2

      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 March 31, 1997

                             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     (619) 451-7300

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 April 29, 1997 was 14,003,320.


                         CYMER, INC.
                              
                          FORM 10-Q
                              
            For the Quarter Ended March 31, 1997
<TABLE>
<CAPTION>
                              
                            INDEX

<S>       <S>                                                          <C>
                                                                       PAGE
PART I.   FINANCIAL INFORMATION                         

ITEM 1.   Consolidated Financial Statements

          Consolidated Balance Sheets as of December 31,               3
           1996 and March 31, 1997

          Consolidated Statements of Operations for the                4
           three months ended March 31, 1996 and 1997

          Consolidated Statements of Cash Flows for the                5
           three months ended March 31, 1996 and 1997

          Notes to Consolidated Financial Statements                   7

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

PART II.  OTHER INFORMATION

ITEM 1.   Legal Proceedings                                            23

ITEM 2.   Changes in Securities                                        23

ITEM 3.   Defaults upon Senior Securities                              23

ITEM 4.   Submission of Matters to a Vote of Security Holders          23

ITEM 5.   Other Information                                            23

ITEM 6.   Exhibits and Reports on Form 8-K                             23

          SIGNATURE PAGE                                               23

</TABLE>
                              

               PART I.  FINANCIAL INFORMATION
                              
CYMER, INC.                                                             
CONSOLIDATED BALANCE SHEETS                                             
(In thousands, except share data)
<TABLE>
<CAPTION>                              
                                               December            March  
                                                  31,               31,
                                                 1996              1997
                                                                 (unaudited)
<S>                                             <C>              <C>

CURRENT ASSETS:                                                         
   Cash and cash equivalents                     $55,405          $32,836 
   Short term investments                         10,449           17,172 
   Accounts receivable - net                      18,833           29,545 
   Foreign exchange contracts receivable           9,317           15,336 
   Inventories                                    15,678           26,007 
   Deferred income taxes                           1,432            1,411 
   Prepaid expenses and other                      1,880            2,509 
          Total current assets                   112,994          124,816 
                                                                        
PROPERTY - net                                    11,707           17,552 
LONG-TERM INVESTMENTS                              1,366            9,028 
OTHER ASSETS                                       3,400            3,397 
     TOTAL ASSETS                               $129,467         $154,793 
                                                                        
LIABILITIES AND STOCKHOLDERS' EQUITY                                    
                                                                        
CURRENT LIABILITIES:                                                    
   Revolving loan and security agreements         $1,750           $1,500 
   Accounts payable                                7,095           15,464 
   Accrued and other liabilities                   8,401           15,352 
   Foreign exchange contracts payable              8,396           13,811 
   Income taxes payable                            2,609            2,996 
          Total current liabilities               28,251           49,123 
                                                                        
OTHER LIABILITIES                                  2,396            2,819 
                                                                        
COMMITMENTS AND CONTINGENCIES (Note 5)                                  
                                                                        
STOCKHOLDERS' EQUITY:                                                   
   Preferred Stock - authorized 5,000,000                               
    shares; $.001 par value,  no shares 
    issued or outstanding                                    
   Common stock - authorized 25,000,000                                 
    shares; $.001 par value, issued and 
    outstanding 13,780,000 and 13,951,000 
    shares                                            14              14
   Paid-in capital                               106,672         106,579 
   Net unrealized loss on investments                                (40) 
   Accumulated deficit                            (7,421)         (3,013) 
   Cumulative translation adjustment                (445)           (689) 
          Total stockholders' equity              98,820         102,851 
                                                                        
     TOTAL LIABILITIES AND STOCKHOLDERS'        
       EQUITY                                   $129,467        $154,793 

</TABLE>
       See notes to consolidated financial statements.

                              
CYMER, INC.                                                       
CONSOLIDATED STATEMENTS OF OPERATIONS                             
(In thousands, except per share data)                             
<TABLE>
<CAPTION>
                                               For the three months 
                                                  ended March 31,
                                                 1996          1997   
                                              (unaudited)    (unaudited)
<S>                                            <C>           <C>
REVENUES:                                                         
   Product sales                               $6,526        $36,446 
   Other                                          634            525 
          Total revenues                        7,160         36,971 
                                                                  
COSTS AND EXPENSES:                                               
   Cost of product sales                        4,210         21,697 
   Research and development                     1,958          4,248 
   Sales and marketing                            755          2,259 
   General and administrative                     551          1,797 
          Total costs and expenses              7,474         30,001 
                                                                  
OPERATING INCOME (LOSS)                          (314)         6,970 
                                                                  
OTHER INCOME (EXPENSE):                                           
   Foreign currency exchange gain (loss)           
     - net                                         97           (555)
   Interest and other income                       17            697 
   Interest and other expense                     (50)          (117) 
                                                                  
          Total other income - net                 64             25 
                                                                  
INCOME (LOSS) BEFORE PROVISION FOR INCOME 
  TAXES                                          (250)         6,995
                                                                  
Provision for Income Taxes                         10          2,587 
                                                                  
NET INCOME (LOSS)                               ($260)        $4,408 
                                                                  
EARNINGS (LOSS) PER SHARE:                                        
     Earnings per share                                        $0.29 
     Weighted average common and common                           
          equivalent shares outstanding                       15,213 
     Pro forma loss per share                  ($0.03)             
     Pro forma weighted average common                            
      and common equivalent shares 
      outstanding                               8,612             

</TABLE>
       See notes to consolidated financial statements.

                              
CYMER, INC.                                                   
CONSOLIDATED STATEMENTS OF CASH FLOWS                         
(In thousands)                                                
<TABLE>
<CAPTION>
                                                        For the three
                                                         months ended
                                                           March 31
                                                     1996           1997
                                                  (unaudited)    (unaudited)
<S>                                                 <C>           <C>
OPERATING ACTIVITIES:                                         
   Net income (loss)                                 ($260)        $4,408
   Adjustments to reconcile net income (loss) to              
    net cash used for operating activities:                           
     Depreciation and amortization                     259          1,163
     Change in assets and liabilities:                        
       Accounts receivable                          (2,201)       (11,537)
       Foreign exchange contracts receivable                       (6,762)
       Inventories                                  (1,886)       (10,491)
       Prepaid expenses and other assets               (79)          (658)
       Accounts payable                                807          7,666
       Foreign exchange contracts payable                           6,085
       Accrued and other liabilities                 2,232          7,147
       Income taxes payable                                           463
       Other                                            22            465
                                                              
