturer of its
          photolithography lasers.

Cymer must also effect timely deliveries of its products and
maintain the product quality and reliability required by its
customers.  Any failure to effectively manage Cymer's growth
or  contraction  would materially adversely  affect  Cymer's
financial condition and results of operations.

Dependence on Single Product Line

      Cymer's only product line is excimer lasers ("KrF, ArF
and  F2  laser  systems"). The primary  market  for  excimer
lasers  is  for  use in DUV photolithography  equipment  for
manufacturing deep-submicron semiconductor devices.   Demand
for  Cymer's  products will depend in part on  the  rate  at
which  semiconductor manufacturers adopt excimer  lasers  as
the  illumination  source for their photolithography  tools.
Impediments to such adoption include:

  *     instability  of photoresists used  in  advanced  DUV
        photolithography and
  *     potential shortages of specialized materials used in
        DUV optics.

There can be no assurance that such impediments can or  will
be  overcome. In any event, such impediments may  materially
reduce  the demand for Cymer's products. Further, if Cymer's
customers experience reduced demand for DUV photolithography
tools, or if Cymer's competitors are successful in obtaining
significant  orders from such customers,  Cymer's  financial
condition  and  results of operations  would  be  materially
adversely affected.
<PAGE>

Competition

     Lambda-Physik, Komatsu and Ushio

     Cymer  currently has three significant  competitors  in
the  market  for  excimer laser systems for photolithography
applications:

     *    Lambda-Physik,
     *    Komatsu, Ltd. ("Komatsu") and
     *    Ushio.

All of these companies:

     *    are larger than Cymer,
     *    have access to greater financial, technical and other
          resources than does Cymer, and
     *    are located in closer proximity to Cymer's customers
          than is Cymer.

Cymer   believes   that  Lambda-Physik   and   Komatsu   are
aggressively  seeking  to  gain  larger  positions  in  this
market.   Cymer  believes  that  its  customers  have   each
purchased  one or more products offered by these competitors
and  that  its  customers will continue to actively  qualify
these  competitors'  lasers in their  search  for  a  second
source.  Cymer believes that Komatsu in particular has  been
qualified  for  production use by chipmakers  in  Japan  and
elsewhere.   Cymer could lose market share  and  its  growth
could  slow  or  even  decline as  competitors  gain  market
acceptances.

     Other Technologies

     In the future, Cymer will likely experience competition
from  other technologies, such as EUV and scalpel processes.
To remain competitive, Cymer believes that it will need to:

     *    manufacture and deliver products to customers on a
          timely basis and without significant defects, and
     *    maintain a high level of investment in research and
          development and in sales and marketing.

Cymer  might  not have sufficient resources to  continue  to
make  the  investments necessary to maintain its competitive
position.

     Small and Immature Market for Excimer Lasers

     In  addition,  the market for excimer lasers  is  still
small  and  immature.  Larger competitors with substantially
greater  financial resources, including other  manufacturers
of industrial lasers, might attempt to enter the market.

     Cymer  might  not  remain competitive.   A  failure  to
remain  competitive would have a material adverse effect  on
Cymer's   business,  financial  condition  and  results   of
operations.

Risk  of  Excessive  Inventory Buildups by  Photolithography
Tool Manufacturers

        Photolithography   tool   manufacturers   constitute
substantially  all  of  Cymer's customers.  Photolithography tool
manufacturers   sell  their  systems in turn to semiconductor
manufacturers.  Market conditions in the industry can cause
Cymer's customers to reduce their  orders for new laser systems
as they try to manage their inventories to appropriate levels which
better reflect their expected  sales  forecasts.   Cymer  is  working
with its customers to better understand end user demand for DUV photo-
lithography tools.  However, there can be no assurance that Cymer will be
<PAGE>

successful in this regard, or  that  its customers will not build excessive
laser  inventories.  Excessive  customer  laser inventories  could  result
in a material  decline in Cymer's revenues and operating  results in
future  periods  as such inventories  are  brought  into balance.