         Net cash used for operating activities     (1,106)        (2,051)
                                                              
INVESTING ACTIVITIES:                                         
   Acquisition of property                          (1,881)        (6,430)
   Purchases of investments                                       (20,375)
   Sales of investments                                             5,950
                                                              
      Net cash used for investing activities        (1,881)       (20,855)
                                                              
FINANCING ACTIVITIES:                                         
   Net payments under revolving loan and            
    security agreements                             (1,786)          (250)
   Proceeds from issuance of redeemable                
    convertible preferred stock                      5,363
   Proceeds (costs) from issuance of common                     
    stock                                               33            (93)
   Net discounting of commercial drafts               (859)   
   Payments on capital lease obligations                              (94)
                                                              
       Net cash provided by (used for)               
        financing activities                         2,751           (437)
                                                              
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND                   
  CASH EQUIVALENTS                                      22            774
                                                              
NET DECREASE IN CASH AND CASH EQUIVALENTS             (214)       (22,569)
CASH AND CASH EQUIVALENTS AT BEGINNING  OF            
  PERIOD                                             2,015         55,405
                                                              
CASH AND CASH EQUIVALENTS AT END OF PERIOD          $1,801        $32,836

                                                              
SUPPLEMENTAL DISCLOSURE OF CASH FLOW                          
 INFORMATION:
   Interest paid                                       $64          $143
   Income taxes paid                                              $1,938
                                                              
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING                  
  AND FINANCING ACTIVITIES:                                   
   Capital lease obligations incurred for              
    furniture and equipment                            $52         $619
</TABLE>

See notes to consolidated financial statements.



                         CYMER, INC.
                              
         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              Three Months Ended March 31, 1997
                         (Unaudited)

1. BASIS OF PRESENTATION

     The accompanying consolidated financial information has
been prepared by Cymer, Inc. and its wholly-owned
subsidiary, Cymer Japan, Inc., (collectively the "Company"),
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. and
its wholly-owned subsidiary, Cymer Japan, Inc.,
(collectively, the "Company").  The Company sells its
excimer lasers in Japan primarily through Cymer Japan, Inc.
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 the Company's
Annual Report on Form 10-K (including items incorporated by
reference therein) for the year ended December 31, 1996.
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 (LOSS) PER SHARE

     Earnings Per Share - Earnings per share is computed
based on the weighted average number of common and common
equivalent shares (common stock options and warrants)
outstanding during each period using the treasury stock
method.  Primary earnings per share is not significantly
different from fully diluted earnings per share for any of
the periods indicated.

     Pro Forma Loss Per Share - Pro forma loss per share is
presented for the period prior to the Company's initial
public offering of common stock in September 1996.  The
amount is computed based on the weighted average number of
common and common equivalent shares outstanding during the
period using the treasury stock method and assumes
conversion of all outstanding redeemable convertible
preferred stock and the exercise of all outstanding
warrants.  Stock options, redeemable convertible preferred
stock and warrants are considered to be common stock
equivalents, except where the stock options are not assumed
converted as such conversion would be antidilutive.  All
shares of common stock and common stock equivalents issued
within twelve months of an initial public offering at a
price per share less than the estimated offering price are
considered to be outstanding for all periods presented in
the same manner as a stock split.  Accordingly, all shares
of common stock and common stock equivalents issued
subsequent to August 1995 at a price per share below the
estimated offering price are considered to be outstanding
for all periods presented.

     New Accounting Pronouncement.  In February 1997, the
Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings
Per Share," effective for financial statements issued after
December 15, 1997.  The statement provides simplified
standards for the computation and presentation of earnings
per share (EPS), making EPS comparable to international
standards.  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 Principles Board ("APB") Opinion No. 15.

     Basic EPS excludes dilution from common stock
equivalents and is computed by dividing income available to
common stockholders by the weighted-average number of common
shares outstanding for the period.  Diluted EPS reflects the
potential dilution from common stock equivalents, similar to
fully diluted EPS, but uses only the average stock price
during the period as part of the computation.

     The Company will be required to adopt the new method of
reporting EPS for the year ending December 31, 1997.  The
Company's EPS reflected in this document includes Primary
EPS for 1997 and 1996 under the rules of APB No. 15 and the
use of stock equivalents only when they are dilutive.

     Based on the Company's capital structure, the
anticipated results of implementing SFAS No. 128 would
reflect Basic EPS as materially different than the results
of computing Primary EPS under the current method.  The pro
forma effects of adopting SFAS No. 128 are as follows:

<TABLE>
<CAPTION>
                                                Three Months Ended
                                                   March 31, 1997
                                               (shares in thousands)

     <S>                                                <C>
     Basic:
     Weighted average number of common shares           13,837
     Earnings per share                                  $0.32
                                                             
     Diluted:
     Weighted average number of common shares
        and common share equivalents outstanding        15,213
     Earnings per share                                  $0.29
</TABLE>


3. BALANCE SHEET DETAILS
<TABLE>
<CAPTION>
                                      December 31,        March 31,
                                       1996                  1997
                                              (in thousands)
<S>                                    <C>                 <C>
INVENTORIES:
     Raw Materials                      $6,243             $11,418
     Work-in-progress                    6,680              10,232
     Finished goods                      2,755               4,357
           Total                       $15,678             $26,007
</TABLE>


4. BORROWING FACILITIES

     Loan and  Security Agreement - The Loan and Security
Agreement (the "Agreement") provides for a loan with a bank
to provide a $2,000,000 bank loan which is secured by the
Company's assets, bears interest at a rate of prime plus
 .25% per annum and is payable in eight quarterly
installments to begin December 31, 1996 through September
30, 1998. The Agreement requires the Company to maintain
compliance with certain financial statement and other
covenants including, among other items, limitation on
additional debt, total liabilities to tangible net worth and
minimum tangible net worth.  As of March 31, 1997 the
Company was in compliance with all such covenants.  There
was $1,500,000 outstanding under the Agreement at March 31,
1997.

     In addition, during the quarter ended March 31, 1997,
the Company canceled revolving loan facilities under the
Agreement which provided combined borrowings of up to a
maximum of $8,000,000 with interest on outstanding
borrowings at the current prime rate.  There were no
balances due under these facilities at the time of
cancellation.


5. CONTINGENCIES

     The Company's Japanese manufacturing partner has been
notified that its manufacture of the Company's laser systems
in Japan may infringe a Japanese patent held by another
Japanese company.  The Company has indemnified its Japanese
manufacturing partner against patent infringement claims
under certain circumstances.  The Company believes, based
upon the advice of counsel, that the Company's products do
not infringe any valid claim of the asserted patent.



  Item 2.  Management Discussion and Analysis of Financial
                          Condition
                  and Results of  Operation

Results of Operations

  The following table sets forth certain items in the
  Company's statements of operations as a percentage of
  total revenues for the periods indicated:
<TABLE>
<CAPTION>
                                            Three months ended
                                                March 31,
                                           1996           1997
<S>                                       <C>            <C>
Revenues:
     Product sales                         91.1%          98.6%
     Other                                  8.9            1.4
        Total revenues                    100.0%         100.0%

Cost and expenses:
     Cost of product sales                 58.8           58.7
     Research and development              27.3           11.5
     Sales and marketing                   10.6            6.1
     General and administrative             7.7            4.9
        Total costs and expenses          104.4           81.2

Operating income (loss)                    (4.4)          18.8
Other income -net                           0.9            0.1

Income (loss) before provision for
     income taxes                          (3.5)          18.9

Provision for income taxes                   .1            7.0

Net income (loss)                          (3.6%)         11.9%

Gross margin on product sales              35.5%          40.5%
</TABLE>

Three Months Ended March 31, 1996 and 1997

     Revenues.   The Company's total revenues consist of
     product sales, which include sales of laser systems and
     spare parts and service and training, and other
     revenues, which primarily include revenues from funded
     development activities performed for customers and 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 increased 458% from $6.5 million in the
     three months ended March 31, 1996 to $36.4 million in
     the three months ended March 31, 1997, primarily due to
     increased sales of DUV photolithography laser systems.
     A total of 84 laser systems were sold in the three
     month period ended March 31, 1997 compared to 15 laser
     systems in the three month period ended March 31, 1996.
     Funded development revenues decreased 17% from $634,000
     for the three months ended March 31, 1996 to $525,000
     in the three months ended March 31, 1997, primarily due
     to substantial completion  of various laser research
     projects sponsored by customers and SEMATECH.
     
     The Company's sales are generated primarily by
     shipments to customers in Japan, the Netherlands, and
     the United States.  Approximately 69%, 81% and 87% of
     the Company's sales in 1995, 1996 and the first three
     months of 1997, respectively, were derived from
     customers outside the United States.  The Company
     maintains a wholly-owned Japanese subsidiary which
     sells to the Company's Japanese customers.  Revenues
     from Japanese customers, generated primarily by this
     subsidiary, accounted for 50%, 61% and 68% of revenues
     from 1995, 1996 and the first three months of 1997,
     respectively.  The activities of the Company'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 the Company's products, including costs of shipment
     to Japan, are recorded on the books of the parent
     company.  The Company 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 and manufacturing and service overhead, and
     foreign exchange gains and losses on foreign currency
     exchange contracts associated with purchases of the
     Companies inventories by the Japanese subsidiary for
     resale under firm third-party sales commitments.
     
     Cost of product sales rose 415% from $4.2 million for
     the three months ended March 31, 1996 to $21.7 million
     for the three months ended March 31, 1997.  The gross
     margin on these sales increased to 40.5% for the three
     months ended March 31, 1997 from 35.5% for the same
     three month period in 1996 as the increase in sales
     over the period absorbed more of the overhead costs
     associated with manufacturing.
     
     Warranty reserve expenses are included in cost of
     product sales as the related sales are reported.  For
     the three months ended March 31, 1997, an additional
     specific warranty reserve was expensed to address
     certain lasers previously shipped.  This additional
     warranty expense was to incorporate improvements in
     these lasers to ensure that they meet the current
     product configuration.  These changes are currently in
     varying stages of implementation.
     
     For the three months ended March 31, 1997, the Company
     incurred an increase in field support overhead costs as
     it continued to build its world wide field support
     infrastructure, including the recruitment and training
     of highly skilled field engineers in order to provide
     fast and responsive service to the semiconductor
     manufacturers.
     
     Net gains or losses from foreign  currency exchange
     contracts are recorded on the date the inventories are
     received by the Japanese subsidiary and are included in
     cost of product sales in the consolidated statements of
     operations as the related sales are consummated.  The
     Company recognized net gains on such contracts of  $2.0
     million for the three months ended March 31, 1997.
     There were no gains or losses on such contracts for the
     three months ended March 31, 1996.
  
     Research and Development.  Research and development
     expenses include costs of internally-funded and
     customer-funded projects as well as continuing research
     support expenses which primarily include employee and
     material costs, depreciation of equipment and other
     engineering related costs.  Research and development
     expenses increased 117% from $2.0 million in the three
     months ended March 31, 1996 to $4.2 million in the
     three months ended March 31, 1997, due primarily to
     increased product support efforts associated with the release 
     of the Company's 5000 series lasers and the hiring of
     additional technical personnel.  As a percentage of
     total revenues, such expenses declined from 27.3% to
     11.5% in the respective periods due to the growth in
     the Company's 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 increased 199% from
     $755,000 for the three months ended March 31, 1996 to
     $2.3 million in the three months ended March 31, 1997
     due primarily to increased product support sales
     support efforts and marketing activities as more lasers
     were placed in the field over the period.  As a
     percentage of total revenues, such expense declined
     from 10.6% to 6.1% in the respective periods due to the
     growth in the Company's revenues.
  
     General and Administrative.  General and administrative
     expenses consist primarily of management and
     administrative personnel costs, professional services
     and administrative operating costs.  These expenses
     increased 226% from $551,000 in the three months ended
     March 31, 1996 to $1.8 million for the three months
     ended March 31, 1997 due to an increase in general and
     administrative support as the Company's sales volume,
     manufacturing capacity, employee recruiting
     requirements, and overall level of business activity
     increased.  As a percentage of total revenues, such
     expenses decreased from 7.7% to 4.9% in the respective
     periods.
  
     Other Income (Expense) - net.  Net other income
     (expense) consists primarily of interest income and
     expense and foreign currency exchange gains and losses
     associated with the fluctuations in the value of the
     Japanese yen against the U.S. dollar. Net other income
     decreased from $64,000 for the three months ended March
     31, 1996 to $25,000 for the three months ended March
     31, 1997, primarily due to the increase in interest
     income associated with the investment of excess cash,
     off set by a foreign currency exchange loss for 1997.
     Foreign currency exchange gains totaled $97,000,
     interest income totaled $17,000 and interest expense
     totaled $50,000 for the three months ended March 31,
     1996, compared to an exchange loss of $555,000,
     interest income of $697,000 and $117,000 in interest
     expense for the three months ended March 31, 1997.
     Interest expense for the three months ended March 31,
     1997 was attributable primarily to the discounting of
     commercial drafts in Japan and interest associated with
     the bank term loan.
  