Dependence on Key Suppliers

         Cymer   obtains  certain  of  the  components   and
subassemblies  included  in  its  products  from  a   single
supplier  or  a limited group of suppliers.  In  particular,
there  are  no  alternative  sources  for  certain  of  such
components  and  subassemblies,  including  certain  optical
components  used in Cymer's lasers.  In addition,  Cymer  is
increasingly   outsourcing  the   manufacture   of   various
subassemblies.   To  date  Cymer has  been  able  to  obtain
adequate supplies of the components and subassemblies  in  a
timely  manner from existing sources.  However, due  to  the
nature  of  Cymer's  product development  requirements,  key
suppliers   often   need  to  rapidly  advance   their   own
technologies  in  order  to  support  Cymer's  new   product
introduction schedule.  These suppliers may or  may  not  be
able  to  satisfy Cymer's schedule requirements in providing
new  modules  and subassemblies to Cymer.  If  Cymer  cannot
obtain  sufficient quantities of such materials,  components
or  subassemblies,  or if such items  do  not  meet  Cymer's
quality standards, delays or reductions in product shipments
could  have  a material adverse effect on Cymer's  business,
financial condition and results of operations.

Limited Production Use of Excimer Lasers

     The  semiconductor industry is at the early  stages  of
adopting  the excimer laser technology into photolithography
applications.   Cymer's products might not  meet  production
specifications or cost of operation requirements  over  time
when  subjected  to  prolonged and  intense  use  in  volume
production in semiconductor manufacturing processes. If  any
semiconductor  manufacturer cannot successfully  achieve  or
sustain  volume  production using  Cymer's  lasers,  Cymer's
reputation  with semiconductor manufacturers or the  limited
number  of  photolithography  tool  manufacturers  could  be
damaged.  This  would  have  a material  adverse  effect  on
Cymer's   business,  financial  condition  and  results   of
operations.

Development of Field Service and Support Organization

     Cymer  believes  that  the need  to  provide  fast  and
responsive service to the semiconductor manufacturers  using
its  lasers is critical.  Cymer cannot depend solely on  its
direct   customers  to  provide  this  specialized  service.
Therefore,  Cymer  believes it is  essential  to  establish,
through  trained  third-party sources  or  through  its  own
personnel, a rapid response capability to service its lasers
throughout  the  world.  Accordingly, Cymer has  an  ongoing
effort  to develop its direct support infrastructure in  the
United States,  Japan, Europe, Korea, Singapore, Taiwan  and
Southeast  Asia.   This development entails  recruiting  and
training  qualified  field service  personnel  and  building
effective and highly trained organizations that can  provide
service  to customers in various countries in their assigned
regions.  Cymer has historically experienced difficulties in
effectively  training field service personnel.  Cymer  might
not  be  able  to attract and train qualified  personnel  to
establish these operations successfully.  Further, the costs
of  such  operations  might  be  excessive.   A  failure  to
implement  this  plan  effectively  could  have  a  material
adverse effect on Cymer's business, financial condition  and
results of operations.

Rapid Technological Change; New Product Introductions

     Semiconductor manufacturing equipment and processes are
subject to rapid technological change.  Cymer believes  that
its future success will depend in part upon its ability to:

     *   continue to enhance its excimer laser products and
         their process capabilities, and
     *   develop and manufacture new products with improved
         capabilities.
<PAGE>

In order to enhance and improve its products and develop new
products,  among other things, Cymer must work closely  with
its  customers,  particularly  in  the  product  development
stage,   to   integrate  its  lasers  with  its   customers'
photolithography tools.  Future technologies,  such  as  EUV
and  scalpel  processes, might render Cymer's excimer  laser
products  obsolete.  Further, Cymer might  not  be  able  to
develop  and introduce new products or enhancements  to  its
existing  products  and processes in a  timely  manner  that
satisfy  customer  needs or achieve market  acceptance.  The
failure  to do so could materially adversely affect  Cymer's
business, financial condition and results of operations.

Dependence on Key Personnel

     Cymer  is highly dependent on the services of a  number
of key employees in various areas, including:

     *    engineering,
     *    research and development,
     *    sales and marketing, and
     *    manufacturing.

In  particular,  there are a limited number  of  experts  in
excimer  laser technology. There is intense competition  for
such  personnel, as well as for the highly-skilled  hardware
and  software engineers Cymer requires.  Cymer  has  in  the
past experienced, and continues to experience, difficulty in
hiring   personnel,  including  experts  in  excimer   laser
technology.   Cymer  believes that, to a large  extent,  its
future success will depend upon:

     *    the continued services of its engineering, research and
          development, sales and marketing and manufacturing and
          service personnel, and
     *    its ability to attract, train and retain highly skilled
          personnel in each of these areas.

Cymer  does not have employment agreements with most of  its
employees,  and  Cymer might not be able to retain  its  key
employees.   The failure of Cymer to hire, train and  retain
such  personnel  could  have a material  adverse  effect  on
Cymer's   business,  financial  condition  and  results   of
operations.

Uncertainty  Regarding Patents and Protection of Proprietary Technology

     Cymer Patents

     Cymer believes that the success of its business depends
more  on  such  factors as the technical  expertise  of  its
employees, as well as their innovative skills and  marketing
and customer relations ability, than on patents, copyrights,
trade   secrets  and  other  intellectual  property  rights.
Nevertheless,  the success of Cymer may depend  in  part  on
patents.  As of  June 30, 1999, Cymer owned 46 United States
patents  covering  certain aspects of technology  associated
with  excimer lasers.  Such patents will expire  at  various
times  during  the period from January 2008  to    September
2017.   As of June 30, 1999, Cymer had also applied  for  65
additional  patents in the United States, 10 of  which  have
been  allowed.  As of June 30, 1999, Cymer owned 15  foreign
patents  and  had filed 177 patent applications  in  various
foreign countries.

     Cymer's  pending  patent applications  and  any  future
applications  might not be approved. Cymer's  patents  might
not   provide  Cymer  with  competitive  advantages.   Third
parties might challenge Cymer's patents.  In addition, third
parties'  patents  might have an adverse effect  on  Cymer's ability
to do business.  In this regard,  due  to  cost constraints, Cymer
did not begin filing for patents in Japan or other countries
with respect to inventions covered by its United States
<PAGE>

patents and patent applications  until  1993.  Therefore, Cymer
has  lost  the  right  to  seek   patent protection in those
countries for certain of its inventions.  Additionally,  because
foreign  patents may afford less protection under foreign law than
is available under  United States  patent law, any such patents issued
to Cymer might not  adequately  protect  Cymer's technology.   Furthermore,
third  parties might independently develop similar products, duplicate
Cymer's products or, to the extent patents  are issued to Cymer, design
around the patents issued to Cymer.

     Competitive Patents

     Others may have filed and in the future may file patent
applications  that  are  similar or identical  to  those  of
Cymer.  To  determine the priority of inventions, Cymer  may
have to participate in interference proceedings declared  by
the   United  States  Patent  and  Trademark  Office.   Such
interference proceedings could result in substantial cost to
Cymer.   Such  third  party patent applications  might  have
priority over patent applications filed by Cymer.

     Other Forms of Protection

     Cymer also relies upon:

     *    trade secret protection,
     *    employee nondisclosure agreements,
     *    third-party nondisclosure agreements, and
     *    other intellectual property protection methods

to protect  its  confidential and proprietary  information. Despite these
efforts, third parties might:

     *     independently  develop  substantially  equivalent
           proprietary information and techniques,
     *    otherwise gain access to Cymer's trade secrets, or
     *    disclose such technology.
Cymer might not be able to meaningfully protect its trade secrets.