     The Company's results of operations are subject to
     fluctuations in the value of the Japanese yen against
     the U.S. dollar due to the fact that sales by the
     Company to its Japanese subsidiary are denominated in
     dollars, and sales by the subsidiary to customers in
     Japan are denominated in yen.  The Company's subsidiary
     manages its exposure to such fluctuations by entering
     into foreign currency exchange contracts to hedge its
     purchase commitments to the Company.  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.
  
     Provision for Income Taxes.  The provision for income
     taxes was insignificant for the three month period ended
     March 31, 1996 as a loss was reported for the period
     and the Company had net operating loss carryforwards
     which would absorb any income tax effect.  The tax
     provision of $2.6 million for the three months ended
     March 31, 1997 was primarily attributable to the
     substantial growth in the Company's pretax income and
     as this was the first reporting period in which the
     Company's performance was subject to a fully burdened
     tax rate.


Liquidity and Capital Resources

     The Company's primary source of liquidity has been the
     cash flow generated from the Company's September 18,
     1996 initial public offering, resulting in net proceeds
     to the Company of approximately $29.7 million and the
     public offering on December 12, 1996, resulting in net
     proceeds of approximately $50.0 million, the private
     sale of equity securities over the Company's ten year
     history totaling approximately $27.1 million and short
     term bank borrowings.  As of March 31, 1997, the
     Company had approximately $32.8 million in cash and
     cash equivalents, $17.2 million in short term
     investments, $9.0 million in long term investments,
     $75.7 million in working capital and $1.5 million in
     bank debt.
  
     Net cash used in operating activities was approximately
     $1.1 million for the three months ended March 31, 1996
     and $2.1 million for the three months ended March 31,
     1997.  The increase in cash used in operations in the
     three months ended March 31, 1997 was primarily
     attributable to an increase in accounts receivable and
     inventory as the working capital requirements of the
     Company increased due to the business expansion during
     the period.
  
     Net cash used for investing activities was
     approximately $1.9 million for the three months ended
     March 31, 1996 as compared to $20.9 million for the
     three months ended March 31, 1997.  The increase in
     cash used for investing activities during 1997
     primarily reflects the investment activity of funds
     received through the Company's public offerings and the
     purchase of computer equipment, test equipment,
     research and development tools, manufacturing process
     machinery and tenant improvements in the manufacturing
     area in order to accommodate the business expansion for
     the period.
  
     The Company's financing activities provided net cash of
     approximately $2.8 million for the three months ended
     March 31, 1996, as compared to a net cash used for
     financing activities for the three months ended March
     31, 1997 of approximately $437,000.  During the three
     months ended March 31, 1996, the Company sold
     Redeemable Convertible Preferred Stock for
     approximately $5.4 million, decreased its bank
     borrowings by $1.8 million and reduced advances against
     commercial drafts by $859,000.  Upon the Company's
     initial public offering in September 1996, all
     Redeemable Convertible Preferred Stock (approximately
     7.7 million shares) and Redeemable Convertible
     Preferred Stock Warrants (to purchase 283,000 shares of
     such stock) were automatically converted into the
     Company's common stock or warrants to purchase common
     stock.  In the three months ended March 31, 1997, the
     Company decreased it bank borrowings by $250,000.
  
     The Company requires substantial working capital to
     fund its business, particularly to finance inventories
     and accounts receivable and for capital expenditures.
     The Company's  future capital requirements will depend
     on many factors, including the rate of the Company'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 market
     acceptance of the Company's products.  The Company
     believes that its current level of liquid assets,
     credit facilities and expected cash generated from
     operations are sufficient to sustain operations and
     provide for the future expansion of its business during
     this fiscal year.  Thereafter the Company may require
     additional funds to support its working capital
     requirements or for other purposes and may seek to
     raise such additional funds through public or private
     equity financings or other sources.  There can be no
     assurance that additional financing will be available
     at all or that, if available, such financing will be
     obtainable on terms favorable to the Company and would
     not be dilutive.
     
     
Risk Factors

     The last paragraph under the heading "Liquidity and
Capital Resources" contains forward-looking statements.  The
Company may from time to time make additional written and
oral forward-looking statements, including statements
contained in the Company's filings with the Securities and
Exchange Commission and in its reports to stockholders.
Such forward-looking statements are subject to certain risks
and uncertainties that could cause actual results to differ
materially from those reflected in the forward-looking
statements.  Factors that might cause such a difference
include, but are not limited to, those discussed below.  The
Company does not undertake to update any forward-looking
statement that may be made from time to time by or on behalf
of the Company.  Readers should carefully review the risk
factors described in other documents the Company files from
time to time with the Securities and Exchange Commission.

     Likely Fluctuations in Operating Results.  The
Company's operating results have in the past fluctuated and
are likely in the future to fluctuate significantly
depending upon a variety of factors.  Such factors may
include: the demand for semiconductors in general and, in
particular, for leading edge devices with smaller circuit
geometries; cyclicality in the market for semiconductor
manufacturing equipment; the timing and size of orders from
the Company's small base of customers; the ability of the
Company to manufacture, test and deliver laser systems in a
timely and cost effective manner; the ability of the
Company's competitors to obtain orders from the Company's
customers; the timing of new product announcements and
releases by the Company and its competitors; the entry of
new competitors into the market for DUV photolithography
illumination sources; the ability of the Company to manage
its costs as it begins to supply its products in volume; and
the Company's ability to manage effectively its exposure to
foreign currency exchange rate fluctuations, principally
with respect to the yen (in which sales by the Company's
Japanese subsidiary are denominated).

     The Company has historically derived a substantial
portion of its quarterly and annual revenues from the sale
of a relatively small number of systems, which are priced at
up to $450,000.  As a result, the precise timing of the
recognition of revenue from an order for one or a small
number of systems can have a significant impact on the
Company's total revenues and operating results for a
particular period.  The Company's operating results for a
particular period could be adversely affected if orders for
a small number of systems, or even one system, are canceled
or rescheduled by customers or cannot be filled in time to
recognize revenue during that period due to, for example,
unanticipated manufacturing, testing, shipping or product
acceptance delays.  The Company had a backlog of orders at
March 31, 1997 of approximately $91.4 million for shipment
during the next 12 months.  However, customers may cancel or
delay orders with little or no penalty, and because of the
Company's limited experience in producing lasers in volume,
there can be no assurance that the Company will recognize
revenue on any significant portion of this backlog.  The
Company's expense levels are based, in large part, on the
Company's expectations as to future revenues and are,
therefore, relatively fixed in the short term.  If revenue
levels fall below expectations, net income will be
disproportionately and adversely affected.  The impact of
these and other factors on the Company's revenues and
operating results in any future period cannot be forecast
with any degree of certainty.