      Possible  Claims to Ownership of Cymer's  Intellectual Property

      Cymer has in the past funded a significant portion  of
its  research and development expenses from outside research
and  development revenues.  Cymer has received such revenues
from  photolithography tool manufacturers and from SEMATECH,
a  semiconductor industry consortium, in connection with the
design and development of specific products. Cymer currently
funds  a  small portion of its development expenses  through
SEMATECH.     Although     Cymer's     arrangements     with
photolithography  tool manufacturers and  SEMATECH  seek  to
clarify  the ownership of the intellectual property  arising
from  research and development services performed by  Cymer,
disputes over the ownership or rights to use or market  such
intellectual  property might arise between  Cymer  and  such
parties.   Any such dispute could result in restrictions  on
Cymer's  ability  to market its products and  could  have  a
material  adverse  effect  on  Cymer's  business,  financial
condition and results of operations.

     Patent Infringement

     Third parties have in the past notified, and may in the
future  notify,  Cymer  that  it  may  be  infringing  their
intellectual  property  rights.   Komatsu,  one  of  Cymer's
competitors,  has  notified Cymer's  Japanese  manufacturing
partner,  Seiko  Instruments, Inc. ("Seiko"),  that  certain
aspects  of  Cymer's lasers might infringe  certain  patents
that  have  been  issued to Komatsu in Japan.   Komatsu  has
notified  Seiko that Komatsu intends to enforce  its  rights
under the Komatsu patents against Seiko if Seiko engages  in
manufacturing activities for Cymer.  In connection with  its
manufacturing  agreement with Seiko,  Cymer  has  agreed  to
indemnify   Seiko   against  such   claims

<PAGE>

under   certain circumstances. Attorneys representing Komatsu are
currently challenging  one of Cymer's U.S. patents in the U.S.  Patent
Office.  In addition, Cymer has engaged in discussions  with
Komatsu  with respect to the Komatsu patents, in the  course
of  which  Komatsu has also identified to Cymer a number  of
additional patents that Komatsu asserts may be infringed  by
Cymer  and  Seiko.   Cymer,  in consultation  with  Japanese
patent counsel, has initiated oppositions to certain Komatsu
patents and  the applications in the Japanese Patent Office.
Litigation  might  ensue with respect to Komatsu's  patents.
Cymer  and  Seiko might not ultimately prevail in  any  such
litigation.  Komatsu might assert infringement claims  under
additional patents.

      Any  patent litigation would, at a minimum, be costly.
Litigation  could also divert the efforts and  attention  of
Cymer's management and technical personnel.  Both could have
a  material  adverse  effect on Cymer's business,  financial
condition  and results of operations.  Furthermore,  in  the
future third parties might assert other infringement claims,
and customers and end users of Cymer's products might assert
other claims for indemnification resulting from infringement
claims.   Such  assertions,  if proven  to  be  true,  might
materially  adversely  affect  Cymer's  business,  financial
condition and results of operations. If any such claims  are
asserted  against Cymer, Cymer may seek to obtain a  license
under   the  third  party's  intellectual  property  rights.
However, such a license might not be available on reasonable
terms or at all.  Cymer could decide, in the alternative, to
resort  to litigation to challenge such claims or to  design
around  the  patented  technology.  Such  actions  could  be
costly and would divert the efforts and attention of Cymer's
management  and technical personnel, which would  materially
adversely  affect Cymer's business, financial condition  and
results of operations.

     Trademark

      Cymer has registered the trademark CYMER in the United
States and certain other countries and is seeking additional
registrations  in  certain countries.   Although  Cymer  has
recently received a positive "Decision for Registration"  on
its CYMER trademark in Japan, Cymer might be subjected to an
action for trademark infringement in other countries,  which
could  be  costly to defend.  If successful, such an  action
would   require  Cymer  to  cease  use  of  the  mark   and,
potentially, to pay damages.