     The Company believes that semiconductor manufacturers
are currently developing capability for pilot production of
0.25um devices.  The Company also believes that demand for
its excimer lasers for DUV photolithography tools is
currently being driven by the efforts to develop such
capability. Once semiconductor manufacturers have acquired
such capability, the company believes that they will
continue to invest in DUV photolithography tools to expand
their capacity to manufacture 0.25um devices only to the
degree to which their sales forecasts and 0.25um
manufacturing process yields justify such investment.
Accordingly, the Company currently expects that demand for
its DUV excimer lasers, and thus its revenues, will grow
subject to such demand and process development constraints.

     Recently, the Company has significantly increased the
scale of its operations and its manufacturing capacity,
including hiring additional personnel and substantially
increasing the number of systems in production.  This
expansion has resulted in higher materials and work-in-
process inventory levels and significantly higher operating
expenses, and has required the Company to implement a
variety of new systems, procedures and controls.  Based on
its backlog of orders at March 31, 1997, the Company expects
to continue to increase its inventories and operating
expenses.  If orders received by the Company do not result
in sales, or if the Company is unable to sustain its
revenues at anticipated levels, the Company's operating
results would be materially adversely affected.

     Due to the foregoing factors, as well as other
unanticipated factors, it is likely that in some future
quarter the Company's operating results will be below the
expectations of public market analysts or investors.  In
such event, the price of the Company's Common Stock would be
materially adversely affected.

     Unpredictability of Future Operating Results.  The
Company was founded in 1986 and shipped its first prototype
laser system in 1988.  Although the Company's revenues have
increased over the last three years and each of the last
nine quarters, and the Company has been profitable for each
of the last four quarters, there can be no assurance that
the Company's revenues will grow or be sustained in future
periods or that the Company will be profitable in any future
period.  The Company's history of annual and quarterly
operating losses, its substantial expansion in manufacturing
capacity, its limited experience in supplying products in
volume and the difficulty of predicting the demand for its
products, among other factors, make the prediction of future
operating results difficult if not impossible.

     Risks Associated with Rapid and Substantial
Manufacturing Expansion.  To meet current and anticipated
demand for its products, the Company must continue to
increase the rate by which it manufactures and tests its
photolithography laser systems. Despite recent success in
expanding production, the Company is currently unable to
manufacture and test its photolithography laser systems fast
enough to fill all orders and is behind on some of its
delivery schedules.  While the Company is not aware of any
order cancellations as a result of these delays, such
delays, if they continue or recur, increase the risk that
customers may cancel orders and seek to meet all or a
portion of their needs for illumination sources from the
Company's competitors.  The Company is also increasingly
relying on outside suppliers for the manufacture of various
components and subassemblies used in its products and is
dependent upon these suppliers to meet the Company's
manufacturing schedules.  The failure by one or more of
these suppliers to supply the Company on a timely basis with
sufficient quantities of components or subassemblies that
perform to the Company's specifications could affect the
Company's ability to deliver completed lasers to its
customers on schedule.  Additionally, the Company may
underestimate the costs required to increase its
manufacturing capacity, which may materially adversely
affect the Company's results of operations.

     In addition to increasing manufacturing capacity at its
facilities in San Diego, California, the Company has
qualified Seiko Instruments, Inc. ("Seiko") of Japan as a
contract manufacturer of its photolithography lasers.  While
Seiko began limited production of lasers for the Company in
the first quarter of 1997, there can be no assurance that
Seiko can maintain production on schedule.  The failure of
Seiko to maintain production on schedule could have a
material adverse effect on the Company's business, financial
condition and results of operations.

     Seiko has been advised by Komatsu, Ltd. ("Komatsu"), a
competitor of the Company, that certain aspects of the
Company's lasers might infringe a patent that has been
issued to Komatsu in Japan and that Komatsu intends to
enforce its rights under that patent against Seiko if Seiko
engages in manufacturing activities for the Company.  Cymer
has been advised by its patent counsel that in the opinion
of such firm the Company's products do not infringe any
valid claims included in the Komatsu patent. In the event
that, notwithstanding its manufacturing agreement with the
Company, Seiko should determine not to continue
manufacturing the Company's products until resolution of the
matter with Komatsu, the Company's ability to meet the
anticipated demand for its products could be materially
adversely affected.

     Dependence on Key Suppliers.  Certain of the components
and subassemblies included in the Company's products are
obtained from a single supplier or a limited group of
suppliers.  In particular, there are no alternative sources
for certain of the components and subassemblies, including
certain optical components and pre-ionizer tubes used in the
Company's lasers.  In addition, the Company is increasingly
outsourcing the manufacture of various subassemblies.
Although to date the Company has been able to obtain
adequate supplies of its components and subassemblies in a
timely manner from existing sources, the Company has only
recently commenced volume production of its laser systems.
The Company believes that its recent manufacturing expansion
has significantly strained the production capacity of
certain key suppliers, including suppliers of optical
components and pre-ionizer tubes.  If the Company is unable
to obtain sufficient quantities of components or
subassemblies, or if such items do not meet the Company's
quality standards, delays or reductions in product shipments
could occur which would have a material adverse effect on
the Company's business, financial condition and results of
operations.

     Dependence on Single Product Line.  The Company's only
product line is excimer lasers, the primary market for which
is for use in DUV photolithography equipment for
manufacturing deep-submicron semiconductor devices.  Demand
for the Company'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 a shortage of engineers
with experience implementing, utilizing and maintaining DUV
photolithography systems that incorporate excimer laser
illumination sources, instability of photoresists used in
DUV photolithography and a shortage of specialized glass
used in DUV optics.  There can be no assurance that such
impediments can or will be overcome, and, in any event, such
impediments may materially reduce the demand for the
Company's products.  In addition, to the extent that such
manufacturers are able to produce semiconductors with
smaller critical feature sizes by extending the performance
capabilities of mercury lamp illumination sources used in
existing DUV photolithography tools, the demand for the
Company's products would also be materially reduced.
Further, if the Company's customers experience reduced
demand for DUV photolithography tools, or if the Company's
competitors are successful in obtaining significant orders
from such customers, the Company's results of operations
would be materially adversely affected.
     
     Limited Production Use of Excimer Lasers.  The Company
first shipped its lasers for photolithography applications
in 1988.  The Company is not aware of any semiconductor
manufacturer using the Company's laser for volume production
of semiconductor devices.  There can be no assurance that
the Company's products will meet production specifications
when subjected to prolonged and intense use in volume
production in semiconductor manufacturing processes.  If any
semiconductor manufacturer is not able to successfully
achieve volume production using the Company's lasers, the
Company's reputation with semiconductor manufacturers or the
limited number of photolithography tool manufacturers could
be damaged, which would have a material adverse effect on
the Company's business, financial condition and results of
operations.

     Dependence on Small Number of Customers.  The Company's
primary customer base is composed of a small number of
manufacturers of DUV photolithography tools.  Four large
firms, ASM Lithography, Canon, Nikon and SVG Lithography (a
subsidiary of Silicon Valley Group, Inc.), dominate the
photolithography tool business and collectively accounted
for approximately 65% and 90% of the Company's total
revenues in 1995 and 1996, respectively.  Sales to ASM
Lithography, Canon, Nikon and SVG Lithography accounted for
approximately 19%, 13%, 54% and 3%, respectively, of total
revenues for the first three months of 1997 and 19%, 30%,
31% and 10%, respectively, of total revenues in 1996.  The
Company 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 the Company's
customers is obligated to purchase a minimum number of the
Company's products.  Loss of any significant business from
any one of these customers or a significant reduction in
orders from any one of these customers, including 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, would have a material
adverse effect on the Company's business, financial
condition and results of operations.

     Need to Manage a Changing Business.  The Company
recently has dramatically expanded the scope of its
operations and the number of employees in most of its
functional areas.  For example, the Company increased the
number of its employees from 136 to 481 between December 31,
1995 and March 31, 1997.  The Company also substantially
increased its manufacturing capacity during that period and
installed a new management information system.  If demand
for the Company's products continues to grow, the Company
will be required to continue this expansion.  The management
of such growth, if such growth occurs, will require the
Company to continue to improve and expand its management,
operational and financial systems, procedures and controls,
including accounting and other internal management systems,
procedures and controls, delivery and field service and
customer support capabilities.  The Company will also be
required to manage effectively its expanding international
operations, effect timely deliveries of its products or
maintain the product quality and reliability required by its
customers.  The Company has experienced, and may continue to
experience, delays in deliveries to customers as a result of
its inability to increase its manufacturing capacity fast
enough to meet demand.  Any failure to manage the Company's
growth, if such growth occurs, would materially adversely
effect the Company's financial condition and results of
operations.

     Balanced Production between Systems and Replacement
Parts.  The Company expects that the demand for replacement
parts and component modules will increase as the installed
base of lasers increases.  As a result, the Company will be
required to rapidly expand its production of component
modules, which are also required for new  laser systems.

     Because the Company prioritizes the reliable operation
of its installed units at semiconductor manufacturers above
all other requirements, the failure to rapidly expand the
production of component modules could necessitate the delay
in shipment of new laser systems as component modules would
be utilized first to support existing systems in the field.
Such delays in system shipments could have a material
adverse effect on the Company's business, financial
condition and results of operations.

     Need to Expand Field Service and Support Organization.
The Company believes that the need to provide fast and
responsive service to the semiconductor manufacturers using
its lasers is critical and that it will not be able to
depend solely on its customers to provide this specialized
service.  Therefore, the Company 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, the Company
intends to expand its direct support infrastructure in Japan
and Europe, expand its field service and support in Korea by
establishing a joint service and support capability with an
independent firm, and establish a joint service and support
capability with an independent firm to serve Taiwan and
Southeast Asia.  The establishment of these activities will
entail recruiting and training qualified personnel,
identifying qualified independent firms and building
effective and highly trained organizations that can provide
service to customers in various countries in their assigned
regions.  There can be no assurance that the Company will be
able to attract qualified personnel to establish these
operations successfully or that the costs of such operations
will not be excessive.  A failure to implement this plan
effectively could have a material adverse effect on the
Company's business, financial condition and results of
operations.
     
     Risk of Excessive Inventory Buildups by
Photolithography Tool Manufacturers.  Substantially all of
the Company's customers are photolithography tool
manufacturers, which in turn sell their systems to
semiconductor manufacturers.  Over the past year, the
Company's customers have substantially increased their
forecasted shipments of DUV photolithography tools.  The
Company believes that the increase in demand for DUV
photolithography tools coupled with the dependence of the
manufacturers of these tools on a limited number of laser
suppliers may have caused a degree of over-ordering of the
Company's products.  The Company is working with its
customers to better understand end user demand for DUV
photolithography tools.  However, there can be no assurance
that the Company will be successful in this regard, or that
is customers will not build excessive laser inventories.
Excessive customer laser inventories could result in a
material decline in the Company's revenues and operating
results in future periods as such inventories are brought
into balance.

     Dependence on Semiconductor Industry.  Substantially
all of the Company's revenues are derived from
photolithography tool manufacturers that in turn depend on
the demand for their products from semiconductor
manufacturers.  Semiconductor manufacturers correspondingly
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, which often have had a severe
effect on the demand for semiconductor manufacturing
equipment, including photolithography tools.  The Company
believes that downturns in the semiconductor manufacturing
industry will occur in the future, and will result in
decreased demand for semiconductor manufacturing equipment.
In addition, the Company believes that its ability to reduce
expenses in a future downturn will be constrained by the
need for continual investment in research and development,
and the need to maintain extensive ongoing customer service
and support capability.  Accordingly, any downturn in the
semiconductor industry could have a material adverse effect
on the Company's business, financial condition and results
of operations.