Risks Associated with Manufacturing in Japan

     Cymer  has  qualified  Seiko of  Japan  as  a  contract
manufacturer  of its photolithography lasers.    Komatsu,  a
competitor of Cymer, has advised Seiko that certain  aspects
of  Cymer's lasers might infringe certain patents that  have
been  issued to Komatsu in Japan.  Komatsu has advised Seiko
it  intends to enforce its rights under such patents against
Seiko  if  Seiko  engages  in manufacturing  activities  for
Cymer.  In the event that, notwithstanding its manufacturing
agreement with Cymer, Seiko should determine not to continue
manufacturing  Cymer's  products  until  resolution  of  the
matter  with  Komatsu, Cymer's ability  to  meet  any  heavy
demand  for  its  products  could  be  materially  adversely
affected.    See  --  "Uncertainty  Regarding  Patents   and
Protection of Proprietary Technology."

Risks of International Sales and Operations

     Significant International Trade

     Cymer  derived approximately 89%,  88% and 85%  of  its
revenues  in  1997, 1998 and the six months ended  June  30,
1999,  respectively,  from  customers  located  outside  the
United  States.  Because a significant majority  of  Cymer's
principal   customers  are  located  in   other   countries,
particularly  Asia,  Cymer  anticipates  that  international
sales will continue to account for a significant portion  of
its  revenues.*  In order to support its overseas customers,
Cymer:
<PAGE>

     *     maintains  subsidiaries in Japan, Korea,  Taiwan,
           Singapore and the Netherlands,
     *     is further developing its field service and support
           operations worldwide, and
     *     will continue to work with Seiko as a manufacturer of
           its products in Japan.*

Cymer   might  not  be  able  to  manage  these   operations
effectively.  Cymer's investment in these  activities  might
not  enable  it  to  compete successfully  in  international
markets  or  to meet the service and support  needs  of  its
customers.  Additionally, a significant portion  of  Cymer's
sales  and  operations could be subject  to  certain  risks,
including:

     *    tariffs and other barriers,
     *    difficulties  in  staffing and  managing  foreign
          subsidiary and branch operations,
     *    currency exchange risks and exchange controls,
     *    potentially adverse tax consequences, and
     *    the possibility of difficulty in accounts receivable
          collection.

Because many of Cymer's principal customers, as well as many
of  the  end-users of Cymer's laser systems, are located  in
Asia, the recent economic problems and currency fluctuations
affecting  that region could intensify Cymer's international
risk.  Further, while Cymer has experienced no difficulty to
date  in complying with United States export controls, these
rules  could change in the future and make it more difficult
or  impossible for Cymer to export its products  to  various
countries.  These  factors could  have  a  material  adverse
effect  on Cymer's business, financial condition and results
of operations.

     Currency Fluctuations

       Sales  by  Cymer  to  its  Japanese  subsidiary   are
denominated  in  dollars, while sales by the  subsidiary  to
customers in Japan are denominated in yen.  This means  that
Cymer's results of operations show some fluctuation based on
the  value  of  the  Japanese yen against the  U.S.  dollar.
Cymer's  Japanese  subsidiary manages its exposure  to  such
fluctuations  by  entering  into foreign  currency  exchange
contracts  to  hedge  its purchase commitments.   Management
will  continue  to  monitor  Cymer's  exposure  to  currency
fluctuations,  and, when appropriate, use financial  hedging
techniques  to  minimize the effect of  these  fluctuations.
However,  exchange rate fluctuations might have  a  material
adverse effect on Cymer's results of operations or financial
condition.   In  the future, Cymer might need  to  sell  its
products   in  other  currencies,  which  would   make   the
management  of  currency  fluctuations  more  difficult  and
expose Cymer to greater risks in this regard.*

     Foreign Regulations

      Numerous  foreign government standards and regulations
apply  to Cymer's products.  These standards and regulations
are continually being amended.  Although Cymer endeavors  to
meet  foreign  technical and regulatory  standards,  Cymer's
products   might  not  continue  to  comply   with   foreign
government standards and regulations, or changes thereto. It
might  not  be  cost  effective for Cymer  to  redesign  its
products to comply with such standards and regulations.  The
inability of Cymer to design or redesign products to  comply
with  foreign standards could have a material adverse effect
on  Cymer's  business, financial condition  and  results  of
operations.

Environmental and Other Government Regulations

     Federal,  state  and local regulations  impose  various
controls on the storage, handling, discharge and disposal of
substances used in Cymer's manufacturing process and on  the
facility leased by Cymer. Cymer believes that its activities
conform  to  present governmental regulations applicable  to
its   operations   and   its  current   facilities.    These
regulations  include  those related to  environmental,  land use,
public utility utilization and fire code matters. Such governmental

<PAGE>

regulations might in the future impose the need for   additional
capital  equipment   or   other   process requirements  upon Cymer.
They might also restrict  Cymer's ability to expand its operations.
The (1) adoption of  such  measures,  or (2) failure by Cymer to
comply with applicable environmental  and land use regulations or to
restrict the discharge of hazardous substances, could subject Cymer to
future liability or could cause its manufacturing operations
to be curtailed or suspended.

Risks of Product Liability Claims

     Cymer  faces a significant risk of exposure to  product
liability  claims in the event that the use of its  products
results in personal injury or death.  Cymer might experience
material  product  liability losses in  the  future.   Cymer
maintains   insurance  against  product  liability   claims.
However, such coverage might not continue to be available on
terms acceptable to Cymer.  Such coverage also might not  be
adequate for liabilities actually incurred.  Further, in the
event  that  any of Cymer's products prove to be  defective,
Cymer  may  need  to recall or redesign  such  products.   A
successful  claim  brought  against  Cymer  in   excess   of
available insurance coverage, or any claim or product recall
that results in significant adverse publicity against Cymer,
could  have  a material adverse effect on Cymer's  business,
financial condition and results of operations.

Possible Price Volatility of Common Stock

     The  following  factors  may significantly  affect  the
market price of Cymer's Common Stock:

     *    actual or anticipated fluctuations in Cymer's operating
          results,
     *    announcements of technological innovations,
     *    new  products or new contracts by  Cymer  or  its
          competitors,
     *    developments with respect to patents or proprietary
          rights,
     *    conditions and trends in the laser device and other
          technology industries,
     *    changes in financial estimates by securities analysts,
     *    general market conditions, and
     *    other factors.

In  addition, the stock market has experienced extreme price
and  volume fluctuations that have particularly affected the
market  price  for  many  high technology  companies.   Such
fluctuations  have  in  some cases  been  unrelated  to  the
operating  performance  of these  companies.   Severe  price
fluctuations  in  a  company's stock  have  frequently  been
followed  by  securities litigation.  Cymer is currently  in
the  process  of  defending such  an  action  (see  -  Legal
Matters).   Such litigation can result in substantial  costs
and a diversion of management's attention and resources.

Legal Matters

     Cymer has been named as a defendant in several putative
shareholder  class  action  lawsuits  which  were  filed  in
September  and October, 1998 in the U.S. District Court  for
the  Southern  District  of  California.  Certain  executive
officers   and  directors  of  Cymer  are  also   named   as
defendants.  The plaintiffs purport to represent a class  of
all persons who purchased Cymer's Common Stock between April
24,  1997 and September 26, 1997 (the "Class Period").   The
complaints allege claims under the federal securities  laws.
The  plaintiffs  allege that Cymer and the other  defendants
made   various  material  misrepresentations  and  omissions
during the Class Period.  The complaints do not specify  the
amount   of  damages  sought.   The  complaints  have   been
consolidated into a single action and a class representative
has  been  appointed  by the court. A  consolidated  amended
complaint  is  due  to  be  filed  in  early  August,  1999.
Discovery has not yet commenced.  Cymer believes that it has
good defenses to the claims alleged in the lawsuits and will
defend itself vigorously against these actions.  The defense
of  these  actions  may  cause some  disruption  in  Cymer's
operations  and  may  from time to time distract  management
from  day-to-day operations. The ultimate outcome  of  these
actions  cannot  be presently

<PAGE>

determined.   Accordingly, no provision  for  any liability or
loss that may  result  from adjudication  or  settlement thereof
has been made in the accompanying consolidated financial statements.