     Competition.  The Company currently has two significant
competitors in the market for excimer laser systems for
photolithography applications.  Lambda-Physik R&D ("Lambda-
Physik"), a German-based subsidiary of Coherent, Inc.
("Coherent") and Komatsu, Ltd., located in Japan.  Both of
these companies are larger than the Company, have access to
greater financial, technical and other resources than does
the Company and are located in closer proximity to the
Company's customers than is the Company.  Although the
Company believes that these competitors are not yet
supplying excimer lasers in volume for photolithography
applications, the Company believes that both companies are
aggressively seeking to gain larger positions in this
market.  The Company believes that its customers have each
purchased one or more products offered by these competitors
and that its customers will consider further purchases, in
part as a result of delays in deliveries by the Company in
recent months as the Company has been seeking to expand its
manufacturing capacity.  The Company also believes that its
customers are actively seeking a second source for excimer
lasers.  Furthermore, photolithography tool manufacturers
may seek to develop or acquire the capability to manufacture
internally their own excimer lasers.  In the future, the
Company will likely experience competition from other
technologies, such as X-ray, electron beam and ion
projection processes.  To remain competitive, the Company
believes that it will be required to manufacture and deliver
products to customers on a timely basis and without
significant defects and that it will also be required to
maintain a high level of investment in research and
development and in sales and marketing.  There can be no
assurance that the Company will have sufficient resources to
continue to make the investments necessary to maintain its
competitive position.  In addition, the market for excimer
lasers is still small and immature and there can be no
assurance that larger competitors with substantially greater
financial resources, including other manufacturers of
industrial lasers, will not attempt to enter the market.
There can be no assurance that the Company will remain
competitive.  A failure to remain competitive would have a
material adverse effect on the Company'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.  The Company 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 to develop and manufacture new
products with improved capabilities.  In order to enhance
and improve its products and develop new products, among
other things, the Company must work closely with its
customers, particularly in the product development stage, to
integrate its lasers with its customer's photolithography
tools.  There can be no assurance that future technologies,
such as X-ray, electron beam and ion projection processes,
will not render the Company's excimer laser products
obsolete or that the Company will 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 the Company's
business, financial condition and results of operations.

     Uncertainty Regarding Patents and Protection of
Proprietary Technology.  The Company 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 the Company may depend in part on patents, and as
of March 31, 1997, the Company owned 19 United States
patents covering certain aspects of technology associated
with excimer lasers which expire from January 2008 to
January 2016 and had applied for 13 additional patents in
the United States, two of which have been allowed.  As of
March 31, 1997, the Company had filed 77 patent applications
in other countries.  There can be no assurance that the
Company's pending patent applications or any future
applications will be approved, that any patents will provide
it with competitive advantages or will not be challenged by
third parties, or that the patents of others will not have
an adverse effect on the Company's ability to do business.
In this regard, due to cost constraints, the Company did not
begin filing for patents in Japan or other countries with
respect to inventions covered by its United States patents
and patent applications until recently and has therefore
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, there can
be no assurance that any such patents issued to the Company
will adequately protect the Company's proprietary
information.  Furthermore, there can be no assurance that
others will not independently develop similar products,
duplicate the Company's products or, if patents are issued
to the Company, design around the patents issued to the
Company.

     Others may have filed and in the future may file patent
applications that are similar or identical to those of the
Company.  To determine the priority of inventions, the
Company may have to participate in interference proceedings
declared by the United States Patent and Trademark Office
that could result in substantial cost to the Company.  No
assurance can be given that any such patent application will
not have priority over patent applications filed by the
Company.

     The Company also relies upon trade secret protection,
employee and third-party nondisclosure agreements and other
intellectual property protection methods to protect its
confidential and proprietary information.  Despite these
efforts, there can be no assurance that others will not
independently develop substantially equivalent proprietary
information and techniques or otherwise gain access to the
Company's trade secrets or disclose such technology or that
the Company can meaningfully protect its trade secrets.

     The Company has in the past been, and may in the future
be, notified that it may be infringing intellectual property
rights possessed by third parties.

     In July 1996, the Company's prospective Japanese
manufacturing partner, Seiko, was notified by Komatsu, one
of the Company's competitors, that certain aspects of the
Company's lasers might infringe certain claims furnished by
Komatsu to Seiko that Komatsu advised Seiko were included in
a patent application filed by Komatsu in Japan (the "Patent
Claims").  Seiko in turn notified the Company of this claim.
In connection with its manufacturing agreement with Seiko,
the Company has agreed to indemnify Seiko against such
claims under certain circumstances. A patent has now been
issued by the Japanese Patent Office covering the Patent
Claims and Komatsu has advised Seiko of its intention to
enforce its rights under that patent against Seiko if Seiko
engages in manufacturing activities for the Company.  The
Company has been advised by its patent counsel in this
matter, Wilson, Sonsini, Goodrich & Rosati, Professional
Corporation, which is relying in part on the opinion of the
Company's Japanese patent counsel, that in the opinion of
such firm the Company's products do not infringe any valid
Patent Claims.  However, there can be no assurance that
litigation will not ensue with respect to these claims or
that the Company and Seiko would ultimately prevail in any
such litigation.

     Any patent litigation would at a minimum be costly and
could divert the efforts and attention of the Company's
management and technical personnel, which could have a
material adverse effect on the Company's business, financial
condition and results of operations.  Furthermore, there can
be no assurance that other infringement claims by third
parties or other claims for indemnification by customers or
end users of the Company's products resulting from
infringement claims will not be asserted in the future or
that such assertions, if proven to be true, will not
materially adversely affect the Company's business,
financial condition and results of operations.  If any such
claims are asserted against the Company, the Company may
seek to obtain a license under the third party's
intellectual property rights.  There can be no assurance,
however, that a license will be available on reasonable
terms or at all.  The Company 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 the Company's management and technical personnel, which
would materially adversely affect the Company's business,
financial condition and results of operations.

     The Company has registered the trademark CYMER in the
United States and certain other countries and is seeking
additional registrations in certain countries.  In Japan,
the Company's application for registration was rejected on
the grounds that it is similar to a trademark previously
registered by a Japanese company for a broad range of
products.  The Company is seeking a partial nullification of
the other registration with respect to laser devices and
related components and does not believe that the holder of
the other trademark is engaged in any business similar to
that of the Company.  For this reason, the Company is
continuing to use the trademark CYMER in Japan and believes
that it will ultimately be permitted to register such mark
for use with its products and that it is not infringing the
other company's trademark.  There can be no assurance that
the Company will ultimately succeed in its efforts to
register its trademark in Japan or that it will not be
subjected to an action for trademark infringement, which
could be costly to defend and, if successful, would require
the Company to cease use of the mark and, potentially, to
pay damages.

     Dependence on Key Personnel.  The Company 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 and competition for such personnel is
intense.  The Company has in the past experienced difficulty
in hiring personnel, including experts in laser technology.
The Company 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 personnel and on its ability to attract
and retain highly skilled personnel in each of these areas.
The Company does not have employment agreements with any of
its employees, and there is no assurance that the Company
will be able to retain its key employees.  The failure of
the Company to hire and retain such personnel could have a
material adverse effect on the Company's business, financial
condition and results of operations.

     Risks of International Sales and Operations.
Approximately 69%, 81% and 87% of the Company's revenues in
1995, 1996 and the first three months of 1997, respectively,
were derived from customers located outside the United
States.  Because a significant majority of the Company's
principal customers are located in other countries, the
Company anticipates that international sales will continue
to account for a significant portion of its revenues.  In
order to support its overseas customers, the Company
maintains a subsidiary in Japan, is expanding its field
service and support operations in Japan and Europe, is
working with an independent firm to establish a joint field service 
and support in Korea, is seeking to establish with an independent 
firm a joint field service and support capability to serve Taiwan 
and Southeast Asia, and will continue to work with Seiko as a 
manufacturer of its products in Japan.  There can be no assurance 
that the Company will be able to manage these operations effectively 
or that the Company's investment in these activities will enable it to
compete successfully in international markets or to meet the
service and support needs of its customers.  Additionally, a
significant portion of the company'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.  Further, while the Company has
experienced no difficulty to date in complying with U.S.
export controls, these rules could change in the future and
make it more difficult or impossible for the Company to
export its products to various countries.  There can be no
assurance that any of these factors will not have a material
adverse effect on the Company's business, financial
condition and results of operations.

     The Company's results of operations are subject to
fluctuations in the value of the Japanese yen against the
U.S. dollar due to sales by the Company to its Japanese
subsidiary being dominated in dollars, and sales by the
subsidiary to customers in Japan being dominated in yen.
The Company's subsidiary manages its exposure to such
fluctuations by entering into foreign currency exchange
contracts to hedge its purchase commitments.  Although
management will continue to monitor the Company's exposure
to currency fluctuations, and, when appropriate, use
financial hedging techniques to minimize the effect of these
fluctuations, there can be no assurance that exchange rate
fluctuations will not have a material adverse effect on the
Company's results of operations or financial condition.  In
the future, the Company could be required to sell its
products in other currencies, which would make the
management of currency fluctuations more difficult and
expose the Company to greater risks in this regard.

     The Company's products are subject to numerous foreign
government standards and regulations that are continually
being amended.  Although the Company endeavors to meet
foreign technical and regulatory standards, there can be no
assurance that the Company's products will continue to
comply with foreign government standards and regulations, or
changes thereto, or that it will be cost effective for the
Company to redesign its products to comply with such
standards and regulations.  The inability of the Company to
design or redesign products to comply with foreign standards
could have a material adverse effect on the Company'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 the Company's manufacturing process and
on the facility leased by the Company.  The Company believes
that its activities conform to present governmental
regulations applicable to its operations and its current
facilities, including those related to environmental, land
use, public utility utilization and fire code matters.
There can be no assurance that such governmental regulations
will not in the future impose the need for additional
capital equipment or other process requirements upon the
Company or restrict the Company's ability to expand its
operations.  The adoption of such measures or any failure by
the company to comply with applicable environmental and land
use regulations or to restrict the discharge or hazardous
substances could subject the Company to future liability or
could cause its manufacturing operations to be curtailed or
suspended.

     Risks of Product Liability Claims.  The Company 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, and there can be no assurance that the
Company will not experience material product liability
losses in the future.  The Company maintains insurance
against product liability claims in the amount of $16.0
million per occurrence and $17.0 million in the aggregate,
but there can be no assurance that such coverage will
continue to be available on terms acceptable to the Company
or that such coverage will be adequate for liabilities
actually incurred.  Also, in the event that any of the
Company's products prove to be defective, the Company may be
required to recall or redesign such products.  A successful
claim brought against the Company in excess of available
insurance coverage, or any claim or product recall that
results in significant adverse publicity against the
Company, could have a material adverse effect on the
Company's business, financial condition and results of
operations.

     Risks Associated with Customer-Funded Research and
Development.  The Company has in the past funded a
significant portion of its research and development expenses
from research and development revenues received from
photolithography tool manufacturers and from SEMATECH, a
semiconductor industry consortium, in connection with the
design and development of specific products.  The Company's
staffing levels and other expenditures for research and
development are, in part, determined by the level of funding
that the Company expects to receive for specific projects.
No assurance can be given that the Company will continue to
generate research and development revenues to offset a
sufficient portion of its production development costs.  Any
material cancellation of this funding or a failure to secure
research and development funding commensurate with the
Company's expectations could have a material adverse effect
on the Company's business, financial condition and results
of operations.  In addition, the recognition of research and
development revenues is dependent on the company
accomplishing certain research and development milestones.
If such milestones are not achieved, the Company will not
recognize the associated research and development revenues,
which could have a material adverse effect on its business,
financial condition and results of operations.  Although the
Company anticipates that it will continue to receive
research and development revenues in the future, there can
be no assurance that this level of support will be
maintained at past levels, and the company believes that
such revenues will constitute a decreasing percentage of its
overall revenues. As a result, the Company may have to bear
a greater proportion of the cost of design and development
of its products which could have a material adverse effect
on the Company's business, financial condition and results
of operations.
     
     Although the Company'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 the
Company, there can be no assurance that disputes over the
ownership or rights to use or market such intellectual
property will not arise between the Company and such
parties.  Any such dispute could result in restrictions on
the Company's ability to market its products and could have
a material adverse effect on the Company's business,
financial condition and results of operations.
     

                 PART II.  OTHER INFORMATION
                              
ITEM 1. Legal Proceedings

        None.

ITEM 2. Changes in Securities

        (c)  Sales of Unregistered Securities.  On February
27, 1997, the Company issued 10,526 shares of Common Stock
to a consultant in consideration of services provided to the
Company.  Such issuance was exempt from registration under
the Securities Act of 1933 pursuant to Section 4(2) thereof
on the basis that the transaction did not involve a public
offering.


ITEM 3.  Defaults upon senior securities

         None.

ITEM 4.  Submission of matters to a vote of security holders

         None.

ITEM 5.  Other Information

         None.

ITEM 6.  Exhibits And Reports On Form 8-K

(a)Exhibits

         11.1  Calculation of Earnings Per Share

         Financial Data Schedule (submitted for SEC use only)
     
(b) Reports on Forms 8-K.

         None.



                         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:  April 30, 1997           By: /s/ WILLIAM A. ANGUS, III

                                   William A. Angus, III
                                   Sr. Vice President and
                                   Chief Financial Officer