Anti-Takeover  Effect of Nevada Law and  Charter  and  Bylaw
Provisions; Availability of Preferred Stock for Issuance

     Nevada  law  and Cymer's Articles of Incorporation  and
Bylaws  contain  provisions that could  discourage  a  proxy
contest  or  make  more  difficult  the  acquisition  of   a
substantial block of Cymer's Common Stock.  In addition, the
Board   of   Directors  is  authorized  to  issue,   without
shareholder  approval, up to 5,000,000 shares  of  Preferred
Stock.   Such  shares of Preferred Stock  may  have  voting,
conversion  and  other rights and preferences  that  may  be
superior  to  those  of  the Common  Stock  and  that  could
adversely  affect the voting power or other  rights  of  the
holders  of Common Stock.  The Board of Directors could  use
the  issuance  of Preferred Stock or of rights  to  purchase
Preferred  Stock  to  discourage an unsolicited  acquisition
proposal.


   Item 3.  Quantitative and Qualitative Disclosures About
                         Market Risk

Foreign Currency Risk

       Cymer  conducts  business  in  several  international
currencies  through its worldwide operations.   Due  to  the
large  volume  of  business  Cymer  manages  in  Japan,  the
Japanese operation poses the greatest foreign currency risk.
Cymer   uses  financial  instruments,  principally   forward
exchange  contracts, in Japan to manage its foreign currency
exposures.   Cymer  does  not enter  into  forward  exchange
contracts for trading purposes.

      Cymer  enters into foreign currency exchange contracts
in  order  to  reduce  the impact of  currency  fluctuations
related  to purchases of Cymer's inventories by Cymer  Japan
for  resale  under firm third-party sales commitments.   Net
gains or losses are recorded on the date the inventories are
received  by  Cymer  Japan (the transaction  date)  and  are
included  in  cost  of  product sales  in  the  consolidated
statements  of  income as the related sale  is  consummated.
Amounts due from/to the bank on contracts not settled as  of
the  transaction  date  are  recorded  as  foreign  exchange
contracts  receivable/payable in  the  consolidated  balance
sheets.

     At June 30, 1999, Cymer had outstanding forward foreign
exchange  contracts to buy  US$33.6 million for 4.0  billion
yen under foreign currency exchange facilities with contract
rates  ranging  from 114.95 yen to 144.05 yen  per  US$  and
various expiration dates through April, 2000.

Investment and Debt Risk

      Cymer  maintains  an  investment portfolio  consisting
primarily   of   government  and  corporate   fixed   income
securities,  certificates of deposit and  commercial  paper.
While  it  is Cymer's general intent to hold such securities
until maturity, management will occasionally sell particular
securities  for  cash  flow  purposes.   Therefore,  Cymer's
investments  are  classified as available-for-sale  and  are
carried  on  the balance sheet at fair value.   Due  to  the
conservative  nature of the investment portfolio,  a  sudden
change in interest rates would not have a material effect on
the value of the portfolio.

      In  August 1997, Cymer issued $172.5 million aggregate
principal  amount of Step-Up Convertible Subordinated  Notes
due  August  6,  2004,  with interest payable  semi-annually
February  6  and  August  6, commencing  February  6,  1998.
Interest  on  the  notes is stated at 3 1/2% per annum  from
August 6, 1997 through August 5, 2000 and at 7 1/4% per annum
from  August  6,  2000  to maturity or  earlier  redemption,
representing  a  yield to maturity accrued at  approximately
5.47%.   The  Notes  are convertible at the  option  of  the
holder  into shares of Common Stock of

<PAGE>

Cymer at any time on or  after  November  5,  1997 and  prior
to  redemption  or maturity, at a conversion rate of 21.2766 shares
per  $1,000 principal  amount  of  Notes, subject  to  adjustment under
certain conditions.  Cymer cannot redeem the Notes prior  to August 9,
2000.  Thereafter, Cymer can redeem the Notes from time  to  time, in
whole or in part, at specified redemption prices.   The  Notes are
unsecured and subordinated  to  all existing  and  future  senior
indebtedness  of  Cymer.   The indenture   governing  the  Notes  does
not  restrict   the incurrence  of senior indebtedness or other indebtedness
by Cymer.   These  Notes  are recorded at  face  value  on  the
balance  sheets.   The  fair value of such  debt,  based  on
quoted  market  prices at June 30, 1999 was $157.8  million.
As of December 31, 1998 and June 30, 1999, $172.5 million in
Convertible Subordinated Notes was outstanding.
<PAGE>

                 PART II.  OTHER INFORMATION


ITEM 4.   Submission of Matters to a Vote of Security Holders

          Cymer  held its Annual Meeting of Stockholders  on
          May  20, 1999.  Out of 27,633,628 shares of common
          stock entitled to vote at such meeting, there were
          present  in person or by proxy 21,417,009  shares.
          At  the Annual Meeting, the stockholders of  Cymer
          approved the following matters:

          (a)  The election of Robert P. Akins, Richard P. Abraham,
            Kenneth M. Deemer, Peter J. Simone, Gerald F. Taylor and Jon
            D. Tompkins as directors of Cymer for the ensuing year and
            until their successors are elected.  The vote for the
            nominated directors was as follows:

            Robert  P. Akins, 21,168,058 votes cast for  and
            248,951  votes  withheld;  Richard  P.  Abraham,
            21,186,013  votes  cast for  and  230,996  votes
            withheld;  Kenneth M. Deemer,  21,163,741  votes
            cast  for and 253,268  votes withheld; Peter  J.
            Simone,  21,166,376 votes cast for  and  250,633
            votes  withheld;  Gerald F.  Taylor,  20,787,973
            votes  cast for and 629,036 votes withheld;  Jon
            D.  Tompkins,  21,194,958  votes  cast  for  and
            222,051 votes withheld;

          (b)  Approval of a 1,250,000 share increase in shares
            issuable under the 1996 Stock Option Plan.  13,409,090 votes
            were cast for approval; 7,856,829 votes were cast against,
            and 151,090 votes abstained, and 6,216,619 Broker Non-Votes.

          (c)  Ratification of the appointment of Deloitte & Touche
            LLP as the independent auditors of Cymer for the year ending
            December 31, 1999.  21,335,705 votes were cast for approval;
            45,179 votes were cast against and 36,125 votes abstained.

ITEM 5.   Other Information

          On  July 23, 1999, Gerald F. Taylor resigned  from
          Cymer's   Board   of  Directors.    Mr.   Taylor's
          resignation was mutually agreed upon by Mr. Taylor
          and  Cymer to avoid any potential future conflicts
          in  the area of post-optical lithography as Mr.
          Taylor    is   continuing   his   senior   advisor
          affiliation with Applied Materials.

ITEM 6.    Exhibits And Reports On Form 8-K

          (a)  Exhibits

          21.1   Subsidiaries of Registrant
          27.1   Financial Data Schedule (submitted for SEC use only)

          (b)  Reports on Forms 8-K.

               None.
<PAGE>

                         SIGNATURES

Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.



                                   CYMER, INC.
                                   (Registrant)


Date:  July 30, 1999          By:    /s/ WILLIAM A. ANGUS, III

                                   William A. Angus, III
                                   Sr. Vice President and
                                   Chief Financial Officer
                                   (Duly Authorized Officer and
                                   Principal Financial Officer)
<PAGE>